Archive for the ‘Malaysia Property Sector’ Category

The Development of Batu Kawan and its land price trends

Monday, March 3rd, 2014

Batu Kawan is on the national attention following the official opening of the Second Penang Bridge by the Malaysian Prime Minister on 1st March 2014. It is officially known as Tuanku Abdul Halim Mu’adzam Shah Bridge.blog.intproperties.com have gathered relevant information and researched the chronological events on the development of Batu Kawan to track its past pricing trends of land transactions from the time Batu Kawan Island was acquired to the present time of the completion and opening of Second Penang Bridge.(Map of Second Penang Bridge).

second-penang-bridge-011

second-penang-bridge-011

Background Information

Batu Kawan used to be an oil palm estate previously owned by Batu Kawan Berhad (BKB). On 8th February 1991, the Penang state government has gazetted Batu Kawan Estate under section 8 of the land acquisition act 1960.

In 1992, the entire 5,260 acre Batu Kawan was acquired by Penang State Government through the Land Office Administrator of South Seberang Perai District for a sum of RM53,197,974 or RM8,167 per acre awarded as compensation.

BKB filed the case to the Penang High Court and the judge reviewed the land acquisition and increased the award of compensation to RM15,000.00 per acre (RM15,000 X 5,260 acres = RM78,900,000.00) on 9th October 1995.

Not satisfied with the compensation, BKB pursued the matter to the Court of Appeal but was dismissed on 22th Sept 1997.

Subsequently, BKB took the matter up to the Federal Court seeking higher compensation of RM40,000 per acre but was dismissed by Federal Court on 11th September 2001. BKB exhausted all the legal means which took them 9 years and finally settled with the compensation of RM15,000.00 per acre(Analysed to RM0.34 psf). The Federal Court judge held that the revised compensation of RM15,000.00 as at that time in 1992 is the “Adequate compensation” on the premise that the land is an agricultural estate land with remote potentiality for any development.

Past Events and Transactions

In Feb 1996, BKB set up a joint venture vehicle with a 60%-owned joint venture company, Padova Corporation Sdn Bhd (“Padova”), with the Penang Development Corporation (“PDC”) whereby Padova has entered into a Land Purchase Agreement with the PDC.

Under this Agreement, Padova was to purchase from PDC 740 acres of former estate land on Batu Kawan Island for a sum of RM50 million for property development(analysed to RM1.55 psf). The land was part of the Company’s Batu Kawan Estate, which was compulsorily acquired by the State Government in 1992 and a sum of RM40 million has been paid to PDC under the Agreement. However, due to economic downturn, the plans for property development in the area were reviewed while the Land Purchase Agreement has been terminated.

On 9th May 2002, Abad Naluri Sdn Bhd (ANSB) submitted tender for Penang Turf Club’s relocation and sale of Batu Gantung land. ANSB proposed to build a new race-course for the Penang Turf Club at a 250-acre site at Batu Kawan. On 25th November 2002 – Turf Club EGM approved sale of Turf Club land in Batu Gantung and proposed acquisition of Batu Kawan site for relocation of Penang Turf Club.

On 16th Jan 2004 – PDC entered into a Principle agreement to sell several parcels of land in Batu Kawan, totaling 750 acres to ANSB. The development was planned in six different phases, each divided into Parcels 1, 2A, 2B 3A, 3B and 4 respectively of which mixed development projects were planned on Parcels 1, 2A, 2B 3A, and 3B measuring 450 acres in total. The development of Parcel 4 was confined to the development of a Penang International Equesterian Centre (PIEC) measuring approximately 300 acres. The purchase consideration for Parcel 4 was reported as RM46 million (analysed to RM3.52 psf).

On 8th March 2008, The DAP-led Pakatan Rakyat took over the Penang State Government administration.

In September 2008, CM Lim Guan Eng and 52-member delegation went to Korea for its first oversea trade investment mission. After the trip, it was widely reported that an MOU between PDC and Korean Group DK ENC has been signed to build a US$ 100 million (RM350 million)golf course in Batu Kawan. However, the deal fizzled out after a memorandum of understanding (MoU)on the project,signed between PDC and South Korean-based DK ENC Company Ltd lapsed.

batu kawan golf course

batu kawan golf course

In year 2009/2010, land acquisition process began on private lands in the Batu Kawan locality affected by the Second Penang Bridge alignment and road linkages to North South Highway and were awarded compensation at a rate of RM8-10 psf.

On 5th April 2011, CM Lim Guan Eng announced the sale of Batu Kawan Land TO ABAD NALURI SDN BHD(ANSB) after a re-negotiation process with ANSB since 2008 to proceed with the development of the remaining parcels since the S&P Agreements for Parcels 2B, 3A and 3B were yet to be signed. After serious negotiations and discussions between both parties, a decision was finally made and agreed upon by both parties in early 2011.

It was reported that the change in the development of Parcel 4 from the PIEC to the proposed mixed development has benefited PDC by enhancing the value of the land from RM3.05 psf to RM4.77 psf amounting to an increased value of RM22,500,000.00.(Approximately 56% increase in value of the land)- Click here for more info.

On 27th June 2011, CM Lim Guan Eng held a press conference and announced that an industrial park catering for SME with 150 acres will be established at the Batu Kawan Industrial Park(1,600 acres) and 67 acres acres for SMEs opened for sale as backbone for solar and renewable energy industries. The current sales price of SME industrial land in Batu Kawan Industrial Park is priced at RM30 psf.

batu kawan industrial park

batu kawan industrial park

On 23rd August 2011, CM Lim Guan Eng unveiled that PDC has allocated 200 acre site in Batu Kawan for the proposed Mega housing project of which at least 7,300 affordable housing units will be built over a period of 5-7 years at a density of 55 units per-acre.

mega housing at batu kawan

mega housing at batu kawan

On 16th February 2012-Ground breaking ceremony for HDB designed affordable homes was held at Bandar Cassia, Batu Kawan- Video.

On 29th February 2012, a signing ceremony was held between Robert Bosch with PDC for the purchase of a parcel of industrial land for RM58 million. 20% of the purchase price has been paid in December 2011. The land is estimated to be 35.2 or 87 acres(Analysed to RM15.30 psf).

In September 2012, Equine Capital Bhd, the controlling company of ANSB, changed its name to Global Oriental(GOB). GOB still has a remaining 350 acres of leasehold land in Bandar Cassia, Batu Kawan.

On 10th October 2012, Malton Berhad announced that Silver Setup Sdn Bhd (”SSSB”), a wholly-owned subsidiary of Malton, had entered into a Joint Development Agreement (“JDA”) with Batu Kawan Development Sdn Bhd (formerly known as Abad Naluri Sdn Bhd) (”BKDSB”) for the proposed joint development of a piece of land situated at Batu Kawan, Mukim 13, Seberang Perai Selatan, Pulau Pinang (“Land”), measuring approximately 300 acres (“Joint Venture”).

The proposed development under the JDA is expected to comprise mixed commercial and residential development (“Proposed Development”). Based on the preliminary plans, the gross development value of the Proposed Development is estimated to be RM3.8 billion.

The Proposed Development is expected to be carried out and completed in phases over 10 years from the date of issuance of the title of the Land, subject to extension as may be approved by the PDC.

Details of the Joint Venture Entitlements under the Proposed Development :-

BKDSB’s entitlement under the JDA is 18% of the Gross Development Value of the Proposed Development, subject to not less than RM300 million, which represents the minimum return expected by BKDSB from the Joint Venture. Whilst SSSB shall be entitled to the remaining 82% of the Gross Development Value of the Proposed Development. Under the JDA, SSSB is solely responsible to meet the costs of the Proposed Development. Upon signing of the JDA, SSSB has paid a sum of RM20 million as deposit to BKDSB as part of BKDSB’s entitlement under the JDA (“Deposit”).

On 28th March 2013, after slightly more than a year, Media reported that Bosch Solar Energy Malaysia Sdn Bhd has decided to shelve its plan to invest RM2.2 billion in a new mono-crystalline solar cell plant at Batu Kawan Industrial Park although a sales and purchase agreement had been signed between Bosch and PDC in December 2011 for a 35.2ha of land in Batu Kawan to build the plant, citing circumstances did not allow Bosch to proceed with the project.More on Bosch pull out.


In August 2013, PDC called for a request for proposal (RFP) for an international theme park and golf resort (with a minimum 18 holes). The RFP is for the purchase and lease of a total 685 acres of land – 215 acres for the theme park (west of Batu Kawan) and 470 acres for the golf resort (north of Batu Kawan). Both projects are required to be completed within four years from the date of agreement. The entire development must be fully completed in 10 years. No new announcement on the outcome of this RFP yet.

On 12th October 2013, PDC signed a purchase and development agreement for the construction of a premium retail outlet in Bandar Cassia,Batu Kawan. The agreement, signed between PDC and developer PE Land Sdn Bhd, will see the nation’s second premium outlet after the Johor Premium Outlet. The premium outlet, costing about RM200mil, will be built on a plot of 16ha (39.54 acres) land that will also include a 300-room international-class hotel, cafes and food and beverage outlets, a landscaped garden as well as residential units. It was reported that the Payment for the land premium of RM65.34mil would be within three months.(Analysed to RM37.94 psf).

On 10th January 2014 – CM Lim Guan Eng announced IKEA’s Entry Into Batu Kawan with the sale of 245 acres of land for the purpose of development of an integrated shopping mall, anchored by an IKEA store to be developed by Ikano Pte Ltd, and mixed development of offices and residences to be developed jointly by Aspen-Ikano (a joint venture company to be formed by Aspen Vision Land Sdn Bhd and Ikano Pte Ltd).  The 245 acres development in Batu Kawan will include: 30 acres for the development of IKEA Store and phase 1 of the Shopping Mall 45 acres for the development of phase 2 of the Shopping Mall; and 170 acres for mixed development purposes (Remaining Parcels) The total land cost for the project is RM 483,951,600 and payment is to be made within 60 months from the date of Agreement. A RM 5 million non-refundable deposit has also being paid to PDC.

Off all the land dealings in Batu Kawan, this is considered as the landmark transaction of year 2014 which analysed to RM45.34 psf with payment terms of up to 5 years.

The last one year also witnessed several big players joining the bandwagon of acquiring lands in southern Seberang Perai in anticipation of the improved infrastructure networks with enhanced accessibility following the completion of Second Penang Bridge. Several reported land acquisition by established developers are :-

MAH Sing Group Bhd bought about 76.38 acres of freehold land in Jawi, Southern mainland Penang for RM42.59 million It was reported that the land was acquired at RM12.80 psf in December 2013 with payment terms within 18 months.

Another developer , Tambun Indah (TILB) acquired additional 21 acres freehold land at Pearl City of Bandar Tasek Mutiara.This came after the acquisition of a 24.1 acre land parcel also in the township a month earlier.The purchase consideration of MR12.7m translates into a land cost of MR14.00 psf, similar to the earlier transaction. Tambun Indah has an accumulated land bank of about 550 acres of Pearl City of Bandar Tasek Mutiara

IJM Land has also acquired 70 acres of land in Jawi, Southern mainland Penang for RM56 million (Analysed to RM18.50 psf ) in July 2013.

According to RHB Research, EcoWorld also bought about 60 acres of land located at the junction of Jalan Paboi and the old Simpang Ampat federal route, near Simpang Ampat, Southern Seberang Perai at over RM30 psf.

After a span of 22 years, Batu Kawan is poised for higher intensity of development with the recent opening of the Second Penang Bridge. There is no doubt that the construction of RM4.5 Bil Second Penang Bridge since 2008 have accelerated the development of Batu Kawan as evidenced by increased investments and land transactions over the past one year. Improved road networks and accessibility has significant impact on its land usability.Its zoning use from that of pure agricultural land in 1990’s has gradually maturing into lands with potential and suitable for housing and industrial use and likely to scale up to higher economic land usage such as commercial and mixed development township. So as its land prices which have surged significantly in recent years in tandem with the change of land usability, zoning and enhanced accessibility.

For more information and advisory on Penang property matters, please visit our website at www.intproperties.com or email to tan@intproperties dot com.

Updates :

On 25th March 2014, Property developer Paramount Corp Bhd (PCB) signed an agreement with PDC to purchase 12.14ha ( about 30 acres)  of freehold land in Batu Kawan for a total of RM65.56 million to develop a university metropolis. It was reported the land cost for the 10 acres of land for education use ie. for development of KDU University College is RM40.50 psf whilst the land cost for the remaining 20 acres earmarked for integrated development is RM55.00 psf.

Under the agreement, PCB is required to commence and complete the development of the education component within 5 years whilst the integrated development is targeted for completion within 10 years from the agreement date.

Update on the Malaysia Real Property Gain Tax(RPGT)-Budget 2012

Sunday, October 9th, 2011

One of the measures to curb real estate speculative activities in the property sector as announced by the Malaysian Government in its budget 2012 on 7th October 2011 is the revision of RPGT rate. For properties held and disposed within 2 years, the RPGT rate is 10%. For properties held and disposed within a period exceeding 2 years and up to 5 years, the rate is 5%. Properties held and disposed after 5 years are not subject to RPGT. (refer picture below)

(source picture : btimes )

RPGT has been introduced in Malaysia at multi-tier rates since year 1995 up to 2007. It was suspended from 1st April 2007 to 31st December 2009 in a move to shore up the sluggish Malaysia property sector affected by the world financial crisis.  In January 1, 2010, RPGT was reinstated at a single rate of 5% for all taxable gains (for all disposal within five years). 

Effective  January 1, 2012, property owners and investors who dispose off their property in Malaysia within five years will be subject to the revised RPGT rate on taxable capital gains for sale and purchase agreements signed on or after that date. For disposal of property whereby state consent is required, the date of disposal shall be the date when such conditions have been complied with but not the date of SPA. However, genuine property owner who disposes their property can apply for exemption of RPGT under the following circumstances ie. a) one-in-a-lifetime exemption for malaysian individuals, b) disposal by way of gift ie between parent and child, husband and wife etc.     

Briefly, the computation of RPGT in Malaysia is as follows:-

A)     Disposal  Price ( LESS allowable expenditure ie. upgrading and improvement costs to maintain or enhance the value of the property  and incidental expenditure such as legal fees and stamp duty, agent fees, administration charges etc)   

B)      Acquisition Price ( ADD incidental costs legal fees, agent fees, administration charges etc)

Taxable capital gains = A-B less RM10,000.00 exemption or 10% of the net gains, whichever is higher for an individual. 

 

 If there is capital gains arising from the disposal of a property after deducting allowance for capital gains exemption up to RM10,000.00 or 10% of the net gains, whichever is higher for an individual, the RPGT rate  shall be 10% on taxable capital gains for disposal within two years and 5% on taxable capital gains for disposal exceeding second years but within fifth years.

In standard practice, A 2% retention sum of the disposal price will be retained by acquirer’s solicitor for RPGT purpose and filing of notification of disposal to Board of Inland Revenue of Malaysia  is required within 60 days. Picture below shows a sample format of the RPGT also known as CKHT form issued by Board of Inland Revenue of Malaysia for your easy reference.

The revision of RPGT rate under the Budget  2012 is considered moderate and  expected to have gradual impact on the property market in key urban areas in KL/Klang Valley, Penang Island and JB where bulk of the property investments and market activities are actively taking place. More  here .

Where to buy a Penang Apartment for less than RM1,000 a month

Monday, October 18th, 2010

The residential subsector for the state of Penang in the second half of 2010 remains vibrant and continue to be the dominant sector in terms of number of transactions of the Penang Property Market. It is inevitable that home prices are on the rising trend in recent quarters brought about by improving economic conditions nationwide and continued bullish outlook of the Malaysian economic performance. It is also a widely known fact that landed house prices such as single and double storey terraced houses, in particular, Penang Island are amongst the highest in the country which have gone beyond the affordable levels of the medium income groups and new home seekers.

However, first time home buyers can still look for affordable Penang Apartments in the secondary market of Penang Island as there are many choices of medium range apartments priced from RM130,000 to RM220,000 per unit.

Incentive for first time home buyers under Budget 2011

Following the recent budget announcement on 15th October 2010, the government will introduce the “Skim Rumah Pertamaku” or “My First Home Scheme” through Cagamas Berhad to assist the newly-employed younger group earning less than RM3,000 per month to buy a house costing less than RM220,000.00.

First time home buyers will be eligible for 100% FINANCING. First-time house buyers will also be given stamp duty exemption of 50 per cent on instruments of transfer on a house price not exceeding RM350,000 as well as stamp duty waiver of up to 50 per cent on loan agreement instruments to finance such first-time purchase of houses. With the exemption in stamp duty, first time home buyers stand to SAVE UP TO RM2,250.00.

Read more :-Full loan for first-time house buyers and Pinjaman rumah 100 % untuk golongan muda.

Perks for first-time house buyers

a)Savings on 50% waiver of stamp duty on transfer instrument:-
House Price say RM220,000.00
1% on first RM100,000.00 – RM1,000.00
2% on balance RM120,000.00 – RM2,400.00
Total RM3,400.00
50% waiver RM 1,700.00

b)Savings on 50% waiver of stamp duty on loan instrument :-
0.5% on full loan say RM220,000.00- RM1,100.00
50% waiver RM 550.00

First time purchaser needs to pay RM2,250.00 only instead of RM4,500.00. Hence, effective savings is RM1,700.00 + RM550.00 = RM2,250.00.

Where to find Penang Apartments ?
Below is our compilation of apartment schemes in selected areas of Penang Island which are within the affordable pricing bracket for first time home seekers where we can help you to locate and own a Penang Apartment at affordable repayments from as low as RM500.00- RM1,000.00 a month. Our company, Izrin & Tan Properties Sdn Bhd is ever ready to assist you to own a Penang Apartment in a hassle-free (no headache to find where to buy), easy and convenience way.

Penang Island Apartment Information
Tanjung Tokong/Tanjung Bungah/Batu Feringgi – Aquarius , Azuria, Bayu Emas, Delima Condo, Ferringhi Delima, Ferringhi Mutiara, Permai Ria, Taman Krsytal, Taman Tegoh
Jelutong – Simphony Park, Mutiara Heights, Mutiara Idaman, Serina Bay, Desa Selatan, Menara Riverview, Taman Jelutong, Taman Cemerlang
Bukit Dumbar – Sinar Bukit Dumbar
Bandar Baru Air Itam – Seri Semarak, Desa Intan, Desa Baiduri, Fortune Court, Sri Impian, Sri Ivory, Sri Krystal, Tanjung Court, Asia Height, BL Garden, Treasure Ville
Padang Tembak - Boundary Court
Paya Terubong – Desa Permata, GL Garden
Perak Road – Casa Impian, Tmn Sri Perak, Tmn Kheng Tian, Kota Emas, Suteramas, Seruan Emas
Gelugor/Bukit Gambier – U Garden, Jade View, Gambier Heights, N-Park, Taman Batu Uban, Villa Sri Kenaga
Bukit Jambul – Taman Bukit Jambul, BJ Court, Desa Daya, Jambul View, Sri Nibong Apt
Batu Lancang/Greenlane – Mewah Court, Desa Green, Kota Emas, Desa Penaga, Eastern Court, Greenlane Heights, Medan Penaga, Taman Sri Damai
Georgetown –Taman Pelangi, Macallum St Ghaut flat, Sri Kota, Medan Samak, Desa Singora
Relau/Sungai Ara – Marina Tower, Taman Desa Relau, Acres Villa, Ara Mas, Desa Alor Vista, Desa Bayan, Relau Vista, Sri Abadi, Sunshine Garden, Villa Kejora, Vista Condo
Sungai Dua- Taman Pekaka, Taman Jubilee, Nipah Emas, Taman Lip Sin
Sungai Nibong/ Bayan Baru – Century Park, Desa Bistari, Gedung Hts, Halaman Cendana, Mahsuri Apartments, Nibong Indah, Taman Jubilee
Bayan Lepas – Saujana Damai, Bayan Permai

Mainland Penang- Seberang Perai Apartment Information
Butterworth – Park View, SeaView (studio unit), Pangsapuri Cantik, Pangsapuri Ria, Vista Perdana, Pantai Apartments, Pangsapuri Sena
Bagan Lallang/ Raja Uda area- Seri Cemerlang, Taman Mesra Indah, Taman Pandan, Pangsapuri Mawar, Pangsapuri Seri Mekar
Bukit Mertajam- Kondo Mutiara, Pangsapuri Seri Pelangi
Prai–Pangsapuri Aman(Prima Prai), Pangsapuri Pesona

Contact us now at +604-6588333 or SMS to 0124072329 to find out how we can assist you to own an affordable Penang Apartment for less than RM1,000.00 a month.


Acres Villa in Sungai Ara, Penang


Asia Height Apartments in Air Item


N-Park in Batu Uban


Jade View Apartments in Gelugor


Park View Tower @Harbour Place in Butterworth


Cassia Resort Condo@ Raja Uda, Butterworth

4 Market indicators on Penang Property Sector 2010

Sunday, September 5th, 2010

1. More new property launches - More housing projects are being slated for launching in the second half of this year by established developers in Penang as there is growing optimism amongst housing developers and market players on the recovery of domestic economic and improving market outlook on the property sector. Read more at Penang gears up for more property launches.

2. Property transactions on the rise -According to NAPIC’s press release, there is an increase of 16% in terms of number of property transaction in 1st Quarter 2010 compared to the corresponding quarter in year 2009 whilst the total transaction values surged significantly, almost 49% from RM16.92bil to RM25.5bil. It is projected that the rise on the property transactions and total values are likely to continue for the forthcoming quarters. The overall property market performance this year is expected to be much better than year 2009 which have been marred by the world financial crisis.

3. Rebound in market demand -The rebound in market demand experienced by the Penang Property sector in the first half of this year is mainly attributable to the pent-up demand after a period of subdue market activities brought about by the impact of the world financial crisis.

Recent reports of higher take up and improving sales performances experienced by Penang’s established housing developers indicates that the market demand has indeed picked up and the demand trend is likely to remain firm in the short term as property investors are flocking back into the property market in anticipation of buoyant economic outlook as well as further price increase following the recent government’s move to implement gradual removal of subsidy on energy and raw materials.

Another factor that could fuel the buoyancy of the property market is the recent strong performance of the Bursa Malaysia KL Composite Index which have recovered over 1,400 points. The stock market has made substantial gains this year and this could boost the property sector.

A local research fund house predicted that Malaysia’s property sector is set to see its biggest residential boom in a decade. The property sector was already entering the early stage of a property “super cycle”. More at OSK bets on Malaysian Property boom.

The Economic Clock - Malaysia’s property sector is currently at the stage of 9 - 12

4. Rising home prices - There is a growing concern that home prices are getting costlier due to the cost push factor as most of the newly launched projects appeared to be in the category of upmarket segment offering luxury housing units.

Penang Island is facing very limited land bank for housing development particularly medium cost housing units and landed homes. With limited supply in land bank, land costs on the Penang Island keep rising and inevitably push up home prices to unprecedented range that go beyond the affordable levels of the majority of the island’s population. A Penang politician MP has recently voiced his concern on rising home prices and has urged the housing ministry to relook into the present housing policy. In the meantime, more parties are urging the state government to review and address the housing issues in Penang which may have an impact on brain drain of Penang employment. The rising prices of homes, if left unchecked, may result in gentrification. Urban gentrification is a phenomenon on socio-cultural changes in an area resulting from wealthier people buying up the housing units in a less prosperous community area.

Impacts of Global Financial Crisis vis-a-vis Asian Financial Crisis on Penang property sector

Sunday, October 18th, 2009

Despite the onslaught of the global financial downturn, the Penang property sector in general has been resilient and relatively stable with no drastic movement in housing prices. The local housing developers have been better prepared this round to ride through the downturn with the exception of handful housing developers which are forced to slow down their construction activities or delay their project launchings during the height of the crisis. Though there are signs of market softening in 2H 2008 and 1H 2009, market sentiment for Penang property sector in the 2H 2009 has improved remarkably with more buyers/investors flocking back into the market whilst housing developers are beginning to make a come back and roll out more new planned projects in anticipation of improving economy outlook. Transaction activities in both primary as well secondary market are poised to pick up again buoyed by the continued support and lending by Malaysia’s banks with attractive financing packages at low interest rates of 3-4%.

Unlike the previous 1997/98 Asian Financial crisis, the Penang property sector at that time was badly hit due to the credit crunch of the Malaysia banking system and the sudden surge in lending rates to as high as 13%.  As a result, many housing projects were stalled and abandoned, with many developers were either facing cash flow and debt servicing problems and eventually collapsed and wiped off from the marketplace such as Adorna, Penas and Cayman etc. The aftermath of the crisis has crippled the Malaysia housing and construction sector with major property sectors suffered sharp price declines as much as 30-40% from their peak levels whilst the banking system saddled with huge bad loans and high NPLs.

Some notable projects in Penang/Kedah region which have been badly affected since the times of 1997/98 Asian Financial Crisis are mostly retail/commercial and several mega projects, some of which are still in abandoned stage and awaiting revival or resuscitation:-

Penang Island

Bayan Central – An uncompleted commercial complex located at Bayan Bayu which commenced construction in 1997 and subsequently stalled.

Bayan Bay Marina and Leisure Resort by Eternal Resources (joint venture between Anson Perdana and PDC) which was originally scheduled for completed by year 2000 but stalled for several years. This multi-million Bayan Mall (now Queensbay Mall) was successfully revived by CP Group and commenced business in 2005.

Mainland Penang (Seberang Perai)

Plaza utama- A commercial complex comprising 6 storey shopping mall, 213 room-hotel and one office block at Bukit Mertajam town. Plaza Utama development commenced in Nov 1995 and completed in 1997. The commercial complex was opened for business after completion but ceased business after a short stint.

View of Plaza Utama in Bukit Mertajam


City Parade at Jalan Megat Harun, Bukit Mertajam – Another completed commercial building which is similarly affected like Plaza Utama and ceased operation after opened for business for a short period.

Both buildings have long been put up for sale by former Danaharta now Prokhas and still looking for potential “white knight” to revive it.

Fasda Heights (Taman Bidara)- a mixed housing project in Macang Bubok, Bukit Mertajam with about 1,000 units which was not fully completed and handover to the purchasers.

Taman Perindustrian Macang Indah- an abandoned SMI industrial park at Sungai Lembu, Bukit Mertajam.

Leisure Tower- A 11-storey integrated commercial complex at Jalan Kampung Gajah, Butterworth by HCC Group originally schedule for completion end of 1999 but only partially completed and abandoned.

Kristal Golf Resort (Suasa Kristal) - a golf resort located at Sungai Bakap, Southern Seberang Perai, ceased operation several years ago and taken over by Danaharta. The site was reportly sold to a private housing developer.

Others approved commercial complexes which have been launched but failed to take off and subsequently shelved are “Plaza Everise” – a planned 2.3 acre commercial complex at Sungai Rambai Commercial Centre and  “Aseania Mall” at Bandar Perda. Both are located within bukit mertajam area. “Plaza Cayman”, another planned commercial project located adjacent to old MPSP building at the heart of Butterworth town.

Kedah

Padang Meha Parklands by MBF Country Homes and Resort (Alamanda) near Kulim– a proposed RM3 billion housing/resort development near Kulim covering 5,200 hectares launched prior to 1997/98 Asian Financial Crisis which has since abandoned. Latest report disclosed that the developer has been liquidated in year 2005. More related info here: Developer liquidated, 300 land buyers in the lurch. Others include the 160 hectare  residential resort scheme (Diamond Santuary) in Mukim Padang Meha near Kulim Hi Tech Park and the proposed RM1 billion Diamond Creeks Retreats with 800 hectares of land in Ulu Behrang, Perak near the proposed Proton City.

In a nutshell, the magnitude and severity brought about by the impact of the 2008/09 Global Financial Crisis on the Penang property sector is comparatively shorter and much lesser compared to 1997/98 Asian Financial Crisis. A healthier and resilient Malaysian banking system, on-going implementation of Malaysia economic stimulus package, Malaysia’s central bank prudent interest rate policy, relaxation of EPF housing withdrawals and other economic liberalization measures, have helped to cushion the impact of the recent economic downturn on the property sector. Malaysia economy is on track for a full recovery next year.

Global economic crisis - implications for Malaysia

Thursday, August 13th, 2009

Khazanah Nasional Berhad organized its 6th Khazanah Penang Lecture entitled “The Global Economic Crisis: Implications for Malaysia” at Wawasan Open University last week. More than 300 guests of mostly businessmen attended the talk by Penang-born Professor KS Jomo, a prominent Malaysian economist who is currently serving as the United Nations Assistant Secretary-General for Economic Development in the United Nations Department of Economic and Social Affairs (DESA) whilst Mr Andrew Sheng,  another prominent Malaysian economist/chartered accountant chaired the panel discussion after the talk. Many were there at Wawasan Open University to seek their latest views and insights into this complex financial meltdown from global and Asia prospectives ! Related article : Global Financial Crisis and Malaysia Property Outlook.

Wawasan Open University along Jalan Sultan Ahmah Shah
(Northam Road), Penang

Here is Mr Andrew Sheng’s An Asian View Of The Global Financial Crisis. Though economists are of the views that the worst is over and confident level on the global economy outlook is improving, the lingering concerns remain whether the world economy recovery is V-shaped or W-shaped recovery? Nobel prize-winning economist Paul Krugman’s view ; World may witness W-shaped recovery whilst a local Fund Manager has a bullish view; V-shaped recovery has begun.

Malaysian Economy - at which stage of economic clock; 7 or 8 or 9 O’clock ?

How to increase your home value through smart renovations

Sunday, May 24th, 2009

Many house owners have the tendency to renovate their new homes exceeding their original budget. It is common to see that house purchasers of newly completed schemes in Penang are “competing” each others in home renovations. Some common renovations visible in Penang’s new residential areas are demolition of front car porch and replaced with a bigger car porch to accommodate two or more cars, hacking down the entire front terrace and facade (without balcony) and replaced with a much bigger car porch incorporating a balcony, extending the rear portion of the house to accommodate a larger kitchen etc.

We have seen house owners carried out major renovations to their houses to the extent that the renovation costs exceeding the purchase price of the house.

Renovations do not always translate to an increase in the value of your home. However, if you’re planning to sell sometime in the future and want to ensure you get the most ROI (Rate of Return), it is important to assess the value renovation. Below are several ways to optimise the cost-value ratio and achieve maximum ROI for your renovations;

a) Avoid renovations with too much customization of personal liking and taste.

If the major renovations and home improvements are customized design to suit to personal liking and lifestyle which is not commonly acceptable in the marketplace sometime in the future, you may not get much of a return when you sell as potential buyers may find these renovations are not value-added renovations but rather owner’s own personal indulgence and lifestyle. Potential buyers may also view it as a liability because he may have to spend more money to change or renovate again.

When choosing tiles, countertops, paint, cabinet doors, kitchen appliances and awnings, go with colors that will stand the test of time even as fashions come and go. Conventional or classic home designs are still the ideal for home renovations because such designs never go out of style and will always attract buyers when you are ready to sell your home.

b) Retain the essence of the original design ambience

Avoid excessive renovations such as changing the structure of house from the original two storey house to become a three storey house or demolition of a front porch and facade and replaced with a totally new design super large car porch with a balcony. Such major renovations could have materially changed the external facade of the house and may render the house no longer blend in with the design ambience of the neighbourhood and this may affect the saleability of the house.

c) Summit proper building plan for new extensions

Check with the building department of the local council MPPP or MPSP and obtain a copy of building  approval guidelines. Engage a licensed draftsman or architect to ensure that the extensions are in compliance with the building guidelines by the local authorities.

A property valuer, when assessing the market value of a house, will give due consideration and only accord full value computation for properly constructed extensions with valid approvals.

d) Value-neutral or value-added renovations

Ascertain whether the renovations to be carried are value-neutral or value-added renovations. Upgrading cement floor with homogenous floor tiles, modernizing a kitchen or upgrading the kitchen into wet and dry cooking area, improving home security system are regarded as value-added renovations whilst demolition of front terrace and house facade and rebuilt it with a large balcony, adding a swimming pool or building a sauna or long bath,  reducing the number of bedrooms to less than three are considered value-neutral renovations.

List down your options before embarking on home renovations. For house buyer who prefers house design with large car porch and balcony, it is wise to compare and weight the option which is more worthwhile and cost effective ? to buy a landed house without a balcony and later renovate it or to look for house design that comes with large car porch and balcony ?.

House Design : 2-storey terraced houses without balcony

Another House Design : 2-storey terraced houses with large car porch and balcony

For more tips on home renovations, go to Renovation quotation.

Very often when house owner decides to sell off his house, they tend to overprice their properties as they calculate their asking price by factor in all the costs incurred during and after acquisition of the house ie. purchase price plus all incidental costs such as payment of legal fees and stamping charges plus  renovations costs, bank interest charges incurred plus exit fees or penalty charges for termination of loan agreement within the lock-in period (if any).

The true fact is that total cost spent on the particular house is NOT necessarily equate to the market price of the house. In an active and uptrend market, house prices tend to go up higher than the total acquisition costs. Conversely, in a weak or depressed market, house prices may go down and fall below the total acquisition costs of the house. The market price of the house is very much influenced by the prevailing economy conditions and market sentiments and more specifically relates to the demand and supply of similar houses in the local area.

For advisory on property investments in Penang and Kuala Lumpur, email to us at Izrin & Tan Properties Sdn. Bhd or call us at +604 6588333 (Penang Office) or +603 92839782 (Kuala Lumpur Office) and we would be pleased to assist.

How to refinance your home loans smartly

Friday, February 20th, 2009

As competition is heating up amongst the commercial banks for banking on home loans, more new home loan promotions and competitive refinancing packages are available in the market to entice homeowners to refinance their existing loans. Following the latest cut of interest rates by Malaysia’s central bank, most commercial banks have already revised their base lending rates (BLR) from 6.75% to 5.75-6.0%. Update : The Malaysia’s central bank has cut interest rate again on 24th Feb 2009, BLRs of commercial banks have further revised lower to 5.55% - 5.60%. With interest rates trending lower, it is a good time to review, restructure and refinance your existing loans. There are several good reasons that home owners would benefit from switching their loans to a new loan with lower interest rates;

1. Lower your monthly installment payment
2. Debt Consolidation
3. Using the Existing Equity in the Home
4. Shorten the term of your home loan
5. Combine a first and second mortgage
6. Reduce the interest you pay over the life of the loan
7. Switch from conventional housing loan with variable rate to a fixed rate loan or Islamic loan (or vice versa)
8. Eliminate MRTA mortgage insurance

Before opting to refinance, it is important for home owners and property investors to consider the savings or benefits of refinancing vis-a –vis the costs of refinancing. Do your own break-even analysis between long term savings and refinancing costs to determine whether the savings really outweigh the costs of  refinancing or otherwise. More at Making sense of mortgage refinancing and Should I refinance now ?.

However, there are circumstances whereby refinancing might not give you the maximum savings such as when you have short remaining years to retire your loan etc Refer why say no to refinancing.

For Malaysia home owner as well as property investors who are uncertain of holding the property for long term or you have plans to sell off the property in the near term, not all refinancing packages will provide you the best refinancing benefits. Refinancing packages with features of “Zero-Entry Cost” or “Zero-Moving Cost” may not necessarily the best option, depending on your financial needs. Under such packages, although you are not required to pay any processing fee, legal fees, stamp duty, valuation fees upfront, the loans are subject to higher interest rates and imposition of exit fees or early redemption penalty up to 5% of the loan amount (vary from bank to bank) in the event that you choose to redeem your loan within the lock-in period of 5 years. Example if a house owner has to redeem his loan of RM200,000.00 within the lock-in period, he has to pay 5% of exit fees ie RM10,000.00!!!

We have come across property sellers who were stuck with loans with lock-in period and only realised that if they decide to take up a good deal offered by interested buyer, they have to pay the exit fees for redeeming the loan prematurely. On the other hand, if they choose to wait until the expiry of lock-in years ie after 5 years to avoid payment of exit fees, they might lose the opportunity of capitalising gains or losing the sale due to changing market conditions. For investment properties, the better alternative is to look for refinancing packages with no exit fees or shorter lock-in period which give you more flexibility in terms of selling / renting,  though initially you may have to pay slightly higher interest rates and documentation costs, it is still better than paying exit fees which could end up diluting your capital gains.

Below is a simple checklist to guide you on home loan refinancing :-

1 Get information on the current mortgage

For the current mortgage, you should be able to get the following information from the bank:

- the outstanding balance or ringgit amount left on the mortgage;

- the remaining number of years on the mortgage; and

- the interest rate on the loan.

2 Get information on the new loan

For the new loan, you should get information on the following:

- the terms or the number of years of the new loan; and

- the interest rate on the new loan.( the latest interest rate can be as low as BLR - 2.4% )

3 Get the costs of refinancing

The costs you are likely to encounter when refinancing include:

- processing fee or application fee;

- credit check fee;

- legal fees;

- stamp duty;

- disbursements fee;

- valuation fees; and

- redemption fees (if applicable)

4. Shop for best refinancing loan packages that suit you.

- Find out the latest home loan promotions by various lenders in Malaysia :-

-Malaysia Home Loans - What’s New (January 2009)

-Conventional home loan packages

-Islamic Home Financing Packages

-other home loan packages offered by non-bank lenders; AIA, ING

For advisory on property investments in Kuala Lumpur and Penang, email to us at Izrin & Tan Properties Sdn. Bhd or call us at +604 6588333 (Penang Office) or +603 92839782 (Kuala Lumpur Office) and we would be pleased to assist.

New housing scheme by SP Setia in Penang Island

New housing area in Prai

5 market indicators on Penang Property Sector

Friday, January 23rd, 2009

1.Fewer new project launchings - Unlike first quarter last year whereby a slew of new housing projects were launched feverishly, this quarter will likely see a subdue market with fewer housing project launchings judging from the promotional activities and advertisements in the local dailies during the period of year-end holiday seasons and new year festivities. Recent housing advertisements and promotional activities are mostly geared towards “stock clearance sales”, indicating that developers/contractors are attempting to reduce their overhang units or clear their inventory.

2.Softening property prices - Whilst some of the housing developers are still holding on to their selling prices, few have started reverting to their old selling prices after price increment ranging from RM10,000 to RM50,000 per unit 5-6 months ago due to escalating costs of fuel and building materials.

Previously, it is common to see developers offering “free legal fees for SPA” only. Now, developers are more “generous” in dishing out perks which include free legal fees for all documentations and absorb all stamping duties on transfer and loan and progressive interest payments during construction period and freebies like LCD TV, air-conditioners, home alarm system, no maintenance charges for first two years etc. Under such packages, If one is to purchase a house costing RM500,000.00 with 95% loan (RM475,000.00), the estimated “savings” can total up to RM35,000.00 - RM45,000.00 per unit or approximately 3-4% of the sales price. The primary market of  Penang Property Sector is likely to see more such offerings and new pro-consumer financial packages such as 5/95 Home Loan Package.

3.Higher overhang units were reported in 3Q08 in the latest NAPIC’s report of which 86% of the overhang units is from Seberang Perai (mainland Penang), which still has abundant of usable lands and is facing stiffer competitions as compared to Penang Island.

In a softening demand environment, developers are shifting strategies to shore up sales and focus more on cash flow management to sustain their projects rather than holding on to their overhang units whilst some may review their project plans to either cater for niche product segment or more affordable products range.  A clearer picture on the take-up rates of the ongoing housing projects which indicating the demand trend will emerge over the next few months when NAPIC releases its 4Q08 and 1Q09 reports.

4. Slower construction activities-Construction activities of some ongoing housing projects have also noticeably slowing down or scaled down in recent months. Several property developers in Penang have already announced plans to defer their projects in the state;here and here.

5. Lower housing supply -Given the global economic downturn and weak domestic market outlook,  the number of new housing supply coming on stream this year may be lower compared to previous good years. It is a challenging times for housing developers to launch new planned projects.

According to Malaysia’s NAPIC Report - Residential Property Stock Report 3Q08(Page 31-33), the Penang State housing stock totals 322,426 units including 1,687 newly completed units in 3Q08. The incoming supply (under construction and works started) is estimated at 51,612 units whilst another 34,648 units planned supply units from housing projects which have been approved as well as those submitted but pending approvals.

On the national front, Malaysia’s housing ministry has projected a lower number of supply of newly completed houses at 80,000 units for year 2009 as compared to annual average of 100,000 units. More at Ministry hopes for 80,000 homes in 2009.

As the property market in Malaysia is taking a breather, the current property downturn has opened up good opportunities for property investors with a long term prospective as Malaysia properties are still comparatively attractive as compared to other regions. For advisory on property investments in Kuala Lumpur and Penang, email to us at Izrin & Tan Properties Sdn. Bhd or call us at +604 6588333 (Penang Office) or +603 92839782 (Kuala Lumpur Office) and we would be pleased to assist.

New housing schemes in Bayan Lepas near Penang International Airport

View of  the newly completed housing scheme in Butterworth town.

Global Financial crisis and Malaysia Property Outlook

Tuesday, November 4th, 2008

Global Financial Crisis

The subprime troubles and the ensuing financial crisis in the US has been called the global financial storm. The crisis, which former Federal Reserve chairman Alan Greenspan described as “once in a century credit tsunami” whilst the 2008 Noble Prize Winner U.S. economist Paul Krugman said the crisis bears some resemblance to the Great Depression of the 1920’s.

The IMF has warned of a sharp slowdown in the world economy next year and forecasts that financial sector losses could total US$1.4 trillion(US$1,400,000,000,000.00) whilst as much as twenty million jobs will disappear by the end of next year as a result of the impact of the financial crisis on the global economy, according to UN’s report. The global economic downturn is expected to last two years before it slowly recovers from 2010 onwards as world economy recovery takes time. For visual illustration to the financial crisis, click here.

Malaysia Response

For Malaysia, like other countries in the world, has already felt the impact of the global financial meltdown as Malaysia’s key sectors show signs of slowdown. The Malaysian economy has been resilient in the first-half of 2008, but is increasingly being affected by the global downturn.

According to MIER, Malaysia’s economy may grow at the slowest pace in eight years in 2009 given the dismal outlook for the global economy stemming from the financial turmoil.

In response to the crisis, the Malaysia Government has already announced several measures of economic stabilisation plan ie. a)Bank deposits are guaranteed by the central bank of Malaysia until the end of 2010 and b) Inject RM5 billion into a special- purpose fund Valuecap to support the stock market etc.

To further cushion the effects of the world economy slowdown, Malaysia’s Prime Minister-in-waiting and Finance Minister Najib Tun Razak has announced the RM7 billion Economic Stimulus Package during his Budget 2009 winding-up speech in Parliament on 4th November 2008, details of the stimulus package are here and here.

Impacts on Malaysia Property Sector

Just about 6 months ago, Malaysia’s NAPIC has projected a bullish property outlook for this year. But the property landscape and market sentiments have changed in recent weeks. Recent statements by REHDA’s President as well as commentary of several property industry experts indicating that Malaysia property sectors are showing signs of softening. The weakening of market conditions has also affected the listing of two largest REITs on Bursa Malaysia.

However, the Malaysia property sector is unlikely to face similar degree of market downturn as experienced by Singapore Property Sector. Malaysian property market still remains attractive to foreign investors. Comparatively, properties in Malaysia are still among the cheapest in the region and property investment remains a solid hedge against inflation in the long term.

For property owners and investors seeking for latest update and outlook on Malaysian economy as well as the Malaysia Property Market amidst the global economy slowdown, here are the several upcoming events and seminars by Malaysia institutions of ASLI, MIER and PEPS:-

National Property Housing Summit 2008 by ASLI;
Date : 13 – 14 November 2008
Venue : Sunway Resort Hotel & Spa, Petaling Jaya

National Economic Outlook Conference 2009-2010 by MIER;
Date: 2 - 3 December 2008
Venue : Hilton Kuala Lumpur

Malaysia Property Market Outlook 2009 by PEPS;
Date : 20th January 2009
Venue : Sime Darby Convention Centre, Kuala Lumpur

Update (1/1/2009) : Latest statement by PEPS’s President James Wong on Malaysia Property Market Outlook 2009, here and here.