Kuala Lumpur market takes a breather
Thursday, 8 November 2007
Pete Wong
After the slew of incentives announced by the Malaysian government since the beginning of the year to boost the property sector, the Kuala Lumpur market has gone quiet in recent times. However, the lull is not expected to last, as several property developers are targeting the last quarter of the year for their new launches.
The Malaysian Budget 2008 announcement on September 7 did little to create excitement in the property sector. Although there were a few measures to make home ownership easier, the benefits are meant for those in the lower to middle-income group, especially those earning less than RM3,000 a month. Some of the new measures include a reduction in stamp duty for transfer of property and the setting up of a fund, to provide guarantee, to help those in the low-income group without fixed income to obtain loans.
Some industry watchers feel that more could be done. Stewart LaBrooy, Executive Director of Axis REIT Managers Bhd, was reported as saying that Malaysia is still behind Singapore, which does not impose tax for dividend income from real estate investment trust funds. Malaysia imposes a 15 per cent withholding tax for local and foreign individuals and 20 per cent for foreign institutional investors.
Overall the government has taken small and incremental steps to boost interest in the property sector, starting with scrapping the rule requiring foreigners to seek Foreign Investment Committee (FIC) approval when investing in properties above RM250,000 and the abolishment of the real property gains tax (RPGT).
Property developers have to play their role, too, to boost the property sector. And one of the ways is to offer value buys at a realistic asking price. Developers usually raise their selling prices to higher benchmarks with each new launch in order to maximise profits. Already the selling price for new condominiums in the Mont' Kiara area is out of reach for the majority of local purchasers.
The media are also guilty of perpetuating the myth that Malaysian property values have a lot of room for upside, especially when compared to values in Singapore. The often quoted line is that a high-end prime property in Singapore is topping S$4,000 per square foot while the most expensive units in the Kuala Lumpur City Centre (KLCC) is only selling for RM1,500-2,000 per square foot. In reality, KLCC should not be compared with New York's Central Park, London's Hyde Park or even Singapore's Orchard Road.
The KLCC area is gripped by a traffic deadlock during rush hours with vehicles at a standstill on most days. And after rush hour, the place is lifeless except for Friday and Saturday nights when tourists go clubbing. A lot still needs to be done to address issues like traffic congestion, poor public transportation, flooding and pollution in the city before it becomes an attractive living environment. Astute investors would do well to remember that local income levels in Kuala Lumpur are nowhere near that of London, New York or even Singapore.
Meanwhile, Tang Chee Meng, COO of Henry Butcher Marketing Sdn Bhd, warned of an oversupply situation looming in the horizon. Some Mont' Kiara condominium units are sometimes left untenanted for eight months to a year. Because of ample supply, tenants can afford to be choosy.
"Many developers know how to build houses and condominiums but few know how to offer the promise of a lifestyle," says Jennie Liew, a local property agent. "Look at Sunrise Bhd. When they started building Mont' Kiara condominiums in the middle of nowhere a decade ago, they also thought about putting in place an international school and lots of high-end restaurants and cafes. They saw the value in enhancing security in the area."
Indeed, selling a property is more than just selling bricks and mortar. The developer must offer a lifestyle concept with good amenities nearby, good public transportation and congestion-free traffic access. There is no point in having the most luxurious condominium unit in the KLCC area with a grand view of Petronas Twin Towers when visitors will not come to see you because of bad downtown traffic.
In the northern part of Kuala Lumpur, SDB Properties has launched 20trees, a mixed development of courtyard homes and low-rise condominiums. Located at the Melawati area and near the National Zoo, the development will offer 201 courtyard-garden-and-terrace-houses on 23 acres of freehold land. The three-storey houses, with built-up areas from 4,411sqft to 6,420sqft, will start from RM1.3 million to RM2.5 million. There will also be 118 low-rise condominium units with prices ranging from RM559,000 to RM994,000. The developer is hoping that investors will pay a bit more for features like designer kitchens, a tropical clubhouse, a gated community with enhanced security, and other attractions.
If you're still hoping to own a piece of real estate in the popular Mont' Kiara area, there's hope yet. Mycom Bhd is teaming up with Merrill Lynch Asia to jointly develop a 16.2-acre tract of land in the area, valued at RM450 million. Mycom is also developing an 88-acre land in an adjacent neighbourhood, the upmarket suburb of Kenny Heights.
Worldwide Holdings Bhd is planning to launch a slew of high-end residential homes in Subang Bestari, Shah Alam around the end of the year. The project will comprise 20 bungalows and 18 semi-detached homes on leasehold land. Built-up areas for the double-storey bungalows will range from 3,300-3,500sqft and prices are expected to start from RM1 million. The double-storey semi-dees will have built-up areas ranging from 2,600-3,000sqft and prices are expected to start from RM800,000.
Shanghai Realty Sdn Bhd launched their Subang Andaman freehold condominium project. The developer is counting on its exciting contemporary designs utilising expansive glass pavilions and extended balconies overlooking exquisite landscaped gardens designed by renowned Australian landscape expert, Don Bergman, to make the project stand out from the rest. The condo units come in two, three-plus-one and four-room configurations. The project features a uniquely designed pool deck with outdoor yoga studio and cafe.
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Internet
After the slew of incentives announced by the Malaysian government since the beginning of the year to boost the property sector, the Kuala Lumpur market has gone quiet in recent times. However, the lull is not expected to last, as several property developers are targeting the last quarter of the year for their new launches.
The Malaysian Budget 2008 announcement on September 7 did little to create excitement in the property sector. Although there were a few measures to make home ownership easier, the benefits are meant for those in the lower to middle-income group, especially those earning less than RM3,000 a month. Some of the new measures include a reduction in stamp duty for transfer of property and the setting up of a fund, to provide guarantee, to help those in the low-income group without fixed income to obtain loans.
Some industry watchers feel that more could be done. Stewart LaBrooy, Executive Director of Axis REIT Managers Bhd, was reported as saying that Malaysia is still behind Singapore, which does not impose tax for dividend income from real estate investment trust funds. Malaysia imposes a 15 per cent withholding tax for local and foreign individuals and 20 per cent for foreign institutional investors.
Overall the government has taken small and incremental steps to boost interest in the property sector, starting with scrapping the rule requiring foreigners to seek Foreign Investment Committee (FIC) approval when investing in properties above RM250,000 and the abolishment of the real property gains tax (RPGT).
Property developers have to play their role, too, to boost the property sector. And one of the ways is to offer value buys at a realistic asking price. Developers usually raise their selling prices to higher benchmarks with each new launch in order to maximise profits. Already the selling price for new condominiums in the Mont' Kiara area is out of reach for the majority of local purchasers.
The media are also guilty of perpetuating the myth that Malaysian property values have a lot of room for upside, especially when compared to values in Singapore. The often quoted line is that a high-end prime property in Singapore is topping S$4,000 per square foot while the most expensive units in the Kuala Lumpur City Centre (KLCC) is only selling for RM1,500-2,000 per square foot. In reality, KLCC should not be compared with New York's Central Park, London's Hyde Park or even Singapore's Orchard Road.
The KLCC area is gripped by a traffic deadlock during rush hours with vehicles at a standstill on most days. And after rush hour, the place is lifeless except for Friday and Saturday nights when tourists go clubbing. A lot still needs to be done to address issues like traffic congestion, poor public transportation, flooding and pollution in the city before it becomes an attractive living environment. Astute investors would do well to remember that local income levels in Kuala Lumpur are nowhere near that of London, New York or even Singapore.
Meanwhile, Tang Chee Meng, COO of Henry Butcher Marketing Sdn Bhd, warned of an oversupply situation looming in the horizon. Some Mont' Kiara condominium units are sometimes left untenanted for eight months to a year. Because of ample supply, tenants can afford to be choosy.
"Many developers know how to build houses and condominiums but few know how to offer the promise of a lifestyle," says Jennie Liew, a local property agent. "Look at Sunrise Bhd. When they started building Mont' Kiara condominiums in the middle of nowhere a decade ago, they also thought about putting in place an international school and lots of high-end restaurants and cafes. They saw the value in enhancing security in the area."
Indeed, selling a property is more than just selling bricks and mortar. The developer must offer a lifestyle concept with good amenities nearby, good public transportation and congestion-free traffic access. There is no point in having the most luxurious condominium unit in the KLCC area with a grand view of Petronas Twin Towers when visitors will not come to see you because of bad downtown traffic.
In the northern part of Kuala Lumpur, SDB Properties has launched 20trees, a mixed development of courtyard homes and low-rise condominiums. Located at the Melawati area and near the National Zoo, the development will offer 201 courtyard-garden-and-terrace-houses on 23 acres of freehold land. The three-storey houses, with built-up areas from 4,411sqft to 6,420sqft, will start from RM1.3 million to RM2.5 million. There will also be 118 low-rise condominium units with prices ranging from RM559,000 to RM994,000. The developer is hoping that investors will pay a bit more for features like designer kitchens, a tropical clubhouse, a gated community with enhanced security, and other attractions.
If you're still hoping to own a piece of real estate in the popular Mont' Kiara area, there's hope yet. Mycom Bhd is teaming up with Merrill Lynch Asia to jointly develop a 16.2-acre tract of land in the area, valued at RM450 million. Mycom is also developing an 88-acre land in an adjacent neighbourhood, the upmarket suburb of Kenny Heights.
Worldwide Holdings Bhd is planning to launch a slew of high-end residential homes in Subang Bestari, Shah Alam around the end of the year. The project will comprise 20 bungalows and 18 semi-detached homes on leasehold land. Built-up areas for the double-storey bungalows will range from 3,300-3,500sqft and prices are expected to start from RM1 million. The double-storey semi-dees will have built-up areas ranging from 2,600-3,000sqft and prices are expected to start from RM800,000.
Shanghai Realty Sdn Bhd launched their Subang Andaman freehold condominium project. The developer is counting on its exciting contemporary designs utilising expansive glass pavilions and extended balconies overlooking exquisite landscaped gardens designed by renowned Australian landscape expert, Don Bergman, to make the project stand out from the rest. The condo units come in two, three-plus-one and four-room configurations. The project features a uniquely designed pool deck with outdoor yoga studio and cafe.
..............
Internet