Recession fears grip Asian markets

KUALA LUMPUR: Recession fears ripped apart Asian markets on Friday, Sept 23 as the FBM KLCI fell more than 1.9% in early trade and sank below the 1,360-level before paring down some of its losses at mid-morning.
Asian stocks, in particular in South Korea and Taiwan, fell sharply with foreign investors taking flight as concerns about global economic stagnation deepened on debt problems in Europe and an increasingly grim US and Chinese economic outlook, according to Reuters.

The FBM KLCI fell 1.37% or 19.08 points to 1,368.73 at 10am. The index had earlier fallen to a low of 1,358.47.
Market breadth continued to be negative with losers beating gainers by 541 to 50, while 125 counters traded unchanged.

Volume was 267.66 million shares valued at RM356.75 million.

At the regional markets, South Korea’s Kospi tumbled 4.84% to 1,713.49, Taiwan’s Taiex lost 3.80% to 7,027.77, Hong Kong’s Hang Seng Index fell 2.35% to 17,491.89, Singapore’s Straits Times Index was down 1.90% to 2,668.96 and the Shanghai Composite Index shed 1.29% to 2,411.58.

BIMB Securities Research in a note Sept 23 said that after the US Federal Reserve failed to rally the markets with their “twist”, global equity markets were all now doing the “limbo rock – how low can you go”?
At this juncture, with the fear button activated the global markets are playing catch down, it said.

It said Wall Street yesterday sparked into a selling spree pre-empting that Europe would experience what US did in 2008, adding that as result, Wall Street plunged by almost 400 points to below the 11,000 level.
Earlier, Asian and European stocks also a wave of selling as most saw declines of 2-4%, it said.
“For today, we would expect a spate of unloading ahead of the weekend for the regional markets.
“For Malaysia, we expect the selling to continue with the immediate support for the FBM KLCI at 1,380,” said BIMB Research.

Among the decliners at mid-morning, KLK and Dutch Lady fell 78 sen each to RM20.42 and RM18.10, Batu Kawan 44 sen to RM15, Panasonic 40 sen to RM18.40, Petronas Dagangan 38 sen to RM16.02, Hong Leong Bank 36 sen to RM9.62, BAT 30 sen to RM43.54, Tradewinds 29 sen to RM8.02 and United Malacca 25 sen to RM6.40.

The actives included Dialog, AirAsia, Trinity, Key West, Petronas Chemicals, MRCB, Compugates and Timecom.

Integrate traffic impact studies, says councillor

PROPERTY developers should channel funds into a common pool for the Penang Municipal Council (MPPP) to appoint independent consultants for traffic impact studies.

MPPP councillor Dr Lim Mah Hui said that the studies up to now have been quite ineffective because consultants were appointed by individual developers.

“We should consider a new system for independent consultants to take an integrated rather than piecemeal approach,” he told a full council meeting yesterday.

Dr Lim said that Penang would end up like Hong Kong with high-density development and over-crowding without the public infrastructure to support it if high-rise buildings were conti-nually being approved and if developers continued to buy up every piece of available property to build to the maximum density ratio.

“I’m not against development. What we need to ask is what type of development — is it rampant and unbalanced, or is it sustainable and balanced?

“I’m afraid our concept of development is simply too property-centric,” he added.

Dr Lim also said that it was the responsibility of the state — politicians, councillors, civil servants and policy makers — to provide the checks and balances, to protect public interest and come up with sensible policies to ensure sustainable development.

Meanwhile, the MPPP financial management sub-committee proposed increasing compounds issued to offenders who were not civic-conscious.

Its alternate chairman Tan Hun Wooi said that the committee proposed to increase the compounds by 100%.

“Examples of errant behaviour include hawkers who smoke while cooking or those who throw rubbish into the drain,” he said.

MPPP Public Health standing committee alternate chairman Ong Ah Teong said the commit- tee approved a 30% reduction on stall rentals at the market complex at Lintang Macallum 2, Ocean View hawker complex and the stalls on the upper floor of the Bayan Baru market complex beginning this month until July next year.

SOURCE: The Star

MP: Relocate golf course to make way for housing

GEORGE TOWN: An independent MP has proposed that a golf course which sits on a state-owned land in Bukit Jambul here should be relocated so that the land can be used for a housing project.

Bayan Baru MP Datuk Seri Zahrain Mohd Hashim said such a move would benefit some 5,000 poverty-stricken people living across the golf course in Kampung Sungai Nibong Kecil.

“It is ironic that these people have to live in poor conditions while across the road, there is a golf course serving only the purpose of some 2,000 golfers.

“The state government should do something about this. We need more houses for the poor. I have been proposing this when I was with PKR but it was shot down,” he said yesterday.

Zahrain told reporters after presenting RM9,000 to families who lost their homes to a fire which destroyed seven houses in Kampung Sungai Nibong Kechil here on Wednesday.

The golf course which is being referred to is the Bukit Jambul Country Club (BJCC) operated by Island Golf Properties Bhd (IGP) and owned by Penang Development Corporation (PDC).

Banking sector's loan growth to taper off: ECM

The banking sector's loan growth is expected to taper off in the coming months following clear signs of a slowdown in momentum due to rising global uncertainties, says ECM Libra Investment Research.

In an update on banking sector, ECM Libra said the growth momentum of all three lending indicators slowed considerably in July.

It said month-on-month growth rate of loan applications, loan approvals and disbursements dropped to RM65.3 billion (-5.3 per cent), RM32.2 billion (-15.4 per cent) and RM64.1 billion (-13.8 per cent), respectively.

"Year-to-date annualised loan growth decelerated to 13.6 per cent from 14.6 per cent in June, dampened by increased global uncertainties and gradual monetary tightening by Bank Negara Malaysia," it said.

ECM Libra said property loans remained the key growth driver.

"However, the growth momentum of property loans was expected to taper off going forward with the May increase in overnight policy rate starting to take effect and a more stringent credit policy instigated by banks," it said. – Bernama

SOURCE: Business Times

Good news for 320 families

MORE than 320 families living on Kampung Cross Street in Bukit Mer-tajam are happy after the developer agreed to increase their compensation.

The residents expressed their happiness when Chief Minister Lim Guan Eng conveyed the good news during a meeting at the Seberang Prai Municipal Council headquarters in Bandar Perda.

Residents action committee chairman Tan Khin Mok, 47, said the developer served an eviction notice to the residents about a year ago.

“We had numerous meetings with the developer, who offered each of us only RM15,000 regardless of our house size.

“The compensation offered then was too little for us to do anything, it was not even enough for us to buy a low-cost flat,” he said yesterday.

Tan said they took up the matter with Chief Minister who managed to get the developer to increase the compensation to RM30,000 and RM45,000.

Source: The Star

Ready for flood response

PROPERTY developers with projects in Batu Maung, Penang, have expressed their commitment to help out during flood-related emergencies.

Batu Maung assemblyman Abdul Malik Abul Kassim said they would work closely with all eight Com-munity Development and Security Committees (JKKKs) in the constituency.

In view of the rainy spell, each JKKK will set up a Rapid Action Force with the help of the developers and Penang Municipal Council to prepare for all eventualities.

The public can contact the respective JKKKs for help during emergency,? he said.

The numbers of the JKKKs are as follow: Sg Ara (013-4883445), Bukit Gedung (019-4142904), Teluk Tempoyak (013-5137324), Batu Maung (016-4131841), Kg Naran (012-4183048), Sg Tiram (017-4279353), Kongsi 10 (016-5622872) and Permatang Damar Laut (012-5787964).

The public can also call Abdul Malik (019-4451005) or his service centre (013-5101968) for assistance.

Abdul Malik was speaking to reporters yesterday after meet- ing with the developers? repre- sentatives from Mah Sing Group Bhd, PLB Properties, Sunway City Berhad (SunCity) Property Development and Setia Promena-de.

During the meeting, they also discussed how to prevent the backflow of seawater, the synchronising of old and new drains, silting problems and retention ponds.

He said Batu Maung was vulnerable to high tides and strong winds due to its close proximity to the sea.

At the same time, he advised Batu Maung residents to obtain the latest information from relevant agencies such as the state Meteorological Department.

SOURCE: The Star

Exco man: 95 people offered Sri Saujana units

THE Penang Housing Department has offered 95 people units at the Sri Saujana flats on Macal- lum Street, and they will move in after their bank loans have been approved.

State Town and Country Planning, Housing and Arts Committee chairman Wong Hon Wai said these people were squatters and residents affected by the Sungai Pinang flood mitigation project.

He was responding to a query by Pengkalan Kota Barisan Nasional coordinator Loke Poh Chye on why 324 low medium-cost units at the Sri Saujana flats had been left empty.

Wong in a statement said the remaining units would be offered to eligible applicants next month.

Loke had said that it was important for the state to fill up the empty units, as they would not only turn into breeding grounds for mosquitoes but also attract drug addicts, who might use the units as their haunt.

Source: The Star

The Wave @ Setia Pearl Island

courtesy of penangpropertytalk :)

The Wave, an upcoming condominium development at Setia Peral Island. This new development comprises 3 blocks with unit size ranging from 1,100 square feet to 2,000 square feet with full condo’s facilities.

Property Project : The Wave @ Setia Pearl Island
Location : Setia Pearl Island, Sungai Ara, Penang
Property Type : Condominium
Built-up Area: 1,100 sq.ft. onwards
Total Units : 539
Land Tenure: Freehold
Developer : SP Setia

Bandar Raya: Tie-up with MPHB opens new avenues

KUALA LUMPUR: Bandar Raya Developments Bhd (BRDB) says its joint venture with Multi-Purpose Holdings Bhd (MPHB) will open new avenues for the company for land development.

BRDB is seeking opportunities to diversify its development portfolio to grow itself, said its chief marketing officer K.C. Chong.

In April, BRDB's wholly-owned units, Pinggir Mentari Sdn Bhd, Orion Vibrant Sdn Bhd and Magna Senandung Sdn Bhd, signed three separate joint venture agreements with subsidiaries of MPHB – Tibanis Sdn Bhd, Magnum.Com Sdn Bhd and Mimaland Bhd.

The joint venture is centred on developing 268ha in Mimaland, Gombak; Rawang and Penang. It will be the first venture for BRDB in these locations.

BRDB has long been accredited with the establishment of Bukit Bandaraya in Bangsar, Kuala Lumpur. It also has projects in the Kuala Lumpur city centre and Johor.

The company's vision moving forward is to provide the unique Bangsar lifestyle in Rawang, Mimaland and Penang.

Chong told Business Times that the joint venture is working towards launching the projects, with an estimated gross development value of more than RM4.25 billion, after 2012.

"The projects are still in the planning stages. Penang would be our most expensive development. We plan to build luxury houses and condominiums, worth more than RM1 million each," Chong said.

In Rawang, the joint venture is planning to build mixed residential properties and a commercial hub.

Chong said the development planned for Mimaland will be the most exciting as it would change the area's landscape.

Mimaland was once a famous recreation park. It opened in 1975 and ceased operations in 1993, following some unresolved plans for expansion.

The joint venture project will include eco-friendly hillside, courtyard and waterfront landed homes set among natural waterways, valleys and water bodies with mature forest views.

Chong said properties at its Rawang and Mimaland projects will start from RM500,000.

SOURCE: Business Times

Exhibition with the best deals in decor and electrical items

VISITORS to the Perfect Livin ’11 Home & Lifestyle Exhibition at the Penang International Sports Arena (PISA) can expect good deals and discounts on a wide range of home decor and home living products.

The one-stop solution, held until tomorrow, from 11am to 9pm, features more than 400 booths offering hot package deals for home innovation and decoration items, gifts for purchases and discounts.

Creative Novelties Marketing Holdings Sdn Bhd group managing director Datuk Adriana Law said this time around, exhibitors were offering competitive prices to attract a crowd of 80,000 visitors over the three-day event.

“Due to the overwhelming response from our previous exhibition in June, exhibitors will bring in more products, especially mattresses and high-quality landscaping products, to cater to demand,” she said.

She said the exhibition was separated into eight zones to enable visitors to get the best options in improving their home with the latest audio-visual systems and gadgets, security systems, kitchen appliances and unique landscape concepts.

There will be a talk titled ‘Feng Shui for Wealth & Prosperity’ by Grand Master Yap Cheng Hai today from 2pm until 5pm, and children’s colouring contests today and tomorrow.

Admission to the exhibition is free and visitors stand a chance to win a 42-inch Panasonic LCD TV per day.

Visitors who spend RM1,000 and above with accumulated receipts will also receive a gift.

Those who spend RM100 stand a chance to win daily prizes, including Napure mattress, wallpaper or a fibreglass water feature in the ‘Purchase & Win’ contest.

The first 1,000 visitors to click ‘like’ on Perfect Livin’s Facebook page will be given a Tupperware snack cup on a first-come-first-served basis, and will also stand a chance to win a three-day-two-night trip for two to Bangkok.

For details, visit www.perfectlivin.com or connect with the event on Facebook or Twitter at perfectlivin.

Source: The Star

Singapore launches green financing for buildings

Singapore has launched a pilot scheme -- Building Retrofit Energy Efficiency Financing (BREEF) -- to provide loans to building owners and energy services companies to enable them to undertake energy retrofits from Oct 1 this year.

Minister of State for National Development and Manpower, Tan Chuan-Jin, said the Building and Construction Authority (BCA) and participating financial institutions would share the risk of any loan default.

"So far, Standard Chartered Bank and United Overseas Bank have confirmed their participation in the scheme," he said at the International Green Building Conference 2011 here Wednesday.

The BCA is the government agency responsible for the built environment and green building policies in Singapore.

Tan said Singapore has set a target of greening 80 per cent of its buildings by 2030, and its current challenge was on greening its existing stock of buildings.

"The financially stronger building owners usually initiate the retrofitting of their cooling plants when the age of the chillers reaches 12 to 15 years.

"The rest of the building owners, including the management corporation, however, may take an even longer time, citing cost of retrofitting, lack of financing or awareness," he said.

Tan said the Ministry of National Development would amend the Building Control Act to extend minimum Green Mark standards to existing buildings as and when they were retrofitted.

Launched in 2005, the Green Mark scheme is BCA's flagship rating system that assesses buildings in the tropical climate for their environmental impact and performance.

Tan also witnessed the signing of two memorandums of understanding (MOUs) with the United Nations Environment Programme (UNEP) and the Zhaoqing Municipality, Guangdong, China.

The collaboration with UNEP will help drive greater adoption of sustainable buildings, while the MOU with the Zhaoqing Municipality will see Singapore share its experience and expertise with Zhaoqing.-Bernama

Penang catches attention of Klang Valley developers

KUALA LUMPUR: Analysts think a trend may start where Klang Valley property developers look to buy a stake in real estate companies in Penang to take advantage of the state's booming sector. CIMB Investment Bank Bhd research head Terence Wong said this is likely to happen over time. "This could be continuing but not in a short time. It could happen once in a year," he said. Investing in the property market in Penang is still a solid option. "This is because property prices in Penang are firm and almost on par with what is being offered in the Klang Valley currently," he said.

On August 29, conglomerate Sime Darby Bhd said it was buying 30 per cent of Eastern & Oriental Bhd (E&O) for RM766 million to expand its portfolio in property development and hospitality, beyond Greater Kuala Lumpur. Having a stake in E&O will immediately give Sime Darby access to present and future property projects in Penang. Analysts have also said that it is cheaper to gain control of a listed company with landbank in Penang than buy large chunks of land in the island.

Three Klang-Valley based developers have already ventured into Penang and launched several properties. IJM Land Bhd has launched it RM422 million The Light Collection I & II while SP Setia Bhd has introduced its RM60 million Brooks Residences, RM230 million Reflections condominium and semi-detached schemes for its Setia Pearl Island project. Mah Sing has launched its the first phase of its Legenda@Southbay, for RM71 million.
 By Business Times

Property loans to keep lead

PETALING JAYA: Analysts expect property loans to maintain their position as a key growth driver of credit expansion with some estimating them to grow between 10% and 12% this year due to the low interest rate environment and ample liquidity in the banking system.

While holding to this view, some feel the external environment, like the slowing US economy coupled with the sovereign debt crisis in the eurozone, could dampen demand for properties.

For the first seven months of this year, property loans remained the key growth driver, accounting for 40.6% of the banking system’s overall credit expansion, followed by working capital loans at 23.6%. Residential property loans currently accounted for about 27% of the system’s total loans.

RAM Ratings head of financial institution ratings Promod Dass told StarBiz that the credit environment to date had continued to be accommodative for borrowers with ample liquidity in the banking system and a stable economic environment. Coupled with attractive promotional packages offered by some developers, he said residential property loans had already shown a healthy 7.1% growth in the seven months to July (or 12.1% annualised), which was more or less at a similar pace compared with the overall total banking system’s year to date loan growth of 7.5%.

“We believe that the full year loan growth for residential property loans will be in the 10%-12% range although we are closely observing the sovereign problems still brewing in Europe as well as concerns on the US economy and the consequent impact on Malaysia’s economic growth stamina, which could affect consumer sentiment in property purchases,” he reckoned.

Dass said that while there was a slowdown in loan applications for residential mortgages in the few months after the implementation of the 70% loan-to-value cap on the third and subsequent house financing, the momentum had picked up again since March.

The move to curb the third and subsequent home financing was introduced by Bank Negara on Nov 2 last year to quell speculation on residential properties.

Alliance Bank Malaysia Bhd consumer banking head Ronnie Lim said he was bullish on property loans. He noted that in Malaysia, housing loans currently accounted for 50% (or RM255bil) of total household debt (RM510bil) and would continue to be one of the key growth drivers of retail credit expansion this year and in the near future.

“One of the main growth areas for properties is Klang Valley, which accounts for close to 60% to 65% of all property transactions. In addition, the population growth in Klang Valley is expected to reach 10 million by 2020 and the demand for residential property is expected to be fuelled by residents of Klang Valley whose average age is 34 years old.

“Coupled with the shortage of land in Klang Valley, demand will always out-strip supply. The economic growth and the low unemployment rate in the country is another catalyst for housing loan growth. The recent Economic Transformation Programme (ETP) announcement will further accelerate demand for residential properties as more affordable properties are being developed,’’ he said.

Lim said prices of properties in Malaysia were still one of the lowest in the region when compared with countries like Thailand, Hong Kong and Singapore. The industry’s total housing loan outstanding stood at RM255bil as of July 2011 compared with RM234bil in December 2010, he noted, adding that this represented a 14% annualised growth.

Given the positive environment and the above factors, Lim said the bank was confident the current growth rate could be maintained despite the recent global market unrest.

An MIDF Research banking analyst said property loans would hold up as a key growth driver of credit expansion this year as the persistent demand for property loans would be driven by low lending rates as well as the sustainable growth of the property market.
SOURCE: The Star

E&O deal hogs limelight

The pundits have it. For the last month or so, the rumour mill was working overtime around Eastern & Oriental Bhd (E&O), the luxury lifestyle property developer, that a merger or acquisition was in the works.

First came the persistent speculation that SP Setia Bhd would merge with E&O, which was soon quashed by SP Setia. Then last week – quite out of the blue – Sime Darby Bhd announced it was acquiring a 30% stake in E&O for a significant premium over the latter’s share price.

In early August, E&O’s shares galloped to a three-year high of RM1.75 on the back of the SP Setia merger rumours, then came down again in line with the global stock slump. Yet, amid the broader market sell-down a few weeks later, its stock again saw aggressive trading, this time from its own shareholders who appeared to be upping their stake.

The notable ones included GK Goh Holdings Ltd, a substantial shareholder of E&O, and Datuk Azizan Abd Rahman, a director of E&O. According to shareholder changes filed with Bursa Malaysia, GK Goh had bought 1.25 million shares in three days, raising its stake to 11.6%, while Azizan acquired 100,000 shares.

The upward trend in E&O’s share price can be observed since Aug 24, from RM1.43 to Friday’s close of RM1.60, an 11.9% increase.

The deal with Sime Darby, which E&O called a “milestone” development, raised more than a few eyebrows about why such a high price was paid. The share sale agreement is for Sime Darby to acquire 273 million shares in E&O and 60 million irredeemable convertible secured loan stocks, representing a 30% equity interest, for RM766mil cash.

The sale price works out to RM2.30 per E&O share, which is a 58.6% premium over the stock’s pre-suspension price of RM1.45. Sime Darby came out in defence of its purchase, saying the RM2.30 was actually a 20% discount to E&O’s estimated realisable net asset value of RM3.2bil or RM2.88 per share.

Upon completion of the deal, slated for Sept 9, 2011, Sime Darby will be the single largest shareholder of E&O.

E&O’s largest project is the 980-acre Seri Tanjung Pinang seafront development, a coveted address in Penang.

To recap, the 30% block in E&O was acquired by Sime Darby from three substantial shareholders: E&O managing director and founding member Datuk Tham Ka Hon, Tan Sri Wan Azmi Wan Hamzah and Singapore-listed GK Goh.

The trio’s collective 41.7% shareholding in E&O will be diluted to 11.5% post-acquisition.

Tham, previously the largest shareholder with 15.7%, will end up with a 5.1% stake while Azmi and Goh will have 3.5% and 2.9% respectively.

A sore point with analysts is the high price paid for E&O. TA Research said the price was 19 times E&O’s forecast earnings for 2012 and 1.85 times its price to book value based on consensus estimates. By comparison, the property sector has an average of 12 times forecast earnings for 2012 and 0.8 times price to book value.

Kenanga Research also noted that since Sime Darby was expected to equity account E&O’s earnings on an associate level, that would only translate to a meagre 0.6% increase to Sime Darby’s profits in 2012 and 2013.

It suggested that management might have been better off using the RM766mil to expand its plantation land or motor segment in China.

A local broker, however, had a more pragmatic view, saying that although Sime Darby was keen to venture into high-end development, it did not necessarily want to obtain everything at one go via a general offer, which would have been a much riskier proposition.

“Furthermore, E&O’s shares in the open market are quite fragmented and not very liquid, making the task of acquiring 30% quite cumbersome and time-consuming.

“By getting the substantial shareholders to agree on a share sale proper, Sime Darby avoided facing a hostile takeover situation,” she said.

In terms of mutual benefits, Kenanga pointed out that phase two of the Seri Tanjung Pinang development might have factored strongly in the deal.

The project, estimated to have a reclamation cost of between RM3.2bil and RM3.5bil and a gross development value of RM9bil to RM10bil, could do with the financial muscle of a company like Sime Darby.

SOURCE: The Star

Depleting landbank may prompt BRDB to sell assets

Kuala Lumpur: Bandar Raya Developments Bhd (BRDB) may sell its prime assets to buy more land in the Klang Valley, Penang and Johor as its current landbank is depleting, analysts said.

It may agree on a price of RM1.2 billion, which is about 27 per cent more than their book value.

They said BRDB wants to increase its property development activities to improve earnings, which have been below par lately.

For the quarter ended June 30 2011, BRDB posted a net profit of RM17.1 million, down from RM84 million in the same period last year.

"The stock has been trading below its true value as its earnings have not been as good as expected. Only recently BRDB had been more active in terms of launches," said a senior analyst with MIDF Research.

BRDB, which has four ongoing projects, has less than 25 hectares of land in Bangsar, Dutamas, Seri Kembangan and Taman Duta, and some 124ha of land in Johor.

On Monday, BRDB's major shareholder Ambang Sehati Sdn Bhd, controlled by its chairman Datuk Mohamed Moiz Jabir Mohamed Ali Moiz, had offered to buy some of its assets.

These include The Bangsar Shopping Centre, Menara BRDB, CapSquare Retail Centre in Kuala Lumpur, and Permas Jusco Mall in Johor.

BRDB has, until September 19, to decide on the offer.

The company had appointed CIMB Investment Bank Bhd as its main adviser to evaluate the offer.

"It is obvious that the owner is taking the good assets. He may eventually flip it in a few years to make back his money. Retail assets are very valuable in Malaysia.

"Most of them are trophy properties … not high value assets except for BSC which is a cash cow for the company," said another analyst.

According to BRDB's 2010 Annual Report, the value for BSC and Menara BRDB is RM660 million while Cap-Square Retail Centre and Permas Jusco Mall are valued at RM214 million and RM68 million, respectively.

OSK Investment Bank Bhd director and head of equity ca-pital markets, Gan Kim Khoon, thinks BRDB will sell the properties and prove to shareholders that they will stand to benefit from the disposal.

"BRDB will make quite a substantial capital gain from the disposal. Otherwise, it won't make sense to dispose of these income-generating assets.

"If BRDB is offered a good deal to sell the assets with substantial capital gain, that may outweigh the loss of future income stream. BRDB can generate income from property development projects," Gan told Business Times.

SOURCE: Business Times

Property players concerned over new housing loan criteria proposal

KUALA LUMPUR: A proposal to change the way housing loans are approved has property consultants and analysts worried as they felt loans given based on net income as opposed to gross income would dampen demand for housing.

Some banks, however, don’t have an issue with the proposed changes as one banker said changes to the debt serviceability ratio would be good for the housing market. He said the proposed changes were for the benefit of home buyers.

“It’s up to the banks to manage it. Banks have their own ways to control and approve loans,” said Zerin Properties CEO Previndran Singhe.

Previndran was critical of the proposed change, saying such a drastic move would be self defeating and would mean more Malaysians could not afford homes.

Henry Butcher Marketing Sdn Bhd chief operating officer Tang Chee Meng said such a move would tantamount to a limit on the amount of money a person could borrow to buy a house.

Although lower demand may push prices down, he does not think developers may be able to reduce prices by much given the increase in building material prices over the years that has pushed the cost of building a home upwards.

“I will support any measure by the Government to cool down the property market so there is no bubble, but they have to be careful when taking measures and need to determine if there is really an asset bubble building up,” Tang said.

One analyst who covers the sector said such a measure, if it was to control speculation in the property sector, was not needed at the moment as house prices would soften in a period of weak demand brought about by an economic slowdown.

“Developers and banks would surely lobby against such a move,” she said, worried about the chain reaction a weaker property market would have on the overall economy.

RHB Research Institute on Monday analysed the proposed changes and concluded that a move to change the assessment of eligibility for housing loans to a net income basis would lower affordability by 14% to 37%.

It said the high-end market would be most affected, and should supply match demand then prices would have to correct by a similar or smaller percentage, or supply will have to be reduced to hold up prices.

“The mass market segment which is largely concentrated in the medium-priced range will see smaller impact, especially if first-time home buyers are excluded from this measure,” it said.

While some might see the measure as a move to bring down the price of homes, others think such a move by Bank Negara would in turn ease the growth in household indebtedness.

Bank Negara, which had been looking to introduce guidelines to stress-test individual borrowers this quarter, has sought the opinion of banks on the proposed move.

One of the factors that precipitated that move is the buildup of debt that has seen household debt to GDP ratio reach nearly 76%, which is on the high side compared with countries in South-East Asia.

“It is understandable for Bank Negara to take action given that the rising household debt, as measured by household debt to GDP ratio, has surged to a record high level in 2009 and 2010, largely stimulated by low interest rate and easy financing scheme for property purchase,” said RHB.

With residential loans rising 14.7% in July, residential loans accounted for 54.3% of total loans in the same month, up from 49.7% a year ago.

Although housing loans had been the biggest contributor to the increase in household debt, the buildup of personal loans had also been rapid and that had caught the attention of the regulator.

CIMB Investment Bank Bhd economic research head Lee Heng Guie concurred that the proposal would affect demand for housing, but said the intention of the proposed change was to get people to buy what they can afford.

Lee said any decision to implement the new computation method had to be weighed against the current sluggish global economic situation.

And while household debt may be an issue, the ability of households to service their loans do not appear to be a problem as yet.

Lee said that in 2010, for every ringgit of income, households paid 47.8 sen to service their debt.

The debt service ratio of household debt was 49 sen in 2009, 39.5 sen in 2008 and 41.1 sen in 2007 and the factors that affect that ratio is household income and the interest rate outlook.

SOURCE: The Star

PLB acquires half share in two pieces of land in Penang

KUALA LUMPUR: PLB Engineering Bhd's wholly-owned subsidiary, PLB Land Sdn Bhd, is acquiring half share over two pieces of
land in Teluk Ketumbar, Penang, from Puan Che Siah Ibrahim, for RM4.2 million.

The purchase of the land measuring 17,681.4712 square meters and 5,916.5035 square meters, respectively, would be financed via internally generated funds.

In a filing to Bursa Malaysia on Sept 7, PLB said the acquisition would increase the group's land bank to cater for future development.- Bernama

U.S. Housing Starts Fall to Three-Month Low

Builders began work on fewer U.S. homes than forecast in August, showing the industry remains flat on its back even as mortgage ratesfall to record lows.

Housing starts dropped 5 percent to a three-month low 571,000 annual rate, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg News survey called for a 590,000 pace. Building permits, a proxy for future construction, unexpectedly climbed.

Foreclosures, declining prices and a lack of employment are holding back residential construction, which has typically helped spark economic rebounds from past recessions. Tighter lending rules and declining homeowner equity mean fewer buyers are able to take advantage of lower borrowing costs, highlighting the limits faced by Federal Reserve policy makers as they consider new ways to stimulate the economy when they meet today and tomorrow.

“Conditions aren’t getting much worse, but there’s also no sign of a real turnaround,” said Celia Chen, a housing economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. August starts may have been put off because of bad weather, she said. “Permits rose and that might be a sign there’s hope.”

Stocks fell amid concern international officials won’t make a decision on further Greek aid until October. The Standard & Poor’s 500 Index lost 0.2 percent to 1,202.09 at the 4 p.m. close in New York. Treasury rose, pushing down the yield on the benchmark 10-year note to 1.93 percent from 1.95 percent late yesterday.

Survey Results

Housing starts estimates ranged from 570,000 to 634,000 in the Bloomberg survey of 78 economists. July’s pace was revised to 601,000 from a previous estimate of 604,000. Home construction totaled 554,000 units in 2009, the lowest since record-keeping began in 1959.

The drop in construction last month was led by a 29 percent slump in the Northeast, which indicates the threat posed by Hurricane Irene may have prompted builders to pull back. The flooding caused by the storm means projects scheduled to begin in the region this month may also have been delayed, according to economists like Jennifer Lee at BMO Capital Markets in Toronto.

Fed officials tomorrow will probably announce a program for monetary easing that will do little to turn the economy around and help 14 million unemployed Americans find work, according to economists in a Bloomberg News survey. Seventy-one percent of the 42 economists surveyed forecast policy makers will agree to replace short-term Treasuries with longer-term debt in a bid to reduce borrowing costs even more.

Mortgage Rates

The average rate on a fixed 30-year mortgage loan decreased to 4.09 percent last week, the lowest since record keeping began in 1972, according to figures from Freddie Mac. The rates are typically based on the yield of the benchmark 10-year Treasury note, one of the borrowing costs the central bank would be aiming to lower in a so-called “Operation Twist.”

Fed Chairman Ben S. Bernanke warned last month during a speech in Jackson Hole, Wyoming, that the central bank alone can’t lift sagging home prices or mitigate a wave of home foreclosures.

Today’s report showed permits rose 3.2 percent to a 620,000 annual rate in August, the highest this year and a sign construction may stabilize. Permits climbed in three of four regions, led by an 11.3 percent jump in the West. They climbed 6.3 percent in the Midwest and 3.3 percent in the Northeast.

New construction of single-family houses decreased 1.4 percent to a 417,000 rate in August from the prior month. Work on multifamily homes, such as townhouses and apartments, slumped 13.5 percent to an annual rate of 154,000.

Regional Breakdown

Starts dropped in two of four regions, with the South joining the Northeast in decline. They climbed in the Midwest and West.

Declining stock values have made households less wealthy, helping push down confidence and discouraging big-ticket purchases. Unemployment above 9 percent also leaves fewer Americans able to take advantage of cheaper borrowing costs.

“With all of the economic turmoil, both domestic and international, there’s not much that points to an improving housing market at any point in the near future,” Ara Hovnanian, chairman and chief executive officer of Hovnanian Enterprises Inc. (HOV), said in call with analysts on Sept. 8. “Our internal business plan assumes market conditions do not improve.”

Confidence among U.S. homebuilders dropped in September to a three-month low as prospective buyer traffic, sales and purchase expectations declined. The National Association of Home Builders/Wells Fargo sentiment index decreased to 14, figures showed yesterday. Readings less than 50 mean more respondents said conditions were poor.

“High unemployment and volatile financial markets continue to undermine consumer confidencein spite of low mortgage rates,” Patricia Bedient, chief financial officer at Weyerhaeuser Co. (WY), said Sept. 15 at a forest products conference. Federal Way, Washington-based Weyerhaeuser owns about 6 million acres of U.S. timberland. “New home markets softened noticeably four to six weeks ago in response to weak employment data and political discord inWashington.”

To contact the reporter on this story: Alex Kowalski in Washington atakowalski13@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

Bank Negara move can affect housing demand

GEORGE TOWN: Slower affordable property launches and less demand for such properties are some of the consequences of the proposed move by Bank Negara to assess housing loans on net income rather than on gross income.

Registered and chartered valuer C.A. Lim & Co proprietor Lim Chien Aun told StarBiz that there would be an impact on the demand for affordable properties priced between RM100,000 and RM300,000.

The proposed move to assess the eligibility for housing loans on a net income basis would lower affordability by 14% to 37%, said a recent RHB Research Institute report.

“We will definitely see slower take-up rate from the low and middle-income segments, resulting in the long run slower delivery of affordable housing projects.

“Ordinary wage earners will be affected more than the high-income segment.

“Unless the Government is willing to lower the price of affordable housing in the country, the proposed move, if implemented, may not support Government’s objective of promoting affordable housing projects,” he said.

Chartered valuer and property consultant Azmi & Co (Penang) Sdn Bhd managing director Chandra Mohan Krishnan said there would be a slowdown in the delivery of houses, especially those priced from RM100,000 to RM300,000, as the eligibility of those in the low and middle income segment for housing loans would be affected, if the move was implemented.

“I don’t encourage this move to be implemented now, as this would generate a chain of effects, although the intention is to curb speculation,” he said.

On the impact of the move on property prices, Henry Butcher Malaysia (Penang) director Dr Teoh Poh Huat said there would be additional downward pressure.

Real Estate & Housing Developers’ Association (Penang) chairman Datuk Jerry Chan said, for example, the impact of the move would be more noticeable on the island than in Seberang Prai where the property market was less speculative.

“Developers who have lined up easy and high percentage financing for its projects will feel the brunt of the proposed move.

“New projects from such developers would assume a slower pace. Property buyers with high leverage for property purchase will also be affected.

“We can expect to see a slower takeup rate from this category,” he said.

Chan said the move, however, would not impact very much on property prices, due to high land cost and strong holding power of major developers in Penang.

They were commenting on Bank Negara’s proposed move to curb rising property speculation, as household debt in the country, as measured by household debt to annual gross domestic product ratio, had surged to a record high level in 2009 and 2010, largely stimulated by low interest rates and easy financing scheme for property purchase.

The household debt to GDP ratio in the country has reached nearly 76%, which is on the high side compared with countries in South-East Asia.

Meanwhile, Penang-based Ideal Property Development Sdn Bhd plans to launch projects with about RM400mil in gross development value over the next 12 months, compared with RM600mil as originally planned.

SOURCE: The Star

SP Setia gets nod to build extra units on Penang Island projects

SP Setia will develop the Penang People’s Park project on the grounds of the Penang International Sports Arena (Pisa). Pisa is an indoor sports arena close to the Penang International Airport.

GEORGE TOWN: The Penang government has set a precedent for housing developers in the state by allowing SP Setia Bhd to build extra units within any of its developments on the island over the next 30 years.

This comes under a build-operate-transfer (BOT) concession agreement that was signed on August 19 between the Municipal Island of Penang Island (MPPP) and Eco Meridian Sdn Bhd (EMSB), a wholly-owned subsidiary of SP Setia

Highly impressive: Artist impression of an aerial night view of the sPICE centre within the Penang People's Park project.

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A summary of the concession, which was prepared by MPPP’s legal unit and disclosed yesterday, said MPPP agrees to grant EMSB the right to additional density of any SP Setia developments within Penang Island and this would be over and above the maximum permissible density for the land.

This must not exceed 1,500 residential units spread out on the island during the concession period.

The concession period is for 30 years and EMSB is also entitled to apply for a renewal for two further terms of 15 years each.

Pisa was completed in 2000 and sits on more than 10 hectares, serving as the largest and most comprehensive multi-purpose indoor venue on Penang Island.

The arena, which is owned by the Penang Island Municipal Council and managed by Penevents Sdn Bhd, boasts an Olympic-sized swimming pool and a spacious air-conditioned area, which has been designed to host conventions, exhibitions and entertainment shows, along with major sporting events.

The new project, estimated to cost up to RM300 million, is made up of three components – which include an international convention and exhibition centre, along with refurbishment works to the existing indoor stadium and aquatic centre respectively.

The concession also compels EMSB to build 450 low medium-cost housing units.

“The State Authority shall provide a piece of land for the purpose of the same,” the summary of the agreement said.

The deal also stated that MPPP has agreed to sell and transfer part of the 10 hectare plot to EMSB for the purpose of a hotel site with a leasehold title of 99 years.

The purchase price of the hotel site is RM13.7 million

Source: Business Times