70% loan for third and subsequent houses?

PETALING JAYA: There is speculation that the loan-to-value ratio for the third and subsequent house purchases could be further reduced to as low as 70% from the assumed rate of 80%.

According to sources, talk of a loan-to-value ratio of 70% has surfaced but nothing has been decided yet and discussions are still ongoing.

To recap, Prime Minister Datuk Seri Najib Tun Razak had said on Tuesday that Bank Negara might impose a limit on financing for subsequent purchases after the second property while first-time buyers can borrow up to 90%.

It is reported that there were plans to lower the loan-to-value ratio for the third and subsequent house purchases to 80% from 90%.

The move is aimed at curbing speculative property transactions in a bid to contain escalating property prices.


"The (property) market will have to adjust itself and find a new level", SK BROTHERS REALTY SDN BHD GM CHAN AI CHENG

SK Brothers Realty Sdn Bhd general manager Chan Ai Cheng said a reduction in the margin of financing to 70% would affect property sales for investments initially.

“There will be an impact on the property market. The more aggressive and gung-ho property investors may think twice about investing in properties if they have to cough up more money.

“For example, a buyer who will have to pay RM50,000 deposit for a half a million ringgit property will now have to come up with RM150,000,” she said.

That said, Chan admits that most investors would have surplus cash and not overgear themselves by taking a maximum loan when buying a property.

“As with any new ruling, the market will have to adjust itself and find a new level,” she said.

She suggested that the central bank should look at a lower loan-to-value ratio for properties that were more prone to speculation and not impose the rule across the board.



An analyst with Affin Investment Bank said the loan-to-value ratio curb may not be imposed on the entire property industry, hence it should not affect the demand and sales of properties except perhaps in selective locations/projects with a higher rental market.

“However, the guidelines do not appear specific at the moment.

“There are also ways a purchaser can play around them.

“We may not see a sharp pullback in terms of property sales and banks’ mortgage growth to be impacted badly,” she said.

The analyst said more stringent measures, such as regulating the discount on base lending rates (which is currently at 1.8% to 2.2% in the market), barring interest-only payments or the absorption of interest cost by developers during the construction period would have a more drastic impact on property sales and loans.

Other measures include increasing stamp duties or real property gains tax rather than imposing a cap on the loan-to-value ratio or even lowering the cap to 70%.

According to AmResearch’s sensitivity analysis, bank earnings are not so sensitive to changes in loan growth.

“We estimate that every 1 percentage point downgrade to our loan growth assumptions will lead to less than 1% downgrade in net earnings,” it said in a note yesterday. Thus, potential moves to reduce the loan-to-value of property related loans would not lead to any major downgrades to net earnings, AmResearch said.

A bank official who declined to be named said most of the bank’s mortgage borrowers were buying residential property for their own stay and the proportion of borrowers who were buying such property for speculative purposes were small.

“Hence I don’t see the loan-to-value curb significantly hurting our business. We also check the credit profile of our borrowers before deciding on the loan amount so if a customer’s credit rating is not so good we will reduce the loan amount accordingly,” he said.

According to Bank Negara statistics, outstanding loans growth for the banking sector grew 11.9% to RM841.74bil in July year-on-year.

Mortgages make up the largest portion with some 26.8% of the total loans outstanding as at end July.

The National House Buyers Association honourary secretary general Chang Kim Loong said a lower loan-to-value ratio for the third and subsequent house purchases was welcomed.

He said property speculators have caused property prices to escalate throughout the years.

“I would like to suggest that the loan-to-value ratio should be even lower, at say maybe 50%, so that those without upfront cash will not speculate on properties and deprive the genuine buyers from buying a decent house,” he said.

PAIA Property Seminar | Expo | Conference | 24 – 26 Sept 2010 | Mid Valley Exhibition Centre (MVEC)

Share

Event: PAIA Exhibition & Conference 2010
Date: 24 – 26 September 2010
Venue: Mid Valley Exhibition Centre, Kuala Lumpur
Organiser: Exhibition Guide (M) Sdn Bhd
Admission: Public – Free Admission

UK property prices continue to fall

The latest property index for the UK has backed up predictions that house prices will fall in the second half of 2010.

Rightmove's data has shown there to have been a decline in values over the last three months, with asking prices falling again in September and eating in to the gains seen during the first half of the year.

Following drops of 1.7 per cent in August and 0.6 per cent in July, UK property prices fell 1.1 per cent this month.

The real estate website's findings are in line with other surveys showing house prices have stumbled in recent months - a phenomenon many commentators are attributing to uncertainty surrounding government spending cuts and an increasing supply.

Miles Shipside, commercial director of Rightmove, explained: "The surge of extra stock has left the market with a real supply hangover. Sellers' attempts to hold onto price gains made earlier in the year have suffered from a relentless stream of fresh property."

Malaysia to monitor property speculation

The government will not introduce measures to make it difficult for first and second time house buyers but will monitor signs of speculative buyings in the property market.

Prime Minister Datuk Seri Najib Razak said after discussing with Bank Negara Malaysia, the government found no reason why it should limit end-financing across the board for residential properties.

Speaking to reporters at Bank Negara yesterday, Najib said the central bank may impose a limit on financing for subsequent purchases after the second property.

"For the bona fide buyers, there will be no review of the limit. So, they can borrow up to 90 per cent," he added.

Reports surfaced recently that Bank Negara was talking to banks about possible measures to check excessive speculation on property prices.

One of the measures brought to the table include capping end-financing to just 80 per cent of the value of property from 90 per cent that is given out by banks now.

Analysts have said they were watching property prices closely for signs of bubble building up in the sector amid talks of excessive speculative buyings.

Developers, however, dismissed the bubble threat, with many saying banks themselves were closely monitoring the situation, including the creditworthiness of borrowers before app-roving loans.

Lists of Delayed Private Residential Projects in Malaysia Until 30th June 2010

Kuala Lumpur

Developer: Huatland Development Sdn Bhd
Project Name: Espland Residences Bukit Jalil
S&P Date: 15/08/2008
Completion Date: 15/08/2010
Actual Progress Stage: 73%
Developer: Setia Putrajaya Development Sdn Bhd
Project Name: Park Village Condominium
S&P Date: 29/12/2009
Completion Date: 29/12/2012
Actual Progress Stage: 3%
Developer: Amatir Resources Sdn Bhd
Project Name: Seni Mont Kiara
S&P Date: 25/09/2007
Completion Date: 25/09/2010
Actual Progress Stage: 75%
Developer: E C H Development & Management Sdn Bhd
Project Name: 2974 & 2975 (Wilayah Persekutuan KL)
S&P Date: 24/08/2007
Completion Date: 24/08/2010
Actual Progress Stage: 87%
Developer: Noble Paradise Sdn Bhd
Project Name: Taman Pinggiran Pelangi Fasa 2 (Wilayah Persekutuan KL)
S&P Date: 17/11/2008
Completion Date: 17/11/2010
Actual Progress Stage: 47%
Developer: Prinaissance Development Sdn Bhd
Project Name: Lot 64 Seksyen 89A (Wilayah Persekutuan KL)
S&P Date: 10/10/2007
Completion Date: 10/10/2010
Actual Progress Stage: 75%
Developer: Primaworld Embassyview Sdn Bhd
Project Name: Brunsfield Embassyview (Wilayah Persekutuan KL)
S&P Date: 17/03/2008
Completion Date: 17/03/2011
Actual Progress Stage: 65%
Developer: Panareno Sdn Bhd
Project Name: PT7560 (Wilayah Persekutuan Putrajaya)
S&P Date: 14/12/2007
Completion Date: 14/12/2010
Actual Progress Stage: 68%
Developer: Sentul Perdana Sdn Bhd
Project Name: 1 Sentul (Wilayah Persekutuan KL)
S&P Date: 25/01/2008
Completion Date: 25/01/2011
Actual Progress Stage: 62%
Developer: Promatik Emas Sdn Bhd
Project Name: Panorama (Wilayah Persekutuan KL)
S&P Date: 02/04/2008
Completion Date: 02/04/2011
Actual Progress Stage: 65%
Developer: KL Landmark Sdn Bhd
Project Name: Regent Residence
S&P Date: 03/09/2008
Completion Date: 03/09/2011
Actual Progress Stage: 37%
Developer: Amarin Wickham Sdn Bhd
Project Name: Amarin Wickham Sdn Bhd
S&P Date: 30/11/2009
Completion Date: 30/11/2012
Actual Progress Stage: 2%
Source: Ministry of Housing and Local Government (Kementerian Perumahan Dan Kerajaan Tempatan)

Selangor State Zone 3 (Shah Alam, Sabar Bernam, Kuala Selangor, Kapar, Meru, Paya Jaras, Kuala Langat, Sepang, Dengkil, Banting)

Developer: Sime UEP Development Sdn Bhd
Project Name: Avira (BR13D) Klang
S&P Date: 06/02/2009
Completion Date: 06/02/2011
Actual Progress Stage: 2%
Developer: Sime UEP Development Sdn Bhd
Project Name: Bandar Bukit Raja Fasa 14A Klang
S&P Date: 18/04/2009
Completion Date: 18/04/2011
Actual Progress Stage: 4.90%
Developer: Rumpun Ehsan Sdn Bhd
Project Name: Lot 133 Sepang, Selangor
S&P Date: 14/10/2008
Completion Date: 14/10/10
Actual Progress Stage: 49.25%
Developer: Jatidiri Gigih Sdn Bhd
Project Name: Bandar Saujana Putra Kuala Langat, Selangor
S&P Date: 25/07/2009
Completion Date: 25/07/2011
Actual Progress Stage: 0%
Developer: Gabungan Efektif Sdn Bhd
Project Name: Bandar Parklands Fasa b11 Klang
S&P Date: 25/06/2008
Completion Date: 25/06/2010
Actual Progress Stage: 67.95%
Developer: Detik Jitu Sdn Bhd
Project Name: Lot 511 Sepang, Selangor
S&P Date: 14/08/2009
Completion Date: 14/08/2011
Actual Progress Stage: 5%
Developer: Segar Timor Sdn Bhd
Project Name: Desa Saujana Putra Sepang, Selangor
S&P Date: 10/08/2009
Completion Date: 10/08/2010
Actual Progress Stage: 5%
Developer: Raffles Villa Sdn Bhd
Project Name: Istana Villas Klang
S&P Date: 09/08/2009
Completion Date: 09/08/2011
Actual Progress Stage: 5%
Source: Ministry of Housing and Local Government (Kementerian Perumahan Dan Kerajaan Tempatan)

Selangor State Zone 2 (Hulu Selangor, Gombak, Hulu Langat, Ampang, Kajang, Cheras, Bangi, Semenyih, Rawang, Batu Caves, Selayang, Ulu Klang, Melawati, Serdang, Balakong, Lembah Jaya, Ampang Jaya)

Developer: Glomac Rawang Sdn Bhd
Project Name: Saujana Rawang Fasa 6, Gombak
S&P Date: 28/08/2009
Completion Date: 28/08/2011
Actual Progress Stage: 0%
Developer: Esatek Sdn Bhd
Project Name: Seksyen 15, Bandar Baru Bangi, Hulu Langat
S&P Date: 29/07/08
Completion Date: 29/07/10
Actual Progress Stage: 44.5%
Developer: Newteque Sdn Bhd
Project Name: Apartment Impian, Gombak
S&P Date: 04/10/07
Completion Date: 04/10/10
Actual Progress Stage: 47.08%
Developer: Bina Satu Leasing Sdn Bhd
Project Name: Taman Serendah Makmur (Hulu Selangor)
S&P Date: 1/7/2008
Completion Date: 1/7/2010
Actual Progress Stage: 55%
Source: Ministry of Housing and Local Government (Kementerian Perumahan Dan Kerajaan Tempatan)

UK launching more projects for M'sian and Asian home-buyers

KUALA LUMPUR: Over the weekend of Sept 4 and 5, Malaysian home-buyers parted with £785,000 (RM3.7mil) for a one-bedroom 530 sq ft apartment and about £2mil (RM9.6mil) for a 1,500 sq ft three-room apartment in prime London.

The yet-to-build project in Kensington High Street, considered a prime London location opposite the Hilton chain, was also exhibited in Hong Kong and Singapore. The average price for the project is £1,400 per sq ft.

This project by Berkeley Homes is one of the most expensive to be brought into Kuala Lumpur. They are working with Malaysian agent Henry Butcher. Berkeley is London’s largest volume house builders.

In the next several months, other house builders like Land Securities Group Plc and Native Land will also be making their way into Kuala Lumpur. They will be working with Rahim & Co.


An earlier property offering, The Sugar House apartments, by Berkeley Homes. The yet-to-build Kensington High Street project by Berkeley Homes is one of the most expensive brought into Kuala Lumpur. They are working with Malaysian agent Henry Butcher. Berkeley is London’s largest volume house builders.
Land Securities will be offering Wellington House, which is located 500m from Buckingham Palace. The average price per sq ft for this project is £1,300.

A 650 sq ft one-bedroom unit is £650,000. Next month, Native Land will be offering the third block of Neo Bankside which averages about £1,300 per sq ft.

Two earlier blocks were sold for about £1,150 per sq ft last year.

In what may be a sign of the shifting balance of wealth in the global economy, British house builders are increasingly making their offerings available to Asia even before launching them in Britain.

Although house-builders have been aggressively selling in the Middle East, China and India, Singapore and Hong Kong, the last two years have seen them explore the new markets of Malaysia, Thailand and Vietnam.

House-builders used to skip Kuala Lumpur because “there wasn’t a market to serve”, said Berkeley group managing director Paul Vallone. This has changed over the last two years. There has been a fairly consistent stream of exhibitions from house-builders here.

Vallone said they were beginning to see a new market in Kuala Lumpur, chiefly because of the weak pound.

The British pound is trading about RM4.80 to a pound compared to its peak of about RM7 a few years ago.

Berkeley is one of London’s largest volume house builders that cater to the mass market.

Of the 2,000 houses it sold last year at an average price of £263,000, more than 30% were sold to China and India compared with a historic average of 10%.

Said Vallone: “London property is generally supported by international money. Generally, about half of prime central London properties goes to buyers from the Middle East, China, India, South East Asia and Europe.

“There has always been a market in Hong Kong and Singapore prior to this. We tried selling in Kuala Lumpur a number of years ago but the market was not ready then.”

Most of Malaysians who bought properties are buying to stay.

“We are seeing a buying-to-stay market, not a buying-to-let market,” he said.

Because of the price of the units in the Kensington project, Vallone said this was the most successful exhibition by the group in terms of gross development value.

“This particular exhibition actually did better in Malaysia than in Singapore,” he said.

Berkeley Homes would be building the project with joint-venture partner Prudential.

Vallone said builders are beginning to look for international buyers because there is a lack of financing for British buyers who normally go for 90% financing when buying off the plan.

“Banks are not lending to this group at the moment,” he said.

In a report in Financial Times (Aug 30, 2010), Berkeley Group CEO Rob Perrins said the demand from Asian buyers, who want to invest offshore, or who want a place for their children to live in while undergoing tertiary education, has no match for the domestic British market.

Telford Homes, the east London focused-group, said the appetite from foreign buyers had allowed it to launch developments that would not have been possible to sell to domestic buyers.

This year, the group sold 70 out of 118 apartments in its Matchmakers Wharf development, which flanks the Olympic Park to buyers in Hong Kong, Singapore and Malaysia.

Property consultant Elvin from Khong & Jaafar Sdn Bhd suggests caution.

“Unless Malaysians are buying for their own stay or for their children, I will not advise it.

“House prices are expected to come down further because the entire country is on a major austerity drive.

“The economy is being reshaped. There is a major readjustment in the United Kingdom and the United States. So if you rush in now, during this cyclical period, you may be in for trouble.

“However, you can go and buy commercial properties like office space where there may be an annual yield of 7.5%. There are some good properties in London. Maybe this is the time to buy. But for the residential sector, be cautious,” Elvin said.

In an August residential sector report, UK-based Jones Lang La Salle said Britain faced a “choppy” recovery. For every four would-be purchasers, agents were listing 10 new properties for sale.

The current supply and demand dynamics are a reversal of fortunes for the British housing market lacking sufficient stock for the majority of the past 18 months.

With supply increasing, and decreasing demand for houses, house prices were slowing down, the report said.

The property consultancy expects prices to remain weak throughout the remainder of this year, with the market stabilising in the latter part of 2011.

RM2 firm creates land deal history

Friday, September 17, 2010

 Urusharta Cemerlang (KL) pays RM210 million, or RM7,209.80 per sq ft, to a company controlled by Singapore's property tycoon Kwek Leng Beng for a vacant land in Jalan Bukit Bintang, Kuala Lumpur.

A RM2 company is the buyer of the country's most expensive piece of land.

On Wednesday, Millennium & Copthorne Hotels plc (M&C), a company controlled by Singapore's property tycoon Kwek Leng Beng, sold 29,127 sq ft of vacant land in Jalan Bukit Bintang, Kuala Lumpur, to Urusharta Cemerlang (KL) Sdn Bhd for RM210 million, or RM7,209.80 per sq ft.

The previous record in a reported land sale was RM2,588 per sq ft for Wisma Angkasa Raya in Jalan Ampang in 2008.

A search at the Companies Commission of Malaysia revealed that Urusharta Cemerlang (KL) is owned by Tan Sri Zainol Mahmood and Shazni Sulaiman. The two have been its directors since 2006.

Zainol is the chairman of Urusharta Cemerlang Sdn Bhd and Pavilion Kuala Lumpur Sdn Bhd. Urusharta Cemerlang owns the Pavilion Kuala Lumpur shopping mall, which is also located in the Bukit Bintang area.

Urusharta Cemerlang is 51 per cent owned by Urusharta Cemerlang Development Sdn Bhd and 49 per cent by the Qatar Investment Authority(QIA).

Not much is known about Shazni.

In the financial year ended December 31 2009, Urusharta Cemerlang (KL), which is described as a dormant company, had current liabilities of RM5,010 and posted a net loss of RM1,305.

Real estate agents are describing the latest deal as "dizzying heights" and reckon that it could take many more years to surpass the figure.

But observers are wondering how and who will finance the acquisition given that the buyer is a RM2 company.

They also questioned whether QIA will later participate in the deal and what will be built on the land - an extended retail mall or luxury residences.

A mall would make sense given the land's proximity to Pavilion. However, at such a price, there is no doubt it could take more than the usual eight to 10 years to see a return on investment should a shopping complex be built.

It might recoup the investment faster if it built and sold high-end residences. After all, the land had been initially slated for the RM500 million Millennium Residences project.

In a statement issued in Kuala Lumpur on Wednesday, M&C said a 10 per cent deposit had been paid to its wholly-owned unit, CDL Hotels (Malaysia) Sdn Bhd, which owns the land.

The deal confirms a Business Times report early last month that a land deal was being negotiated by CDL Hotels which could fetch a record price of over RM3,000 per sq ft.

The latest deal is nearly three times the price paid per acre in several private sales of nearby land, and the highest ever in the country's history.

"This transaction has obviously set a new benchmark in the local property market. I view the transaction as a special transaction as it is a special purchaser - an adjoining property owner who probably places more value on the asset than others," said a real estate agent, who declined to be named.

It is understood that the YTL group, which owns the nearby Starhill Gallery, Lot 10 Shopping Centre and JW Marriott Hotel, had also been eyeing the land.

The deal is expected to be completed no later than the second quarter of 2012.

M&C's carrying value of the land was RM42.8 million. Based on this, the sale is expected to result in a pre-tax profit of RM164.1 million after taking into account transaction costs.

Lake Fields takes YTL to new heights

Saturday, September 18, 2010

YTL Land & Development Bhd, the property arm of YTL Corp Bhd, says its priced development in Sg Besi, Kuala Lumpur, called Lake Fields has taken the company to new heights, as it has set a new price standard for properties in the area.

"Lake Fields has demonstrated Sg Besi's potential as Kuala Lumpur's next property hotspot," YTL Land executive director Datuk Yeoh Seok Kian told Business Times.



Lake Fields, a joint-venture by YTL Land via Syarikat Pembinaan Yeoh Tiong Lay and the Employees Provident Fund, spans 74ha and the centrepiece is a 6ha lake.

The first phase, known as Meadows & Glades, launched in 2005, were snapped up overnight.
The three-storey homes were priced from RM380,000 per unit and they are now worth around RM665,000.

YTL Land recently had a preview for the second phase known as Dale, which sold out in four days.

The RM300 million Dale project comprises 343 units of three-storey semi-detached homes and the prices range from RM638,800 to RM1.33 million.

More than half of the units were snapped up on the first day of preview on August 25 by existing buyers of YTL Land's other projects such as Sentul East, Sentul West, Lake Edge and Pantai Hillpark.

Dale saw over 4,000 registrants and the preview was held on a first-come, first-served basis.

The key point for Dale is the double-volume living area with floor-to-ceiling windows. It has five bedrooms including one with an en suite bathroom on the ground floor for the elderly.

YTL Land will launch phase three soon, known as the Groove, worth over RM300 million. The price of the homes here will be higher than Dale.

The three-storey homes feature a built-up of more than 4,000 sq ft and comes with a private lap pool and rooftop garden.

Yeoh said following the completion of Lake Fields, YTL Land will focus on its ongoing Sentul West and Sentul East projects in Kuala Lumpur, its flagship development.

UK residents showing increased interest in property overseas

Article Date : 16 September 2010 -->

UK residents are showing increased interest in overseas property, according to research by Rivermead Global.In particular, property in nations outside the eurozone, such as Turkey and Egypt, are attracting attention as they are often cheaper than countries which have adopted the euro.This could lead to an increased number of people looking to buy real estate in Mugla or search real estate in Aydin.Writing for the Global Property Guide blog, realtor Aydin Cakir said that the fact Turkey is not in the eurozone is one of its main benefits from a property investors' point of view.He added that people wanting to buy property abroad tended to look straight to the European Union during the boom years, however, this is set to change post-crash."With many countries in Europe having been downgraded, many facing a downgrade, and some even having been downgraded and facing being downgraded again, Turkey is standing out," he said.

Buyers returning to property mart: IJM

Wednesday, September 15, 2010

Property developer, IJM Land Bhd (IJM Land), believes the recent launch of 116 units of double-storey terrace houses called "Serena" will be a hit among housebuyers who want modern-concept houses at attractive prices, says sales and marketing manager Susan Teh.Moreover, she said, this was the right time to buy houses as the financing cost was at the lowest. "Of late, we can see a renewed buyers' interest to buy houses. They have started to return to the property market," she said.The Serena is among new housing projects being developed by IJM Land at S2 Heights in Seremban 2. The houses, measuring 2,269 square feet a unit, are being built on a 607-hectare site.Susan said 30 per cent of the houses have been booked since the project launch. The houses, costing RM326,800 a unit, are slated for completion at end-2011.