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MONTH: MAY 2012 ISSUE: 05/2012 Property News PA International Property Consultants is a registered real estate firm committed to providing a comprehensive range of property solutions to meet the needs of investors, occupiers and developers. The Research Division provides core real estate information to clients and internal departments in order to ensure accurate real estate decision-making. Our research team has completed market studies and research work for various ongoing development schemes within Klang Valley, providing comprehensive economic analysis, property PA INTERNATIONAL market information, forecasts and consulting advice based PROPERTY CONSULTANTS (KL) SDN BHD on reliable sources. Phone: 03-7958 5933 We constantly strive to present the most up-to-date Fax: 03-7957 5933 Website: http://www.pa.com.my market knowledge in order to ensure clients are well- Email: [email protected] armed with sufficient data to make the right property decisions. Issue 05: 1- 31 May 2012 GENERAL ECONOMIC & PROPERTY MARKET 1. Najib unveils 21 new projects worth RM20.46 billion (Bernama, 28-May-2012) . Prime Minister Datuk Seri Najib Tun Abdul Razak announced 21 new projects worth RM20.46 billion under seven National Key Economic Areas (NKEAs). The projects are expected to boost Gross National Income (GNI) by RM4.59 billion and create 39,918 jobs. Najib said the 21 projects fell under agriculture, business services, education, healthcare, wholesale and retail, electrical and electronics and the Greater KL/Klang Valley NKEAs. With Gross Domestic Products (GDP) growing at 4.7% in the first quarter of the year, which was above general consensus, Najib reminded Malaysians that the ETP was “ far from saying mission accomplished”. He adds, “global economic headwinds are still uncertain and now, more than ever, we must keep to our GENERAL ECONOMIC & PROPERTY MARKET true north, to focus on the key engines of growth in the economy, and to be competitive globally”. Meanwhile, a statement by the Performance Manangement Delivery Unit (PEMANDU), issued before the briefing said committed investment for Agriculture NKEA amounted to RM456.69 million and would contribute about RM367.58 million in GNI and create 2,539 jobs by 2020. 2. Shorter waiting time for construction permits (The Star, 26-May-2012) . Pemudah, the Government’s special task force to facilitate business, Federal Territories and Urban Wellbeing Ministry and Kuala Lumpur City Hall (DBKL) will introduce a new procedure for the approval of construction permits on June 1 that will significantly reduce the waiting time involved. According to Pemudah, the new procedure, known as OSC 1Submission” would significantly reduce the approval process to 10 steps and to a maximum of 100 days by simplifiying and eliminating unnecessary requirement. It also added, the current procedure involved 22 steps and a waiting time of 260 days. The fast track approval procedure for small-scale non-residential project would cover the submission of planning permission plans, buildings plans, engineering plans, fire safety plans and utility plans. According to Pemudah co-chair Tan Sri Yong Poh Kon, this fast-track approval system will significantly reduce the time and procedures involved and will benefit investors, developers and consumer. 3. Malaysia inflation likely subdued in April (Business Times, 22-May-2012) . Headline inflation is likely to stay subdued in Malaysia in April as subsidies keep fuel prices low, said economist. They expect inflation level to moderate, on base effects. According to a Business Times poll, the Consumer Price Index (CPI) is expected to be flat, recording 2.12% year-on-year growth from March’s 2.1%. The Statistics Department is expected to release the details on 23rd May 2012, along with the 2012 first quarter GDP data. BNM chief Tan Sri Dr Zeti Akhtar Aziz recently said, this year inflation rate estimate of between two to three per cent will remain intact. She said the only risk to that range of inflation is commodity prices. If energy prices rise sharply like it did in 2008, then higher prices would be expected. But in the event that does not happen, inflation would continue to moderate. Our philosophy is simple: A unique combination of People, Intellectual Property, Relationships, Services and Commitment 1 Issue 05: 1- 31 May 2012 4. 540 abondoned low-cost flat to be occupied next year (The Star, 16-May-2012) . Buyers of the abandoned Phase 1 low-cost flats in Jalan Kuang Gunung, Taman Kepong, can expect to move in by August next year after waiting for almost 7 years. Housing and Local Government Minister Datuk Chor Chee Heung said the land owner would fund the project because the developer had been declared bankrupt. The project began in May 2003 and Phase 1 was scheduled to be completed in 2006 but was abandoned with 81% completed as the developer, Gallant Acres Sdn Bhd, was declared bankrupt on March 5, 2008. Chor then ordered the landowner, Kepong Development Sdn Bhd to find funds amounting to RM14 million to complete the project. In 2010, the land owner and project’s liquidator, Tetuan Hals & Associates, were given six months to get a court order to restart the project. GENERAL ECONOMIC & PROPERTY MARKET . Chor had told the house buyers at the time that the ministry would take over by appointing a third party if the landowner and liquidator failed to take action within the six months. Phase 1 of the Li Garden Apartment and condominium project consist of three blocks of low-cost flats and 12 shoplots while Phase 2 consist of 396 low-cost units. Kepong Community Centre head Yee Poh Ping, who had been champoining the issue on behalf of the buyers, said the project would be completed between December this year and February next year. Chor added, the buyers can only move in around August next year as we still need time to apply for the Certificate of Fitness and get approval for other utilities. He also mentioned that 100 out of 177 abandoned housing projects had been revived and completed since 2009. 5. Commercial property loans 22.7% higher (The Star, 14-May-2012) . Credit for the purchase of commercial properties in March grew by 22.7% year-on-year, raising concerns in some quarters of a potential asset buble. This loan growth in the non-residential sector, which includes industrial and commercial properties, was the highest followed by credit growth for the construction sector at 19.2%. Meanwhile, loan growth for purchase of residential properties in March 2012 had somewhat moderated to 13.9% year-on-year. Starting from end 2009, there has been a big loan growth in the non-residential sector. Ilustrating the rapid pace of loan growth, the total stock of loans in the non-residential sector has grown from RM70 billion in June 2009 to RM116 billion currently or an increase of 66%. The non-residential sector has grown significantly but the bulk in value is still in residential which comprised 25% of total loans in March 2012. Non-residential properties made up only 11% of total loans in March. 6. Where the market heading? (The Star, 5-May-2012) . Sales of new launches are a bit slow today, as some developers have discovered as they take their launches to the market. This is particularly so for those offering high-end residential category, both landed and high- rise. Property professionals say there are a couple of reasons for this wait-and-see attitude by buyers. Valuer and property manager Datuk Mani Usilappan of Mani Usilappan Chartered Surveyors says buyers are still digesting the hefty price rise of the last couple of years. But, while that is still going on, something else is happening and that is the pricing of today’s new launches. Our philosophy is simple: A unique combination of People, Intellectual Property, Relationships, Services and Commitment 2 Issue 05: 1- 31 May 2012 . He says, many of today’s new launches are way above the secondary market while the prices of new launches today should be closely linked to the secondary market in that area. He mentioned, in Kajang, a new double-storey is priced between RM400,000 and RM500,000 while the older units are less than RM400,000. This may be the reason why people are taking a longer time to decide whether to buy or not. And when they do buy, it is because they need a house in that location to stay. For those who are buying to rent, he does not think the rental will justify the price. Mani, however added that there are quite a number of people who are looking for capital gains, and no longer at yields, and may still buy. Property consultant, CH Williams Talhar & Wong’s MD Foo Gee Jen says “the cautious attitude of buyers are reflected in some ways by the developer themselves”. GENERAL ECONO . He mentions launches of high-end landed properties are few and far between. The number of units released are also small, maybe 50 and 80 units. It would be commendable if they are able to sell 50% of them. He further said, “in the high-end high-rise residential sector, there is an oversupply which explains why buyers can afford to look around. If you look at the past six to nine months, there is a trend that the sales is weakening. The seller who is asking for RM1 million is now asking for RM900,000. Six to nine months ago, it was the reverse, the sellers were pushing prices up. In some locations, the price of new launches are higher than the existing properties”. He concludes that buyer have become more educated and cautious. As to the direction of the housing market, all of them say buyer will wait for the election if their intention is MIC & PROPERTY MARKET to invest.