The positive multiplier effect from an improved performance in the construction and property sector is tremendous, with the stakeholder chain including the manufacture and supply of building materials; the service industry of contractors, architects, engineers, etc; the developers and even the financial institutions.
This industry is not just about residential and commercial development but also the tourism and industrial economy. It is a holistic economic driver.
Take the tourism industry for example. When tourist arrivals are up, there will also be a boost to hotel and retail consumer demand. With tourism being one of the Government’s top priority growth sectors, there has been a focus on encouraging the development of affordable three-star hotels to attract mass tourists.
However, with the country shifting towards a modern developed economy, we must turn our attention to attracting investments into upmarket, boutique and innovative hotel property development to bring the industry to the next level; tourist arrivals must increase together with the increase in value spending.
Hotel owners should be given additional incentives to bring the investment yield return earlier. It may be worthy to relook at the existing investment tax allowance incentive as well as the availability of duty exemption for materials in hotel property development.
Closely linked to the tourism industry is the availability of retail attractions to complement hotels of similar class, with retail development popularly linked to commercial office space development to provide the consistent retail traffic. Commercial space also remains the top three property interest of Malaysian and foreign investors.
Currently, there are no incentives for the retail sector. Consideration should be given to developing incentives holistically and linking it with initiatives to drive tourism, thus providing further push to the sector. Perhaps tax incentives such as income exemption based on retail investment turnover value or spending on green technology can be given to retail outlets or “green” commercial buildings.
When it comes to landed or high-rise residential properties, crisis or not, there seems to be no lack of demand, with some of these properties being snapped up on launch.
This show of investor confidence bodes well for the real estate sector which has attracted much foreign investment and known to offer a reasonable investment yield.
Hence, we must continue to attract foreign investment into the high-end property development market and leverage our “preferred location” status in this part of the world.
Here, the attraction for foreign investors would not be tax incentives but rather, high quality development with full facilities and in a prime location – the formula to high investment yield. Hence, the Government should continue to deliver on its policies to facilitate a speedy investment process for foreigners.
A final analysis on the property sector is for the Government to consider how it can support the wish of most Malaysians to own their own home. Malaysia has a large middle-income population who strive to own a home and it is this dream which can keep the demand for residential property healthy.
With pockets of initiatives sporadically introduced such as the reduction in interest rates, subsidies given to developers for low-cost housing and even financial institutions’ willingness to reschedule loan repayments, we must ask if more can be done.
Relative to our salary standards, it is becoming more difficult for the middle-income group/family to sustain a home, let alone own one. Suggestions previously put forward such as first home subsidy and deduction for interest expense on loans for home purchases should be reviewed.
Some other thoughts are tax rebates for a certain period of the loan term depending on the value of property purchased, different stamp duty rates for different property prices, unprecedented tax breaks for developers undertaking certain types of projects or development type.
The challenge will be in ensuring that the savings given to developers is passed on.
The property sector plays a crucial role in sustaining and spurring economic growth. There is a compelling need to review and introduce policies that are holistic and integrated, with incentives provided to each player in the property chain and across the portfolio of properties.
Ng Say Guat is executive director at PricewaterhouseCoopers Taxation Services Sdn Bhd.
The Star – 21 October 2009
]]>The building located along the Damansara-Puchong Highway (LDP) appears “incomplete” due to its modern design characterised by the use of raw, simple materials.
The 2.2ha project consisting of four blocks of office buildings with 20 to 21 storeys each, one two-storey annexe building and about 2,000 car park bays was unveiled to the media in conjunction with the handover of Menara Mustapha Kamal, which occupies Tower A, to Emkay Group recently.
It was the maiden project of developer Tujuan Gemilang Sdn Bhd run by executive chairman Ahmad Khalif Mustapha Kamal and executive director Peter Chan Sai Kong.
Also present at the ceremony was Emkay group chairman Tan Sri Mustapha Kamal Abu Bakar
Chan took the media members on a tour around the project that emphasised on nature with 1,400 trees planted within the compound, as well as being energy saving and environmentally friendly with a strong Malaysian character.
Mustapha said he was excited that the group was moving into its very own building after 26 years.
Menara Mustapha Kamal is accessible by LDP, Penchala Link, New Klang Valley Expressway and PLUS North-South Expressway.
The Star – 16th October 2009
]]>Deputy general manager Leow Sian Hiong said she expected rental rates to double to RM8 per sq ft once the upgrading works were completed.
“We expect revenue of RM55mil over the next five years. We want to transform one of Kuala Lumpur’s oldest and bustling areas into a vibrant lifestyle hub,” Leow told a media briefing yesterday.
Refurbishment works started early this year and is expected to be completed by year-end.
Leow said the group was renting up to 162,000 sq ft of space and was trying to secure tenants, especially for a supermarket it had started building within the development.
“We currently have an occupancy rate of 50%. With the supermarket coming in, we should reach 70%,” she said.
Low Yat, in a statement issued yesterday, said it was targeting a 90% take-up rate for Rivercity by the first quarter of 2010.
“We are very selective about the tenants we choose,” Leow said.
In a slide show presentation, Leow said the bulk of the lettable areas would be for food and beverage outlets and offices.
Rivercity will also offer home furnishing outlets, beauty and wellness centres, education facilities like the Victoria International College, edutainment, telecommunications and service centres.
“Located on nine acres of prime land, Rivercity is positioned to meet the discerning taste and needs of the ever growing population of more than 300,000 families, college, schools, business and commercial entities with its 5km radius,” Leow said.
“It will also help boost the rental yields of our Rivercity condominium which is located within the area.”
She said the group decided to embark on the upgrades following an in-depth study on the locality.
“We found Jalan Ipoh to be a strong catchment area as it is strategically located within the city centre with multiple roads and highways accessible via Jalan Tun Razak, Jalan Kuching, Jalan Duta, North Klang Valley Expressway, Duta-Ulu Kelang highway and the Penchala Link,” Leow said.
The Star – 13th October 2009
]]>According to SunCity managing director for property development Ngian Siew Siong, the local property market had not been too badly impacted by the global crisis and it should recover quite fast.
“Demand for property is a function of economic growth and, with the country’s economy expected to bounce back next year, property demand should also move in tandem with the higher market confidence,” he said.
For the fourth quarter ended June 30, SunCity’s property sales showed a strong rebound of 120% to RM88mil from RM40mil in the previous quarter.
The stronger sales were mainly due to improving consumer sentiment and the launch of the “Triple Z Series” promotion in April.
Sunway SPK Villa Manja’s semi-detached residences showed a stronger take-up with RM57mil sales during the quarter compared with RM8mil in the preceding quarter.
However, year-to-date revenue was down 16.8% to RM1.09bil compared with the previous corresponding period while earnings before interest and tax dropped 7.8% to RM331.1mil.
Property development earnings, which dropped 39.6% year-on-year due to lower sales and construction progress, were the main culprit. For the current financial year, SunCity will be changing its financial year-end from June 30 to Dec 31.
To further boost its RM743mil unbilled sales, which will provide more than a year’s earnings visibility for the company, SunCity is planning over RM1bil in new launches next year.
The projects include Sunway Velocity in Jalan Peel, Sunway-SPK townhouses, South Quay condominiums, and Sunway Damansara zero-lot bungalows.
Ngian said the company would be using its cash reserve of close to RM450mil to expand its land bank in the Klang Valley as well as in China and India. “Land prices have come off from their previous highs and we are actively looking to make some value buy.”
SunCity would also be launching its India and China projects next year.
“We have already done our homework and feasibility studies on both countries and we like what we saw there. There is a growing middle-class population and the higher purchasing power is translating into greater demand for housing,” Ngian said.
With a population of 1.3 billion in China and 1.2 billion in India, the two countries make up 40% of the world population. The sheer size and growth prospects were very attractive, he added.
For its maiden project in China, SunCity has partnered with Sunway Holdings Bhd’s subsidiary, SunwayMas Sdn Bhd, and Shanghai Guanghao Real Estate Development Group Co Ltd for a mixed high-rise development in the central business district of Jiangyin New Harbour City in Jiangsu Province.
The 39:26:35 joint venture to develop the RM492mil project will be launched in mid-2010. The Sunway Guanghou Jiangyin project will have 1,172 medium-end condominiums and some specialty shops on about 17 acres.
“We believe our maiden project in China will be our platform to secure other future property projects in this high growth country, especially in tier-two cities,” Ngian said.
In India, SunCity’s maiden project, Sunway Opus Grand in Hyderabad with a gross development value of RM1.17bil, is also targeted for launch next year.
The 35-acre project will comprise 2,423 medium-range condominiums priced from RM193 per sq ft.
Ngian said India was still a very young country as far as progress in property development was concerned, and SunCity’s expertise in project design, quality and management capability had opened up immense opportunities to play a bigger role in its property market.
Its preferred cities include Hyderabad, Bangalore and Pune. Hyderabad tops the list as its growth is fuelled by the information technology and biotech industries.
Besides a huge demand for quality housing, Grade-A commercial properties are also in short supply in India.
The Star – 12th October 2009
]]>Master Builders Association Malaysia (MBAM) president Ng Kee Leen said there was certainly greater optimism of a revival in the construction sector, thanks mainly to the Government’s stimulus packages and overall improvement in the global economy.
“We are definitely seeing more tenders and small public works jobs being dished out in recent months, but most of the bigger or mega projects are likely to be rolled out next year,” he told StarBiz recently.
The construction sector grew 1.1% in the first quarter but contracted 2.8% in the second.
“We expect the third and fourth quarter results to be positive,” he said, adding that the construction sector’s growth for the whole of 2009 could be 3%.
For 2010, Ng said “barring unforeseen circumstances, the construction sector’s gross domestic product should be better than this year’s 3% forecast, but definitely well below the highs seen in early 2000 when it was hovering around 6% to 7%.”
The construction sector remains attractive, especially since material costs such as sand, steel and cement prices have stablised, he said.
However, Ng advised construction players, especially developers in the sector, to not just build “more of the same” and expect the market to mop up whatever they build.
“Developers must be market driven to build projects that are wanted by the community,” he said, adding that there was now more interest in energy-saving buildings that embraced the green concept.
According to Ng, the construction sector’s yearly turnover was around RM60bil.
“About 50% of this turnover are from government projects and the balance from private initiated investments,” he said, adding that much of the government spending was for infrastructure development, including road works.
Ng noted that developers were also more confident of the property sector’s growth, with some unlisted ones like GSB Sentral Sdn Bhd, a member of the diversified Gapurna Group, having already started groundworks on its 348 Sentral development – a green property project with a gross development value RM1.1bil to be completed 2012.
GSB Sentral director Imran Salim said the company was very confident of the project’s success going by the 60% uptake of floor space of the building by its main tenant – Shell Malaysia.
Datuk Osman Abu Bakar, the secretary-general of the Malay Contractors Association which represents some 7,000 bumiputra contractors, said many of the projects dished out so far by the Government were for smaller projects.
“There are more tenders and small construction projects out these days and our members have benefited from these projects as our members are mostly Class F contractors,” he said.
A member of the Indian Contractors’ Association said he had benefited from the Government’s simulus packages.
“Most of the contracts we’ve secured are small roadworks projects. However, our company has not derived any benefits or jobs from mega projects,” he said.
A construction analyst with OSK Research concurred that the construction sector was on the road to recovery and that players in the market, from developers and contractors to real estate agents, were definitely more optimistic of the sector’s growth going forward.
“There are more property launches by developers and more tenders this third and fourth quarters. This is a good sign. But many contractors are waiting for more mega projects to be rolled out, which we suspect will occur next year,” he said.
The billion-ringgit projects that are likely to be rolled out or have been confirmed include the RM9bil Pahang-Selangor interstate raw water transfer project, the RM7bil Kelana Jaya and Ampang light rail transit line extension works and the construction of the low-cost terminal, according to the OSK analyst.
A construction analyst from another brokerage said that while there were early signs that the construction sector was recovering, the rollout pace of major projects remained slow.
“Also, now that the global economy appears to be on the mend, we wonder if the mega projects proposed when the economy was in a downturn will be implemented,” the analyst said.
“Granted mega projects implemented can help boost significantly the construction sector, but government funds on smaller infrastructure projects such as those in east Malaysia can also have significant impact on the overall health and resilience of the Malaysian economy, besides the construction sector, over a longer term.”
The Star – 12th October 2009
]]>Hopefully with the new economic model to raise the people’s income level, their higher consumption ability will be able to drive domestic consumption for a broad variety of products and services, and strengthen the economy further.
For the rural and urban poor, more proactive measures to help them own a home will be a good start. Despite the many housing packages offered by developers to promote sales and home ownership during the past year, the poor are still unable to fork out the minimum 5% or 10% downpayment for a property. These people depend on affordable public housing projects.
With growing urbanisation in many parts of Malaysia, there is a need to ensure that higher quality and better equipped public housing projects are built for the poor.
Although there are many low-cost and affordable housing projects, most of them have failed to provide an improved quality of life to the lower income population. This is because these no-frills projects have not been properly maintained and managed.
Perhaps we can emulate China and Hong Kong, which have initiated government-driven public housing projects to house their urban poor and displaced people.
As prices of properties have appreciated sharply in many first and second tier cities in China, local councils and private developers in Nanjing came together to address the issues of good property management and quality living for displaced villagers and squatters.
Each project is targeted for 5,000 homes in multi-storey blocks with each 5,000 home development equipped with a 24 classroom primary school and a 12 classroom kindergarten. There is also a service centre, a community day-care medical centre, a supermarket and some retail single-storey shop lots.
The utilities include an organic solid waste bio chemical disposal station, sewage recycling and waste water recycling system, solar energy heating system for all homes and centres, and photo voltaic cells for street lighting.
The entire concept was not only to solve the problem of providing affordable housing but to address the issue of post development property management.
The proposal was to fund the entire support system of the project with capital expenditure up front to reduce the long term management and maintenance cost.
Local councils previously were unhappy to manage designated low cost housing due to problems in collection of service charges and the resulting lack of services.
The urban planning model is based on self management by the residents.
The project does not allow vehicular traffic within the urban landscape but allows for courtyard style neighbourhoods with pedestrian and bicycle traffic only.
The project cost 2,232 yuan per sq metre based on the net residential area. The fund for the project was subsidised by the state government, a loan from the bank and part construction subsidy from the private contractor.
Last November, the Nanjing project was awarded the United Nations Special Contribution Award for Sustainable Urban Development by the United Nations.
It will be good for local industry players and governing authorities to emulate similar high quality standards to liven up our public housing projects.
Deputy news editor Angie Ng believes that thinking out of the box and being proactive will be the saving grace for many old existing problems in the world today.
The Star – 10th October 2009
]]>Another example is the Tree House (pic above), where architects from Design Network Architects Sdn Bhd undertook Wong Chung Chek’s brief for a tree house for a city dweller (and no tree required). It was so good that the client’s friends asked to purchase the “kit” as it has a self-assembled functional, yet sleek look about it.
The Star – 12th October 2009
]]>Malaysian architects who pursue excellence in design deserve recognition and this is one of the aims of Persatuan Arkitek Malaysia (PAM) through its PAM Architectural Awards.
In addition, it recognises architects for promoting the advancement of a quality built environment that has beneficial, social, physical and cultural impact in our country, and the diversity of Malaysian architecture.
The awards started in 1970 but since 2000, they have been reformatted to serve a dual purpose: providing PAM with an archive of information on important projects, and the promotion of Malaysian architects and their work of quality.
A total of 165 entries were received and according to PAM Awards 2009 organising chairman Alvin Lim Hai Seah, they varied in degrees of complexity.
Perhaps you might be inspired by looking at these winning entries and explore possibilities for your own home or workplace?
Categories: Single Residential Buildings; Overseas Buildings; Interior Design; Commercial Buildings; Showroom; Adaptive Reuse; Industrial Buildings and Special Category (for entries not falling under the previous seven categories).
Judges: Philip Cox (preeminent Australian architect who has designed many of Sydney’s iconic buildings), Tai Lee Siang (immediate past president of the Singapore Institute of Architects), Prof Datuk Elias Salleh (Malaysian architect and academician) and Datuk Ng Poh Tip (Group Editorial/Education Adviser of Star Publications (M) Bhd).
There were no winners in the Overseas Buildings and Showroom categories as the judges felt that no entry completely fulfilled the criteria for a winning design.
For the Commercial Buildings category the jury was unable to decide between the two finalists and declared them joint winners (the first time in the history of the awards).
And for the Single Residential Buildings category, besides the winner, one other entry came close and was given an honorary mention.
The Star – 12th October 2009
]]>By the time you are ready to retire – assuming you’ve been able to find a job in the first place – there will be two billion more.
You will have watched the world population grow by 30% and I don’t know what you are going to do about it.
The two billion new people we are talking about are unlikely to come from the West where recreation is no longer remotely synonymous with procreation.
They will come from countries such as China and India where people are pretty clever. For the first time in history they will be a colossal economic force largely united by nationality, coming from financially independent families and looking for a job. Maybe your job.
I don’t want to scare you, but if you are reading this article instead of doing your homework, please get back to your studies immediately.
Malaysia, as an under-populated resource-rich country, will become increasingly attractive. The next wave of migrant workers into Puchong and Ampang may well be coming from the same countries as 100 years ago but this time they won’t be miners or rubber tappers. They will be carrying laptops and living in condos.
My point is that as its knowledge economy gathers pace, Malaysia will continue to grow at a faster rate than a mere organic 2% and the impact on real estate values is going to be substantial.
There is no point grizzling about the terraced house you could have bought in Bangsar when the biggest building there was the Apilektrik; the opportunities are here and now, and property is still cheap.
If you want a new three-bedroom bungalow for RM250,000 or a quarter-acre building lot for RM150,000, they are all available within an hour’s drive from Kuala Lumpur.
You would think that agricultural land would have shot up in value but rural smallholdings can still be bought for RM20,000 to RM25,000 per acre and they will give you a net income of 10% or so if you’re prepared to put in the time to manage them properly.
In the secondary market, bargains abound. There is a tremendous miss-match between buyer and seller and the bottleneck revolves around antiquated loan recovery systems.
Even now, banks are sitting on billions of ringgit worth of non-performing loans, which may eventually be parcelled up into huge packages and sold off to other institutions at so many sen in the dollar. Banks will moan about the existing foreclosure legislation and so forth which gives them little choice, but isn’t this a cop out?
There is a need for fresh, market-driven solutions to the problems of foreclosure and sale, starting with the archaic auction process, which is long overdue for an overhaul. I don’t understand why the banking industry is not pushing harder for reforms, which would enable them to take more innovative and proactive initiatives.
For example, if my bank approached me with a RM1mil package comprising a few acres of agricultural land in Johor, a low-cost flat in Rawang and an apartment in Kajang, wrapped up in an attractive 80% mortgage deal, I’d probably take it. In my personal case, I’d take it in disbelief that any bank might think I could repay before I popped my clogs, but many other customers would see it as a unique long-term and diversified stake in the market.
Malaysia has many other hidden assets, one of which is the ability to complete big development projects in challenging circumstances. The Government has recognised this and organises roadshows to developing countries, encouraging Malaysian professionals and developers to promote their capabilities.
The market out there is massive; it is estimated China will build 430 billion sq ft in about five million buildings by 2025. These numbers are almost too huge to comprehend, like the distance to the moon or the number of times I have to explain to my wife that golf is good for business.
To maintain their slight lead in the region, I feel that professionals might be given some fiscal and financial incentives to export their expertise. An example would be double-tax deductions for travelling expenses. Other countries such as Australia have practiced this with success.
See you in Shanghai, Bruce.
Christopher Boyd is executive chairman of Regroup Associates Sdn Bhd
The Star – 7th October 2009
]]>At 62, the executive chairman – who made a surprising re-appearance at TA Enterprise EGM on Monday – plans to hand over the baton to his children in five years.
“I’ve come back to prepare my successor and I am training a succession team to take over,” he told StarBiz in what he called his “first and last interview to the press”.
Tiah said the controversy surrounding his conviction about a decade ago should be kept in the past.
“I am not a stumbling block for this company. The shareholders are happy with me,” he said, adding that he did not “disappear” but had been behind the scene, making land acquisitions and steering the company.
“Without Tony Tiah, there is no TA. My wife is good at operations, I am the visionary one.”
Tiah was convicted for making false reports to the stock exchange in 2002, which led to his resignation from TA Enterprise in the same year. He was fined RM3mil and barred from holding any directorship for five years.
“My past is something difficult to explain. What’s the point of blemishing me? What can you achieve? It has been years,” he said.
Tiah and Datuk Soh Chee Wen were charged with defrauding Omega Securities Sdn Bhd of RM424mil in a share transaction in August 1999.
His wife Datin Alicia Tiah, who has been shouldering the business for the past five years, said: “He has paid the price. It is unfair to keep bringing up the past. Judge the performance of the company.”
Meanwhile, Tiah said he was on his last leg and training the right people to take over.
“If we are not careful, after one generation it will go away.
“I am not the end. I am the beginning of bigger things to come. If I don’t have good succession, this would be the beginning of the end,” he said.
Tiah also said his role as executive chairman was not to be involved in operations but focus on the strategy and future growth of the company.
“We are all transient here. A lot of tycoons don’t seem to realise that. We all have an expiry date,” he said, adding that his “drive is almost drying up”.
He continued: “I am using my last portion of my drive to form a young team to lead my company. We are the first team. There will be many teams to come in years to come. I don’t want to build up something and it disappears after I am gone.
“I don’t want to be associated with the Chinese saying that wealth does not extend beyond the fourth generation. That’s why there is an urgency for me to train the next team.”
His son Joo Kim, who is slated to take over from him eventually, has been with the company for the past 22 months. He acknowledged that he was on a steep learning curve and grateful for his parents’ steering hand.
The Star – 7th October 2009
]]>