Malaysia | Penang 2013 Blueprint Development | One Penang, Two halves, Three links...what is it for me as investor/developer?

What is Penang state development plan moving forward? Penang state, Consortium Zenith BUCG Sdn. Bhd. and China Railway Construction Corporation International(#CRCC) together with Beijing Urban Construction Group are the prime movers. 

With future development in Penang been catered for rapid growth, any discerning investors and developers that concerned with their investment and development of the Penang state would be keen to know what are in store for them in the near future.

Lately we've KL's developers like #EcoWorld is coming over to Penang to buy lands both in island and mainland. News circulation mentioned that Eco World has acquired 5.26ha in Air Itam, Penang Island; 24.28ha in Seberang Prai, Penang. Another been #Tropicana (previously Dijaya) with their maiden project #Tropicana #218Macalister. On my part I'm working with developers from KL as they're keen to have their maiden projects both here(Penang) and Johor.

Few weeks ago media annoucement of major road projects and undersea tunnel in Penang(refer to attachment). Total estimate value is RM6.3billion to be built in Penang with target completion dates as follow:

(a) Third Tunnel Link: 6.5km of undersea tunnel to be completed by 2025. This third connection is between Gurney Drive(Penang Island) to Bagan Ajam(Butterworth).

(b) Gurney Drive-Tun Dr. Lim Chong Eu Expressway By-pass: 4.2km of expressway and a by-pass to be completed by 2022.

(c) Tun Dr. Lim Chong Eu Expressway to Bandar Baru Air Itam By-pass: 4.6km expressway and a by-pass to be completed by 2019.

(d) Tanjung Bungah-Teluk Bahang Paired Road: A four-land, 12km road to be completed by 2018. (The news for this came out in March, 2013 that caused price for bungalow land near the project increase from RM110 psf to RM140psf. I made some land transactions there). 

Also been mentioned is that Consortium Zenith BUCG Sdn. Bhd. jointly with China Railway Construction Corporation International(CRCC) together with Beijing Urban Construction Group to undertake feasibility studies and detailed design works(FSDD) for the planned Penang highway and traffic mitigation projects. 

"The FSDD is a critical component of the total project plan to ensure that we meet the requirements," said Consortium Zenith BUCG Sdn. Bhd. chairman Datuk Zarul Ahmad Zulkifli adding that initial phase of the FSDD project will take approximately a year and a half after which upon approval together with environment impact assessment(EIA) approval will then commence the initial phase of tunnel and road works.

There'll be 70/30 split on construction works between CRCC and Beijing Urban Construction Group.

The major infrastructure projects is also to improve connectivity and help to bring about development in Seberang Perai Utara(SPU). This balanced development is to give SPU a link after Seberang Perai Tengah has the 1st Penang Bridge and Seberang Perai Selatan has the 2nd Penang Bridge to achieve "one Penang, two halves, three links". Henceforth, the title of this blog message.

On the funding of this mega project, it'll be funded exclusively by local and international banks. In terms of funding concessions, the state government will award 110 acres of net leand in its permitted land bank on Eastern & Oriental Bhd's Sri Tanjung Pinang 2 and a 30-year toll concession to operate the tunnel with the same rate as that of the Penang 2nd Bridge.

This article has been written by VULCAN INT'L Real Estate Research Institute http://www.vulcanresearch.blogspot.com for VULCAN INTERNATIONAL Real Estate Investors Club http://www.vulcaninternational.blogspot.com .

VulcanInternational could be contacted at +6 016 451 1321 .

You're welcome to write your constructive comment below.

Property Development Company In Malaysia | Australia Property Market | SP Setia: WTF(What The Facts) about 50/50 contribution?

Quote: "The vision must be followed by the venture. It's not enough to stare up the steps, we must step up the stairs"...Vance Havner. The quote has been chosen as it's appropriate for this blog post.

By now #SPSetia has been fully grown to be "A-list" developer in Malaysia. It has been said that the company under its current CEO Tan Sri Liew Kee Sin has managed to position S P Setia at its pedestal. As a matured company pushing for its revenue to 50% contribution from local(Malaysia) and 50% from elsewhere is indeed a prudent and wise strategy as the saying "never put all your eggs into one basket." In the event Malaysia's market softening as with the hike of #RPGT(Real Property Gain Tax) the company still can cling on its revenue elsewhere to be in healthly balance sheet. He envisioned the 50/50 contribution five years ago.

It's known that SP Setia has its development in elsewhere in countries like Australia, Singapore, Vietnam and London(on massive #Battersea Power Station project joint-ventured with EPF and Sime Darby). Australia, Singapore and London are developed economies whilst Vietnam and Malaysia are developing economies.

In Australia, they've previously launched Fulton LN (http://vulcaninternational.blogspot.com/2011/06/current-australia-property-market.html) and now Parque(557 St Kilda Road) both in Melbourne. The units at Parque are with build up of 1,500 sq ft to 1,700 sq ft. It's a 332-apartment development. SP Setia is said to sold 331units within few months after the project was launched. 40% of the units sales came from Malaysia while the rest 60% was sold in Melbourne. To put icing on the cake, they hired renowned architect in Australia, Karl Fender to design Fulton Lane and Parque. This is to added value. Having top architects design SP Setia's projects are becoming a theme as it fits into the concept Liew is championing, which is having 5-start consultants to go along with a 5-star service and 5-star quality for its projects. Construction for Parque is expected to begin in early 2014 and end in 2016.

Having such good response, they're said to be looking for buy land in major cities in Australia such as Sydney, Perth and Brisbane.

To quote CEO Tan Sri Liew Kee Sin,"We definitely want to continue investing in Melbourne and London. These two markets are very good markets."

This article has been written by VULCAN INT'L Real Estate Research Institute http://www.vulcanresearch.blogspot.com for VULCAN INTERNATIONAL Real Estate Investors Club http://www.vulcaninternational.blogspot.com .

VulcanInternational could be contacted at +6 016 451 1321 .

You're welcome to write your constructive comment below.

Praque, 557 St Kilda Road

Penang Landed Property Investment | Mudah | Building For Sale In Penang

Malaysia | Penang | One of few pieces of land which encompassed more than half an acre of land off Green Lane Road (Jalan Mesjid Negeri), Penang is currently available for sale. With vicinity such as 24-hour Green Lane's #McDonald Fast Food Restaurant, Penang Free School, Heng Ee Secondary School, Convent Green Lane and situated at tranquility neigbourhood this place does indeed command good value for investment.

The current state of the land (see Fact Sheet below) has a three storey building erected at site.   

Fact Sheet:

Type Of Land: Freehold

Total Build Up Area: 14,337 sq ft

Land Area: 26,318 sq ft (0.6 acre)

Low Density: Per floor consists of 3 units. Total unit is 9 (three storey)

Floor Layout: Each unit has three rooms and three bathrooms

Carpark: 20 parking lots

Note: The sale is 'as is where is basis'

Copy of Proposal For Sale report is made available (compliment from VULCAN INT'L Real Estate Research Institute(Penang iProperty)) for interested prospect(s).  

Those interested in the property please contact Vulcan Lau, mobile: +6 016 451 1321 to arrange for viewing.

Penang Property | Malaysia Real Estate Investment | Budget 2014 Malaysia | RPGT and its cousin Stamp Duty

The dust has settled...almost. Now that we're digesting on the Budget 2014 announcement. One of the talkabout is RPGT(Real Property Gains Tax) and to much lesser extent Stamp Duty. 

Budget 2014 is said to contain six amendments to Real Property Gains Tax Act and two amendments to Stamp Act.

It has been highlighted in Malaysia's media that RPGT is to be increased with effect from 1-Jan-2014. The structure quantum of increase has been varied based on the following:

1-3rd year: 30%

4th year: 20%

5th year: 15

6th year: No Tax

(see table below, RPGT rates)

Prior to this the RPGT is pegged as:

1-2nd year: 15%

3-5th year: 10% 

6th year: No Tax

Foreigner's RPGT:

1-5th year: 30%

6th year onwards: 5%

This will hurt developers in promoting the project aboard since the exit plan with this new scheme requires foreigner to pay 30% flat RPGT for first five year.

The mechanism of 2014 RPGT rates is said to curb speculation of would be investors or flippers. It's used as step with measues to slow down the steep rise in properties prices due to false demand and excessive speculation fuelled by easy mortgages and previous low tax.  On the subsale of 70% of total transacted properties, the price might be increased due to scarcity of supply with developer been slowed down due to sale and thus will slowdown nation development. The 2014 RPGT is likely to dampen speculation but it's unlikely to stop house prices from escalating. 

Limiting of foreign buyers to buy property above 1 million due to their superior exchange rate. This new limit ruling doesn't really applies to Penang as Penang state requirement for foreigner to purchase condominium is above 1 million ringgit and for foreigner to buy landed property it has to be above 2 million ringgit. Foreigner under #MM2H programme in Penang will be able to purchase at lower than 1 million ringgit for condo and 2 million ringgit for landed property respectively.

Not much news been said about Stamp Duty which has two amendments. At the moment, stamp duty chargeable on the Sale and Purchase Agreements is RM10.00 each. In addition, the stamp duty chargeable on a memorandum of transfer(MOT) is based on property transacted value, with stamp duty of 1% for the first RM100,000.00, 2% for the next RM400,000.00 and 3% for amounts  exceeding RM500,000.00 .

DIBS has been removed. It was with understanding that developers offering DIBS had actually marked up prices by about 5% to cover the interest they paid when the properties were under construction.

#GST(Goods and Services Tax) of 6% to be implemented on 1st April 2015, which is 17 months to go.

This article has been written by VULCAN INT'L Real Estate Research Institute http://www.vulcanresearch.blogspot.com for VULCAN INTERNATIONAL Real Estate Investors Club http://www.vulcaninternational.blogspot.com .

VulcanInternational could be contacted at +6 016 451 1321 .

You're welcome to write your constructive comment below.

Malaysia Real Estate | Budget 2014 Malaysia Conundrum | What is there for real estate?

Scenario: Number of my investors are asking me on whether should they proceed with purchase of new development or sub-sale properties at the moment? 

My answer to them is why not wait for the budget 2014 to be announced first before you take any action(afterall is only one week to go) so that you've a clearer pictures on how property market going on then.

By next Friday, 25-Oct-2013 Malaysian will again vis-a-vis the 2014 budget (you can follow via #Bajet2014) that will be tabled. It has been quite a number for speculations of what are going to announce then. As from the perspective of Malaysia's real estate sector the following might be affected:

(1) #DIBS (Developer Interest Bearing Scheme): As we're awared our neighbour(Singapore) has banned on DIBS since 2009. The Malaysian government might follow the same path.

(2) #RPGT (Real Property Gains Tax): There has been talked around that RPGT will be increased from current of 15%(for first two year upon signing of SPA) and 10%(from 3rd to 5th-year upon signing of SPA) to 30% and 15% respectively. Reason behind this move is that the RPGT can be effectively use to curb speculation on property by flipper or investor that looking for short term gains.

(3) #Stamp Duty: As been mentioned the current scale of Stamp Duty for property transaction will be increased from the current of 1%(up to RM100,000.00 purchase price) and 2%(from between RM100,000.00 and RM500,000.00 purchase price) and 3%(RM500,000.00 and above). The quantum of increase will be reveal then.

(4) #GST (Goods and Services Tax): Currently real estate agents are charging 6% GST for their services. It has not been implemented in all sector of industries. With this budget there might be a chance to implement across other industries. At present, we're paying a sales tax of 10% and 6% in service tax(as charge by McDonald Restaurant outlets).

(5) #LTV(Loan-To-Value): Reducing loan-to-value cap for a second property would affect genuine upgraders, who may find it challenging to pay a higher downpayment while waiting to sell their existing properties. This could reduce supply to the secondary market.

PS: Rising #RPGT and #Stamp Duty could risk pushing house prices higher as sellers would tend to pass the increemental costs to buyers and also delay disposal leading to even tighter supply. Developers will also hold back launches in view of weaker sentiment. This could reduce supply to the primary market.

This article has been written by VULCAN INT'L Real Estate Research Institute http://www.vulcanresearch.blogspot.com for VULCAN INTERNATIONAL Real Estate Investors Club http://www.vulcaninternational.blogspot.com .

VulcanInternational could be contacted at +6 016 451 1321 .

You're welcome to write your constructive comment below.