New waterfront development in Penang aims to be iconic

Already one of the most popular states in Malaysia for foreign property ownership, Penang will now have a new mixed-use waterfront development named The Light City.

TheLIghtCityPenangPhoto credit: Perennial Real Estate Holdings

A joint venture between Perennial Real Estate Holdings and IJM Corportation, both companies have a 50% stake each in the IJM Perennial Development which will develop the landmark project that stands along the eastern coast of Penang in the Gelugor suburbs, near the Penang Bridge.

The 13.25 hectare project is targeted for a 2021 completion and will have a 4.1 million sq ft gross floor area on which sits the largest convention centre in Penang – The Penang Waterfront Convention Centre, 2 luxury hotels, an office tower, a retail mall and 2 residential developments – The Mezzo and The Essence. The developers hope to elevate Penang’s status as a destination for international conventions, events, exhibitions and retail shopping, and helping to create job opportunities for the state’s residents, to attract tourists and investors.

THeLIghtCityPenang3Photo credit: Perennial Real Estate Holdings

The Light City will be situated just a short drive from the Penang International Airport, which makes it accessible for visitors coming for future events and exhibitions at the convention centre. The 27,000 sq ft Penang Waterfront Convention Centre will contain a 76,000 sq ft multi-purpose hall, grand ballroom that seats 800 and pre-function areas with sea views.

 

New 153,000 hectare township near KL planned for next 30 years

There are big plans for a big project spanning 153,000 hectares in Negeri Sembilan, just beside the administrative capital of Putrajaya. At twice the size of Singapore, the township will launch its first phase which at 11,000 hectares is 22 times the size of Sentosa, in Q3 this year. 

MVV ipropertyMYThe Malaysia Vision Valley (MVV) is a major township development which encompasses the Seremban and Port Dickson districts near the Kuala Lumpur International Airport (KLIA) and just an hour’s drive away from downtown Kuala Lumpur. The masterplan is managed by 2 government-linked entities – Sime Darby Properties and Kumpulan Wang Persaraan – and  is reflective of the Iskandar Malaysia development in Johor. The MVV will consist of 5 main clusters, namely: a Central Business District (CBD), residential estates, a nature city, an education and technology hub and a tourism and wellness precinct.

SenadaResidencesSimeDarbyPhoto credit: Sime Darby Properties

The residential offerings in this new township is expected to be at lower costs in comparison with the higher property prices in KL city. There seems to be future plans for an eventual merging of KL and Seremban within the next 2 decades and the current impetus is for the development to accrue RM290 million (S$93.9 billion) in investments and to become the hotbed of potentially 1.38 million job opportunities. The federal government has also put aside RM560 million to develop transportation infrastructure that will serve the MVV district.

 

Forest City aims to reach out to International market

As China’s foreign exchange reserves dipped, the authorities have taken steps to stem the outflow of capital by putting restrictions on investments by their citizens outside of China. Their aim is to stabilise the Chinese yuan. And what effect does this have on Malaysia‘s Forest City development? Not as much as it was deemed to have been.

forest-cityPhoto credit: Forest City

The Forest City development in Johor is part of the overarching Iskandar Malaysia master plan. Country Garden, one of China’s largest developers has recently signed a joint venture with Damansara Realty Berhad to develop the mega Forest City project in Johor. Despite having to shut down the showrooms in China, the project is still garnering interest from investors in the region, with many making the effort to visit show flats. Though China’s capital controls might have an impact on the Forest City project, it only drives the developers to market more aggressively in the international and regional markets, in countries such as Myanmar, Vietnam, Dubai, Japan and Taiwan.

8,000 units in Forest City have been sold last year, making it the largest of the 60 projects with the Iskandar Malaysia development. Other China-backed projects include Princess Cove and Danga Bay. The former had sold more than half of its 3,000 units last year.

CountryGardenJohorPhoto credit: Danga Bay at Country Garden

Allaying fears of a possible housing supply glut, Iskandar Regional Development Authority chief executive Ismail Ibrahim has conveyed the need for 500,000 more homes in Iskandar to cater to the projected population of 3 million by 2025. Current housing stock stands at 70,000, with an estimated 20,000 t0 25,000 more being built. Taking into account the 7 to 8 per cent growth rate expected in Iskandar, whether a property bubble develops might be dependent on the various factors associated with economic growth.

Overseas properties – Invest wisely

Buying a home overseas might seem like a good way to reap profits, but there are also many dangers which may derail your straight track to financial profits.

Singaporeans have always been one of the bigger foreign buyers of properties in Malaysia, and especially in Johor, Kuala Lumpur and Penang. But the Monetary Authority of Singapore (MAS) and Council of Estate Agencies (CEA) has warned that a supply glut might be looming, especially in some of the newer regions under Iskandar Malaysia. The Advertising Standards Authority of Singapore has also announced their plans to implement new guidelines for property investment ads by the end of the year.

Under MAS’ Total Debt Servicing Ratio (TDSR) Framework, banks and lenders are required to conduct stricter checks on customers who wish to apply for loans. This move has already put many local properties out of buyers’ affordability range, pushing their sights further to properties outside the country. But as the number of properties in Iskandar Malaysia increase, buyers are finding an increasing number of options to buy but perhaps not necessarily a corresponding number of buyers willing to purchase on the resale market, or even to rent for that matter.

Horizon Hills in Nusajaya, Johor, Malaysia.

Horizon Hills in Nusajaya, Johor, Malaysia.

Unless the overseas property was purchased as a second home or with occupation in mind, flipping properties overseas is a delicate and time-sensitive issue. In Southern Johor for example, where more developers are coming up with new private residential and mixed-use property options, investors may be drawn to the low prices without consideration for further value of their properties. The opportunity costs and likelihood of value appreciation in these properties need to be clearly explained to potential investors. The CEA already has guidelines in place to explain the risks involved in overseas property investment, and also provides sources to inform investors on rules and regulations for foreign ownership and properties and dispute-resolution avenues. Investing in overseas property comes with its fair share of promises and dangers, thus prior market research and a sound understanding of one’s own finances will help hedge against unexpected losses.

There are avenues to secure advice and assistance, especially with upcoming International Property Investment Exhibitions and estate agencies out there specialising in foreign investments in specific regions. As always, doing your homework will ensure a safe and stable journey ahead.

 

Property market cooling in Malaysia as well?

Singapore aside, it seems the property market is cooling just across the border as well.

Similarly, higher interest rates are expected for the year ahead, and with weaker buying sentiments and a possible market saturation, property experts are saying that the property developers’ expectations and pricing will be the main factor determining a slowdown (or not) or sales this year. There was an increase in the Real Property Gains Tax rates and the minimum purchasing price for foreign buyers in October 2013, which have affected those investing in properties in the region.

Cypress Villa PenangHome prices in Malaysia have been rising faster than incomes. Could a bubble be slowly forming? How will this affect investors? In the past, it may have been easier and cheaper for foreign buyers to purchase a property in Malaysia, but when it comes to rental and future resale possibilities, the prospects may be slightly dimmer now as locals may not be able to afford and there are rules against selling the properties to other foreign buyers. Without a constant rental yield, the property could become an empty shell.

When purchasing overseas properties, selecting a good location may help shield you against some of these risks. And doing as much research as possible, finding a reputable agent, attending investment seminars and talks, will give you the tools to do just that. Home prices in Johor for example, are still on the rise, with a 5.44 per cent growth in Q3 of last year, albeit a drop from 10.93 per cent in Q1. There are still a reasonable pool of middle-income home buyers who are still looking for prime properties in this state, as well as select others such as Kuala Lumpur, Selangor and Penang. Singaporean investors may have the strong Singapore dollar as an advantage but a keen eye for spotting good launches and a sense of the right timing are what makes a worthy investment.

30 April deadline for Johor property buyers

Change is happening up north. In the southern-most state of our neighbouring Malaysia – Johor. Residential property buyers will be looking at new curbs and levies as more overseas, especially Singaporean, property buyers have been flocking there in recent years. New rules and regulations will apply for real estate in the famed and popular Iskandar region as well.

Thus far, majority of the property investors in the Iskandar region have been non-Malaysian citizens, with Singaporeans making up 70 per cent.

Iskandar ResidencesWhat are the new rules?

  • New price thresholds. Currently foreign buyers are only allowed to purchase properties of a minimum RM500,000. The minimum could be raised to RM1 million.
  • The minimum levy for foreigners buying Malaysian properties are at RM10,000. This could be raised to RM20,000 or 2 per cent of the property price, whichever is higher.

What do you have to do to avoid being limited by the new rules?

  • Sign on the dotted line to purchase the property by April 30.
  • Submit the sales and purchase agreement to Johor’s land department by May 29.

With just slightly over two months left before the new property measures kick in, Johor’s real estate industry might be seeing a lot more action from buyers, with quick decisions made too.

Iskandar properties excite Property investors

It certainly so. By the way they are snapping up units. As far as foreign property goes, Iskandar Malaysia is one of the most popular destinations for Singaporean investors when it comes to exploring into foreign lands.

Proximity to home, stepped up security measures and increasing number of new property launches make for better fodder. And the investors are certainly finding this fertile feeding ground. Property developers are also offering more, and better discounts. And it’s not only the new homes which are finding new owners. Resale units are already commanding heightened interest, with buyers who are looking to move in immediately and into areas where amenities are established.

Meridin SUiteMeridin Suites, Medini Signature and Horizon HIlls count as some of the chart toppers in the preferred list of properties investors are looking at. How much are most investors willing to spend? Although foreigners are only allowed to purchase properties valued above RM$500,000, most buyers are willing to go as high as RM1 million. As a second property, that might be a viable option, especially as locally, curbs and other cooling measures are in place and makes investing in the second or subsequent property more difficult.

There are some concerns, of course. Top on the list are Malaysia’s fluid policies surrounding land and property ownership, and also the political situation in the region.

Iskandar Double Happiness

If you were one of the early uptakers at the Iskandar development in Malaysia, you may be laughing all the way to the bank now. Residential properties, in particular condominium units, at the major up-and-coming development across the Straits have doubled in price since it began selling early 2012. Compared to condominiums which were launched and completed even further back, prices now have nearly tripled. But older completed projects are usually situated in less sophisticated or desired locations.

Most of the homes which sold earlier on were landed residential properties, but now the high-rise lifestyle have been calling the shots. Compared to projects launched early last year, prices new apartment developments have almost doubled. Property developers have all jumped on the bandwagon and are ramping up the supply and quality of condominiums. Up to 13, 500 more condominium and serviced apartment units are expected to be built within the next 3 to 4 years. Previously, only 8, 000 homes were built within 6 years, from 2006 to 2012.

Taken at the iProperty.com Expo: International Collection, Marina Bay Sands Expo Centre, Oct 2010

Taken at the iProperty.com Expo: International Collection, Marina Bay Sands Expo Centre, Oct 2010

Afiniti Residence in Medini, in the Iskandar Nusajaya zone, launchd last weekend with units ranging from RM850 ($340) psf to RM1,000 psf. Units at the nearby iMedini which launched in January 2012 were sold then at RM450 psf. Puteri Harbour is another area within Iskandar Malaysia which have proven popular with buyers. It is considered the equivalent to Singapore’s Keppel Bay area. Freehold condominium, Pinetree Residences, launched earlier this year in March, at RM1, 210 to RM 1,616 psf. Serviced apartments Somerset Puteri Harbour Iskandar was also launched at the same time for RM800 psf.

Iskandar ResidencesHowever, buying activity is the busiest around the RM400 psf range, though developers have been pushing for the sales of high-end luxury condos. Besides Singaporeans, who make up a big sector of the property-buying pie at Iskandar, a Japanese firm has also bought an entire 285-unit tower at Iskandar Residences in Medini.

With the rate things are going, it takes a real savvy investor to make his buck go the longest way. It helps that there are many property investment seminars and experienced property agents out there who are sharing their views and advice.