Property Malaysia

The annual Malaysian Budget Speech was read out by our Prime Minister Datuk Seri Abdullah Ahmad Badawi yesterday at the Parliament. The thrust of the next year’s budget was billed at promoting growth and business while improving the quality of the life of the people (read the Star’s report here).

For the property and construction sector, there were some major announcements, more really for the housing and property side of things, and not so much on the construction half of the equilibrium. At a glance, here are some of the highlights for the property sector (highlights can also be read here, here and here):

• RM3.6bil set aside for houses and quarters for teachers, armed forces, firemen and customs officials;
• Government to allocate RM2.1bil to build low-cost housing. From that amount RM1bil is set aside for building 21,600 units under government housing programmes;
• To encourage developers to construct low-cost houses, estimated losses on low-cost homes can be used to offset estimated profits of other rea property development projects for tax purposes;
• The Prime Minister will chair a Bumiputra property trust foundation (called Yayasan Amanah Hartanah Bumiputra) with a capital of RM2bil for purchasing commercial properties in major towns;
• Emphasis on revenue collection, land conversion, sub-division and partition land by the local government;
• Issuing strata titles will be simplified, now based on Certificate of Completion;
• Proposal for capital expenditure on moulds to manufacture Industrial Building System (IBS) components will be given accelerated capital allowance to be claimed for 3 years;
• To encourage more REITs by allowing tax deductions on legal, valuation and consultancy expenses.

The move to build more low cost homes is definitely a welcome sign in view of the spiralling property prices in the country. The setting up of the Bumiputra property trust foundation was actually talked about a bit by industry folks recently before the budget. The thrust towards IBS is a welcome move, the quality controls on prefabricated building components are generally easier to monitor. As for REITs, we look forward to more corporations issuing such instruments to diversify investors’ choices.

For the construction sector, there was not much big news compared to previous years. There will be RM5.7bil for rural economy and infrastructure, including RM581mil for construction and road upgrading, RM299mil for water and electricity. Sabah and Sawarak were given the main priority in this portion of the budget.

We weren’t planning to drop by since most of Team Property Malaysia were committed to prior arrangements, but in the end we did pop by for about one and a half hours before it closed on Saturday. (For details, read our earlier posts here and here)

At first impression, there seemed to be a lot of booths packed into a sizeable hall, but after a quick recon, we were able to visit almost all the relevant exhibitors (well, those that caught our fancy, anyway).

The range of properties on show were from affordable sub-RM100k apartments to upper-middle class luxury bungalows and villas. Mostly were below the RM350k bracket, though. I guess Homebuyer Expo 2005 is more suitable for those above RM500k. Most were developments were in the Klang Valley, a few were in Nilai/Seremban growth corridor, and one or two out-of-towners (Ipoh, Kuantan…)

After a brisk round, there actually not as many developments on show, there were many financial institutions exhibiting, too (like Citibank, HSBC etc).

All in all, there were a few new and interesting projects that interested us, which we will be reviewing in the next few days. Many more have actually been reviewed here, like Heron Residency, SP Setia’s projects, Sterling@PJ, USJ 1 Avenue and Dana 1 Residence.

The expo is still on today, so there’s still time to for you to drop by if you’re interested.

A few days ago most of the local newspapers ran the article about the Malaysian Nature Society (MNS) voicing their concern about the proposed development of Federal Hill and the Lake Gardens. The massive green lung is home to a multitude of fauna can might be forced to invade nearby homes if their natural habitat is destroyed.

An online version of the report can be read here (source: The Malay Mail, you can also check out the Star).

According to the article:

Malaysian Nature Society (MNS) executive director Loh Chi Leong said this is inevitable as the forested area is home to a variety of fauna.

He said although the wildlife comprises nothing out of the ordinary, the forest is still home to monkeys, snakes, civets, porcupines and many species of birds.

“If Federal Hill goes, you will probably see an ‘invasion’ of these animals into nearby homes as they have nowhere else to go,” he said.

In the article, it is also reported that:

Federal Hill, a 70-hectare forest area between Jalan Parlimen and Jalan Bangsar, is reportedly being coveted by property developers who plan to build 1,000 units of luxury bungalows, semi-detached and terraced homes in the area.

The area is much sought-after due to its close proximity to KL Sentral, Parliament building, the National Mosque and Muzium Negara.

It is claimed that the bungalow lots could fetch at least RM4 million each.

Both MNS and WWF Malaysia emphasized the need to maintain the green lung in the city. They also highlighted that perhaps KL can emulate the concept of Hyde Park in London and Central Park in New York City.

Indeed, a deeper question is whether or not such a high-end and sprawling development is really needed at the expense of the beautiful Lake Gardens and Federal Hill, considering the glut of luxury homes in the city (like here and here).

Anyway, billion ringgit projects like these have little or nothing to do with man-on-the-street folks like us, whether it is in terms of planning, buying or selling them.

The Bumiputera Property Exhibition 2005 KL is on at the moment until Sunday, September 11 at the Mid Valley Megamall.

This event is jointly organized by KL City Hall (DBKL) and the Real Estate and Housing Developers’ Association, Wilayah Persekutuan Kuala Lumpur branch (Rehda KL), and will focus on selling available to Bumiputera buyers.

This event received coverage from the local Property Times (NST), which reports:

“It will also help DBKL monitor demand from Bumiputera purchasers. Participating developers are putting in all their effort to ensure their Bumiputera units are sold,” said Rehda KL secretariat spokesman Soon Teck Giap.

It also notes that:

If there are still unsold Bumiputera units after the exhibition, DBKL will have the final say on how the Bumiputra housing quota for KL can be fulfilled, and whether the units not taken up can be “released” to the general public.

Rehda KL has also submitted a proposal to DBKL to streamline the existing guidelines on Bumiputera housing quotas to include a “structured release mechanism” so as to allow for automatic release of unsold Bumiputera units, provided all other DBKL requirements are met.

“Rehda KL is fully supportive of DBKL’s efforts in looking into ways to improve the existing situation on the release of unsold Bumiputera quota units. Our proposal will create greater efficiency that will help the developers considerably,” Soon said.

More than 30 major developers, including Tan & Tan Developments Bhd, See Hoy Chan Sdn Bhd, Bukit Kiara Properties Sdn Bhd, Asia Pacific Land Bhd, Bolton Bhd and Sunway City Bhd, are taking part.

You can check out REHDA’s website on this event here.

Property Malaysia has found a very article on real property gain tax. The source of the info is very reliable, after all, it’s from our Inland Revenue Board Malaysia (LHDN)!

So for those interested in reading up on gain tax or planning to invest, now’s a good time to learn what you’re getting into.

The site is laid out in easy-to understand sectional FAQ. You can check it out here.

The woes of condominium living made the front page of the Star, the most widely read English daily in Malaysia (you can read the online version here). According to the article,

About 70% of the condominiums and apartments in the country are being badly managed, resulting in the residents having to put up with deplorable, and even downright hazardous conditions.

The article also says that:

The problem is more acute in older buildings.

This is despite residents forking out a monthly service charge of between RM50 and RM500 or even more.

The article highlights the common problems faced by both the residents and management companies, as described by the National House Buyers Association (HBA) (link available at the sidebar).

The Star also invites readers to send feedback regarding this issue (e-mail it to feedback@thestar.com.my).

Alternatively, you can also take the Strata Title Property Owners’ Survey at the HBA website.

You can also check out three other related articles in the Star:

Residents living in fear
Management firm gets an ‘A’ from teacher
Malaysians lack right mentality to live in high-rise

Today Property Malaysia takes a break from reviewing new homes and talking about the market or industry news (due to some temporal loss of morale). Today we pay homage to one of the earliest large scale public housing projects in Kuala Lumpur, the Tuanku Abdul Rahman Flats, or better known as the Pekeliling Flats.

Pekeliling flats in the last few decades, had become an ageing relic of a bygone era, an established landmark to the millions of people that pass by on the ERL and Jalan Tun Razak everyday. Thousands of families – Malays, Chinese, Indians and others – live in the small units, in the heart of the old city, sandwiched between Kg. Baru, Sentul and gleaming freeways.

Residents have become immune to the inherent problems and complaints – rotting garbage everywhere, dangerous dark corridors, parking congestion, traffic noise, access problems, unsightly balconies, clogged pipes, the list goes longer and longer as the years go by. But the residents, by and large have had no other choice but to stay put in the apartments they moved in since the 60’s. Why? Some of my colleagues who stay there can’t afford more expensive housing anywhere else, some depend on the good transport system the area provides to earn their living, most of them are generations born there with nowhere to go.

How did the Pekeliling Flats come about? Perhaps most senior citizens from the city can give a better account of its genesis, but in the late sixties, there a huge demand for cheap housing in the young city to cope with the sudden influx of emigrants from all over the country. Kg. Baru was already established, so mass low cost flats with small units seems like the natural solution. Pekeliling was chosen for obvious reasons: close proximity to Kg. Baru and the government offices, good road and public transport system, plus it was at that time almost of at the edge of the city centre (of course at that time KL was not a city yet).

As the years went by, the nation and city grew bigger and more affluent, somehow the Pekeliling flats filled up to its brim and started to show its age.

I have passed by the place a million times, but the most memorable visit was my last one. It was for my good friend Dave’s wedding dinner. The wedding was held at the Tamil Methodist Church in nearby Sentul, and the dinner was at the multi-purpose hall in Pekeliling.

After years of deliberation and public forums, the government has finally decided to relocate the dwellers to the new flats in Sri Rampai (awarded to Kejuruteraan Bintai Kindenko Sdn Bhd) and the exodus has currently begun (see the Star Metro dated August 19, 2005). While I was at my previous firm many years ago, the complany was partially involved in of the many proposals to redevelop the place.

And what of the precious where the flats are located? The site will be rebuilt as a mixed development project (awarded to Asie Sdn. Bhd. for RM2bil) which will commence in mid-2006.

And so finally the sun has set on one of the earliest public housing projects in our country. Many of the dwellers are sad to leave the place, it had become one of the true melting pots of racial harmony and a snapshot of a country’s journey from the independence years to a developed nation. Others still, are only too happy to bid adieu to the flats. But however you see it, along with it goes a piece of our nation’s history, and a million memories of the humble Malaysian.

Any foreigner buying property in Malaysia is required to get approval from the FIC (Foreign Investment Committee) and the State Authority. The FIC is part of the EPU (Economic Planning Unit) in the Prime Minister’s Department (JPM).

But before we go any further, who qualifies as a ‘foreigner’? (please insert your own AOR rock band joke here)

• Someone who is a not a Malaysian citizen; or a PR of Malaysia; or,
• A foreign-owned company or institution incorporated outside Malaysia; or,
• A local company or local institution with more than 50% of shares held by (i) or (ii) above.

According to the FIC, foreigners can only purchase properties valued more than RM150,000 and above, but there is no limit to how many units a foreigner may buy.

Foreigner on-selling to another foreigner requires to approval from FIC, if on-selling to a Malaysian individual / corporation, no approval necessary, but FIC need to be notified.

Some state authority approvals are specific, it would be best to check with them for a particular project you are interested in. Usually the developer can obtain the info for you. If you have queries for them, a good place to start would be the website for the Department of the Director of Land Office. (It’s in Bahasa Malaysia, though).

As part of the government’s effort to improve the economy by increasing the inflow foreign funds in the country, the Malaysia My Second Home campaign. The crux of the campaign was to provide incentives to foreigners from any country (except Israel) to buy property and stay in Malaysia.

The program is to allow people from all over the world, who fulfill certain criteria, to stay in Malaysia as long as possible on a social visit pass with multiple entry visa. The Social Visit Pass is initially for a period of 5 years and renewable.

This programme was widely promoted in countries like Singapore, Hong Kong, the UK and the Middle East, jointly organized by the Immigration Department and Tourism Malaysia. In the latter’s website, they list several benefits of staying in Malaysia, like high standard of living, reasonable cost of living, infrastructure, political stability, etc. Even for Malaysians, the info makes an interesting read.

Ask any expatriates or tourists who have stayed in or visited Malaysia, they will tell you all about the fantastic food, warm and friendly people, diverse ethnic culture and traditions, etc. So if you’re a foreigner and planning to invest to retire in another country, Why not check Malaysia out?

Those interested can look up the following government websites:

Immigration Department of Malaysia

Tourism Malaysia

As a side note, I found a website called Penang My Second Home. The sites is pretty spartan and it looks like it was coded in 1994.

Yesterday while browsing the PPS, I found this ping by Bobjots regarding the Draft Structural Plan for Selangor.

It is very interesting, everyone resident of Selangor who is concerned with development and land use of the state up until the year 2020 should make and effort to inspect this document. In a nutshell, Bobjots notes that:

A Structural Plan is basically a statutory land-use planning document that sets out detailed development policies for a certain geographical locality (ie, a city, municipality, district, etc). This is mandated under the Town & Country Planning Act 1976 (Act 172). The Act also requires that such plans be made available to the public in draft form for inspection and feedback for no less than 30 days prior to it being adopted.

He is also organizing a petition to request the state government to extend the public viewing period (which currently ends on 1st August). Details can be found at his page, along with some interesting further reading.