Melbourne identified as one of the top cities in the world in which to invest

March 1, 2017 | Commercial Real Estate 2017-04-20 00-41-07.jpg

Melbourne’s controversial Fishermans Bend urban renewal precinct has been instrumental in making the city one of the top investment hotspots in the world, according to a new global report.

It joins the US cities of Austin, New Mexico, Miami, the Dutch city of Amsterdam, Germany’s Berlin and India’s Bengalaru on the list of cities identified in Knight Frank’s 2017 Wealth Report as presenting “exciting opportunities for private property investors in 2017”.

Melbourne’s growing population, projected to overtake Sydney’s by 2036, a 24 per cent increase in the number of workers based in the inner city in the past decade and consistently high performance in liveability indexes were other reasons for its attraction for investors, the report found.

The seven cities were identified as places “that are leading the way in developing a compelling mix of education, lifestyle, infrastructure, technology and real estate and, in the process, becoming the kind of vibrant, attractive locations where people want to work, shop, play and live”.

Fishermans Bend, along with other major mixed use renewal schemes, is set to continue Melbourne’s trend towards inner-city living and boosting office supply, according to the report.

The emergence of these projects “provides investment opportunities of a scale and diversity to appeal to large investors”, helping Melbourne remain a “primary location for global and domestic capital”, according to Knight Frank’s report.

Fishermans Bend involves the redevelopment of 450 hectares of previously industrial area in Port Melbourne and will be home to 80,000 residents and a working population of 60,000 by 2046, according to the report.

The project has been the subject of heated political argument, especially over height restrictions on new developments in the precinct.

The same report also identifies Australia as the eighth most-likely country to attract wealthy private investors.

And it found that diversification was the key reason these investors put money in to commercial real estate globally.

The report also nominated urban logistics’ sites as the commercial asset class to watch in 2017, as the increasing demand caused by the rise in online retailers contributed to a global shortage of these sites.

“Strong structural occupier demand and significant restrictions on suitable supply, combined with the opportunity to gain exposure to land in growing cities, make for a very compelling story,” the report said.

Undersupply of affordable houses seen to worsen

Friday, 24 March 2017 | The Star

PETALING JAYA: The undersupply of affordable homes in the local property market is expected to worsen, going forward, due to demographic factors and current income trends.

Since 2012, the increase in house prices in Malaysia has outstripped the rise in income levels, according to Bank Negara’s Financial Stability and Payment Systems Report 2016.

“Consequently, prevailing median house prices are beyond the reach of most Malaysians. This is primarily attributable to a gross mismatch between housing supply and demand amid diverging expectations between households and developers.

“The issue has been compounded by the fact that the distribution of new housing supply has been concentrated in the higher-priced categories.”

The central bank said the issue of affordable housing, which reflects the supply-demand imbalances in Malaysia, worsened during the 2012 to 2014 period.

“During these years, new housing supply fell short of the increase in demand (average supply of 85,000 new units versus the formation of 118,000 new households).

“This is in contrast to the 2007 to 2009 period, when the new supply exceeded the demand for housing.”

The central bank added that the effect of the supply shortfall on housing affordability was exacerbated by the slower increase in household incomes (12.4%) relative to house prices (17.6%).

Another factor which worsened the housing affordability issue was the trend of higher property launches in the price categories above RM250,000, it said.

“While there were more launches during 2012 to 2014, the number of new affordable housing units for households earning the median income (below RM250,000) was fewer by 16,200 units per year since the 2008 to 2009 period.

“The oversupply of higher-end properties beyond what households can afford resulted in a significant portion of these non-affordable properties remaining unsold.”

On the supply side, Bank Negara said the housing market has not provided an adequate supply of affordable housing for the lower and middle-income households.

“In 2014, the shortage of affordable houses was estimated to be 960,000 units. This gap is evident across most states, with Sabah and Sarawak having the highest deficit, accounting for 50% of the total shortage in Malaysia.

“Among the four states with the highest concentration of urban population, the shortage of affordable housing was largest in Kuala Lumpur, followed by Penang and Johor. On the other hand, Selangor was found to have a surplus of affordable houses.”

Going forward, Bank Negara said a carefully-designed strategy of policy interventions is required for the housing market to ensure that it is able to accommodate households of all income groups.

“Meeting the demand of affordable housing units, going forward, will require the commitment of both the Government and the private sector. The establishment of a central agency to consolidate the provision of affordable housing as well as a central repository is key.

“Additionally, reducing costs associated with the development of affordable housing through the implementation of cost-saving and productivity-enhancing technologies would increase the speed and scale of delivery of affordable housing projects, going forward.”

On the demand side, the central bank said the development of the rental market to bridge the affordability gap could relieve some of the pressure on the Government to build all of the affordable housing needed.

“This should be complemented by more innovative schemes to fund the delivery of affordable houses. As for end-financing, as in other countries, the central bank has introduced macro-prudential measures to deter speculative activity in the housing market and to avoid over-borrowing beyond one’s means.

“It is important to note that these measures do not in any way hamper access to financing for eligible borrowers, including those who are first-time buyers.”

3 Danger Signs for Singapore Property in the Year of the Rooster and Beyond

January 24, 2017 |

So much is going on in the global economy that I find very interesting and disturbing at the same time. We’ve seen incredible changes in governments, economies, stock markets, currency and real estate.

I am not making a forecast that a crash is going to occur

My best guess is there are unavoidable, short to long-term economic forces that are about to deal a devastating blow to our real estate market, economy and society. I am not bullish on Singapore’s real estate market in the near or long term. Looking back at the lessons of the past, it had been oversupply, speculative buying, lack of affordability, and lack of sustainable investment that have really deflated the market.

I am still 100 percent pro real estate no matter how “bearish” you think I am. But it would be irresponsible to wildly claim that there are no clouds on the horizon near and far, when building cranes are casting very visible shadows on the market. I believe there are currently three danger signs in the market.

Danger Sign #1 – Per Capita GDP Contraction

The industry might lie, but the numbers don’t deceive. Below is a historical real per capita GDP growth rate for Singapore’s aging society. Notice the obvious growth decline over the decades.

1961 – 1965: 4.52%

1966 – 1970: 10.71%

1971 – 1975: 7.58%

1976 – 1980: 7.2%

1981 – 1985: 4.26%

1986 – 1990: 6.35%

1991 – 1995: 5.46%

1996 – 2000: 3.12%

2001 – 2005: 3.67%

2006 – 2010: 2.93%

(Source: World Bank and Singapore’s Economic Development)

The most recent number for 2016 GDP growth rate was 1.8%. What do you think your property values might be moving forward if you bought into the peak of the market?

Danger Sign #2 – Rise of the US Economy… And (Likely) Slowdown of Asian Economies

The US economic trends are the opposite of Singapore’s and Asia’s economy – and so is their real estate markets. Mortgage rates in the US are currently at an all-time low, around 4.5%p.a.

The US economy continues to improve, so much so we now know the FED is projecting to raise interest rates three times instead of twice in 2017. It’s going to take quite a while before interest rates revert back to their previous norms – and some years before we see another 2008 type of bubble.

As the US economy continues its uptrend, Asian economies like Singapore will continue its downtrend. The Singapore property market will likely fall further as the US real estate market improves. “Gurus” who opine that it is currently a good time to enter the Singapore property market because prices are down 11% from peak are either in serious denial, lying or misinformed.

Danger Sign #3 – Diminishing Longer Term Prospects

All investments consist of two components: risk and reward. But all real estate investment books and “experts” and “authorities” I know of consist of only one component: Reward. Risk? What’s that?

The current weak housing market is not a cyclical issue. It is one impacted by long-term changes in global economic issues, such as an aging population. It has little room left for accelerated growth. The mantra “real estate values always go up” has therefore become a fundamentally flawed belief for the changing markets of the future.

A recent McKinsey Economic Report by world central banks and economists suggest “diminishing returns” will be the new norm for at least the next two to three decades.

For Singapore’s real estate market, I’m not inferring a local market-crash or bubble-bursting scenario. The real danger comes not from within our shores, but from a turbulent world outside. Our government cannot prevent an external crisis from happening and a fast-evolving geopolitical – it can only seek to minimize the harm with good policies.

As expected of a mature economy, economic growth rates will be lower. In the past decade, Singapore’s annual real GDP per capita growth has slowed to about 3% to 3.5%. We can assume a rather a more optimistic real property growth of 3% and slower real growth rate of 0.5% to 2% from the recovery of a major recession. This is quite a reversal from the bygone golden years of 6 to 8% annual growth.

A slow economy and moderate real estate price growth is likely to be the new normal going forward and it may not be such a bad thing.

Should You Sell or Hold?

“Due to the lack of positive economic news, we are expecting that prices will generally continue their decline. However, buyers may capitalise on this continued window of falling prices to snag some attractive deals,” said Eugene Lim, Key Executive Officer of ERA Realty Network, who expects private home prices to drop by 3 to 3.5 percent this year.

If property prices are on an uptrend, they sell you the idea of not missing out on “future gains.” If property prices are on a downtrend, they sell you the idea of not missing out on “discounts.”

Beware of the hubris of those in charge

There are no “attractive deals” in a market when every important indicator points DOWNWARDS – falling rents, falling prices, a potentially devastating recession on the horizon, and rising interest rates.

As a savvy asset-buyer, you only want to buy into a recession since prices always revert back to their fundamental values. Leave the measly discounts (and the balloting) and cheapskate marketing ploys for penny wise, pound foolish buyers.

SELL or HOLD are the only actions for property owners and buyers today. There’s no “but” or “if” unless you want to be kicked in the butt when things go further south.

What Should You Do Now?

From 1960 to 2013, there were eight major economic crises in the Singapore market. This means recessions occur roughly once every 6.6 years. Our present economic expansion has lasted far longer than seven years. The last recession ended in June 2009, about seven and half years ago. Even though certain indicators look amazing today, if history is any guide, we are due for another economic downturn.

Economic theories, such as works by economist Hyman Minsky, explain that the longer an expansion continues, the more likely a recession becomes. Whatever the reasons that expansions end, Singapore has rarely had an expansion that lasted longer than seven years in the last 50 years. There was only one exceptional period from 1986 to 1996.

The economy is like a game of musical chairs at a party. Everyone has a wonderful time until the music stops and then everyone wants to sit down simultaneously. Then suddenly the euphoria becomes a panic, and the boom becomes a slump.

No individual has the power to stop a recession. However, by planning you can mitigate the impact an economic downturn has on you and your family. Right now most people are enjoying good economic times. They will not last forever. Save some money now. Pay down credit card debt and other loans. Give yourself a financial cushion that will protect you in the event of an economic downturn.

Make some plans now for the next downturn. Even if I am wrong, the worst thing that will happen is that you will have less debt and more money saved. Is that so bad?

China projects in Malaysia to hit Singapore

18th Jan 2017 |

 Goh: Most of the Malaysia-China indirect trade (about RM200bil) that goes through Singapore could return to Malaysia.

Goh: Most of the Malaysia-China indirect trade (about RM200bil) that goes through Singapore could return to Malaysia.

The giant republic's aggressive investments in ports and rail links in Malaysia under its belt-road regional economic expansion programme is going to change the outlook for the island republic.

China's current mega belt-road projects in Malaysia, once completed, will alter trade routes in the region and this may divert hundreds of billions worth of trade from Singapore, according to industry players.

Cargoes and goods within the region heading for China or vice versa could bypass the Port of Singapore, when China-funded ports and East Coast Rail Line (ECRL) in Peninsular Malaysia are completed within five to 10 years.

The double-track five-year ECRL project, scheduled to launch this year with soft loans from China, will cater for passenger and freight transport when construction by a Chinese state-owned company is completed.

It will connect ports on the east and west coasts of Peninsular Malaysia and will alter current regional trade routes, which ply between the busy Straits of Malacca and the South China Sea via Singapore.

Currently, Singapore is in a strategic position along the east-west route.

About 80 per cent of the world's maritime trade between east and west passes through the Straits of Malacca, and the strait is the main shipping channel between the Indian Ocean and the Pacific Ocean linking major Asian economies such as India, China, Japan and South Korea.

Singapore is the regional oil hub that captures oil tankers carrying an annual US$600 billion (S$857.47 billion) worth of the commodity and an important transhipment centre for the region.

It is at the southern tip of the South China Sea, that sees an annual trade traffic to the tune of US$5 trillion (RM22 trillion) a year.

But China's aggressive investments in ports and rail links in Malaysia - under its belt-road regional economic expansion programme - is going to change the outlook for Singapore.

This game changer will bring vast economic benefits and opportunities to Malaysia but will most likely exert negative impact on Singapore and force it to make adjustments to its future plans.

"This is a dream of a lifetime for Malaysia to eventually stop cargoes transiting through Singapore, with the generous inflow of direct investments and expertise from China now.

In 10 years or so, Malaysia can say bye-bye to Singapore," says a veteran port operator and logistics consultant with experience in Malaysia, Singapore and China.

The belt-road projects are part of China's strategy to expand its economic activities and influence overseas, export its over-capacity, while at the same time, help the less developed nations to build infrastructure and connectivity to boost trade and economic development.

By participating in China's string of belt-road projects, Malaysia's economy, trade and logistics services will be further enhanced.

 Kong: Singapore will not close down.They are going to fight us. They are aware of what we do in Malaysia.

Kong: Singapore will not close down.They are going to fight us. They are aware of what we do in Malaysia.

The port operator/consultant, who declines to be named, projects: "Transhipment cargoes in Singapore will be greatly reduced at a faster pace than before as the new ports will become more competitive and will have more sailing frequencies to key points.

"Port's contribution to Singapore's economy will be reduced and its attractiveness as a global transhipment hub will fade with the regional ports now having the capability to provide direct shipping services."

In fact, PSA Singapore Terminals have seen a gradual decline in handling container cargo volume in recent years.

Last year, PSA Singapore Terminals handled 30.59 million TEUs of cargo containers or 0.1 per cent less than 2015's 30.62 million.

However, the island republic is still the world's busiest transhipment hub, with excellent connectivity to 600 ports.

While the global economic slowdown has certainly contributed to the decline, there is talk that the China's switch to Malaysian ports could be another factor.

In contrast, Port Klang continued to post a respectable increase in cargo volume.

In 2016, container throughput of Port Klang posted an increase of 10.8 per cent to 13.17 million TEUs.

Goh Bok Yen, urban land planning and transportation management consultant, believes that Kuala Lumpur could capture Malaysia-China indirect trade once the plan to hook up port and rail systems is operational.

In 2015, Malaysia-China's indirect trade - largely through Singapore - was close to RM200 billion (S$63.97 billion).

"You can safely say that most of the indirect trade that went through Singapore would return to Malaysia as there is no necessity to use Singapore anymore in the future," says Goh.

China is currently the biggest trading partner of Singapore, and Malaysia ranks second.

Projects with impact

While China is already involved in the building of the Gemas-Johor double-tracking railway, the most impactful project has to be the RM55bil ECRL.

The ECRL acts as a land bridge between Port Klang and Kuantan Port and other ports along the East Coast of the peninsula.

It will enable China-bound goods from Port Klang, inland and the north to be moved to Kuantan Port, without having to go south to Singapore.

And taking the reverse of the same route, Malaysia-bound goods from China could stop at Kuantan Port, now being deepened and expanded, after plying the South China Sea.

In the ASEAN region, hundreds of billions of China-bound goods from Thailand, India, Middle East and Indonesia may stop at Port Klang and move overland to Kuantan.

The reverse is true.

For Malaysia, the Port Klang-ECRL-Kuantan route will not only boost trade volume for the peninsula but will improve the economic and tourism landscape for the East Coast.

In addition to Kuantan Port and ECRL, down south along the west cost of Peninsular Malaysia, Malacca is building a US$2.8bil (RM12.6bil) Kuala Linggi International Port (KLIP), financed by belt-road funds from China.

The state is reclaiming land along the Straits of Malacca to build a port to offer oil storage, repair and refuelling services for huge tankers.

According to reports, KLIP is eyeing a slice of oil traffic sailing on to Singapore - the hub for the region's oil trade.

Expected to be completed in 10 years, KLIP is being constructed by local port operator TAG Marine and Linggi Base on a 250ha of reclaimed land.

With a planned 1.5 million cubic meters of oil storage capacity and dry docks to handle huge oil tankers, KLIP could attract customers due mainly to its lower rates.

According to a Reuters report, KLIP now handles a few thousand vessel calls a year, compared to Singapore's over 100,000 calls a year.

KLIP hopes to handle three times its current volume.

In fact, Reuters reported that some Singapore clients have been paying attention to KLIP.

One potential KLIP customer is Singapore-based Toyota Tsusho Petroleum.

The fuels supplier has signed a memorandum of understanding with TAG to explore bunkering.

In fact, China's involvement in all aspects of port services in Malaysia is likely be widened and deepened if a proposed new port project is launched and awarded to Chinese firms.

Last week, Tan Sri Kong Cho Ha, chairman of Port Klang Authority (PKA) and Malacca Port Authority, revealed to The Star that he has recommended to the Government to undertake a massive port-city project at Carey Island.

Cargo handling at Westport and Northport in Port Klang is hitting maximum capacity.

This mega project to the south of Port Klang requires infrastructure investments of more than RM200 billion and China's state-linked corporations are keen to develop the whole island with an area of more than 100 sq km.

This 20-year project will comprise the development of an integrated port and related infrastructure, industrial parks and free trade zones, commercial and residential buildings.

The port will cater for all types of ships, which include container ships, bulk carriers, vessels that carry grains, oil and liquids, minerals.

"Currently, our facilities at Port Klang are limited.

Hence, we cannot provide some maritime services such as ship repair, bunkering and maintenance.

This new port will bring in new business," says Kong.

"If we don't develop this port fast, we will forever play second fiddle to Singapore.

But Singapore aside, trade is important to our open economy.

"For national interest, we need to develop it for our needs," adds Kong.

Growth in oil markets in this region is strong enough to warrant further investments, according to analysts.

Singapore watching Malaysia

"Singapore is watching us. This project, which aims to handle 30 million TEUs of container cargo annually in 20 years, will have a major impact on Singapore.

They fear they will lose some of their business to Malaysia," says Kong, who received many calls from Singapore-based media after The Star broke the news.

"But with the population in the region rising, there is a lot of room for growth.

We are talking of another 10 to 20 years. The cake is big enough for all to share," shares Kong, former Transport Minister, for this feature.

However, Kong sees Singapore growing at a slower pace than Malaysia.

He notes that the container cargo business of Singapore has been on the decline in recent years compared to Port Klang.

China 'punishing' Singapore?

Due to China's massive investments in Malaysia, this has caught the attention of regional analysts - particularly from Taiwan.

In a recent television programme, several prominent commentators of Taiwan said the belt-road projects in Malaysia would deal a huge blow to Singapore's economy.

They opined that this is China's "deliberate move to punish Singapore and isolate it in belt-road projects" because the republic has sided with the US on disputes involving the South China Sea.

In fact, the displeasure China has shown towards Singapore is becoming more intense, with China's government spokesman recently warning Singapore to observe the "one-China" policy after the latter's military dealing with Taiwan.

But Goh, of MAG Technical & Development Consultants, takes exception.

"I think having neglected rail and ports development for sometime, Malaysia now wants every port to be developed, backed by an industrial park to give it volume.

There was no intention to hurt Singapore although it is inevitable there will be negative impact on Singapore."

Elaborating, Goh says the ECRL project was conceived in the early 1990s after Japan International Cooperation Agency (JICA) did a study and made recommendations for the rail link.

However, the lack of funds then forced Malaysia to place the project on hold.

"The notion to develop Kuantan Port jointly with China, together with the Malaysian-China Industrial Park at its hinterland, was mooted before the belt-road initiative was announced.

"The development of ECRL will make Kuantan Port even more strategic for Malaysia-China trade as ECRL will become a land-bridge to link up all the ports."

Kuantan Port is expected to receive huge ships by middle of next year, after IJM Corporation Bhd and China's Beibu Gulf Port Group have reclaimed 40ha of land and deepened the port.

And when all industries at its hinterland in the Malaysia-China Kuantan Industrial Park are up and running, cargo volume will be boosted.

The park has secured RM19 billion in investments and is hoping to get another RM8 billion to RM10 billion in investments this year.

Currently, it is exporting most of the bauxite extracted in Pahang to Sime Darby's Weifang Port in northeast China.

But the latest developments are lending some credence on claims made by the Taiwanese.

China's interest in the proposed mega development at Carey Island, as well as in KLIP are seen as attempts to cut down over-reliance on PSA Singapore.

"Due to Singapore's attitude towards the mainland, China has to be cautious and diversify.

To protect its own interest, its ships have to cut down their over-reliance on Port of Singapore," says an analyst.

"In fact, being close and friendly towards China, Malaysia is benefiting from China's investments.

Its economy will be lifted by all these investments and projects, if all goes well according to plan," adds the analyst.

Adjustments seen

But most people believe that Singapore will plan ahead and make adjustments as it confronts new challenges.

"Singapore will not close down.

They are going to fight us.

They will continue to expand.

They are aware of what we do here and they are ahead of us," Kong says.

He observes that Singapore has the advantage of being a global financial centre, besides having the vast experience to provide a whole range of maritime services.

"Shipping liners also look into maritime legal framework and insurance coverage. Singapore has become the choice for big corporations."

Goh, who has business in Singapore, agrees:

"Don't under-estimate Singapore. They have gained respect for their maritime transport.

They understand users' needs.

"Time is money and port management will affect the entire production line of industries."

After Malaysia develops everything, there will be re-distribution and re-routing, he opines.

He believes Singapore still has an important role to play, although "it will not be as important as today in the region."

Eventually, Singapore may focus on trading with countries where they have good frequencies, he says.

"Singapore knows it will need to face new challenges.

Being smart and far-sighted, it will identify a new role, once they lose their catchment area that does not belong to them."

The other advantage that makes Singapore resilient is that it has one of the best financial systems in the world.

"It gives people the confidence to deal with them.

Nobody seems to be able to fiddle around with them, and its recent move to jail local and international bankers involved in money laundering speak volumes," Goh notes.

As counter measures, Singapore could be buying into Malaysian ports, Kong opines.

He notes that Singapore has already bought into many ports in the world.

Despite Singapore's strain in relations with China, PSA International (PSA) last October invested in China United International Rail Containers Co, a Sino-foreign JV with a mandate from China to develop and operate 18 railway container terminals within the country.

The inland railway container terminals are strategically located at regional economic centres across the country to form the core of China's intermodal transportation network.

A lot to catch up

With future world-class infrastructure in a strategic location, could Malaysia fulfil its dream of bringing back most of the indirect trade back and attract more trade in the region?

A businessman, who has had bad experience in dealing with local ports, says he is unsure if Malaysia can get everything right and fast.

"There is still inefficiency and corruption that we have to deal with, and shipping frequency (issues) too. This is why some of us prefer to use Singapore," said the businessman.

It is an undeniable fact that Malaysian ports still lack in efficiency and productivity, ship frequencies and destinations.

But with the involvement of huge Chinese funds and their expertise in managing ports and railways, as well as their speed in developing infrastructure, the chances of Malaysia doing wrong may be reduced.

However, Kong defends Port Klang: "Currently, the efficiency at our Port Klang operation is as good as Singapore.

Corruption, if there is, has to be eliminated."

Goh fears that Malaysian ports might not have enough cargo for international liners to make a call.

"Singapore is not worried as it is linked to every destination in the world."

Hence, to create port volume, the Government must come out with incentives to entice industries to invest in the hinterland.

The port operator/logistics consultant says Malaysia must ensure there is strong flow of direct investments into the country to provide what they call "gateway cargo".

"Port management is not about hardware only. Software is important too.

"Apart from having a good plan, you must have good managers and their maritime knowledge must be kept updated with world pattern."

Lessons from Penang affordable housing

Saturday, 9 April 2016 | The Star

AS we all know, affordable housing is the saving grace for the middle to low income group in our common dream to pursue the “roof over our heads”.

Most often, aspiring homebuyers are sandwiched between increasing property price and developers’ tendency to build high-end apartments especially in greater KL for the last decade.

The introduction of PR1MA and other affordable housing agencies by the federal government is aimed at addressing this gap and to promote better home ownership as part of the prime minister’s national transformation programme. Nonetheless, not many realised that affordable housing is also a state initiative whereby state governments are free to introduce affordable housing schemes given that land and development are within the exclusive power of the state under the Federal Constitution. For instance, Penang is fully behind the notion of affordable housing by placing their top priority on increasing homeownership ratio within the state.

Checking online, there are currently 29 affordable housing projects in Penang with 12 being developed by the state government and the other 17 by the private sector. Penang is delivering a commendable amount of affordable housing by trading plot ratio of built-up area in exchange for more units to be built.

The state government is constantly reviewing and updating the criteria for the purchase of affordable housing in Penang. A person who already owns a property can still purchase affordable housing in Penang provided the person can satisfy the conditions imposed.

For example, the house to be purchased must be of higher value than the one already owned.

In addition, for those who are not born in Penang, under the talented and skilled category, they may also purchase affordable housing in Penang provided they undertake to reside there for a minimum of five years. In short, affordable has become a driver for talent retention. This ultimately helps to upgrade living standard in Penang.

On the flip side, Penang has uncovered a problem. Those who are entitled to affordable housing may not qualify for financing, especially those from the lower income group as they are considered as high risk by banks.

Job and income security at this level are extremely vulnerable given the high cost of living that in effect reduces disposal income. Bank and financial institution are after all profit-making entities. Loan disbursements below a certain threshold amount does not always generate their desire margin. Many expiring home owners are left helpless.

While nothing is perfect, one can only achieve success through lessons learned along the way and from history. The federal government is aware of the high loan rejection rate. It has, therefore, provided a 10% loan guarantee and First House Deposit Financing to help purchasers with their downpayments. The “Rent to Own” scheme was also introduced to circumvent the stricter loan financing situation.

Penang has introduced a similar Rent to Own scheme. Under this scheme, the state government provides 30% of the home price so that the house buyer can seek a 70% loan margin.

PR1MA, on the other hand, is facing difficulties finding suitable land as land is state matter. There is also a tendency for the state government to allocate land for this purpose in areas they want to urbanise, but which are often far from amenities and transportation links.

We all know that to develop affordable housing is not the best commercial decision to make because profit margins are definitely lower. As such, we cannot expect private sector developers to always bear the cost.

Penang, on the other hand, is able to overcome this problem by reducing the development charges via an increase in plot ratio. This then attracts private sector developers to come in.

A recent survey conducted by PR1MA shows that buyers prefer to purchase residential projects close to schools, clinics and shops. They also prefer access to transportation. Penang is closer to achieving its objective in the affordable housing arena because it “focuses on the homeowners”.

Under the recently announced Penang Transport Master Plan, the state government is mulling over RM8bil worth of projects that will enhance connectivity.

The development of an underground tunnel from Gurney Drive to Bagan Ajam, Gurney Drive to Jelutong Expressway and an alternative road connecting Gurney Drive right up to Batu Feringhi will really improve connectivity.

Penang is ambitious in executing its affordable housing plans. It is also spot-on when it comes to addressing the different issues connected with this subject.

The banking sector must buy into it. Banking and financial institutions are governed by the fiscal policy of the federal government. Maybe some mandatory quota or corporate social responsibility initiatives can be imposed on banks to provide loans to deserving house buyers. So it is timely that Bank Negara has called for a comprehensive and carefully designed National Planning Policy to support the Government’s aim in delivering more social housing in its recently released annual report.

For Singaporean investors, there’s no place like Cambodia

August 10, 2016 | Property Report

Cambodia has become the fulcrum of attention for Singaporeans in a broad spectrum of sectors, ranging from manufacturing and agriculture to real estate, The Phnom Penh Post reports.

Cambodia’s relatively loose regulations on foreign shareholding (100 percent foreign ownership of companies) and brisk clip of economic growth (more than 7 percent per annum for most of the last decade) have attracted Singapore to become the third largest investor in the Khmer Kingdom next only to China and the UK, according to The Council for the Development of Cambodia.

To many Lion State investors, especially property firms, the chance to start from a clean slate in such a country as Cambodia is manifest. “We’re bringing in concepts from Singapore that are new here and transforming (the urban landscape),” Jackie Eng, CEO of diversified real estate company SC Capital, told The Phnom Penh Post. “We have an opportunity here in Cambodia to do what we can’t do in Singapore.”

Singapore’s Oxley Holdings has two residential projects in Cambodia, the Bridge and the Peak. Huttons Real Estate Group also opened in Phnom Penh last year.

Tan Soon Kim, assistant chief executive of government agency International Enterprise Singapore, said that the non-existent caps on foreign shareholding in Cambodia is a rare draw in the Southeast Asian region. “This gives foreign investors greater flexibility in their mode of entry (and) is one aspect that we have highlighted when promoting Cambodia to Singaporean investors,” he said.

Singapore Business Federation CEO Ho Meng Kit also commends Cambodia’s uniquely open foreign investment regime. “The liberal FDI policies in Cambodia, together with competitive labour costs, compensate to a large extent for the small size of the market and poor infrastructure,” he said.

Singaporean businesses would also find added incentive in the recently signed Double Taxation Agreement (DTA) between Cambodia and Singapore, which minimises double taxation of income flows from cross-border investments.

How the Singapore-KL HSR could affect property prices

The Edge Property | July 29, 2016

Two years ago, Singaporean David Neubronner moved into his new home at Straits View Residences, a gated landed housing community located in the Permas Jaya housing estate of Johor Baru. He bought the four-bedroom, semi-detached house from Malaysian property group BRDB Developments when the project was launched in Singapore in 2010. The double-storey house has a built-up area of 3,000 sq ft and sits on a freehold land area of 6,000 sq ft.

Neubronner purchased the property six years ago with a view of retiring at 55. In 2014, when he received the keys to his new home, he also took up the position of director of business development at property agency SLP International. He continues to work in Singapore on weekdays while his son just started secondary school this year.

They look forward to Friday afternoons when he drives across the Causeway to their home. “Security in JB may still be an issue, but I like the privacy and open space,” says Neubronner. “Singapore is getting very expensive and congested. It’s just a matter of time before more Singaporeans will consider living in Iskandar Malaysia.”

That could happen within the next decade, with greater rail connectivity between the two countries. On July 19, a memorandum of understanding (MOU) was signed, which marks a significant step towards more detailed planning and the eventual construction of the 350km high-speed rail (HSR) link connecting Singapore and Kuala Lumpur. HSR is said to cut travelling time between the two cities to 90 minutes — as the trains will run at a top speed of more than 300kmh — and is targeted to be operational in 2026.

Between the two terminal stations at Bandar Malaysia in KL and Jurong East in Singapore, there are six intermediate stations in Malaysia that will be connected via a domestic service: in Putrajaya, Seremban, Ayer Keroh, Muar, Batu Pahat and Iskandar Puteri (formerly known as Nusajaya). Besides the non-stop HSR service between Singapore and KL, and the domestic service, there will be a shuttle service between Iskandar Puteri in Johor and Singapore.

Passengers will be able to clear customs, immigration and quarantine for both countries at their point of departure, with both governments co-locating these CIQ (customs, immigration and quarantine) facilities at three locations — Singapore, Iskandar Puteri and Kuala Lumpur. With HSR and the station at Iskandar Puteri offering a shuttle service to Singapore, will more Singaporeans be encouraged to revisit the Iskandar housing market?

Capitalising on proximity to HSR station

Some Malaysian developers with projects located near the site of the prospective station at Iskandar Puteri have already capitalised on their proximity to launch their projects. An example is UEM Sunrise, the masterplanner of Iskandar Puteri. UEM Sunrise launched its first residential development in Gerbang Nusajaya, where the HSR station will be located.

Called Melia Residences, the strata landed housing community on a 73.64-acre freehold site will contain five phases with a total of 625 units. Launched in early May, the first two phases of 206 units were snapped up within a fortnight, registering total sales of RM206 million ($68.5 million), according to UEM Sunrise in a release on May 19.

Leisure Farm, a 714ha gated resort residential community — about six times the size of Sentosa Cove — is located just a two-minute drive from the upcoming station at Gerbang Nusajaya, says Wayne Wong, Mulpha International’s gene ral manager of sales and marketing.

The HSR service will cut travelling time from Iskandar to Singapore to just 15 minutes from station to station. “There is already an international community with many Singaporeans and expatriate residents in Leisure Farm who work in Singapore and commute daily to work,” says Wong. “This MOU announcement will excite the market and create renewed interest among Singaporean investors.”

Mulpha therefore plans to soft-launch its latest project, Residensi Bayou, a strata landed housing development with 82 terraced houses and 10 semi-detached houses. The three-storey terraced houses with three-bed- rooms-plus-study will have built-up areas of 3,344 sq ft and be priced from RM2.08 million ($693,503).

Another five luxury villas (house and land) at Leisure Farm has just been released. They are individually designed houses with land sizes ranging from 17,724 to 23,957 sq ft, with built-up areas from 7,578 to 9,662 sq ft. Buyers may choose between a fully-furnished villa priced from RM8.82 million and a partially furnished one priced from RM7.63 million ($2.54 million).

“HSR will enhance value and demand for residential properties in the neighbourhood of Iskandar Puteri — but not necessarily the whole of Iskandar,” says Neubronner. “However, that depends on when it is up and running.”

There are lingering concerns about oversupply in the housing market in Iskandar Malaysia. Last May, Lawrence Wong, Singapore’s Minister for National Development, warned about the impact of oversupply on housing prices, with 336,000 new private residential units in the pipeline in Iskandar Malaysia. This is equivalent to 46% of the existing housing stock in the whole of Johor in 2015 (see table).

Which housing market will be an immediate beneficiary?

Chris Boyd, executive chairman of Savills Malaysia, says: “Research has shown that, initially, the greatest impact of HSR on residential property values is seen around the stations at each end of the line. HSR tends to ‘level’ values, and KL will be the biggest beneficiary.”

A lot will depend on the cost of the fare and frequency of the HSR train service as well, says Boyd. “There should be plenty of morning and evening services with Japanese-style punctuality,” he says. Those stations in between towns such as Ayer Keroh, Batu Pahat and Muar may benefit the least. “Seremban and Southern Johor may become so-called dormitory suburbs,” he adds. “However, that will only happen if the fare is inexpensive.”

Likewise for Singaporeans, the ticket price of a train ride on HSR will also be important, according to Ivan Hoh, managing director of PropNex International.

Jurong — immediate beneficiary

Desmond Sim, head of CBRE Research for Singapore and Southeast Asia, is putting his bet on Jurong’s housing market being the most immediate beneficiary of HSR. “The international high-speed-rail terminus was the concluding piece for the Jurong Lake District, and so it will certainly benefit the property market there,” he reckons.

Jurong East had already been earmarked as Singapore’s second CBD in the 2008 Master Plan. The two precincts announced then were the commercial hub of Jurong Gateway clustered around the Jurong East interchange station as well as the leisure and residential Lakeside precinct.

On July 11, URA announced that it was looking for multidisciplinary teams to develop masterplan proposals for Jurong Lake District. A key focus of the masterplanning exercise includes developing proposals for Lakeside Gateway, a new mixed-use precinct and home to the future terminus of the KL-Singapore HSR. A large part of the 112ha Lakeside Gateway precinct is occupied by the Jurong Country Club, which has been acquired by the government.

MCL Land was the first to capitalise on the recent announcements in Jurong Lake District with the launch of its Lake Grande private condominium project. The 710-unit, 99-year leasehold condo is located just across the road from Lakeside MRT station. Balloting of units started on the weekend of July 23 and 24, and 90%, or 449, of 500 units released that weekend were snapped up at an average price of $1,360 psf.

Besides the merits of the property, the pricing of units and its location, the recent announcements on HSR and URA’s affirmation of Jurong as Singapore’s second CBD also played a role in creating interest, says Koh Teck Chuan, CEO of MCL Land.

Lim Ming Yan, president and group CEO of CapitaLand, is optimistic about the HSR. “With around 100,000 additional commuters estimated to use the service daily, HSR is set to stimulate both business and leisure travel between the two countries,” says Lim. This increase in traffic is expected to boost values of CapitaLand’s properties, as it has three malls near the upcoming HSR terminal in Jurong East — Westgate, JCube and IMM.

KL — longer-term beneficiary

KL’s housing prices will benefit only over the long term, as development has yet to take place in Bandar Malaysia. “The 200ha site of the former air force base at Sungei Besi has still not been redeveloped,” says Prop- Nex’s Hoh.

There are concerns about the ramifications of the 1MDB scandal on Malaysia’s economy and currency. And while KL may only be 90 minutes away when HSR is completed and KL’s property prices are cheaper relative to Singapore’s, foreign investors are unable to buy cheap property because of the floor price of RM1 million, says CBRE’s Sim.

Besides currency, there are also other risks associated with owning a property in Malaysia, such as the condo management, maintenance of facilities as well as security. “The foreign exchange is a worry, though. That’s why investment demand has fallen off quite a bit,” says Sim.

Retirement haven?

Still, buying property in Malaysia makes sense if one is looking to retire. “When you retire, if you’re not earning the same kind of income that you once did, it makes sense to move to a place where you can stretch your dollar, and that’s what makes Iskandar a viable place,” says Neubronner. “One will have greater spending power in Johor, with the exchange rate at RM3 against the Singapore dollar compared with six years ago when it was RM2.30.”

He advises buyers to look at landed properties in gated communities by established developers with a good track record. For instance, he bought his semi-detached house at Straits View Residences for RM1.15 million six years ago. This year, developer BRDB sold a similar-sized house for RM2.25 million. Even after taking into consideration the currency erosion of 30% in the intervening period, Neubronner says he is still sitting on a capital gain. “Landed homes in gated communities have proven to be more resilient in the current challenging climate,” he says. “That may not be the case for high-rise projects.”

Besides HSR, a study is underway to explore the possibility of the northward extension of the Thomson- East Coast MRT Line (TEL) to Johor Baru.

“Without a shadow of a doubt, the MRT will have the most impact,” says Savills’ Boyd. “The term ‘game changer’ is overused, but the completion of the MRT linking Singapore with JB is going to change the landscape forever, and both will benefit enormously. The beneficial impact of the MRT on JB property has been underrated so far.”

In the meantime, most buyers will prefer to wait and see on the progress and outcome of the HSR. “There have been successful launches in both KL and Iskandar this year, but sentiment is currently muted; so, it might be best to wait for a while,” says Boyd.


Li Keqiang Visits Malacca, Indicating to Carry Forward China-Malaysia Peace and Friendship and Create a Future of Mutually Beneficial Cooperation

23rd November 2015 | Ministry of Foreign Affairs of the People’s Republic of China

On the afternoon of November 22 local time, Premier Li Keqiang went to Malacca by car more than one hour after wrapping up his attendance at the series of leaders' meetings on East Asia cooperation, starting the first stop of his official visit to Malaysia. Li Keqiang's wife Mme. Cheng Hong accompanied him during the visit.

Malacca has deep connections with China. Ancient Chinese navigator Zheng He (Cheng Ho) made seven voyages to the Western seas, and for five times he stopped at Malacca, leaving plenty of historical relics and touching stories about friendly exchanges with the local place. In recent years, friendly cooperation between Malacca and Chinese provinces and cities such as Guangdong Province has been making progress, with great potential for bilateral cooperation in fields like maritime economy, culture and tourism.

Malacca demonstrated its welcome for the distinguished Chinese guests with both Chinese and Malaysian national flags in a dozen of kilometers along the way. When Premier Li Keqiang and Mme. Cheng Hong arrived, Governor of Malacca Tun Mohd Khalil bin Yaakob and his wife, and Chief Minister Datuk Seri Idris Haron and his wife greeted them warmly and talked with them kindly.

Later, Li Keqiang and his delegation visited the Cheng Ho Cultural Museum. When the motorcade arrived at the ancient and prosperous alley, owners of the shops on both sides hung up banners voluntarily to welcome the Chinese premier, and people on the street waved and cheered to them warmly. Inside the museum, a large number of exhibits such as boats and chinaware were shown, with vivid scenes and lifelike character models, showing lively the spectacular scenes of Zheng He's maritime expeditions, as well as the vivid pictures in which he spread advanced production technology in areas including agriculture, fishery, and textile industry to the local people.

Li Keqiang expressed that China and Malaysia are friendly neighbors across the sea. Over six hundred years ago, Zheng He's fleet arrived with peace and friendship, conducted mutually beneficial exchanges of business and culture, and also helped the locals to maintain peace and tranquility, serving as an emissary of peaceful exchanges, mutual benefits and friendship. This remark stroke a strong chord among those present.

Li Keqiang communicated warmly with representatives of the local people, and presented them with the Malaysian-version of Chinese classic Journey to the West first published on that day. When meeting with old friends acquainted during his visit to Malaysia 19 years ago, Li Keqiang was quite pleasant. He talked with them warmly, learned about their recent lives, and praised their contributions to promoting China-Malaysia friendship. Both new and old friends were gathering together. Li Keqiang said that his current visit in Malacca made him feel that the story of Zheng He has already been deeply rooted in the local people's hearts. What Zheng He spread was the seed of peace and friendship, while the fruit is harmony and inclusiveness. We should carry forward the spirit and concept advocating peace on the top of other things, harmony in diversity and inclusiveness.

With the company of Governor Tun Mohd Khalil bin Yaakob, Li Keqiang also listened to introduction of the project of Malacca seaside industrial park. At present, Guangdong Province is actively dovetailing development planning with Malacca, and making preparations to build a modern seaside industrial park integrating maritime high-tech industries, deep-water wharf and logistics centers. Li Keqiang inquired in detail about the project design and the actual process, overlooked the Strait of Malacca and learned about the local government's planning and needs for the port construction. He expressed that Malacca enjoys an advantageous geographical position, while Chinese enterprises boast international competitiveness in infrastructure construction and other sectors. The Chinese government is willing to offer strong support for mutually beneficial cooperation between Chinese and Malaysian local places, and encourages Chinese enterprises to take part in the construction of the industrial park.

In the sand table was the blueprint of hundreds of vessels competing for the advancement, with green waves of the Strait of Malacca glittering brightly. The historical channel and modern busy shipping indicate that China-Malaysia peaceful and friendly cooperation passed downed to this date will certainly enjoy longer voyage in the future.