First-time buyers struggle in London property market

Kensington and Chelsea have been named as the most expensive area to buy property in London, according to a new survey. The National Housing Federation has released its Home Truths survey which details the top ten most expensive borough's within the capital and the top five most affordable. Average prices in Kensington and Chelsea top the £1 million mark, the data shows. The three most affordable boroughs in London are Barking & Dagenham, Bexley and Waltham Forest. Belinda Porich, head of London region at the National Housing Federation, said that the statistics show how unaffordable property in London is for first-time buyers. "With average house prices of over 20 times the average income in some areas of London, it has become increasingly difficult to get onto the property ladder," she said. "Housing associations across London are working hard to help combat the housing crisis but need continued government investment to build new homes."

Estate agents positive about UK property market prospects

The UK property market has experienced a "jump-start" to the year, with estate agents hopeful that the increase in activity will continue throughout 2011. According to a survey conducted by the National Association of Estate Agents (NAEA), 59 per cent of those surveyed said that they had seen an increase in the number of house hunters looking to buy property in the UK during the first two weeks of the year. This was counterbalanced by a rise in the number of potential sellers signing up to agents over the same period, NAEA said. "The results of this latest survey would seem to indicate a renewed confidence in the housing market as we begin 2011," said NAEA president Mike Jones. "It is encouraging to see that the majority of our agents are noting an upturn on both the buyer and seller sides and those that didn't are still reporting steady figures consistent with January of last year." Meanwhile, a recent report from property consultants Winkworth suggested that the availability of finance from banks would determine the UK property market's recovery.

Aussie government crackdown on foreign buyers blocks 15 property sales

An Australian government crackdown on non-Australians who attempt to buy property contrary to investment rules has blocked 15 property sales since it was announced nine months ago, the Age newspaper has reported.

The Department of Treasury said an additional 73 proposed residential property sales were withdrawn voluntarily since former assistant treasurer Nick Sherry announced a tightening of laws on Australian property ownership last April. The new measures were in part a response to public fears that Asian buyers were driving up property prices. They included a monitoring system piloted in Melbourne and Sydney that matched records from the Foreign Investment Review Board with state land title offices and visas from the Department of Immigration.

As part of the effort, the Department of Treasury also set up a 1-800 hotline where callers can report those attempting to buy property against the laws of foreign investment. The hotline has received 131 calls since its inception,  but none of the 15 blocked sales came from a hotline tip a department spokeswoman said. All 15 of the canceled real estate sales were deemed “contrary to national interest” and picked up in routine screenings since November.

In Australia, foreign investors can only buy newly built real estate, such as off-the-plan apartments, and must start construction on vacant land within two years.

Good outlook despite soft rental market for property

KUALA LUMPUR: The overall property sector is expected to enjoy an uptrend this year, buoyed by the various economic transformation programmes announced by the Government and expansion in the manufacturing and services sectors, a property real estate consultancy said.

Rahim & Co Chartered Surveyors Sdn Bhd, one of the largest property consultancy firms, said at a press conference that the outlook was good despite a soft market in the rental of high-end condominiums. Executive chairman Datuk Abdul Rahim Rahman said average prices in the secondary high-end condominium market fell by 29% between the second quarter of 2008 and the second quarter of 2009 but this sub-segment of the residential market had been on the uptrend since the third quarter of 2010, increasing by 13%. Prices of new launches range between RM750 and RM2,500 per sq ft (psf).

“The leasing market has not fully recovered. Rental rate has remained low at about RM4.30 psf compared with its high in 2008 at RM4.90 psf. With the various projects to be implemented under the ETP to make city living more vibrant, we expect the market to be on the uptrend by 2012,” said Abdul Rahim.

In locations like Shah Alam, landed units by the more reputable developers are snapped up within six months. “People are buying because for RM2mil or so, they can buy the same type of houses which cost RM6.5mil to RM7mil in the city. That is why the launches outside KL are doing well, coupled with the fact that there is no landed launches within KL itself because of the scarcity of land. In locations like Bangsar and Sri Hartamas, only condominiums are launched,” he said.

In view of this, Shah Alam, Rawang, Selayang and Sg Buloh have become the hot spots today. The effects of the 2008 financial crisis also put pressure on the rental rate in the office sector, which enjoyed a peak of between RM6.50 and RM8 psf in 2007/2008.

He said there were limited transactions in 2010 but capital values rose to an average of RM775 psf after a sharp decline of 19% in 2008/09. Net yield is estimated to be between 6% and 7%.

Abdul Rahim cautioned that in the next five years, an estimated 14.5 million sq ft of new office space would be completed, of which about 27% would be located in the suburbs.

He added that with selling prices of between RM500 and RM1,000 psf, some companies in the city centre were relocating to new office buildings in the suburbs due to lower rental rates, opportunity to own their own space, and convenience which helps recruitment and retention of staff.

“With the recovery in the economy expected to continue in the second half of 2011 and the effects of the ETP being felt, the office market may stabilise in the short term but will continue to be challenging in the long term,” he said.

In the retail property market, Abdul Rahim was upbeat about this sector, noting that retail sales were forecast to increase from RM137bil in 2010 to RM227bil in 2014.

For this year, 13 new malls are expected to be opened offering a total of 4.5 million sq ft of retail space, including two malls that are being refurbished and rebranded, Intermark (previously City Square) and Viva Mall (previously UE3 Mall).

Singapore sellers rush to close deals by midnight

Property sellers in Singapore rushed to close deals before midnight last night before a new round of anti-speculation measures took effect today. Some chose to pull their properties from the market all together, the Today newspaper reported.

Many property firms said that they received a flood of inquiries from buyers and sellers when news of the cooling measures broke on Thursday.

Prospective first-time property buyer Christoper Ng, 36, was rushed into making an offer by his agent last night because the seller apparently wanted to close the deal quickly but was beatern by another bidder. “My other agents actually called me and said that most of the listings have been delisted and so the supply has shrunk,” said Ng.

The measures raise the seller’s stamp duty to a maximum 16 per cent on property re-sold withing the first year of purchase, a big jump from the previous 3 per cent. Banks are also reducing the maximum LTV (loan-to-value) rate to 60 per cent of the property value for those who already have at least one mortgage.

While other property analysts felt it was premature to assess the full impact of the measures, Propnex CEO Mohd Ismail said he expects 20 per cent of buyers who had bought properties recently to rethink their transactions. Buyers who have paid a deposit but do not exercise the option to purchase might forfeit the fees – amounting to 1 per cent of the property’s value – which they have paid.

Kuala Lumpur, New York City, London are top picks for 2011

Kuala Lumpur, London and the ‘Big Apple’ are where Hong Kong’s savviest investors are now spending their money. Today, Hong Kongers are also investing in Malaysia after almost a decade of preferring London, Singapore and New York. With Malaysia’s economy expected to grow 5.3% in 2011 and London’s forecast to grow 3.8%, investors are venturing across the globe to invest in real estate.

Hot Pick 1: MALAYSIA 
“Malaysia’s property market is driven by owner occupiers and domestic consumption, not pure rampant speculation like many parts of Asia,” claims Tim Murphy, IP Global’s Founder and Managing Director.

Malaysia is growing in reputation as the prime investment location in Asia because of its stable property market and relative affordability. Investors across the region are seeking to diversify their portfolios with affordable, mid-range property and Malaysia’s well-regulated market is attracting the attention of buyers looking for long-term and relatively secure investment opportunities.

Compared with markets such as Hong Kong, where the property price is typically 5 times more expensive than that of Kuala Lumpur, Malaysia remains affordable. Property prices in the capital increased by only 3% over the past 12 months compared with 25% in Hong Kong and 38% in Singapore. It is predicted however, that due to the lack of supply of mid to luxury condominium properties, property prices will continue to increase over time.

“The property market in Malaysia has remained stable during the global financial crisis and we are expecting it to improve substantially over the next 12 months,” claims Tim Murphy. “You can own property as a foreigner, making the most of another market’s low taxes and strong economic fundamentals.”

Hot Pick 2: NEW YORK CITY
“Increased mortgage availability and positive growth trends in New York mean strong rental yields and solid returns,” says Tim Murphy.

Recently there has been an increase in the number of Asian investors purchasing property in the USA, most notably in New York. According to the Global Property News Service, Propertywire, 25% of the purchases of New York’s centrally located Armani-designed 20 Pine Building are made by overseas investors. Property investors are purchasing properties without even viewing them because the USA’s high unemployment rate and weak currency make for an attractive buyers’ market for an international investor.

IP Global research claims that since property prices reached their lowest point in May 2009, prices have increased by 3.9%, making New York a potentially lucrative investment opportunity. As the world’s leading financial hub, New York offers attractive options for the foreign investor. The economy and property market have proven to be more robust and have recovered more quickly than any other US market with steady price growth expected in the long term.

Hot Pick 3: LONDON
“In London, low interest rates and high rental yields will offer strong value over the next 12 – 18 months,” claims Tim Murphy.

Despite London’s property prices continuing to improve following the recession, prices still remain below their peak in 2007; however, over the last 12 months, property prices have increased by 11.4% marking the 11th consecutive month of positive price growth. There is also the highest supply shortage since records began for properties in London, with an average of 5.5 tenants competing for every property. With tenants preferring to purchase property due to high rents, investors should see a strong capital growth and healthy returns on their capital invested. As well, interest rates remain extremely low, which bodes well for the property market.

Hong Kong investors targeted for iconic development in Niseko

‘The Rocks - Edge’ - the initial phase of the development - are scheduled for completion in the Upper Village of Hirafu in 2012.

Hong Kong-based Summit Properties plans to unveil the first condominium-hotel development at Niseko ski resort in Japan.

Located in the centre of the quaint alpine village of Hirafu within Hokkaido’s national park, the development concept features a substantial second ‘ski-in, ski-out’ development in the Upper Village, offering doorstep access to the celebrated ski-fields.

Niseko is Japan’s skiing and snowboarding mecca, famous for some of the world’s most pristine and dramatic champagne powder snow.

The initial phase of the development ‘The Rocks – Edge’ will comprise three-bedroom townhouses of 168 sqm and four-bedroom penthouses of 259 sqm and 286 sqm, scheduled for completion by the end of 2011.
Each apartment will include substantial additional exclusive areas such as balconies and gardens, and including roof terrace the top level penthouse will be over 440 sqm.
“The Rocks is inspired by the dramatic mountain beauty of Niseko, natural charm of the Hokkaido seasons and the sublime and elegant culture of Japan,” said Summit Properties spokesman Lucas Fuller.

Subsequent phases will incorporate a Kid’s Club, traditional Japanese onsen hot spring, modern spa, gym, restaurants, bar, deli, café and ski concierge. Apartments’ owners will benefit from the vibrancy of the Middle Village combined with full access to the on-the-snow facilities at the Upper Village development including onsen, ski concierge and storage, boot lockers and owner storage cupboards and parking.

Fuller added: “The Rocks will be an iconic development and the first of its kind, setting standards of service and breadth of facilities not seen in the village before. The combination of its unique National Park location providing stunning views with an ease of skier access not achieved by any other Niseko condominium development to date is unmatched.”

The project is planned and designed by Riccardo Tossani Architecture, while global engineering giants Arup provides engineering design, planning and project management services. Arup is renowned for iconic projects including Sydney Opera House and the Beijing Olympic Stadium.

The first phase of The Rocks will be showcased for the first time in Hong Kong between January 18-19 at  the Landmark Mandarin Oriental Hotel.

List Of Blacklisted Developers in Malaysia Due to “Ingkar Award” Case until 30 September 2010

What is the meaning of “Ingkar Award”? Anyone? Because, I was shocked to find out that some of the well-known property developers in Malaysia were in the list too. Here are some of the developers:

• Berjaya Golf Resort Sdn Bhd
• Mammoth Empire Holding Sdn Bhd
• Mayland Development Sdn Bhd
• Perdana Park City Sdn Bhd
• Perbadanan Kemajuan Negeri Selangor (PKNS)
• Puchong Kinrara Development Sdn Bhd
• Shamelin Holdings Sdn Bhd
• Summit Housing Development Sdn Bhd

Launched -- Sunway Nexis with RM500m GDV

Sunway City Bhd has launched its latest integrated mixed development, Sunway Nexis, located at Dataran Sunway, Petaling Jaya.

In a statement today, the company said the development covers 5.83 acres (2.36 hectares) with a gross development value (GDV) of RM500 million.

The development is being undertaken by Sunway Damansara Sdn Bhd.

Sunway City managing director property development Malaysia, Ho Hon Sang said: "Sunway Nexis is a complete lifestyle centre encompassing leisure, entertainment, recreation and work facilities right at the doorstep.

"Following the success of Sunway Giza, this innovative development offers modern retail shops, office suites and SoHo with a promising potential for growth."

The commercial development at Sunway Nexis comprises three-storey retail shops with sizes ranging from 4,133 - 8,718 sq. ft and priced at RM4 million and above.

The 13-storey office suites range in size from 925-1,722 sq. ft and are available at more than RM 700,000 while the 20-storey flexi office block is from 850 to 1,980 sq. ft.

10 Projects Removed From Abandoned Project List – Deposit Refund

Referring to a report from Kementerian Perumahan Dan Kerajaan Tempatan (KPKT), for the past 10 years, there is total of 717 home buyers, who have bought their house, but unfortunately was identified later as abandoned project is now entitled to claim back their deposit!

HAVE YOU CLAIMED BACK YOUR MONEY?

Your inputs here are much appreciated in order for us to ‘help’ our government and developer to do their job better in future! Here are the 10 projects and developers involved:

Pulau Pinang
Project: Taman Gelugur Mukim 13, Timur Laut
Developer: Rethiko Sdn Bhd
No. of Buyers: 72

Project: Taman Singgahsana Putera Mukim 7, Seberang Prai
Developer: Bagan Masyur Sdn Bhd
No. of Buyers: 44

Kuala Lumpur
Project: Sentul Indah, Sentul
Developer: Homeng Realty Sdn Bhd
No. of Buyers: 139

Melaka
Project: Taman Ria Jasin, Merlimau
Developer: Wawasan Nusantara Sdn Bhd
No. of Buyers: 21

Selangor
Project: Taman Suria Indah, Dengkil, Sepang
Developer: DDR Properties & Devt. Sdn Bhd
No. of Buyers: 5

Project: Taman Lingkaran Nur Fasa 1B (RTKS)
Developer: Saktimuna Sdn Bhd
No. of Buyers: 52

Johor
Project: Taman Rawang Jaya, Mukim Kesang, Muar
Developer: Life Devt. Sdn Bhd
No. of Buyers: 18

Project: Taman Perdana Muar, Mukim Serong, Muar
Developer: Primeplan Corporation Sdn Bhd
No. of Buyers: 26

Pahang
Project: Taman Perwira Fasa 2, Jerantut
Developer: Yee Hoong Loong Corp. Sdn Bhd
No. of Buyers: 260

Negeri Sembilan
Project: Taman Desa Gemas, Gemas
Developer: Sri Sembilan Property Sdn Bhd
No. of Buyers: 80

Boosting demand for properties

It was a mixed year for the Malaysian property sector in 2010.

A few things to note include the implementation of the LRT and MRT systems, the Greater KL Transformation Plans, the New Economic Model, the 10th Malaysia Plan and the Economic Transformation Plan (ETP).

The plans are to pave the way for the country to become a high-income nation, boosting demand for properties in Greater KL, Penang and Johor.

The government also announced plans to open up some of its prized landbank around Kuala Lumpur and the Klang Valley for redevelopment.

Among the government-owned prime land are the 20ha at Jalan Cochrane, some 12ha in Ampang Hilir, and smaller parcels at Jalan Stonor, in Brickfields and Bukit Ledang, off Jalan Duta.

But the crown in the jewel is the redevelopment of the Rubber Research Institute land in Sungai Buloh and the Sungai Besi land, and building of Matrade Centre and the Kuala Lumpur International Financial District (KLIFD)

OSK Research Sdn Bhd head of research Chris Eng said the LRT and MRT projects have added excitement to the market as some homebuyers have begun to speculate which housing areas would benefit from the locations of these stations.

"These projects in the short term will create excitement and attract more capital into the region, thereby potentially boosting or sustaining the values of certain properties," Eng told Business Times.

Malaysia's residential property sector is expected to register the highest sales transactions on record in 2010 of around RM50 billion (2009: RM42 billion).

MIDF senior analyst Syed Muhammed Kifni Syed Kamaruddin said this can be attributed to accommodative home-financing schemes and greater housing demand, especially from upgraders.

"Residential sales transactions are estimated to rise by some 20 per cent annually to breach the RM50 billion mark for the first time in 2010," he said.

Another notable good news is the guaranteed downpayment of 10 per cent for houses below RM220,000 for first-time buyers earning below RM3,000 a month, implying full financing of the value of a property.

Muhammed Kifni said the move will spur demand for affordable housing.

A new scheme where the Employees Provident Fund contributors can withdraw more from their Account 2 savings for their first home will help the market.

The bad news would be the cap on the loans-to-value ratio for third housing mortgages and onwards by Bank Negara Malaysia (BNM) to curb speculation.

Effective November 3 last year, house buyers who have two mortgages and apply for their third loan can only get 70 per cent financing of their house value.

Real Estate and Housing Developers' Association president Datuk Michael Yam had said this will affect the upmarket segment by 20 per cent.

BNM's Overnight Policy Rate (OPR) hike to 2.25 per cent from a record low of 2 per cent in 2010 has softened the market a little.

But Previn Singhe, founder of Zerin Properties, said broad-based landed properties and condominiums in good location will continue to move.

Property and other loans growth poised to slow down

PETALING JAYA: Loans growth is poised to slow down as lending indicators are showing signs of moderation in credit expansion, said analysts.

ECM Libra Investment Research expects household loans growth to slow down as property sales cool down amid credit tightening and policy measures to curb excessive speculative activities.

In a report issued yesterday, ECM Libra said the loans growth momentum could be curbed by slow deposit growth which has continued to lag credit expansion at 6.5% year-to-date or 7% on an annualised basis.

Despite slower growth rates, leading loans indicators remain at comfortable levels considering that absolute levels of loan applications and approvals stayed close to peak levels. Its calendarised loans growth forecasts is 8.4% for this year and 10.9% for last year, according to AmResearch Sdn Bhd's report yesterday.

AmResearch added that net interest margins might see less pressure with the average lending rate stabilising.

OSK Research Sdn Bhd said in a report yesterday that this year's loans growth would remain robust as the rise in interest rates from record lows was unlikely to dampen pent-up credit demand spurred by a recovering economy.

AmResearch said the slowdown in the residential loans segment was positive, considering that household debts had risen significantly over the past one year.

“The future (loans) growth will likely be driven partly by execution of projects under the government's Economic Transformation Programme (ETP),” it added.

While the ETP implementation will be predominantly financed by the private sector and result in higher business loans growth, ECM Libra said it was cautious on the prospect of project implementation delay at this juncture.

The banking industry saw an overall loans growth of 13.2% year-on-year (y-o-y) in November 2010 due to business and household sector loans expansion as compared with the 12.4% y-o-y loans growth seen in October 2010.

“This growth has surpassed the previous high of 12.9% y-o-y growth almost two years earlier in December 2008. The peak before this would be the 14.9% growth in April 1998. Thus, industry loans growth is now at the highest level since the Asian financial crisis,” said AmResearch.

However, slower growth was seen in leading indicators. Loans applications, approvals and disbursements all expanded slower on a y-o-y basis for November 2010 at 13.2%, 4.7% and 0.7% against October's 20.8%, 21.4% and 11.8% respectively.

Despite the slower loans growth, AmResearch said the absolute amount of loans applied of RM56bil was still close to peak levels compared with the monthly average of RM43.4bil for 2009.

It added that the muted increase in loans approved in November 2010 was not a major concern, as it came mainly from a 74.5% y-o-y drop in other purpose segment (which included lumpy loans approved to the public sector).

OSK Research said that loans applications dipped as applications for the business and household sectors trended lower. It added that weaker demand for construction and purchases of fixed assets other than land and buildings led to slower business applications.

“Loans applications for the household sector declined, mainly due to slowing growth in the purchase of residential property,” said OSK Research.

Loans approval growth slowed due to weaker growth in the business sector with loans approvals for the purchase of fixed assets other than land and buildings being the major drag while loans approvals for the household sector moderated, it added.

Meanwhile, ECM Libra said competition in the mortgage market had resulted in widening negative spread over the base lending rate (BLR).

“This is likely the cause for the fall in average lending rate (ALR) to 4.99% despite average BLR remaining unchanged at 6.27%. Interest margin is under pressure as the ALR-3 month fixed deposit spread has fallen to 2.25%, the lowest level in 12 years,” it added.

However, momentum in merger and acquisition activities is expected to be sustained, which would underpin non-interest income growth. CIMB Group Holdings Bhd would be the main beneficiary, said ECM Libra.

Cautious optimism for Malaysian property

The new Puteri Harbour development in Iskandar

Property prices in Malaysia’s most popular locations reached record levels last year. In fact, investors in landed property have enjoyed strong capital appreciation of 20 to 30 per cent in recent years. The market was so hot that concerns over a possible bubble led the Bank of Negara to impose restrictions on third home mortgages, imposing a 70% cap on loan-to-value ratios.
Experts on the ground say a strong economy will ensure continued demand in the Malaysian property sector through 2011, particularly in the Klang Valley and Penang with new residential launches and major infrastructure projects coming online. Data from the National Property Information Centre suggests  a reduction in supply following the global economic crisis drove demand last year and analysts believe this trend looks set to continue.  Confidence remains high, although the supply shortage will ease this year as developers match demand.
According to CB Richard Ellis, well-located medium-cost high-rise dwellings will remain the most popular in Malaysia with strong demand from younger middle-class buyers and  the trend towards  towards building smaller, affordable units close to the central business district will continue. New locations such as Iskandar Malaysia and Ipoh will also draw demand, albeit at a slower rate than the main centres. However, luxury level residences in areas such as Kuala Lumpur City Centre and Mon’t Kiara may face a more challenging market as an oversupply is now suffering from weak rental demand.
Although the 70 per cent LVR ruling has had little impact in terms of wider investment, experts like CB Richard Ellis Sdn Bhd executive chairman Christopher Boyd advise buyers to be careful not to over-commit because prices may soon level off, making it more difficult to exit the market.

Prices for mass-market condos in Singapore continue to rise

The latest estimates from the National University of Singapore (NUS) show that prices of non-landed private homes in Singapore’s Central region (districts 1-4 and 9-11) have appreciated 7.9 per cent in the first 11 months of 2010 from the end of 2009, according to The Business Times.

The NUS’s latest findings are in line with what local property agents have been reporting about the rise of mass-market condo prices, while prices of prime and luxury condos have yet to touch their 2007 records.

DTZ executive director Ong Choon Fah said that entry-level suburban condos had strong demand in 2010, riding on demand from those looking to upgrade in a buoyant resale market for Housing Development Board flats (HDB).

“The trend of developing a higher proportion of smaller units in private residential projects has spread from the prime districts where rental demand is stronger to the suburbs,” she said. “This has also helped to boost sales of mass-market projects by making the lump sum investment more palatable to buyers.”

According to Ong, developers of suburban projects started to offer some of the innovative features, such as sky gardens, which in the past were available only in prime area projects.

Meanwhile, Tan Tiong Cheng, chairman of a property consultancy firm Knight Frank Pte Ltd, said that prices of high-end condo did not increase much in the past year due to weak foreign demand, especially when compared with the previous bull run in 2007.

“These days, buyers from the West, Middle East and Russia seem to be out of the equation. Also Western bankers were a significant buying contingent in 2007 but post-crisis, banks are less generous with remuneration,” he said.

Despite being wrong with their earlier forecast of stronger price appreciation for high-end condos compared to those in the mass-market for 2010, industry experts still predict the same trend in 2011 as there have already been significant price hikes in the mass-market segment.

According to  analysts, if the government manages to control HDB resale prices, that will have an impact on upgrader demand for entry-level condos. In addition, any interest rate hike, or further property cooling measures, will likely to affect demand in the mass-market segment rather than on upmarket condos.