mpi monthly report july 2011

8/3/2019 Mpi Monthly Report July 2011

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July 2011 issue 14

FACILITATING & P ROMOTING INVE STME NT FOR MALAYSIAN RE AL E STATE | www.malaysiapropertyinc.com

COVER STORYA MODEL WORTHY OF RECOGNITION

NEWSFLASH

SPOTLIGHT

CEOS SPACE

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Bandar Sunway offers a mix of education, shopping, healthcare, leisureand hospitality all in one integrated township.

>> Read more

OF FAILED LAND SALESAND FAKE LOANS

>> Read more

NAPIC report shows that the unsoldresidential properties in Penang is thelowest compared to other states inMalaysia.

>> Read more

INVESTOR PREFERENCESRIDING ON THE RISING REDBACK

HSBC Banks Activate Asia ASEAN- Chinabusiness forum showcases Chineseimportant on the world stage.

>> Read more

SPECIAL REPORTPENANG RESIDENTIAL SECTOR UPDATE

BUILDING MATERIAL COSTINDEX BY STATE(High Rise ResidentialBuilding)

>> Read more

GRAPHICALLY

SPEAKING

IN A NUTSHELLAN EXPAT DESTINATION

Despite rising inflation and Ringgitappreciation, the cost of living inMalaysia is still low as compared to othercountries in the region. >> Read more

URBANISING MALAYSIADirector of Performance

Management and DeliveryUnit (Pemandu) elaborateson ETP and its successes.

>> Read more

ETP EFFORTS TAKING

SHAPEJOHOR PREMIUM

FASHION OUTLETOPENS ON 11.11.11

>> Read more

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BEFORE

AFTER

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Thirty years ago, Bandar Sunway was anabandoned mining land on the peripheryof the city. It has now evolved into atownship with various developmentclusters that have sprung over the years.Gravitating away from the city centrethis 800 acre development enclavepresently has two leading universities,hospital, hotels, one of the countryslargest shopping malls and a theme park.All this amenities and entertainmentoutlet provides an integrated lifestyleliving.

Flanked by 4 major highways, BandarSunway has a large catchment area withover 50,000 residents and there are morethan 7,000 residential, commercial andlight industrial units surrounding thedevelopment.

ResidentialThe latest residential development inBandar Sunway is the 178 acre SouthQuay development. It comprises a mixof bungalows and luxury condominiumdevelopments surrounding a 28

acre lake. The 77 units bungalowdevelopment, Bayrocks, has a build uparea of 6,400 sf to 6,700sf with prices

A MODELWORTHY OFRECOGNITIONBandar Sunway offers a mix ofeducation, shopping, healthcare,

leisure and hospitality all in one

integrated township

by S.Sulocana

COVER STORY 2

Office and IndustrialPresently there is only one grade A officebuilding, Menara Sunway, which wasbuilt in 1993. This 19 storey building hasa net lettable area of 268,978 sq ft anda competitive rental rate of RM4.50 psf.Upcoming grade A office building in thisarea is a 27 storey tower, The Pinnacle and18 storey office tower which is part of theSunway Pyramid extension. This officetowers are scheduled for completion byend 2013 and will supply 780,000 sq ftnet floor area more space into the officemarket.

The industrial development area covers3.2 million sq ft space of factory lotsbuilt in the early 90s. There three typesof factory lots available; Terrace Factory25 x 80, Terrace Factory 30x 80 andSemi-Detached Factory 65x150. Overthe years the price psf of the factory lotshas increased almost 75%.

LeisureThe highlight of the Bandar Sunwaydevelopment is Sunway Pyramid

shopping mall and the SunwayLagoon theme park. Sunway PyramidShopping Mall is the first shopping andentertainment theme mall in Malaysiawhich was opened back in 1997. It has1.7 million sq ft of floor area housing over800 units of retail outlets. The rental ratefetches an average of RM10psf.

Sunway lagoon theme park openedin 1992. There are 88 acres of parks toexplore namely Water Park, AmusementPark, Wildlife Park, Extreme Park and

Scream Park. It draws close to 35 millionvisitors both local and foreign every year.

(continued next page)

ranging from RM 708psf to RM 923psf.The luxury condominiums, Amarine andLaCosta are commanding prices fromRM900,000 onwards. The new launchestake up rate hovers around 70%.Residential properties command ahigher price due to the maturity of thetownship and strong brand image of thedeveloper, Sunway City Berhad. Capitalappreciation of properties in this areahas been growing at a steady rate of 25%-35% over 5 years. Sunway South Quay isculmination of 30 years of development

and effort into perfection. It jellstogether all the existing developmentsinto a complete self sufficient township.Approximately 20% of the totalproperties are owned by foreigners.

Project/ Area Price Take up DetailsDevelopment (acres) Range (RM) rate

BayRocks 21.63 4.7 million 75% 77 unitsLuxury Bungalows onwards

Amarine 3.45 0.9 - 1.2 million 80% 242 unitsCondominiums

LaCosta 5.39 0.9 - 2.4 million 70% (Phase 1 - 2 blocks) 377 unitsCondominiums 30% (Phase 2 - 2 blocks launched in July 11)

Figure 1: New Residential Developments

Source: Company data

Bandar Sunway has alarge catchment area withover 50,000 residents andthere are more than 7,000

residential, commercialand light industrial

units surrounding the

BayRocks Luxury Bungalows


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COVER STORY 3

(from previous page)

Education & HealthcareThere are two universities locatedhere, Sunway University and MonashUniversity Sunway campus. Sunway

University and Monash University wasopened in 1987 and 1998 respectively.These universities have over 11,000students, out of which 30% areinternational students from more than80 countries. Sunway InternationalS ch o o l o f f er s p r o g r a m m es f o rgrades7-11 programmes which aretaught by fully Canadian certifiedteachers. It currently has almost 16,000students from 80 different countries.

Sunway Medical centre, a private

healthcare offers specialised andtertiary care services. Equipped withstate of the art medical facilities, ithas a total of 350 beds, more than100 consultation suites, 12 operationtheatres.

Hospitality5-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 occupancy

rate of 70%.

Moving ForwardBandar Sunway is also been earmarkedas a leisure and entertainment clusterunder the Economic TransformationProgram. As such, more developmentscan be expected happening notably inthe leisure segment. Remaining landbank in Bandar Sunway is about 18 acreswith a gross development value of upto RM5.8 billion mostly earmarked forreal estate investment projects like ThePinnacle, extension of Sunway Pyramidshopping mall, residences, retail outletsand shop offices.

Like a jigsaw puzzle everything fitstogether in creating a sustainable andself sufficient township worthy ofrecognition.

Project/ NetLettable Rent DetailsDevelopment area (NLA) (RM / psf)

Menara Sunway 268,978 4.50 Completed in 1993

The Pinnacle 580,000 5.50 Under construction.Expected completion:Year 2013

Sunway Pyramid(extension) 200,000 5.50 Under construction.

Expected completion:Year 2013

Figure 2: Office Space

Project/ NetLettable Average Rent No. of retail outlets

Development area (NLA) (RM / psf)

Sunway Pyramid 1,700,000 10.00 > 800

Sunway Pyramid(extension), expectedcompletion: Year 2013 11,000 n/a n/a (6 level retail podium)

Figure 3: Shopping Complex

Factory Built-up Current Launch DetailsLots area (sf) Price Price

(RM / psf) (RM / psf)

Terrace Factory 2,500 - 3,800 300 - 360 68.00 323 units25 X 80

Terrace Factory 3,200 - 4,800 300 - 360 73.00 146 units30 X 80

Semi Detached 3,200 - 4,800 300 - 360 55.00 48 unitsFactory 65 X 150

Figure 4: Industrial Offerings



Bandar Sunway is alsobeen earmarked as a

leisure and entertainment

cluster under the EconomicTransformation Program


Sunway Resort Hotel & Spa


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SPOTLIGHT 4

URBANISINGMALAYSIADirector of Performance

Management and DeliveryUnit elaborates on ETP and its

successes

Ahmad Suhaili Idrus is currentlythe Director for NKRA Urban Public

Transport and NKEA Greater KL/Klang Valley under the GovernmentTransformation Programme (GTP) andEconomic Transformation Programme(ETP) respectively in PerformanceManagement and Delivery Unit(PEMANDU).

He spent the last 30 years in the privatesector mainly in heavy equipment andinternational oil and gas industries. Hisexperience include technical services,sales and marketing, commercial gas,

oil trading, project management andtransformation. He served in ShellInternational Petroleum offices inMalaysia,Singapore and the UK atdifferent periods in his 25 years careerwith the Shell Group. He then spent 2years as COO of a Malaysian companydeveloping oil and gas projects in Iranbetween 2007- 2009. Prior to joiningPEMANDU in January 2010, he wasDirector for Integrated Planning/SocialDevelopment in Iskandar RegionalDevelopment Authority (IRDA)based in

Johor Bahru.

He actively speaks at conferences andseminars on PEMANDUs activities andefforts of the ETP and GTP. Real estateMalaysia caught with him through anemail interview to gain insights on ETPand its initiatives.

PQ: Other countries in the regionhas similar strategic plans to ETP (ie.Indonesias new infrastructure plansannounced last week and Singaporeaspiring to be R&D hub of the region).How do you think Malaysia compares tothose in terms of delivery?Ahmad Suhaili: The ETP is unique in thesense that it is very focused, havingidentified 12 National Key EconomicAreas (NKEAs) and under it, 131 EntryPoint Project or EPPs.

The ETP has specific goals in order tomake Malaysia a high-income economyby the year 2020. The ETP is expectedto attract a combined Foreign andLocal Investment of USD444 billion bythe year 2020. It will need to create 3.3

million jobs, while increasing Malaysiasgross national income (GNI) per capitafrom USD6,700 or RM23,700 in 2009to more than USD15,000 or RM48,000in 2020, and through a Gross NationalIncome (GNI) growth of 6 percent perannum, that will allow the country toachieve the targets set.

PQ: Where do you think Malaysia hascomparative advantage?Ahmad Suhaili: Traditionally, Malaysiasselling points have always been its

strategic location, good infrastructure,a work force with good English skillsand strong leadership that drives theeconomy towards transformationalchange. Now with the ETP in place,Malaysia has a clear value propositionto attract investors.

PQ: The ETP is now 9 months old,how has it been received by foreigninvestors?Ahmad Suhaili: The ETP has certainlyimproved overall investor confidence.

As of 30 June 2011, the ETP has already65 out of 131 EPPs off the ground. Thisaccounts for nearly RM170 billion incommitted investments, both foreignand local, that will generate a totalof RM220 billion in GNI up to 2020. Asizable amount of these investmentscome from the private sectors,many of which are by internationalcompanies. To name a few, AdvancedMicro Devices (AMD) has opened anew state-of-the-art Global ServicesCentre in Cyberjaya (approximately

500 million in investments). Under theHealthcare NKEA, Biocon is investingRM500 million in the establishment ofa state-of-the-art facility at BioXcell,a custom-built biotechnology parkand ecosystem in Iskandar Malaysia,Johor. General Electric has investedRM30 million into the development ofa regional Diagnostic Services Nexus(DSN), a teleradiology hub. Details ofthese investments, and many more areavailable on our website.

PQ: Pemandu has targeted MNCs tocome to Malaysia, how many has comeinto Malaysia since Pemandus initialforay overseas? Have there been anyfine tuning of Pemandus proposalssince the beginning?Ahmad Suhaili: All the NKEAs areexpected to deliver on foreign invest-

ment goals, while under the NKEA GKL/KV, EPP1 MNC Attraction has a goal ofattracting 100 MNCs to relocate theirregional headquarters to the GKL/KV area. Since the launch of the ETPRoadmap on 25 October, already twoMNCs have commenced their regionaloperations Schlumberger and PayPal.Just recently, InvestKL commencedoperations with objectives of deliveringthe targets set under this EPP.

PQ: The only real estate portion of theETP is the Greater KL and there are somecriticism that it is too narrow a focus.What are your views?Ahmad Suhaili:In any programme,it is necessary to have focus, this willensure we do the necessary work todeliver the results. Under the GreaterKL/KV, the focus is to simultaneouslyachieve a global top-20 ranking in cityeconomic growth (as defined by cityGDP growth rates) while being amongthe global top-20 most liveable citiesby 2020. To achieve this, Greater KL/KV has identified nine specific EntryPoint Projects along four dimensions:Magnet, Connect, New Places, EnhancedServices. Greater KL/KV is also seen as

a catalyst for growth in the remaining11 NKEAs as well as other economicsectors, including the real estate sector.

PQ: What is the primary role of InvestKL and what are Invest KLs KPIs?Ahmad Suhaili: InvestKLs primaryobjective is to attract 100 of the worldstop MNCs to locate their regionalheadquarters in Greater KL/KV. Thesecompanies are expected to delivera total of RM40 billion in GNI, whilegenerating approximately 230,000 new

jobs by the year 2020.

For more information on ETP, visithttp://etp.pemandu.gov.my

by S.Sulocana


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SPECIAL REPORT 5

lability of land in the island coupled withincreasing demand from widespreaddispora of Penangites. This diasporapurchase properties for retirement,holiday homes and homes for theirfamilies. Presently, foreign buyersconstitute 3-5% of total propertytransactions and majority of thisbuyers are from Singapore, Hong Kong,Indonesia, UK and China.

The unsold residential property datapublished by the National PropertyInformation Centre (NAPIC) shows thatthe demand for residential properties inPenang is firm as the residential stockoverhang in the state is the lowestcompared to Kuala Lumpur, Selangorand Johor. Unsold residential property in

Penang is on a decreasing trend recordinga 45% decline in year 2010 comparedto 2009 (see Figure 5). Overall unsoldresidential property in Malaysia declined1.2%.

Despite concerns on rising propertyprices, the buying sentiment forresidential properties in Penang arestill strong. MPI visited 8 developers togain insight on the market trends andperformances of the new launches.

According to the property developers,the average take-up rates for newlaunches are a healthy 85%, showingno sign of softening demand. Capitalappreciation is hovering around 20-30%over a period of one to two years and thisis attracting continued interest fromproperty buyers. According to Dr. JasonTeoh Director of Henry Buther (Penang)Malaysian, the most sought after areasare Gurney Drive, Pulau Tikus, BatuFeringghi, Tanjung Bungah and GeorgeTown. Upcoming areas which is showingincreased interest from buyers are areassurrounding the Second Bridge, areasalong the Jelutong Expressway, GreenLane, Relau, Sungai Ara and Balik Pulau,he added.

Dr. Jason Teoh noted that the residentialoutlook for 2011 will see a strongdemand with similar trend moving into2012. This is primarily due to limited avai-

Unsold stock in the Kuala Lumpur, Johorand Penang declined 4.3%, 2.1% and2.8% respectively. Average propertyprices in Penang hovers approximatelyRM400 RM900 psf. Robust economicdevelopment has put property prices inPenang almost at par with that of KlangValley and Nusajaya,Johor areas.

Foreign Direct Investment (FDI) into thestate has increased tremendously overthe years. In year 2010 Penang attractedRM10.45b worth of FDI compared to RM1.45b in 2009. The Penang governmentis also actively rolling out infrastructureprojects to increase the standard of livingand stimulate growth. Presently, a totalof RM8.4b worth of projects is slated tocome on stream over 5 years (see Figure

6).

The second Penang bridge which isexpected to be completed by 2014will help to regulate movement andreduce congestion in the island. Themove of the said urbanisation showsthe governments efforts to reducetime and expenses in commutingand transportation while improvingopportunities for jobs and education. Allthis catalytic developments is expectedto lead the growth of Penangs population

and consequently trickle positive spill-over effect on the residential propertydemand in Penang.

PENANGRESIDENTIALSECTOR

UPDATENAPIC report shows that the

unsold residential properties in

Penang is the lowest compared to

other states in Malaysia

by S.Sulocana

Projects Investment Value(RM000)

1) Second Penang Bridge 4,500,0002) Penang International Airport (expansion) 211,0003) Swettenham Port (expansion) 97,0004) Butterworth Sentral Bus Terminal 15,5005) Mengkuang Dam (expansion) 1,200,0006) Penang Hill railway development 63,0007) National Key Economic Area (NKEA) in

electrical and electronics sector 635,0008) Northern Corridor Economic Region (NCER)

logistics development 100,0009) Balik Pulau Polytechnic 175,00010) Pharmaceutical and Nutraceutical Institute 128,00011) Jelutong treatment plant 523,00012) Kepala Batas Medicine and Dentistry Institute 186,000

13 Road upgrading between Balik Pulau town and Genting 72,00014) Upgrading of Penang Bridge 503,000

Total 8,409,000

Figure 6: Following are some of the on-going and up-coming urbanisationdevelopment by the Goverment

Source: Company data, Various website

Year Klang Kuala Selangor Johor Penang Others MalaysiaValley Lumpur

2004 28,293 3,604 25,319 17,817 3,550 29,218 79,5082005 24,939 2,713 22,226 19,735 3,173 32,859 80,706

2006 27,471 7,751 19,720 21,523 1,393 35,104 85,4912007 20,961 5,931 15,030 18,407 1,164 35,566 76,0982008 19,630 5,808 13,822 19,015 1,888 35,846 76,3792009 18,752 6,612 12,140 13,475 2,483 30,696 65,4062010 15,952 6,327 9,625 13,095 1,366 34,198 64,611

Figure 5: Unsold Residential Property (units)

Source: NAPIC


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SPECIAL REPORT 6

Figure 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 units2) 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

Figure 7: Average House Price in Penang, 1Q2008-2Q2011

RM 000

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

500

450

400

350

300

250

200

150

100

50

0

Source: NAPIC

Legend: Landed property High rise property

Malaysia Property Gallery, Singapore willbe featuring Best of Penang Propertiesfrom 16 September to 22 September2011. Property developers that will

be participating in the event are MTTProperties & Development Sdn Bhd,Selangor Dredging Berhad, PlenitudeBerhad and Magna Putih Sdn Bhd. Therewill also be seminars and talks on realestate opportunities in Penang by DatukLee Kah Choon of InvestPenang, Dr. JasonTeoh of Henry Butcher Malaysia (Penang)Sdn Bhd and Gavin Tee of SwhengteeInternational Sdn Bhd.

For more information please contactA.Lalitha:[email protected]


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INVESTOR PREFERENCES 7

by Afiq Syarifuddin

2010, bilateral trade between the twosides reached USD136 billion, a year-on-year increase of 55%.

Asia is the place to be amidst the globalcrisis Mr. Wellian Wiranto, ASIAN

Economist (Singapore). Limited said.This sanguine view is actually backed byreal economic growth, but he cautionedthat ASEAN growth banked on a stableglobal economic condition as thesecountries inflations depend on prices ofcommodity prices notably the oil pricetrend.

Mr. Thomas Poon, Head of BusinessPlanning and Strategy (Hong Kong)mentioned that by 2020, the Chinesegovernment will be working towards

making the RMB a choice reserve currencywhich is fully convertible. Currently,Hong Kong is the most developed RMBoffshore centre with annual trade ofRMB5.34 billion (USD0.83 billion). If theRMB becomes the next internationalcurrency, investment in RMB canmitigate paper loss due to hedging costand risk-management exercise on theUSD. Mr. Poon is confident that RMB isAsias redback in the future as the USsgreenback.

Chinas investment in ASEAN countrieshas also grown over the years since theACFTA was ratified. Recently, Chinamade a major investment in Thailandby constructing a large trade centrecomplex worth USD1.5 billion locatedat a short distance from Bangkoks newinternational airport. This trade centrecomplex is slated to be the largestdistribution centre in ASEAN and thesecond largest in Asia.

Export dependency from Malaysia to

China is at 1.4% of Malaysian GDP andChina to Malaysia constitutes only 1%

of Chinas GDP. This small percentage oftrade relations shows that Malaysia isstill a long way from leveraging chinaseconomic prowess.

W i t h M a l a y s i a s E c o n o m i cTransformation Programme picking upits pace, Malaysia should ride on Chinasinvestment, attracting more inflowsinto the country. Due to Chinas sheer

size, the economies of scale would allowtheir players to spur the constructionindustry in Malaysia and furtherincrease competitiveness.

Real estate investments are slowby Chinese investors in Malaysia.To increase interest, MPI is activelyorganising events in China.

Following are upcoming MPI ChinaMarket Events open for participationfrom Malaysian developers and realestate companies.

16-17 September 2011: MalaysiaProperty Showcase, Shanghai

23 September 2011: MalaysianInvestment Forum, Beijing

For more information please contactJames Choo:[email protected]

What do the US Dollar, ChineseRenminbi (RMB) and Euro have incommon? Monetary strength, and thislies on the vastness of the economic areait covers. In the Activate Asia ASEAN-China: Awakening of A New Economybusiness forum organized by HSBC Bankon 19 July 2011, economists and expertswas upbeat on the potential available inthe ASEAN region.

In his opening speech Mr. Jon Addis,Executive Director and Deputy ChiefExecutive Officer HSBC (Malaysia)Berhad said that ASEAN-China FreeTrade Area (ACFTA) is the largestgeographical economic area and the 3rdlargest in GDP growth. This has lead tothe push for the RMB towards becomingthe choice primal settlement for trade,with the emerging markets now leadingthe way.

From 2003 to 2007, year-on-year ASEAN-

China trade has been growing at anaverage of 30%. During the first half of

RIDING ONTHE RISINGREDBACKHSBC Banks Activate Asia ASEAN-China business forum showcases

Chinese important on the world

stage

Countries 2008 2009 2010 2011f 2012f(f = forecast)

China 9.6 9.2 10.3 9.3 8.5India 6.2 6.8 10.3 8.5 8.0Indonesia 6.0 4.6 6.1 6.0 6.0Malaysia 4.7 -1.7 7.2 4.3 5.0Singapore 1.5 -0.8 14.5 5.5 4.5

South Korea 2.3 0.2 6.1 4.3 4.7Thailand 2.5 -2.3 7.8 4.0 4.5Emerging Asia 6.9 5.9 9.5 7.9 7.4

Figure 9: Growth Rates in Emerging Asia(Real GDP, percentage change over previous year)

Source: Allianz

Figure 10: Asean-China Trade,1996-2008

Source: Asean Statistical Yearbook

1996

1998

2000

2002

2004

2006

2008

120

100

80

60

40

20

0

Legend: Imports from China

Exports to China

Imports and exports in billions of U.S. dollars


8/12

NEWSFLASH 8

Despite the surging commodity prices,

rising inflation in emerging markets andsovereign debt crisis in PIGS countriesand the US, Malaysia managed toattract healthy flow foreign directinvestments (FDI). FDI increased awhopping 448.6% from RM5.0b in 2009to RM27.7b in 2010. Manufacturingremained the largest contributor interms of attracting FDI inflows with54.9% of the total FDI inflow of year2010 followed by services sector with34.1%. Malaysia ranked third among theASEAN countries, after Singapore and

Indonesia, which attracted FDI inflowsof USD38.6b and 13.3b respectively.

T h e p r i m a r y r e a s o n f o r t h ein cr ea s e is a t t r ib u t ed t o t h eMalaysian Governments EconomicTransformation program which wasimplemented to propel economicgrowth and improve living standards.Since the launch of the ETP on 25October 2010, a total investment ofRM 169.78b from 87 projects has beensecured. These investments has created

approximately 362,396 jobs and raisedRM220.15 billion in GNI.

ETP EFFORTSTAKING SHAPE Asean USDmillion

Countries

Singapore 38,638

Indonesia 13,304Malaysia 9,103Vietnam 8,173*Thailand 5,813Philippines 1,713Cambodia 783Myanmar 756*Brunei Darussalam 496*Laos 350*

Figure 11: Foreign Direct InvestmentFlows, 2010

Source: UNCTAD Note: * estimates

Figure 12: Foreign Direct Investment (FDI)into Malaysia, 2001-2010

(RM million)

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

Source: Department of Statistics, Malaysia

Announce- Initiatives Investments GNI Jobsment Date (RMmillion) (RMmillion) Created13-Jun-11 15 63,378 66,313 63,53119-Apr-11 12 11,156 16,617 74,45708-Mar-11 23 14,777 20,056 88,40411-Jan-11 19 65,588 31,540 52,40430-Nov-10 9 9,574 85,522 70,50025-Oct-10 9 5,310 100 13,100Total 87 169,784 220,147 362,396

Figure 13: Economic Transformation Programme (ETP) Updates

as at 13th June 2011

Source: PEMANDU

JOHORPREMIUMFASHIONOUTLET OPENS

ON 11.11.11On the auspicious date of 11.11.11,the Johor Premium Outlet (JPO) will beopened, making it the next shoppinghaven for top designer brands. Locatedon an 18ha site, it will sell productsthat are at least 25%-60% cheaper thanmalls. Presently, it is 80% completed.Designer brands like Burberry, Coach,Polo, Ralph Lauren, Prada, Armani,Canali, Ferragamo, Tods, Zegna, Nikeand Puma will be featured in thisRM149mil outlet.

JPO is a 50-50 joint venture betweenGentings 54.6% owned subsidiary,Genting Plantations Bhd and Premium

Outlets, a division of Simon PropertyGroup. There are 52 such outletsincluding 41 in the United States, one inMexico, eight in Japan and one in SouthKorea . JPO would be the first in South-East Asia.

To ensure interconnectivity, a flyoveris being completed on the Second Linkbetween Singapore and the North-SouthExpressway. The outlet is planningto bus in visitors from Malaysia andSingapore, and use Senai airport to drawin regional tourists from neighbouringcountries to drive in traffic.


9/12

CEOS SPACE 9

by Kumar Tharmalingam

we havea sorry spectacle of UDArequiring a bail-out in spite of the factthat it has had considerable governmentfunding for most of its life. Hopefully,the new management now whollyowned by the government of Malaysiawould see a new resurgent of UDA forthe future.

On the second more serious issue, Imet Elvina Gelepis, an estate agentfrom Athens, Greece when she visitedMalaysia for an International RealEstate Conference in Kuala Lumpur in

2002. Very impressed by Kuala Lumpur,she stayed here for a week along withthe other delegates from Greece and shewent back to practice real estate agencyin Athens. 3 weeks ago she sent me anemail asking whether I could assess thecredibility of a bank which had promisedto lend 1 million US dollars to one of herclients who wanted to buy a commercialproperty in Athens and hence the bankrequested a processing fee.

My office checked the veracity of the

bank and discovered that it was setup similar to a Nigerian scam in usingMalaysian offices in a prime buildingin Jalan Sultan Ismail and offering itsservices for funds from Malaysia forloans.

I replied to her that the bank was afraud and that Bank Negara regulatesall banks in Malaysia and I have neverheard of this bank before. But it was toolate, she has already sent a processingfee of RM5,000 to the bank to processthe US dollar loan and subsequentlyshe emailed me again and said thatthey were going to send her the moneyby the 25th July. I reiterated that thereis no such bank in Malaysia but her

client insisted that the correspondencewas valid and so on the 25th of July shereceived another letter saying that theBank Negara of Malaysia had blockedthe transfer of the funds and that theywould require a further fee to releasethe funds from Bank Negara Malaysiaof US$3,000.

At this point, I had already made acomplaint to Bank Negara and thecompany is under investigation.

M a l a y s i a i s s o m e t i m e i n t h einternational news for the wrongreasons and this kind of scam ispromoted all over Europe due to theirfinancial crisis, so people everywhereare being cheated by such companieswho are now also using Malaysia as theirbase of operations. Let us not forget thefake story of a rich Malaysian tycoonbuying a US$4 billion gold plated boat.The positive thing about that is shouldHedge Funds and private equity thinkthere are rich Malaysians with surpluscash for such frivolity, they may make abeeline for Kuala Lumpur. Is that goodfor us?

Two things happened last month in thelocal real estate world that provided uswith much thought.

The first one was when UDA was deniedthe sale of its prime property in JalanSultan Ismail by the Ministry of Finance.And the second was an enquiry froman estate agent in Greece about theworkings of a so called bank in Malaysia.Let me explain.

UDAs sale of its prime location in JalanSultan Ismail was defended by thecompany as necessary to revitalize itsfinances but rejected by the Ministryof Finance. The Urban DevelopmentAuthority was set-up in the 70s based onthe Urban Re-Development Authorityof Singapore on a similar format withthe sole purpose of making sure thatcommercial centres in major cities inMalaysia had a Bumiputra content. Itwas run like Government division andfor the next 10 years it received largeallocations of funds to allow it topurchase prime real estate whetherthey came up for auction or for saleso that they could be re-branded and

Bumi enterprises will be placed there intandem with others. At that time BukitBintang Plaza was the flagship withMetrojaya as the anchor.

Other than the Bukit Bintang Plazathere were housing projects in Penang,Kedah and in Johore and also parts ofcities and commercial developmentsaround small towns.

I remember that in one briefing in 1984,UDA was proud to admit that they had

a thousand properties in their portfoliotaller than 7-storeys, which was at thattime a real achievement.

When UDA was privatized, thingsturned very quickly downhill and today

OF FAILEDLAND SALESAND FAKE

LOANS

I remember that in onebriefing in 1984, UDA wasproud to admit that they

had a thousand propertiesin their portfolio taller than7-storeys, which was at that

time a real achievement

Developments along Jalan Sultan Ismail, Kuala Lumpur


10/12

IN A NUTSHELL 10

by Afiq Syarifuddin & Grace Chang

nese renminbi. Malaysian ringgit hassurged 8% against the U.S. dollar overthe past year. According to MalaysianInstitute of Economic Research in their2Q11 Malaysian Economic Outlookreport, MYR/USD is projected to averagearound 3.00 in 2011 and improvingmacroeconomic fundamentals will seean average MYR/USD of 2.95 in 2012.

Malaysia subsidises petrol pricesfor its local consumers. However, to

better manage the country resources,it is slowly trying to reduce subsidiesof various items including petrol andlooking at ways to further improvepublic transportation system to reduceimpact on consumers. Nonetheless,with current subsidised petrol and nocongestion charges, transportation costhas been kept minimal.

Property prices in Kuala Lumpurcity centre is considered affordablecompared to neighbouring countries

capital cities. As reported in NationalProperty Information Centres 2010Property Market report, a condominiumin Bangsar is transacted at aboutRM611 per sq ft in the city centre whilethe rental average of the same unit isRM5,500 per month.

With about four million sq ft of officespace located in the Golden Triangleslated to complete by the end of 2014,Kuala Lumpur aspire to attract 100multinational companies (MNC) by year2020. Malaysia is wooing MNCs to setup regional operations here to createdynamism in the service industry andenhance the local economy. Cost of livingis one of the most important factorexpatriates look at when planning torelocate and live.

Figure 14: Cost of Living Index by Cityas at July 2011

ost of LivingIndex

Source: www.numbeo.com

KualaLumpur

Seoul

Sydney

London

HongKong

Beijing

Paris

Singapore

Tokyo

56.55

81.11

131.47

Base City: New York = 100

Driven by economic growth, it is inevitablethat cost of living will continue to risewith time. To continue being a viable

business destination, Malaysia is workinghard towards making Kuala Lumpur oneof the top livable cities in the world.

Plans are underway to achieve thisthrough economic transformationinitiatives such as public transportationsystem revamp with the constructionof 150km of an initial MRT line tosupplement existing LRT and Komuterrail services which will begin this year atan estimated cost of RM36.6 billion. It isthrough these initiatives and more thatrising cost of living could sustain andremain attractive to prospective MNCs.

Kuala Lumpurs cost of living isranked 104 by consulting fim Mercer,indicating a relatively low cost of livingcompared globally. Cost of Living Indexas characterized by Mercer takes intoaccount 200 odd items constitutinga basket of goods including property-b a s ed co m m it m en t , h o u s eh o ldexpenses, transportation cost andcurrency fluctuation to reflect a fairexpatriate compensation package.

Inflationary pressures are plaguingmany Asian cities and Malaysia is notspared. Consumer prices rose 3.5% inJune 2011 from a year earlier, the mostsince March 2009. Malaysian ringgithas also strengthened against the USdollar to an average of In July, the ringgitexhibited a mixed performance. Inrecent months, ringgit has strengthenedagainst the US dollar, the euro and Chi-

140

120

100

80

60

40

20

0

120.45

94.57

50.82

99.55

127.9120.5

City Country March 2011 March 2010 Change inRank Rank Rank

Tokyo Japan 2 2 0

Singapore Singapore 8 11 +3Hong Kong China 9 8 -1Rio De Janeiro Brazil 12 29 +17Sydney Australia 14 24 +10London United Kingdom 18 17 -1Seoul South Korea 19 14 -5Beijing China 20 16 -4Paris France 27 17 -10New York United States 32 27 -5Prague Czech Republic 47 47 0Kuala Lumpur Malaysia 104 138 +34

Figure 15: Mercers Cost of Living Ranking by Selected CIty, 2010 and 2011

Source: Mercer

Figure 16: Index of Ringgit Performanceagainst Major Trade Partners*

Source: Bank Negara MalaysiaNote: Currencies in the index: USD, CNY SGD, JPY, EUR ,

Each currency carries equal weight

Dec-08

Apr-09

Jul-09

Oct-09

Feb-10

May-10

Aug-10

Dec-10

Mar-11

Index (Dec 2008 = 100)

112

110

108

106

104

102

100

98

96

MYR appreciation

AN EXPATDESTINATIONDespite rising inflation and

Ringgit appreciation, the cost ofliving in Malaysia is still low as

compared to other countries in the

region


11/12

GRAPHICALLY SPEAKING 11

BUILDING MATERIAL COST INDEX BY STATE(HIGH RISE RESIDENTIAL BUILDING)

Figure 17:Peninsular Malaysia

Figure 18:Sabah & Sarawak

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

(2002=100)

Building MaterialCost Index

2002

2003

2004

2005

2006

2007

2008

2009

2010

170

160

150

140

130

120

110

100

Source: Construction Industry Development Board (CIDB)

(2003=100)

Legend: Zone G1 - Kota Kinabalu Zone H1 - Kuching

Zone G2 - Tawau Zone H2 - SibuZone G3 - Sandakan Zone H3 - Miri

Building MaterialCost Index

2003

2004

2005

2006

2007

2008

2009

2010

145

140

135

130

125

120

115

110

105

100

Source: Construction Industry Development Board (CIDB)


12/12

12

ABOUT US

Malaysia 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 and

Malaysian 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.com

For further enquiry, write to:[email protected]

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 andcomplete. 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 theinformation contained herein, and the same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to anyspeciallistingconditionsimposed

mpi monthly report july 2011

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