Follow MyMM2H on......

Facebook Page Twitter


Discontinuation of The Reduction Of Fixed Deposit Placement Based On Property Purchase And MM2H Approval By Government Pension
Kindly be informed that MM2H Centre has discontinued the reduction of Fixed Deposit placement based on property purchase worth RM1 million and above in Malaysia. Also discontinued is the MM2H...
Penang sees new hope amid global recession Print E-mail
Monday, 14 September 2009 18:58

THE liberalisation of the Penang property market to counter the challenges of the global recession has given the market new drive and inspiration.

Stimulus packages, low interest regimes, special financing packages and the recent revision of the plot ratio guidelines by the state government were some of the measures to keep interest high among both consumers and developers when the island’s property market went into a slowdown for the first quarter of this year.

StarBizWeek chief reporter DAVID TAN meets up with property players at The Star Property Fair 2009 roundtable discussion to gauge the impact of these measures and takes a peek at the island’s future property market.

George Town was declared a heritage city by UNESCO World Heritage List.

The panellists are state executive councillor Chow Kon Yeow, Ministry of Finance’s valuation and property services department director Lau Wai Seang, Real Estate Housing and Developers’ Association (Rehda) Penang chairman Datuk Jerry Chan, Eupe Corp Bhd managing director Beh Huck Lee, SP Setia Bhd general manager (North) S. Rajoo, IJM Land Bhd managing director Datuk Soam Heng Choon, Henry Butcher (Malaysia) Penang director Dr Teoh Poh Huat, Socio-Economic & Environmental Research Institute (SERI) research fellow Dr Goh Ban Lee, and Blossom Time director Kan Weng Hin.

The following are excerpts of the roundtable discussion:

StarBizWeek: Has the liberalisation of property investment guidelines for foreigners increase properties sales?

»The question is: Does the World Heritage Site status enhance Penang as a state?« STATE EXECUTIVE COUNCILLOR CHOW KON YEOW

(For example, the acquisition of residential/commercial units valued respectively at RM250,000 and above and RM500,000 and above that do not require permission from the federal government. The said minimum threshold will be increased to RM500,000 beginning Jan 1, 2010.)

Datuk Soam Heng Choon: Buyers under Malaysia My Second Home (MM2H) programme are buying properties RM500,000 and below. The other thing to note is the vast price differences even within the state. For example, prices on the island and in Seberang Prai.

We are also seeing this in Selangor, where prices have already moved up; RM500,000 is considered low in Petaling Jaya, but high in Kuala Selangor. (Both these locations are in the state of Selangor)

In recent sales of property in Penang, we hardly hear of foreigners buying. Foreign money may be coming in but these are all Penangites who are working in Singapore or Hong Kong.

Chow Kon Yeow: Are they going for new units or re-sale units, those from the secondary market?

Dr Teoh Poh Huat: The total number of successful MM2H applicants since the programme started in 2002 is about 12,000. We do not know how many of them live in Malaysia because there is no necessity for them to actually stay here. Of these, 500 bought properties, with the majority of them buying from the secondary market. Those who bought to invest is small.

The conditions for the MM2H can be improved. The demand is for strata-titled properties, landed and high-rise projects, in gated communities. The price of these strata-titled properties range between RM300,000 and RM800,000. The landed properties that were transacted in the secondary market range between RM700,000 and RM1.2mil.

Kan Weng Hin: Location is important. We have sold units priced between RM800,000 and RM900,000 in Batu Ferringhi to foreigners.

They prefer to buy completed units, and price is not an issue. They want the lifestyle that Batu Ferringhi offers and security is crucial.

Beh Huck Lee: Foreigners are buying our condominiums priced at RM400,000 to RM550,000 in Sungai Petani but they do not come under the MM2H programme, which they consider as too restrictive. These being restrictions on work and children having to apply for student visa in order to study here.

Foreigners want the lifestyle that Batu Ferringhi offers and security is crucial« BLOSSOM TIME DIRECTOR KAN WENG HIN

Seventy percent of them are professionals buying for their retirement.

StarBizWeek: What were the property sales like for the third quarter, compared with the first two quarters of this year?

Soam: Figures from February until today have been encouraging, not only in Penang alone but nationwide.

S. Rajoo: Our financial year ends on Oct 31, 2009. The first quarter saw a sudden surge thanks to our 5:95 home loan package launched on Jan 19.

Datuk Jerry Chan: Confidence is back. The low interest rate regime has helped. At the end of last year, the banks were all very cautious and that made it very difficult for buyers. The low interest regime basically made property cheap and a good alternative to fixed deposits.

Lau Wai Seang: When it comes to purchasing residential properties, a lot of buyers look at the track record of the developer. The location, whether it is a signature address or not, is next.

Historically, the second half of the year is traditionally stronger than the first half. The good sign is there is no dumping of properties or panic selling. People still have the money, the question is where to put it.

Teoh: This resurgence in interest was obvious in the third quarter. They were taking a wait-and-see stand and made their decision pretty quickly, both in the primary and secondary market. The same thing is happening in Singapore and Hong Kong. The fire sale did not come.

Chan: It is a slow recovery. The stock market has recovered from 50% to 80%. What is the next thing to do? The property market and we are expecting a quick rebound with the high end moving first.

»With income rising, why is there a need for social housing projects?« IJM LAND BHD MANAGING DIRECTOR DATUK SOAM HENG CHOON

Lau: In terms of volume, we will not be worst off than last year. In terms of value, we may not reach last year’s figures. Higher end property on the island did not perform well in the first half of 2009.

StarBizWeek: What are the key challenges that developers in Penang need to overcome over the next few years and what are the measures that could energise the property market?

Rajoo: We would like to see further relaxation of policies such as waiver of stamp duty and a speeding up of government approval process. The restrictions of development for landbanks above 250ft sea level need to be studied.

Soam: One of the challenges we are facing is land shortage. There must be quality urban redevelopment projects for the island. If we continue with the requirement for social housing and public amenities, the cost of construction will go up, which forces developers to leave Penang.

We could explore the Singapore model to see how we want to plan for urban redevelopment programmes, not only for housing but also for supporting industries.

Chan: Social housing is the responsibility of the federal government. Everyone pays taxes. The federal government should take care of healthcare, education, and social housing as well.

Rehda’s approach to the government has always been to build public amenities such as hawker centres on a need-to basis rather than a blanket requirement. Otherwise, we will have these amenities multiplying in every new development.

If I build something and hand it over to the council and it does not know what to do with it, we end up with a white elephant. And then we complain why there is no green space; the green space is taken up for all the little elephants.

Although in 2007 Penangites paid about RM3bil in taxes, what we got back from the government in terms of infrastructure is pitiful.

The last major infrastructure work in Penang was the Jelutong Expressway. However, in Malacca, every year for the past seven years, there are major changes such as flyovers, road expansions and land reclamation work.

Soam: With income rising, why is there a need for social housing projects? Something is wrong somewhere.

For example, not even 10% of our low-cost Desa Sri Pinang, comprising 2,000 units of apartments, is occupied. Every house has an Astro and air-conditioning units. I’m surprised how those who buy the units at RM25,000 to RM40,000 can afford Astro and air-conditioning.

Goh: The low-cost housing system must be changed.

Teoh: We should not be looking at the old philosophy of home ownership as the main thrust. It should be having a roof over our heads. So we should be looking at renting out homes instead.

StarBizWeek: Has George Town’s World Heritage Site Status (WHS) helped to increase property sales?

Soam: I don’t think the heritage status affects prices. People may come for a holiday but they don’t buy property because of it.

Chow: The question is: Does the WHS status enhance Penang as a state?

Kan: George Town’s WHS status does not attract foreign buyers, nor is it going to bring tourists back.

Foreigners are willing to spend thousands to stay in Phuket because it is clean and has good infrastructure. Batu Ferringhi beaches can be rather dirty.

Chan: The listing is a badge that we can carry with pride. There’s a prestige attached to it. Regardless whether you have the status or not, there are infrastructure and hygiene issues to be attended to.

Lau: Some of the properties at the heritage buffer zone have increased in value, but it is not clear whether the increase was due to the WHS status. George Town today is in a dilapidated and shocking state.

StarBizWeek: What will be the impact of the state government’s revision of property density guidelines?

Chan: The revision of plot to ratio guidelines give developers more scope for innovation and creativity. The revision allows developers to develop apartments with a variety of prices.

They can now build homes for families with different generations staying near to each other, all within one block.

Rajoo: It is a win-win situation for all. It will allow developers to increase the supply of homes in the state and give purchasers more choices. This will help to stabilise property prices.

StarBizWeek: Is there a mismatch between property prices and household income?

Kan: For the past six months, you would only need to pay 5% to buy a home.

The rest can be deferred for three years. The problem is that the payment is three to four years down the line.

Chan: We should not question the way banks granted such loans. The onus is on the developer is to deliver. The buyer has to figure out if he has a job tomorrow. We are seeing prices moving up because of demand.

Beh: From our statistics over the last 12 years, most houses were sold to those aged above 40. Last year, we sold 1,600 units and 45% of buyers were below 30. I was also shocked, I don’t know how they can afford it.

But these people generally have much better income. Their parents would have to work 20 years to get a combined income of RM4,000 in Sungai Petani but the starting salary of today’s young people can easily be RM1,800.

Plus incentives, bonuses and other combined income. And they generally believe their salary will go up.

So, working couples making RM4,500 to RM5,000, go for properties of RM300,000 to RM400,000, and borrow a bit from their parents at no interest.

Mismatch is relative. The demographic has changed.

Goh: Some 30% of the amount that is for the partial settlement of a property usually comes from the savings of parents.

StarBizWeek: Is there an oversupply of properties?

Lau: There is an overhand in location. On the island, there is none, there is some overhang on the mainland.

However, the situation in Penang is not as critical as in other states. Selangor has a high oversupply of low-cost housing.

Beh: Certain properties are of the “hardcore unsaleable” type, due to their location or design. Or maybe they are still priced too high.

StarBizWeek: What is the economic implication of the MM2H programme?

Teoh: Based on research, the average price of a house bought by a foreigner is about RM1mil. The total expenses of a small household who are renting spends about RM10,000 per month.

If we multiply those numbers with the 12,000 applicants under the MM2H and assume that half of them buy one house each in the region of RM1mil, the figure is astounding. Even if they don’t buy a house and just live here, we cannot deny that the numbers are astounding.

Under the recent ruling they are now allowed to work, subject to certain conditions. Foreigners only buy 3.5% of the country’s total housing transactions. In Singapore, they account for 25% to 30% of transactions.

The fear that foreigners will take away our real estate is unsubstantiated.

Countries like Bangladesh, Pakistan, India, China and Indonesia are top of the list of the MM2H programme because of the social economic political situation back home. If they can bring in money and are talented, we should pay attention to this segment of the market.

Chan: We should not just target MM2H buyers. We should focus on tourism and make Penang liveable. Australia does not make it easy for you to buy property or become a permanent resident, but many would like to go there because of the lifestyle.

MM2H alone is not big enough to move Penang’s property market or the economy. But if tourism picks up, it will help the state economy.

Goh: I still don’t see how we are benefiting from the MM2H programme. The focus should be to make Penang exciting for the locals.

If the foreigners want to come, they are welcome. If only our Malaysian government treat our own citizens the way we treat the MM2H buyers.


Add this page to your favorite Social Bookmarking websites

Currency Converter by Google

Convert   into    

Licensed by

Ministry of Tourism, Malaysia Tourism Malaysia Imegresen Malaysia Malaysia My Second Home

Member of

SME International