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PETALING JAYA: UEM Sunrise Bhd, the principal developer of Iskandar Malaysia, says it will restrategise and replan, where necessary, in view of the changes in the property market and the entry of China developers in Johor.

UEM Group Bhd group managing director and chief executive officer Datuk Izzaddin Idris said there would always be challenges in the property sector, which he described as “cyclical” in nature.

“With Khazanah (Nasional Bhd) as the parent company, we have the advantage of knowing what’s going on,” said Izzaddin after UEM Sunrise’s EGM yesterday.

In recent months, the property market has softened, while developers from China had launched houses in the Danga Bay area by the thousands, causing concerns of an oversupply in Johor.

“With the unique offerings such as Legoland Malaysia, Pinewood Iskandar Malaysia Studios, townships and other elements, we have the upper hand. Having said that, we will watch the China players closely and adjust our plans accordingly,” he told reporters after the EGM that approved the company’s purchase of 2,500 acres in Kulai Jaya near Senai and the disposal of 500 acres in Gerbang, Johor.

The deal would give UEM Sunrise the option of buying a further 500 acres in the 5,000-acre plot in Kulai so as to round up the development to 3,000 acres within five years, as well as the first right of refusal over the remaining 2,000 acres.

Two joint-venture companies, Scope Energy Sdn Bhd (SESB) and Aura Muhibah Sdn Bhd (AMSB), will be formed for the development in Gerbang and Kulai Jaya, respectively.

 

UEM Sunrise will have a 40% stake in SESB, which has the mandate to undertake the Gerbang development with Kuala Lumpur Kepong Bhd (KLK).

As for AMSB, which will undertake the development in Kulai Jaya, KLK will hold 40% while UEM Sunrise will have the balance.

The Gerbang land sold to KLK at RM40 per sq ft is more valuable compared with the RM8 per sq ft Kulai Jaya plot, which has yet to be converted from its current agricultural land status.

“Now that we have Nusajaya, that will be our main focus,” UEM Group chairman Tan Sri Dr Ahmad Tajuddin Ali said.

UEM Sunrise’s Almas, a high-rise development in Puteri Harbour, has only sold 25%-30% in light of the cooling measures implemented by the Government last year.

However, Izzaddin said it wasn’t a concern, as there was some RM300mil in unbilled sales and the company would take heed and cater to landed property seekers in Gerbang instead.

In a filing with Bursa Malaysia, UEM Sunrise said the board had appointed Anwar Syahrin Abdul Ajib as MD and CEO effective Sept 1. The positions had been previously held by the late Datuk Wan Abdullah Wan Ibrahim.

Izzaddin will be redesignated as non-independent non-executive director from executive director of UEM Sunrise effective Sept 1.


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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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