How to ‘make money’ from your home loan

May 20, 2013 By Leave a Comment

At first thought, it might appear prudent to pay off a property loan as quickly and as soon as possible. However, consider using cheaper home loans to grow your net worth, says Lee Mun Wai in StarBiz’s Financial Snacks column.

Home loans usually have lower interest rates than vehicle loans and other unsecured credit, because the use of a home as collateral reduces the lender’s risk of financial loss.

So if you have other debts with higher interest rate, like credit card debts which have rolled over several months, pay these off first, before paying off your home loan.

If you don’t have other debts to pay off, consider using your excess cash to invest in solid, reputable investments (such as unit trusts, Amanah Saham Malaysia, real estate investment trusts, etc) that can potentially give you returns in excess of what your home loan is costing you.

If your home loan is costing you 5% but you can derive returns of 8% from your investments, you are growing your net worth by 3%!

If your home loan terms are not very good, if the interest rate has dropped since you first executed your home loan, consider refinancing it. Refinancing a RM1mil, 30-year loan from 7.5% to 6.5% would save more than RM240,000 in interest over the life of the loan, or more than RM150,000 in today’s dollars given a present value discount of 3%, all other elements remaining equal. Despite market turmoil, interest rates remain at attractive levels.
Source by: The Star

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How to choose a home loan

May 20, 2013 By Leave a Comment

TO the common folk, choosing a home loan is almost as hard as choosing the property itself. If you’re currently in the midst of shopping for a home loan to buy your dream house, here are six things you should consider before making what could arguably be the biggest financial decision of your life.

 

1) Type of home loan

First and foremost, consider what works best for you: a traditional term loan or a flexible home loan (flexi-loan). A traditional term loan requires you to pay a fixed amount each month for the entire tenure of your home loan (eg. 30 years), while a flexi-loan gives you the option of reducing your interest whenever you wish (i.e. by saving your extra money into a linked current account. The more you save, the less interest you pay).

If you have a strict and predictable cash-flow pattern, a traditional term loan may be best. If you prefer flexibility in paying off your loan, a flexi-loan is recommended.

 

2) Interest rate

As with all loans, your priority should probably be to go to the bank that offers you the lowest interest rate. Let’s consider a home loan of RM500,000, over a period of 30 years. The difference in interest payment between an interest rate of 4.2% and 4.15% (i.e. a mere 0.05%) could be well over RM5,000! 3) Margin of financing (how much you can borrow)

Depending on various factors which include the value of the property as well as your standing with the bank, different banks may offer you different margins of financing. As you will be required to pay any amount not covered by the home loan upfront, this becomes very important, especially if you’re short on cash.

Let’s consider a house that costs RM500,000. You will need to pay RM100,000 upfront if your margin of financing is 80%, but you will only need to pay RM50,000 upfront if your margin of financing is 90%. 4) Lock-in period

Lock-in period is the period you will incur a penalty if you choose to pay off your home loan in full before it reaches the end of its tenure. Usually, the penalty is between 2% and 3% of the principle loan amount. When it comes to choosing a home loan, it pays to have a lock-in period that is as short as possible with a penalty that is as low as possible. Also, some banks do not charge a penalty at all if sufficient notice is given. 5) Fees & charges

A home loan application involves professional and government-regulated processes. This includes preparation and disbursement of loan agreement, payment of stamp duty and processing by the bank, just to name a few. All these processes usually come with fees and charges that will be borne by you, the buyer.

In certain cases, it may also be wholly, or partly ,borne by the banks as part of your loan package. Hence, it is best to sit down with the loan officers (with all the banks you are considering taking your home loan from) and get them to run through with you the fees and charges that will be incurred. The task may be repetitive and time-consuming, but it will be time well spent.

 

6) The bank

Lastly, understand that you’ll be dealing with the bank on a frequent basis for as long as your home loan is in effect (which may be 20 to 30 years). With that in mind, you should probably choose a bank you are comfortable with. Some of the things you may wish to think about include:

·Do you have an existing savings or current account with the bank (for ease of inter-account transfer)?

·Are you satisfied with their standard of service?

·Is a local branch available near your home or office?

·Do you consider the bank to be trustworthy and reliable?

·Does the bank offer value-added services that will make your life easier for the long haul?

·How is the bank’s reputation as a whole?

·Does the bank provide online banking facilities? This will allow you to pay your instalments easily.

·Is your loan officer approachable? Can you call him when you have a question?

 

Source by: The Star

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Well-planned land transport network can boost Greater KL area

May 20, 2013 By Leave a Comment

A SOUND and well-planned rail network inclusive of the upcoming Klang Valley Mass Rapid Transit (KVMRT) Line 2 will form the spinal cord of Kuala Lumpur’s public transportation system that will not only improve the liveability of the Greater Kuala Lumpur (KL) dwellers, but more importantly support the sustainability of the city’s future development.

In recent years, the country’s economy as well as construction industry have been largely buoyed by the massive multi-billion investment to improve the capital’s public transport network.

Syarikat Prasarana Negara Bhd is now in the midst of developing its RM7bil light rail transit (LRT) extension and MRT Co is currently overseeing the construction of the RM23bil KVMRT Line 1 from Sungai Buloh to Kajang.

Currently, the market is anticipating the approval of the KVMRT Line 2 that spans from Sungai Buloh to Putrajaya with an estimated cost of RM25bil.

Land Public Transport Commission (SPAD) chief executive officer Mohd Nur Kamal confirms that the feasibility studies for KVMRT Line 2 is completed and is awaiting Cabinet approval.

According to the the National Land Public Transport Masterplan (final draft), the KVMRT Line 2 or the North-South Line is meant to link developing areas such as Sungai Buloh, Kepong and Selayang with the eastern side of the city centre including Kampung Baru and Tun Razak Exchange.

The third line or the circle line should provide an orbital link between areas such as Mid Valley, Mont Kiara, Sentul Timur, Ampang as well as the planned Matrade.

The KVMRT project, consisting of three lines, is expected to have a total network of 145 km.

By the time the KVMRT Line 1 is completed in 2017, it is expected to carry some 384,000 passengers daily.

A MRT rail system would require some 20,000 passengers per hour per direction to be feasible.

The Greater KL Land Public Transport Master Plan sets out an integrated 20-year plan to transform land public transport in the region responding to local needs and aspirations.

While this investment does give a shot in the arm for the country’s economy in the short term in view of a sluggish global environment, it is interesting to look further into the future at what these rail networks really means tothe Greater KL development. Ideally, Malaysia has the aspiration to be ranked in the top-20 city economic growth while being among the global top-20 most liveable cities by 2020 via nine entry point projects (EPP) which include improvement in land public transport services and networks.

And most of these pertinent issues are highlighted in the country’s first land public transport blueprint.

In the masterplan, Greater KL was identified as the critical economic growth centre as over 37% of the nation’s gross national product is identified as being related to Kuala Lumpur and Selangor.

The region comprises Kuala Lumpur, Putrajaya, Klang, Kajang, Subang Jaya, Selayang, Shah Alam, Ampang Jaya and Sepang.

The 2010 census identified a regional population of 6.3 million in Greater KL that reflects an additional 1.7 million people living in the region compared to 2000.

The largest growth has been to the south and west of Kuala Lumpur in districts such as Sepang, Petaling Jaya and Putrajaya.

“The KVMRT project involves the construction of a railway network which will form the backbone of the Klang Valley’s public transport system.

“The project is a crucial component of the Greater KL National Key Economic Area and is the largest infrastructure project in the country.

“It will significantly improve the coverage of rail-based public transport in the Klang Valley and enable 50% of all trips in the Klang Valley to be done on public transport by 2020, up from the current 17%,” said the masterplan.

While this is a positive aspiration, alarmingly, the masterplan identifies that in recent decades the mode share of land public transport in the morning peak has fallen from 34% in the 1980s to 10%-12% in 2008.

“This share is relatively low compared to other international cities such as Hong Kong at 90%, Singapore at 63%, and London at 55%.

“This reduction in land public transport usage reflects the increase of the highway network supply, changes in household characteristics, the affordability of cars and poor quality of public transport,” it said.

On its economic benefits, the masterplan describes historical data in Malaysia and around the world indicating a correlation between GDP and mobility growth – increased population, employment and economic activity always translate into higher mobility requirements.

“In this context, a first-class land public transport system is especially important given our immediate aims as outlined in the Economic Transformation Programme’s 6% annual growth and 3.3 million new jobs by 2020.

“Travel vehicle demand grew from 13 million trips per day in 1991 to 40 million in 2010. Projections point towards this trend as continuing in Malaysia, with the figure expected to reach a staggering 133 million in 2030,” it said.

The masterplan adds that with urbanisation expected to reach 7% by 2020, there is a need to enable an efficient and smooth flow of people, which in turn also enables growth of new urban areas through increased connectivity.

“Beyond satisfying a growing demand, land public transport plays a catalytic role in accelerating and shaping economic growth. Provision of effective public transport services has the potential of opening up new growth clusters, enhancing the attractiveness of existing clusters and driving urban revitalisation.

“And there are other positive spill-over effects of increased economic activity built upon an advanced land public transport network – it yields employment and business opportunities in local economies by having synergies with other industries like advertisement, retail and property development,” says the masterplan.

 

Source by: The Star

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Billionaire Robert Kuok’s investment in Iskandar a vote of confidence

April 30, 2013 By Leave a Comment

THE return of Malaysia’s “prodigal son”, Robert Kuok to invest in Iskandar Malaysia, Johor is a vote of confidence in the country’s first economic corridor.

To be sure, Iskandar has already reached a good level of success in the short seven years since its inception, having received RM111.37bil in cumulative committed investments as at the first quarter of this year.

Every big Malaysian property developer has made a concerted effort to get a project in Iskandar going.

But the entry of Kuok, Malaysia’s richest man and South-East Asia’s second richest is expected to spur international interest and catalyse more such investments.

Kuok has not actively invested locally since the 1990s. In fact, he was seen as one of those tycoons who were exiting Malaysia.

True, today his business empire – via flagships Kuok Brothers Sdn Bhd and Kerry Properties Ltd – are mostly outside Malaysia. It is no secret that Hong Kong has been 89-year old Kuok’s base for a very long time.

In 2006, when PPB Oil Palms Bhd was injected into Singapore-listed Wilmar International Ltd, it was seen as Kuok “cashing out” of the country. In 2009, Kuok who is estimated to be worth US$17.3bil according to the Bloomberg Billionaires Index, sold the sugar business that he founded in the 1950s – the Malayan Sugar Manufacturing company – to Felda Global Ventures Bhd.

Following this, his most notable flagship company here is the PPB Group Bhd and Shangri-La Hotels (M) Bhd.

His return to Johor, his birthplace, dispels this notion. He was possibly waiting for the right time and place and what can be more exciting than putting money in a future metropolis that is set to rival Singapore and Hong Kong. Sources say that Kuok has been keen to pursue an investment in Iskandar for some time now.

Kuok’s faith in Iskandar is possibly reflected in that he was willing to pay top dollar or RM334 per sq ft for the two plots totalling 12.5 acres in Puteri Harbour in Nusajaya. This land deal, bought from UEM Land Holdings Bhd sets a new benchmark.

Early this year, UEM Land had sold land 3.5 times bigger than that bought by Kuok in Puteri Harbour to Liberty Bridge Sdn Bhd – a consortium ownded by four tycoons from Malaysia and Singapore for RM211 per sq ft.

The Kuok group has teamed up with UEM Land’s major shareholder, Khazanah Nasional Bhd (in a 70:30 joint venture) to develop the place into a mixed residential and commercial development slated to have a gross development value of RM1bil.

Notably, the project will spin off construction jobs and employment opportunities in multiple disciplines for Johoreans.

It is also likely that the media-shy Kuok would be making more trips to Malaysia as work on this project progresses.

Kuok has done one more favour for Iskandar. He has reportedly influenced another foreign tycoon to invest there. It has been reported that Australian billionaire Lang Walker, who has developed properties around the world, has switched his focus to Iskandar following the hard sell made by Kuok. Walker is undertaking a US$1.3bil project in Senibong Cove, which he is jointly developing with Iskandar Waterfront Sdn Bhd, and this is his biggest bet outside Australia.

The two billionaires are partners in the US$1.4bil Collins Square redevelopment project in Melbourne. With Kuok’s help, Walker identified two areas in Johor Baru – the Lido Beach and Senibong Cove – but picked the latter to invest in.

Meanwhile, the other beneficiary from Kuok’s entry into Iskandar is Khazanah, who has a 30% stake in the venture. The sovereign fund will be able to leverage on the expertise that Kuok brings and enjoy its portion of profits from the project.

 

Source by: The Star

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InvestKL may secure up to 12 global firms to invest in Greater KL

April 22, 2013 By Leave a Comment

PETALING JAYA: InvestKL targets to secure another ten multinational companies (MNCs) to invest in Greater KL in 2013, and if plans sail smoothly, it could even attract up to 12 MNCs.

At the moment, the agency is in talks with five MNCs from the United States, Europe and Japan to make Kuala Lumpur their business hubs.

If the talks are successful, the number of MNCs investing in KL will increase to 22 because thus far, InvestKL has brought in 17 MNCs in collaboration with partners such as the Malaysian Investment Development Authority and Multimedia Development Corp.

According to InvestKL, the investments from the 17 MNCs are expected to create 15,113 high value jobs and generate gross national income (GNI) of up to RM2.71mil by 2020.

Among these MNCs, six are establishing their centres of excellence, five their operational headquarters, four their shared services centres, one is setting up a hub for its trading of non-petroleum commodities while another for its retail business.

Chief executive officer Zainal Amanshah has been dubbed “a man with a 2020 mission”. Indeed, as he has a mission to attract 100 of the world’s largest multinationals from the lists of Fortune 500 or Forbes Global 2000 to invest in Greater KL by that year.

InvestKL, the government entity set up under the Economic Transformation Programme (ETP) has been in operations since August 2011 and it believed that the ETP and the Government Transformation Programme have also been critical to InvestKL’s success.

Under both programmes the initiatives of which have bore results, InvestKL has been able to convince investors that Malaysia is serious about its commitment to transform.

In the 18 months it has been established, Zainal and his team have proven they can deliver results with the strategic oversight provided by the agency’s three ministers – International Trade and Industry Minister Datuk Seri Mustapa Mohamed, Federal Territories and Urban Wellbeing Minister Datuk Raja Nong Chik Zainal Abidin and Performance Management and Delivery Unit chief executive and Minister in the Prime Minister’s Department Datuk Seri Idris Jala.

“At the same time, there is still a lot of work to do. While we have done much over the past 18 months, we have to work closely with the MNCs to ensure their investment is realised,” Zainal said.

“If they succeed, we succeed.”

He also commended the ministers for lending a big hand for fast-track processing and approvals for all investments through their strategic guidance and support.

“Datuk Raja Nong Chik as the minister-in-charge of the Greater KL National Key Economic Area has been instrumental in helping us achieve our key performance indicators,” said Zainal.

He added that Raja Nong Chik is a very hands-on minister who worked closely with InvestKL to ensure that the agency brought in MNCs that would spur innovation, talent and income growth.

“The minister is very focused on ensuring we bring in high quality investment that will create high value jobs, a high income society and contribute to Malaysia’s GNI,” he said.

The 100 hotshot companies InvestKL intends to bring in are expected to contribute RM40bil in GNI and create more than 60,000 jobs by 2020.

InvestKL notes that investors have also been impressed with the Government’s focus to improve Greater KL’s liveability.

“The commitment to resolve transport woes by constructing the mass rapid transit (MRT) and increase connectivity which, among others, include building the high speed train to Singapore,” the agency said, “The greening of the city and the ongoing work to transform the Klang River into a world-class water front have been positively received.”

Top international talent

To support the MNCs’ growth and ensure availability of talent, InvestKL is also working closely with the MNCs to bring in top international talent and is building a pipeline of talent from within the country through tie-ups with institutions of higher learning.

Among the companies already on board, Fortune 500 company Darden Restaurants Inc from the United States will make Malaysia its hub in Asia Pacific.

“We definitely see a lot of potential in this part of the world. We are looking to expand in Asia Pacific and bring some of our brands here,” Darden Inc chairman and chief executive Clarence Otis Jr has been quoted as saying.

The group intends to eventually introduce its chain of restaurants, such as Red Lobster, here and establish a regional operations hub in Malaysia to assist future restaurant growth in the Asian market.

On collaborations with local companies, Darden will also be developing the world’s first integrated lobster aquaculture park in Sabah under a US$600mil (RM1.86bil) deal with two Malaysian companies.

French international group and global leader in innovation and high-tech engineering consulting, Altran has set up its regional centre in Greater KL and will be setting up an innovation centre too.

In a report, chairman and chief executive Phillippe Salle said Malaysia was Altran’s surest way to foray into South-East Asia.

“We’re here for the infrastructure, access to surrounding countries and a wide talent pool.”

He added: “In Europe, we are an innovation centre where we have a pool of engineers who develop patents of their own.”

Salle believes that Kuala Lumpur will offer a fitting environment for Altran to expand in its key areas of business in aviation, automotive, healthcare, telecommunications and smart society.

Philips Malaysia and University of Malaya Specialist Centre are also collaborating to open the region’s first sleep disorders centre in July this year.

The first in the region, the Asean Sleep Research and Competence Centre will run clinical research, training and sleep medicine services to raise awareness and provide early diagnosis of sleep disorders.

On board is also Promat, a leading professional fire protection products and systems manufacturer, which will relocate its existing Asia-Pacific operational headquarters in Hong Kong to Greater KL.

This company is the main subsidiary of Belgium’s Etex Group, which is headquartered in Brussels.

Other companies InvestKL has brought in are European oleochemicals producer Oleon, which will set up its regional headquarters here to complement its processing plant and leading energy solutions and transport company Alstom, which will open its centre of excellence for regional projects in the city.

 

Source by: The Star

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Hunza plans RM3.5b mixed development project in Bayan Baru, Penang

March 14, 2013 By Leave a Comment

GEORGE TOWN: Hunza Properties Bhd plans to undertake a RM3.5bil mixed development scheme in Bayan Baru, the south-west district of the island, two years from now.

Group executive chairman Datuk Khor Teng Tong said the project on a 40-acre site would comprise a shopping mall, a hospital, an indoor amusement park and a college.

An auditorium with a seating capacity of 3,000 to 5,000 people and an automobile mall that featuring branded cars are also in the pipeline.

“About 55% of the scheme will comprise commercial properties managed by us.

“We are now working with consultants from Singapore on the concept,” he said.

Khor added that the group would develop 700 low-cost units for the squatters who would be relocated.

On the group’s projects in the pipeline, Khor said there were now about RM800mil worth of projects.

These projects would be undertaken from this year till 2016.

The projects include the RM350mil Alila II, RM250mil high-rise condominium scheme in Segambut and a RM204mil landed terraced property project in Bandar Putra Bertam, Kepala Batas.

On its Gurney Paragon office tower block in Gurney Drive/Kelawei Road, Khor said about 70% of the building with a total floor area of 100,000sq ft had been leased out.

“Each floor has a 10,000 sq ft of floor area.

“The Hunza corporate office occupies the first top two floors, while the rest is for leasing.

“We are renting out per sq ft for around RM3.20 to RM3.50.

“When fully occupied, we expect to generate from rental about RM3mil per annum,” he said.

On the RM500mil Gurney Paragon shopping mall scheduled for opening in July, Khor said he expected the mall to generate a yearly return of 10% to 12% of the mall’s total cost.

“We have leased out around 75% to 80% of the mall, which has a total lettable area of 700,000sq ft.

“There would be at least 270 to 280 retail outlets for the mall,” Khor added.

Hunza expects to generate returns on the investment for its Gurney Paragon shopping mall in eight to 10 years.

“All the retail outlets should be fully operational in the second year after the opening,” he said.

 

Source by: The Star

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Foreign real estate investment

September 24, 2012 By Leave a Comment

Lured by dreams of settling in a foreign land and leading a care-free life after retirement or attracted by its low prices and good returns, of late, according to a survey, saw a significant increase in overseas property investments undertaken by retirees and investors alike. Their numbers are growing. Since, there are countries that offer lower prices on properties that allowed the dreams of foreign real estate investment to flourish. Under such circumstances, it is often considered wise for one to only invest in completed project. Payment made prior to completion bear the risk of non-completion. In such event, it might be difficult to recover the monies paid from the foreign developer.

Today, investors are swamped with an abundance of well designed advertisements accompanied by glossy and colourful pictures all over newspaper, magazines and even websites enticing and arousing the investor’s imagination of being seated next to a beautiful infinity pool watching the sunset in the comfort of their home at Central America, Australia or some other world’s more popular destinations. Addition to that, with lower living cost and property pricing, retiring personnel finds it extremely interesting to invest in overseas property. Unfortunately, there were many recorded cases where the investors complained of being misled by the advertisements.  As such, it is always prudent to conduct sufficient research and study prior to taking the move.

Spoilt with enormous choices for holiday makers and expatriates, investors are able to grab hold on a freehold property anytime. Based on survey and observation, countries that are active in promoting foreign real estate investment include:

  1. Dominican RepublicinCaribbean

Situated next toHaitia smallislandofHispaniola,Dominican Republicis famous for its property market acrossCaribbean. Depending on one’s investment budget,Dominican Republicoffers a wide range of invest-able properties from sea-front houses, condominium, villas to unique rural farmhouses. It is known as the Jewel of theCaribbeandue to its clean sandy beaches, clear blue sea, magnificent mountainous terrains and sweet-smelling pine forest. InDominican Republic, if one looks hard enough, one can find fairly affordable property with promising return. The low cost of living is also what attracts the interest of migrants or retiring couples.

2. BelizeinCentral America

Since there are extreme prices placed on land, there are minimal alternative on the selection of property inCentral America. However, due to its proximity to popular tourist spots like Placencia and the island of Ambergris Caye, Belize, located in the British colony, Central America offers majestically layout condominium which blend nicely with its beautiful and scenic surrounding.

3. DubaiinUnited Arab Emirates

Government ofDubaihas transformed this desert place into a modernized city with international acclaim. In Dubai, there are made available, for investment purposes, wide range of luxury condominium and holiday houses and commercial outlets and facilities with impeccable design that are owned by the world’s rich and famous personalities. This is one of the reasons whyDubaiis gaining fame internationally. Best part is investors can purchase any property in the market be it for residential or commercial purposes.

 

Picture by: colourbox

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Cyberjaya properties draw foreign investors

September 21, 2012 By Leave a Comment

PROPERTIES in Cyberjaya are starting to attract interest from foreign investors as the development matures and returns good yields.

Cyberview Sdn Bhd assistant general manager for business, corporate communications and planning Nazri Tumin said Cyberjaya is on the investment radar of investors namely from Japan and South Korea.

“There is a huge demand for Cyberjaya properties due to their good returns,” Nazri said at a briefing on the Cyberjaya Premier Property Showcase here yesterday.

Mah Sing Group Bhd chief operating officer Teh Heng Chong said the company has been getting lots of interest from Hong Kong and Singaporean investors for its properties in Cyberjaya.

Most of the properties in Cyberjaya have been largely up market ever since its inception in 1997.

The premium prices at the location, however, have not deterred even local investors to own a property there.

UEM Land Holdings Bhd chief marketing officer Siti Mariam Mohd Desa said presently about 80 per cent of its property purchasers in Cyberjaya are locals.

Setia Haruman Sdn Bhd chief operating officer CK Lao said demand for houses above RM2 million is still high with a take up rate that can reach 100 per cent for certain projects.

Lao said there are over 20 projects ongoing in Cyberjaya currently with a gross development value of RM10.25 billion.

He noted that there is a provision under Cyberjaya’s development masterplan for affordable housing but that would depend on market demand.

Meanwhile, the developers hope the government would relax rules on financing third property ownership and allocate more funds to improve public transportation accessibility in the Cyberjaya in the upcoming Budget 2013.

The showcase, to be held on September 22-23, will feature seven developers namely Setia Haruman, Cyberview, UEM Land, Mah Sing, Glomac, MCT Consortium Bhd and Emkay Group.

 

Source by: Business Times

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Gold can still shine and analysts believe its price still has room to climb

September 20, 2012 By Leave a Comment

PETALING JAYA: Industry executives say the stimulus measures brought on by the US Federal Reserve and European Central Bank (ECB) have yet to be fully priced into gold, despite the profit-taking that immediately followed the commodity’s rally on Friday when it rose to its highest in seven months.

“Gold is not overbought at all. We think it still has room to appreciate,” said Oversea-Chinese Banking Corp Ltd analyst Barnabas Gan, who has an end-2012 target of US$1,800 to US$1,850 for bullion.

“The US dollar was prior to this our safe haven pick but with the rollout of QE3 (quantitative easing) last week we have shifted our focus to gold as the preferred store of value,” he told StarBiz.

Bullion peaked at US$1,777.51 on Friday, a day after the Federal Reserve announced its third round of quantitative easing.

Both the US central bank and the ECB had since early September introduced plans for open-ended pump priming activities to rouse their economies, with the former committing to buy some US$40bil worth of mortgage-backed securities each month until its labour market improved, and the ECB saying it would purchase, without quantitative limits, sovereign bonds on the open market.

Although gold investors locked in their gains over the past two days, spot gold yesterday briefly overtook its Friday high, climbing to US$1,779.39 per ounce. As at press time, it was up US$3 to US$1,774.25.

“Everytime there is a surge, it is followed by profit-taking. This is called a correction. But the trend we see is that prices are on an uptrend,” Poh Kong Holdings Bhd executive director Ermin Seow said at a briefing.

“Overall, the environment for gold is still quite bullish. Now that QE3 is out, many analysts believe gold can reach US$1,900, if not US$2000, by the end of the year,” Seow said, adding that Poh Kong’s own forecast was a more conservative US$1,800 for this year and US$2,000 next year.

OSK Research technical analyst Mohammad Ashraf Abu Bakar also believes the underlying price trend for gold points upwards, despite some selling. “The current resistance is pegged at US$1,800, the next level being US$1,900. The rally could continue for the next one month. “The selling pressure, if you look at it, has in fact not been able to keep prices down,” he said.

However, OCBC’s Gan noted that a caveat to this was more bad news from the eurozone, which would prompt a flight to safety to the dollar. Factors such as ultra-low interest rates in the developed countries and sustained money printing by central banks have resulted in negative real returns for savers, spurring investors to turn to gold as a hedge against inflation.

Meanwhile, Poh Kong’s Seow said he expected the combined sales of the country’s three listed gold retailers, namely Poh Kong, Tomei Consolidated Bhd and DeGem Bhd, to moderate this year to the mid-teens from last year’s 32% growth on the back of a high base.

An estimated 20 tonnes of gold were sold in Malaysia in 2011 worth some RM4bil, with the three players seizing RM1.5bil of the market.

Poh Kong had the largest share at 52% versus Tomei’s 33% and DeGem’s 15%, Seow explained.

On the outlook for Poh Kong’s sales, Seow said its turnover for the first three quarters this year alone have surpassed last year’s total sales.

“On an annualised basis, our full year revenue should be 20% to 25% higher than last year, Seow said, attributing this to its new outlets, growth in same store sales as well as higher gold prices.

Poh Kong is due to report its financial results for the fourth quarter ended July 31 next week.

The company may also set up shop in neighbouring countries when the Asean Economic Community comes into fruition in 2015, which would enable the duty-free flow of products within Asean, Seow added.

“At the moment we are almost 100% domestic and export very little of our gold. We are more retail-based and do not cater for export markets.

“We could tag along with our retail partners into Indonesia and Vietnam when they venture there.”

 

Source by: The Star

Picture by: numbersleuth

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Filed Under: Commodities & Precious Metals, NON-PROPERTY INVESTMENT Tagged With: ,

House price hike likely

September 3, 2012 By Leave a Comment

GEORGE TOWN: The selling price of properties in Penang will soon surge by 5%-10% following the recent move by Lafarge Malayan Cement to raise cement prices by about 6%, according to housing developers here.

Following Lafarge’s announcement, a 50kg bag of cement is now priced at RM17.50, compared to RM16.50 before the hike.

Penang Master Builders & Building Materials Dealers Association president Lim Kai Seng said 60% to 80% of the materials used for a building comprised cement and cement-related materials.

“This is why an increase in cement price will have a significant impact on property prices.

“The other cement manufacturers in the country have sent signals that they will raise prices very soon,” Lim said.

There are six cement producers in Malaysia, namely YTL Cement Bhd, Tasek Corp Bhd, Cement Industries of Malaysia Bhd, Lafarge, CMS Cement Sdn Bhd, and Holcim (M) Sdn Bhd.

Only Sarawak-based CMS Cement has confirmed it would keep prices at the current level.

Lim said the price of other essential building materials such as sand and aggregate had also increased.

“The price of sand is now between RM40 and RM43 per cu yard, depending on the grade, compared to RM38-RM40 earlier this year.

“The price of aggregates is now at RM21 per tonne, compared to RM20 per tonne earlier this year,” he said.

House prices on the island are expected to rise by 10%, while in Seberang Prai, housing prices are expected rise by 5%, following the hike in cement price.

Kuala Lumpur-based developers such as Mah Sing Group Bhd and SP Setia Bhd with projects in Penang will continue to absorb the cost of the cement price increase.

Ideal Property Development Sdn Bhd managing director Datuk Alex Ooi said the company was now revising the selling prices of its new projects upwards, due to the hike in cement price.

“There will be at least a 10% hike in the selling price of properties on the island.

“A hike in cement price means the price of all cement-related products such as concrete and bricks will rise. Construction cost will go up by between 15% and 20%.

“We expect the rest of the cement manufacturers in the country to adjust the price of cement upwards in the next one to two months,” he said.

In addition to the rise in cement prices, the cost of labour and transportation charges have also increased this year.

Tambun Indah Land Bhd managing director K.S. Teh said the cost of labour had increased to RM45 per day this year, compared to RM35 a year ago.

Transportation charges for sand have increased to RM450 per truck load this year from RM400 a year ago.

“There is also a labour shortage, as many Indonesian workers have gone back to Indonesia, which is booming currently.

“The selling price of properties will be impacted by the hike in raw materials and labour costs.

“However, Tambun Indah will absorb the increase in the price of raw materials until year-end.

“We will revise our pricing next year,” he added.

Teh said the selling price of properties on the island would increase more because of the additional transportation charges to ferry the raw materials to the island.

“This is why the increase in property prices on the island will be around 10%, compared to about 5% in Seberang Prai,” he said.

Tambun Indah will be launching next month the Straits Garden@Jelutong on the island, the Pearl Residence@Pearl City and Pearl Indah@Pearl City projects in Simpang Ampat.

The Straits Garden is a high-rise project comprising 183 condominiums priced from RM688,000 onwards, while the Pearl Residence@Pearl City and Pearl Indah@Pearl City schemes comprise landed properties priced between RM353,000 and RM508,000.

Mah Sing managing director and chief executive Tan Sri Leong Hoy Kum said the cement price hike would have less than a 1% impact on construction cost.

“Most of our projects have been tendered out and the construction costs are already locked in,” he added.

SP Setia property (north) general manager Khoo Teck Chong said the group would absorb this impact for now to be competitive.

”If other raw material prices such as bricks, rebar and tiles were to increase drastically, we may then have to review and adjust our property selling price accordingly,” Khoo added.

Meanwhile, the Malaysian Competition Commission (MyCC) chief executive officer Shila Dorai Raj had said the price hike by cement manufacturers did not at this juncture warrant a formal investigation.

“Price increases are by themselves not anti-competitive in nature. However, if there is evidence of collusion among the competitors to increase prices, this would be of concern to MyCC and may merit an investigation,” she said.

 

Source : Star Property

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