Sweet success for All Seasons

Belleview Group has raised the living standards in Bandar Baru Air Itam with the successful completion and strong sales of the RM700mil residential All Seasons Park and the commercial All Seasons Place projects.

The All Seasons Park has, to date, sold 95% of its 808 condominiums, leaving only 5% for sale.

Its managing director Datuk Sonny Ho said in an interview that the effort to engage internationally known consultants to advise on the architectural and landscaping design paid off.

“Bandar Baru Air Itam was previously recognised as a housing-cum-commercial neighbourhood known for its affordable and low-medium cost property.

“Now it has All Seasons Park, comprising 808 units of lifestyle condominiums and surrounded by a three-level strip mall, All Seasons Place,” he said.

Ho said of the 5% units open for sale, eight were penthouses with built-up areas ranging from 1,602sq ft and 2,333sq ft, while the remaining were standard units, with built-up areas of 856sq ft and 1,323sq ft.

“The penthouses are priced between RM1.1mil to RM1.6mil.

“One of the penthouses is the show unit, which is completely furnished.

“The standard units are priced between RM650,000 and RM800,000,” he said.

Ho said when the All Seasons Park was first launched, the selling price ranged between RM300,000 and RM350,000 per unit.

“The price for All Seasons Park has more than doubled, which indicates the popularity of the scheme as a choice residential address among Penangites,” he added.

The success story was recently featured as a cover story in Trends, an internationally known architectural and interior decoration magazine.

There are three key factors that are crucial in accounting for the success of the projects, according to Ho.

“First, there is the surrounding panoramic view facing all the four condominium towers in All Seasons Park.

“Residents get a view of the Penang Hill and the historic Kek Lok Si Temple in Air Itam.

“Secondly, All Seasons Park comes with comprehensive recreational facilities such as viewing deck, flower court with water feature, relaxation and barbecue pavilions, Olympic-sized lap pool, reflection pond, meditation lawn, wading pool, recreational park, Jacuzzi and sauna, games room, and children’s playground.

“Thirdly, All Seasons Place provides integrated lifestyle facilities for the residents.

“There are branded lifestyle retail as well as food and beverage brands such as Giant Superstore, Subway, PappaRich, The Manhattan Fish Market, Guardian Pharmacy, Chatime and 7-Eleven.

“There are 120 shop lots, which are single-entity owned,” he said.

Opened in December 2012, the All Seasons Place strip mall is designed to cater to the needs of modern living.

“It is easily accessible by the over 350,000 people living in the nearby housing estates,” he said.

The show units are open to the public for viewing from 10am to 6pm daily at the Belleview Gallery in All Seasons Place. - By David Tan (The Star)

The impact of GST on property

Of late, there has been concern on how the impending Goods and Services Tax (GST), effective April 1, 2015, will impact the property sector.

Broadly, property buyers can be divided into two groups - those who want to buy before April 1 and those who want to buy post-GST.

There is an explanation for both groups for their decision. The main concern is the GST effect on prices.

According to three tax consultants, GST will result in an overall price increase, less on the residential sub-segment, but more on the commercial sub-segment.

The margin of increase will be about 3% for residential properties, although developers cannot charge house buyers GST for properties build on residential land as they are exempt-rated. Two of them have also brought up an important point, that property prices are a function of market forces.

Poon Yew Hoe, tax partner at Crowe Horwath says the market is a bit soft. It is uncertain how the market will be the first half of next year.

Although a developer cannot impose GST on the residentials, he would have paid GST on building materials and services. A RM1mil house would have a tax element of about RM30,000. He may absorb it and make less profit, if the market is soft, says Poon.

Tax Advisory and Management Services Sdn Bhd (TAMS) executive director Yong Poh Chye says there are some thoughts to make residential properties zero-rated. The government will then return to the developer the input tax incurred on raw materials/services. But the government will lose a source of revenue.

To strike a balance, there is a proposal to have properties RM500,000 and below to be zero-rated. “This will be a policy decision and will be made known later,” says Yong.

Deloitte Malaysia country tax leader Yee Wing Peng relates the Australian situation when it imposed GST in 2000.

Anticipating property prices to go up, the people rushed to buy and developers rushed to complete their project pre-GST. They ended up paying a premium for materials and services, which resulted in higher prices. Six to nine months post-GST, less transactions led to a price drop.

“Pricing is a function of demand and supply,” says Yee.

While the Australian experience has been brought up by both tax and property consultants, it is not an apple to apple comparison as there are differences, says the tax men.

Rush to buy

Yee says five out of 10 are “in a rush to buy”. Developers are aware of that. Yee says some developers have already imputed their costs into the selling price today.

“The pricing of new launches today would have priced in GST,” he says. They also highlight the GST effect on financing structure, particularly for commercial properties. A buyer signs an agreement to buy a shop lot priced at RM1mil.

On April 1, he has paid only RM400,000 because it is 40% complete. The remaining 60% will be subject to GST because it is a commercial property. Yong of TAMS concludes there is “no point in rushing to buy now.”

The buyer will resist the extra payment. Who will bear the extra cost depends will on how the Sales and Purchase Agreement is structured.

All three tax men also highlighted the complexities of certain properties built on commercial titles. Commercial properties include offices, shops, retail, hotel, malls, factories, hospitals, SoHos (small offices, home offices) and the like.

While malls and offices are pretty clear cut in that they are subject to GST, residential units on commercial land and hybrid units such as SoHos are may complicated.

If a property is built on commercial title, the buyer will have to pay GST, theoretically speaking. The Government is currently looking at the usage rather than the land title the property is built on. There will be more clarity later on.

Says Yong: “If you have a property where levels 1 and 2 are shops but the level three is used as a residential, hopefully the government will not impose GST on level 3.”

Other GST-related issues include car parking lots and their taxability. The current trend of fitting out properties with additional features like kitchen will have a GST element.

While there is much dissecting and scrutiny on residential units on commercial land, there is a greater element forgotten by property buyers. The quit rent, assessment and utilities will be substantially higher. These charges must be a consideration.

View from valuer

VPC Alliance (KL) Sdn Bhd’s chartered surveyor James Wong says in most countries, the trend is a rally due to the expectation of future price increase with more buyers pre- than post-GST.

However, with the current cooling measures, there seems to be no rally. There are buyers but they do not qualify for loans under the current stringent lending measures.

Therefore, the GST will not have a great impact on prices as it has been over taken by the government’s cooling measures and tighter lending by the banks, Wong says.

As for tax men saying that prices will go up, Wong is of the opinion that residential prices will not go up post-GST but commercial properties may.

“Developers will include the GST element into pricing. Whether the inclusion will result in overpricing - leading to less sales - will depend on the supply and demand situation. If there is a demand for that particular type of property, the developer may try to include the GST cost into its pricing,” he says.

Wong says developers will have no choice but to absorb the GST for those which are in over supply. Cost does not equate value, he says.

“Most developers will say they have to increase prices. However, market value is not cost, so there is no guarantee that prices will definitely go up. We anticipate the property market in the first half of next year will still be quiet and slow with less transactions and may be a minor price correction,” he says. - By Thean Lee Cheng (The Star)

Another OPR hike: Too soon?

A number of risks emerged in the first half of 2014, sending jitters across financial markets. In some developed nations, the negative sentiments of geopolitical affairs and economic uncertainties fuelled concerns of economic slowdown.

Notwithstanding the uncertainties in the advanced economies, Malaysia’s gross domestic product (GDP) growth accelerated to 6.4% in the second quarter of the year, up from 6.2% in the first quarter.

While it is an indication of our economic strength stemming from well-thought-out policies by the Government and Bank Negara, the robust economic performance has fuelled speculation of another hike in overnight policy rates (OPR) come September.

This follows the earlier hike of 25 basis points in July that brought the OPR to 3.25%, which is still deemed as a “normalising” level to the economy at large.

However, given the current economic challenges and a closer look at on-ground sentiments following recent inflationary pressures, such a hawkish expectation on further OPR hike should warrant some reconsideration.

In the last OPR hike, it is clear the central bank is concerned about addressing financial imbalances.

Nonetheless, the development of demand-pull inflationary pressure should also be closely monitored when considering the next course of monetary policy action.

It should be noted that the average inflation rate of 3.4% in the first half of the year, which was above the long-run average of about 2.5%, was largely cost-push.

The rising global petroleum product prices and in particular, the subsidy cut adjustment to the local pump prices last September contributed to the elevated prices.

Addressing financial imbalances the primary target

As stated in the July Monetary Policy Committee (MPC) meeting, Bank Negara’s main focus right now is to address the financial imbalances within our economy.

Essentially, the high household-to-GDP debt ratio, which stood at 86.8% at end-2013, is uncomfortably close towards 90%.

Currently, half of the RM727bil total outstanding amount of household lending from banks is for residential property financing.

In this context, addressing financial imbalances is also to tackle the larger issue of real estate valuation.

If left unattended, the house price escalation at a peak of 12.2% house price index growth in the last quarter of 2012 may be a property asset bubble in the making.

The consequences of a financial bubble burst are serious – the United States and the United Kingdom are still grappling with the aftermath of such an event since 2007.

Lest we forget, the Government has put in place various macro-prudential policies to curb speculative activities in the property market, unduly-high house prices and the escalation in household indebtedness.

The notable policies include limiting the maximum tenure for property financing to 35 years, the removal of the Developer Interest Bearing Scheme and the hike in real property gains tax.

Although the actual impact of macro-prudential policies is more difficult to gauge than a blunt OPR hike, there was a notable slowdown in the housing price index in 2013.

The latest housing price index growth has eased to 8% in the first quarter of the year, down from the average growth of 11% in 2013.

However, in terms of bank loans for financing of residential properties, the growth rate has hovered at around 13% since 2011 – conspicuously unaffected by the macro-prudential tightening.

An insight from the International Monetary Fund research paper published in April 2014 on the Malaysian housing market suggested that there is no underlying evidence of a direct correlation between the rise in house prices and the residential loans growth.

This should not come as a surprise, given that progressive macro-prudential measures are not meant to choke the market off responsible homebuyers. Essentially, these macro-prudential policies are meant to strike a balance between curbing speculative profiteering of property assets and encouraging responsible household loan taking.

Other policy options at hand for the central bank to tighten irresponsible lending activities include adjustments to the statutory reserve requirement (SRR).

SRR is the legal requirement of money balances that banking institutions have to comply with.

An increase in the SRR ratio will effectively absorb liquidity within the banking system, thereby containing loans growth.

The last SRR revision was in July 2011, when Bank Negara raised it to 4% from 3%.

In this regard, if Bank Negara feels that the OPR adjustment will not be adequate to deter speculative buyers, they could still raise SRR by 1 to 2 percentage point come September or November.

More importantly, the authorities will likely gauge the effectiveness of earlier policies and will not rush into another OPR hike.

Meanwhile, the Government also has the flexibility to design policies to meet the objectives of pre-empting potential dangers from an asset price bubble. The annual Budget come this October will be an avenue to introduce such policies.

At this juncture, there is still ample room to manoeuvre without involving the OPR.

Further increase would trim private consumption further

If the remarkable 6.4% second quarter GDP growth is any solid assurance of a stronger economy moving forward, look again.

During the quarter, the export sector was the key driver of the GDP performance (8.8% growth versus first quarter 7.9%).

In the meantime, private domestic consumption growth moderated for the fifth consecutive quarter at 6.5%, down from the last peak of 8% in the third quarter of 2013. This onset of the moderation coincided with rising inflation on the back of the fuel subsidy rationalisation.

This downward trend will only likely persist in the coming quarters, given the anticipation of a new fuel subsidy rationalisation mechanism and the implementation of the goods and services tax (GST).

As private domestic consumption makes up half of Malaysia’s GDP, it will be a challenging time for consumers to brace for domestic headwinds.

In light of the softening domestic consumption and geopolitical uncertainties that would affect the global economic outlook, the second half of 2014 will be expected to fall short of the first half performance.

Although Bank Negara and consensus have raised the full-year GDP target upwards, it is nevertheless below the first half growth. An OPR hike now will only further weigh down domestic spending.

To complicate matters more, the impending GST next April will likely distort the macroeconomic trends as consumers bring forward consumption prior to implementation, as seen in recent Japan’s sales tax hike early this year.

The short-term economic data that we will be facing will be accompanied with noises. This will only add to the challenges for Bank Negara to disentangle the signals from the ground and evaluate the effectiveness of its monetary policy stance.

No hike for now

Rightly so, Bank Negara has to consider its next move carefully.

With other measures at its disposal and the consideration of domestic consumption resilience, an OPR hike so soon after the last one might be too premature. - By Manokaran Mottain (The Star)

Skyview Low-Medium Cost Apartment (LMC)

Skyview Low-Medium Cost Apartment is located at Jelutong, Penang consists of a 23-storey apartment block. There are 109 apartment units in total, each apartment unit comes with 3-bedrooms.

Skyview is a mixed development property project which include Skyview Residence (42-storey condominium), Skyview Piazza (12 units of shoplots) and Sky Avenue (6 units of 3 & 4-storey shop offices).

Property Info | Photo | Floorplan | Map | Sale & Rent

Property Project : Skyview Low-Medium Cost
Location : Jelutong, Penang
Property Type : Apartment
Tenure : Freehold
No. of Blocks : 1
No. of Storey : 23
Total Units : 109
Developer : Gema Intan Sdn Bhd

Skyview Piazza & Sky Avenue

Skyview Piazza & Sky Avenue is part of Skyview mixed development located in Jelutong, Penang. It is strategically situated in the heart of Jelutong along Jalan Perak, an exclusive commercial property ideal for anchoring all kind of corporate offices and retail outlets.

Skyview Piazza has a total of 12 units shop lots and Sky Avenue offering 6 units of 3 & 4-Storey shop offices.

Besides Skyview Piazza & Sky Avenue, Skyview mixed development project will also consists of Skyview Residence (42-storey condominium block) and Skyview Low-Medium Cost Apartment (23-storey apartment block).

Property Info | Photo | Floorplan | Map | Sale & Rent

Property Project : Skyview Piazza & Sky Avenue
Location : Jelutong, Penang (Property for sale & rent in Jelutong)
Property Type : Shoplot, Shop Office (Shoplot for sale & rent)
Tenure : Freehold
Total Units : 12 & 6
Developer : Gema Intan Sdn Bhd