Supply and demand is most significant cause of rising property prices

Real Estate and Housing Developer’s Association (Rehda) national treasurer Datuk N K Tong recently said that the escalating prices of properties, was significantly caused by the supply and demand factor.

 

“As land prices continue to rise, there is also the issue of not producing houses fast enough to cater to the increasing demand.

 

“We need to accelerate the number of units being built and this can be done when all parties work closely,” said Tong, adding that a property market report by the National Property Information Centre (Napic) showed the existing stock nationwide in the first quarter of 2013 was 4.6mil residential units (excluding kampung and estate houses).

 

The report also said the average housing completion yearly was 100,000 units relative to the average annual household formation, which was 140,000.

 

Tong also noted that the delay in issuing approvals was also a reason why property prices had increased tremendously over the years.

 

“When there is a delay in issuing planning approvals, development costs, which include utility costs, tend to increase, resulting in more costs passed down to house buyers,” he said.

 

He added that Rehda had been continously engaging with the Government and utility companies like Tenaga Nasional Bhd, Telekom Malaysia and Indah Water Konsortium Sdn Bhd, among others, to find ways to resolve the matter.

 

“Unfortunately, despite all these issues, the public still has the misconception that the developers are to be blamed for escalating property prices,” said Tong, adding that the best way to tackle the issue was to hasten approval time, decrease red tape and utility costs, as well as building more affordable houses to cater to the population.

 

While everyone has a role to play, Tong suggested that the Government should also look at ways of relocating some of the subsidies and allocate the sum for more affordable homes to be built instead.

On Aug 29, Selangor Development Corporation (PKNS) general manager Othman Omar had also said that delays in issuing planning approval can lead to an increase in development costs of about 20% to 30%, which, in turn, increases the development cost from RM5 per sq ft to RM30 per sq ft. The cost would then be passed down to the house buyer.

 

Othman also mentioned that outdated and inconsistent requirements from local councils also contributed to the contrasting cost of houses in different jurisdictions.

 

Meanwhile, Tong said the second Malaysia Property Expo (Mapex) of the year would be held from Oct 25 to 27 and it was expected to generate RM300mil in sales.

 

He said REHDA was confident that the property event would be more successful than the first Mapex in April, which recorded RM200mil in sales.

 

He said about 92 property developers would be participating in the event, which would also include several free public talks on a variety of subjects.

 

Star, October 17, 2013

 

Raising RPGT will push up house prices

PETALING JAYA: Raising the real property gains tax (RPGT) and stamp duty could risk pushing house prices higher, according to HwangDBS Vickers Research.

 

This is because sellers would try to pass on incremental costs to buyers and delay disposal, leading to even tighter supply.

 

“We understand the Government needs to be seen to be actively reining in property speculation, but we do not advocate raising real RPGT, which had a relatively short-lived impact in the past and could push house prices higher as sellers may pass on the incremental costs to buyers.

 

“It could also spur sellers to postpone disposal and developers to hold back launches in view of weaker sentiment, leading to even tighter supply in the market,” said the research house in a report yesterday.

 

Currently, RPGT is charged at 15% for disposal within two years and 10% for disposal within three to five years (compared with 5% to 30% prior to Budget 2010).

 

HwangDBS Vickers also noted that while raising stamp duty may have a bigger impact, sellers would also try to pass on the incremental costs to buyers.

 

“Any hike would not only affect new projects but also those under construction, especially strata-titled and projects under the master title which have yet to be transferred.”

 

Aside from the once-in-a-lifetime exemption from RPGT for individuals, the research house suggested for specifically first and second home-buyers to be spared from any tightening measures, to be in line with the Government’s aim to promote home ownership.

 

“Reducing the loan-to-value cap for a second property would affect genuine upgraders, who may find it challenging to pay a higher down-payment while waiting to sell their existing properties.

 

“This could reduce supply in both the secondary and primary markets, as developers may also delay launches due to poorer take-up.”

 

HwangDBS Vickers added that the Government should encourage the development of more international-class condominiums, such as those in KLCC and Bukit Bintang, to attract more foreigners.

 

“While other countries in the region are restricting foreigners from buying properties, Malaysia should conversely open up, as foreigners currently made up less than 5% of transaction volume (albeit rising marginally based on the Malaysia My Second Home applications).

 

“Property can be a new engine of growth for Malaysia in view of Iskandar Malaysia’s potential to leverage on Singapore and Greater Kuala Lumpur’s significance within the Economic Transformation Programme (which is targeting to attract 100 multi-national companies to set up operational headquarters in KL).”

 

HwangDBS Vickers also said that the potential introduction of the goods and services tax by 2015 could lead to lower personal and corporate tax rates.

 

“This should improve Malaysia’s competitiveness in attracting foreign direct investments and talent, along with stemming Malaysia’s brain drain and rising investments overseas by local corporates.”

 

Star, October 2013

 

Best Western to manage hotel and serviced apartments in i-City

SHAH ALAM: I-Bhd has partnered with Best Western International, the world’s biggest hotel chain, to develop the first hotel in the 29ha i-City project, scheduled to open in September 2014.

The three-star hotel, Best Western@i-City, has a gross development value of RM50mil, and represents the first of two hotels planned for the international park.

 

At the signing ceremony between the two parties, I-Bhd deputy chairman Datuk Eu Hong Chew said the hotel would probably have one of the shortest gestation periods due to the attractions based in the park.

 

Meanwhile, Best Western will also manage its first Best Western Service Suite in the country by providing hospitality and building management services for a period of 5+5 years.

 

“It is a standard arrangement with all our hotel owners. After that period, it is an automatic renewal unless there is an issue,” said Best Western vice president of international operations for Asia and the Middle East Glenn de Souza.

 

He added that the hotel would be an addition to its international portfolio and would be promoted overseas. “i-City is pretty self-contained, it’s like a one-stop shop. We would work with the tourism organisation to promote i-City.

 

It would attract a lot of foreigners because it provides everything for families and businesses,” he said.

 

Best Western Service Suite@i-City will comprise 826 units of serviced residences.

 

It will be the first hotel-branded residential development in Shah Alam and is expected to be completed in 2016. Eu added that the project would be launched by the end of this year. I-Bhd expects the hotel to enhance the number of visitors to the theme park attractions, as visitors now have the option of staying within i-City.

 

 

“The rooms would be comfortable and trendy. Rather than compete with the other facilities within i-City, we would complement and support them,” de Souza said.

 

The hotel is part of the third building block in the development of i-City as a tourism destination, said Eu. “The three tourism components are i-City’s theme park attractions, a 1.5-million-square-feet super regional shopping mall and hotels,” he said.

 

To-date, the company has invested RM70mil in various rides and attractions.

 

Eu added that I-Bhd planned to invest an additional RM30mil in the theme park in the next few years.

I-Bhd is working with Thailand’s Central Retail group to develop the RM580mil CentralPlaza@i-City, which has been slated for completion in 2016.

 

Best Western has more than 4,100 hotels in more than 100 countries worldwide. In Malaysia, it currently operates in KL Sentral, Kota Kinabalu, Sandakan, Pulau Pangkor and Port Dickson. It plans to have 15 hotels in the country by end-2015.

 

Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim, who officiated the signing ceremony, said there were still opportunities for international-class hotels within the capital city. “I hope this project would be an eye opener for other international hotel operators,” he said.

Star, 17 Oct 2013