Ivory seeks investor for proposed 5-star hotel

IVORY Properties Group is looking for an investor for the 450-room five-star hotel planned at its Penang Times Square development in Penang.

Ivory Properties Sdn Bhd executive director Datuk Seri Nazir Ariff Mushir Ariff said the proposed hotel and podium block carry an estimated gross development value of RM250 million.

"The 10-storey podium block will comprise six floors of retail outlets and six parking levels," he told Business Times in an interview.

Nazir said the hotel will form the fourth phase of development for the RM400 million Penang Times Square project on the fringe of George Town's heritage enclave, which has been included in Unesco's World Heritage List.

"We are seeking an investor who is also keen to operate the hotel whose rooms are expected to take up 200,000 sq ft over 20 floors.

"Alternatively, we are willing to build the hotel if a renowned hotel chain is keen to operate it on a long-term basis," he said, adding that the proposed hotel is expected to break ground in 2010 and be completed by 2013.

Ivory Properties managing director Datuk Low Eng Hock said the company has held initial talks with potential investors from the Middle East, but nothing has materialised as yet.

According to Nazir, the first two phases of Penang Times Square, which include residential and commercial units, are scheduled to be completed early next year.

"The third phase, which will include a convention and exhibition centre and a cineplex, is expected to break ground by the end of 2009," he said.

The value of the residential units has already appreciated by 30 per cent, while that of neighbouring properties in the Datuk Keramat area has doubled.

Penang Times Square sits on 5.2ha where one of the country's oldest tin smelting operations, Escoy Smelting Sdn Bhd, once stood.

About 0.8ha has been earmarked by Ivory Properties for an urban open space and a heritage museum.

Ivory Properties' other projects include the luxurious hilltop villas at its "Moonlight Bay" development along the Batu Ferringi tourism belt and "The View Twin Towers" which overlook the Penang Bridge.

By Marina Emmanuel (Business Times)

Property investment a solid bet

It provides a hedge against inflation caused by economic slowdown

THE deepening financial crisis is making property investment a more attractive option, Fiabci vice-president for marketing and networking Michael Geh said.

He said there was going to be a shift of investment money in the coming years from the traditional financial products like bank deposits to property, which was deemed more solid.

“Income-bearing properties is the hedge against inflation that comes with an economic downturn,” he added.

Geh was speaking at a one-day forum by MIEA Penang chapter held in conjunction with the official visit of a 50-member delegation from North Sumatra Real Estate Indonesia (REI) headed by its chairman Rusmin Lawin to Penang on Saturday.

Penang chapter chairman Danny Ooi said MIEA was embarking on an initiative to assist its members to be actively involved in international marketing to tide over the impending difficult times brought about by the global economic slowdown.

“We want to encourage our members to be involved in promoting international marketing. It is our ability to adapt to the challenges ahead that is crucial to help us remain competitive,” he said.

Ooi said the REI inaugural visit would enhance on the working ties and cooperation established under the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) and upgrade the quality of professional services provided by estate agents in their respective countries.

Both MIEA and REI signed a Memorandum of Understanding to explore areas of cooperation and collaboration and foster inter-regional ties.

Ooi signed on behalf of MIEA Penang chapter while Rusmin for REI.

The signing was witnessed by MIEA president Soma Sundaram, Penang Fiabci chairman Datuk Khor Teng Tong, REI secretary Jafar S. Ritonga and REHDA Penang chairman Datuk Jerry Chan.

Rusmin, in his remarks, stressed on the importance of networking and exploring other markets during difficult times.

He said the Indonesians were particularly keen to learn from the success of Malaysia My Second Home or MM2H programme and Penang as the top choice destination.

“We are interested in how Penang is promoted to the international market.

“We also hope for some business matching and sharing of experience from this meeting,” Rusmin said, when presenting on the topic "New trend and opportunities in North Sumatera".

Later, delegation members were briefed during their visits to several project sites such as the Paragon by Hunza, Tanjung Sri Pinang (E&O) and Hillside Homes (Asia Green).

On a separate matter, Ooi advised house buyers to be wary of illegal estate agents.

He said there had been many instances of buyers being cheated of their deposits and receiving substandard services.

He said it was an offence to act as an illegal estate agent without accreditation and punishable with a three-year jail sentence, or RM25,000 fine or both, and a further fine of RM500 each day levied for subsequent offences.

By The Star

Start building houses, Govt urges developers

Housing developers should launch their projects now that the fuel prices and the cost of building materials have dropped, Housing and Local Government Minister Datuk Seri Ong Ka Chuan said.

Over the past six months, he said, many projects did not take off as developers chose to stall them because of the rising cost of building materials.

He pointed out an average of 100,000 homes were built each year, but as of October, only half of that amount had been delivered so far.

“We always need the sale of houses to generate economic activity. Every house has 140 components, so if the developers stop building, then this also affects the factories producing the building materials.

“The professional bodies would have no business and this creates a backlash in the industry,” he told reporters at a Perak Fire and Rescue Department Hari Raya celebration here on Wednesday night.

“Launch the project because the demand for houses is always there. Of course, some developers still prefer a ‘wait-and-see’ attitude,” he added.

Ong also said the ministry was working out a mechanism to stabilise the cost of building materials for the housing sector, particularly low and medium cost housing schemes.

The Government, he said, had learnt its lesson from previous experiences when steel prices, for instance, had once soared and thrown builders into a difficult position.

“We have to talk with the developers, manufacturers and building material suppliers to work out the mechanism because we cannot make a decision when it affects their interest.

“We don’t want a situation where the high prices (of building materials) affect the supply of low and middle cost houses, which are in great demand,” he added.

Among the possibilities for the mechanism was the Government stockpiling steel or rendering other form of assistance, he said.

By CHRISTINA KOH (The Star)

Guan Eng to promote Penang in Korea

Penang is marketing itself as an ideal place for second home by setting up a pavilion at the Asia Pacific Tourism Investment Conference and Expo (Aptic) in Seoul, Korea.

Property developers Eastern & Oriental Bhd, SP Setia Bhd, Hunza Properties Bhd, Ideal Property Intelligence Sdn Bhd and the Penang Health Association are among the participants of the Penang Pavilion, whose objective is to promote Penang as an ideal home for Malaysia My Second Home (MM2H) programme.

Participation in the expo is part Penang’s trade and investment promotion mission to Korea from Oct 28 to Nov 1. The mission’s 52-member delegation will be led by Chief Minister Lim Guan Eng. He is scheduled to present a paper at Aptic entitled Sustainable Tourism Development in a Heritage Environment — the Penang Story tomorrow.

Lim is expected to hold business meetings with companies and potential investors from various sectors.

By The Edge Daily

Penang factories to be hit by global financial crisis soon

Factories here are expected to feel the heat of the global meltdown by December or early next year, according to the Federation of Malaysian Manufacturers (FMM) northern branch.

Its chairman Datuk O. K. Lee said the branch was now looking into ways to help factories here cushion themselves from the impact and take remedial measures.

Lee said industry players had complained that demand for their products had softened due to the global slowdown, adding that the sharp rise in electricity tariff, transportation fees and gas had been burdensome.

“The only good news for us is that the US dollar is growing strong as industry players here are more focused on export-oriented activities,” he said on Wednesday.

A survey would be conducted to find out how members had been affected by the world economic turmoil as Penang was home to many multinational companies.

He added that members in Penang were concerned about the impact of the global crisis on their businesses and their survival.

The branch has about 350 members in the northern region, 280 of which are based in Penang while the rest are from Kedah and Perlis.

“Right now, the effect is still not that strongly felt here. But we anticipate a chain reaction as it is only a matter of time before it hits us,” he said.

By The Star

China, S.Korea must do more to avoid property crash

China and South Korea have moved to prop up their frazzled housing markets but probably need to do much more to avoid major price slides that could ruin developers, damage banks and threaten the region’s economies.

A share price collapse this week for Chinese property developers such as Guangzhou R&F and China Overseas Land suggests that many investors believe a housing market bust is on the cards, despite a policy U-turn by Beijing.

“Investors might just be throwing in the towel,” UBS analyst Eric Wong said of the sharp drop, which saw some stocks lose as much as 35 per cent of their value over Monday and yesterday.

The Chinese government, fearing a price bubble, was in market cooling mode only a year ago, squeezing developers with a clampdown on loans and hatching moves to stamp out speculation.

New home prices then slumped by up to 40 per cent in the southern cities of Guanzhou and Shenzhen as sales dried up, and property firms began slashing prices across the country to keep cash flowing in.

The outlook grew even dimmer as the global credit crisis began to buffet Asia and batter its financial markets, stalling the region’s once-roaring economies.

So last week Beijing unveiled cuts in taxes, mortgages and down payments on homes in an effort to breathe life into a property industry that accounts for about 10 per cent of gross domestic product (GDP) in the world’s fourth-largest economy.

But the country’s biggest developer, China Vanke Co, reported yesterday a 13 per cent decline in net profit and a nearly 30 per cent drop in sales volume, in another reminder of how deep-seated the problems are.

If the housing market fails to perk up, analysts say policy makers will probably resort to macro-economic measures to spur demand, such as cutting taxes and interest rates.

“The usual monetary cocktail is a blunt instrument but it’s longer lasting,” said UBS’s Wong, adding that Beijing might also raise export subsidies and hike pay at state companies.

On the property side, the government could reel back on its measures to dissuade people from buying apartments as investments and tell banks to start lending to developers again, Wong said.

TOO WEAK, TOO LATE?

In South Korea, where around half the country’s personal wealth is tied up in property, the government pledged 5 trillion won (US$3.4 billion) last week to buy unsold homes and land from developers to prevent mass bankruptcies in the industry.

An interest rate cut of 75 basis points followed on Monday as policy makers tried to keep the global financial storm at bay.

The steps are a reaction to slowing economic growth and a steep climb in the number of unsold new homes on the market, which rose 43 per cent to a record 160,595 units in July from the end of 2007, according to government data.

Just as in China, the government had a hand in slowing the market in early 2007, tightening restrictions on mortgages and buying second homes.

Analysts believe freeing up finance for homebuyers is the answer, not just taking homes off the market. Apartment prices in the most expensive districts in Seoul and in satellite towns have fallen up to 20 per cent from their peaks in 2006.

“The measures came too late and are too weak,” Daiwa Institute of Research analyst Hyo Yim said of the government’s action to shore up the property market.

The government should loosen rules on mortgage lending and cut back taxes on owners of two or more homes, Yim said.

Mortgage debt in South Korea is still only a quarter of GDP, compared to 61 per cent in Australia, and 105 per cent in the United States, according to CLSA. In China, home loans equal only 12 per cent of GDP.

“The government cracked down on so-called speculative buyers, but people won’t buy homes if they don’t expect prices to rise,” said Yim, adding that the housing market would probably not recover before 2010.

Many of South Korea’s 12,000 builders face a cash crunch as credit dries up and home sales slow, with 88 firms defaulting in the first nine months of 2008, up 17 per cent from a year earlier.

Even top developers are not immune to such worries, with shares in GS Construction, Hyundai Development and Samsung Engineering tumbling between 37 and 50 per cent in the last month.

But some analysts are suggesting that South Korean construction stocks may have bottomed thanks to the government’s actions, with valuations at historical lows and at a 30 per cent discount in price/earnings terms to the overall stock market.

BNP Paribas analyst Jae Rhee has a 12-month target stock price for Hyundai Development that is double its current price. And the potential upside for GS Construction and Samsung Engineering is about 70 per cent, he wrote in a report last week.

Chinese developers are now trading at near 70 per cent discounts to net asset value, and at 7.4 times forecast 2008 earnings, according to Citigroup analyst Oscar Choi, who believes the stocks have been sold off “indiscriminately”.

And Beijing will do all it can to stop a property market crash, said CLSA analyst Nicole Wong, who has a buy rating on New World China Land and Agile Property.

“Policy is very supportive; basically they’re underwriting a put option on market,” she said. “For sure the government will take further steps if the downward spiral doesn’t stop.” - Reuters

Singapore private home prices fall 2.4%

Singapore private home prices fell 2.4% in the third quarter, worse than an initial estimate of a 1.8% drop as the property market weakened sharply at the end of September.

Rents during the July-September period fell 0.9% after gaining 2.5% in the three months to June, the government’s Urban Redevelopment Authority (URA) said yesterday. Homes in prime areas registered the biggest price decline of 2.7%.

“We know the property markets turned so the revised figures were not a huge surprise. It’s more than likely the fourth quarter will see a sharper decline,” said Song Seng Wun, Singapore-based economist at CIMB.

The fall in Singapore home prices in the three months to September marked the first decline in four years and coincides with the economy’s descent into recession during the quarter.

Demand for government built HDB apartments remained firm during the third quarter as prices gained 4.2%, a separate index from the Housing Development Board showed.

The increase was, however, slower than the second quarter’s 4.5% gain. - Reuters

Paya Terubong landslide destroyed eight cars

A massive landslide in Paya Terubong narrowly missed an apartment building but destroyed at least eight cars parked beneath the 30-metre hillslope early yesterday.

The 3am landslide caused by continuous rain, washed down tonnes of earth, uprooted dozens of trees and caused several boulders to crash down on the outdoor car park.

With the surface of the car park covered with a thick layer of mud, Taman Terubong Jaya residents had difficulty salvaging their cars.

It was a case of no hope for Teh Han Cheow, 34, after his Honda City was crushed by earth and boulders.

"I am sad because my car, which I bought for RM85,000 two years ago, is beyond repair.

"To make matters worse, the insurance company has confirmed that it will not compensate me for my losses as the damage was caused by a natural disaster," said Teh, who cut a forlorn figure when met at the scene.

He said he was notified by a security guard that his car was destroyed.

Meanwhile, Siti Hayati Noor, 25, said she was fortunate that her car was not affected by the landslide.

"My car was parked further away and the landslide narrowly missed it."

The chief minister's political secretary, Ng Wei Aik, who visited the scene, said he would ask the state Public Works Department to identify landslide-prone areas in the state.

"We will identify these areas so that retention walls can be constructed on the hillslopes to prevent landslides."

By Phuah Ken Lin (New Straits Times)

FIC guidelines review welcomed

The government should raise the selling price of residential units for foreigners to RM350,000 instead of the current level of RM250,000 to help local buyers, Fiabci-Malaysia honorary treasurer Yeow Thit Sang said.

“This way we can be seen to be helping our local buyers,” he said. The government had in December 2006 allowed foreigners to buy residential units costing RM250,000 or more without the need to seek the Foreign Investment Committee’s (FIC) approval.

The move is aimed at encouraging foreign investors to purchase high-end residential units but there is also a strong demand for residential units costing RM250,000 or more from local buyers.

Nevertheless, Yeow said any positive changes in the FIC guidelines to ease the sale and purchase of real estate property was most welcome, as Malaysia was one of the most favourable country for the purchase of real estate property in Southeast Asia.

“The foreign investors who bought commercial property will need to pay assessment, quit rent and other form of taxes, he will definitely have to occupy or rent the premise to others to make any meaningful return,” said Yeow.

Zerin Properties Sdn Bhd’s chief executive officer Previndran Datuk Singhe said foreign investors should be free from the compliance to have or increase bumiputera equity to at least 30% to acquire bigger commercial properties in Malaysia.

He said the lifting of this restriction on foreigners to own larger commercial properties would have a positive impact on the economy.

“The owners of the foreign companies will not have to apply for exemption (exempted from the compliance to allocate 30% stake for bumiputera), they will not have to report back to their headquarters and so forth,” he said.

Finance Minister Datuk Najib Razak on Monday said the FIC guidelines would be reviewed to attract more foreign investors, especially in the property and commercial sectors.

Nevertheless, Previndran said Malaysia would remain one of the top choices for foreign property investors in view of its relatively low-priced properties as compared with Singapore and Hong Kong. “Malaysia is also among the few countries that offer foreign investors to hold freehold properties,” he added.

Yeow said besides being an English speaking country, Malaysia’s laws on sale and purchase and taxes were most favourable.

“These are all factors that will encourage foreigners to invest in the country. The awareness of all these favourable factors is not make known to the world. There is a need to do this is a big way,” said Yeow.

The Nomad Group Bhd’s (formerly Kuala Lumpur City Corporation Bhd) chief executive officer Hew Thin Chay said the government should also focus on the bigger picture by boosting foreigners’ confidence in the country’s security and stability.

“The big picture plays a more vital role. For foreigners, the stability and security of the country are very important. The government should also ensure efficiency in the process for foreigners to obtain approvals,” he said.

by Yantoultra Ngui Yichen (The Edge Daily)

Great Depression versus now

As much as there are similarities between the two crises, the damage caused by the current turmoil is likely to be less severe given the swift actions of central banks.

AS a result of the recent financial tsunami, some experts have started to ponder whether we are headed for a depression.

The current credit crunch and the meltdown in some financial institutions were quite similar to what happened during the Great Depression in the 1930s.

In this article we will analyse the reasons behind the 1929 Wall St crash, which kickstarted the Great Depression and compare it to the current situation to identify any signs that a depression is approaching.

Milton Friedman, the leading advocate of monetarism, argued that every great depression had been accompanied or preceded by a monetary collapse.

According to Ben Bernanke, the US Fed chairman, the main reason behind the Great Crash of 1929 was due to the tight monetary policies adopted during that period.

He said the high interest rates back then caused the US economy to fall into a recession that led to the great market crash in October 1929.

As the US dollar was backed by gold, the acute selling of dollars for gold resulted in a run on the dollar.

The Fed continued to increase interest rates in an effort to preserve the value of US dollar.

As a result, high interest rates caused bankruptcies for many companies.

At the peak of the Great Depression, the US unemployment rate hit 25%

To rub salt into the wound, massive withdrawals of cash by panicky depositors were the last straw that brought about the total collapse of financial institutions.

In that period, bank deposits were uninsured and the collapse of the banks caused depositors to lose their savings.

And due to the economic uncertainties, the surviving banks were reluctant to give out new loans.

Another culprit in the 1929 crash was margin financing which caused excessive speculation in the stock market.

Investors needed only to put up 10% capital and borrow the rest from the bank to invest in the stock market.

The collapse of stock prices led to margin calls and further selldowns.

Coming back to the 2008 crash, the banking and credit-market crisis was mainly due to the property boom and subprime bust.

The collapse of subprime loans sparked the credit crunch, which dragged some financial institutions into trouble.

As a result of the securitisation and the creation of innovative financial products like collateralised-debt obligations and credit-default swaps, the collapse of one financial institution had a domino effect, leading to the collapse of other financial institutions.

Now, the pertinent question is whether we are in a long bear market and heading for a depression.

We believe a depression like the one in 1929 may not happen exactly the way it did before.

Given the fast actions taken by central banks around the world, the damage caused by this crisis will be less severe than the one in 1929.

Central banks around the world have been putting in concerted efforts to make sure the global economy will not fall into a depression.

The rescue packages being implemented throughout the world will help stabilise the financial system.

We believe the reduction of interest rates and the increase in money supply will help cushion the impact of the credit crunch.

Besides, deposits placed with most financial institutions are guaranteed by central banks.

Even though the US unemployment rate may rise to 10% from 6.1% currently, it is still far below the peak of 25% hit during the Great Depression.

In the 1929 crash, the Dow Jones Industrial Average took about three years to reach bottom in July 1932 from its peak in September 1929.

From the peak to the trough the Dow lost about 90%.

The Great Depression in the US started in August 1929 and ended only in March 1933.

The stock market started to recover eight months before the US economy ended its depression.

At present, the Dow has already dropped for a year from its peak in October 2007, currently down about 37.5% against its peak of 14,164 points on Oct 9, 2007.

In view of the possible economic recession in most developed countries, we think the Dow will drop further from current levels.

Nevertheless, we believe it will recover much faster and the magnitude of the fall will be far less severe than the one in 1929.

Lastly, we believe the stock market will eventually recover.

At this point, to be more prudent, we may take a “wait and see” approach until things stabilise.

> Ooi Kok Hwa is an investment adviser licensed by Securities Commission and the managing partner of MRR Consulting

by OOI KOK HWA (The Star)

Buying property a better bet

CAN the financial “tsunami” currently drowning many banks in the United States and Europe hit our shores? And, if so, how will our property market be affected?

I believe we cannot run away from the contagion effects of the credit crunch in the West and like it or not when our economy is affected, so will the property market.

However, we will pull through especially given our conservative and well-regulated banking system.

The good thing is we are not faced with a property “bubble” as in the early 1990s and also, banks have reduced their construction loans since end of last year to avoid an over-supply situation.

Fear, uncertainty and even panic have gripped many investors who have dumped their shares in the local bourse.

We must remember that it’s not the global credit crunch that is worrying but soaring inflation caused mainly by spikes in crude oil prices. Although crude oil price has dropped recently, it may go up again.

Our property market has been affected by the high construction costs, inflation and a perceived over-built situation especially of high-end homes.

However, I am confident that if one has extra money and can afford to service a loan, investing in property especially in a good location is still a safer bet and will yield better returns in the long run.

This is not to say that one should not save money in fixed deposits. It is always prudent to have sufficient savings but with fixed deposit rates hovering around 3.7% to 4.2% for 12- and 60-month tenures respectively, it is still a negative return when compared with the current inflation rate of over 7% (for many people it is more like 30%).

What about the stock market? Punters have been nibbling at some bargains in the hope of making a tidy profit in the event of an upswing in price. Trouble is many of us are unsure of when it will hit bottom and how long it will take for it to recover, not to mention a bull-run which seems unlikely in the near future.

Unlike property, which is solid brick and mortar, share prices are often determined by sentiments and, currently sentiments are very weak. Many property counters have taken a beating.

My advice for those wishing to buy their first home is to do it now. Don’t fool yourself that prices of new launches will come down because developers cannot afford to reduce prices anymore as their profit margins are already cut to the bone.

In fact many developers I talked to said they were either withholding launches or increasing prices by 20% to 30%. This is also a good time to go bargain hunting in the secondary market and snap up unsold units of upmarket residential homes before developers are forced to increase their price.

Those who can afford homes priced above RM1mil may hold back on their purchase because of the prevailing global financial and local political uncertainties. There are already reports of some high-end projects having problems pushing off their units.

Times are indeed very challenging.

by SC Cheah (The Star)

Penang will not convert reclaimed land to freehold

Chief Minister Lim Guan Eng does not want to follow the previous state government’s policy of circumventing the National Land Code (NLC) 1965 by converting reclaimed land to freehold status.

He said Section 76 of the NLC prohibited the state authority from converting reclaimed land to freehold, or for any period exceeding 99 years in order to protect and reserve coastal areas.

“I have been advised that after a piece of land has been reclaimed, it ceases to be seabed and foreshore factually, physically and legally; leaving it within the state’s right to convert its status to freehold.

“But this state government will not choose to exercise its powers to make such conversions,” he said in a press statement yesterday.

Lim was commenting on the land conversion of the 28ha Queensbay development project in Bayan Lepas in 2006 that sparked controversy recently when it was reported to be against the NLC.

He said that while he disagreed with the previous state government’s policy of converting reclaimed land to freehold, he was advised by state legal advisers and consultants that it was done legally.

“The state government also has to comply with the Penang High Court’s consent order given to the scheme arrangement to rescue the original Bayan Bay project,” he said.

However, he stressed this was not something the Pakatan-led state government endorsed or concurred with.

Lim also advised former Chief Minister Tan Sri Dr Koh Tsu Koon to cooperate with the present state administration to expose more land scams and clarify one-sided agreements detrimental to the state.

“It is regrettable that despite the new government’s repeated calls to promote Competency, Accountability and Transparency (CAT), those from the previous state government still refuse to come clean on the land scams which have caused losses totalling hundreds of millions of ringgit,” he said.

by The Star

Fiabci Penang urges review of development criteria

The Penang chapter of Fiabci Malaysia has urged the state goverment to consider allowing development to be carried out exceeding the height of 75 metres in view of the shortage of land.

In a memorandum submitted to Chief Minister Lim Guan Eng, Fiabci-Malaysia Penang said land prices were high in view of the land shortage in the state and purchasers were burdened with escalating costs of materials.

Fiabci-Malaysia Penang branch chairman Datuk Khor Teng Tong, who led a delegation to submit the memorandum to Lim, said that soon it would almost be impossible for Penangites to own homes and developers would also find it difficult to sell their products due to the escalating price of land.

“More development projects will be able to go on if the height of 75 metres for hillslope development is revised. Penang has also not revised its density guidelines for the last 30 years and developed countries have their density ratio reviewed every five to 10 years.

“In Penang, 80% of residential units come with a built-up area of only 700 sq ft and this does not do justice to consumers who are now more affluent and need bigger living space.

“We should move away from constructing homes based on the equivalent floor space and we feel that the size of residential units to be built should be left to market demand.

“The plot ratio for commercial development should also be uniform and we propose that higher plot ratios should only be given to development in prime areas such as tourism-related areas,” he added.

He also suggested that the state government make it compulsory for all high-rise residential units to come with at least two car park lots which could be sold, while landed properties should be designed to house more cars which could effectively rid of all illegal roadside parking and prevent traffic congestion in housing estates.

Khor said there was a demand for 8,000 to 10,000 units of residential housing yearly and to adequately address the demand, proper planning according to market demands must be made so the right products were made available to the public and not resulting in an overhang.

“The people’s average income has since increased and the poverty rate in Penang is less compared to other states, so we are proposing that the low-cost requirement imposed by the state government be reduced to 15% (from 30% currently).

“If low-cost housing is not able to be provided in certain areas where land is limited, developers should be given the flexibility to pay financial contribution in lieu of providing low-cost units which can be used to upgrade and upkeep existing low-cost housing projects,” he added.

Fiabci Malaysia Penang also urged the state government to promote “kampung tersusun” and allow the landowners to develop their land for efficient usage.

Khor also called on the state government to allow service apartments to be built in commercial areas to attract long staying foreigners under the Malaysia My Second Home (MM2H) programme.

Fiabci also called the state government to ensure the implementation of the second link, Penang Outer Ring Road and monorail without further delay.

“Even though the federal government has indicated the cancellation of these projects, the state government should still find other solutions to solve these issues, especially traffic jams on the island,” he added.

He said the guideline compelling developers to complete high-rise buildings within 36 months to be reviewed due to the strict enforcement by the state government for works to be carried out only from 8am to 6pm.

He said wasteful expenditure of millions of ringgit of public funds under the “cleaning effort” in the past should also be halted and instead what was needed was total dedication, commitment and strong political will to address the issue by looking at efforts taken by other countries worldwide.

by Regina William (The Edge Daily)

Reclamation issue ‘water under the bridge’, says Lim

Chief Minister Lim Guan Eng yesterday put to rest the issue of the conversion of 28ha of reclaimed Queensbay land from leasehold to freehold by the previous state government, saying it was done in full compliance with the National Land Code (NLC).

Saying the matter was “water under the bridge,” Lim said the decision to convert from leasehold to freehold was a question of policy implemented by the previous state government.

“As far as this new state government is concerned, we consulted legal authorities, both within and outside the state government about this and it has been done in full accordance with the NLC and the legal process is valid. It was done in the past and it is for us to comply with.

“The state government is entitled to convert the category of land from river/river bed to dry land and also to convert foreshore and seabed into dry land by way of reclamation and there is no prohibition against this.

“Since the foreshore and seabed ceased to be of existence upon reclamation of the land, there is no issue of the foreshore and seabed being converted into freehold status.

“The question that should be posed to the previous state government is why such a policy decision was made to convert the land from leasehold to freehold in the first instance.

“Why was there no consultation made before such a decision was reached?” Lim said at a press conference which was also attended by Penang Development Corporation (PDC) general manager Datuk Rosli Jaafar and PDC legal adviser Zainun Abdul Rahman.

He was responding to a press report on the status of the state-owned land which is converted to freehold for a private commercial project. The conversion followed a court sanctioned scheme of arrangement in 2004 to enable the project to be revived by a “white knight”.

The land was reclaimed by PDC and later sold to a private developer and was part of the Bayan Bay project.

However, the development, helmed by Bayan Bay Development Sdn Bhd via a joint venture between the PDC (which held a 30% stake) and Anson Perdana Bhd, was stalled in 1998, a casualty of the Asian financial crisis. (Anson Perdana is now under liquidation.)

After several attempts, the state government gave the project to the “white knight” CP Landmark Sdn Bhd. The terms included converting the reclaimed land into freehold.

Rosli said the rescue plan for the project was based on the new business model which was presented by CP Landmark at the court convened meeting where a scheme of arrangement was agreed upon.

To another question on why the land was converted to freehold when PDC had reclaimed the land at its own cost, Rosli said when the reclaimed land was sold via a tender exercise, the cost was recovered.

“The whole privatisation exercise was paid in full and even when the land was converted from leasehold to freehold, the premium was paid in full. When the rescue proposal was submitted and before the court gave its consent, the PDC brought the matter of conversion to the state executive council for consideration.

“It was then that it was agreed that in order for the business model of the “white knight” to be guaranteed and successful, the freehold status should be granted.

“Otherwise, we would not have been able to revive the project,” he added.

by Regina William (The Edge Daily)

Submit report on land change

THE Penang Government has instructed Penang Development Corporation (PDC) to submit a report on the conversion of the reclaimed land in Pantai Jerejak from leasehold to freehold.

The report is to ‘guide’ the state government from committing ‘mistakes’ in the future and ensure that public access to the seafront would not be denied.

Penang Chief Minister’s political secretary Ng Wei Aik said he had spoken to PDC general manager Datuk Rosli Jaffar to prepare the report for Chief Minister Lim Guan Eng, who is currently away on a trade mission.

“We need to study and check whether the previous administration had committed any wrongdoing. The conversion of reclaimed land where the Queensbay project stands was made before we took over and the present administration does not want to repeat the same thing.

“Although the state government has the jurisdiction on land issues, we want to protect public interest and Lim will personally look into the matter,” he said.

Ng, who is also Komtar assemblyman, said the state government would also refer the matter to the state Legal Adviser because several other major projects were also carried out on reclaimed land.

Apart from the RM3bil Queensbay project, two other massive reclaimation projects are being carried out off Tanjung Tokong and along Jelutong Expressway near Batu Uban.

There have been questions as to why the previous state government converted 28ha of reclaimed foreshore land from leasehold to freehold for the Queensbay project which contravened the National Land Code.

The code prevents state authorities from disposing of alienated coastal land as freehold. Section 76 of the code stipulates that the state authority cannot dispose of any part of the foreshore or seabed for a period exceeding 99 years.

The land was originally vested in the Penang state authority, then alienated to PDC as leasehold for 99 years and later sold to a private company for RM54mil. The land status was converted to freehold.

Ng said the state government need not convert the status of any land in exchange for development and that there should be a win-win situation between developers and the state government.

“We have to look at the prospect of such projects while at the same time protect the interest of the people,” he said.

Batu Uban assemblyman S. Raveentharan, who is also a practising lawyer, said there should be a judicial review as the code could be interpreted differently.

“We should rectify a legal wrong and there is a question of whether the developer could be compensated should the state government decide to revert the status.

“The reclaimed land cannot be converted to freehold because the code clearly dictates its status. It is tantamount to selling state sovereignty to a private company,” he said.

Former Deputy Chief Minister Datuk Seri Abdul Rashid Abdullah when contacted said the land in question was reclaimed for development.

“Don’t expect me to remember everything and I am not a walking library of the Land Office. I don’t keep records of the previous state exco meetings and all the papers are being kept by the Land office,” he said.

by ZARINAH DAUD (The Star)

Rep: Set up panel to probe land conversion

AN assemblyman has called on the Penang Government to set up a committee to look into the land conversion of the 280,000sq m property project on the island’s south- eastern foreshore that is now a major commercial area.

Batu Uban assemblyman S. Raveentharan said that the state government should call for a dialogue with the former state government to shed light onto the land conversion, that he claimed, was against the National Land Code (NLC) 1965.

“The previous state government owes Penangites an explanation on how reclaimed land could be converted from leasehold to freehold.

“The NLC is clear. Reclaimed land on sea-bed cannot be converted from leasehold to freehold,” he said after opening Kampung Batu Uban’s new Village Security and Development Committee (JKKK) hall on Saturday.

Raveentharan, a practising lawyer, said he brought up the matter in a written question to Chief Minister Lim Guan Eng in July’s state assembly when he asked how reclaimed coastal land in Batu Uban and Pantai Jerejak had been made freehold.

It was reported last week that the property project in question was originally on a reclaimed land area under the state authority.

It was meant to be developed into a marina and leisure resort but the developer failed to deliver the project due to the economic slowdown in the late 1990s.

The land was then alienated to the Penang Development Corporation (PDC) and later sold to another developer. Since then, the status of the land had been converted to freehold.

The current development is reportedly worth RM3bil and its masterplan includes bungalows, seafront villas, condominiums, apartments, shoplots, hotel and a shopping mall.

Lim had defended the conversion as an effort by the previous state government to revive the project after it was abandoned.

Raveentharan said he was concerned with what would happen to the people who had bought the properties on the reclaimed land that had been marked as freehold.

“If it is against the NLC to convert the land status, it could make the sales of the said properties null and void,” he said.

Raveentharan claimed that land on a major development project in Tanjung Tokong has also been converted to freehold.

by The Star

Panel to study case over formation of JMB

PENANG is mulling over a landmark case involving the formation of Joint Management Bodies in leasehold properties.

A special committee has been formed to look into the issue after the state received an appeal to a Commissioner of Buildings’ (COB) decision from residents of a condominium in Tanjung Tokong.

“A request from the Marina Bay condominium residents to form a Joint Management Body (JMB) was rejected by the COB in June after which, they appealed against the decision to the state.

“Marina Bay is located on a plot of land leased from the Kwantung and Tengchow Association for 99 years and the COB made its decision based on an interpretation of the Building and Common Property (Maintenance and Management) Act 2007,” said Penang Town and Country Planning and Housing Committee chairman Wong Hon Wai, who is heading the special committee.

He added the law was relatively new and stipulated that parties could appeal to state authorities if they were unhappy with the COB’s decision.

“This is the first of such an appeal the state has received and according to Section 41 of the Act, the state’s decision will be final and binding,” he said.

He added that the three-man committee also consisted of state Health, Welfare and Caring Society chairman Phee Boon Poh and state Domestic Trade and Consumer Affairs Committee chairman Abdul Malik Abul Kas-sim.

“We will conduct fact-finding and get feedback from several parties before we make a decision by year-end.

“We understand that this decision will set precedence to whether we allow the formation of JMBs for leasehold properties which include housing projects and shopping complexes,” Wong said.

On another matter, Wong said the land development process at Hilir Sungai Pinang had been completed and tenants who had been relocated would begin moving back to the area.

“The development project called Serina Bay has received its Certificate of Fitness (CF) in February and tenants eligible for low cost and low medium cost apartments there will be picking lots for their homes today,” he said.

A total of 190 residents were relocated to Projek Perumahan Rakyat Taman Manggis on Lorong Selamat and the Rifle Range Flat to make way for the project

by The Star

Property developers had started to conserve cash

Property developers are starting to conserve cash as they brace for tougher times, given the severity of the global financial crisis, analysts said.

Having seen a marked drop in new property project launches this year, they said cash conservation is key to the players’ ability to proceed with ongoing projects and later rebound after a prolonged slump.

“Everyone is unsure how long this credit crisis will last. There has been credit tightening across the board… it is tougher to get loans, not only for property developers but for every industry. Staying liquid is very important now,” said a property analyst with K&N Kenanga Research.

She said property developers had started to conserve cash to buffer their existing projects. “A lot of property developers have pre-sold their projects in 2006 and 2007, and they are conserving cash to make sure they have a lifeline to readily available funds for their existing projects, which have been sold.

“Although raw material prices have come off slightly, they are still on the high side. Having a little extra cash in one’s pocket is the safer option to ensure that there is readily available funding for their projects moving forward. They do not want to be hit with late penalty payments,” she noted.

She added that they were also conserving cash to buy cheap land, should prices fall.

“Although prices of properties and land are holding up pretty well currently, it is anybody’s guess whether the prices will fall in time,” she said.

“As it is, we are already seeing a slowdown in the secondary property market in terms of take-up. However, the owner-occupancy market is holding up pretty well.”

Selangor Properties Bhd saw its cash and bank balances jumping to RM439.1 million for its third quarter ended July 31, 2008, compared with RM249.4 million a year earlier, while Penang-based Hunza Properties Bhd’s cash pile rose to RM68.7 million as of June 30, 2008 from RM18.3 million a year ago.This year has not been as good for property developers as last year. With higher raw material prices, which started rising early this year, and the ongoing global financial crisis, developers generally are not keen to launch new projects.

According to Ong Chee Ting, a senior property analyst at Aseambankers Research, developers are reading the market carefully before they launch any project.

“They are trying to read the market now… They want to see if there is demand for a product as well as to make sure the timing is right for a project launch. Although raw material prices are starting to drop, with inflation, purchasing power too has dropped,” he said.

The property analyst from K&N Kenanga concurs. “Property developers are launching smaller parcels compared to last year. A number of launches are concentrated more on townships as opposed to high-end properties. There is some softening of demand in the property market,” said the analyst.

by Joyce Goh (The Edge Daily)

Patrick Lim cuts loose from Equine Capital

Datuk Patrick Lim Soo Kit, the controlling shareholder of property developer Equine Capital Bhd, stepped down late last week as the company’s chairman and executive director.

Speculation that Lim planned to leave the company had been circulating for months, after Equine’s RM20 billion Penang Global City Centre project was shelved. Equine’s associated company Abad Naluri Sdn Bhd was given the mandate to develop the mammoth project.

Lim’s stepping down has raised yet more questions surrounding the shareholding structure of the company, including what has happened to his 29% equity stake.

The equity interest was held via private vehicles Indera Muhibbah Sdn Bhd, Perharap Sdn Bhd, Temasya Permai Sdn Bhd, Insan Mayang Sdn Bhd and Duta Kembang Sdn Bhd, as well as under his wife Datin Wong Mun Yee’s name.

In April this year, rumours had it that Equine and Lim were about to part company and a new controlling shareholder would appear. The notion was dispelled by the company, as the parties that were purportedly affiliated to Datuk Lim Siew Choon of Malton Bhd were already in the company.

There has also been many shareholder changes in the company this year.

For starters, British Virgin Islands-registered Smiling Sun Ltd ceased to be a substantial shareholder in Equine from end-May this year. The company emerged as a substantial shareholder at end-January after acquiring a 5.4% stake or 8.7 million shares. Smiling Sun upped its stake in Equine in March to 7.9% or 15.1 million shares.

Just who acquired Smiling Sun’s block is still unclear.

At the end of April, Long Ngah Mat Unah, via his vehicle Azim Raya Sdn Bhd disposed of 15.7 million shares or 8.2% in Equine and ceased to be a substantial shareholder. His equity could have been taken over by privately held Jasa Lumayan Sdn Bhd, which emerged as a substantial shareholder with the same number of shares that Azim Raya had disposed of.

Checks with the Companies Commission of Malaysia (CCM) revealed that Jasa Lumayan’s directors were Wee Beng Aun and Lee Kian Jin, and together with one Suanto Ng, the three controlled 98% of the company.

However, a mere two days later Jasa Lumayan ceased to be a substantial shareholder and Istima Permata Sdn Bhd emerged with a 10.8% stake, or 20.8 million shares.

CCM’s corporate information showed that Istima Permata’s shareholders and directors are Ng Ah Pong and Teng Mee Leng. However, two individuals, Goh Chee How and Wong Wing Fatt, were said to have a stake in Istima Permata, according announcements on shareholding changes to the Bursa Malaysia.

Both Teng and Ng were also minority shareholders in Jasa Lumayan with 1% each. Wee from Jasa Lumayan was also a director of Domain Resources Sdn Bhd, which is a wholly owned unit of Malton. This was what sparked rumours of Malton’s chieftain Siew Choon entering Equine.

With Lim leaving his executive position, what lies in store for Equine is not clear.

Equine’s main assets are its land banks in Selangor and Penang, which according to the company’s latest annual report have a net book value in excess of RM350 million.

For the first three months of its financial year ending March 31, 2009, Equine posted a meagre net profit of RM26,000 on the back of RM28.3 million revenue. For the corresponding period a year earlier Equine netted RM575,000 profit on RM19.3 million revenue.

The new faces at Equine are executive director Othman Mohammad and chairman Datuk Seri Tengku Ahmad Shah Sultan Salahuddin.

by Jose Barrock (The Edge Daily)

Rehda backing for WiFi

THE Penang branch of the Real Estate and Housing Developers’ Association Malaysia(Rehda) will continue to support the Penang Free WiFi project unless there is conclusive evidence that the wireless network poses a health hazard to the public.

Its association chairman Datuk Jerry Chan said Penangites stood to benefit greatly from the wireless network which is made available to them at no cost.

“Many advanced cities in the world are or are in the midst of being equipped with WiFi service.

“Moreover, hotspots are already widely implemented in hotels, offices and other entertainment centres,” he said in a press statement in George Town yesterday.

Chan said the wireless network offers added convenience for business and the public at large.

“Rehda is in agreement with the Federation of Malaysian Manufacturers (FMM) that the facility will be the envy of other states and that Penang is progressive in this Information Age,” he said.

On Oct 8, it was reported that FMM said unproven concerns raised about health risks posed by the electromagnetic transmission of the WiFi and WiMAX services should not impede or delay Penang Government’s plans to introduce such free services in the state.

In early September, the state launched the free WiFi service under its Wireless@PENANG initiative which would eventually cover 750 hotspots in the state over the next 15 months.

Last month, Penang Chief Minister Lim Guan Eng said the WiMAX service would be made available in stages from December.

His announcement had caused the Consumers Association of Penang to voice its concern on possible health hazards posed.

by The Star