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PETALING JAYA: The residential property segment, a sub-sector of the overall property market, appears to have entered “a cooling phase” in the first two quarters with sales expected to stay “moderate” for the coming third quarter, according to the Malaysian Institute of Economic Research (Mier).

“The macro-prudential measures implemented by Bank Negara to cool down the property market since 2010 look likely to have played a role here,” Mier said.

Mier based its conclusion after doing a residential property survey designed to be an indicator of economic activity in the property sector.

Its Residential Property Index fell for the second quarter to 109.9 points, slipping 1.3 points from the first quarter, and 28.3 points from a year ago.

 

The survey also showed that total unsold new residential properties have accumulated faster than sales in recent months.

More than a quarter of house builders reported bigger stocks in hand, which is at a three-year high.

The Mier report said that given the built-up in total unsold new units, those surveyed have decided to keep creeping prices at bay by maintaining them at current levels.

But in the months ahead, prices “are likely to escalate again” more than half of those surveyed said while the remainder said they will “neither raise nor slash theirs (their prices) for now.”

Fewer of them increased prices in the second quarter compared with the first and some even offered price cuts, the survey found.

Moving forward, about half of those surveyed expect sales for the current third quarter to remain the same while more than a third of those surveyed foresee higher sales as “home buyers bought ahead of the Goods and Services Tax” which will come into effect next April.

Property prices are envisaged to rise due to higher input costs after that.

Double-storey houses continued to be the most popular while none of those surveyed seem to have sold any bungalows during this same period.

The survey concluded that affordability issues may continue to haunt the market if property prices outpaced income growth and interest rates edged up.

“Housing demand may eventually lose ground,” Mier said.

 


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PETALING JAYA: More developers are choosing to relocate their developments towards the south of the Klang Valley due to escalating land prices in and around Petaling Jaya and Kuala Lumpur.

“Escalating land prices within Greater KL have reduced the supply of affordable landed properties, which remain in demand,” said AllianceDBS Research in a report yesterday.

“The mass rapid transit (MRT) connectivity at Kajang (ready by 2017) and the ready infrastructure with several highways have made Kajang/Semenyih the natural choice for developers to expand township developments.”

The research house said this was supported by the availability of large tracts of land and these districts recording among the strongest population growth in Selangor.

“The close proximity to KLCC and the Putrajaya federal administrative centre will ensure KL South continues to thrive.”

AllianceDBS Research noted, however, that Greater KL and the Klang Valley remain the core of the Government’s Economic Transformation Programme.

“The Government wants to grow the Greater KL population to 10 million by 2020 from an estimated seven million currently. This means the Greater KL population has to grow by 5.2% per annum on average, much higher than the national average of 1.4%.

“If the goal materialises, then this would translate into stronger demand for housing of 80,000 units per annum in Greater KL alone vis-à-vis 78,000 units completed for the whole country in 2013.”

AllianceDBS Research said the housing demand in Greater KL is likely to remain healthy going forward, adding, however, that buyers would be picky because of the steep pricing, no thanks to a slew of cost-push factors, including inflationary pressure, subsidy rationalisation and the implementation of minimum wages.

“Faced with the risk of margin compression, property developers will naturally look to landbank in areas where land cost is relatively low and there is ready infrastructure and a growing population.”


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SHAH ALAM: I-Bhd, which will launch the RM820mil Grand i-Residence service apartment in Jalan Kia Peng, Kuala Lumpur next month at an average price per RM2,300 per sq ft, expects an almost full take-up rate based on the interest it is now garnering.

“We are launching about 450 units, and we are offering small units. This has been our niche for our developments in Shah Alam. We are not going to Kuala Lumpur with unit sizes of 2,000 to 3,000 sq ft. We expect i-Residence to be fully sold,” I-Bhd deputy chairman Datuk Eu Hong Chew told reporters after the company’s EGM yesterday.

This project will be I-Bhd’s maiden condominium outside of its flagship I-City development in Shah Alam.

Meanwhile, shareholders approved all the resolutions tabled at the company EGM, namely the RM702.3mil corporate exercise which consists of rights, a bonus issue, warrants and convertible stocks.

The exercise will see I-Bhd’s number of shares increase from 114 million shares of RM1 each to about 1.4 billion shares of 50 sen each.

 

I-Bhd will be issuing convertible securities amounting to RM502.3mil for two parcels of land in i-City and one parcel of land in KLCC. The remaining RM200mil from the rights issue is for investment in its shopping mall and working capital.

This exercise will see I-Bhd chairman Tan Sri Lim Kim Hong’s stake in the company drop to 65% from 75% presently. “I don’t mind reducing my stake further to 60%, but only if there are good joint-venture opportunities with strategic partners,” said Lim.

I-Bhd currently has a 10-year development pipeline with a gross development value of RM9bil. For 2014, there is a launch plan of RM1.6bil.

In 2015, the significant development will be I-Bhd’s RM1.2bil Central Tower development with total gross floor area of 1.6 million sq ft.

I-Bhd expects to recognise profit margins of 25% for the tower.

The first phase of Central Tower development comprises two residential towers slated for completion in 2019. The remainder two towers will comprise a hotel and offices.


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