The court cases involving Datin Seri Rosmah Mansor, her former aide Datuk Rizal Mansor and ex-Cabinet member Datuk Seri Tengku Adnan Tengku Mansor centre upon allegations that millions have been demanded and paid in connection with projects pursued by companies.
Meanwhile, a property developer is charged with bribing Tengku Adnan and the names of other companies and businessmen have appeared in the charges - The Star
KUALA LUMPUR: Property developers are behaving more and more like local councils, Deputy Housing and Local Government Minister Datuk Raja Kamarul Bahrin Shah said, noting that this has given rise to the current form of townships that are not centralised and are dominated and led by private developers.
There are developers who are acting like local councils as the latter have not been taking the lead, and this is a cause for concern, he said.
Raja Kamarul noted that traditionally, the local governments were the decision makers but this fact has changed of late.
“Long ago, it was the local government that determines what developers should build, creating markets, shopping malls, commercial, industrial, agricultural and entertainment areas, and of course, knowing how many homes need to be built because they know the population in the area,” he said in his keynote address at the opening of the one-day Housing and Property Development Colloquium on “Reimagining the Housing and Property Industry in the New Malaysia” here yesterday.
“But now, the role has shifted to the developers, giving rise to the current form of townships that are not centralised and are dominated and led by private developers,” he said.
“Most concerning is the recent trend that developers are behaving more and more like the local council themselves, in having their own private security for substantial portions of residential and commercial areas as an example, and other provisions of services and infrastructure.
“Although the local governments retain power and control where their approval is needed to build, they have often failed to take a more proactive role,” said Raja Kamarul.
He also highlighted that some local governments have failed in providing basic services to the people, causing developers to step in to fill the void.
“Local governments must find the will and desire to see their own town, cities and districts develop into comfortable townships and not allow developers to take entire pieces of land and create their own defacto privatised local government,” he said.
He also said this is why the government is looking to bring back local government elections, in order to bring back a sense of accountability by local governments.
“Once constituted, citizens can take leaders of the local government to task when services and facilities are not up to par. This should lead to more tangible and improved living conditions for the rakyat,” added Raja Kamarul.
Credit:
Ahmad Naqib Idris The Edge Financial Daily
Affordable living: The history of Stuyvesant Town, Manhattan New York dates back to 1943. In October 2015, Blackstone Group LP led a deal to buy New York’s Stuyvesant Town-Peter Cooper Village, a transaction that would put Manhattan’s biggest apartment complex in the hands of the world’s largest private equity firm and maintain some affordable housing at the property.
Experts predict between 2018 and 2019
AT a recent property seminar organised by Asian Strategy & Leadership Institute, several developers and property consultants had a debate predicting when the property market will pick up.
Real Estate and Housing Developers’ Association Malaysia (Rehda) patron Datuk Jeffrey Ng Tiong Lip reckoned the residential sector should recover next year or in 2018.
Ng was the moderator for the session on The Future Outlook and Challenges of the Housing and Property Sector.
Property consultants Savills Malaysia managing director Allan Soo, who specialises in the retail malls, expects a 2019 recovery.
Office market specialist Jones Lang Wootton executive director Malathi Thevendre declined to make any predictions. “It all depends ...,” she says.
Ng says the current slow housing market is actually good over the long term, although it is painful in the short term. It all depends on how we manage “the noise”, he says.
There are lots of noises at present, both on the national and international level.
“If next year is election year, the recovery – if there is one – will be after that because between now and then, there are so many uncertainties.
“There is a lack of clarity at the moment,” says Ng.
His reading of the property crystal ball of a 2017/2018 turnaround is by far the most positive and contrasts with Kenanga Investment Bank Bhd equity research head Sarah Lim Fern Chieh.
Lim expects house prices to be flattish or slightly weak depending on locations “over the next four to five years, if there are no major policy changes”.
Her rationale for a longer down-cycle is simple. If your destination is Genting Highlands, but you are driving in the opposite direction, you will need a longer time to arrive there when you finally realise you are driving in the wrong direction.
Although it is widely accepted that the property cycle is between eight to 10 years, within this cycle are “mini two-year cycles. There were two-year up-cycle in 1999-2000 after the Asian Financial Crisis, and another in 2003-2004 and 2007/2007.
But after the 2008 Global Financial Crisis, Malaysia had an extended five-year up-cycle between 2010 and 2014 with prices peaking in 2013, and this was largely due to quantitative easing (QE).
She is, therefore, expecting a longer consolidation period of between four and five years, starting from 2015, before the next up-cycle, barring any policy changes and the global economic climate.
She is also expecting the property market to experience structural changes due to affordability and liquidity factors, among others.
More realistic pricing
Notwithstanding the fuzzy horizon, there are nevertheless a few certainties which may well put the sector on a better footing.
First, home ownership has become a national issue.
Second, the government, at both federal and state levels being landowners, are stepping up on affordable housing.
Third, prices are expected to be more realistic going forward.
Rehda president Datuk Seri FD Iskandar Mohamed Mansor is seeking government cooperation to reduce or waive development charges and other charges, collectively known as compliance costs, in order to bring down prices as this is “too challenging” for private developers to go it alone, considering today’s high land prices.
“If the Government wants developers to build more affordable housing, give us cheaper premiums or don’t charge at all.
“We will then see more stability in prices, or even a reduction, if development charges and all sorts of other charges imposed on developers come down,” said FD Iskandar at a Rehda first half-year review recently.
He says property development and land matters have been the biggest revenue earner for every state. Both federal and state governments own large tracts of land. Although FD Iskandar had made this call before, he was very passionate and firm this time around. Other developers, previously silent, are also quite vocal about the various land and development charges they have to fork out.
This is probably the first time developers are coming together to make a collective public call to seek a waiver or reduction of development and other aspects of compliance cost. The effectiveness of that call depends on the Government’s will to act.
While developers can clamour for such waivers, what is facing the market today is weak sales and this in turn is forcing developers to tweak pricing and strategy a bit, hence the drop in the number of launches as they try push unsold stock.
Andaman group managing director Datuk Seri Vincent Tiew says developers will be offering “more realistic pricing” from now onwards with location being a paramount factor.
There will be more affordable housing and this can be seen from the various affordable housing projects being planned by both the federal and state government although the end-products are slow in coming.
This, says Tiew, can be seen in the various agencies under the federal and state governments, among them being PR1MA Corp mandated to build 500,000 units of affordable housing units by 2018, as outlined in Budget 2013.
A total of 240,000 houses were due by end-2015, with an annual mandate for 80,000 between 2013 and 2015. The number of completed units was 883 at the end of 2015, says Tiew. By the end of this year, 10,000 units are scheduled to be completed. The number of units approved to date are 232,807 against 1.24 million PR1MA registrants as of February 2016. All eyes will be on the affordable segment in the coming Budget 2017.
Healthy demand
The demand for housing has always been there. The issue is affordability, says Kenanga’s Sarah Lim.
“Of late, developers are beginning to price units at RM500,000 and below,” she says.
The current change in direction is attributed to societal and government pressure. Unsold stock and government pressure forced developers to relook their pricing strategy.If developers keep building RM1mil homes, when the threshold is RM500,000 and less, they will be left holding unsold stock. In order to move stocks, creative marketing/financing strategies are employed to move these stocks.
Lim says if developers were unable to meet at least 40% of their sales target by mid-year, they would be unable to meet this year’s targets.
More than two-thirds missed their sales targets last year.
“Prior to this, what was booked was considered sold. Now, this is no longer true,” Lim says.
Lim says there are two issues here, the pressure on the sector as the rate of aborted sales crept up and the people’s demand for realistic prices.
“What we are seeing today is the government’s influence. It is actually steering the market in the right direction,” she says.
Renting the way forward
The other certainty is observed in the rental market, which is expected to continue to be soft next year.
There will be “low occupancy rate” for projects completed last year (2015) and this year, with rental yield at less than 3% a year, says Andaman group’s Tiew.
It is cheaper to rent than to buy. There is so much supply going around and the purchasing power of the ringgit is shrinking.
Selangor State Development Corp (PKNS) senior manager (corporate planning and transformation) Norita Mohd Sidek advocates renting.
She says if there is a 50% loan rejection rate for affordable housing, and considering the limited supply by private developers, renting may be the only option.
She suggests building affordable housing cities the likes of Stuyvesant Town’s Peter Copper Village, Manhattan New York and counters the argument that there is no money to be made from affordable housing.
In October 2015, Blackstone led a deal that put Manhattan’s biggest apartment complex in the hands of the world’s largest private equity firm and maintain some affordable housing at the property.
Blackstone and Canada’s real estate company Ivanhoe Cambridge Inc acquired the 80-acre enclave for about US$5.3bil. Rent is kept below market rates for some 5,000 units. Public transport and other amenities must be part of the development for it to succeed. “Government grants and resources are needed to identify the right location to built more council homes,” she says in her paper.
In today’s low yield environment, pension funds around the world are looking at other ways to generate dividends besides equities and fixed income securities. They are buying into infrastructures and large township developments where there are economies of scale for maintenance.
Malaysia’s national housing dilemma cannot be solved by profit-oriented private developers alone. The golden property years between 2010 and 2014 have been intoxicating, having resulted in expectations of 20% to 30% rise in sales year-on-year, like the manufacturing sector. But the property sector is quite unlike manufacturing. The reflection point was seen in 2014 after the government introduced certain cooling measures and anti-speculation sales gimmick.
Going forward, the emphasis on housing priced RM500,000 and below means developers have to sell more units to make the same sales value as previous years.
“They have to sacrifice some of their margins. Higher profit margins can be had from the mid- to high-end segments,” says Lim. They will have to work harder to help buyers secure loans.
This search for some form of cohesion in the national housing arena has taken a bit of time. Hopefully, the coming Budget 2017 will pave the way for more positive action.
By Thean Lee Cheng The Star/Asia News Network The Related posts:
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Check your risk appetite and start investing as this is as good a time as any to invest in real estate be they physical assets, property stocks or real estate investment trusts (REITs).
Industry experts held this view during a panel discussion entitled “Where to put your money – real estate, stocks or REITs?” at The Edge Investment Forum on Real Estate 2016 (REIF 2016) on April 30.
For housebuyers especially, this is a good time to buy as the market correction which started last year will continue this year, said panellist Sunway Bhd managing director of the property development division for Malaysia and Singapore Sarena Cheah.
She said the banking sector is well-capitalised while non-performing loans are declining, which means borrowers still have the ability to service their loans.
Cheah noted that property prices have been on the uptrend for the past 10 years with an average capital appreciation of 8% to 9% from 2005 to 2015, buoyed by a healthy employment rate and low interest rate.
“Property price growth for 2015 had dipped 2% compared with 2014, but the compounded annual growth rate (CAGR) of capital appreciation had achieved 12%,” she shared.
“Property investment is a safe investment as it is one of the basic necessities. Strong demand will continue to support the capital appreciation of properties,” she added.
However, she advised investors to study the location, the developer and the future growth potential of a property or project before buying.
Also on the panel were Kenanga Investment Bank Bhd head of equity research Sarah Lim and Axis REIT Managers Bhd chief executive officer and finance director Leong Kit May. The Edge Communications Sdn Bhd and The Edge Property Sdn Bhd managing director Au Foong Yee was the moderator.
Lim expected property prices to plateau for the next few years before the next upcycle.
“The big rally in transaction volume and prices in 2010 to 2012 was supported by the baby boomers who were in their late 30s or early 40s. The next upcycle will depend on the next generation which would be the Millennials,” she explained.
In the near term, Kenanga Investment Bank has placed an “underweight” rating on the property sector as it expected property stocks to be volatile and eventually be range-bound due to the absence of catalysts, while earnings risks remain.
However, steady defensive big-cap players such as UOA Bhd and S P Setia Bhd have light balance sheets and high exposure to areas in the Klang Valley while Sunway Bhd and Eco World Development Group Bhd are worth looking at, she said.
Among the small to mid-capital players to look out for is Hua Yang Bhd – it is undervalued and has high yields.
Lim also noted that Malaysia’s residential supply is outpacing demand in the wrong segment as there is insufficient supply for residential properties priced between RM250,000 and RM500,000.
“Residential developments priced below RM500,000 constitute less than 35% of most developers’ upcoming projects,” she said.
Meanwhile, REITs could be the cornerstone of a portfolio of quality assets for investors who are looking for lower risk and stable income from rental properties.
“A REIT is a listed vehicle that invests in a portfolio of income-generating properties. Rents collected from tenants, less expenses, are distributed on a regular basis to provide stable yields to unit holders,” said Leong.
She noted that the current dividend yield for Malaysian REITs is at 6.69%, compared to fixed deposits which is at 3.31% and the Employees Provident Fund’s yield of 6.40%.
“The benefits of investing in REITs include the predictability in income stream in the form of distribution income, having a liquid proxy to physical property investment, transparent daily pricing, high level of disclosures and transparency, low entry cost and professional management,” she added.
On the future performance of MREITs, Leong said the company foresees no future interest hikes which augurs well for REITs as a higher interest may affect the trust companies’ ability to pay higher dividends. - The Edge Property
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Liew and his son Tian Xiong (left) at the interview. The biggest shareholder of Eco World Development Group is Tian Xiong, who at 22 in 2013 became the major shareholder of the company.
Entrepreneur who drives the smaller Eco World group is still a much talked-about figure in corporate world
AT 57 years of age, Tan Sri Liew Kee Sin can easily count himself to be one of the most talked about personality in Malaysia’s corporate circle – by the Government, the private sector and property investors.
Amidst the unravelling of events over the past four years, including his exit from SP Setia Bhd, Liew continues to be among the corporate figures today that enjoy the adulation of some and the wrath of others.
Since leaving SP Setia a year ago, Liew has been furiously on the ball, trying to “regain” what he has lost. He has kept a fast and furious pace, though buffeted on every front by unabating current.
Although he has previously overcome challenges thrown at him, the pressure this time is different, in severity and magnitude. It’s a pressure cooker in Eco World Development Group Bhd (EWB), he admits.
“The momentum is on-going. It forces me to be the face of Eco World,” he says.
The positive side to all these is that he has about 300 out of a staff count of 800 who joined him from his previous company. This round of rebuilding includes his son, Tian Xiong, 24. That may also account for him being more driven than before.
While he has made a success of the 4,000 acres in S P Setia’s flagship development in Shah Alam years ago, today’s climate of high house prices and stagnant wages mean his team would have to work doubly hard. So far, however, most of his projects in the Klang Valley and Johor seem to enjoy take-up rates of 80% and above.
His latest launch in Batu Kawan, Penang, has prices hovering in the RM700,000-RM800,000 bracket.
Credited with making something out of 4,000 acres in Shah Alam, Liew is trying to do the same in Semenyih, Selangor, and Batu Kawan, Penang, on a smaller scale. Liew says his objective is to set a new benchmark in terms of concepts, ideas and designs for branding purposes.
Next month, he will be launching 1,130 units in London City Island with a gross development value (GDV) of £617mil, at a time when house prices are frothy, with wages stagnant. The May 7 elections is another dampener. The Employees Provident Fund (EPF) has just sold a building at a profit and may be selling another.
The weakening ringgit works for and against him. For local investors, a property abroad is a good hedge against exposure to any possible future weakening of the ringgit. The downside is that the pool of buyers shrink with the weaker ringgit.
However, the target market for the London City Island project goes to Hong Kong, Singapore and London.
Even as he is keeping his finger on sales, other challenges faces Liew and the Eco World group.
Eye on SPAC
In October last year, Liew and his team proposed to list Eco World International Bhd (EWI) as a SPAC (special-purpose acquisition company). But the Securities Commission has yet to approve the application.
While awaiting the SC’s nod for the the proposed SPAC, in January, he and his right hand man Datuk Voon Tin Yow in their personal capacity, via a private vehicle, entered into a joint venture with UK-based Ballymore on a 75:25 basis to develop three projects in London – with the first slated to kick off next month.
The plan was to inject the three properties into EWI, which will be the vehicle for the proposed SPAC. Shareholders of EWB would not be left out as they would be offered up to a 30% stake in EWI.
It was a neat plan – at least on paper.
But the snag is that a SPAC is a blank cheque listing. It is supposed to list without pre-identified and ready assets, which is an issue when it comes to EWI. This is despite Liew’s plan to inject the private purchases “at cost plus holding costs” – meaning Liew and Voon do not profit from the asset injection.
“But this goes against the spirit of SPAC guidelines as set by the SC. A SPAC is a blank cheque listing ... a cash box looking for assets,” says a merchant banker.
“To go global, we must react quickly to market conditions, better design concepts and learn. We have the skill set,” he says. He learned a lot managing and marketing Battersea. No matter how challenging a project, “you gotta break it down to smaller bits”.
Nevertheless, Liew hopes to see some development with respect to the SPAC application within the next month or so.
Keeping EWB and EWI on separate lanes will help him to manage the gearing of both companies and reduce dilution for shareholders of EWB that includes his son, who is the major shareholder.
Liew says he also does not want to park the London assets under EWB because they are too big for its balance sheet.
Although his stake has diluted from 35.05% in 2013 to 13.52% on March 27, 2015, he is still the major shareholder.
Visionary though he may be, time was on his side when Liew built his previous “priced possession”, which is S P Setia. He built S P Setia over the years at a more even pace while the momentum and task he faces today with regards to the Eco World Group has been nothing short but blistering.
Within two years, the company has accumulated 5,396 acres with a GDV of about RM55bil. Debts was up at RM1.15bil as at Jan 31, 2015, from RM215mil in September 30, 2014. (Sept 2013: RM52mil). EWB completed a rights issue raising RM800mil and will undertake a placement. At the end of the corporate exercise, EWB’s gearing will be less than 0.6 times and it will be sitting on a pile of cash that will be used for working capital to develop the massive land bank here.
Liew says he received a lot of offers to work with landowners.
“People ask, why so aggressive? It’s because of the brand. We want to charge ahead in Malaysia. We are using up about 800 acres a year.”
Dealt a good hand
Although Liew has been dealt a good hand in his working life, he may be losing another priced project, all within two years.
As he goes about tying up loose ends on the Battersea chairmanship, a legacy from S P Setia days, and finishing the restructuring in EWB by the end of this month, questions about conflicts of interest have surfaced.
The Battersea Power Station is a 40:40:20 project with S P Setia and Sime Darby holding equal share and EPF remaining 20%.
“When I resigned from S P Setia in April 2014, the Battersea board suggested I wait till September 2015. At that time, there was no Eco World Ballymore (Holding Co Ltd, a developer of the three projects) yet.”
The private vehicle belonging to Liew and Voon – Eco World Investment – has a 75% stake in EcoWorld-Ballymore while UK-based Ballymore Group owning the rest.
At about June of last year, he declared to the board of Battersea of his interest to go into property development in Britain. He was told to wait.
Six months later in January this year, Liew and Voon went public with their 75% stake in the UK-Malaysia joint venture. At that point, he felt “obligated to resign” but was told to wait.
“We have three projects which may seem to be competing with Battersea Power Station although in terms of price point, they are priced differently.”
The latest Battersea Phase 3A units are priced at £1,700 per sq ft while the EcoWorld-Ballymore units are being sold at about £1,000 per sq ft. About 90% of the EcoWorld Ballymore units will be less than £1mil.
Ironically, a vexing issue confronting Liew these days is his chairmanship of Battersea. The roots of the situation he is caught in today can be traced to his entrepreneurship that created Malaysia’s biggest property company that he lost control to Permodalan Nasional Bhd – after a protracted corporate exercise which started in 2011.
Liew, however, is still capable and motivated to use his set of skills to further create value for himself and those around him. But the dichotomy is between duty and interest.
“I do not want to offend anyone anymore. But I (also) feel duty bound,” says Liew.
The Battersea project, which is Liew’s brainchild when he was in S P Setia, has several key milestones in the next one year.
Phase one of the project will be handed over to buyers next year. Work on Malaysian Square – the pride and joy of Malaysia – has just started. Work on London’s underground Northern Line extension, which connects to Battersea, begins this year. These milestones will help the investment to appreciate.
The British authorities are concerned about the reconstruction of the four white chimneys and the restoration of the power station brickwork. So Battersea has quite a bit of important obligations to meet in the next one year and it cannot afford any slip-ups.
“I am under a lot of pressure ... Morally, I should resign. But when I buy (my land in London), I also declare (to the board). I am duty bound to declare on the grounds of good governance. At the same time, I am also duty-bound as chairman because this year is crucial for the Battersea.
“I am trying to get out of this (situation) because I want to reduce the areas of conflict between myself, the Government and everybody else. I have lost S P Setia and I should gentlemanly give up (Battersea),” says Liew.
Time will only provide an answer.
With London mayor Boris Johnson ending his term in 2016 – and considering Liew has a good working relationship with him – there are are more than several reasons for shareholders of Battersea to continue to retain him for another year as chairman. Before works such as the construction of the underground station and reconstruction of white chimneys take off, there is a lot of interaction with the London authorities, something that is not easy to cultivate.
Interest versus duty
Whatever the outcome of his Battersea chairmanship, there are at least two broad contentious issues here. His fiduciary responsibility and duty of care is one. Liew has taken that duty seriously and returned value for that which was entrusted to him. The second issue is his skill set. Life has obviously given Liew a good card, despite his losses.
Now, the question that arises is if he should wait if opportunities come, complete all ties with Battersea and S P Setia before embarking on new ventures that may not come knocking every day?
Every day, directors are offered various opportunities which conflict with their fiduciary duty. Often times, the fiduciary duty of directors, parallel to trustees, can be onerous. But the law is the law.
Yet, in many ways, Liew’s situation is parallel to a 1978 case of Queesland Mines Ltd v Hudson. The company Queensland Mines was an iron ore mining company that established as a joint venture between A Ltd and F Ltd. Hudson was the managing director of A Ltd and had negotiated with the Tasmanian government for mining licences.
Just before the licences were issued, Hudson’s joint-venture partner ran into financial difficulties and was unable to proceed with the venture.
Hudson resigned, taking the licences with him, and formed his own company. At considerable risk and expense, Hudson exploited the licences and earned profits. Queensland later filed a suit against Hudson for what it claimed was abusing his position to divert opportunties for himself.
However, the courts ruled that although the opportunity to make profits came to Hudson through his position at Queensland Mines and was something that the board was made aware of, Hudson was not in a position of conflict.
The position Hudson was prior to 1978 is the predicament Liew faces today. In both these cases, the contention boils down to timing and turn of events.
If one were to consider the big picture and balance out the events surrounding Liew in the last four years, should he not be allowed to exploit the resources due to him because of his skills and expertise? Or should he be shackled by time and ties, despite having added value to those he has been entrusted with? That would be unfair to Liew.
The legacy issue – passing the baton to the right person
AT the spanking new Eco World International Centre in the Gardens office block in Kuala Lumpur recently, a photo session was in progress. There was a light-hearted camaraderie in the air.
Tan Sri Liew Kee Sin and his top management were present, all of them in their white Nehru-collared shirt with green trimmings.
The photo session was as much symbolic as telling. It was as if to say: “These are the people I will need to grow Eco World Development Group Bhd (EWB).”
With a staff strength of about 800, about 300 of them were from Liew’s previous company S P Setia Bhd. Despite the market conditions working against the property sector and crushing issues confronting him, Liew was his usual warm, confident self.
A lot of this has to do with the people around him. Liew was named chairman in March and his right-hand man Datuk Voon Tin Yow, previously from S P Setia, joined the group officially as executive director.
A notable addition was newbie Liew Tian Xiong, 24, bright-eyed and smiling. He first surfaced in 2013 and has been seen as a proxy of his father. The presence of that young man has changed the landscape for Liew.
Passing the baton
It is a legacy issue. As one considers the property sector, a number of the country’s developers have in one way or another paved their sons and daughters to join Dad.
There is Datuk N.K. Tong, 47, group managing director of Bukit Kiara Properties Sdn Bhd who joined Datuk Alan Tong, who is known as Condo King for his work in Sunrise Bhd’s Mont’Kiara.
It was the elder Tong who saw the potential of the area, then Segambut and bought 100 acres there. Over the years, Mont’Kiara has progressed to become a thriving suburb and is currently considered as “an aspirational location” among the young.
Ken Holdings Bhd group managing director Sam Tan, 35, joined his father Datuk Kenny Tan. That was 2004, and he was 24.
Over at the Sunway group, Sarena Cheah, 40, the daughter of Sunway Bhd founder Tan Sri Dr Jeffrey Cheah and anointed successor, will assume full control of the group’s key property unit effective May 1. She may well have been the youngest to join Dad, when she was just 20, in 1995. She started out in the corporate finance and group internal audit divisions.
Passing the baton cannot be done overnight. There is a lot of planning to do. There is also the task of moulding and nurturing the right person for the job and looking over the shoulder of the young person to ensure they are constantly on the straight and narrow. If there are more than one, then there is the selection process of who will take up the position of annointed successor.
After the painful lesson of having lost S P Setia, Liew would clearly circumspect legacy and stewardship issues.
Which takes this story to next level.
Who is working for who?
The years of passing the baton may be painful, for both parties. This explains why the years of preparation are so crucial before the final moment of actually handing over the reins. In each of the three cases – N.K., Sam and Sarena – the children joined Dad and allowed themselves to be moulded.
Which takes us to the next question.
Is Tian Xiong working for Dad, or is Dad working for Tian Xiong?
Every parent wants the best for their children and Liew is no exception.
By joining the company now, Tian Xiong will have “the history” of the company. But will he be able to take on turbulent times?
He ponders: “It’s a pressure cooker here.”
If the staff do not accept him, he will never be the “real boss”, says Liew.
Of late, Liew has been keeping the young man closely by his side.
The rationale, says Liew is that, whatever Tian Xiong had learned in EWB in the last two years, he would take years to learn outside. So he better learn fast and learn now.
Stewardship
It is not just passing the baton. It is stewardship.
Says Tian Xiong after Liew steps out of the room: “Every night, from 9 to 10pm, he would nag me about how I dress, my tie, what time I get into office, how long I took for lunch and what I did after lunch. And other larger office and market issues.
“He also told me that I have to earn it, that it is not going to drop on me, that I have other siblings,” says Tian Xiong.
On whether he was pressured into returning to Malaysia from Melbourne where he graduated in 2012 with a Bachelor of Commerce from the University of Melbourne, Australia, he says he returned on his own free will.
The young man first surfaced in 2013 as a buyer for a little known company Focal Aims Holdings Bhd. His emergence “caused a tsunami” because during that period, there was many questions as to Liew’s move.
Tian Xiong started out in corporate finance department for the first two years and is currently in corporate marketing.
S
P Setia's head honcho Liew resigns, looking forward to mentoring in Eco
World. Ten months after S P Setia Bhd unveiled its succession plan,
head honcho Tan Sri Liew Kee Sin has announced his intention to resign
as president and chief executive officer. Also quitting the ... Liew
would leave the property giant on April 30 while Teow would stay on
until July 31. Liew and Teow would continue to be involved in the
Battersea Power Station project in London until ..
Tan
Sri Liew Kee Sin, President Executive officer of SP Setia Berhad, with
the Malaysian Ernst & Young Entrepreneur of the Year 2011 award
yesterday at the J W Marriot Hotel in Kuala Lumpur. Liew stands out for
his ...
Teh(pic), 27, co-founder of Beulah International, strides proudly in the footsteps of her father, Datuk Teh Kean Ming, chief executive officer/managing director of IJM Corp Bhd, who has been in the construction and property development industry for over 35 years.
MELBOURNE: Adelene Teh, a second-generation Malaysian property developer, is quickly making her mark in the competitive property development market here.
Teh, 27, co-founder of Beulah International, strides proudly in the footsteps of her father, Datuk Teh Kean Ming, chief executive officer/managing director of IJM Corp Bhd, who has been in the construction and property development industry for over 35 years.
Teh, a graduate from the University of Melbourne with a Master’s degree in architecture, was born and raised in Malaysia.
“I fondly remember my father taking me for walk-throughs on project sites and explaining the details. I am proud of what he was doing,” he told Bernama.
She attributed much of her own interest in property sector to her father, whose dedication and passion have influenced her career path.
Teh has collaborated with internationally-renowned global architects, Woods Bagot and multi-award winning landscape architect, Jack Merlo, to offer sophisticated first-class lifestyle in her new project, Gardenhill.
The A$76.5mil 11-storey, 136-unit apartment project offers luxury living in Doncaster, a prestigious eastern suburb here.
The prices range from A$360,000 to A$405,000 for one-bedroom units while two-bedroom units range from A$490,000 to A$745,000.
The estimated yields are between 4% and 6%.
In a recently-published article in The Age newspaper, Andrew Leoncelli, managing director of CBRE Residential Projects, said the location, perched high above Doncaster Hill and just 15km to Melbourne CBD, is a huge draw.
“Being high on the hill means amazing city and park views, while being directly adjacent to such a good shopping centre, with a host of luxury brands makes it an excellent prospect in real estate terms,” Leoncelli said.
Together with her partner, Jiaheng Chan, co-founder of Beulah International, they are the driving force behind the success of Gardenhill.
Malaysians will have the opportunity to attend and select the units at the KL Westin preview this weekend before the public Melbourne launch.
With already 30% of the units sold and scores of registrations before the public launch, Gardenhill is set to be a resounding success.
Like her family heritage, Teh’s property development skills have been well honed.
Fee ling the heat: Although the guidelines on the prohibition of the DIBS is not surprising, the new rule on using the net selling price to determine the loan- to-value ratio is a negative surprise to some analysts.
PETALING JAYA: A new circular from the central bank that took effect
last Friday will pile more pressure on an already hard-hit property
sector, even if its merits are likely to be felt in the long-term,
analysts and industry executives said.
In a bid to make the
property market sustainable, the new rules have put the brakes on
interest capitalisation schemes (ICS) and the developer interest-bearing
scheme (DIBS).
It also calls for the use of the net selling
price of a property as the benchmark for obtaining bank loans, which
raises the amount to be paid upfront.
Alliance Research’s banking analyst Cheah King Yoong
said the measures were “more onerous” than anticipated and posed
downside risks to his 9% loan growth estimate for the banking sector
next year.
“Although the guidelines on the prohibition of the
DIBS was not a surprise, the new rule on using the net selling price to
determine the loan-to-value (LTV) ratio is a negative surprise to us.
“While it is difficult to gauge the impact on banks, the fact that this
new rule applies to all property financing, including first-time home
buyers, means that property buyers’ affordability will be affected, and
this will lead to lower property loan growth,” Cheah said in a report
yesterday.
“We believe the latest policies illustrate the sheer determination of the authorities to contain the growth of household debt.
“These measures, together with potential rate hikes in 2014, fiscal
tightening by the federal government and subsidy rationalisation next
year, could further drag on loan growth in the retail segment,
temporarily leading to a rise in credit costs, and dampen investor
sentiment on the banking sector,” he added.
The circular
prohibits financial institutions from granting end-financing facilities
to individuals or non-individuals for the purchase of property offered
under an ICS, including the DIBS.
Financial institutions are also barred from granting a bridging facility to finance a property development that offers ICS.
According to Alliance Research’s Cheah, this effectively removes any alternative incentives that developers might concoct to replace the DIBS.
“Nonetheless, our channel checks show that for the banking groups under
our coverage, property loans with the DIBS only made up 1% to 3% of
their outstanding mortgages,” he said.
Affin Bank is the exception, with some 7% of its mortgage loanbook comprising loans tied to the DIBS.
“Given that property loans with the DIBS are immaterial to overall
outstanding mortgage loans as well as new mortgage loans approved, we do
not expect the restrictions to have a significant impact on the banking
sector,” Cheah said.
Public Bank has the highest exposure to housing loans at 56% of its gross loans, followed by Alliance Bank with 55% and Hong Leong Bank, 46%, company data showed.
Another key item on the circular requires banks to calculate the LTV
ratio based on the net price of a property instead of its gross price.
To illustrate, a property with a list price of RM1mil, rebate of 5% and
90% financing would incur a down payment of RM50,000 after discount.
Under the new regime, the down payment increases to RM95,000 because
the 90% loan will be computed using the discounted price tag of
RM950,000.
While property executives expect a slowdown in sales, they believe that genuine buyers will remain undeterred.
Mah Sing Group Bhd group managing director and CEO Tan Sri Leong Hoy Kum told StarBiz
via email that demand for properties would continue to be robust,
especially among those buying to own or for long-term rental income.
“There is still a large supply-demand gap as supply growth for
properties has been on a decreasing trend since 2003, with Malaysia’s
supply growth in the second quarter of this year at only 0.8%.
“The fundamentals driving the property market’s growth in recent years
have not changed, for example a younger population leading to new
household formation, a rising middle-income group, the supply-demand gap
and stable employment.
“Initiatives in Budget 2014 may remove the speculative element, but not the fundamentals,” he said.
Leong noted that the lending environment was still conducive, with low
interest rates and banks offering BLR minus 2.4%, from BLR minus
2.1%-2.2% a year ago.
Mah Sing had stopped offering the DIBS for most of its launches since the start of the year. None of its projects in Iskandar Malaysia feature the DIBS.
Companies factor in freebies into the cost of the property
The marketing tactic of offering lifestyle-oriented freebies is often quite effective when it comes to high-end premium homes
DEVELOPERS often offer sales gimmicks and marketing ploys like free
legal fees, rebates, air-conditioners and furniture. Budget 2014,
however, seems to make it a requirement that developers be transparent
about their property prices.
The adage “There’s no such thing as a free lunch” rings true in this
instance. While developers are quick to advertise various blandishments
such as “free legal fees/stamp duty, etc”, such freebies are always
factored into the property price. These freebies should be translated
into cash incentives to be deducted from the purchase price of the
property, as otherwise, it becomes meaningless to offer these gimmicks,
which are usually recovered in the form of substandard materials. Here,
we again thank our Prime Minister for announcing that developers, when
offering their products, should disclose the value of the freebies to
the buyers. Such transparency is a move in the right direction so that
buyers would know what they are letting themselves in for. The enforcers
of the law should be able to count on the Urban Wellbeing,
Housing and Local Government ministry to do its job to ensure that there is strict compliance and observance.
Whilst such a requirement will not deter speculation, it will
hopefully educate house buyers on what makes up their final property
price and not to be misled by developers advertising such freebies.
Additional measures
The National House Buyers Association (HBA)
reiterates its call on the Government to take additional measures to
stem the steep rise in property prices. There are basically two ways to
reduce speculation: increasing the entry cost and increasing the exit
cost.
Whilst Budget 2014 has increased the exit cost in the form of the
higher real property gains tax or RPGT, more measures are needed to
increase the entry cost to further reduce speculation.
The current stamp duty payable for the transfer of properties is
based on the value of the property. This does not deter speculators, as
the stamp duty payable is the same, regardless of the number of
properties already held or bought.
The Government’s current low stamp duty regime has been misused by
property speculators to accumulate multiple properties, driving up these
prices by creating false demand and denying genuine buyers the
opportunity to buy such properties.
It is every Malaysian’s wish to buy at least one property in their
lifetime for their own dwelling, and perhaps an additional piece of
property as a long-term investment or to fund their children’s
education.
Hence,HBA has proposed that the current scale stamp duty remains the same
for the first two properties bought, but is increased to a flat rate
based on the property price for the third and subsequent properties to discourage speculative buying.
(See table for a comparison between the current stamp duty and the stamp duty proposed by HBA.)
With the same scaled stamp duty payable regardless of the previous
number of properties held, speculators are not deterred from buying
multiple properties.
Even for properties costing RM600,000, the stamp duty payable is only 2% of the value of the property.
The HBA-proposed stamp duty would not cause any disruption to
genuine house buyers who can only afford two properties in their
lifetime (one for their dwelling and one for long-term investment).
On the other hand, property speculators would be discouraged as the stamp duty greatly increases their entry cost.
RPGT will not lead to higher property prices
Certain parties with vested interest are claiming that the revised
RPGT rate would lead to higher property prices, as speculators would
definitely factor in the RPGT into their property prices, only for the
subsequent buyer to end up paying the RPGT indirectly.
Such statements only confirm that speculators are indeed responsible for driving up property prices.
If indeed the speculators factor in the additional 20% to 30% RPGT
into their property prices, then it would make the property prices
unattractive to the next buyer.
Financial Institutions
may be unwilling to finance such exorbitantly overpriced properties, as
such institutions have their own market intelligence to determine the
fair value of such properties.
RPGT will lead to an orderly property sector
The aspiration of every rakyat is to own a roof over their
heads and shelter their young rather than making money from properties.
Hence, having the RPGT in place would deter speculators, and eventually
lead to a more orderly property sector driven by market demand and not
speculative forces.
Therefore, HBA supports the Government’s RPGT proposal and urges the
public to support such a move to curb the current excessive speculation
in the property sector.
HBA strongly believes that the cost of a roof over one’s head should
not be left to market forces. The repercussions whereby a large section
of society is deprived of affordable housing is serious and
far-reaching. The present property price increase does not commensurate
with the present rise in wages. The affordability of house ownership is
becoming an elusive dream to the present generation. Controlling the
upward spiral of property costs is not in the interest of housing
developers. In fact, they certainly favour it. Therefore, it would be
totally unrealistic to expect any developer to be interested in bringing
down property prices.
Contributed by Buyers Beware Chang Kim Loong
CHANG KIM LOONG is the honorary secretary-general of the National House Buyers Association (www.hba.org.my), a non-profit, non-governmental organisation (NGO) manned by volunteers. He is also an NGO councillor at the Subang Jaya Municipal Council.
