Ipoh landed properties to cost 10%-15% more in second half

IPOH: The selling price of landed properties targeted for launch here in the second half of this year will be priced between 10% and 15% higher than last year due to better demand, rising raw material and land cost.

Real Estate Housing Developers’ Association (Perak) chairman Datuk Francis Lee said that since the Asian Financial Crisis in 1997, property prices had been stagnant.

“Presently profits reached sub-normal levels in Ipoh, with margins of about 10%.

”For example, the cost to construct which include the land and raw materials, and to market a landed property with a built-up of 1,800 sq ft, is around RM200,000.

“When sold in the market, such a property is priced between RM210,000 and RM225,000, depending on its location.

“The profit should be at least 20% as there are risks that the developer have to encounter, such as late delivery due to unforeseen circumstances and the liability period for claims on defects,” he said.

Lee said that for the past six months, the property development market in Ipoh had picked up.

“The demand is rising gradually,” he added.

“The growing demand in the property market, rising raw material prices, and land cost are likely to push property prices up in the second half by 10% to 15%.

“However, if the demand drops, there will be no new projects launched because of the abnormal returns.

“This will eventually force prices to move up to a more equitable level,” he said.

Lee said the present home ownership in Ipoh is about 60%, while the remaining 40% comprised those who stay as extended families or in rented premises.

“The potential for home ownership to grow in Ipoh is there, as it has a population of about 710,000,” he said.

Lee added that the purchase of primary and secondary residential properties in Ipoh was largely driven by effective home ownership demand. And only a fraction of which is in the form of property asset investment.

“As property prices in Ipoh are largely determined by economic fundamentals devoid of speculative investment, prices of properties are relatively stable even through the recent recession,” he said.

By The Star

Wise home improvements

RENOVATING your home is often an aesthetic choice, but if done right, it can enhance both the abode's rental worth as well as its resale value.

Whether it's something minor (such as changing the faucet on your kitchen sink) or a major reconstruction (like adding a new floor to your home), some renovations will help recoup your returns near instantly, while others might be nothing more than an investment disaster.

Know what you want

Before getting started, it's important to decide whether the house you intend to renovate is for keeps.

“If you don't intend to sell or rent, than you're limited only by your imagination,” says KL Interior Design executive designer Robert Lee. “For the investor who's looking to rent or re-sell some day, he should realise that some renovations, though appealing to him, may end up making the house less marketable to a potential buyer or tenant,” he says.

Lee recalls a client many years ago who insisted on having nearly everything in one of the rooms in pink. “It was for his daughter. He wanted pink drapes, a pink carpet, wall, door, everything. Many years later, his daughter moved out of the home and they were looking to rent out the room but had problems finding a tenant.”

Making upgrades or changes to your home can be a costly affair. According to Lee, renovations can cost more and take longer to complete than initially envisaged.

“A lot of people that decide to renovate their home are often taken aback by how much it actually costs. When this happens, they go for relatively unknown contractors who, though cost less, tend to cut corners and give you a cheaper but less durable product,” he says.

Lee recalls a neighbour who wanted to install a new kitchen cabinet and sink but was “not willing to pay beyond a certain amount.”

“She paid RM1,500 but after only three years, the sink was shaking in its place, water was seeping into the cabinet and the wood started rotting. She ended up paying RM3,000 for a new cabinet, which, after five years, is still going strong.

“It's better to fork out a little more for something that lasts a long time. My neighbour could have just paid RM3,000 initially for a good job but because she was thrifty, she ended up paying RM4,500.”

Lee says people who want to renovate their home but are worried about the costs should do thorough research and find the best price.

Home improvements do not have to be expensive to look good and marketable. Home-Deco Art Sdn Bhd director Rachel Tam says the key to efficient spending is to spend wisely.

“The kitchen paint might be peeling but that doesn't mean you have to spend RM20,000 just to make it look good. All it may need is a fresh coat of paint and perhaps some of the appliances may need renewing,” she says.

Tam says that those looking to sell their homes should “know their limits” when it comes to making renovations.

“If you're living in a mid-to-high-end neighbourhood and plan to sell your home, it's best to limit renovations to a certain level,” she says.

“It's pointless to spend RM500,000 on renovations when the market rate for the average home within the area is just RM250,000. You're not going to make your money back when you sell.”

Lee gives an example of a client who installed a swimming pool in the yard of his home, which was located in a mid-income neighbourhood. “This guy was living in a corner single-storey terrace house. With the added space he had, he had a pool built. But when he wanted to sell the house, he had difficulties because nobody wanted to pay more for something which would require added maintenance,” he says.

For those looking to rent, knowing the type of tenant you are targeting is important too. Some tenants are only willing to pay so much.

Says Lee: “If you're living near a college or university and are targeting students as tenants, don't expect them to pay for the high-horsepower air-conditioning you installed in the room you are letting. This might be more appropriate if you are renting out to someone who's working.”

Renovations that pay

Freelance real-estate agent cum property investor Kamarul Ariff reckons that renovations made to the kitchen and bathroom are great ways to enhance the resale value of a property.

“Nowadays, people are finding more ways to beautify their kitchens and bathrooms. It's also what a lot of people look at first before buying a home.”

Ariff says renovation works can range from upgrading appliances, changing the flooring or a total make-over.

“Compared to renovating the living area or a master bedroom, the kitchen or bathroom is generally smaller and tend to cost lesser - making it easier and faster to recoup your cost,” he says.

He also says building a new room or an extension, though costly, can provide good, long-term returns. “It costs a lot but then you'll be able to rent it out. You'll be recover your money in no time,” he says.

By The Star

China property bubble to burst 'very quickly'

Workers labor on a construction site for a residential development in Shanghai. Photographer: Qilai Shen/Bloomberg

SINGAPORE: The "bubble" in China's property market is going to burst very quickly, with prices set to fall as much as 20 per cent in the next 12 to 18 months, according to Nomura Holdings Inc.

National real-estate prices may drop between 10 per cent and 20 per cent on average, compared with an increase of about 22 percent last year, Sun Mingchun, a Hong Kong-based economist at Nomura, said in a Bloomberg Television interview.

"If you look at housing prices to disposable income in Beijing and Shanghai, they are 13, 14 times," said Sun. "There's no way you can say there's no bubble."

Dissecting China's Housing Market

View Interactive

Explore China's booming real-estate market and the government's latest policies through graphics, analysis and video stories.

Real-estate prices jumped 12.4 per cent across 70 cities in May, adding to the 12.8 per cent surge in April that was the most since the data series began in 2005. The gains suggest that measures ranging from a ban on loans for third-home purchases to higher mortgage rates and downpayment requirements for second- home purchases have yet to cool the real-estate market.
Stephen Roach, chairman of Morgan Stanley Asia Ltd, said the government's measures are working "by all accounts".

China's property boom isn't a bubble because it's supported by "solid" demand for residential housing, he said. While portions of the real-estate market such as high-end apartments are overheating, demand for homes will remain robust as rural Chinese migrate to bigger cities, he said in a radio interview.

"This is just a sliver of the property boom," Roach said, citing that each year since 2000, between 15 and 20 million people migrate to Beijing, Shanghai, and second- and third-tier cities in the mainland.

The China Banking Regulatory Commission warned of growing credit risks in the nation's real-estate industry and increasing pressures of non-performing loans. Risks associated with home mortgages are growing and a "chain effect" may reappear in real-estate development loans, according to its annual report published on its website on Monday.

By Bloomberg

Kayveas moots 10pc discount for non-Bumi house buyers

KUALA LUMPUR, June 19 — People’s Progressive Party (PPP) president Datuk M. Kayveas has suggested that non-Bumiputeras earning an income of less than RM3,000 be given a 10 per cent discount currently enjoyed by Bumiputera house buyers.

He said a Bumiputera house buyer received a 10 per cent discount, irrespective of the person’s financial capability, whereas a non-Bumiputera house buyer needed to pay that 10 per cent.

“In this way, it is believed that every citizen will be more confident on the implementation of the quota and status system,” he said in his policy speech at the PPP’s 57th annual general meeting here today.

The meeting was opened by Prime Minister Datuk Seri Najib Razak.

Kayveas also proposed an annual increase in the budget allocation for education, in view of the increase in the number of outstanding students every year.

On the Maika Holdings Berhad shares, Kayveas said that as the response to the 80 cents offer per share was lukewarm, the government could step in to pay 20 cents to enable its more than 60,000 shareholders to benefit.

On May 12, a notice of conditional takeover offer was served on the Maika board of directors to inform them of G Team Resources’ intention to acquire all Maika shares.

The rationale for the offer was to return to Maika shareholders their cost of investment in the company on the basis of a cash offer price of 80 sen for each Maika share held.

On another matter, Kayveas said PPP would not trouble Najib’s leadership by raising petty issues and hoped the prime minister would continue with his people-responsive policies.

“In the meantime, PPP will continue to take a positive political stance suitable to the multi-racial composition of the country. — Bernama

New launches and better connectivity

The local property market is abuzz with new launches once again with reports of good take-up for quite a number of recently launched residential projects especially those in well sought after locations.

Things are looking up for the market, especially in the landed residential sector although the condominium market is still quite soft.

The overall sentiment has certainly improved and developers are reporting much stronger sales compared with the last two years.

In fact, residential property prices have appreciated quite substantially with prices even doubling in some areas.

Property buyers are taking advantage of the prevailing low entry cost and cost of financing to “catch the rising tide”.

Although interest rates have increased slightly, the hike is quite gradual and minimal, and have not impacted sales much.

Mortgage loans easily make up close to 30% to 40% of the total loans disbursed and this shows the importance of the property market to the overall economy.

Although the market has been quite resilient, it is important to ensure it will not be over-geared as too much borrowings could be a prelude to over-speculation and price bubbles.

While more launches mean more choices for buyers, the question is whether the flurry of new project launches is good or bad for the market.

This depends on various factors including the percentage of buyers who are buying for their own occupancy, the holding power of those who buy for investment, the strength of the local economy and market sentiment going forward.

More buyers buying for their own occupancy is a good sign as it shows the market is fundamentally stable and well supported. This seems to be the case for the landed residential market so far.

Those who purchase for investment but do not have the holding power may need to liquidate their positions to cut their losses in the event of a market correction. They are actually speculators and many of them usually resort to bank loans to finance their purchase.

If the market gets too speculative, it is unhealthy as the risk of artificially driven prices and overheating will be higher.

While things still seem to be going well, industry players should plan and build according to what the market actually needs and should not over-price their projects. Affordable housing projects that have good accessibility and infrastructure facilities are still in short supply.

Meanwhile, the commercial property sector is still facing a glut and there should be better planning to space out the developments.

While new project launches take care of the supply side of the equation, the demand side is also important and should be given due attention.

One of the factors driving demand for a project is its accessibility.

News that the Government is looking at a mass rapid transit (MRT) system to improve Kuala Lumpur’s public transportation network will give a boost to buying sentiment, especially for areas that will be serviced by the MRT.

It should be accorded top priority as it is a project that will improve the people’s quality of life.

Having a highly efficient and well integrated public transport system that is dependable upon will take the load off our heavily congested roads.

There are many ways to raise the quality of life for Malaysians and one of the fast tracked ways is to put in place a world-class public transport system right where it is needed most.

Much has been said about how disenchanted Malaysians are with the state of the existing public transport system as the various modes of transport and facilities are not integrated with nor complementary to each other.

Hopefully the latest initiative will look into all the important areas and will be implemented holistically with other ancillary facilities and services to ensure the whole public transportation network is totally integrated and complements each other.

Hopefully it will ply most of the heavily populated neighbourhoods and commercial centres not just in the city but also in other parts of the Klang Valley like Petaling Jaya and the suburbs. Besides the cost savings, it will also be a greener option and ensure a more oxygenated environment for city folks.

·Deputy news editor Angie Ng looks forward to leaving her car at home and enjoying the simple luxury of a cheap and safe mode of travelling around the Klang Valley in public transportation.

By The Star (by Angie Ng)