BUYING Malaysia property that finally becomes deserted is a excruciating experience for many house buyers. It not only harms purchasers who have lost their hard-earned money but also affects the property industry’s standing which has taken a whipping owing to unethical activities of a small number of culprits.
This is primarily so when the abandoned project is not caused by factors such as economic downturn or withdrawal of purchasers, but exclusively owing to irresponsible people who assert to be “developers” but do not hold a license to do so.
It was of late reported that our Housing and Local Government Ministry has recognized 195 abandoned developments that have no license to operate in our country. I am perplexed as to how these “developers” are able to begin their projects when they do not even possess a license to apply for financing in the event they are required a bridging loan, and is their sales and purchase (S&P) agreement appropriately attested by a lawyer prior to the start of selling?
In this situation, what can be done and who should take part in minimizing these unlawful developers? Evaluating our existing housing development process would provide us with some ideas.
When a developer plans for a housing project, he must first secure the essential approvals and licenses from the pertinent authorities such as the development order, building plan, advertising permit and developer’s license. The developer then may require to source for a bridging loan from a financial institution and this is followed by hiring the services of lawyers to prepare the legal documents that will include the S&P agreement.
As the project is launched to the market, the developer will oblige the buyers to sign the S&P agreements in order to finalize the purchase. Should the purchaser obtain a housing loan from a bank, the bank will enter the picture to process the loan application submitted by the purchaser. These are the basic procedures involved in developing and marketing a housing project in Malaysia.
For unlicensed development, the regulatory bodies are not in the picture. In such cases, it becomes obvious that the lawyers and/or bankers, both representing the house purchaser, have a role to play as the first line of defense to safeguard the interest of the purchaser.
Therefore, there are questions that asked for an answer. How is it doable for financial institutions to endorse the end financing loan for a property development in the absence of all or part of the required approvals and licenses? The same questions are posted to lawyers who get ready all the legal documents for unlicensed development.
I suppose everyone has a part in identifying irresponsible players in the industry, particularly the bankers and lawyers with their better access to information and strong regulatory network as compared to the general public. As a purchaser and a customer, you would have anticipated your banker and lawyer to carry out due diligence to guarantee that your interest is not compromised.
In other industries, professional practitioners who do not express the right message and do not look after customers’ interests can be given severe punishment as their action may be construed as negligence, fraud or even criminal breach of trust.
According to the record of National House Buyers Association, in the case of Keng Soon Finance Bhd (1996), a financial institution had approved a loan to an unlicensed developer, and it was decided that the loan and the security offered were invalid. The bank is unable to institute the foreclosure proceedings on the said land and consequently could not recover its loan.
Under our Housing Development Act, a property developer that engages in, carries out or undertakes housing development without a proper license can be subjected to a fine between RM250,000 and RM500,000 or to imprisonment for a term not exceeding five years or both. This is an opportunity to take action against unlicensed developers. While we have the law in place, it is likewise important to make certain that strong enforcement comes along.
For house buyers, you are strongly advised to buy property from reputable developers and to do thorough “shopping” and analysis prior to affixing your signature on the dotted lines. Responsible developers are eager to work hand-in-hand with purchasers and welcome the role of the National House Buyers Association which advocates the protection of house buyers in Malaysia. We should stand jointly as a team to fight against irresponsible developers.
And for anyone of you who believe that you have purchased one of those unlicensed developments as mentioned earlier in the article, it is right time to write and call your banker or lawyer for clarification.
KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) will fund the builder and buyers of Malaysia’s major abandoned housing project, to be found in Bandar Baru Salak Tinggi, Sepang as part of its efforts to decide its corporate legacy accounts issue.
MBSB, which is 65.5%-owned by the Employees Provident Fund (EPF), will grant term and bridging finance facilities of up to RM215mil to builder NCT United Development Sdn Bhd (NCT), and an added RM243mil to the buyers, said MBSB CEO Datuk Ahmad Zaini Othman.
“When the new management (of MBSB) came in in 2009, we wanted to find a way on how we can resolve these legacy problems.
“And one of the ways is to support this project through NCT to revive the project.
“This project have been unresolved for more than 10 years,” Ahmad Zaini said.
“We foresee they’re (the buyers) are going to face problems to secure financing from the banks.
“So we are also putting up another package which is the end financing package to support purchasers.
“We are shifting the corporate risk from NCT to the purchasers,” he added.
Buyers will have to pay an interest rate of base financing rate minus 0.5%, which is somewhat more costly compared with conventional loans because of the fact that these borrowers are mostly in their 50s. This is according to MBSB.
MBSB is also classified as an ‘exempt finance company’ and as a result it is not restricted by any financial regulators in Malaysia.
“It is only fair and just to do so as they (these borrowers) have honoured their initial obligations but failed to receive their end of the bargain,” Ahmad Zaini said.
Following deliberations with the purchasers, an accord was arrive at to separate them into two classes.
According to NCT, one class of buyers who desire to carry on with the purchase will have to top up another 30% to the original purchase price of either RM140,000 (for 20X70) or RM97,000 (for 18×60) units.
These units have make out a price appreciation of about 80% from the time it was abandoned.
The second group of buyers can obtain a full amount as refund for their units as construction of their units was at a minimum.
“This is a big step for us.
“Hopefully it will be a win-win situation for all,” Ahmad Zaini said at the signing ceremony here yesterday, adding that there were two more such abandoned legacy projects that were scheduled to be revived.
“NPL (non performing loans) will not go away unless and until you revive the project,” he said, adding that MBSB’s net NPL stood at 8.5% as at December 2011.
The project, named Taman Kenanga, was deserted in 1999.
The developer, Kumpulan Sepang Utama Sdn Bhd (KSUSB), is at present in liquidation.
The signing of the said agreement yesterday has involved three parties – MBSB, NCT and KSUSB’s liquidators, GTC Corporate Advisory Sdn Bhd.
According to MBSB, the Malaysia property housing project was abandoned by reason of the cost overruns together with the “unfavorable economic situation then”.
It will be renamed Sepang Perdana and is likely to be completed within the span of two years, said NCT CEO Zulfikri Saidin.
The project was originally earmarked to have 2,536 units of commercial, linked houses and low cost houses on 110 acres.
JOHOR BARU: Selia Pantai Sdn Bhd is searching strategic partnerships with domestic and foreign investors to fast track the development of its on-going SouthKey project.
Managing director Datuk Mohamed Zaini Amran said the company was at present conferring with some reputable Malaysia property developers as well as that of Singapore for partnerships.
“We are looking at partners who can add value to our long-term development project,” he said at the launch of SouthKey by Johor Mentri Besar Datuk Abdul Ghani Othman on Saturday.
Mohamed Zaini said the joint-venture development would engage certain precincts of the project which would be divided into nine different development zones.
He said the company liked to work with Singapore-based developers as this would open the way for the company to draw property buyers from the republic.
Mohamed Zaini said the new ruling introduced by Singapore for foreigners purchasing private properties in the republic would profit property developers in Iskandar Malaysia.
Singapore had in December last year imposed a 10% duty stamp for foreigners buying private residential properties in the island state increasing the selling price by 10%.
“We are banking on our project’s strategic location to attract buyers not only from Singapore but also those from outside Johor and other countries in the region,” he said.
Mohamed Zaini said apart from its strategic location, the company also saw Iskandar Malaysia as another strong pulling factor to aid sell the project.
He said phase one made of 128 units of Lakefront strate-titles shop offices consist of three, four, five and eight-storey blocks with prices varies from RM918,000 to RM15.50mil. Ninety-seven per cent of the units have been sold.
SouthKey is situated on a 133ha in the Majidee Army Camp area which called as the “last remaining large prime development land” about 4km north of the Johor Baru city centre.
It enjoys good accessibility and connectivity by means of three major highways the Tebrau Highway and Southern Link Expressway and soon-to-be-opened Eastern Dispersal Link Expressway.
The project, with a GDV of RM13bil, will take about 15 years to develop and is a 70:30 joint venture between Selia Group and state-owned Kumpulan Prasarana Rakyat Johor.
A number of Singapore property developers are insistently promoting their unsold units from earlier launches; presenting prospective buyers with attractive and appealing discounts.
Over the weekend, Bukit Sembawang offered 19 units at Paterson Suites, a high-end condo situated at Paterson Road that was finished in 2010. A good number of the homes have been snapped up with the exception of two four-bedroom units nestled on the second and fourth floors.
In an advertisement carried in The Straits Times, the developer guaranteed a five percent rental yield for a span of four years, or equivalent to S$300,000 yearly (S$25,000 monthly) for a S$6 million apartment. If the rent drops below S$25,000 per month, what’s left will be topped up by the developer.
In addition, owner-occupiers are entitled to a 10 percent discount off the purchase price.
Separately, CEL Development is planning to let loose homes at the 301-unit My Manhattan condo found in Simei. Despite the fact that the project was started last year, property experts trust the high prices (S$1,219 psf) could have chased off buyers.
Expected to be completed by the year 2014, the project has so far sold 45 percent or 134 units basing on the data from the URA (Urban Redevelopment Authority).
Nicholas Mak, Head of Research at SLP International Property Consultancy, said it is ordinary for developers to have unsold units a year or more subsequent to the launch. As such, it is essential to have a re-launch to take advantage of the strong market.
“They may feel that there are now more buyers in the market, or are encouraged by the high number of sales in the previous months,” he said.
Colin Tan, Research Head at Chesterton Suntec International, commented that “in the central areas, developers see no reason for lowering prices… At the moment they feel optimistic enough to give such discounts hoping that it would attract more sales”.
The 124-unit luxury condominium Marina Collection by developer Lippo Group was completed just last year, and is situated next door to ONE°15 Marina Club. The project has seen a craze of buying interest notwithstanding the introduction of the additional buyer’s stamp duty (ABSD) last Dec 8. Based on the latest caveats lodged and downloaded from URA Realis as of Jan 18, there were three transactions at the project, with caveats lodged in late December.
The most latest transaction is the sale of a three-bedroom, 1,873 sq ft unit on the second floor, which was disposed for $5.34 million ($2,850 psf) in December. In the meantime, right on the first floor within the same block, two units, both three-bedroom apartments of 2,099 sq ft, was sold at $5.88 million ($2,800 psf). All three units were said to have been bought by foreign investors directly from the developer. Phylicia Ang, executive director of Savills Residential said that they are buying the property with the intent of renting them out. She further added that foreigners, particularly from Thailand and India have made known of their interest in Marina Collection, and are looking to purchase primarily for long-term investment,” she adds.
Interest in Marina Collection had picked up just before the end of last year. Inspite the ABSD of 10% imposed on residential property purchases by foreigners, 3% for permanent residents buying their second and subsequent property, and Singaporeans buying their third and more, interest in Sentosa Cove condos has not fall considerably, says Nancy Hawkes, senior group division head at Jones Lang LaSalle (JLL) Residential. “It has certainly slowed down,” she concedes, “but buyers who’re really interested will still buy.” Interest from China buyers at Sentosa Cove, which had slowed in the weeks following the imposition of the ABSD, has also picked up over the last few weeks, and they are zooming in on the bungalows rather than the condos, notes Savills’ Ang.
Whereas most bungalow buyers at Sentosa Cove tend to be owner-occupiers, those who buys condos tend to be investors, observes JLL’s Hawkes. At Marina Collection, a three-bedroom apartment can obtain a rental rate of $9,000 a month, she adds.
Launched in December 2007, the 99-year leasehold Marina Collection witnessed units sold at prices varies from $2,636 to $2,917 psf. Latest transaction prices of $2,800 to $2,850 psf are close to the record highs attained in late 2007/early 2008. This is based on the caveats lodged with URA Realis.
Most of the units at Marina Collection overlook the berth, and developer Lippo Group presents homebuyers a complimentary membership at ONE°15 Marina Club. Savillls Ang said that it is unique and stands out from the other condo in Sentosa Cove due to the fact that it offers a yachting lifestyle.”
It is also noted to be the only condo on Sentosa Island that brags an Olympic-sized pool, adds JLL’s Hawkes. “The layout of the units makes good use of space. For example, the bomb shelter is under the stairs instead of a room in a corner,” she notes. Residents can also enjoy a variety of entertainment and retail selections nearby once the 240-room resort hotel, The W Singapore Sentosa Cove, opens later this year. Next to the W hotel is the 228-unit The Residences at W.
According to Ang, buyers looking fora panoramic view of the seas may be enticed to the 151-unit Seascape instead. The 99-year leasehold condo development by Ho Bee Group and IOI Properties was also completed last year. Ho Bee Group is the first mover at Sentosa Cove and simply the biggest stakeholder there if we’re talking about the number of projects developed. The luxury project showcased spacious apartments with an open sea views. Last month, two units of four-bedroom apartments were disposed for $11 million each. One was a 4,241 sq ft unit that went for $2,594 psf, while the other was 4,133 sq ft, and was sold for $2,661 psf. The condos at Sentosa Cove each have their own distinctive offering, says Hawkes. “It really depends on the buyer’s lifestyle and demands but for those who like boating, Marina Collection offers the best location and facilities,” she adds. She further added that investors who acquire condo units at Sentosa Cove can expect to attain rental rates of $4.50 to $4.70 psf per month.
Moreover, in this luxury waterfront residential enclave, most Singapore property buyers have assumed a wait-and-see approach. Ang observed that buyers are a little bit unsure of committing in the present economic situation. There have been numerous viewings but few offers. Hawkes, who is a resident at Sentosa Cove and the owner of two other condo units for investments, is waiting for The Pinnacle Collection to be launched sometime this year prior to deciding on her next Sentosa Cove purchase. The Pinnacle Collection, a joint venture between Ho Bee and IOI Properties, is situated at the entrance of the marina leading into Sentosa Cove and is slated to be 20 storeys, the tallest building in Sentosa Cove.