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4 Responses to “Malaysian Property Market Outlook and REITs at Ipoh Perak”

1. alan on January 16th, 2010 at 5:48 pm

   Let’s be cautious about the property sector
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   PROPERTY markets in various parts of the world are coming alive again and property is regaining its lustre as one of the favourite investment instruments after more than a year of “hiccup” caused by the global financial crisis.

   Even while Dubai is still mired in a crisis after the collapse of its property market last November, most markets that have succumbed to the global financial crisis are bottoming out and are on a recovery mode.

   Despite the more positive outlook, industry players should not lose sight of the patches of “quick sands” that will easily negate any progress made if one is not careful.

   Among the possible pitfalls that will happen include a relapse in the global economy if it falters from its recovery path that will send property prices on another downward spiral like what has happened in London, Singapore and Hong Kong.

   Despite having shown a gradual recovery since the second half of 2009, the global economy continues to be filled with uncertainties this year.

   There is still the possibility of a double dip or another round of correction before we can claim the worst is over.

   Although Malaysia’s property market is also showing signs of recovery and there are more buyers looking for good property to buy, there are some outstanding issues that are still plaguing the market.

   Firstly, there is still a mismatch between demand and supply of both landed residences and high-end condominiums in some parts of the country.

   That explains why there are properties that have been completed in some townships that are still unsold and are languishing.

   Most of these projects are located in rather secluded places that are not easily accessible and were built without prior market diligence and feasibility studies to gauge their feasibility.

   Usually projects that are located in well planned or mature and vibrant neighbourhoods with ready facilities including schools, colleges, markets, shops and good road connectivity will have many ready buyers.

   Developers that are affected by poor take-up for their property should, wherever possible, make as much effort to “redeem” their projects by introducing more value added features and facilities to them.

   Hopefully, the extension of the light rail transit network to other parts of the Klang Valley will give a new lease of life to these projects.

   Another area with higher supply of properties than demand at this juncture is the Kuala Lumpur City Centre (KLCC) vicinity.

   This year alone, there will easily be another 1,200 new condominiums that will be completed.

   Last year, about 2,000 units came onstream and not all have been sold yet.

   Many of the units are still relatively large residences of more than 2,000 up to 7,600 sq ft whereas research has shown that there is a greater demand for smaller units of between 1,000 to 2,000 sq ft, especially among first time home buyers.

   Instead of catering just to the super high-end clients, it will be worthwhile for developers to re-size their units and build more smaller units to make them more affordable for the buyers.

   At average prices of RM900 to RM1,100 per sq ft, most of these smaller units will already have price tags of close to RM1mil or more.

   Another challenge that will be faced by the market is the possibility of rising entry cost for buyers once developers decide to end their housing financing facilities.

   Although a growing number of Malaysians have become savvy property buyers and own multiple properties, many are still dependent on the low entry cost offered by the developers and the banks in the past one year to make their first purchase.

   Efforts to promote stronger buying interest among local buyers should be continued as they form the bulk of property purchases.

   Malaysians are also known for having a longer term outlook and will not just liquidate their positions in a hurry like some of the foreign buyers.

   Should the housing packages be ended, developers can help ease the burden of buyers by absorbing the cost of transactions including stamp duties and legal fees, among others, for houses priced below RM500,000.

   Deputy news editor Angie Ng sees the need for closer consultation and collaboration between the various stakeholders of the property fraternity to offer their views on project planning and designs that will promote greater unity and kinship among Malaysians.

   fr:biz.thestar.com.my/news/story.asp?file=/2010/1/16/business/5477011&sec=business

2. alan on July 20th, 2010 at 7:51 am

   Axis REIT posts rise in Q2 net profit
   By FINTAN NG

   PETALING JAYA: Axis Real Estate Investment Trust (Axis REIT), which owns mostly industrial properties, has posted a 74.51% rise in net profit to RM21.87mil for the second quarter ended June 30, compared with the same quarter a year ago.

   According to Axis-REIT Managers Bhd CEO and executive director Stewart Labrooy, the jump in net profit was due to a combination of revaluation surplus and realised gains from distributed profit and revaluation gains. He told StarBiz that the revaluation brought the REIT a surplus of RM9mil. Axis-REIT Managers is the manager of Axis REIT.

   Revenue for the quarter under review stood at RM21mil, a rise of just over 21% compared with year ago. Labrooy said in a statement that performance for the third quarter would improve due to the satisfactory performance of the existing portfolio and Quattro West coming onstream.

   fr:biz.thestar.com.my/news/story.asp?file=/2010/7/20/business/6695338&sec=business

3. alan on July 27th, 2010 at 8:06 am

   Starhill Global REIT gets RM$1.2bil loans

   SINGAPORE: Starhill Global Real Estate Investment Trust, a Singapore-based investor in retail and office buildings, got S$496mil (RM1.16bil) of three-year loans from five banks, according to a Singapore stock exchange statement.

   DBS Holdings Ltd, Oversea-Chinese Banking Corp, Commonwealth Bank of Australia, Societe Generale and ING Groep NV provided the loans, which include a S$50mil revolving credit facility, the statement said.

   The proceeds would be used to refinance S$447mil of maturing debt while the balance will be made available for working capital and general corporate funding purposes.

   In a revolving credit facility, money can be borrowed again once it’s repaid.

   fr:biz.thestar.com.my/news/story.asp?file=/2010/7/27/business/6739756&sec=business

4. alan on August 22nd, 2010 at 2:11 pm

   Pros and cons of suburban malls
   By ANDREW LEE

   WITH so much shopping mall space already taken up in the Klang Valley, developers are turning toward building suburban malls in residential areas.

   One such example is the new 470,000 sq ft SSTwo Mall along Jalan SS2/75, set to open in the fourth quarter of this year.

   The imminent opening of the new RM180mil mall is causing some uncertainty among residents in that area.

   Says a resident: “The development of this mall will cause traffic jams along the main roads. Also, parents picking up children studying in Sekolah Kebangsaan Taman Sea will add to the traffic. Security may become an issue if cars resort to parking in our housing area.”

   She says the close proximity of Tropicana City Mall makes it difficult to understand the objective behind the development of SSTwo Mall.

   Indeed, there are questions that should be asked about this new mall. For instance, Tropicana City Mall is located a stone’s throw away – why build another mall so close to it?

   Both malls appear to be targeting a similar income group (the middle to upper household income bracket) and will attract customers from the same area, so surely SSTwo Mall will suffer from a lack of tenants or shoppers?

   Henry Butcher Retail managing director Tan Hai Hsin rejects this notion. “At the moment, there is no large shopping centre in Petaling Jaya that offers one-stop retail facilities. SSTwo Mall could replace Jaya Shopping Complex as the retail icon of PJ,” says Tan.

   What about the increasing number of shopping centres in the Klang Valley?

   “Market saturation is irrelevant to this shopping complex. The challenges that SSTwo Mall faces are more localised, such as its ability to offer products and services different or better than its competitors, while staying relevant with its target customers,” he says.

   This is also a view shared by Asian Retail Mall Fund II (ARMF II), the developer of SSTwo Mall. ARMF II is managed by Pramerica Real Estate Investors in Singapore.

   “Malls are built to cater to segments of the population with varying needs and demands. For SSTwo Mall, we aim to become a community-centric establishment for the SS2 community, providing the residents with a comfortable venue to dine or shop with their families,” says a spokesman from ARMF II.

   He says that the mall was designed with the surrounding residents and families in mind.

   The residents living in the apartments directly along Jalan SS2/75 are the ones who will benefit the most from the new mall.

   There are easily over 2,000 units of apartments along the same road and many of the residents are optimistic about the new mall.

   “The opening of SSTwo Mall will be good for the community. It will be convenient for me to dine and buy groceries from the mall, especially if there is a new hypermarket. I will not have to go very far to get the things I need,” a resident from Five Stones tells StarBizWeek.

   She says she understands the concerns of residents living in the houses nearby, and urges them to lodge their complaints over difficulties indirectly caused by the mall through the local council – a view shared by the developer.

   The story of a mall in an area with different resident views is not a new one.

   Malaysian Association for Shopping and Highrise Complex Management member Richard Chan tells of how the development of Atria Shopping Centre in Damansara Jaya had to contend with complaints from residents in 1990.

   “Before Paramount Corp Bhd took over what was then known as DJ Centre, the shopping mall was in a mess. The mall was not fully occupied, it was facing competition from neighbouring retail outlets and worst of all, the mall did not meet the needs and wants of the residents, who were worried about the impact of the mall on the community,” says Chan.

   “When we took over, we formed a resident association to allow residents to voice their complaints as well as promote discussion. It turned out that residents were worried about the impact of the shopping centre on the location of the night market or pasar malam. So we helped resolve their concern, while convincing the neighbouring shops that we were not a threat,” says Chan.

   Paramount Corp’s assurance to the residents that the area would benefit from Atria Shopping Centre won them over, something the developers of SSTwo Mall will do well to follow. With a net lettable area almost 100,000 sq ft larger than Tropicana City Mall, and almost 2½ times larger than Centrepoint, it is fair to say that SSTwo Mall will definitely have an impact on the area immediately around it.

   Whether the benefits of this new mall will outweigh its cost is yet to be seen. But the obvious conclusion is that there is a price to pay for development.

   fr:biz.thestar.com.my/news/story.asp?file=/2010/8/21/business/6812829&sec=business