Complete Property Market Updates of Singapore

The success of Malaysia’s Iskandar Development Region (IDR) in Johor state hinges on Singapore’s participation, the executive director of Malaysia’s Institute of Economic Research (MIER) was quoted as saying on Wednesday.

Hence it does not make economic sense for Malaysians to discriminate or be prejudiced against Singapore with regard to the IDR, Mohamed Ariff Abdul Kareem said in an interview with Oriental Daily News published yesterday.

To do so would result in geopolitical struggles obscuring the vision for the IDR, the daily quoted him as saying.

He pointed out that apart from attracting RM4.1 billion (S$1.78 billion) worth of investments from the Middle East, the IDR has not received any other prominent foreign investments. Malaysia needs Singapore more than the Republic needs Malaysia, he said.

‘It is not that Singaporeans are staying away, but Malaysians themselves are harbouring suspicions and doubts and creating problems, and some politicians are doing such things,’ he said.

He added: ‘The IDR is not a zero-sum game; it is a positive game. If it is Singapore’s game, it is also Malaysia’s game. We want to create a win-win situation.’

Mr Mohamed Ariff said the success of the IDR would hinge on Singapore’s participation. It would not take off if response from the Republic was cool.

He explained that the mega projects under the IDR were important in two ways. Firstly, they would create more investment opportunities and, in particular, prompt local investors to stay and boost the local economy.

‘The Malaysian economy is too dependent on the domestic sectors. If local market conditions are resilient, they will ensure that the economy is protected and is not easily affected by external upheavals. These IDR projects will create opportunities to secure local investments, and there will, of course, be opportunities for the inflow of foreign investments,’ he said.

Secondly, he pointed out that the development of the various corridor projects would spill over to other parts of the country and not be restricted to the Klang Valley alone while neglecting other areas.

Source : Business Times - 12 Oct 2007

THE first section of Malaysia’s planned Iskandar Development Region, across the straits from Singapore, was yesterday identified for special incentives for approved companies.

It is called Node 1 and covers 96 million sq ft - 8.9 sq km - of greenfield waterfront land between the Johor state new administrative centre and the second crossing to Singapore.

The IDR-status companies for Node 1 must operate in six specific service sectors, as announced in March: creative industries, education, financial advisory & consulting, healthcare, logistics, and tourism. The first package of incentives, which includes 10-year income tax exemptions for certain qualifying activities, will be extended to approved developers and approved development companies as well as IDR-status companies.

Approved developers are those acquiring sub-lease rights to lands within Node 1, while approved development managers are those sanctioned by the developers. In effect, these would be companies which acquire some interest in the building or management of components within the node.

The first node which has already attracted some Middle Eastern investment, is envisaged as a comprehensive development including leisure, residential, financial and high-end industrial components.

Yesterday, Prime Minister Abdullah Ahmad Badawi indicated that the government was also prepared to consider ‘customised incentive packages’ for bigger investors with specific needs.

Mr Abdullah told a press conference in Putrajaya after he co-chaired the third Iskandar Regional Development Authority board meeting: ‘If it is important to do that, we certainly can (consider). The point is we can have discussions with them to decide.’

Malaysia is actively promoting the IDR - which is intended eventually to cover an area about three times the size of Singapore - as a new economic zone for the country and surrounding region.

Some RM4.3 billion (S$1.8 billion) would be injected by the government into infrastructure development for Node 1, and with an estimated RM40 billion required in the first five years alone, huge levels of private investment are needed to drive the plan.

In August, the IDR received its first major boost when four Middle Eastern groups - Aldar Properties, Mudabala Development Company, Kuwait Finance House and Millennium Development International Company - committed about RM4.1 billion to develop the whole area of Node 1 into various themed zones that would include lifestyle, cultural and financial districts.

Source : Business Times - 10 Oct 2007

CHRISTOPHER BOYD sees more upside potential in the high-end residential market as demand pushes prices to ever-higher levels

THE residential market in Malaysia can best be described as well taken care of at the lower end, and, at long last, in a state of broad equilibrium at the middle levels. The excitement, such as it is, can mainly be found at the top end, which is the main focus of this article.

The Klang Valley these days covers an enormous area from Ampang in the northeast through Kuala Lumpur and on westwards towards Klang and Port Klang. It includes a great many suburbs within reasonable access of this east-west axis and since the whole valley lacks a formal definition, it is reasonably susceptible to hijack by those suburbs on the fringes. By our calculation it contains about 1.4 million dwelling units, of which half are landed, and half high-rise.

Last year, turnover was (in KL and Selangor, pretty much the whole Klang Valley) 57,151 units (Malaysia in comparison: 144,224 units) and the year before 50,715 units (Malaysia:153,315.) About 7 per cent of this turnover was new dwellings. Across the board, as at Q1 2007, the Klang Valley (KL and Selangor) had some 236,998 new housing units under construction and another 186,572 approved but not started yet; an indication of the fast growth rate since an ‘overhang’ of unsold units is barely an issue.

The number of completed condos in the best residential areas and priced at over RM500 per square foot amounts to 4,479 units, with a further 9,872 under construction.

There has been some concern that these top-end projects may be in oversupply, but the majority have met with a ready market, spurred early this year by the suspension of decades-old real property gains tax.

Global draw

The luxury condominium market has international appeal and buyers include the Irish and Middle Easterners, as well as expatriates in Hong Kong. Meanwhile, the Koreans have recently come into the market quite strongly and, who knows, it may soon be the turn of the mainland Chinese. There are no restrictions on the purchase (or resale) of most Malaysian residential property; you get a clear title and loans are freely available locally.

The market has moved up quite strongly over the past two years. Buyers of One KL facing the Petronas Twin Towers who were lucky enough to pay RM1,000 psf last year can now resell their units at twice that value - and the building is still under construction! The project is a development carried out by Malaysian tycoon Chua Ma Yu.

Purchasers of the nearby Marc Residences, a development by Singapore’s CapitaLand, who paid RM600 psf three years ago, are now taking possession of their completed units and getting offers of RM1,200 psf. The developers of the luxury Troika, within the vicinity of the Kuala Lumpur City Centre area, sold for an average of RM1,000 psf at its launch in 2005. The balance of unsold stock was re-priced early this year with a price tag of up to RM2,000 psf to keep pace with the market.

Is there any more upside potential? Will the madness continue? We don’t see why not. Interest rates are low, demand is high and supply, although increasing, is limited. Yields may fall as values rise, but we do not see this as dragging values down. Our experience in the region has shown that yield expectations from top-end residential property are not high. A rental of RM25,000 (S$11,000) a month from a condominium worth RM6 million is still 5 per cent, better than the deposit rate and offering the possibility of growth.

A far greater threat to long-term value is the quality of the proposed management and investors should check this carefully.

In Penang, the mood is bullish and upbeat with the announcement of the Northern Corridor Economic Region and with it, the Second Bridge, Outer Ring Road and monorail. These government initiatives have shaken the cobwebs off a moribund market and given it a new lease of life.

Luxury developments such as The Sanctuary in Batu Uban, Moonlight Bay in Batu Ferringhi, and Seri Tanjung Penang, a reclamation project in Tanjung Tokong have all reported over 70 per cent sales. The proposed Penang Global City Centre, launched on Sept 12, will bring new focus to Penang Island and will inevitably benchmark residential values which, at the moment, are stuck at around RM400 psf for top-end condos.

Johor, much like Penang, was a stable, well-supplied market with no discernable trends until the recent unveiling of the Iskandar Development Region turned it on its ear. The recent announcement of a RM4.1 billion investment by a Middle East group in the region has created excitement and done much to convince the sceptics.

Property prices are reacting accordingly. A three-bedroom apartment in Danga Bay, facing Singapore, which would have sold for RM250,000 in 2005 is now worth RM300,000. Newly-launched detached houses in Casa Almyra overlooking the proposed Integrated Leisure Resort were recently snapped up at prices from RM900,000 to RM1.6 million.

The main growth areas are seen to be within the vicinity of the Second Link to Singapore and the area around Aeon Tebrau City known as the Tebrau Corridor.

Johor Bahru residents can look forward to the creation of a new class of residential accommodation in response to the international attention now focused on their city.

The writer is executive chairman of ReGroup Associates

Source : Business Times - 27 Sep 2007

If Singapore developers are more your cup of tea, Keppel Land (KepLand) has teamed up with partners to develop a 500ha residential township in Johor.

Named Taman Sutera, the project is centrally located near the Johor Baru City Centre and the upcoming Danga Bay waterfront city.

It will have homes and shops as well as recreational facilities spread over two zones: Taman Sutera and Sutera Utama.

So far, 2,439 units have been launched for sale with 89 per cent already snapped up, KepLand said.

The development offers several home types. In Sutera Utama, which has 24-hour security, single-storey terraces with about 1,900 sq ft of built-up area are going for as little as RM299,000 (S$132,300).

There are also bigger terrace houses at up to 3,200 sq ft, costing from RM446,200.

Also on sale in Sutera Utama are two- or three-storey semi-detached houses, with built-up areas ranging from 3,600 sq ft to 4,300 sq ft. The double-storey houses cost from RM698,000 while the triple-storey ones start from RM748,000.

Source : Sunday Times - 5 Aug 2007

TWENTY minutes away from the Johor Baru city centre is the township of Taman Perling, on the border of the Nusajaya region.

Launched in the 1980s by developer Pelangi Berhad, Taman Perling covers 373ha and comprises 9,924 homes.

Of these, 80 per cent have been sold and built.

Residents can enjoy a shopping mall, cinemas and banking facilities, all located within the township.

Pelangi is constructing a new phase of 118 double-storey terrace homes in the development, to be completed by the middle of next year.

Two types of terraces will be up for sale: the smaller ones will have 2,124 sq ft of built-up area and cost from RM288,000 (S$127,400).

Bigger units will be built up to 2,351 sq ft and start from RM302,000.

Pelangi will also launch a gated and guarded community of 116 double-storey homes next month. Prices for these houses are expected to be around RM380,000 for a standard intermediate unit.

Source : Sunday Times - 5 Aug 2007