Super penthouse going for RM50mil

The Binjai on the Park features 171 luxurious condominiums with the 50-acre KLCC Park right at its door step.

The sprawling 19,200 sq ft of four-level super penthouse with an unobstructed full-length view of the Petronas Twin Towers can easily vie for the title of the “Most Exclusive Residence in Kuala Lumpur” if there is such an award up for take.

The spectacular vista of the world’s most touted and tallest twin towers is indeed a sight to behold.

To enjoy this exclusive privilege atop the 45th floor of Binjai Barat (Tower A) of the luxurious condominium homestead of The Binjai on the Park project, the buyer has to be someone in the super rich list who will not bat an eye to sign over RM50mil. Yes, a cool RM50mil in exchange for the super penthouse, nothing less.

For that price, the lucky owner will get to enjoy a host of privileges besides the 24 hours, seven days a week of unsurpassed view of Kuala Lumpur’s most recognised architecture landmark and a 360 degree view of the city’s skyline.

On what makes the super penthouse such a coveted residence that warrants a RM50mil price tag, Layar Intan Sdn Bhd head of marketing and sales, Terri Har says: “It is the ultimate in luxury living. The proud owner can lay claim to the most exclusive address – right at the peak of The Binjai on the Park.”

Layar Intan Sdn Bhd, which is developing the project, is a wholly-owned unit of KLCC (Holdings) Sdn Bhd.

Har further points out that the luxurious residence is the crowning glory of the exclusive condominium project which is the only residential project within the whole of the 100-acre Kuala Lumpur City Centre (KLCC) development.

It is also the only one of two super penthouses that is still available for sale. The other slightly smaller three-level super penthouse with built-up of 14,000 sq ft in Binjai Timur (Tower B) was sold two years ago for RM38mil. The buyer is a prominent business tycoon who is on Forbes’ list of billionaires.

The owners of these super penthouses will get to enjoy a private 24-metre infinity swimming pool and their own private lift.

Har says despite its RM50mil price tag, the residence will be sold as a “shell and core”.

“We have established that the buyer of such an exclusive home will want the flexibility to design their own home. The uniqueness of the super penthouse is the unfurnished layout, allowing the proud owner an opportunity to use their creativity in designing and ID fitting their dream home to their own taste and preference,” she explains.

Designed by renowned architecture firm Architects Allen Jack + Cottier, The Binjai on the Park comprises a total of 171 residences on two 44-and 45-storey blocks.

The units range from three-bedroom units of 2,200 sq ft to 3,700 sq ft, penthouses of 5,600 sq ft to 7,300 sq ft, and a super penthouse on each of the towers.

According to Har, the project is developed based on the built-then-sell model, and since its completion in February last year, 70% of the units have been sold.

The average price per sq ft (psf) fetched is about RM2,600.

All the 100 residences in the 44-storey block or Tower B have been sold.

Besides the super penthouse, two duplex penthouses of 7,300 sq ft each priced at RM23mil are still available in Tower A.

Also available are a number of standard units in Tower A priced from RM9mil to RM10.6mil.

Har says it is the exclusive factor that makes the project such a hit among the well-heeled owners.


RM50mil view. The owner of the RM50mil super penthouse in The Binjai on the Park gets to enjoy this scenery and a 360 degree view of the KL city skyline, among other benefits.

For Tower A, there are only two units per floor with three high speed lifts opening up to the owner’s own private lobby via the personal security access card. Tower B has three residences per floor serviced by four lifts.

She says the design of the residences will definitely meet the requirement of the high profile owners – a well-planned layout separating the entertaining area and the owner’s private living area.

So far, there have been a number of interested potential buyers and discussion is still ongoing for the unsold units.

One of the strong attractions of the project is that it is anchored on the lush 50-acre KLCC Park which provides residents a direct access to the park - home to over 1,900 indigenous trees that have been transplanted from their former sites to retain the sanctity of the city’s gazetted green lung.

“This signature landmark of the KLCC masterplan provides more than 20 million sq ft of commercial, retail, hotel, residential, convention and entertainment facilities.

“The availability of a plethora of prominent entertainment hubs, food and lifestyle outlets, shopping amenities, commercial, business and health facilities, all within a stone’s throw of the development, underpin the development’s uniqueness and appeal,” Har points out.

She says the target buyers are highly discerning buyers who appreciate the quality of the product and location, and are exposed to iconic real estate development in the likes of the Hyde Park in London or Central Park in New York.

“From private catering to getting those hard-to-come-by Philharmonic tickets at Suria KLCC, our hospitality-trained concierge provides a host of personalised services. Living at The Binjai on the Park is no different from the attentive level of lifestyle one gets living in upscale Manhattan or central London,” she adds.

She says most of the foreign buyers are buying the property as part of their “trophy collections” to be used as one of their many holiday homes in various global cities.

The upscale project has so far attracted buyers from Hong Kong, the UK, Singapore, China, New Zealand, Taiwan, Dubai and Japan.

SP Setia buys 40pc of KL Eco City for RM75m

KUALA LUMPUR: Property developer SP Setia Bhd has proposed to acquire 40 per cent equity interest in KL Eco City Sdn Bhd(KLEC) from Yayasan Gerakbakti Kebangsaan for RM75 million.

The acquisition will be through the issuance of 19,379,845 new ordinary shares of RM0.75 each in SP Setia at an issue price of RM3.87 per share, SP Setia said in a filing to Bursa Malaysia today.

The KLEC project is an integrated commercial and residential development.

The development was master planned by Jerde Partnership, an international award-winning architect and master planner well-known for integrated mixed-use commercial and residential developments.

"The management of SP Setia believes that in addition to the integrated master planning by a world-renowned planner and its plan for green accreditation, the development’s key advantages are its strategic location near the affluent Bangsar area and its connectivity to key roads, highways, the KTM Commuter and the LRT Kelana Jaya lines," it said.

The acquisition resulting in KLEC becoming a wholly-owned subsidiary of SP Setia will enable it to reap the full benefits of the project to be developed.

It is also envisaged that a consolidation of KLEC’s shareholding structure would provide SP Setia and its subsidiaries with greater funding flexibility for the KLEC project, it added.

House prices slide in Perth, Australia

Perth in Western Australia has experienced its fifth consecutive quarter of property price falls, new figures have revealed. The preliminary findings by the Real Estate Institute of Western Australia (REIWA) show that housing values slid by two per cent during the second quarter of this year, compared to the first three months of 2011. Alan Bourke, president of the organisation, commented: "Our early data suggests there has been little movement in the median sale price for multi-residential, but turnover for units, villas and townhouses has been stronger than in the previous quarter." He added that he expects the average value of a dwelling in the city to stand at around AU$475,000 (£315,938) once all the sales information has been collated. In May, REIWA criticised the state government for failing to take steps in its budget to help boost the provision of affordable housing in the region. The association had previously called for tax breaks for those who own more than one property in a bid to help stimulate the real estate sector and introduce more rental accommodation.

Singapore to rein in rogue overseas property lawyers

Bank of China is one of the banks appointed by the Ministry of Law to open dedicated accounts for overseas property lawyers

Two high profile cases in 2006 and 2007 resulting in fraud of around S$17 million (US$14 million) have prompted Singapore to introduce new measures next month to protect property buyers from rogue overseas property lawyers.

The Conveyancing (Miscellaneous Amendments) Bill was passed in Parliament in April and will come into force on August 1^st 2001. The aim of the new legislation is to tighten the safeguards in terms of lawyers holding conveyancing monies.

The law change means that overseas property lawyers in Singapore will no longer be allowed to hold and receive such money in their standard client accounts. The money must instead be held in dedicated accounts offered by the Ministry of Law.

According to Channel News Asia, five banks have been appointed: Bank of China, DBS Bank, Overseas Chinese Banking Coorporation (OCBC), Bank of East Asia and United Overseas Bank (UOB).

Any overseas property lawyers found in breach of the rule may be fined up to S$50,000 (US$41,500) or face a prison sentence of up to three years.

Another KLCC Prop mixed project in the works

Kuala Lumpur: With the completion of Lot C by the end of this year, KLCC Property Holdings Bhd will be looking at the development of Lot D1, another 0.6ha plot of land adjacent to Hotel Mandarin Oriental.

A development plan for the area is only expected to be finalised in about a year.

"As usual, this is a mixed development and the trend for us is to have a mixed component of retail and service apartment or retail and office, depending on the demand at that time," its chief executive officer Hashim Wahir said after KLCC Property's annual general meeting yesterday.

As part of its risk management measures, KLCC Property only begins building once tenancy and clients for a development have been firmed up.

KLCC Property expects to complete the development of the office tower in Lot C year-end.

Petroliam Nasional Bhd (Petronas), which will be the sole tenant of the office tower with a net lettable area of 840,000 square feet (sq ft), is likely to move in early 2012. The tower will be known as Petronas Tower 3.

The retail component of the development has already been handed over to Suria KLCC Sdn Bhd and some 22 tenants have already signed up.

Full occupancy of the 140,000sq ft net lettable area is likely by September this year.

The retail and office components of the development are set to contribute about RM100 million a year to the group once fully occupied.

KLCC Property is also undertaking a refurbishment exercise of Menara Dayabumi, a 26-year-old and 36-storey office building. Between RM30 million and RM40 million will be spent for the two-stage refurbishment work which is expected to be completed by the end of the year.

Another plan in the works is the redevelopment of City Point, a six-storey office-cum-retail-podium annexed to Menara Dayabumi.

"We hope to redevelop it to have additional office space and make the retail space more exciting," Hashim said.

Sunway City - The most profitable company in the property and REIT sectors

From left to right: The Edge chairman Datuk Tong Kooi Ong; Minister at the Prime Minister's Department Yang Berhormat Datuk Seri Idris Jala; Sunway City Berhad director of strategic & corporate development Sarena Cheah and OCBC Bank (Malaysia) director and CEO Jeffrey Chew.

Sunway City Berhad (Sunway City) was recognized at the Edge Billion Ringgit Club Corporate Awards Gala Dinner 2011 as the most profitable company with highest return of equity over three years in the property and REIT sectors. Sunway City received the award from Minister at the Prime Minister’s Department, Yang Berhormat Datuk Seri Idris Jala who graced the prestigious event held at the Shangri-La.

The Edge Billion Ringgit Club (BRC) inductees are the best companies listed on Bursa Malaysia with at least RM1 billion in terms of market capitalisation on March 31 each year, or turnover for the immediate preceding year. Sunway City, Sunway Holdings Berhad and Sunway REIT are members of The Edge Billion Ringgit Club 2011. While membership in the Edge Billion Ringgit Club is automatically open to companies that meet the criteria, the awards are based on performance.

Sunway City was incorporated as a private limited company in Malaysia in 1982, and was converted to a public listed company in 1995 and currently has a market capitalization of over RM2.3 billion. Last year, Sunway City had made its mark in the industry by becoming the first integrated real estate conglomerate when it successfully listed Sunway REIT on the Main Market on the Bursa Malaysia – the largest REIT in Malaysia in terms of market cap and asset value. Today, it has a market capitalization of RM3.0 billion.

The company’s major financial achievements include a surge of 143% in share price from Jan 1 2007 to June 30 2011, from RM 2.21 to RM 5.38. Profit attributable to equity holders (PATMI) had increased from RM 155.8 mil in FYE 30 June 2007 to RM 542 mil in FYE 31 Dec 2010, while basic earnings per share increased from 35.19 sen in FYE 20 June 2007 to 115.32 sen in FYE 31 Dec 2010 representing a CAGR of over 40% p.a. Net assets per share grew from RM3.06 per share in FYE 30 June 2007 to RM 5.53 per share in FYE 31 Dec 2010 representing a CAGR of approx 20% p.a. It had rewarded its shareholders with the highest gross dividend declared since its listing amounting to 31 sen per share for FYE 31 Dec 2010.

“We are privileged indeed to receive this recognition which underscores Sunway City’s commitment to deliver and create value for our shareholders. We attribute our extraordinary performance to visionary leadership, perceptive and transparent corporate policies; as well as synergistic and passionate teamwork which compound the bulwark of the company’s continuous progress,” said Sunway City Berhad managing director - property investment Datuk Ngeow Voon Yean.

“Sunway City will continue to strive to perform all our economic functions in the most efficient and productive manner, employing optimal use of current technology. We will continue to protect our shareholder’s investments, and provide them a sustainable return, and give them confidence in our corporate governance through transparency and accountability,” said Sunway City Berhad managing director - property development, Malaysia Ho Hon Sang.

“The merger between Sunway City and Sunway Holdings will unlock even more value for all shareholders through the creation of a streamlined platform for expansion of the property and construction businesses, as well as realisation of synergies within the Group,” he added.

Sunway Berhad, as a result of the merger, is expected to be listed on the Main Market of Bursa Malaysia in August. The exercise will create a single, more sizeable integrated regional property-construction player which shall create economies of scale and synergies as well as greater brand clarity for going to market and to attract talent.

The new entity will be one of the largest property-construction players with strong presence in the region, with total assets amounting to RM7bil, a land bank of 2,200 acres with a total GDV of approximately RM 25bil and a market capitalization of over RM 3.5bil, propelling Sunway to be one of the top five property and construction companies listed on Bursa by market cap.

The enlarged entity will translate to an optimized access to capital markets through an expected increase in liquidity which will command greater investor interest. The company is also expected to enjoy lower financing cost with enhanced cash management. It’s larger and stronger balance sheet will also empower the Group to bid for larger and more profitable projects.

US real estate sales decline

Sales of existing homes in the US fell unexpectedly in June, the National Association of Realtors (NAR) has announced.

According to the organisation, transactions declined by 0.8 per cent compared to May, while they remain 8.8 per cent lower than the figures recorded in June last year.

However, real estate values registered an increase of 0.8 per cent in June, in comparison to the same month in 2010.

NAR chief economist Lawrence Yun stated: "Home sales had been trending up without a tax stimulus, but a variety of issues are weighing on the market, including an unusual spike in contract cancellations in the past month."

Meanwhile, president of the association Ron Phipps commented that due to the high levels of affordability in the US housing sector, sales would be expected to be stronger.

Earlier this month, NAR warned politicians not to introduce policies that could jeopardise the recovery of the US property industry. The organisation stressed that a robust housing market is vital to underpin a wider economic recovery.

More MRT lines likely beyond 2020

KUALA LUMPUR: Apart from the blue and circle lines of the My Rapid Transit system, there is a possibility for other lines, depending on density and economic activity, to be built beyond 2020, said Transport Minister Datuk Seri Kong Cho Ha.

However, Kong stressed that the focus would be to implement the blue line, which covers the 51km Sungai Buloh-Kajang MRT route. This line will have 31 stations.

Speaking after the launching of the Third World Chinese Economic Forum, he said details of the circle line had yet to be finalised and may be announced by the year-end or early 2012.

Kong said the waiting time for KTM Kommuter train services would be reduced from 30 minutes to 10 minutes once the 38 sets of Electric Multiple Units (EMUs) ordered by KTM Bhd were operational by June 2012.

“The first EMU will be delivered in September while the remaining five will be delivered by the year-end. We will receive all by June next year,” he said.

The 38 sets of EMUs cost RM1.89bil, excluding maintenance, repair and overhaul (MRO) expenses. KTM signed an agreement with CSR ZELC in May last year to purchase the EMUs for commuter service in the Klang Valley.

Kong also said the park and ride facilities in various commuter and light rail transit stations in the Klang Valley were now being upgraded, which will see the addition of about 7,000 parking lots.

UK Plans Disposal Prime Ampang Land

Kuala Lumpur: The British government plans to sell the land where its High Commission in Malaysia sits, sources said.

The land located on Jalan Ampang measures some 1.22ha and could fetch as high as RM1,500 per sq ft or RM196 million, real estate agents estimated.

It is understood that the High Commission is looking at relocating to a prestigious office building and has been making enquires within the Golden Triangle in Kuala Lumpur for its new base.

A source said that the decision to move comes as it has more space than it requires. With the advancement in information technology, it now has fewer back office or administration staff.

It is keen to take advantage of modern offices that function effectively.

An official at the High Commission when contacted by Business Times to confirm this said: "The High Commission had in principle decided to relocate the High Commission but no firm decision has been taken on the location".

It is understood that the High Commission will not go ahead with the sale until it finds an alternative location.

The current building includes office, residences, a swimming pool and tennis courts.

The British High Commission Kuala Lumpur's website states that the piece of land was given to the British government in return for giving up Carcosa in 1987.

The British government had until then used Carcosa as its diplomatic residence.

The website noted: "So in 1987, in return for giving up Carcosa, the British government was given a plot of land near the corner of Jalan Tun Razak and Jalan Ampang, then a fair distance from the city centre (but now very convenient to the Twin Towers!), on which it decided to build a new High Commission building".

It would be interesting to see if the neighbours of the British High Commission will buy the land.

They include Boustead Properties, IOI Group, HSC Healthcare and Sri Mersing Hotels Sdn Bhd.

Sri Mersing owns the vacant land at the corner of Jalan Ampang and Jalan Tun Razak.

The land measures 1.22ha and it is understood that Sri Mersing is linked to Malaysia's richest man, Robert Kuok.

HSC, meanwhile, runs the recently-opened HSC Medical Centre, while Boustead Properties has a project named 183 Ampang located behind the High Commission.

The IOI Group too has land in the embassy enclave in Kuala Lumpur.

EPF owns Quill 7?

The Employees Provident Fund (EPF) may be the new owners of Quill 7 located in KL Sentral, sources say.

Quill 7 is a 29-storey office building with a six-storey podium. The building has a total net lettable area of 356,759 sq ft.

Industry estimates for the building are in the tune of RM1,200 per sq ft or some RM428 million based on recent transaction value in the same area.

The building, which is virtually full, with the exception of the penthouse, collects an average rental rate of RM7 per sq ft including service charge. Its tenants include Axiata and Nokia Siemens.

It is understood that EPF had extended a loan to a special purpose vehicle to construct the building and under the terms, EPF has an option to buy it.

Quill 7, previously called Tower D, is located on Lot J at KL Sentral, and developed by Quill Realty Sdn Bhd.

It was reported during the topping-up ceremony that Quill Realty is 60 per cent owned by Quill Group and 40 per cent by Malaysia Commercial Development Fund (MCDF), which is a closed-end private fund sponsored by CapitaLand Group.

A source told Business Times that tenants at the building had already signed a novated tenancy agreement which revealed the name of a new company understood to be linked to the EPF.

Messages left at Quill group of companies to confirm this were not returned.

Zerin Properties Group chief executive officer Previndran Singhe, when contacted to comment on the building, said: "KL Sentral offices have proven due to connectivity and with its MSC status, its ability to attract tenants worldwide.

"This, plus limited initial supply, has pushed rental and capital values upwards. Moving forward, with the impending new supply coming into KL Sentral, we will see slightly lower occupancy rates with rentals remaining at present levels."

Las Vegas tops list of best US locations for rental property investment

People seeking to invest in property in the US have been advised to consider homes in Las Vegas, Nevada, which is apparently a good bet for those buying to let.

The city topped a list of the ten best locations for opportunities in the single family rental market compiled by HomeVestors of America, beating Detroit and Warren in Michigan and Orlando in Florida to the number one spot.

Launched this week, the property investment indicator will continue to keep track of changes in the market to provide those buying homes in the US with quality real estate predictions.

David Hicks, co-president of HomeVestors, said: "We're pleased to have developed this ranking system with Local Market Monitor to help investors ... identify opportunities and gauge potential local market investment performance."

The ClearCapital Home Data Index recently suggested that, despite a small increase in house prices over the second quarter of the year, values are set to drop by the end of 2011.

Experts turn cautious

The local property market is almost into its second year of an upward cycle and is being closely watched for signs of changes in its direction.

While the outlook is still reasonably positive in the immediate future with demand and pricing still expected to hold out well, some industry observers are already factoring in the possibility that demand may start to turn soft next year.

A number of research houses have downgraded the property sector and given it a “neutral” grade from the previous “overweight”.

“Sentiment will turn slightly negative and we expect demand to start to soften possibly next year. It is appropriate to be watchful of property stocks as we are now almost two years into the upward cycle,” an analyst with a local research house says in a recent report.

Property consultancy DTZ Nawawi Tie Leung Sdn Bhd executive director Brian Koh says the short-term expectation looks reasonably positive, especially if the Government’s Economic Transformation Programme (ETP) to promote a high income economy results in higher investments and new job creation.

However, Koh does not discount that sentiment may turn soft if the highly expected “double dip” in the western countries materialises.

“It will affect the country’s manufacturing and export sectors. Another factor that can dampen property sales is if there are further hikes in interest rates,” he adds.

According to Knight Frank Research, in its latest Real Estate Highlights report, the property sector is anticipated to remain promising as the economy continues to maintain growth, albeit at a slower pace compared to 2010.

“Proposed measures under the ETP are set to boost the residential markets of Greater Kuala Lumpur/Klang Valley alongside the government’s target to increase the population to 10 million by 2020,” it says.

Projects in good locations, delivered by reputable developers with a good track record will continue to attract buyers. With several launches planned in second half of this year (2H2011), property developers are now focusing on quality construction and on-site services to drive the market forward.

However, the high-end condominium sector looks set to retain a cautious outlook following a period of slower domestic economic growth, the imposition of a maximum loan-to-value ratio of 70% on third mortgages, and the recent announcement by Bank Negara on the overnight policy rate hike.

CH William, Talhar & Wong Sdn Bhd (WTW) managing director Foo Gee Jen says the local property market is expected to ease slightly in the 2H2011 due to concerns that the economy will slow down while costs rise.

Foo points out that concerns the economy will slow down in 2H2011 in light of rising crude oil prices might put pressure on inflation rates.

“Coupled with the strengthening ringgit, manufacturing costs could be moving higher which would render the country’s export less competitive in the global marketplace,” he explains.

On the construction front, he says inflation will lead to higher construction cost while the recent Bank Negara interest rate and SRR hikes are expected to constrict future housing credit expansion, and raise borrowing cost.

“Collectively, these factors may result in a significant rise in the cost of house purchases and lead to a fall in demand for newly launched housing starts,” he adds.

Foo says growing competition in the high-end residential market in the Klang Valley may result in a slight decline in sales take-up in secondary localities, although strong demand still persists for high-end landed residential properties in well sought after locations.

“Projects in well-established localities with good connectivity and shopping, recreational and entertainment facilities, will continue to be in high demand.

“However, those located in isolated enclaves such as Ulu Kelang are facing resistance in demand due to a lack of comprehensive facilities and concerns of deteriorating accessibility as traffic jams around Kuala Lumpur worsen,” he adds.

Foo says prices of luxury condominiums will face strong downward pressure due to the large incoming future supply, adding that developers will attempt to maintain prices by improving their quality, layout design and lifestyle marketing concepts.

By the end of 2011, the number of luxury condominiums in Kuala Lumpur will further increase by 1,314 units.

The total supply of condominiums in Kuala Lumpur as at the first half of this year stood at 86 developments offering 10,104 units.

According to a recent report by WTW’s research department, the average occupancy rate of luxury condominiums in Kuala Lumpur in selected locations ranges from 60% to 75% in the first half of 2011 (1H2011).

Luxury condominium prices in the city centre range from RM800 to RM1,300 per sq ft while in off-city centre locations such as Mont’ Kiara and Damansara Heights, they are from RM600 to RM1,000 per sq ft.

“Our random surveys continue to reveal that the purchasers of the developments are predominantly locals but the occupiers (in most cases as tenants) comprise a large population of expatriates,” the report adds.

It also says the Klang Valley’s office market remains a tenant’s market with a large amount of space available for leasing.

Landlords of newly completed buildings continue to offer two to three months rent-free periods as one of the sweeteners to attract new tenants. Newly constructed or refurbished office buildings are securing new lease at a much slower rate while there are also office buildings along Jalan Tun Razak which have remained largely untenanted for more than two years since their completion in 2008 and 2009.

As at 1H2011, purpose-built office space in Kuala Lumpur’s central area (KLCA) accounted for 40.10 million sq ft.

Approximately 5.975 million sq ft will be completed by end 2014, and of this about 4 million sq ft of space in nine buildings will be located in Kuala Lumpur’s golden triangle (GT).

Over 3 million sq ft of the new office space will come onstream by end-2011.

The average occupancy of office space in the GT was slightly below 90% in 1H2011, compared to 91%-93% in the last two years.

Average rental and net yield of prime office space in the KLCA were in the range of RM6.50 per sq ft and 6.5% respectively.

On the retail front, the WTW report points out that the retail sector continues to be resilient and vibrant with high occupancy levels in all the popular and established shopping malls. The latest retail centre to be opened was Viva Homes along Jalan Loke Yew.

“The take-up rate was reported to be good and attracting a good volume of visitors and shoppers. Occupancy levels and rentals are expected to be maintained in 2H2011 as retail spending is expected to grow about 6% this year,” the report adds.

As at 1H2011, there were 120 retail centre developments in the Klang Valley, totalling approximately 40.45 million sq ft, with no significant new future retail space supply in the KLCA.

Property trends – where are we heading to?

There have been many speculation (and subsequent refuting by various parties) of a property bubble. Year 2009 marked an economic slowdown due to the global financial crisis, while year 2010’s economic recovery was largely boosted by the government’s economic stimulus package.

Some attributed the astronomical price increases in hot areas to the suppressed demand of year 2009. In that year, it was common for developers to offer 5% downpayment and 0% interest until upon completion of a development. Similarly, banks offered attractive rates, where the interest rates were at approximately the high 3% or low 4%.

Escalating prices 
2011 came and property investors had to rethink their investment strategies. Prices of properties have surpassed the levels recorded before the crisis and in the first half of 2010 itself, prices of landed houses in some popular areas in the Klang Valley, Penang and Johor have appreciated by 10% to 30%. Bank Negara Malaysia (BNM), in its “Financial Stability and Payment Systems Report 2010”, stated that house prices in selected locations within and surrounding urban areas had increased to four times higher than the national house price index.

BNM has been staying on the pulse of the market’s movements and implemented a loan to value ratio of 70% for third mortgage borrowers. However, crafty property buyers have resorted to using their spouse or relatives’ names when applying for loans. Some have opted to take the commercial route, as the required downpayment is at an average of 80% (as opposed to 70% if the buyer has more than two residential properties currently). Plus, the capital gains and rental yield are relatively higher than residential properties. Hence, some buyers have changed their strategy by investing in commercial properties.

Proceed with caution 
In early May 2011, BNM raised the overnight policy rate (OPR) by 25 basis points to 3% and increased the statutory reserve requirement (SRR) by one percentage point to 3%, and as such, banks have raised their base lending rates (BLR) and base financing rates (BFR) by 30 basis points to 6.60% respectively. Banks that offer BLR minus 2%, means that effective interest rates are still below 5%.

However, property investors should look at the slight rate hike with caution. It is imperative that property buyers make decisions based on repayment capability, and also factor in expected rental yields.

New developments continues to mushroom especially in the Klang Valley and Greater Kuala Lumpur and reports have indicated that investors are still very much active, with investors snapping up units during property launches, despite the price increase. Analysts have indicated that it is still too early to measure the impact of current regulations.

Property Investment Convention 2011 (PIC 2011) 
If current property trends and regulations are at the top of your mind, join the Property Investment Convention where current topics of interest will be analysed and shared by various speakers.

The convention will mainly be about movement in the property market, the current and future trends based on the MRT, how to purchase as regulations change, how to tweak your strategies in view of the changing regulations, managing your portfolio, diversifying into REITS, and many more.

The speakers include:
- Best-selling author and property investment coach, Milan Doshi
- Location researcher and map maker, Ho Chin Soon
- The master of lead generator and co-author of the first ‘Lease Options’ book in the UK, Vincent Wong
- International property investment trainer and co-founder of Wealth Dragon in the UK, John Lee

The Property Investment Convention is scheduled to be held on 6 and 7 August 2011 at The Gardens Ballroom, Mid Valley City.

MRCB unit gets KL land for 3 projects in Brickfields

PETALING JAYA: Country Annexe Sdn Bhd (CASB), a 70% subsidiary of Malaysian Resources Corp Bhd (MRCB), will be given land in Kuala Lumpur with a potential RM1bil gross development value, in consideration for undertaking three projects in the city's Brickfields area.

In a Bursa Malaysia filing yesterday, MRCB said CASB had entered into a privatisation agreement with the Government and Syarikat Tanah dan Harta Sdn Bhd for the construction of three projects in Kuala Lumpur.

The projects consist of Little India (upgrading and beautification of Jalan Tun Sambanthan, Brickfields), Pines Bazaar (a three-storey building consisting of office space, 28 units of stalls and 140 car park bays) and Ang Seng Development (212 units of new government Class F quarters near Jalan Ang Seng to replace the quarters at Jalan Rozario).

DMIA Sdn Bhd owns the remaining 30% stake in CASB, which was set up as a special purpose vehicle to develop the projects in return for two pieces of land at the intersection of Lorong Chan Ah Tong and Jalan Tun Sambanthan.

The land is 214,630 sq ft in total, and is valued at RM601 per sq ft or RM129mil in total.

MRCB said a proposed mixed property development on the two pieces of land represents a good investment opportunity to further strengthen the future income of the group.

To recap, in June last year, the RM36.6mil Little India project was jointly awarded to MRCB and DMIA by the Government on a design, build, finance and transfer basis. It was completed last October.

To support the Government's initiatives for Greater Kuala Lumpur, the project was later expanded to include Pines Bazaar and Ang Seng Development.