MPI Quarterly Newsletter - July 2011


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MPI Quarterly Newsletter - July 2011

  1. 1. FA C ILITAT 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 | July 2011 GALLERY UPDATE Malaysia Property Gallery in Singapore OPINION Indonesia Eyeing Close Ties with Malaysia for Business Growth Expanding HorizonsRISING EXPECTATIONS REGIONAL FOCUS Johor: A Mega City in the Making SPOTLIGHT Going Green JOHOR - SINGAPORE CAUSEWAY
  2. 2. GALLERY UPDATE MALAYSIA in the region of RM450 - RM700 psf. Earning Singapore Dollars and buying into Malaysian real estate is becoming an increasingly PROPERTY common trend among the island’s populace. The recently-announced joint venture between GALLERY IN the two sovereign wealth funds Khazanah Nasional and Temasek Holdings to jointly SINGAPORE develop the former KTM Railway station in Tanjung Pagar and more importantly, to develop a parcel of land within Iskandar Malaysia for a wellness retreat, can only spell good news for the future of Singapore- By Abraham Philip Jacob Malaysia relations. In this case, Iskandar Malaysia offers the space and lifestyle that is lacking on the island republic. Malaysian development can still command a healthy market slice from the Singapore In the recently concluded general elections in investment crowd and there is eager Singapore, real estate was arguably the most anticipation for more new Malaysian launches heatedly contested topic. New Minister, Khaw in our Singapore Gallery, driven by the spirit of Boon Wan in an immediate response, has cooperation between the two governments, attempted to cool down the runaway housing the favourable exchange rate and the "bargain prices in Singapore by announcing the building pricing" that Malaysian properties offer. of more HDB flats, the dwelling of choice for most of Singapore’s populace. Total sales since opening in October 2010 amounted to RM95.9 million and moving Whether this move will pay off will depend forward, we are confident of increased sales largely on factors such as the recovery of the volume for Malaysian properties. global economy, the continued position of Singapore as the regional hub for corporations, Abraham Philip Jacob is its strong exchange rate and its burgeoning Vice President I , Investment Promotions at MPG economy. There is an increase in hiring, talent in Singapore. is in short supply, real estate prices are moving upwards and there is an inherent pressure building up on its economic system. Supply simply cannot keep up with the current demand. Taking the cue from this scenario, developers in Malaysia are in the best position to take advantage of the high prices that are prevalent across the border. The favourable exchange rate towards the Malaysian Ringgit helps local developers. Typical upper middle class condominiums in either KL, Penang or Johor Bahru would cost1 real estate malaysia july 2011 2
  3. 3. OPINION INDONESIA EYEING CLOSER TIES WITH MALAYSIA FOR BUSINESS GROWTH ASIDE FROM CONSIDERING MALAYSIA AS A MEDICAL TOURISM DESTINATION, However, over the years, increasing property commerce in Indonesia, visited the Minister INDONESIANS ARE prices and healthcare costs have prompted them to look beyond Singapore. The obvious of International Trade and Industry, Dato’ Sri Mustapa Mohamed in February 2011. NOW COMING OVER TO choice has been Malaysia, where property EXPLORE INVESTMENT NUMBER OF INCOMING FOREIGN prices are still attractive and the standard of medical services remains excellent. The delegation was led by Dato’ Sri Dr Tahir, the Executive Chairman of Mayapada Group, OPPORTUNITIES PATIENTS YEAR 2002–2010E who said that besides the property and hotel 550 400 Indonesia is currently experiencing industries in Malaysia, the group is looking at 500 exponential growth backed by strong domestic the possibility of buying up or entering into 350 Number of Foreign Patients (000) Revenue (RMMillion) 450 consumption, increasing commodity prices and joint-ventures with private hospitals due to the By Hizzan Hamid 400 300 rising foreign direct investments. According to increasing demand. He added that despite large 350 250 the International Monetary Fund, Indonesia’s numbers of Indonesians visiting Malaysia to 300 GDP growth rate is forecasted to reach 6.2% seek medical treatment, there are many more 200 250 and 6.7% in 2011 and 2012 respectively. who are still unaware of this available option. 200 150Back in 1989, Tun Mahathir, the then His decision sent a strong and clear signal 2008 and 2009. According to Frost & Sullivans 150 100 Foreign direct investment in the country One of Indonesia’s largest conglomerates, 100Prime Minister of Malaysia, complained to the rest of the world that the quality of principal consultant of healthcare Asia Pacific, 20 reached a record of USD9.8 billion in 2010. Ciputra Group, a major property development 50about having persistent shoulder pains. An Malaysia’s physicians and its hospitals were Dr. Pawel Suwinski, at this growth rate, the The Indonesian economy was not hit by the company in Indonesia, is also eyeing Malaysia 0 0electrocardiogram was done and he was told on par with those of the most developed revenue garnered from this sector will increase 2008/09 global financial crisis as it relies heavily as a next potential investment destination. 2010E approximately 90% from RM204million in Currently, they are undertaking large scale 2006 2003 2004 2005 2006 2007 2008 2009he would have to undergo a coronary as soon countries. The message was: If the Prime on domestic consumption. All these factorsas possible. Everyone expected him to go Minister of Malaysia trusts his doctors, so can (2006) to RM390million (2010). have contributed to enhancing the prosperity urban development in Hanoi, Vietnam and the Number of Foreign Patientsabroad to get it done; instead, he summoned the rest of the world. Revenue (RHS) of individuals and corporations. first and biggest township development inMalaysia’s top cardiac surgeon and directed The number of medical tourists visiting note * 2010E figures are estimated Phnom Penh, Cambodia. SOURCEhim to operate on him. Mahathir’s message may or may not have been Malaysia has more than quadrupled since Association of Private Syahril Syazli, Economic Counsellor at the calculated to send just that message, but 2002 and the trend has been growing despite Hospitals of Malaysia Embassy of Malaysia in Indonesia said the Malaysia Property Inc will be organising aHis decision caused a kerfuffle amongst his inadvertently or not, it marked the beginning the 2008/09 sub-prime crisis. The majority of country’s economic growth has resulted in property exhibition in Jakarta, IndonesiaCabinet members and his counterpart in of regional interest in what Malaysia’s medical foreign visitors seeking medical treatment in Indonesian entrepreneurs venturing overseas from 11 to 13 November 2011. This B2B andMalaysia’s southern neighbour. Tun Daim sector could offer and spurred the growth of a Malaysia are Indonesians (70%) followed by to expand and diversify. B2C exhibition will showcase MalaysianZainuddin, the then Finance Minister, flew new industry – medical tourism. Singaporeans (12%), Europeans (5%), Japanese companies comprising developers,in an American heart specialist to Kuala (4%), Indians (3%) and others (6%). A delegation of Indonesian Chinese captains of healthcare and education companies,Lumpur to oversee the operation. Singapore Malaysia has leveraged on this by globally the industry known as PERMIT (Perkumpulan government-linked companies and economicPrime Minister Lee Kuan Yew offered to send promoting its position as a medical tourism Indonesians prefer to seek medical treatment Masyarakat dan Pengusaha Indonesia corridor corporations. The event will beprominent Australian heart specialist Dr Victor destination of choice. The Malaysian in Malaysia due to the close proximity, similar Tionghoa) who are members of KADIN (Kamar co-hosted with the Ministry of InternationalChang at his country’s expense. government’s efforts to position Malaysia culture and language. Although Singaporeans Dagang dan Industri), the biggest chamber of Trade & Industry, KADIN and PERMIT. as a world-class healthcare services continue to remain the largest foreign For more information, please contactTun Mahathir remained adamant: provider has spurred the emergence of purchasers of Malaysian property, it is the COST COMPARISON (USD) Malaysian medical system was good well-equipped hospitals, first-class medical Indonesians who are making a significant Procedure USA UK Germany Singapore Malaysiaenough for him. facilities and best expertise from the impact on the medical tourism sector today. professionals. The health tourism website Heart Bypass (CABG) 30,000 27,395 14,310 9,643 9,220 has been set This was not always the case. Traditionally, Hip Replacement 44,816 21,335 10,856 8,359 5,000 up by the Malaysian government to assist affluent Indonesians, especially from Eastern Cataract 5,510 5,296 2,159 1,433 895 medical tourists globally to acquire more Java, considered Singapore to be the preferred information and understand the regulations destination when it came to seeking medical Rhinoplasty 6,000 8,264 6,168 4,478 2,500 and procedures in seeking medical treatment. services because of its proximity, excellent Eye Tuck (Both eyes) 5,500 8,401 3,454 2,388 1,425 clinical services and sophisticated healthcare Tummy Tuck 8,000 10,227 4,318 4,500 3,395 As a result of all these initiatives, the Malaysian facilities. Many of them also bought property in Singapore for convenience due to their SOURCE medical tourism industry has been experiencing KPJ Healthcare consistent growth at a rate of 15% throughout frequent travels there.3 real estate malaysia july 2011 4
  4. 4. OPINION NEWS EXPANDING BRIDGING ACROSS HORIZONS TO EAST MALAYSIA SPREADING MPI By S. Sulocana By Afiq Syarifuddin INITIATIVES TO SARAWAK AND SABAH DEVELOPERS The Ciputra Group is a leading property developer in Indonesia involved in township development in more than 20 cities. They also have businesses in Vietnam, Cambodia and China and are constantly seeking new markets How would your business Sabah and Sarawak offers untapped, unique Areas identified are the Tanjung Manis cluster in the region. model be in Malaysia? real estate investment opportunities with earmarked for a halal hub; Mukah cluster for The most difficult part of capital appreciation growth in the long run. Smart City, Services, R&D and Education Hub; MPI caught up with Ciputra Group Director entering a country to do Realising this potential, Malaysia Property Inc Samalaju cluster as the center for heavy and Artadinata Djangkar during his recent visit property development is has expanded its coverage to East Malaysia in energy-intensive industries; Baram cluster to Malaysia, during which he shared his views securing land banks. As an effort to raise awareness on its initiatives for Oil Palm cultivation and eco-tourism; and insights on the real estate market and his such, we are looking for and activities and how the local developers can and Tunoh cluster for Forestry, Plantation group’s expansion plans. joint-venture opportunities be part of it. A one-day briefing was held on 5 and Agricultural industries. The current ARTADINATA DJANGKAR with Malaysian companies July 2011 in Sarawak and 7 July 2011 in Sabah. investment breakdown for SCORE is RM67mil to embark on our township (Government-initiatives) and RM267mil development projects. So In both states members of the Sarawak (Private-initiatives). Interest from Chinese far, we have met up with Housing Developers Association (SHEDA) and and Korean investors have been rising in thisMPI: Besides township What makes Malaysia MRCB, UEM Land Corporation Sabah Housing and Real Estate Developers energy and resource rich state, Malaysia isdevelopment, what other attractive to your company? Berhad and Iskandar Region Association (SHAREDA) congregated to leading in Halal food certification especially forbusinesses is Ciputra Malaysia is attractive because Development Authority to gain insights on how they can leverage the Middle East market which India and China Kota Kinabalu, Sabah (7 July 2011)involved in? of the close proximity, explore opportunities. and participate in activities to promote wish to penetrate.Artadinata: We are involved economic growth, minimal their respective real estate investment Kota Kinabalu aims to be the most livablein commercial projects cultural differences, What opportunities are there opportunities. tourism state in Malaysia by 2015. Sabah isas well. We have a mixed transparent regulations, for Malaysian companies well known internationally for its diversedevelopment project called conducive investment to embark on property Kuching, Sarawak (5 July 2011) and vibrant tourism industry. By leveragingCiputra World in Jakarta’s environment and the development in Indonesia? on this, Sabah plans to brand itself as theCentral Business District area Malaysian Government’s There are vast opportunities. With strong demand exceeding current destination for business and tourism. Kotawhich comprises an office upbeat efforts in facilitating Indonesia has a huge supply for housing worth above RM500,000 Kinabalu is developing eco-tourism projectstower, a hotel by Fairmont investment. We want to population of 238 million in Kuching, the Sarawak market can prove to such as the Karambunai project which isRaffles Hotels International explore opportunities in and its GDP is expected to be a formidable investment destination for part of the Kinabalu Gold Coast locatedGroup, serviced apartments Malaysia, especially in Kuala reach 7 to 8 per cent in 2011. foreigners. The Sarawak State Government in Tuaran, the Jesselton waterfront andby Ascott Singapore and a Lumpur and Johor Bahru. The Indonesian economy initiative through the Sarawak Corridor of the Oil Palm cluster which has generatedshopping complex by Lotte, Besides that, Malaysia has a relies heavily on domestic Renewable Energy (SCORE) is the primary interest amongst Korean investors.Korea. The total gross floor large Indonesian population consumption, hence it is catalyst in creating spillover from the heavyarea is 6 million sq ft , with who are working and studying shielded from the global industries and manufacturing projects to Presently the Korean population residing ingross development value of here that we can tap into. economic crisis. The real housing and town developments. Kota Kinabalu stands at 900 people who haveUS$700 million over a period estate outlook in Indonesia primarily invested in the condominium market .of four years. What value-added features is very promising this year; Nonetheless, the current housing market scene can you bring from your home for instance, the price of is mainly fueled by local purchasers due to theApart from Vietnam, base in Indonesia? high-rise residential units has windfall from rising palm oil prices. DevelopersCambodia and China, what We have expertise and know- grown by 20% from Rp1.95m in Sabah also point out that strong interest hasother countries are you how in township development psf (US$234 psf) to Rp2.33m come from Indonesian investors. This can beinterested in? CIPUTRA and we bring this concept psf (US$279 psf) in the first The majority of the developers from Sarawak attributed to the clear business opportunitiesWe are interested in investing WORLD into all the countries that half of this year. Currently, were interested to showcase their property present as developers seek to sell land and JAKARTAin countries that have a we invest in. We would like there is interest from Korea, in MPI’s Malaysia Property Gallery located at indicate their openness to joint-ventures withgrowing population with to explore opportunities China, the Middle East and SGX Centre 1, Shenton Way in Singapore as a foreign partners. Following MPI’s overseasstrong economic growth. This for a similar concept here in Singapore to invest in real start to market and promote the state globally. seminars and conferences, Sabah developersis very important because our Malaysia. estate and other industries. They also grasped at the opportunity to tap have expressed keen interest to featurebusiness model of township Areas of concentration for into Kalimantan investors’ interest in Sarawak developments in specific overseas targetdevelopment will only be development are major cities properties by organising an MPI-led event in markets and capture investment interest.feasible in countries with such as Jakarta, Surabaya, Pontianak, East Kalimantan.strong fundamentals. Makassar and Medan.5 real estate malaysia july 2011 6
  5. 5. REGIONAL FOCUSA MEGA CITY IN According to McKinsey Global Institute’s Iskandar Malaysia development, launched Although the economy of Johor is experiencing Flagship B: Nusajaya Urban World report titled; “Mapping the in November 4, 2006, is one such corridor steady growth, the urbanisation level still economic power of cities”, China’s rapid that has been strategically planned to lags behind Kuala Lumpur’s. The services and Nusajaya is the 2,400 acres of residential andTHE MAKING growth is fueled by the continued growth jumpstart the urbanisation of Johor real estate sector is stagnant with low per commercial development that comprises of its megacities and the emergence of Bahru (JB) and its surrounding areas. capita gross national income. Analysts say seven signature developments: Kota new ones. Emerging cities are important as the state has been experiencing the “middle Iskandar (Johor state’s new administrative they spread wealth, reduce concentration Johor as a hub income trap” dilemma – a phenomenon that centre); the Southern Industrial andWITH COMPARATIVE ADVANTAGES AND and enhance per capita income. leads to migration of talented workers to Logistics Clusters (SiLC); Puteri HarbourA MYRIAD OF INVESTMENT INCENTIVES, JB, the state capital of Johor, is strategically Kuala Lumpur and Singapore where salaries Waterfront Development (residential andISKANDAR MALAYSIA IS ON ITS WAY The largest city in Malaysia is the capital, Kuala Lumpur, which contributes eight located within six to eight hours flight radius from Asia’s growth centres such as Bangalore, are higher and living standards much better. Hence, to draw Johor out of the trap and commercial development); EduCity (Education Cluster); Afiat Healthpark; InternationalTO BE A SUSTAINABLE METROPOLIS times the GDP of any other city in Dubai, Hong Kong, Seoul, Shanghai, Taipei create a vibrant city, Iskandar Malaysia Destination Resort; and Nusajaya Residences.OF INTERNATIONAL STANDING Malaysia and about RM263 billion to the nation’s Gross National Income. In and Tokyo and has a reach of a global market of some 800 million people. With an urban was conceptualised to jumpstart and propel economic growth. Nusajaya is positioned to be primary residential and commercial enclave. order to spread the wealth of the nation, population of 2.2 million and rural populationBy S. Sulocana the government has announced five of 1.1 million, the state of Johor is serviced by Developing Iskandar Malaysia “economic corridors” to develop the three major ports, Pasir Gudang Port, Port of various states and propel Malaysia into Tanjung Pelepas and Tanjung Langsat Port. Iskandar Malaysia was established onJOHOR STATE a fully developed nation by 2020. 30 July 2006. Spanning across 547,830ADMINISTRATIONCENTRE acres, it is divided into five flagship zones UNEMPLOYMENT RATE and each flagship has its own sector % (2005-2010) concentration. These flagships are designed to create a conurbation that completes 3.5 the characteristics of an emerging city. 3.0 Flagship A: JB City Centre 2.5 2.0 This comprises the Central Business 1.0 District and the State Capital of Johor. It is also the main gateway into and out 0.5 of Singapore; thus it will be the primary 0.0 business district complementing Singapore’s 2005 2006 2007 2008 2009 2010 vibrant financial industry and act as a SOURCE platform to support local businesses. Labour Force Survey, Dept. of Statistics Malaysia To improve accessibility between JB City Johor’s business concentration has been Centre and Singapore, both Governments primarily on the manufacturing and are in talks to implement the RTS-MRT RESIDENTIAL DEVELOPMENT IN agricultural industries. The state was the project, connecting Polytechnic station NUSAJAYA, ISKANDAR third largest contributor to the nation’s GDP (Singapore) to JB Central. The project is in its at 9.3%, behind Selangor and Kuala Lumpur initial study stage and the transportation at 22.1% and 14.8% respectively in 2009. linkage will support the heavy traffic that is flowing in and out of JB to Singapore. RADIUS TRAVEL TIME The steady flow of foreign investments and low unemployment rate in the state R KOREA has increased its appeal for foreign and P.R CHINA domestic investors alike to participate in its growth. The foreign direct investment JAPAN as at March 2011 stood at RM1.05 billion despite the global economic situation. R.O.C TAIWAN JOHOR: GDP PERFORMANCE UNITED ARAB EMIRATES HONG KONG INDIA 52 SAUDI ARABIA THAILAND PHILIPPINES 50 RM Billion 48 BRUNEI DARUSSALAM 46 SINGAPORE 44 2006 2007 2008 2009 SOURCE GDP Value Malaysian Investment INDONESIA (Billion) Development Authority > 8 HOURS 6-8 HOURS 4-6 HOURS 2-4 HOURS <2 HOURS 87 real estate malaysia july 2011