HGS akin to guaranteeing developers’ profit

The HGS will probably result in a big increase in cases of abandoned housing projects.

THE first question the Government needs to face is why does abandonment of housing projects take place? The root cause is the lack of and lax in enfocement of existing laws.

The National House Buyers Association (HBA) is deeply concerned that the Government proposes to set up a Housing Guarantee Corporation (HGS) purportedly to protect buyers and housing developers in the event of abandonment of housing projects by developers. What is more worrying is that the loss caused by abandonment is to be incurred by the Government. The Government will hold 70% equity in the HGS while the balance is held by private funds i.e. Rehda and government-linked agencies such as the Employees Provident Fund (EPF) and Tabung Haji.

Lax and lack of enforcement

The public who rely on legislations are often let down by the enforcers. Any law is only good on paper and will continue to remain in our archives unless the existing laws or whatever revamped “for the protection of house buyers” are used to their full capacity. The problem with enforcement is not because of the lack of laws but because of the lack of or lax in enforcement. Enforcement programmes must be organised and must be implemented.

We have Section 10 of the Housing Development (Control & Licensing) Act 1966, where it is stipulated that the minister may direct the controller or an inspector to make investigation (under condition of secrecy investigate the commission of any offence under this Act or investigate into the affairs of or into the accounting or other records of any housing developer) if he “has reason to believe” that the housing developer in question is carrying on his business “in a manner detrimental to his purchaser’ or “has assets insufficient to meet his liability”. 

This section is further enhanced and amplified with the inclusion of Sect 11 (Powers of the Minister to give directions for the purpose of safeguarding the interests of purchasers) and Sect 10A (Power of entry, search and seizure) and all safeguards and safety nets under the legislation. The minister and his ministry have wide-ranging powers to intervene and salvage a “sick project” and to offer “treatment to provide cure”. 

However, just look at the number of abandoned projects which emerge as a dire financial picture for naïve and innocent buyers. Individuals and the community are being harmed by the lax in enforcement and monitoring mechanism. 

Misguided Concept

The Housing Ministry having attributed to developers’ abandoning of housing projects, now takes it upon itself to rehabilitate the abandoned housing projects, all at the taxpayers’ expense. The Housing Ministry’s Housing Guarantee Scheme (HGS) simply means that the matter is taken to another level in making the Government go further in ‘teaming-up’ with developers.

This is clearly a case where the Government has been ill advised or, to put it plainly, misled by business groups with vested interests on how to tackle the problems of abandoned housing projects which they caused themselves without any expense to themselves. The saying that “the road to Hell is paved with good intentions” certainly holds true for the proposed Housing Guarantee Corporation (HGC). It will not solve the problem of abandoned housing projects but will increase them exponentially. HGS will also not solve issues that relate to shoddy workmanship, sub-standard materials, timely delivery and a host of other problems which one has to encounter with errant and wayward developers.

The setting up of the HGC will be seen as a “licence” for developers to recklessly launch new housing projects in huge volumes regardless of its viability. The most-talked about case is where a developer launched over 9,000 housing units simultaneously a few years ago as the norm. Going forward, developers know that they can abandon the projects should things turn bad for whatever reason and the HGC will take over the project and “mop up” the consequences of abandonment. It will be a clear example of “Profits Privatised – Losses Nationalised”.

Gambling house buyers’ monies

Housing Developers will be encouraged to gamble with house buyers’ monies through the progress billings under the current sell-then-build system only to abandon the project at the earliest sign of trouble. This will result in a big increase in cases of abandoned housing projects throughout the country and will pose a huge strain on the HGC and, ultimately, the Government and taxpayers while the housing developers laugh all the way to the bank.

This ill-conceived HGC is not the solution to minimise abandoned housing projects. The only way to minimise abandoned housing projects is when developers have to use their own money and not house buyers’ monies (under the sell-then-build system) in order to complete a housing project. When people use their own money, they will be more careful.

This ill-conceived HGC will face all the same problems to revive abandoned housing projects, that is to deal with so many different parties, namely house buyers, end-financiers, bridging financiers, insurers and all of which have different objectives and interest.

Built-Then-Sell (BTS 10:90) concept

Under the BTS 10:90 concept mooted by HBA, the bridging financier can immediately take over an abandoned housing project without having to deal with so many parties and the task of reviving the project will be much easier.

Under the BTS 10:90 concept, the developers will walk away empty-handed should the project be abandoned as the developers will only have access to house buyers’ funds when the project is successfully completed. Under the BTS 10:90 concept, should the project be declared abandoned and the developers had taken a bridging loan to fund construction cost, then the developers’ financiers can take over the project, and it will not involve any public funds.

The BTS 10:90 model as proposed by HBA is the solution to minimise abandoned housing projects as under the BTS 10:90 concept, the developer must use its own monies or borrow from banks to launch and successfully complete the housing projects. Under the BTS 10:90 concept, the developer will suffer the most if the housing project is abandoned. Hence, the developer will do all it can to ensure the project is completed on time.

But first some questions:

> Why burden house buyers with payment of premium of between 0.5% and 1% (of the house price or the loan amount) when the benefits of lower risks accrue to banks and developers who bear no upfront cost. Is this not another case of hitting innocent purchasers to spare developers?

> Invariably, a tax payer unable to afford to buy a house is actually funding a house buyer to own a house? Does this make sense to you?

> Who will ensure the interest rates charged for home loans by financial institutions will be reduced for this scheme? 

> House prices have shot through the roof. Why the additional cost to buyers whose affordability is already severely constrained?

> Why should the Government fund the scheme but house buyers still have to bear extra cost?

> What are the pre-conditions that must be fulfilled before HGS is activated? Will there be a continuing set-back for victims of abandoned housing projects?

> Is there a need for additional public funds with layers of bureaucracy and headache just to buy a livable house?

> Isn’t the proposed HGS seen for what it really is – an exit door for errant developers? The errant developer will wind up the company and its directors will go scot free by hiding behind the corporate veil, something which happens too rampantly. Then, the HSC is left to deal with another abandoned project. Isn’t this another form concocted as false protection for house buyers?

> Is the Housing Ministry mindful of the news headline “Korea Housing Guarantee Receives Massive Bailout” in 2001? It was reported in the Chosun media on May 31, 2001 that the government and creditor organisations decided to inject a total of 1.84 trillion won into the Korea Housing Guarantee Corp, which has tottered on the brink of insolvency, to put the state-invested housing guarantee firm back on track.

The South Korean model which has been touted by developers as the way to go has to be studied thoroughly. Maybe there are now robust checks and balances in South Korea for the protection of house buyers from unscrupulous developers.

The minister and his ministry should engage all stakeholders before making a decision. What is good for South Korea may not be good for our country.

Chang Kim Loong is the honorary secretary-general of the National House Buyers Association (HBA), a non-profit, non-governmental organisation manned by volunteers.

Hua Yang eyes Sabah next after its foray into Penang

Kenanga Research says Hua Yang’s earnings are driven by strong billings as a result of higher recognition from higher-margin projects like One South in Seri Kembangan, Selangor. 

AFFORDABLE housing developer Hua Yang Bhd has set its sights on Sabah as the next market to venture into, following its maiden foray into Penang recently.

Chief executive officer Ho Wen Yan says that the company is constantly seeking opportunities to expand available landbank for development. “It has been our intention to broaden our reach into Penang and Sabah. The recent land acquisitions in Bukit Mertajam, Penang, is in line with our broad landbanking strategy to diversify developing activities to fuel longer-term growth,” he tells StarBizWeek via email. 

The mid-cap developer valued at RM583.44mil has 11 ongoing projects in the key regions of the Klang Valley, Johor, Perak and Negri Sembilan.

It has a total landbank of 486 acres across these areas with a potential gross development value (GDV) of RM2.8bil that will keep the company busy for the next five to six years. “The recent land acquisitions in Bukit Mertajam have expanded our available acreage to 494 acres and raised our total available GDV to about RM3.1bil,” says Ho. 

Last month, Hua Yang announced that it was acquiring two land parcels measuring 4.9 acres and 3.1 acres in Bukit Mertajam for RM31mil. This translates into land costs of RM66 per sq ft and RM103 per sq ft for the two land parcels, respectively. Early this month, it announced plans to acquire an 8.09-acre land parcel in Selayang, Selangor, for RM120mil, which works out to RM340.51 per sq ft. 

The Bukit Mertajam parcels of land, earmarked for the development of serviced apartments, commercial shoplots as well as a condominium block, is estimated to garner a GDV value of about RM313.5mil, while the Selayang project will also comprise a mixed development with a GDV estimated at RM800mil. Analysts expect Hua Yang to price most of its products at below RM500,000/unit for its Selayang development.

Explaining the company’s landbanking strategy, Ho says the focus is on matured and established areas that have ready infrastructure and good accessibility, as well as potential for population growth. 

He says the softening property market presents opportunities to acquire new landbanks and Penang fits into its criteria. “Further, we believe we have the ability to introduce innovative and affordable projects to appeal to our buyers, whom are largely first-time home buyers within the age group of 25-40 years.” He also believes that the company’s focus on the affordable market segment, where demand has been more resilient in the current market environment, will serve it well.

Chief executive officer Ho Wen Yan

As to observations that it had paid a higher price for its Bukit Mertajam land, given that land transactions in that area are typically below RM100 per sq ft, Ho says that the company has so far been able to ensure that land cost is not more than 20% of a project’s estimated GDV. “Through our efficient development approach and discipline in land acquisitions, we have been successful in delivering gross margins in excess of 30% for our development projects. These two land transactions (in Penang) will not be exceptions,” he explains. 

Hua Yang’s back-to-back land acquisitions have not gone unnoticed by the market. The stock has risen 11% to RM2.20 from the low of RM1.98 it had done in early January. In the last 52-week range, the stock had traded to a high of RM2.52, which, incidentally, is the target price RHB Research had set for the stock in its recent report. 

Its substantial shareholder is Heng Holdings Sdn Bhd, the private vehicle of the Ho family, with 30.3%. The stock is fairly liquid with a free float of 63%. 

Hua Yang, which was founded by the late Ho Mok Heng and has its roots in Ipoh starting with eight four-storey shoplots in Jalan Gopeng, today gets 60% of its available GDV from its Klang Valley projects.

With RM250mil in a sukuk programme in place solely for landbanking purposes, more acquisitions are expected. Notes Kenanga Research in a recent report, “Upon completion of the three parcels of land acquisition, Hua Yang would have about RM100mil of its sukuk programme left. In terms of target GDV replenishment, it has met 22% of its targeted RM5bil replenishments, and we reckon that it would be able to achieve that target in one-to-two years’ time.” 

One concern is Hua Yang’s relatively higher-than-average net gearing for a developer. “We expect net gearing to climb up to a high of 0.84 times from the current level of 0.50 times and expected to end at 0.70 times at the end of financial year 2016. This is still beyond our comfort levels of 0.5 times to 0.60 times for developers,” Kenanga Research says in the report. One way to ease balance sheet strain is cash calls to finance future landbanking. However, Kenanga Research notes that the company has not openly indicated that it intends to do a cash call in the near term.

On how the company will perform this year amid a softer property market, Ho believes it will be satisfactory. For the first nine months of its financial year ending March 31 (9MFY15), it had achieved a net profit of RM80.9mil – an increase of 82.2% over the corresponding nine-month period previously. 

“Our unbilled sales as at Dec 31, 2014 stood at a high of RM733mil – this is expected to provide us earnings visibility, going forward,” says Ho. Kenanga Research estimates that this unbilled sales will give it at least 1½ years of earnings visibility.

The research firm notes that Hua Yang’s earnings for the 9MFY15 were driven by a strong billings and growth in earnings before tax, interest, depreciation and amortisation to 26.1% as a result of higher recognition from higher-margin projects like One South in Seri Kembangan, Selangor, plus Taman Pulai Indah and Taman Pulai Hijauan in Johor. 

Still, Hua Yang has not been spared the effects of a weaker property market. “Its 9MFY15 sales of RM342mil is still proportionally behind our estimate, making up only 59% of our full-year sales estimate of RM580mil and management’s target of RM500mil,” says Kenanga Research. 

On the whole, however, analysts reckon that the company should continue to fare better than some of its peers, riding on its affordable product offerings. - The Star

Wish list for the Year of the Goat

BEFORE every New Year, plans and preparations are made to usher in the new lunar year. Most would also want to start the New Year with new resolutions. For me, I would like to usher in the Year of the Goat with a wish list.

To many, the Year of the Goat holds worthy personalities in facing the current uncertainties and challenges of the world economy. It symbolises gentle, calm, stable, sympathetic and amicable natures, brimming with a strong sense of kindheartedness and justice. 

On this premise, my top 10 wishes for the Year of Goat are listed below without order of preference. 

1. Government to be fully in-charge of affordable housing

The key factor to affordable housing is affordable land. I wish our Government would focus on opening up large tracts of government land, including agriculture land, for housing. 

The various authorities and government bodies should also pool resources in building affordable homes. While everyone can play a part in developing the nation, our Government, like any other government globally, will always remain accountable when it comes to providing affordable homes for the rakyat. 

2. Shift subsidy savings to the right channel

The Government scrapped the fuel subsidy in December last year and in turn, introduced the floating fuel price system. Almost instantaneously, the Government is able to save billions of ringgit a year. 

It is estimated that the total accumulated fuel subsidies from year 2006 to 2013 alone was almost RM120bil. That is enough to fund three MRT lines and subsidise two million affordable homes.

Wouldn’t it be better to wish for the savings to be channelled back to the rakyat via an improved public transportation system and more affordable homes?

3. Allocation of low cost-homes to deserving rakyat

The National Property Information Centre (NAPIC) stated that the total residential homes in Malaysia at the second quarter of 2014 was 4.76 million. Low-cost houses and flats account for 22% (1.06 million) of the total units. Yet the domestic news reported that many qualified applicants faced difficultly acquiring low-cost houses. 

My wish is for the authorities to enforce strict measures on the ownership of low-cost units – they should only be in the hands of the needy and not speculators or landlords. 

4. Proper utilisation of limited land in city centres

Our cities will be more efficient and vibrant if the authorities allowed higher density in the city centres supported by an efficient public transportation system. 

High-rise living enables land conservation, preserves the environment, slows down urban sprawl and, with proper planning, will allow for the creation of a more efficient mass transportation system.

Here is wishing for a greener city for ourselves and our future generations. 

5. Better enforcement of Housing Development Act (HDA)

While Malaysia has one of the most comprehensive and stringent housing development Acts in the world, the same cannot be said on its enforcement. 

In 2012, it was reported that there were 195 unlicensed developments in our country. It is puzzling as to how these “developers” were able to operate in the first place without detection. It is without doubt that these irresponsible developers have affected the industry’s image, leaving many would-be home owners in delirium, and all the responsible developers in the Real Estate and Housing Developers’ Association (Rehda) with the unfair blame.

Wishing for stricter enforcement of the HDA has become a priority. Anything less will have serious implications not only to the property industry but also to the nation and authorities.

6. Greater transparency in housing approval process

Wishing is hoping, so, let’s hope for greater transparency of the housing approval process and the procedures that can be simplified to lessen bureaucracy and to improve efficiency.

A shorter approval time will lead to more home units being supplied to the market as and when required to meet the demands of the urban growth and the nation, and to make it more affordable for the rakyat.

7. Incentivise SME developers to build affordable homes

Small and medium enterprise (SME) developers should be encouraged to build affordable homes by giving them some form of incentives, such as removing certain restrictions. For example, the requirement to build 30% low-cost home priced at RM42,000 each is a challenge for small developers or any developers to stay in business, especially when selling affordable homes below RM250,000. 

It would be great for the authorities to help the developers to help the rakyat. 

8. Bank’s CSR on affordable housing

Most of the banks in Malaysia are generating a significant portion of their business and profit via housing loans. 

As high as one-third of their loan portfolio comes from housing. It would be beneficial for the rakyat if banks can set aside a Corporate Social Responsibility (CSR) fund to contribute to the provision of affordable housing. 

This can be done via lower interest rates for a low-cost housing loan and to have certain requirement imposed on banks to provide loans for affordable housing.

9. A comprehensive public transportation system

It is my hope that there is greater urgency to establish a comprehensive public transportation system in the Klang Valley in the fastest time possible if we are to meet the 10 million population growth envisaged for 2020. Crucially, the public transportation system should be operated by the Government based on a service-oriented paradigm as practised in many countries, instead of by private sector based on profit-driven.

10. Have a goat (good) year ahead!

The above are my top nine wishes for the Year of the Goat. I hope all Malaysians would benefit from them when they are materialised. 

Last but not least, I wish everyone a wonderful year ahead. May the Year of the Goat bring joy, health, prosperity and peace to you and your family. May you also look forward to the day where travelling through the city is a pleasure! 

FIABCI Asia-Pacific Regional Secretariat chairman Datuk Alan Tong has over 50 years of experience in property development. He is also the group chairman of Bukit Kiara Properties. For feedback, please email feedback@fiabci-asiapacific.com.a - The Star

Improving your home’s appeal

WITH the current property market slowdown, selling your property to an eager buyer might not be as easy as it was before, but it is not impossible.

In light of the current market situation, improving the marketability or appeal of your home is vital. Here are some ways to do it, without breaking the bank.

All about cosmetics

It’s no surprise that a home that looks well-maintained would be more appealing than one that appears dilapidated.

SK Brothers Realty Sdn Bhd general manager Chan Ai Cheng says keeping your home neat and clean is the easiest way to improve its appeal.

“When it’s messy and dirty, it gives the impression that it’s not being taken care of. This could actually end up affecting its resale value.”

Sometimes, even having an old, beat-up vehicle that’s rotting away in your porch could have a negative impact, says Chan.

“If there’s a rusty car that’s not been driven in ages in your driveway, it might not bring down the property’s value, but it won’t improve it either.

“Potential buyers want to have an impression that the property is being looked after well,” she says.

Malaysian Institute of Estate Agents president Siva Shanker concurs that when it comes to improving the look of your home, much depends on cosmetics.

“Before deciding to sell, you need to try and imagine what the buyer wants,” he says.

Fix it now

Giving your home a fresh coat of paint or fixing a leaky roof or tap would make all the difference, Siva adds.

“In other parts of the world, buyers tend to fix up the place before putting it up for sale. But unfortunately, it’s not the case in Malaysia for a lot of sellers.

“People who are looking to rent only wait until they get a tenant before deciding to fix up the place. But when a potential tenant comes and looks at the place and sees the condition of the property, they will be deterred more than anything else!”

Siva reiterates that it’s the little things that make all the difference.

“Get your house done up. Sometimes, the repairs might be minimal and won’t even cost much.”

Be creative

According to Forbes in “10 Cheap Ways To Increase Home Value,” a cheap way to increase your home’s value is to “invent” a room rather than add one.

“Main-floor master bedrooms, baby nurseries and crafting rooms are desirable, but many homes don’t have them. If you have a den, attic, or bonus room, decorate it ... your realtor can tell you what clients in the area are looking for.”

Forbes adds that having more space or storage is something that buyers are always looking for.

“Buyers want storage and sellers need homes that look open, organised and spacious. 

“Even a basic wire-rack closet system will make a basic closet look like an efficient storage space – and adding a freestanding wardrobe to a room that lacks a closet, such as a den, allows you to present it as a nursery or guest room.”

Upgrade the landscape

For those living on landed property, sprucing up the backyard can help make that difference. Says Chan, “Small add-ons to the landscaping like adding a gazebo can make it more appealing.”

According to US-based home-customisation expert Elite Craft Homes, by creating a backyard space that is perfect for entertaining, you’re helping potential buyers visualise all the good times they could have if the space was theirs.

“Improving your backyard area doesn’t have to be overly expensive or a major undertaking. By simply adding some new patio furniture, a fire bowl, potted plants and exterior lighting, your space becomes inviting and ready for guests.

“Don’t forget the importance of a well-manicured lawn and garden area too.”

The market determines its value

Siva points out that while making tiny amendments to your home can help improve its appeal, at the end of the day, it’s the market that determines the value of the property.

“There’s so much that an individual can do to improve the property’s value. That’s determined by the market. To use an analogy, replacing your car’s audio system with an RM5,000 one doesn’t make your car RM5,000 more expensive. 

“So, there is actually very little that a buyer can do to move the price upwards.” - The Star

E&O upbeat on new UK properties

EASTERN & Oriental Holdings Bhd (E&O) will leverage on its UK properties, with a combined gross development value (GDV) of up to £400mil, to expand its presence there.

E&O now has a platform to expand after its purchase of two office buildings in London – the 11-storey Thames Towers and 15-storey Landmark House – for £57mil (RM308.94mil) in January. 

E&O deputy managing director Eric Chan Kok Leong says with the two buildings in addition to the two current properties of Princes House and Esca House in the UK, the base case of the combined GDV would be from £270mil to £400mil.

Currently, the GDV of Princes House is RM325mil (£60mil) and Esca House RM434mil (£80mil). Chan says the latest acquisitions of Thames Towers and Landmark House represent a sizeable project that will anchor E&O’s portfolio.

These projects will provide it a scale that is significant to attract a separate and dedicated London management team fully focused on building the E&O brand and properties abroad.

An artist’s rendering of the STP2 project, which is expected to stretch over 15 to 20 years comprising mixed development of residential and commercial components.

“The formation of this E&O Property UK team is imminent and would be the platform in which current and future projects in London would be managed and spearheaded, and could be potentially achieved through strategic partnerships and/or through a listed entity in the UK within the next 12 months,” he told StarBizWeek.

Chan says the assets in the United Kingdom would be the platform to attract the talent who will have a sizeable project to work on. It can then work with the strategic partners, via a joint venture (JV) that would be formed. 

There will be 30% equity and 70% bank financing for the platform. 

“E&O has insofar come up with £32mil, 30% of the equity value for all three assets. The first priority is to establish a team to manage the projects within the platform,” he added.

UK-listed entity 

A JV plan, according to RHB Research, is a good move as it would allow E&O to reduce its gearing while holding an associate stake in the JV, but retaining a “significant influence” on the board.

AmResearch, meanwhile says the platform will transfer E&O’s debts arising from London to a UK-listed entity or JV. According to the research firm, any future acquisitions in London could be done via this platform.

Commenting on analysts’ initial concerns that E&O’s gearing might rise, Chan says: “Our gearing is at 0.3 times. With the acquisitions, it would be 0.5 times, which is still conservative.”

Chan: ‘The UK team is imminent and will be the platform in which current and future projects in London will be managed .and spearheaded.’

He explains that with the rental income at 70% occupancy, it is sufficient to service the loan for the acquisition. The buildings can also be refurbished or redeveloped and maintained as office buildings due to the fairly strong demand. 

On yields, it can expect a 7% to 8% net yield, he adds. 

UK is one of E&O’s four growth engines, besides Greater Klang Valley, Penang and Iskandar Malaysia.

As for earnings outlook, Chan is confident the company can register sustainable after-tax profit for the next three year and after. Cumulative after-tax profit for the period of 2014 to 2016 should come in the region of RM450mil and if it does better, Chan expects it can stretch to RM500mil. 

E&O’s unbilled sales stood at RM831mil as at Sept 30, 2014, while cash and cash equivalent amounted RM224mil. 

Seri Tanjung Pinang 2

Giving an update on its Penang project, Chan says in January it had its first regional launch in Taiwan for the exclusive condominium project – the 18 East at Andaman that is being developed at Seri Tanjung Pinang (STP), Penang.

“Over 200 people expressed interest in the 18 East at Andaman at the Taipei launch. These interested buyers were looking at the bigger units, which were the two to three bedrooms and facing the sea.” 

E&O recently got the nod start land reclamation works for Phase 2 of Seri Tanjung Pinang (STP2).

STP2 is expected to stretch over 15 to 20 years comprising mixed development of residential and commercial components. Analysts estimated that STP2’s total cost to be RM2.8bil and gross land cost at RM94 per sq ft (net land cost at RM133 per sq ft). STP2, covering 760 acres is touted as a rerating cataylst for E&O shares. 

Chan says the advantage with reclamation is that E&O will have a clean slate to undertake the master planning. “The development of STP2 is long term and as long as Penang continues to grow, there will be a need for land resources,” he adds. 

E&O has prequalified the contractors for the project and it is now undertaking the due diligence.

It has opened the tenders for the reclamation in January and expects to close the tenders by end-February and award the jobs by the first half of 2015.

“As for the total reclamation cost, this will be from the tenders provided by the contractors,” he says.

Also the Securities Commission and E&O’s shareholders have approved the RM500mil convertible medium-term notes (MTN) programme.

“We have not issued it as yet as it depends on its cashflow requirement. We expect the notes to be fully taken up. The coupon is 2%. They are convertible into shares at RM5 per share.

The MTN will cover the initial preliminary and infrastructure works and the balance will be covered by completion bank guarantees. - The Star

Decent home of your own

THOSE who are looking for affordable homes in the inner city of George Town should check out the Chelliah Park City development in Jalan S.P. Chelliah.

Developer Zubicon Sdn Bhd is conducting a registration roadshow at D’Piazza Mall in Jalan Mahsuri, Bandar Bayan Baru, from 9am to 5pm today.

Zubicon managing director Lim Beng Keong said the project with the Penang Development Corporation would house 883 units with built-up size of 800sq ft priced at RM200,000, 165 units of 900sq ft (RM300,000) and 275 units of 1,000sq ft (RM400,000).

“The response is overwhelming and the state government has released the names of 770 applicants to us for this project. 

“Imagine owning a unit in the inner city of George Town by paying only RM250 per sq ft for the 800sq ft units.

“Normally it will cost between RM550 and RM600 per sq ft. This is definitely a good deal,” he said during a press conference organised by state Housing, Town and Country Planning Committee chairman Jagdeep Singh Deo at Komtar on Thursday.

Jagdeep said Penangites should grab the opportunity to own affordable homes in George Town since the state had allowed applicants to choose the project they were interested in.

“People have to bring the relevant documents to register for this project,” he said.

Jagdeep said the state had received about 4,000 applications for affordable homes in the state.

“We urge the private sector to build 100% affordable housing,” he said. 

“The market is there, especially with the impending implementation of Goods and Services Tax,” he added. - The Star

Two new condos coming up

Facing the sea: An artist’s impression of the I-Satorini project in Tanjung Tokong.

IDEAL Property Group will launch two condominium projects this year, the I-Santorini@Tanjung Pinang in Tanjung Tokong and I-Condo@One Foresta in Bayan Lepas. 

The projects have a collective gross development value of RM1.8bil. 

The RM800mil I-Santorini will be launched in June while the I-Condo@One Foresta will be launched after Chinese New Year.

Since last month, more than 5,000 potential buyers have registered for the projects.

The projects will be open for registration at the four-day Star Property Fair 2015 to be held at Sunway Carnival Mall and Sunway Carnival Convention Centre in Seberang Jaya.

The fair will be open from March 12 to March 15.

Group executive chairman Datuk Alex Ooi said the units at both projects are priced between RM300,000 and RM400,000 each.

“The I-Santorini@Tanjung Pinang comprises three blocks of 2,155 units with shoplots on the ground and first floor. 

“The 850sq ft condominium units face the sea and are designed with three bedrooms and two bathrooms,” Ooi said.

The open space of the project is inspired by the landscaping found only in the Greek islands which will be interspersed with water features.

The I-Condo@One Foresta comprises 2,685 units of 900sq ft built-up areas.

The units have three bedrooms and two bathrooms.

“There are four blocks of condos.

“It is a value-for-money condominium scheme as it provides recreational facilities such as swim- ming pools, gymnasium, barbeque pavilion, jungle track, camping area, tea house and observation platform.

“Residents will be delighted with the natural and sustainable recreational park there.

“The park is well-connected by lush landscaped walkways within a gated and guarded enclave,” he said.

“From the swimming pools, the residents can all enjoy a panoramic view of Pulau Jerejak,” he added.

The Star Property Fair 2015 will see over 20 exhibitors showcasing their latest projects.

The fair will be open from 10am to 10pm.

To add to the excitement, there will be a Spin & Win Contest during the four days of the fair.

More than RM50,000 worth of prizes are up for grabs. - The Star

Cheah clan may lose 205-year-old clan house in Penang

Court order: Yusmizan putting up the writ of seizure and sale (inset) at the Seh Tek Tong Cheah Kongsi premises in George Town’s Armenian Street.

GEORGE TOWN: One of Penang’s oldest clanhouses – the Seh Tek Tong Cheah Kongsi – is under threat of being sealed and its assets seized in an ongoing legal spat with a deve­loper over breach of agreement.

The Kongsi has been given seven days to pay more than RM4.7mil to Hun Meng Development Sdn Bhd or risked the 205-year-old clanhouse being put up for public auction.

Penang High Court bailiff Yusmizan Yusoff conducted an attachment on the Cheah Kongsi’s moveable assets by way of a writ of seizure and sale at the premises in Armenian Street here.

The attachment, which stated that the public auction would be held on Feb 23, was carried out at 12.30pm yesterday.

Cheah Kongsi’s lawyer Lee Khai said the writ was not expected to affect its operations.

Its chairman Cheah Swee Huat, however, said the premises had been closed to the public for the past two years for renovation but remained open to members.

Hun Meng Development obtained the writ after Cheah Kongsi failed to comply with a High Court order on Sept 30 last year. The application for the writ was made on Jan 29 and issued by the court on Feb 6.

Hun Meng Development had sued Swee Huat and Cheah Kongsi’s secre­tary Cheah Sin Choon for breach of contract in respect to a joint venture agreement.

Last Sept 30, High Court Judicial Commissioner S. Nantha Balan held that Cheah Kongsi had to pay the developer compensation of RM3.5mil, a refund of the RM50,000 deposit, interest and costs, after finding that the Kongsi was liable for repudiating the Joint Venture Agreement entered between both parties on March 5, 1999.

Penang High Court bailiff Yusmizan Yusoff putting up the writ of seizure and sale.  

The agreement was for the deve­­­lopment of two plots of land in Victoria Street belonging to the clanhouse.

Hun Meng Development had claimed that the clanhouse had refused to hand over the title deeds, resulting in the company failing to carry out work as per plans approved by the Penang Municipal Council between October 2006 and November 2008.

Cheah Kongsi had maintained that the agreement was not binding as its trustees, who executed it, were not authorised to do so.

It also held that it was unable to hand over the title deeds as there was no court order sanctioning and approving the transfer of the two lots to the developer.

Cheah Kongsi had applied to the Penang High Court for a stay of execution of the judgment but was dismissed on Jan 21 with costs of RM3,000.

When asked for comments at the Cheah Kongsi office after the attachment was carried out, Swee Huat said he would leave it to his lawyer.

Lee said an application for a stay of execution would be heard by the Court of Appeal on Feb 26.

Hun Meng Development was re­presented by Yiew Voon Jin. 

Also present were the company’s managing director Datuk Lai Ah Han and director Ooi Ark Heng. - The Star

YTL’s Shorefront condo project in Penang offers great location and exclusivity

Resort living: An artist’s impression of The Shorefront from the balcony perspective.

YTL Land & Development announced it had sold 67 of the 115 units of its RM330mil Shorefront project in Penang during the launch of the property on Feb 6 and 7.

Group executive director Datuk Yeoh Seok Kian said the project, comprising 100-odd luxurious units in three blocks next to the Eastern & Oriental Hotel, had attracted 2,500 registrants prior to the launch. 

He said the project was targeted at high-net worth individuals, Penangites working abroad, and foreigners looking for luxury developments in prime locations.

“Buyers queued up as early as 7.30am on both preview days, which saw the release of only one block on each day. We still have one last block comprising 48 units, which we have yet to decide when to release,” Yeoh said.

Shorefront is YTL Land’s first foray into Penang, and the units are priced between RM1,200 per sq ft and RM1,500 per sq ft.

“We have been watching Penang’s property market very closely, and noted the impact of the recent cooling measures adopted by the Government. 

“Buyers have maintained a cautious approach and are very selective in their purchase. 

“The imposition of additional restrictions by the Penang government to curb speculative activities poses another challenge. However, we remain confident on the state’s long-term economic and investment fundamentals,” he said.

The success of Shorefront was largely driven by YTL Land’s well-articulated product in terms of concept and design to complement the landmark address, said Yeoh. Moreover, Shorefront was one of the last remaining sea-front locations in Penang.

“The other key attraction is the low-density feature,” he said.

According to Yeoh, two private lifts serviced each floor, with only two condominium units on each level with a private lift lobby serving as entrance foyer for each unit.

“All the three blocks are positioned to take advantage of the sea-view from various angles. 

“The blocks are separated by landscaped gardens and water features that nestle between the buildings. 

“The units on the ground floor have private gardens, while those on the highest floors come with rooftop or sky terraces,” he said.

According to Yeoh, the group planned to expand its prime land bank in Penang, either on the island or in Seberang Prai, for residential or hotel projects.

On the local property market, he said Penang remained attractive as a property investment destination for both locals and foreigners.

“It enjoys an enviable track record for capital gain, and is second only to Kuala Lumpur in this respect. Nostalgic streaks of Penang’s Old World charm – its tradition, culture and heritage are instantly recognisable abroad,” he noted. 

The declaration of George Town as a Unesco World Heritage Site was another boost, Yeoh added.

He said while demand in the property market had moderated due to stringent financing policies, there was still a demand for niche, luxury properties on the island. 

“Prices in Penang are still deemed very competitive, being much lower than neighbouring countries like Hong Kong, Singapore and Thailand.

“The property market is likely to remain stable on the back of the state’s healthy fundamentals – its young population demographics, high employment rates and stable income levels,” he concluded. - The Star

Pudu jail development takes on Malaysian perspective

Artist’s impression of Bukit Bintang City Centre project.

FROM a morbid historical site to an upcoming iconic Malaysian integrated development, UDA Holdings Bhd chairman Datuk Johari Abdul Ghani explains how he got the project to transform the former Pudu jail site into a multi-billion ringgit mix-development, the Bukit Bintang City Centre (BBCC).

“The project has taken a different approach now as all partners are Malaysians – it will be a Malaysian project. Previously, it was a proposal by a foreign entity from China and now with Eco World Development Group Bhd and Employees Provident Fund (EPF) in the consortium, it makes a lot of difference to develop the site as well as not to steer away from our social responsibility agenda. 

“Eco World is a reputable partner and Tan Sri Liew Kee Sin has vast experience and stellar track record under his belt. He (Liew) understands our agenda and is accommodative. Additionally, EPF has the resources and is comfortable to work with reputable partners,” Johari tells StarBizWeek. 

UDA, Eco World and EPF formalised an agreement to jointly develop the BBCC project with a gross development value of RM8bil. The project will be carried out via a special purpose vehicle (SPV) – BBCC Development Sdn Bhd.

The SPV will pay UDA development rights of RM1bil while the gross development cost of the project is estimated at RM6bil.

UDA, owned by the Ministry of Finance Inc, recently engaged Eco World as its partner. UDA is the government agency tasked with urban development and the promotion of bumiputra participation in urban areas.

To recap, a Chinese construction firm, Everbright International Construction Ltd, was tipped to secure the project with an RM2bil investment into UDA in 2011 but the plan fell through.

Last June, UDA decided to partner Eco World, whose key personnel including Liew are mostly from SP Setia Bhd with experience in big projects such as the multi-billion ringgit Battersea, London project, also an urban regeneration project like the BBCC.

UDA decided on the partnership after failing to find a suitable partner from a list of 10 companies which submitted proposals. Of the 10, Johari shares that half of them did not have strong balance sheets to undertake a project of this magnitude.

Eco World came into the picture because it has the experience as well as the financial strength.

Johari explains that several of the bumiputra developers who submitted their proposals had the financial strength and good ideas for the project but these developers wanted control of the project with at least a 51% stake.

He says UDA wanted joint participation and not any party having outright control of the project. Johari says UDA’s commitment to the project is such that the chief financial officer and two other senior management personnel will be seconded to oversee the project.

“Thus, UDA will not only benefit from the value of the land but also fulfil our responsibility and at the same time train our people. We have to learn as this is our biggest project to date,” Johari says. 

He adds that Eco World had no hesitation over the 50% bumiputra participation in the project. “The company understood our social responsibility,” Johari says.

Another dimension to the project is UDA’s commitment to help bumiputra contractors and developers, which Johari says have a stigma attached to them for work delays. 

“We now have to erase the stigma that bumiputra contractors and developers are associated with work delays. We will get the right bumiputra companies with good track records,” he says.

Johari strongly believes this will be a true Malaysian project. 

“Eco World is a Malaysian company. And they have a good team and experience,” he says, adding that EPF has also worked with a number of the senior management from the company when they were with SP Setia working on the Battersea project.

“With this kind of talent, if we can bring them together as a showcase development in our city, why not?” he asks.

To date, the project had attracted some interest from Japan’s Mitsui Fudosan Co Ltd and Zepp Live Entertainment Inc, an unit of Sony Music Entertainment Japan.

“I don’t think there is an issue to be raised in this project. A mega-size project such as this needs investors, buyers, customers and also stakeholders. 

“The way we structured our project under the SPV ensures direct participation from UDA, Eco World and EPF.

“It is structured similar to the Battersea project. No one can have total control. 

On the development rights, Johari expects UDA to receive a cash portion out of the total once all the necessary aprovals are obtained

Approval for the development order is expected in six months and once that is settled, he wants to quickly do the groundbreaking. 

He says UDA will also have the option to use proceeds from the development right to acquire some property that will then be built into offices or hotels.

“UDA plans to own the malls with our partners. That will generate about RM180mil a year,” Johari says. Estimates of UDA’s portion from the mall’s recurring income is between RM80mil and RM90mil.

The BBCC project, a redevelopment of the 19.4-acre former Pudu jail site, will comprise a mixed residential and commercial development with a proposed world-class master plan, consisting strata offices, office towers, a hotel and serviced residences. There will also be a lifestyle mall which will include a Malaysian grand bazaar, a retail mall, food and beverages as well as entertainment components.

“I am very confident of the project although some people are saying oversupply of malls and offices.

“We are bringing something unique here where it will be catalyst development in that area. connectivity. In fact, we are teaming up with Mitsui that has 70 malls in Japan,” he says.

On the relisting of UDA, Johari says the idea to re-list is to tap the capital market and acquire more landbank. 

“It is still in the pipeline. with this project this will be more attractive. We will continue to engage with our shareholders on this matter,” he says. - The Star