Kiyosaki advises Andaman investors to invest for cash flow

Andaman Group and their property buyers have been given the rare chance to meet wealthy self-help author and financial literacy activist, Robert Kiyosaki during a gathering held at The Summit Hotel Subang Jaya on Monday.

Hundreds of avid investors showed up at the event, during which Kiyosaki conducted a book signing for his recent work ‘Unfair Advantage: The Power of Financial Education'.

The author of ‘Rich Dad Poor Dad' shared that he started small in the property scene - a small condo in the 1970s and thanks to careful planning and asset management, his wealth eventually grew.

In the same manner, Andaman Group has implemented principles such as good property management and smart property development to become what it is now. Today, the company offers Guaranteed Rental Returns (GRR) Serviced Apartments, which provide investors with low investment capital outlay, secured rental yield and significant value appreciation, all at the same time.

It also eliminates the hassles of managing one's own property because Andaman will be managing them, with options ranging from six years, 10 year or 25 years leasebacks.

Datuk Dr Vincent Tiew, Head of Sales and Marketing at Andaman, said "the eight percent Guaranteed Rental Return package which is higher return than financial institution's fixed deposit rate."

Kiyosaki also noted that he has weathered the US property recession because he invests in property "for cash flow not for capital gain," investing in residences located near places with job opportunities and increasing populations. Explaining the key to successful property investment, Kiyosaki said that "assets put money in your pocket and liability take money from your pocket".

Likewise, Andaman believes in this principle, hence builds projects near colleges or CBDs where rental demand is strong, recurring and secured.

Malaysia surpasses China as largest Singapore property buyers

Malaysian buyers have overthrown the Chinese from the top spot among the largest foreign property buyers in Singapore.

According to a recent report by DTZ Research, Malaysians recorded a total of 362 transactions, marking a 28 percent share among foreign buyers, which may be attributed to the larger number of Malaysian Permanent Residents (PRs) in the country.

On the other hand, the Chinese, including permanent residents (PRs), acquired only 292 homes in Q1, which is 54 percent down from the 640 homes in Q4 last year, aside from being the lowest volume in over two years.

Consequently, the proportion of Chinese buyers relative to non-Singaporean buyers dropped to 23 percent from 29 percent from the last quarter, which is the sharpest decline among all foreign nationalities.

Figures have soared for Malaysia amid the cooling measures introduced in December, which included a 10 percent ABSD (additional buyer's stamp duty) to all home purchases made by foreigners. Meanwhile, PRs were required only an extra three percent on their second and subsequent home purchases.

As a result, demand from non-permanent resident foreigners bottomed 75 percent to 336 units only, or a three- year low of just six percent. The remaining 78 percent accounted for Singaporean buyers while 16 percent went to PRs.

The DTZ noted that the decline in proportion of foreign purchases post-ABSD was more drastic compared to 17 years ago when a major policy change was rolled out. In Q3 1996, foreign purchases fell by a smaller percentage, 57 percent, following the government's restriction on extension of loans to PRs and foreigners.

Riverson to be KK's latest landmark

Extracted from Sabah Times on 8th November, 2011

KOTA KINABALU: The city will get another new landmark when the Riverson project is completed in 2014.

The Riverson, costing some RM590 million, is a mix integrated commercial development, strategically located along the coastal highway of the city here.

The dazzling development which has commenced is sited on 5.5 acres of prime commercial land and is just 10 minutes away from Kota Kinabalu International Airport.

It is perched within the central business district, offering marvelous seaside views and the blue waters of the bay beyond the Tunku Abdul Rahman Islands, said Riverson Corporation Sdn Bhd, managing director Ben Kong.

The development is consisted of four main pillars-The Gleneagles Kota Kinabalu Medical Centre, Riverson Walk (three-storey of retail shops), Riverson Suites (a tower of six-storey office suites with mezzanine floor) and Riverson SoHo (a seven storey tower of SoHo units with mezzanine floor).

The Gleneagles is expected to contribute to the development of the medical tourism targeting patients from Indonesian cities such as Balikpapan, Pontianak in Kalimantan and from Brunei Darussalam, as well as neighbouring countries such as Philippines, Singapore, Hong Kong and even Korea, he remarked.

“There will be a focus on setting up specialists centres such as cardiology/cardiac surgery, neurosurgery, surgery, orthopaedics, gastroenterology and women & chidren,” he said.

The standard of the hospital is in compliance with the Joint Commission International and adhering to local and national regulations has a capacity of up to 250 beds, 180-seat auditorium, large operating complex, 24-hour Accident & Emergency Department and Trauma & Intensive Care Centre.

“The hospital will create some 1,000 jobs and can accommodate 95 specialists. It is important to have a hospital in the city for the convenience of the tourists,” said Ben, who has more than 15 years of experience in property development.

The facility will also cater to the growing healthcare needs of the residents in Kota Kinabalu and its surrounding areas in Sabah and will also compliment to serve as one of the main private referral centre for Sabah, he said.

The Riverson Walk consists of 247 retail outlets with sizes ranging from 100sq ft to 937 sq ft a unit.

“It is ideal for small boutique retail businesses-a concept similar to Singapore’s famous 313@Somerset, Orchard Road and Empire Subang,” said Ben, who is formerly the executive director of Wah Mie Group for 11 years where he oversaw the construction of Sutera Harbour Resort and Grace Ville Kota Kinabalu.

The F&B and al-fresco cafes to be open there will be carefully selected to let patrons to dine, hang-out, relish and enjoy over good food in chic surroundings, he stated.

The Riverson SoHo is designed with contemporary architecture with modernistic taste which consists of only a block of 152 units of one to two bedrooms suites and duplexes with double volume living space, with size ranging from 530 sq ft to 1,775 sq ft.

It comes with swimming pool, gym, function room, a common garden, security surveillance, and own private drop-off area and lift lobby, he added.

The Riverson Suites offer a flexibility of space where one could have an option of owning a customizable corporate suite of 1,000 sq ft, or half a floor, and even the entire full floor of some 20,000 sq ft.

Overall, he said Riverson offers investors a whole new all-rounded urban lifestyle development under one roof.

“It will bring about substantial integration of activities and continuous crowd movements, served and generated by about 900 residences, over 600,000 sq ft of commercial retail outlets, about 800,0000 sq ft of office space, more than 6,000 car parks and more than 12 hotels in the vicinity; offering no less than 15,000 job opportunities into the market,” said Ben.

Riverson’s development is poised to be in-line with its neighbouring landmarks – Sutera Harbour Golf & Country Club, KK Times Square I & II, the upcoming transport-interchange station, Wawasan Plaza, Harbour City and the new Ming Garden Hotel.

“Together they will form the new KK Southern City Hub, which had been touted as the Orchard Road of Kota Kinabalu,” said Ben.

The whole development was further boosted when Danajamin Nasional Berhad sealed an agreement with Riverson to provideRM200 million five-year Private Debt Securities programme on August 2, this year, said Ben.

The bond programme has been rated AAA by Malaysian Rating Corporation Berhad, he said.

Danajamin Nasional Berhad (Danajamin)

Danajamin Nasional Berhad (Danajamin) is Malaysia’s First Financial Guarantee Insurer. We were established in May 2009, to be a catalyst to stimulate and further develop the Malaysian bond/sukukmarket. We provide financial guarantee insurance for bonds and sukuk issuances to viable Malaysian companies to enable access to the Private Debt Securities (PDS) market.

Jointly owned by Minister of Finance Incorporated (50%) and Credit Guarantee Corporation MalaysiaBerhad (50%), Danajamin is rated AAA by both RAM Rating Services Bhd (RAM) and Malaysia Rating Corporation (MARC).

We have an issued and paid-up capital of RM1 billion and another RM1 billion callable capital. Our underwriting capacity is up to RM15 billion.

Danajamin is licensed under the Insurance Act 1996 and are regulated and supervised by Bank NegaraMalaysia.

Malaysia is home to some of Asia's happiest millionaires

Malaysia, Indonesia and Thailand are home to Asia's happiest millionaires while those in Singapore, Hong Kong and South Korea are the least content, according to a new report.

The findings, part of the Futurepriority Report 2012 and published by Scorpio Partnership and supported by Standard Chartered Priority Bank, gathered views from individuals worth more than US$1.4 million (RM4.4 million).

"The results are striking. The Malaysian, Indonesian and Thaimarkets have shown positive exuberance in these tough markets when it comes to wealth creation, and is matched only by Indian millionaires. The linkage between happiness and confidence in wealth creation ambitions is significant," said Catherine Tillotson, Managing Partner at Scorpio Partnership.

In a report by CNBC, CEO of Wealth-X Mykolas Rambus said, "Despite the pessimistic economic outlook and global challenges, Southeast Asia continues to be a major growth area when it comes to ultra high net worth individuals (those worth more than $30 million [RM94 million]). Wealth-X uncovers new ultra rich in Malaysia and Indonesia on a daily basis." 

Some 89 percent of the 2,800 survey participants wanted more guidance about how to manage their investments, while 86 percent specified a need for more education about how best to manage their wealth.

Banks dominate when it comes to money management, with 69 percent of Asia's wealthy having this relationship. Financial advisors, online investment firms, private banks and wealth advisors all jostle for second place in terms of popularity.

Paradigm Mall, first of more to come from WCT

WCT Bhd gears up to boost its existing portfolio of properties with the addition of two more shopping malls that are expected to provide a steady stream of income for the group.

The company unveiled its maiden retail project, dubbed the AEON Bukit Tinggi Shopping Centre, back in 2007 and is now leased to retailer Aeon Co Bhd.

The second retail project, which was launched yesterday, is the Paradigm Mall, while the third mall at the KL International Airport 2 (KLIA2) integrated complex is scheduled to open by April next year, said Choe Kai Keong, Executive Director at WCT.

"We will be managing the 350,000-sq-ft shopping mall ourselves. Meanwhile, the fourth mall will be part of a 60-acre mixed development in Overseas Union Garden with an expected total gross development value of RM4 billion."

"We are in the midst of acquiring the land now," he said at the launch of Paradigm Mall in Petaling Jaya.

Ben Chong, General Manager at WCT Land Sdn Bhd, noted that Paradigm Mall will be managed by WCT itself.

"After the experience and learning curve of our first mall in Bukit Tinggi, we are now prepared to manage a mall on our own. This would allow us to have the ultimate control on rental rates and other extra income generation."

Featured Article from Sabah Property Magazine - Canggih Heights

Extracted from www.sabahproperty.com.my

Welcome to a world of sophistication at Canggih Heights. Canggih, a Malaysian word that embodies chic sense of style and new sophistication will be the name of an upcoming residential development project situated off Jalan Tuaran By-Pass on the West Coast of Sabah.

Located on a pristine hillside just 15 minutes drive from Kota Kinabalu city centre, this new 12-storey condominium will offer 92 exclusive units for house buyers who value living in a peaceful enclave within a low-density development. Canggih Heights will be a sanctuary of comfort and leisure for its residents, a place to unwind, away from the hustle and bustle of Kota Kinabalu city.

The piece-de-resistance of Canggih Height’s architectural façade will be a mirror-like, full-height reflective glass panel at the central helm of the building, which will reflect the different moods of the sky and lush views surrounding this new residential development.

As one ventures through the lobby, the charming and thoughtful facilities prepared exclusively for the residents of Canggih Heights will also be conversation starter; this upcoming condominium will incorporate a Karaoke Room as well as a mini-theatre catered for movie lovers.

The mini-theatre facility also acts as a community space, where children can bring their friends to watch cartoons on the big screen as well as for neighbors to watch televised sporting events such as the Olympics, or the soccer World Cup together with like minded friends and family.

A table tennis recreation area will be made available for students to unwind after a busy school day, while a multi-purpose hall will also be built into the condominium’s design to cater for its residents’ private functions, family gatherings, birthday parties and special occasions that one would like to spend with their loved ones.

Designed as a place of tranquility and leisure, first-time visitors to Canggih Heights will be greeted by an interesting sight - a mini putting green area built specifically for golf aficionados to practice their skills at 1st Floor Level, above the Lobby Entrance. This oneof- a-kind architectural feature will most certainly leave a lasting impression!

The residents of Canggih Heights will also have access to their own leisure and recreation facilities such as a beautiful 49’ x 25’ swimming pool facing the mountainside, with an ‘infinity’-edged border that cascades into a 5-metre waterfall at the side of the pool! This peaceful, relaxing atmosphere will be enhanced by the landscaping features of the condominium’s open spaces; twin mini-maze gardens designed for young children to experience nature with their parents. The adventurous setting of the mini-mazes will be further complimented by a children’s playground, complete with a slide and swing set to create a wonderland of fun and delight for kids!

For the health-conscious, owning a residence at Canggih Heights means that they too, can enjoy the best of fitness and wellness facilities. A specially appointed gym room will be made available for working adults, housewives and students to sweat their way to a healthier lifestyle. And for those who love to entertain, a designated BBQ area will allow for friends and family to gather and bask in each other’s company whilst endulging in the sights and sounds of the swimming pool and the nature beyond.

Imagine waking up to a breeze of fresh ocean air and the smell of nature; higher units of Canggih Heights facing northwest and towards UMS will not only enjoy the spectacular sunsets of the Sabah’s West Coast Division, but may also be able to have potential views of the South China Sea! Whereas for the units facing southeast, the majestic panorama of Mount Kinabalu and its
soothing green mountainside ridges beckons every morning, heralding the dawn of each new day. With fully glazed windows facing towards both mountainside and coastline areas, Canggih Heights condominium presents an unique investment opportunity for future homeowners who can now enjoy the beauty of Sabah’s natural surroundings from the residential comfort of urban living.

For the condominium units at Canggih Heights, the minimum floor area is approximately 1,115 ft2 to 3,200 ft2 for the 5 units of duplex residences located on the 11th floor. The developer has taken special care to ensure only the best quality workmanship is provided for the construction of Canggih Heights, by appointing China Borneo Builders Sdn Bhd - a company reputed for its quality work - as their main contractor. Surface finishes of each residential unit will be set in 2’ x 2’ floor tiles for all common areas – living room, dining room and kitchen. Bedrooms will be laid with laminated timber flooring, while international quality TOTO brand sanitary fittings will be used for all bathrooms. All exteriors will be tastefully accented with ICI Dulux Weathershield wall paints.

Canggih Heights represents the best opportunity to invest in a condominium home in Kota Kinabalu, living in the lap of nature and luxury. With such a tagline it is an assurance that one’s notion of having a dream home is now within reach.

For interested parties, the Top Green Development (Sabah) Sdn Bhd Sales Gallery located on the Ground Floor, Shoplot No. 14 at Taman Canggih Commercial Centre, Jalan Tuaran By- Pass, Kota Kinabalu has on display, a scale model of the Canggih Heights condominium for the viewing pleasure of potential homeowners and investors.

The Sales Gallery is open daily from 9 a.m. to 5 p.m. and the public is more than welcome to come and have a first look at this upcoming new project.

Developer:

Top Green Development (Sabah) Sdn Bhd, No. 2, Lorong Kacang Tanah 1, Jln Kolombong, Kolombong 88450, Sabah, Malaysia

Tel: 088-386 999 Fax: 088-388 881

Sarawak properties offer good investment opportunities

Property prices in Sarawak are rising, giving investors ample opportunity to "ride the current property wave."

According to The Borneo Post, Datuk Amar Abang Johari Tun Openg, State Housing Minister, said that home prices in different locations are increasing, with a standard two-storey terraced house now priced from RM350,000 to RM400,000.

"It is worth noting that most of the new residential projects in the state's capital city (Kuching) are located further away from the city centre, like Jalan Muara Tuang, Jalan Kuching-Serian, Batu Kawa and Matang."

He noted that the launching prices of landed houses in Sibu have also climbed. On the other hand, semi-detached and two-storey terraced houses in Bintulu continue to be saleable and favourable products in themarket.

Looking forward, prices in Bintulu could be sustained or even rise, as shown by the upward correction in prices of properties that were launched previously.

"Over the long-term, we expect an increasing demand for houses due to several major on-going projects being constructed or in the pipeline under the Sarawak Corridor of Renewable Energy (SCORE) development area," he explained.

Meanwhile, prices of houses in Miri could remain competitive in 2012 and could increase further due to the higher cost of construction materials, labour and land.

Likewise, Sibu will continue to witness better demand for residential properties, particularly in prime and secondary areas. This demand uptrend is attributed to limited land availability near the town centre and the robust property growth in the Sibu Jaya Township.

He added that the Bintulu's property sector will continue to see active construction activity including low-cost houses. Moreover, double-storey semi-detached residences and double-storey terraced homes will still be the most saleable and favourable products in the area.

AEON plans expansion into Sabah, Sarawak markets

Banking on its proven management capabilities and strong branding, AEON Corporation (M) Bhd has revealed its plan to expand into Sabah and Sarawak markets.

In a report published by Maybank Investment Bank Bhd (Maybank IB), the markets in Sabah and Sarawak were not completely underserved, with the major players including Parkson Holdings Bhd (Parkson), Giant Hypermarket (Giant) and The Store Corporation Bhd (The Store).

AEON's strong branding of its Jusco outlets is expected to eventually work to its advantage in the two East Malaysian states.

"The group has not yet set any specific timeline for expansion, but market evaluation and feasibility studies have been carried out," it said.

AEON's foray into Sabah and Sarawak place it in direct competition with upcoming and current shopping centres.

"Presently there are only two big shopping malls in Kuching, namely, tHe Spring Shopping Mall (tHe Spring), which opened in January 2008, and the Boulevard Shopping Mall (Boulevard), which opened in December 2007 and is partially occupied by both Parkson and Giant," the research firm stated.

It added that four other malls were being developed in the states. CityOne Megamall, one of the four malls, is set to be the largest upon its completion.

Foreign investments shine despite bleak Eurozone crisis

Despite the ripple effect of the Eurozone debt crisis, Malaysian investors are still keen on overseas property markets, particularly, the UK, Germany and France, according to Business Times Malaysia.

Companies like Permodalan Nasional Bhd (PNB) and Syarikat Takaful Malaysia are just some of the Malaysian firms that are investing on overseas property markets.

PNB has recently acquired three properties in London - Milton and Shire House, 90 High Holborn and One Exchange Square - while the Syarikat Takaful Malaysia is presently seeking offices or commercial buildings in the capital.

Bindesh P Shah, Co-Founder of Amiri Capital, said the UK, especially London, is an important city among international investors looking to invest in commercial property markets.

This is attributed to the UK's good regulatory and legal infrastructure, along with highly-liquid property sector. These qualities make selling and acquiring properties both reliable and easy.

Aside from that, full repairing and insuring (FRI) leases in the country places the responsibility of up-keeping on the tenant, making property investments easy to manage.

"What it means is when you buy a building, every year, as the investor, as the owner of the building, your responsibility is just to make sure the building's there and collect your lease payment, but the responsibility for maintaining the building both inside and outside rests with the tenant," explained Bindesh.

"Whereas in many other markets, responsibility of the maintenance of the buildings still rests with the owner of the building."

He noted that although the Eurozone debt crisis created uncertainties among international investors, many investors fail to understand the diverse nature of the Eurozone.

"The debt crisis is referred to the European debt crisis when in fact it is a debt crisis of certain countries in Europe and so, not every country is in that crisis situation... Main economies in Europe including Germany and France, have strong fundamentals."

Conditions that can derail growth in the property sector

In my last article, I touched on two reports that offered a very positive outlook for the property market in Malaysia and its neighbours in this region.

According to the Malaysian Property Market Report 2011, the property sector recorded a significant growth in the five preceding years, and the value of property transacted and the number of transactions also rose substantially in 2011, compared with the previous year.

And according to the Asia Property Market Sentiment Report 2012, Malaysians were generally quite positive about the property market, with more than half expressing a desire to acquire new property in the next six to 12 months.

Sadly, these upbeat sentiments could all change as a result of recent events and some prevailing conditions if they are allowed to continue unabated.

The most recent is, of course, the Bersih 3.0 rally and the ensuing violence that have certainly raised a lot of concerns, at the very least, about conditions in this country.

It may still be too soon to realise the full impact of the April 28 event. Nevertheless, the experience of our northern neighbour should give us some invaluable lessons on how a prolonged open show of dissent and how the authorities deal with such incidents can have an adverse impact.

The Red Shirts and Yellow Shirts rallies that brought Bangkok to a standstill for months in 2010 and which eventually caused the downfall of Prime Minister Abhisit Vejjajiva, should offer some invaluable insights.

Of course we have to concede that the Bersih 3.0 rally was on a much smaller scale, and it lasted only for a day, so the effects would be dramatically different.

But incidents such as Bersih and the Anti-Lynas protest also bring to light how people power causes can sometimes be hijacked and be diverted from the real issue.

In the property sector, for instance, it is not uncommon to see groups banding together to object to one thing or another in an upcoming project even if all conditions are met.

Things are aggravated further by a lack of clear-cut guidelines on what is and is not allowed in a project. When guidelines are not clear, city or local council officials are inclined to make decisions based on political expediency. In such instances, investors or developers usually end up with the short end of the stick.

Then there is the personal safety issue. A day before Bersih, 12-year-old schoolboy Nayati Shamelin Moodliar was abducted while he was walking to school from his home in Mont Kiara, Kuala Lumpur.

Thankfully, the boy was released unharmed just over a week later upon payment of a ransom. All the same, the incident has certainly raised concerns about the level of security in the Mont Kiara area.

Indeed, the police may tout facts and figures on how much the crime index has dropped over the years, and how safe the streets are now. But the reality is that parents are still worried and anxious about letting their children out of the house, and out of sight.

Another urban centre where personal security is an issue is Johor Baru. We may not like it that the Singaporeans complaint about rampant carjacking when they visit Johor, but we cannot deny that these things happen.

Apart from these, we are constantly being tested by natural disasters that rock this region. While Malaysia is not located in the Ring of Fire, the 2004 tsunami and occasional tremors only show that we are not exactly a safe distance from a major disaster.

Then, there are the man-made calamities floods and landslides caused by irresponsible and uncontrolled interference in the natural landscape.

What, you may wonder, do all these have to do with property' Put simply, disturbances of any kind public show of dissent, criminal activities or natural disasters are not good for the economy and, by extension, for the property market.

As mentioned earlier, we have done fairly well over the past few years. The economy has been growing at a steady pace, and property was selling well.

Many homebuyers have seen their investments record substantial increases in value in the secondary market, and are still looking forward to bigger gains.

However, this feel-good factor can very easily be reversed by any number of developments groups taking the law into their own hands, street crimes, another big natural disaster or worse a man-made calamity.

How well are we dealing with all these conditions' Are the authorities making the right moves' Do we continue to pander to the loudest voice, never mind what is right or wrong'

Value, location and design are no longer the only considerations when we look for a new home to buy. The security situation has also become a prime consideration.

We also now have to check if our new home is located in a flood-prone area, or if we are likely to feel an earth tremor.

The property sector is already facing so many challenges.

Recently, Bank Negara introduced stricter lending guidelines that substantially reduced the quantum of loan an individual could qualify for. That essentially means that fewer people will be able to get loans and among those who still qualify, the amount they can get will be much lower.

The impact will be significant and it may take some time before the market adjusts to the new lending regiment.

At the same time, costs to the developer continue to rise. Land prices, particularly in urban areas, are going up. The cost of building materials have been increasing over the past few years and is expected to rise further. The cost of labour has also risen.

Anymore uncertainty in the political front, or concerns about personal safety, will only make things worse. We cannot afford to continue on this road.

Teh Lip Kim is the MD of SDB Properties Sdn Bhd, a lifestyle property company. Bouquets and brickbats are welcomed. Send by e-mail to md@sdb.com.my.

By The Star

Deed of Receipt & Reassignment

This deed of receipt and reassignment is to be completed by the lender upon repayment of the loan. It releases the borrower from all agreements and reassigns the property to the borrower.

Home prices fall in 60% of big Chinese cities

Prices for new homes in China fell in more than 60 percent of major cities in April from March, the government said Friday, as moves to curb the property market took effect.

Out of 70 major cities tracked by the government, 43 registered month-on-month falls in house prices last month, although that number was less than the 46 cities recorded in March.

Prices were unchanged in 24 cities in April while only three cities saw price rises, the National Bureau of Statistics said in a statement.China has implemented several measures aimed at limiting runaway property prices for more than a year, including bans on buying second homes, hiking minimum down-payments and introducing property taxes in certain cities.

Despite worries about the impact on the economy, authorities have shown little sign of easing their tight policies."We must firmly strengthen control of the property market... not allowing the adjustment and control (policy) to be reversed," a senior housing ministry official said in comments published Friday.

Zhang Xiaohong, deputy head of the ministry's market supervision department, said the goal was to return prices to "reasonable" levels, the official Securities Times newspaper reported.China recently announced a slew of disappointing economic figures for April, prompting the government to cut the amount of money banks must keep in reserve in a bid to boost lending -- and therefore growth.

Property investment also helps drive growth and land sale revenue is a key source of income for local governments.

But analysts said little change in government policy was expected in the short term."The adjustment of home prices is still in the middle of a long cycle.

We expect home prices to remain weak in the coming months," Zhang Zhiwei, chief China economist for Nomura Securities, told AFP.

Sarawak, Sabah poised for more investments

Improved infrastructure and the availability of land, coupled with abundant supply of affordable energy, have made Sarawak and Sabah prime for investments, according to a report by Bernama.

Creating an industrial ecosystem, these factors are attracting more foreign companies looking for education and investment opportunities in this part of Malaysia, said Mark Burgess, Vice President for Malaysia and Indonesia at BAE Systems.

"East Malaysia is very dynamic and ambitious and we can allow ourselves to think in the same way. We have high aspirations for this east Malaysian marketbecause we can use this market to work with the rest of the region," he said during his recent visit to the state.

Burgess' three-day visit to Labuan, Sarawak and Sabah, aims to explore the educational and industrial opportunities that the company could venture into.

He explained that one of the firm's goals in this part of Malaysia is to empower small and medium enterprises (SMEs) with the know-how and technology that BAE Systems could offer.

"What we've added to our industrial approach in Malaysia is that we are now more engaged with the SME community because there are some real capabilities out there, capabilities that we can make use of or the technology and know-how that we have that the SMEs can make use of."

As experienced in other countries where the company also operates, SMEs require assistance in terms of global market access and project management, he noted, adding that BAE Systems will also discuss its long list of projects to the relevant authorities and will seek suitable companies to work with.

"Some of the work we want to look into is to get some of the Malaysian industries involved in our global supply chain for requirements all over the world."

Burgess added that Malaysia is one of most successful economies in Asia for over 20 years, saying "most of that can be attributed to the very strong and enduring ties between the UK and Malaysia in terms of strong defence relationship."

Najib ill-advised on ‘ridiculous’ first home scheme, says house buyers’ group

File picture of new homes. A person earning RM3,000 a month can’t afford a RM400,000 house.

KUALA LUMPUR, March 9 — A house buyers’ group has labelled the My First Home scheme an “ill-advised” policy after it was reported this week that not a single loan application has been approved under Putrajaya’s home ownership scheme for low-income earners.

The scheme, launched by Datuk Seri Najib Razak a year ago, has come to a grinding halt as banks are unwilling to hand out 100 per cent financing for property worth up to RM400,000 to applicants earning less than RM3,000 a month.

National Homebuyers Association (HBA) honorary secretary-general Chang Kim Loong toldThe Malaysian Insider that setting a ceiling of RM400,000 under a scheme for “affordable housing” was “ridiculous and somebody must have told the prime minister the wrong facts.”

“It is obvious that our honourable PM was ill-advised by parties with vested interest on setting the price range of RM400,000 for income earners below RM3,000,” he said in an interview.

He said the association had run checks with banks and found that most applicants were those who have been blacklisted or lack proper proof of income.

“The feedback was simply that if people can’t afford it, then don’t buy. How can you take a 100 per cent loan for such an amount without commitment?” he asked.

Chang said that a 20-year loan of RM400,000 at the industry standard two per cent below base lending rate would require a monthly repayment of RM2,552, or 85 per cent of RM3,000.

He added that a 30-year agreement would still require monthly instalments of RM2,051 or 68 per cent of RM3,000.

The scheme’s website also states that to qualify for the programme, the repayment commitment cannot exceed 55 per cent of the applicant’s gross income.

“It is not surprising there have been zero approvals as borrowers would be living beyond their means and default in a matter of time.”

He said that based on Bank Negara’s guidelines that loan repayments cannot exceed one-third of income, the ceiling for the scheme should be set between RM150,000 and RM180,000.

The prime minister announced in October when tabling Budget 2012 that the initial RM220,000 ceiling would be raised to RM400,000 as property prices continued to spiral.

The government had earlier said that a state-owned mortgage agency would put up the initial 10 per cent deposit required to purchase the houses.

Chang suggested that if the government was serious about affordable housing, it should “go into a joint venture with reputable developers and not cronies” that want to keep prices closer to RM400,000.

He said the government should write-off land cost by “unlocking strategic locations” such as its landbanks in Sungai Besi and the Rubber Research Institute’s acreage in Sungai Buloh.

“Instead of pushing for these lots to be ‘high-value,’ go for affordable housing,” he said.

Chang added that qualified applicants must live in the homes bought for at least 10 years and only be allowed to resell them to the government so it can then be reallocated to “the next generation of qualified buyers who need affordable housing.”

Property prices in urban areas, such as Penang and Kuala Lumpur, rose by up to 40 per cent in 2010, fuelled by low interest rates and a surge in speculative buying, although prices grew slower last year due to dampened sentiment from tightening measures such as a hike in the real property gains tax for early disposals.

Some reports have also estimated that property prices jumped from 5.9 times income in 1989 to 10.9 times in 2010.

The Demographia International Housing Affordability Survey rates markets whose property prices are 5.1 times median income or more as “severely unaffordable”.

The HBA last year warned that an entire generation of young adults are at risk of being locked out of the property market due to runaway house prices.

Almost half ineligible for My First Home scheme loan, say BNM

March 14, 2012

The scheme aims to allow young working adults to obtain 100 per cent financing from banking institutions for the purchase of their first home.

KUALA LUMPUR, March 14 — Nearly half of the 1,624 applicants thus far have been found ineligible for loans for the My First Home scheme while slightly more than one third were approved by banking institutions for houses up to RM400,000, Bank Negara Malaysia (BNM) said tonight.

To qualify, applicants need to prove they can meet their debt obligations by showing evidence of a sustainable income and a good credit history. The national mortgage corporation Cagamas provides a guarantee for the first 10 per cent of the loan.

“The intention is to ensure young borrowers are not over-burdened by debt obligations that may lead to bankruptcies or foreclosures,” BNM said in a statement.

The central bank’s latest figures on the progress of the scheme, as of end-January, revealed that 1,624 people had applied for the scheme. However, 562 were withdrawn due to multiple applications to various banking institutions.

From a total of 1,062 actual applications, 389, or 36.6 per cent, were approved by banking institutions with 280 getting their 10 per cent deposit guaranteed by Cagamas, while 505, or 47.5 per cent, were rejected. The remaining 168 applications, or 15.8 per cent, are still being processed.

The scheme was launched in March 2011 and aims to allow young working adults to obtain 100 per cent financing from banking institutions for the purchase of their first home, valued at a maximum of RM220,000 (for single applicants) or a maximum of RM400,000 (for joint spousal applicants with a household income of below RM6,000 per month cumulatively).

Chinese-language daily Sin Chew Daily reported in March that the home ownership scheme for low-income earners has come to a grinding halt just a year after it was launched as banks are unwilling to risk loans with monthly repayments worth more than half the applicant’s salary.

The daily said that a 30-year-loan for RM400,00 with a 4.3 per cent interest rate would require a monthly repayment of RM1,780.

“The banking industry finds that with an income of RM3,000, they do not qualify for RM400,000 loans,” it reported, adding that not a single loan under the scheme has been approved.

The scheme’s website also states that to qualify for the programme, the repayment commitment cannot exceed 55 per cent of the applicant’s gross income.

The newspaper also quoted an industry source as saying that “even if the loan is for 80 per cent, the buyer must pay a deposit of RM80,000 and many cannot afford to pay this.”

Commercial property loans 22.7% higher

PETALING JAYA: Credit for the purchase of commercial properties in March grew by 22.7% year-on-year, raising concerns in some quarters of a potential asset bubble.

This loan growth in the non-residential sector, which includes industrial and commercial properties, was the highest followed by credit growth for the construction sector at 19.2%.

Meanwhile, loan growth for purchase of residential properties in March had somewhat moderated to 13.9% year-on-year.

“Starting from the end of 2009, there has been a big loan growth in the non-residential sector,'' Pong Teng Siew, head of research, InterPacific Research, said. “The pick-up in loan growth in this sector was evident in the second half of 2009.''

Illustrating the rapid pace of loan growth, the total stock of loans in the non-residential sector has grown from RM70bil in June 2009 to RM116bil currently, or 66%.

“This is faster than for any kind of loans,'' said Pong. “Can this pace of loan growth be sustained?''

“At the moment, demand for non-residential properties is a reflection of the strength of the economy,'' said Pong. “If there is a lot of demand for office space, then the 66% growth would be a reflection of the confidence in take-up.''

However, a note of caution is that projections of strong demand usually lead to overbuilding, and eventually an oversupply situation.

The presence of too many listed property and construction firms also places pressure on the need to grow profits.

“The non-residential sector has grown significantly but the bulk in value is still in residential which comprised 28% of total loans in March,'' said Low Yee Huap, head of research, Hong Leong Investment Bank.

“Meanwhile, non-residential properties made up only 11% of total loans in March.''

Over the past few years, a low interest-rate environment and accumulation of liquidity has encouraged the buying of shophouses and offices, while some high-rise buildings come with commercial titles.

“But if the situation (of rapid loan growth) gets out of hand, it will cause a potential bubble,'' said Low. “There needs to be a balance for healthy growth.”

Recently, there has also been a lot of non-residential launches. Moreover, the purchase of non-residential properties is not subject to the loan-to-value cap.

“It's become a trend now for commercial launches, with smaller commercial units and sohos being built for affordability.

“It is more a matter of market forces and changing of customer preferences,'' said Chan Ken Yew, associate director of Kenanga Investment Bank Bhd and head of its research division.

By The Star