FACILITAT ING & PROMOT I N G I N VE ST M E N T F O R M A LAY S I A N R E A L E S TAT E | www.malaysiapropertyinc.com      ...
COVER STORY                                                                                                               ...
COVER STORY                                                                                                               ...
SPOTLIGHT                                                                                                                 ...
SPECIAL REPORT                                                                                                            ...
SPECIAL REPORT                                                                                                            ...
INVESTOR PREFERENCES                                                                                                      ...
NEWSFLASH                                                                                                                 ...
CEO’S SPACE                                                                                                               ...
IN A NUTSHELL                                                                                                             ...
GRAPHICALLY SPEAKING                                                                                                      ...
12ABOUT USMalaysia Property Incorporated is a Government initiative setup under the Economic Planning Unit to drive invest...
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MPI Market Report – July 2011

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MPI Market Report – July 2011

  1. 1. FACILITAT ING & PROMOT I N G I N VE ST M E N T F O R M A LAY S I A N R E A L E S TAT E | www.malaysiapropertyinc.com July 2011 issue 14COVER STORY pg 2A MODEL WORTHY OF RECOGNITIONBEFORE pg 4 SPOTLIGHT URBANISING MALAYSIA Director of PerformanceAFTER Management and Delivery Unit (Pemandu) elaborates on ETP and its successes. >> Read more pg 8 NEWSFLASHBandar Sunway offers a mix of education, shopping, healthcare, leisureand hospitality all in one integrated township. • ETP EFFORTS TAKING >> Read more SHAPE • JOHOR PREMIUM FASHION OUTLETSPECIAL REPORT pg 5 OPENS ON 11.11.11PENANG RESIDENTIAL SECTOR UPDATE >> Read more NAPIC report shows that the unsold residential properties in Penang is the lowest compared to other states in Malaysia. >> Read more pg 9INVESTOR PREFERENCES pg 7 CEO’S SPACERIDING ON THE RISING “REDBACK” OF FAILED LAND SALES HSBC Bank’s Activate Asia ASEAN- China AND FAKE LOANS business forum showcases Chinese >> Read more important on the world stage. >> Read more pg11IN A NUTSHELL GRAPHICALLYAN EXPAT DESTINATION pg10 SPEAKING Despite rising inflation and Ringgit BUILDING MATERIAL COST appreciation, the cost of living in INDEX BY STATE Malaysia is still low as compared to other (High Rise Residential countries in the region. Building) >> Read more >> Read more
  2. 2. COVER STORY 2A MODELWORTHY OFRECOGNITIONBandar Sunway offers a mix ofeducation, shopping, healthcare,leisure and hospitality all in oneintegrated township BayRocks Luxury Bungalowsby S.SulocanaThirty years ago, Bandar Sunway was an Office and Industrialabandoned mining land on the periphery Presently there is only one grade A officeof the city. It has now evolved into a Bandar Sunway has a building, Menara Sunway, which wastownship with various development built in 1993. This 19 storey building hasclusters that have sprung over the years. large catchment area with a net lettable area of 268,978 sq ft andGravitating away from the city centre over 50,000 residents and a competitive rental rate of RM4.50 psf.this 800 acre development enclave there are more than 7,000 Upcoming grade A office building in thispresently has two leading universities, residential, commercial area is a 27 storey tower, The Pinnacle andhospital, hotels, one of the country’s 18 storey office tower which is part of thelargest shopping malls and a theme park. and light industrial Sunway Pyramid extension. This officeAll this amenities and entertainment units surrounding the towers are scheduled for completion byoutlet provides an integrated lifestyle end 2013 and will supply 780,000 sq ftliving. net floor area more space into the office market.Flanked by 4 major highways, Bandar ranging from RM 708psf to RM 923psf.Sunway has a large catchment area with The luxury condominiums, A’marine and The industrial development area coversover 50,000 residents and there are more LaCosta are commanding prices from 3.2 million sq ft space of factory lotsthan 7,000 residential, commercial and RM900,000 onwards. The new launches built in the early 90’s. There three typeslight industrial units surrounding the take up rate hovers around 70%. of factory lots available; Terrace Factorydevelopment. Residential properties command a 25’ x 80’, Terrace Factory 30’x 80’ and higher price due to the maturity of the Semi-Detached Factory 65’x150’. OverResidential township and strong brand image of the the years the price psf of the factory lotsThe latest residential development in developer, Sunway City Berhad. Capital has increased almost 75%.Bandar Sunway is the 178 acre South appreciation of properties in this areaQuay development. It comprises a mix has been growing at a steady rate of 25%- Leisureof bungalows and luxury condominium 35% over 5 years. Sunway South Quay is The highlight of the Bandar Sunwaydevelopments surrounding a 28 culmination of 30 years of development development is Sunway Pyramidacre lake. The 77 units bungalow and effort into perfection. It jells shopping mall and the Sunwaydevelopment, ‘Bayrocks’, has a build up together all the existing developments Lagoon theme park. Sunway Pyramidarea of 6,400 sf to 6,700sf with prices into a complete self sufficient township. Shopping Mall is the first shopping and Approximately 20% of the total entertainment theme mall in Malaysia properties are owned by foreigners. which was opened back in 1997. It has Figure 1: New Residential Developments 1.7 million sq ft of floor area housing over 800 units of retail outlets. The rental rate Project/ Area Price Take up Details fetches an average of RM10psf. Development (acres) Range (RM) rate Sunway lagoon theme park opened BayRocks 21.63 4.7 million 75% 77 units in 1992. There are 88 acres of parks to Luxury Bungalows onwards explore namely Water Park, Amusement Park, Wildlife Park, Extreme Park and A’marine 3.45 0.9 - 1.2 million 80% 242 units Scream Park. It draws close to 35 million Condominiums visitors both local and foreign every year. LaCosta 5.39 0.9 - 2.4 million 70% (Phase 1 - 2 blocks) 377 units Condominiums 30% (Phase 2 - 2 blocks launched in July ‘11) (continued next page)Source: Company data
  3. 3. COVER STORY 3(from previous page) Figure 2: Office SpaceEducation & Healthcare Project/ NetLettable Rent DetailsThere are two universities located Development area (NLA) (RM / psf)here, Sunway University and MonashUniversity Sunway campus. Sunway Menara Sunway 268,978 4.50 Completed in 1993University and Monash University wasopened in 1987 and 1998 respectively. The Pinnacle 580,000 5.50 Under construction.These universities have over 11,000 Expected completion:students, out of which 30% are Year 2013international students from more than Sunway Pyramid80 countries. Sunway International (extension) 200,000 5.50 Under construction.S c h o o l o f f e r s p r o g ra m m e s f o r Expected completion:grades7-11 programmes which are Year 2013taught by fully Canadian certified Source: Company datateachers. It currently has almost 16,000students from 80 different countries. Figure 3: Shopping ComplexSunway Medical centre, a private Project/ NetLettable Average Rent No. of retail outletshealthcare offers specialised and Development area (NLA) (RM / psf)tertiary care services. Equipped withstate of the art medical facilities, it Sunway Pyramid 1,700,000 10.00 > 800has a total of 350 beds, more than100 consultation suites, 12 operation Sunway Pyramidtheatres. (extension), expected completion: Year 2013 11,000 n/a n/a (6 level retail podium) Bandar Sunway is also Source: Company data been earmarked as a leisure and entertainment cluster under the Economic Transformation ProgramHospitality5-star Sunway Resort Hotel & Spa and4-star Sunway Pyramid Tower Hoteland Pyramid Suites & Studio offercomfortable stay for the burgeoningtourist visiting the theme park. This1,234 room hotels has a high occupancyrate of 70%. Sunway Resort Hotel & SpaMoving ForwardBandar Sunway is also been earmarkedas a leisure and entertainment cluster Figure 4: Industrial Offeringsunder the Economic TransformationProgram. As such, more developments Factory Built-up Current Launch Detailscan be expected happening notably in Lots area (sf) Price Pricethe leisure segment. Remaining land (RM / psf) (RM / psf)bank in Bandar Sunway is about 18 acreswith a gross development value of upto RM5.8 billion mostly earmarked for Terrace Factory 2,500 - 3,800 300 - 360 68.00 323 unitsreal estate investment projects like The 25’ X 80’Pinnacle, extension of Sunway Pyramidshopping mall, residences, retail outlets Terrace Factory 3,200 - 4,800 300 - 360 73.00 146 unitsand shop offices. 30’ X 80’Like a jigsaw puzzle everything fits Semi Detached 3,200 - 4,800 300 - 360 55.00 48 unitstogether in creating a sustainable and Factory 65’ X 150’self sufficient township worthy ofrecognition. Source: Company data
  4. 4. SPOTLIGHT 4URBANISING The ETP has specific goals in order to make Malaysia a high-income economyMALAYSIA by the year 2020. The ETP is expected to attract a combined Foreign and Local Investment of USD444 billion byDirector of Performance the year 2020. It will need to create 3.3Management and Delivery million jobs, while increasing Malaysia’sUnit elaborates on ETP and its gross national income (GNI) per capitasuccesses from USD6,700 or RM23,700 in 2009 to more than USD15,000 or RM48,000 in 2020, and through a Gross National Income (GNI) growth of 6 percent per annum, that will allow the country to achieve the targets set. PQ: Where do you think Malaysia hasby S.Sulocana ment goals, while under the NKEA GKL/ comparative advantage?Ahmad Suhaili Idrus is currently Ahmad Suhaili: Traditionally, Malaysia’s KV, EPP1 ‘MNC Attraction’ has a goal ofthe Director for NKRA Urban Public selling points have always been its attracting 100 MNCs to relocate theirTransport and NKEA Greater KL/ strategic location, good infrastructure, regional headquarters to the GKL/Klang Valley under the Government a work force with good English skills KV area. Since the launch of the ETPTransformation Programme (GTP) and and strong leadership that drives the Roadmap on 25 October, already twoEconomic Transformation Programme economy towards transformational MNCs have commenced their regional(ETP) respectively in Performance change. Now with the ETP in place, operations – Schlumberger and PayPal.Management and Delivery Unit Malaysia has a clear value proposition Just recently, InvestKL commenced(PEMANDU). to attract investors. operations with objectives of delivering the targets set under this EPP.He spent the last 30 years in the private PQ: The ETP is now 9 months old,sector mainly in heavy equipment and how has it been received by foreign PQ: The only real estate portion of theinternational oil and gas industries. His investors? ETP is the Greater KL and there are someexperience include technical services, Ahmad Suhaili: The ETP has certainly criticism that it is too narrow a focus.sales and marketing, commercial gas, improved overall investor confidence. What are your views?oil trading, project management and As of 30 June 2011, the ETP has already Ahmad Suhaili:In any programme,transformation. He served in Shell 65 out of 131 EPPs off the ground. This it is necessary to have focus, this willInternational Petroleum offices in accounts for nearly RM170 billion in ensure we do the necessary work toMalaysia,Singapore and the UK at committed investments, both foreign deliver the results. Under the Greaterdifferent periods in his 25 years career and local, that will generate a total KL/KV, the focus is to simultaneouslywith the Shell Group. He then spent 2 of RM220 billion in GNI up to 2020. A achieve a global top-20 ranking in cityyears as COO of a Malaysian company sizable amount of these investments economic growth (as defined by citydeveloping oil and gas projects in Iran come from the private sectors, GDP growth rates) while being amongbetween 2007- 2009. Prior to joining many of which are by international the global top-20 most liveable citiesPEMANDU in January 2010, he was companies. To name a few, Advanced by 2020. To achieve this, Greater KL/Director for Integrated Planning/Social Micro Devices (AMD) has opened a KV has identified nine specific EntryDevelopment in Iskandar Regional new state-of-the-art Global Services Point Projects along four dimensions:Development Authority (IRDA)based in Centre in Cyberjaya (approximately Magnet, Connect, New Places, EnhancedJohor Bahru. 500 million in investments). Under the Services. Greater KL/KV is also seen as Healthcare NKEA, Biocon is investing a catalyst for growth in the remainingHe actively speaks at conferences and RM500 million in the establishment of 11 NKEAs as well as other economicseminars on PEMANDU’s activities and a state-of-the-art facility at BioXcell, sectors, including the real estate sector.efforts of the ETP and GTP. Real estate a custom-built biotechnology parkMalaysia caught with him through an and ecosystem in Iskandar Malaysia, PQ: What is the primary role of Investemail interview to gain insights on ETP Johor. General Electric has invested KL and what are Invest KL’s KPIs?and its initiatives. RM30 million into the development of Ahmad Suhaili: InvestKL’s primary a regional Diagnostic Services Nexus objective is to attract 100 of the world’sPQ: Other countries in the region (DSN), a teleradiology hub. Details of top MNCs to locate their regionalhas similar strategic plans to ETP (ie. these investments, and many more are headquarters in Greater KL/KV. TheseIndonesia’s new infrastructure plans available on our website. companies are expected to deliverannounced last week and Singapore a total of RM40 billion in GNI, whileaspiring to be R&D hub of the region). PQ: Pemandu has targeted MNC’s to generating approximately 230,000 newHow do you think Malaysia compares to come to Malaysia, how many has come jobs by the year 2020.those in terms of delivery? into Malaysia since Pemandu’s initialAhmad Suhaili: The ETP is unique in the foray overseas? Have there been anysense that it is very focused, having fine tuning of Pemandu’s proposalsidentified 12 National Key Economic since the beginning?Areas (NKEAs) and under it, 131 Entry Ahmad Suhaili: All the NKEAs are For more information on ETP, visitPoint Project or EPPs. expected to deliver on foreign invest- http://etp.pemandu.gov.my
  5. 5. SPECIAL REPORT 5 PENANG Figure 6: Following are some of the on-going and up-coming urbanisation development by the Goverment RESIDENTIAL Projects Investment Value (RM’000) SECTOR 1) Second Penang Bridge 4,500,000 UPDATE 2) 3) Penang International Airport (expansion) Swettenham Port (expansion) 211,000 97,000 NAPIC report shows that the 4) Butterworth Sentral Bus Terminal 15,500 unsold residential properties in 5) Mengkuang Dam (expansion) 1,200,000 6) Penang Hill railway development 63,000 Penang is the lowest compared to 7) National Key Economic Area (NKEA) in other states in Malaysia electrical and electronics sector 635,000 8) Northern Corridor Economic Region (NCER) logistics development 100,000 9) Balik Pulau Polytechnic 175,000 10) Pharmaceutical and Nutraceutical Institute 128,000 11) Jelutong treatment plant 523,000 12) Kepala Batas Medicine and Dentistry Institute 186,000 by S.Sulocana 13 Road upgrading between Balik Pulau town and Genting 72,000 Despite concerns on rising property 14) Upgrading of Penang Bridge 503,000 prices, the buying sentiment for residential properties in Penang are Total 8,409,000 still strong. MPI visited 8 developers to gain insight on the market trends and Source: Company data, Various website performances of the new launches. lability of land in the island coupled with Unsold stock in the Kuala Lumpur, Johor According to the property developers, increasing demand from widespread and Penang declined 4.3%, 2.1% and the average take-up rates for new dispora of Penangites. This diaspora 2.8% respectively. Average property launches are a healthy 85%, showing purchase properties for retirement, prices in Penang hovers approximately no sign of softening demand. Capital holiday homes and homes for their RM400 – RM900 psf. Robust economic appreciation is hovering around 20-30% families. Presently, foreign buyers development has put property prices in over a period of one to two years and this constitute 3-5% of total property Penang almost at par with that of Klang is attracting continued interest from transactions and majority of this Valley and Nusajaya,Johor areas. property buyers. According to Dr. Jason buyers are from Singapore, Hong Kong, Teoh Director of Henry Buther (Penang) Indonesia, UK and China. Foreign Direct Investment (FDI) into the Malaysian, the most sought after areas state has increased tremendously over are Gurney Drive, Pulau Tikus, Batu The unsold residential property data the years. In year 2010 Penang attracted Feringghi, Tanjung Bungah and George published by the National Property RM10.45b worth of FDI compared to RM Town. “Upcoming areas which is showing Information Centre (NAPIC) shows that 1.45b in 2009. The Penang government increased interest from buyers are areas the demand for residential properties in is also actively rolling out infrastructure surrounding the Second Bridge, areas Penang is firm as the residential stock projects to increase the standard of living along the Jelutong Expressway, Green overhang in the state is the lowest and stimulate growth. Presently, a total Lane, Relau, Sungai Ara and Balik Pulau”, compared to Kuala Lumpur, Selangor of RM8.4b worth of projects is slated to he added. and Johor. Unsold residential property in come on stream over 5 years (see Figure Penang is on a decreasing trend recording 6). Dr. Jason Teoh noted that the residential a 45% decline in year 2010 compared outlook for 2011 will see a strong to 2009 (see Figure 5). Overall unsold The second Penang bridge which is demand with similar trend moving into residential property in Malaysia declined expected to be completed by 2014 2012. This is primarily due to limited avai- 1.2%. will help to regulate movement and reduce congestion in the island. TheFigure 5: Unsold Residential Property (units) move of the said urbanisation shows the government’s efforts to reduce Year Klang Kuala Selangor Johor Penang Others Malaysia time and expenses in commuting Valley Lumpur and transportation while improving opportunities for jobs and education. All 2004 28,293 3,604 25,319 17,817 3,550 29,218 79,508 this catalytic developments is expected 2005 24,939 2,713 22,226 19,735 3,173 32,859 80,706 to lead the growth of Penang’s population 2006 27,471 7,751 19,720 21,523 1,393 35,104 85,491 and consequently trickle positive spill- 2007 20,961 5,931 15,030 18,407 1,164 35,566 76,098 over effect on the residential property 2008 19,630 5,808 13,822 19,015 1,888 35,846 76,379 demand in Penang. 2009 18,752 6,612 12,140 13,475 2,483 30,696 65,406 2010 15,952 6,327 9,625 13,095 1,366 34,198 64,611Source: NAPIC
  6. 6. SPECIAL REPORT 6 Figure 7: Average House Price in Penang, 1Q2008-2Q2011 RM’ 000 Malaysia Property Gallery, Singapore will 500 be featuring ‘Best of Penang Properties’ 450 from 16 September to 22 September 2011. Property developers that will 400 be participating in the event are MTT 350 Properties & Development Sdn Bhd, 300 Selangor Dredging Berhad, Plenitude Berhad and Magna Putih Sdn Bhd. There 250 will also be seminars and talks on real 200 estate opportunities in Penang by Datuk 150 Lee Kah Choon of InvestPenang, Dr. Jason Teoh of Henry Butcher Malaysia (Penang) 100 Sdn Bhd and Gavin Tee of Swhengtee 50 International Sdn Bhd. 0 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 For more information please contact A.Lalitha: Legend: Landed property High rise property lalitha@malaysiapropertyinc.com Source: NAPICFigure 8: Residential Property Projects and Take-up rate in Penang Developer Projects Total Area Price Range Take up rate (acres) (RM / psf) IJM Land Berhad The Light Linear, The Light Point, 152.00 450 - 930 65% The Light Collection 1 & 2 E&O Property Seri Tanjung Pinang 240.00 707 100% (landed) Development Berhad 80% (strata) MTT Properties & Botanica.CT 300.00 275 - 442 60% Development S/B Selangor Dredging Bhd Dedaun 10.70 1,180 - 1,600 70% Plenitude Berhad Bayu Ferringi Condominium 10.76 516 - 539 80% Magna Putih S/B Mansion One 3.00 670 - 1,100 80% Belleview Group 1) 6 Western Residences 1.00 1,000 - 1,200 50% • Bungalows, 6 units 2) Bukit Dumbar Residences 3.00 400 - 430 90% • 3 storey terrace 3) All Seasons Park Condominium 20.00 350 - 700 75% 4) Plamyra Residences Condominium 12.00 390 95% Ivory Properties 1) Birch Residency 2.80 450 - 850 100% Group Berhad (Penang Time Square - Phase 2) • Condominium, 359 units • Retail Lots, 159 units 2) The Zen @ The View 0.84 450 (build up) 90% • 3 storey bungalows with a 100 (land) private lift, 7 units 3) 10 Island Resort 3.00 520 96% • Condominium, 266 units • Semi-detached villas, 11 units 4) The Peak Residences 3.40 396 95% • Condominium, 609 units • Commercial, 30 units 5) Aston Villa 11.00 226 (Shop lot) 90% • Shop lots 195 (Terrace) • Terrace & Semi-detached 210 (Semi-D)Source: Company data, MPI Research
  7. 7. INVESTOR PREFERENCES 7RIDING ON 2010, bilateral trade between the two sides reached USD136 billion, a year-on- Figure 10: Asean-China Trade, 1996-2008THE RISING year increase of 55%. 120 Imports and exports in billions of U.S. dollars“REDBACK” “Asia is the place to be amidst the global crisis” Mr. Wellian Wiranto, ASIAN 100HSBC Bank’s Activate Asia ASEAN- Economist (Singapore). Limited said. This sanguine view is actually backed by 80China business forum showcases real economic growth, but he cautionedChinese important on the world 60 that ASEAN growth banked on a stablestage global economic condition as these 40 countries’ inflations depend on prices of commodity prices notably the oil price 20 trend. 0 Mr. Thomas Poon, Head of Business 1996 1998 2000 2002 2004 2006 2008 Planning and Strategy (Hong Kong) mentioned that by 2020, the Chinese government will be working towards Legend: Imports from China making the RMB a choice reserve currency Exports to Chinaby Afiq Syarifuddin which is fully convertible. Currently, Source: Asean Statistical YearbookWhat do the US Dollar, Chinese Hong Kong is the most developed RMBRenminbi (RMB) and Euro have in offshore centre with annual trade of of China’s GDP. This small percentage ofcommon? Monetary strength, and this RMB5.34 billion (USD0.83 billion). If the trade relations shows that Malaysia islies on the vastness of the economic area RMB becomes the next international still a long way from leveraging china’sit covers. In the Activate Asia ASEAN- currency, investment in RMB can economic prowess.China: “Awakening of A New Economy” mitigate paper loss due to hedging costbusiness forum organized by HSBC Bank and risk-management exercise on the With Malaysia’s Economicon 19 July 2011, economists and experts USD. Mr. Poon is confident that RMB is Transformation Programme picking upwas upbeat on the potential available in Asia’s redback in the future as the US’s its pace, Malaysia should ride on China’sthe ASEAN region. greenback. investment, attracting more inflows into the country. Due to China’s sheerIn his opening speech Mr. Jon Addis, China’s investment in ASEAN countries size, the economies of scale would allowExecutive Director and Deputy Chief has also grown over the years since the their players to spur the constructionExecutive Officer HSBC (Malaysia) ACFTA was ratified. Recently, China industry in Malaysia and furtherBerhad said that ASEAN-China Free made a major investment in Thailand increase competitiveness.Trade Area (ACFTA) is the largest by constructing a large trade centregeographical economic area and the 3rd complex worth USD1.5 billion located Real estate investments are slowlargest in GDP growth. This has lead to at a short distance from Bangkok’s new by Chinese investors in Malaysia.the push for the RMB towards becoming international airport. This trade centre To increase interest, MPI is activelythe choice primal settlement for trade, complex is slated to be the largest organising events in China.with the emerging markets now leading distribution centre in ASEAN and thethe way. second largest in Asia.From 2003 to 2007, year-on-year ASEAN- Export dependency from Malaysia toChina trade has been growing at an China is at 1.4% of Malaysian GDP and Following are upcoming MPI Chinaaverage of 30%. During the first half of China to Malaysia constitutes only 1% Market Events open for participation from Malaysian developers and realFigure 9: Growth Rates in Emerging Asia estate companies. (Real GDP, percentage change over previous year) • 16-17 September 2011: Malaysia Countries 2008 2009 2010 2011f 2012f Property Showcase, Shanghai (f = forecast) • 23 September 2011: Malaysian Investment Forum, Beijing China 9.6 9.2 10.3 9.3 8.5 India 6.2 6.8 10.3 8.5 8.0 For more information please contact Indonesia 6.0 4.6 6.1 6.0 6.0 James Choo: Malaysia 4.7 -1.7 7.2 4.3 5.0 james@malaysiapropertyinc.com Singapore 1.5 -0.8 14.5 5.5 4.5 South Korea 2.3 0.2 6.1 4.3 4.7 Thailand 2.5 -2.3 7.8 4.0 4.5 Emerging Asia 6.9 5.9 9.5 7.9 7.4Source: Allianz
  8. 8. NEWSFLASH 8 Figure 11: Foreign Direct Investment Figure 12: Foreign Direct Investment (FDI)ETP EFFORTS Flows, 2010 into Malaysia, 2001-2010TAKING SHAPE Asean Countries USD’million (RM’ million) 35,000Despite the surging commodity prices, Singapore 38,638 30,000rising inflation in emerging markets and Indonesia 13,304 25,000sovereign debt crisis in PIGS countries Malaysia 9,103 20,000and the US, Malaysia managed to Vietnam 8,173*attract healthy flow foreign direct Thailand 5,813 15,000investments (FDI). FDI increased a Philippines 1,713 10,000whopping 448.6% from RM5.0b in 2009 Cambodia 783 5,000to RM27.7b in 2010. Manufacturing Myanmar 756* 0remained the largest contributor in Brunei Darussalam 496* 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010terms of attracting FDI inflows with Laos 350*54.9% of the total FDI inflow of year2010 followed by services sector with Source: UNCTAD Note: * estimates Source: Department of Statistics, Malaysia34.1%. Malaysia ranked third among theASEAN countries, after Singapore and Figure 13: Economic Transformation Programme (ETP) UpdatesIndonesia, which attracted FDI inflows as at 13th June 2011of USD38.6b and 13.3b respectively. Announce- Initiatives Investments GNI JobsThe primary reason for the ment Date (RM’million) (RM’million) Createdincrease is attributed to theMalaysian Governments’ Economic 13-Jun-11 15 63,378 66,313 63,531Transformation program which was 19-Apr-11 12 11,156 16,617 74,457implemented to propel economic 08-Mar-11 23 14,777 20,056 88,404growth and improve living standards. 11-Jan-11 19 65,588 31,540 52,404Since the launch of the ETP on 25 30-Nov-10 9 9,574 85,522 70,500October 2010, a total investment of 25-Oct-10 9 5,310 100 13,100RM 169.78b from 87 projects has beensecured. These investments has created Total 87 169,784 220,147 362,396approximately 362,396 jobs and raisedRM220.15 billion in GNI. Source: PEMANDUJOHORPREMIUMFASHIONOUTLET OPENSON 11.11.11 On the auspicious date of 11.11.11, Outlets, a division of Simon Property the Johor Premium Outlet (JPO) will be Group. There are 52 such outlets opened, making it the next shopping including 41 in the United States, one in haven for top designer brands. Located Mexico, eight in Japan and one in South on an 18ha site, it will sell products Korea . JPO would be the first in South- that are at least 25%-60% cheaper than East Asia. malls. Presently, it is 80% completed. Designer brands like Burberry, Coach,To ensure interconnectivity, a flyover Polo, Ralph Lauren, Prada, Armani, is being completed on the Second Link Canali, Ferragamo, Tod’s, Zegna, Nikebetween Singapore and the North-South and Puma will be featured in this Expressway. The outlet is planning RM149mil outlet. to bus in visitors from Malaysia and Singapore, and use Senai airport to draw JPO is a 50-50 joint venture between in regional tourists from neighbouring Genting’s 54.6% owned subsidiary, countries to drive in traffic. Genting Plantations Bhd and Premium
  9. 9. CEO’S SPACE 9OF FAILEDLAND SALESAND FAKELOANSby Kumar TharmalingamTwo things happened last month in thelocal real estate world that provided uswith much thought. Developments along Jalan Sultan Ismail, Kuala LumpurThe first one was when UDA was denied we havea sorry spectacle of UDA I replied to her that the bank was athe sale of its prime property in Jalan requiring a bail-out in spite of the fact fraud and that Bank Negara regulatesSultan Ismail by the Ministry of Finance. that it has had considerable government all banks in Malaysia and I have neverAnd the second was an enquiry from funding for most of its life. Hopefully, heard of this bank before. But it was tooan estate agent in Greece about the the new management now wholly late, she has already sent a processingworkings of a so called bank in Malaysia. owned by the government of Malaysia fee of RM5,000 to the bank to processLet me explain. would see a new resurgent of UDA for the US dollar loan and subsequently the future. she emailed me again and said thatUDA’s sale of its prime location in Jalan they were going to send her the moneySultan Ismail was defended by the by the 25th July. I reiterated that therecompany as necessary to revitalize its I remember that in one is no such bank in Malaysia but herfinances but rejected by the Ministry briefing in 1984, UDA was client insisted that the correspondenceof Finance. The Urban Development proud to admit that they was valid and so on the 25th of July sheAuthority was set-up in the 70s based on received another letter saying that thethe Urban Re-Development Authority had a thousand properties Bank Negara of Malaysia had blockedof Singapore on a similar format with in their portfolio taller than the transfer of the funds and that theythe sole purpose of making sure that 7-storeys, which was at that would require a further fee to releasecommercial centres in major cities in time a real achievement the funds from Bank Negara MalaysiaMalaysia had a Bumiputra content. It of US$3,000.was run like Government division andfor the next 10 years it received large On the second more serious issue, I At this point, I had already made aallocations of funds to allow it to met Elvina Gelepis, an estate agent complaint to Bank Negara and thepurchase prime real estate whether from Athens, Greece when she visited company is under investigation.they came up for auction or for sale Malaysia for an International Realso that they could be re-branded and Estate Conference in Kuala Lumpur in Malaysia is sometime in theBumi enterprises will be placed there in 2002. Very impressed by Kuala Lumpur, international news for the wrongtandem with others. At that time Bukit she stayed here for a week along with reasons and this kind of scam isBintang Plaza was the flagship with the other delegates from Greece and she promoted all over Europe due to theirMetrojaya as the anchor. went back to practice real estate agencyfinancial crisis, so people everywhere in Athens. 3 weeks ago she sent me an are being cheated by such companiesOther than the Bukit Bintang Plaza email asking whether I could assess the who are now also using Malaysia as theirthere were housing projects in Penang, credibility of a bank which had promisedbase of operations. Let us not forget theKedah and in Johore and also parts of to lend 1 million US dollars to one of her fake story of a rich Malaysian tycooncities and commercial developments clients who wanted to buy a commercial buying a US$4 billion gold plated boat.around small towns. property in Athens and hence the bank The positive thing about that is should “requested” a processing fee. Hedge Funds and private equity thinkI remember that in one briefing in 1984, there are rich Malaysians with surplusUDA was proud to admit that they had My office checked the veracity of the cash for such frivolity, they may make aa thousand properties in their portfolio bank and discovered that it was set beeline for Kuala Lumpur. Is that goodtaller than 7-storeys, which was at that up similar to a Nigerian scam in using for us?time a real achievement. Malaysian offices in a prime building in Jalan Sultan Ismail and offering itsWhen UDA was privatized, things services for “funds” from Malaysia forturned very quickly downhill and today loans.
  10. 10. IN A NUTSHELL 10 AN EXPAT Figure 15: Mercer’s Cost of Living Ranking by Selected CIty, 2010 and 2011 DESTINATION City Country March 2011 March 2010 Rank Rank Change in Rank Despite rising inflation and Tokyo Japan 2 2 0 Ringgit appreciation, the cost of Singapore Singapore 8 11 +3 living in Malaysia is still low as Hong Kong China 9 8 -1 compared to other countries in the Rio De Janeiro Brazil 12 29 +17 Sydney Australia 14 24 +10 region London United Kingdom 18 17 -1 Seoul South Korea 19 14 -5 Beijing China 20 16 -4 Paris France 27 17 -10 New York United States 32 27 -5 Prague Czech Republic 47 47 0 Kuala Lumpur Malaysia 104 138 +34 by Afiq Syarifuddin & Grace Chang Source: Mercer Kuala Lumpur’s cost of living is nese renminbi. Malaysian ringgit has Figure 16: Index of Ringgit Performance ranked 104 by consulting fim Mercer, surged 8% against the U.S. dollar over against Major Trade Partners* indicating a relatively low cost of living the past year. According to Malaysian Index (Dec 2008 = 100) compared globally. Cost of Living Index Institute of Economic Research in their 112 as characterized by Mercer takes into 2Q11 Malaysian Economic Outlook account 200 odd items constituting report, MYR/USD is projected to average 110 a basket of goods including property- around 3.00 in 2011 and improving 108 based commitment, household macroeconomic fundamentals will see 106 expenses, transportation cost and an average MYR/USD of 2.95 in 2012. currency fluctuation to reflect a fair 104 expatriate compensation package. Malaysia subsidises petrol prices 102 for its local consumers. However, to 100 Inflationary pressures are plaguing better manage the country resources, many Asian cities and Malaysia is not it is slowly trying to reduce subsidies 98 MYR appreciation spared. Consumer prices rose 3.5% in of various items including petrol and 96 June 2011 from a year earlier, the most looking at ways to further improve May-10 Mar-11 Aug-10 Dec-08 Dec-10 Feb-10 Apr-09 Oct-09 since March 2009. Malaysian ringgit public transportation system to reduce Jul-09 has also strengthened against the US impact on consumers. Nonetheless, dollar to an average of In July, the ringgit with current subsidised petrol and no Source: Bank Negara Malaysia exhibited a mixed performance. In congestion charges, transportation cost Note: Currencies in the index: USD, CNY SGD, JPY, EUR , recent months, ringgit has strengthened has been kept minimal. Each currency carries equal weight against the US dollar, the euro and Chi- Property prices in Kuala Lumpur Driven by economic growth, it is inevitable Figure 14: Cost of Living Index by City city centre is considered affordable that cost of living will continue to rise as at July 2011 compared to neighbouring countries’ with time. To continue being a viable capital cities. As reported in National business destination, Malaysia is workingCost of Living Base City: New York = 100 Property Information Centre’s 2010 hard towards making Kuala Lumpur one Index 131.47 Property Market report, a condominium of the top livable cities in the world. 140 120.45 120.5 127.9 in Bangsar is transacted at about 120 RM611 per sq ft in the city centre while Plans are underway to achieve this 94.57 99.55 the rental average of the same unit is through economic transformation 100 81.11 RM5,500 per month. initiatives such as public transportation 80 system revamp with the construction 56.55 50.82 With about four million sq ft of office of 150km of an initial MRT line to 60 space located in the Golden Triangle supplement existing LRT and Komuter 40 slated to complete by the end of 2014, rail services which will begin this year at Kuala Lumpur aspire to attract 100 an estimated cost of RM36.6 billion. It is 20 multinational companies (MNC) by year through these initiatives and more that 0 2020. Malaysia is wooing MNCs to set rising cost of living could sustain and up regional operations here to create remain attractive to prospective MNCs. Kuala Lumpur dynamism in the service industry and Hong Kong Singapore London enhance the local economy. Cost of living Sydney Beijing Tokyo Seoul Paris is one of the most important factor expatriates look at when planning to Source: www.numbeo.com relocate and live.
  11. 11. GRAPHICALLY SPEAKING 11BUILDING MATERIAL COST INDEX BY STATE(HIGH RISE RESIDENTIAL BUILDING)Figure 17: Peninsular Malaysia (2002=100) Building Material Cost Index 170 160 150 140 130 120 110 100 2002 2003 2004 2005 2006 2007 2008 2009 2010 Legend: Zone A - Penang, Kedah & Perlis Zone D - Johor Zone B - Perak Zone E - Pahang Zone C - Kuala Lumpur, Selangor, Negeri Sembilan & Melaka Zone F - Kelantan & Terengganu Source: Construction Industry Development Board (CIDB)Figure 18: Sabah & Sarawak (2003=100) Building Material Cost Index 145 140 135 130 125 120 115 110 105 100 2003 2004 2005 2006 2007 2008 2009 2010 Legend: Zone G1 - Kota Kinabalu Zone H1 - Kuching Zone G2 - Tawau Zone H2 - Sibu Zone G3 - Sandakan Zone H3 - Miri Source: Construction Industry Development Board (CIDB)
  12. 12. 12ABOUT USMalaysia Property Incorporated is a Government initiative setup under the Economic Planning Unit to drive investments inreal estate into Malaysia.As the first port-of-call for real estate investment queries,Malaysia Property Inc. connects interested parties throughan extensive network of government agencies, private sectorcompanies, real estate firms, business councils and real estate-related associations.MPI has two core objectives; to create international awarenessand to establish connections between foreign interests andMalaysian real estate industry players, ultimately contributingto real estate investments into the country.For further information andup-to-date tracking of Malaysian real estate data, visit:www.malaysiapropertyinc.comFor further enquiry, write to:info@malaysiapropertyinc.com Disclamer: This report contains information that is publicly-available and has been relied on by Malaysia Property Incorporated on the basis that it is accurate and complete. MPI is not liable if the case proves to be otherwise. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and the same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed.

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