HSR can power economic growth

HSR

Much has been said about how the anticipated high speed rail (HSR) from Kuala Lumpur to Singapore will slash travel time to as few as 90 minutes, thus expediting the rapid movement of people between the two countries.

However, this particular HSR project is much more than just a mere transportation project, even if its very basic premise is to shorten travel times.

Critics who rail against the project on the grounds that there is very little, if at all any, need for one to be whisked rapidly to and from Singapore, often miss the fact that there is now an opportunity to create entirely new townships around the seven stations on the Malaysian side – Bandar Malaysia (KL), Putra­jaya (and by extension, southern Selangor), Seremban, Ayer Keroh (Malacca), Muar, Batu Pahat and Iskandar Puteri (all in Johor).

HSR has the ability to compress geographical distances, and with that, change entirely how people live, work and play.

Imagine the ability to get to Seremban from KL in possibly no more than 25 minutes.

Love Malacca? A trip from Bandar Malaysia to Ayer Keroh can be made in approximately less than 40 minutes, which is even shorter than what some Klang Valley residents endure while driving to and from work every day.

And for Muar and Batu Pahat residents with jobs in Singapore, daily travel to work can be as short as approximately 45 minutes and 30 minutes, respectively.

This drastic shortening of travel times will open up many possibilities, some of which are unimaginable in the pre-HSR era, contends MyHSR Corporation Sdn Bhd, the Finance Ministry-owned entity tasked with managing the bilateral project.

Synergy is the key

“The HSR will enable the spreading of development out of the Klang Valley,” says MyHSR Corp CEO Mohd Nur Ismal Kamal.

“It will uplift the Gross Domestic Product (GDP) for the entire southern corridor, and the country’s as well. Not everything has to happen in KL anymore. This is similar to the idea behind the United Kingdom’s HS2 (high speed rail project) where they are trying to rebalance the economic growth by spreading development to central England, the Midlands.”

The Malaysian government wants to harness the agglomeration of resources and human capital from combining Kuala Lumpur with Singapore, along with six Malaysian cities.

“It is about being seen as an integrated market when multinationals and investors look at the area. Combining KL (six million people) with Singapore (five million) gives a population of around 11 million, which is a larger consumer market and talent pool compared to viewing the two cities separately. This is enabled by the fact that people can move freely from end to end in just 90 minutes,” says Mohd Nur.

“It is not about size nor ranking, but about being seen as an integrated market in many aspects, including GDP. When you bring cities closer together, they start acting like a large single entity. In this case, HSR is able to overcome physical distance by shortening travel times.

“The HSR will further enhance the GDP growth of intermediate cities such as Seremban, Ayer Keroh, Muar and Batu Pahat when managed properly in tandem with the availability of HSR.

“With the HSR operational in 2026, you could potentially have vibrant cities along the southern corridor all the way to Singapore,” he says.

Plans in place

MyHSR has been conducting extensive studies of HSR-related developments globally to find the right model for Malaysia.

It is cognisant of the fact that the mere presence of HSR in a town alone is no guarantee for success. In particular, it wants to emulate the examples found in Shin-Yokohama after the Tokyo-Osaka HSR started operations in 1964, as well Lille’s following the commencement of the London-Paris HSR service in 1993.

“Developments and activities around the stations have to be planned from the start,” says Mohd Nur.

In Shin-Yokohama, the development of the biotechnology and ICT industries happened with target policies and incentives driving the efforts. Combined with other enabling components of a city such as improved connectivity through public transport, the city saw an increase of 147% in the population and approximately 700,000 jobs created from 1966 to 2006.

To prevent sub-optimal developments from sprouting around HSR stops, MyHSR Corp is collaborating with public and private agencies to ensure that everyone is on the same page. Thankfully, all the states are clamouring for HSR, which is a good start, according to Mohd Nur.

“Besides the partnership with Economic Planning Unit, we are working with other federal government agencies, state authorities, statutory bodies, as well as private organisations and associations to ensure all the benefits arising from HSR will be realised.

“We are helping to set the direction of development. To spur the right kind of activity or industry, our plan will have incentives, the provision of basic infrastructure, and so on. All this requires federal intervention, and all parties have to work together to push this comprehensive agenda forward.

“In this regard, the conversation to create synergy has to cut across the entire corridor, rather than leaving them to grow on their own. We have to ensure complementary growth – this goes back to minimising overlapping, to allow each city to capitalise on their respective unique propositions,” says Mohd Nur.

Alignment of interests

The HSR can help to realise the aspirations in the 11th Malaysia Plan (2016-2020), the Economic Transformation Programme, the Government Transformation Prog­ramme, the respective State Struc­ture Plans, as well as Local Struc­ture Plans (Rancangan Struk­tur Tempatan).

“All these will be taken into consideration in our Strategic Deve­lopment Framework (SDF), which is premised upon the economy, inclusiveness, and sustainability pillars. There are efforts to ensure effective local participation, and there definitely has to be a spillover of benefits to locals in terms of jobs, transit oriented developments, and so on,” says Mohd Nur.

“MyHSR Corp has been actively doing many engagements over the entire year, going back as far as January. There were labs with the public and private sectors to test the viability of ideas and proposals,” he says.

Mohd Nur stresses that every­thing about HSR-related developments is never top down.

“This is not an independent plan crafted in a silo. It is about fulfilling earlier plans like the ETP and so on, and giving them a much needed boost.

“A lot of the components of the ETP are incorporated, with focus areas including healthcare, tourism, and financial services. It is about alignment of interests.

“The right (federal) incentives will be there to spur the desired kind of activities, and we are working with Mida, Matrade and Miti to come up with them,” says Mohd Nur.

He assures that there will be intense joint scrutiny of every development proposal to ensure they make economic and rational sense.

The big picture

For sure, the HSR project is capital intensive, even if MyHSR is in no position to reveal how much it expects the final cost will be as an international tender will be called soon.

“We should not merely look at the financial payback period. We are looking more at the economic rate of return, which is way more important,” says Mohd Nur.

Based on a study conducted in 2015, the wider spillover benefits from HSR is estimated in the region of RM21bil of GDP in 2060 with 111,000 jobs created. This is on top of the direct and indirect GDP impact in the region of an estimate RM29bil, as well as RM70bil in multiple benefits from the construction process.

“It is not just building a railway. It is about turning the southern corridor of the country into an economic powerhouse, which is all part of a grander plan to achieve the aspirations of the country by creating jobs and wealth so that we can be a high-income nation.

“There is a plan, and we are putting into place a mechanism to make the plan happen,” says Mohd Nur.
Read more at http://www.thestar.com.my/news/nation/2016/12/24/hsr-can-power-economic-growth-the-klsingapore-high-speed-rail-project-is-more-than-just-about-fast-t/#Q0IlEQ5yRiaYldCq.99

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Two highly anticipated Singapore condos to launch in Feb 2017

Following the Chinese New Year lull period, developers are gearing up to launch two private residential projects in Singapore. One of them is The Clement Canopy, the first condominium to be launched this year, with its showflat opening for preview this Saturday (11 February).

Jointly developed by UOL Group and SingLand, the 99-year leasehold development in Clementi Avenue 1 will comprise two 40-storey blocks of 505 condo units. Buyers can choose from two- to four-bedroom units ranging from 635 sq ft to 1,539 sq ft.

“We are riding on the positive market sentiment and launching The Clement Canopy with a unique approach of doing away with one-bedroom units. Instead, we have introduced a variety of two-bedroom apartments, which are affordably priced from $850,000,” said Liam Wee Sin, Deputy Group CEO at UOL.

In fact, 194 of the units (40 percent) are two-bedders sized from 635 sq ft to 732 sq ft, while prices of all the units range from $850,000 to over $1.62 million.

“Given its close proximity to NUS and the second CBD in Jurong, The Clement Canopy will appeal to both investors and owner-occupiers. For our initial launch, we are going out at an average price that ranges from $1,330 to $1,360 psf,” said Liam. The project is expected to be completed in 2020.

Located near the Clementi MRT station, the development will come with full condo facilities, including smart home features. The developers will also incorporate smart technology within the common areas and facilities, such as the tennis court and clubhouse.

Meanwhile, CEL Development, the property arm of Chip Eng Seng Corporation, will soft launch a 720-unit condominium in the east next weekend.

Dubbed Grandeur Park Residences, the 99-year leasehold development along New Upper Changi Road / Bedok South Avenue 3 will feature one- to five-bedroom units.

Located within walking distance from the Tanah Merah MRT station, the project boasts a three-generational (3G) gym that comes with state-of-the-art equipment. It is also one of the few condominiums to have Omnia gym equipment.

According to Raymond Chia, Executive Chairman and Group CEO of Chip Eng Seng Corporation, buyers will be “treated to a year’s worth of complimentary fitness and lifestyle classes and activities”.

In fact, the developer has teamed up with Amore Fitness to organise fitness classes, such as Zumba classes and Pilates sessions.

Scheduled for completion in 2021, unit prices at Grandeur Park Residences range from about $500,000 to over $1.4 million. In addition, there are two shops priced around $3,500 psf.

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5 Strongest Real Estate Markets in Asia-Pacific

2017 is going to be a big year for Bangalore real estate.

With a blossoming tech sector, the Indian megalopolis is the new champ in the latest City Investment Prospects survey released this week with the annual Emerging Trends in Real Estate Asia Pacific report by the Urban Land Institute and PricewaterhouseCoopers (PwC).

Bangalore switched its 12th-place ranking last year with former first-placer Tokyo. Sydney and Melbourne dropped from the second and third place, giving way to two Southeast Asian cities.

“This year’s Investment Prospects survey shows a strong shift away from last year’s favourites, which featured core markets in Japan and Australia,” KK So, Asia Pacific real estate tax leader at PwC, said. “Instead, it favors emerging-market destinations. It is also notable that several gateway cities are in the bottom half of the list – indicating their declining popularity.”

Here are the cities with the strongest property investment prospects next year:

 

1. Bangalore

Bangalore’s status as a magnet for business process outsourcing (BPO) and other IT industries has never been stronger. An overarching need to open call-in and research-and-development (R&D) centres underpins a huge demand for office space in the city, which also placed number one on the report’s Development Prospects index.

 

2. Mumbai

hile you shouldn’t expect “rising prices” in Mumbai’s residential market next year, as one survey respondent put it, the Indian metropolis is faring well in the office sector. High-grade assets are drawing strong demand and rental growth. Major road and rail infrastructure works, due for completion in 2019, will connect outlying areas to the city centre.

 

3. Manila

Like Bangalore, Manila is thriving on the strength of the BPO industry and showing “good growth” in office capital values and rents. Remittances from overseas Filipino workers (OFWs) continue to gush in strongly, although they are palpably hurting from decelerating economies in the Middle East, where many workers are based.

The market is also coming to a “very heated point in the property cycle,” as developers confront the issue of sourcing land in the populous city.

4. Ho Chi Minh City

 

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Now “on the radar screen of nearly all the major investors in the region,” Vietnam and its largest city are benefiting from continued capital inflows from Japan, Singapore, and Hong Kong. There is a real risk of an oversupply in the condominium sector, but landed house purchases remain as popular as ever. Office rentals are now higher in HCMC than Bangkok.

5. Shenzhen

 

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Shenzhen’s residential market is the fastest-growing in the world, rocketing more than 40 percent year-on-year in the first three-quarters of 2016, the researchers noted. Office rents have doubled their values in 2009.

The full ranking of cities with the best investment prospects for 2017:

 

  1. Bangalore
  2. Mumbai
  3. Manila
  4. Ho Chi Minh City
  5. Shenzhen
  6. Shanghai
  7. Jakarta
  8. Bangkok
  9. Sydney
  10. Guangzhou
  11. Beijing
  12. Tokyo
  13. New Delhi
  14. Auckland
  15. Osaka
  16. Melbourne
  17. Seoul
  18. Hong Kong
  19. Kuala Lumpur
  20. China–secondary cities
  21. Singapore
  22. Taipei
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Singapore Property Market is a falling knife like JB’s

While Singapore has long been South East Asia’s biggest success story (with property prices to match), the current climate poses another, less rosy picture.

With a declining economy and fears of a recession in the air, real estate values have hit new lows, and record numbers of agents are turning their backs on the business entirely. The downturn may seem sudden to some, but for those keeping a beady eye on things, this was to be expected.

“Singapore is at a crossroads at this point,” says Dan Toh, founder and CEO of consulting firm RunningStream International. “The country is facing new challenges that require it to innovate its way through the rise of ASEAN and a very different world economic landscape due to globalization.”

Singapore has achieved phenomenal economic progress over the last 50 years. However, as a country reliant on outside resources, its continued success depends on a great many factors outside its immediate control.

“The equalization of economies in ASEAN means that the neighboring countries are getting increasingly sophisticated. Infrastructural advantage is being eroded by the pervasiveness of the internet, and its geographical advantage by the progress of regional logistic capabilities,” Toh explains.

This is especially true in light of China’s effort to improve the region through rails, ports and shipping canals. Singapore will likely be collateral damage in the process.

While in the real estate world, cooling measures may have effectively moderated price growth, the overall declining economy poses a much greater risk. Singapore is seeing a drastic fall in transactions and rental demand as the country becomes less attractive both in terms of costs and infrastructural advantages for business. Fewer jobs and fewer foreigners equate to less overall demand, especially in the luxury segment.

“Increasing unemployment and a weak rental market means that now is not the best time to be investment hunting in Singapore,” Toh says. “That said, Singapore will remain a key player in ASEAN and will continue to serve as a base for many businesses. The property market will certainly not crash.”

If one has to buy now, Toh suggests bargain hunting in prime zones, citing Districts 1, 2, 6, 9, 10 and 11 as districts to watch, whereas River Valley, Newton, Tanglin, Upper Bukit Timah are all pretty exposed to the mid tier foreigners and thus hold significant market risks.

A good bargain, he explains, would be in the area of 20 percent discount. “Naturally, finding such deals will not be easy. But weak rental conditions and potential weakening of the SGD alongside rising interest rates may motivate foreign owners to seek an exit. Locals will hold out better.”

In terms of the kind of properties investors should consider, two bedrooms allows for the best growth potential and balanced yield, Toh advises. Buyers should only consider buying now if they are wanting to live in – buying a rental property would not be wise given the current outlook.

“Investors should not try to catch a falling knife”

Ideally though, investors would be well advised to wait a couple of years, and late 2017 and early 2018 is when Toh predicts the country’s fortunes may start to change.

“Currently, Singapore prices have escalated to a point where it is non viable,” he says. “Given the current economic challenges I suspect the government will be happy to let the prices fall to increase the country’s competitiveness, and unless business conditions improve, I wouldn’t see the motivation to let prices rise again just yet.”

For this to happen, Singapore will need to reinvent itself and find a new catalyst for growth. At this point, Toh says, this still seems a little distance away, however, he is confident that Singapore’s star will soon rise again.

“The country’s track record should inspire some amount of investor confidence. Singapore will remain a key market, but for its property to boom again we will need to see some major new directions. Only when that happens would I be keen to call a property bull market.

“In other words, investors should not try to catch a falling knife, and instead wait for signs of new upward economic momentum.”

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Malaysia properties continues to fall in 2017

Prices of luxury homes, especially strata units, are expected to decline this year due to the absence of the Developer Interest Bearing Scheme (DIBS), which previously played a role in pushing up the cost of these properties, according to CBRE-WTW Managing Director Foo Gee Jen.

“You have to go back to the history of what happened two to three years ago. Whenever developers offer a project, a lot of DIBS and so forth were catered to stratified properties. For landed properties there were no issues in selling so there’s not so much mark-up in terms of pricing for landed properties but a lot of mark up for stratified properties.”

As such, he believes that prices of upscale strata residences could fall by 10 percent to 15 percent in 2017, while the cost of landed housing could drop by 10 percent or lower.

Foo explained that many people who have purchased units with the aid of DIBS and other rebates two years ago are now selling them at lower prices, and this trend is particularly evident in Kuala Lumpur, Kota Kinabalu and Johor Bahru.

In the subsale market, Foo noted that sellers are now more practical, reducing the gap between the asking price and the final agreed amount.

“I believe strongly that the price correction has started. A lot more developers are taking note of that. A lot of them are suffering. Some of the high-end products are not moving and if you go into their showroom it is very quiet.”

Based on his company’s research, the overall number of upscale condos in Kuala Lumpur reached 37,824 units last December. Of this, units costing between RM700 to RM1,000 psf account for 86 percent, but this could slide to 64 percent in 2019.

For high-end units valued from RM1,001 to RM1,500 psf, these are expected post the highest growth of 4,000 units per annum on average, comprising 23 percent of total number of condominiums by 2019.

But the most problematic segment in the housing market are SOHOs/SOVOs (small office home office/serviced office virtual office), as occupancy levels are so low given the supply glut. This situation is expected to persist until the government’s infrastructure projects are finished in the next three to four years.

Once these infrastructures are established, these are anticipated to bolster the SOHO/SOVO sector, and some landlords would find it easier to rent out their units via websites like Airbnb, said Foo.

Overall, the housing sector is forecasted to be flattish in 2017 and lower in terms of value as more builders venture into low-cost flats.

“The only good sign is a lot more developers will venture into affordable housing. If the government pushes hard enough in terms of supply of PR1MA homes and others, the residential segment, I think, will see a slight improvement but overall if you add up the rest, commercial and others, I think it (volume) will be very flat,” he added.

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Metro Homes Iskandar 2017 Letter

Dear Metro Homes Iskandar colleagues since 2012,

We have come a long way since the heydays of property boom in 2013 to the present lull in 2017. Property markets move in cycles and its inevitable that we would move from the current low to another high point again in the medium to long term.
We have started our MHI office in Horizon Hills office in Sept 2012, being the 1st property agency to open in Horizon Hills when the shoplots are mainly vacant back then. We spent two very busy years in 2013 and 2014, followed by a slowdown in the next two years 2015 and 2016. At its peak we have slightly more than 100 RENS & Expat Consultants, when the market was red hot in 2013 and 2014.
Today in Jan 2017, we have trimmed lots of fats and slimmed into a lean team of not more than 10 active RENs. The matured and actives players are still earning their keeps, having established themselves as the niche markets leaders in Horizon Hills, East Ledang, Puteri Harbour and Leisure Farm. They are still doing well and would do better in the coming years when the market slowly returns to its bull cycle in the next few years.
From Jan 2017, we have moved to our own shop office purchased in 2014, and completed in Q4 2016 in Ion Medini. The address is :
No.8-1, Blk D1, Pusat Perdagangan Ion Medini 1, Persiaran Medini Sentral 6,  
Bandar Medini Iskandar, 79600 Iskandar Puteri, Johor, Malaysia.
We are using the 1st floor office with the same experienced Admin staff Fazilah and an additional colleague, Joel Desilva, who is our D&Jo Hospitality Asst Manager. Joel is in charge of our short term leasing business, with special focus presently in our Afiniti Residensi Legoland Serviced Apartments where we manage about 30 units. Our shoplot ground floor No. 8 is still vacant and is open for any business opportunities from all of you.
We have a 10 plus people Hi-Tea gathering in our MHI’s Ecoworld Botanic Corner Villa on 14 Jan 2017 and we look forward to another gathering in our shop office in the next quarter.
I hope everyone continue to stay in touch via our What’s app group and via emails as well, till better days return for us to strive again…..
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Johor Sultan replies to Dr Mahathir

Johor ruler Sultan Ibrahim Sultan Iskandar has blasted former prime minister Dr Mahathir Mohamad for claiming that Johor is “surrendering land to the Chinese”, and said the veteran politician has “gone too far”.

In an exclusive interview with The Star published today, the sultan is reported as saying he was “deeply offended and hurt” by Mahathir’s comments made over the past weeks.

“Enough is enough. I have so far restrained myself from commenting on the controversy on Forest City generated by Dr Mahathir and his supporters.

“But Dr Mahathir has gone too far with his twisting of the issue. He is making allegations that 700,000 mainland Chinese will stay in JB, and that citizenships will be given away, and that huge tracts of land have been sold to the Chinese.

“He is giving the impression that Johor is surrendering land to the Chinese and that we are giving up our sovereignty, comparing even how we gave up Singapore to the British,” The Star reported the sultan as saying in an interview at Istana Bukit Serene.

The sultan also pointed out that a large portion of Forest City would comprise condominiums that are to be built on reclaimed land.

‘Take a look at Singapore’

“I would like to ask Dr Mahathir if these foreign buyers can just take their apartments back home or carry off an inch of the reclaimed land.

“Take a look at the number of foreigners who have bought pro­perties in Singapore. Are the Singaporeans in that tiny island republic worried? No, they are not and they, in fact, welcome affluent expatriates there,” the sultan is quoted as saying.

The situation in Singapore, he said, was unlike Mahathir’s attempts to allegedly create fear using race for political motives.

“He (Mahathir) is not stupid, he’s just selfish and opportunistic,” Sultan Ibrahim added.

Commenting further, the sultan said that Forest City’s mixed development project was not targeted at Chinese investors, but for anyone around the world, inclu­ding Johoreans.

“This project will increase Johor’s land size and sovereignty,” he said in noting that the spill­over effect would include re­venue for the state go­vernment in terms of taxes and about 200,000 job op­­por­­­­tunities.

The sultan said this in response to a series of comments and blog posts by Mahathir, who had claimed that huge tracts of land around Johor Bahru were being sold to fo­­reigners with no restriction, and there would be mass immigration to take up residence in these new cities.

Mahathir had raised his concerns based on a Bloomberg report that claimed Forest City would accommodate 700,000 new houses upon its completion.

This was on top of 60 similar other projects within Iskandar Malaysia around Johor Bahru, which could add another 500,000 houses.

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