ISSUES: 04/2011 MONTH: APRIL 2011 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 market information, forecasts and consulting advice based on reliable sources. PA INTERNATIONAL We constantly strive to present the most up-to-date PROPERTY CONSULTANTS (KL) SDN market knowledge in order to ensure clients are well- armed with sufficient data to make the right property Phone: BHD03-7958 5933 Fax: 03-7957 5933 decisions. Website: http://www.pa.com.my Email: [email protected] Issues 2: 1-30 April 2011 GENERAL ECONOMIC & PROPERTY MARKET 1. Quiet 1Q in the Klang Valley (The Edge Property, 15-Apr-2011) . According to Siders Sittamplam, managing director of PPC International Sdn Bhd, the Klang Valley property market has been quiet in the 1Q 2011 though it has picked up however, dows not expect the market to be more vibrant in the coming months. School festive holidays in January and February, the New Year, Thaipusam and Chinese New year do contribute to the slowdown which began at the tail end of 2010. The 2Q 2011 would see some improvement over 1Q as there are more transactions of commercial and residential properties in April 2011. With the current rise prices of fuel, essential items, local and international events such as the impending general election in Malaysia and natural disaster in Japan) not much was expected in vibrancy market as the property market works within the framework of the economy, it is bounded to be affected. MARKET & PROPERTY ECONOMIC GENERAL . Other factor such as the reduction of the loan-to-loan value ratio to 70% for third-house buyers and the probability of further interest rates could have an impact on property market. 2. GDP growth to decelerate to 4.5 per cent in first half 2011 (Bernama, 15-Apr-2011) . Malaysia’s gross domestic product (GDP) growth is expected to decelerate to 4.5 per cent in the first half (1H) of 2011 vis-to-vis 9.4% in the same period last year. According to Kenanga Research, the services sector along with the mining and agriculture sectors would play a major role to support growth in the 1H 2011 amid the languishing manufacturing output. The combined 3 sectors are expected 20 contribute about 3.2% to the overall GDP growth in 1H 2011. Since October 2010, the government had announced 51 key projects under the Economic Transformation Programme (ETP), with estimated investment worth RM90.1 billion. The key infrastructure economic project would be the Greater KL Mass Rail Transit system estimated at RM36 billion scheduled to start in July 2011, based on Kenanga Research. With more than 5 years to complete, it is expected to generate the biggest multiplier impact in and around the Klang Valley over the next decade. 3. M’sian economic recovery sustainable, inflationary risk up (The Star, 7-Apr-2011) . A survey by Malaysian Rating Corp Bhd (MARC) shows that market participants are optimistic the economy will stay in recovery mode but they also agreed that inflationary risk has heightened. Most also believed that ringgit in range of 3.00 to 3.10 against the greenback with unanimous expectations of monetary tightening this year. MARC said in the report published on its website that 61.3% of the 33 fund managers, bank treasurers, market researchers, advisors and investment bankers were confident the economy would grow 5% to 6% this year with 29% expected the economy would grow less than 5%. Respondent unanimously agreed that inflationary risk is on the upside, with 59.4% looking at headline inflation in the range of 2.5% to 3% this year, while the remaining 40.6% believe that inflation could even surpass 3%. MARC added 78.1% predicted the central bank to hike the overnight policy rate (OPR) while 18.8% expected the pause mode to persist over the same period. Of the sub-sample that expects interest rate hikes in 2011, 75.9% thinks that the OPR will close the year in the range of 3% to 3.25% while the remainder believes that the quantum of rate hike should be in range of 50 to 75 basis. Our philosophy is simple: A unique combination of People, Intellectual Property, Relationships, Services and Commitment 1 Issues 2: 1-30 April 2011 4. Downtrend in property loans (The Star, 6-Apr-2011) . Bank Negara’s move to require house buyers to pay a higher deposit seems to be weeding out speculation in the property market, said by some analysts . It is monthly statistical bulletin last week showed that for fourth consecutive months since November, the number of loan application to buy residential property has reduced. On November 2010, the central bank announced a 70% loan-to-loan value (LTV) cap on a borrower’s third and subsequent house-financing facility MARKET & PROPERTY ECONOMIC GENERAL meaning that these buyers would have to fork out 30% of the purchase price. Drop in housing loan applications and reduction in the number of loans approved would eventually lead to a softening of the property market. Additionally, developers will find it more difficult to push sales and this will lead to a softer property market too. Our philosophy is simple: A unique combination of People, Intellectual Property, Relationships, Services and Commitment 2 Issues 2: 1-30 April 2011 DEVELOPMENT LAND TRANSACTIONS 5. Development land (zoned for commercial) sale in Cheras Selatan (Bursa Malaysia, 29-Apr-2011) Location Along Jalan Goh Hock Huat. Its southeast boundary fronts onto Lorong Tampin. Vendor FK Realty Sdn. Bhd. (subsidiary of Fung Keong Rubber Manufactory (Malaya) Sdn. Berhad) Purchaser Berkeley Sdn. Bhd. (subsidiary of Paramount Corporation Berhad) Title details Lots Nos. 932, 933, 934, 935, 1873, 2518, 2519, 1875 and 164, all within Mukim of Kapar Land tenure Freehold Mukim/ District Mukim of Kapar, District of Klang, State of Selangor DEVELOPMENT LAND TRANSACTIONS Description . The land is currently zoned for commercial use under Majlis Perbandaran Klang and has been approved for commercial development. There are currently being used as a factory and a warehouse. The proposed development is an integrated commercial hub and expected to commence in financial year 2012 and span over a development period of approximately 10 years. Land area 1,270,209.6 sq ft @ 29.16 acres Price RM110,000,000 @ RM86.60 per sq ft Date of SPA 29 April 2011 6. Development land sale in Seberang Perai (Bursa Malaysia, 1-Apr-2011) Location Batu Kawan, Seberang Perai Selatan, Pulau Pinang Vendor The Penang Development Corporation Purchaser Abad Naluri Sdn. Bhd. Property details Parcel 2B Land tenure Leasehold 99 years upon its alienation by the State Authority of Penang to the Penang Development Corporation Mukim/ District N/A Description . The land will be subjected to the category of land use for mixed development comprising residential and commercial properties. At present the land is bare and vacant. The land is strategically located within 4km from the landing of the Second Penang Bridge on the mainland at Batu Kawan. Built-up area 5,490,302.40 sq ft @ 126.04 acres Price RM16.75 million @ RM3.05 per sq ft Date of SPA 31 March 2011 Our philosophy is simple: A unique combination of People, Intellectual Property, Relationships, Services and Commitment 3 Issues 2: 1-30 April 2011 RESIDENTIAL PROPERTY IN KLANG VALLEY 7. Residential land sale in Cheras Selatan (Bursa Malaysia, 26-Apr-2011) Location Cheras Selatan, Hulu Langat, Selangor Vendor Webcon Sdn. Bhd. Purchaser SDB properties Sdn. Bhd. (subsidiary of Selangor Dredging Berhad) Title details Held under Geran Mukim 3320, Lot 33945, Tempat Hulu Sungai Balak, Pekan Ceras. Land tenure Freehold Mukim/ District District of Hulu Langat, State of Selangor Description . The Vendor has obtained the approval for conversion of the land use of the property from 'agriculture' to 'building' for residential use and has complied with all terms of payment of charges, premium and fees. The Vendor has obtained a development order to develop a housing development consisting of 540 units of condominium. Land area 391,149.74 sq ft @ 36,339 sqm Price RM31,000,000 @ RM79.25 per sq ft RESIDENTIAL PROPERTY RESIDENTIAL Date of SPA 26 April 2011 8. Residential property prices may see some correction (The Edge Property, 29-Apr-2011) . Based on Gavin Tee, Founder and President of Swhengtee International Sdn Bhd, residential property prices may see corrections this year. Having escalated too quickly last year, property prices may soften for certain locations. Property prices were seen rising since 2007 and last year’s level was especially high. Areas that don’t normally have high appreciation have also seen impressive capital gains. He adds that over the long term, the next few years until 2020 would be a good period to invest in property, mainly due to implementation of developments under the Greater Kuala Lumpur Plan with the aim of supporting 10 million residents. Greater KL will encompass 279,327ha, an area four times the size of Singapore. It is envisaged that by 2020, 7 out of 10 Malaysians will be living here. It will be a livable city and an economic hub covering 10 municipalities with more open spaces, improved waterfronts and a superior public transport system. Covering Klang and Sepang, and stretching past the Selangor coastline, Greater KL will also include the green belt of Templer's Park in Selayang.