Penang property prices move sideways in Q1 2016

THE Penang housing market moved sideways on both the primary and secondary markets in the first quarter of the year, says Michael Geh (pictured), director at Raine & Horne International Zaki + Partners.

“I noted active transactions on the secondary market with prices staying flat,” he says in presenting the 1Q2016 Penang Housing Property Monitor.

Banks, he adds, only provide loans of up to 70% to 80% of a property’s value and serious first-time homebuyers have to make up the difference in order to sign the sales and purchase agreement.

Michael Geh“A few primary market projects have obtained the Advertising Permit and Developer Licence (APDL) and moved into the stage of processing loans from commercial banks and signing the S&P.” These projects include I-Santorini, SummerSkye and ForestVille, all under Ideal Group.

Will the prices of Penang houses, considered expensive, drop because of the soft market conditions? Geh says prices have come down to more realistic levels, especially with the government pushing the developers to build properties priced from RM300,000 to RM400,000 in the last two years, specifically for owner-occupiers.

Some of these properties, in areas such as Sungai Ara, Patani Road and Relau, have been taken up and are currently under construction, he adds.

Elsewhere in the country, some developers are pushing sales by providing financial assistance to the purchasers. Will those in Penang follow suit?

Geh says such a practice is not widespread for now. “Besides Sunway Bhd and S P Setia Bhd, I don’t see any other developer providing financial packages at the moment. I believe there are plans for such assistance but so far, nothing has been announced.”

He believes a catalyst for the state’s housing market would be the much-talked-about RM27 billion Penang Transport Master Plan (TMP). The ambitious plan will not only benefit the people but also bring about a more equitable housing situation and help retain local talent.

The TMP, he feels, will lead to equitable home property prices as areas that are not in prime locations will become more accessible, boosting demand for homes and resulting in higher prices. Properties in prime areas, which normally fetch higher prices, should see some price correction as demand is more evenly distributed across the state.

Apart from that, Geh opines that the TMP will help retain talent, which will subsequently impact the property market as the pool of workers seek to rent or own residential properties.

“Penang needs the TMP to grow in the next 10 years. We need to stem the migration of youths to the Klang Valley, Iskandar Malaysia and Singapore in search of better job opportunities. We need to create jobs and make conditions more liveable for our youth to prosper,” he says.

At present, two light rail transit lines have been approved under the TMP — one from Prangin Canal to Penang International Airport in Bayan Lepas and the other from Prangin Canal to Straits Quay.

As for creating jobs, the state government is making a concerted effort to develop new business sectors so that Penang can stay relevant to the global economy.

“An industry that has been highlighted by the state is the knowledge economy, such as apps and animation,” Geh says. This has been identified as a key economic sector for the next decade.

There is a proposal for three reclaimed islands in the southern part of Penang island to locate businesses for this sector, he says, and for the islands to be connected by an LRT line that extends from Penang International Airport.

However, it has not been plain sailing for the TMP because one of its components — the Sky Cab or cable car system — has been rejected by the federal government. The 4.8km cable car system, according to the Penang government’s TMP website, was to have connected Butterworth on the mainland to Jelutong on the island. While this is a blow to the state government’s plans, Geh does not believe it will affect property prices.

“Cable car systems are generally more for tourists and not meant to move high volumes of people. I don’t think there will be a large negative impact on the property market. High-volume, high-frequency vessels that travel on water may be a better solution,” he says.

Another component of the TMP is an undersea tunnel linking the island with the mainland. However, further details are not forthcoming at present.

A development that will have an indirect impact on the Penang housing market is the much-debated Gurney Wharf. This 3km-long reclamation project lies just off the shores of popular tourist spot, Gurney Drive.

Geh believes this project has great potential to benefit the island. “I believe Gurney Wharf is an exciting development because it creates recreational activities for Gurney Drive. I think it is a boost to the area.”

Terraced houses

The prices of landed properties did not rise much compared with those of high rises, the data compiled for the monitor reveals. This is due to “stagnation” as there were very few transactions during the quarter under review, compared with the high-rise sector where there was much more activity, Geh explains.

Nevertheless, property values have increased compared with a year ago.

For 1-storey terraced houses, some areas surveyed showed activity year on year but little movement quarter on quarter.

On the island, properties in Jelutong showed the highest price growth, rising 5.88% to RM900,000 from a year ago, followed by houses in Tanjung Bungah (up 5.26% to RM800,000). Houses in Sungai Dua, Sungai Ara and Bandar Bayan Baru saw slight price increases of 2.56%, 2.04% and 1.96% respectively while those in Green Lane and on the mainland saw no changes.

For 2-storey terraced houses, there was no activity q-o-q but prices rose y-o-y in some of the areas surveyed.

The prices of houses in Pulau Tikus rose 6.67% to RM1.6 million, followed by those in Sungai Ara (5.26% to RM1 million) and Sungai Nibong (4.55% to RM1.15 million). Prices remained unchanged in Green Lane and the mainland.

Semi-detached and detached houses

The 2-storey semidees in some areas saw more activity in 1Q2016 than in the previous quarter and last year. Prices in Sungai Dua and Minden Heights rose 6.67% to RM1.6 million q-o-q, followed by those in Sungai Nibong (up 5.71% to RM1.85 million) and Island Park (up 2.27% to RM2.25 million). Prices in Sungai Ara remained unchanged.

There was no q-o-q increase for 2-storey detached houses but 50% of the units surveyed in the monitor saw y-o-y activity.

Island Glades bungalows saw a 3.57% increase to RM2.9 million y-o-y , the prices of Green Lane houses rose 2.86% to RM3.6 million and Pulai Tikus houses were up 2% to RM5.1 million. House prices in Tanjung Tokong, Tanjung Bungah and Minden Heights remained unchanged.

Flats and condominiums

Three-bedroom flats in Green Lane and Bandar Baru Air Itam showed price increases q-o-q as well as y-o-y .

In Green Lane, prices rose 5.26% to RM400,000 q-o-q and 17.65% y-o-y. Units in Bandar Baru Air Itam rose 4.35% to RM240,000 q-o-q and 20% y-o-y.

Compared with a year ago, the prices of flats in Paya Terubong were up 12.5% to RM180,000, followed by Sungai Dua and Lip Sin Garden (6.06% to RM350,000) and Relau (3.45% to RM300,000).

Among the 3-bedroom condos, the biggest gainers were properties in Pulau Tikus, which rose 4.62% q-o-q and 9.68% y-o-y to RM680,000.

In Island Park and Island Glades, prices rose 4.17% q-o-q and 6.38% y-o-y to RM500,000 while condos in Batu Ferringhi rose 2.22% to RM460,000 q-o-q and y-o-y.

Batu Uban condos rose 5% to RM420,000 from the previous year but there was no activity q-o-q. The prices of Tanjung Bungah units remained unchanged.

By Wong King Wai The Edge Property

Soaring house prices worry Penangites below 30

GEORGE TOWN (June 21): Despite the affordable housing programme by the state government, Penangites, especially those below the age of 30, are worried that they are unable to own a house in the future.

This is because housing prices in Penang island have risen by about 50% for the last five years and even for houses that was built under the affordable housing project.

A Bernama survey showed that several affordable housing projects that were completed less than 10 years ago in Bandar Baru Air Itam was originally priced at about RM175,000 but currently being resold at RM300,000 and above.

State Housing, Local and Town and Country Planning Committee chairman Jagdeep Singh Deo, said the state government had no power to control the price of houses being sold by house owners.

At present the state government had set a moratorium of five years for affordable housing and 10 years for low cost housing before it could be sold in the open market.

"There's nothing that can be done by the state government to control the price but, what we can do is to provide more affordable housing so that the people can buy at a lower price," he said.

Muhamad Amir Amin, 26, who worked as a graphic designer, said he earned about RM2,300 per month and could not even able to buy a low cost house with that wage.

"A low cost house costs RM42,000, which I cannot even afford to buy and from my observation, there is no low cost housing in Penang any more.

"All are either low medium cost or affordable housing which cost RM75,000 and above," he said.

Universiti Sains Malaysia (USM) Social Science senior academician, Zainab Wahidin said that building more houses to tackle the increase of property price was not a solution given that Penang's land was limited, especially on the island.

"If the state keeps building houses as an effort to provide affordable housing there will be more empty houses than those being occupied.

"There must be a regulation to control the housing price as a house is a basic necessity. Everybody needs a house to live in," she added.

By Bernama

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Promoting women entrepreneurs; mind your finances

Do we need specific initiatives to help female entrepreneurs? Some say no, because men and women face similar obstacles in business. However, there can be no denying that women face challenges not experienced by their male counterparts.

LAST May, the SME Association of Malaysia organised a talk on women entrepreneurship at its regular SME Club get-together. We were worried that the topic would not be interesting, but to our surprise, the event was well received.

About a hundred people participated in the talk.

When we told the SMEs that we were going to have a talk on women entrepreneurship, some of them asked: Why talk about women entrepreneurship? Does it matter? Why bother?

After all, business is a men’s world. The place for women is at home.

Others said there was no need to differentiate women entrepreneurs from entrepreneurs in general, as many of the barriers faced by female-owned SMEs were similar to those faced by male-owned SMEs.

To this, I would say: Yes and no.

While male and female entrepreneurs may face similar constraints in general, women face specific barriers and challenges not experienced by their counterparts.

While women make up about 50% of Malaysia’s population, less than 20% of the SMEs are owned by women. Even though the number for women entrepreneurs is small, it’s nonetheless encouraging as it shows that women no longer buy the stereotype of business being a male domain.

There are several key reasons for women to get into business. Running your own business provides flexibility in managing career and domestic responsibilities.

Also, it gives some degree of personal freedom to women who are dissatisfied with “fixed” employment. Job flexibility, like work hours, office location, environment, and the people they work with, is appealing to many women.

Other reasons for women to start a business include income security and career satisfaction. Some women become entrepreneurs due to some personal circumstances, like being laid off, divorce, or the retirement of their spouse. They start a business to improve or maintain their social or economic status.

Some women who do not have any previous work skills or experience start a business in order to prove that they can be productive and useful.

The majority of women-owned businesses are smaller outifts than those owned by men, and they are mostly concentrated in the service sector (about 90%). Many of these businesses are likely to be unregistered micro-enterprises operating in the home or on temporary premises, with few employees and limited capital for expansion.

Access to financing is one of the biggest challenges. They are less aware of the options relating to loan and grant opportunities. In addition, women usually lack the collateral required compared to men, stemming in part from restrictions on asset ownership.

Women entrepreneurs are also less likely than their male counterparts to have a history of interaction with formal financial systems, lowering their credit-worthiness and potentially raising interest rates on loans assumed.

They also encounter obstacles in accessing opportunities to acquire knowledge and skills that underpin successful entrepreneurship. This may be due to impediments in access to education, training and job experience. These are usually compounded by the demands of domestic responsibilities.

Time constraints further limit women entrepreneurs’ formal networking, which, in turn reduce access to skill and capacity-development opportunities. Formal networks, such as business associations, provide a wealth of information on business opportunities, access to government officials, grants and support programmes, as well as credit credentials and access to loan packages, to name a few.

Good networks provide good access to information and resources. First-hand information allows entrepreneurs to move one step ahead and grab the opportunities. A good pool of resources would help entrepreneurs to survive in bad times and to expand more effectively.

The Government needs to take a proactive role in promoting women entrepreneurs. We need to put in place gender-responsive policies and capacity-building initiatives to address the structural, institutional and socio-cultural inequalities.

It would perhaps be best to start by enhancing their access to finance, which is essential in building a good business foundation.

By Datuk Michael Kang who is the national president of the SME Association of Malaysia.

Mind your finances

Up to 36 of business failures are caused by inadequate financial management, according to a report by the ACCA. —123rf.com

IN GENERAL, more than 50% of startups fail within five years, and up to 36% of business failures are caused by inadequate financial management, according to a report by the Association of Chartered Certified Accountants (ACCA) entitled “Financial management and business success - a guide for entrepreneurs”.

The report says many entrepreneurs are not equipped to make informed and effective decisions about their financial resources.

“Having the right financial capabilities remains vital throughout the life of a business, whether you are just starting out, have an established business or are looking towards a final exit from a firm,” explains Rosana Mirkovic, ACCA’s head of SME policy.

“Businesses are changing and innovating more rapidly than ever, and the financial management needs of organisations must continue to evolve alongside their developments. Recognising the right financial management capabilities is therefore imperative to their success,” she explains.

Mirkovic adds that understanding financial information is vital for offsetting the risk of business failures as it reveals the early warning signs of impending problems.

The report by ACCA addresses the financial literacy skills gap, potentially serving as a guide to those starting their own businesses and are new to financial management.

Business planning plays a critical role at every stage of the business, says the report.

“Preparing a business plan pushes you to identify and assess the opportunities and threats facing your business. It helps ensure that you have an in-depth understanding of your market, the competition and the broader business environment,” it elaborates.

Effective planning takes into account long-term goals, objectives, strategy, tactics and financial review.

ACCA also advises startups to seek good financial advice and involve their accountants or individuals with financial expertise at the planning stage to take full advantage of their expertise in areas such as business planning, raising business finance, tax planning and setting up financial management systems.

Significant financial expertise may be needed to understand and evaluate the different financial options entrepreneurs may have. This includes knowing the company’s financial strength, financing cost, financial flexibility, business control, financial risk, personal finances and business strategy.

“Good financial control offers far more than just keeping track of purchases and sales. Rather than approach financial control as a chore to be left to the bookkeeper, your aim should be to see how the right capabilities can improve your business,” the report advises.

ACCA notes that business owners should gradually develop the capabilities of their in-house financial team.

“Choosing the right solution for your particular business takes careful planning. Your overall investment in financial capabilities — whether you are paying for additional employees, higher salaries for more skilled employees, training costs, use of external providers or upgraded systems — must be affordable and offer value for money,” it adds.

But financial management is at its most powerful when used to drive improvements in business.

Moreover, for many entrepreneurs, it could also lead to a successful business exit. Preparation for a successful exit typically begins far in advance of its final date.

Effective exit planning needs to start early and take into account a whole range of issues like timing, succession, management systems and tax efficiency.

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BDS, the Beidou Navigation Satellite System from China

China launches 23rd BeiDou satellite into space - CCTV News - CCTV.com English
 http://t.cn/R5SsGFc

China eyes Silk Road countries for its Beidou satellite system

18 satellites to launch for BDS by 2018

China on Thursday vowed national efforts to complete its Beidou satellite navigation system to serve global users by 2020, with priority going to countries involved in the new Silk Road initiative.

The current goal of developing China's BeiDou Navigation Satellite System (BDS) is to "provide basic services to countries along the land and maritime Silk Roads and in neighboring regions by 2018, and to complete the constellation deployment of 35 satellites by 2020 to provide services to global users," said a white paper released Thursday by the State Council Information Office.

A "globalized" BDS would have "positive and practical significance" in terms of connectivity around the globe, especially the interconnection between China and Southeast Asian countries under the Silk Road plan, known as the Belt and Road initiative, Huang Jun, a professor at the School of Aeronautic Science and Engineering at Beihang University, told the Global Times on Thursday.

In line with the Belt and Road initiative, China will jointly build satellite navigation augmentation systems with relevant nations and promote international applications of navigation technologies, the white paper states.

To fulfill the 2018 goal, the country plans to launch some 18 satellites for the BDS by 2018, Ran Chengqi, BDS spokesperson, told a press conference on Thursday.

"In priority Chinese cities such as Beijing and Urumqi in Northwest China's Xinjiang Uyghur Autonomous Region, as well as low latitude countries like Thailand, the BDS is capable of offering a positioning accuracy of better than five meters," said Ran, who is also director of China's Satellite Navigation System Management Office.

Since 2015, the country has sent up seven more satellites into space in support of the BDS, including five navigation satellites and two backup satellites, Ran added, citing Sunday's launch of the BDS' 23rd satellite - a backup satellite - as an example.

In 2020, the BDS might offer different positioning accuracy choices and could provide centimeter-level accuracy under certain requirements, said Lu Weijun, a BDS expert at Beijing University of Posts and Telecommunications.

Unique features

Despite being a late starter compared with the US-developed GPS, China's BDS has unique features, Huang said, citing the BDS short-message communication service as an example.

"The short-message communication service is mainly useful in places with insufficient ground and mobile communication capabilities, such as deserts, seas and disaster areas where communication facilities have been destroyed," Lu told the Global Times.

More than 40,000 fishing vessels along China's coastline have been equipped with the BDS application terminals, Ran said, adding that they also provided better communication for islands near the coastline.

The BDS short-message communication service is mainly handled by five Geostationary Orbit (GEO) satellites, Lu said. Located above China, the five GEO satellites mainly serve a coverage area of Chinese territories and the Asia-Pacific region" and "could be used to locally enhance the signal in wartime, when other satellites might have been closed."

An independently designed global navigation and positioning network would also contribute to national security, Huang said. Industrial chain

China is developing chips, modules and other basic products based on the BDS and other compatible systems, and fostering an independent BDS industrial chain, the white paper noted.

"By the end of April, the BDS technology has been applied to more than 24 million terminals and over 18 million mobile phones," Ran said.

It is expected that by the end of this year, up to 50 million mobile phones will have been installed with domestic chips that will be compatible with three satellite navigation systems, namely the BDS, GPS and Russia's GLONASS, Wang Hansheng, vice president of Olink Star, a Beijing-based company that makes navigation satellite system products, told the Global Times.

By Ding Xuezhen Source:Global Times

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Smartphones going modular

A near-final prototype of Google’s Project Ara. – Photo : ©Google ATAP

There has been much talk of modular smartphones this spring, after LG released its G5 handset and Google presented a near-final version of its Project Ara.

Modular smartphones differ from regular mobiles thanks to their “building block” design, made up of various interchangeable modules containing different hardware components. These can be switched quickly and easily to boost performance or replace faulty parts.

The current wave of modular smartphones draws on a concept created by a Dutch designer, Dave Hakkens, whose Phonebloks mobile is based on a set of small modules (processor, hard disk, camera, etc.) that can be easily changed and updated.

Once assembled, they form a smartphone with varying levels of performance and functionality, a bit like a desktop PC. As well as making savings for users, a modular design can also help counter planned obsolescence in smartphones.

This idea inspired Google’s Advanced Technology and Projects group (ATAP), who went on to develop Project Ara. Initially presented as a similar project to Phonebloks, comprising almost as many modules as a smartphone has components, the handset evolved, little by little, into a slightly less ambitious prototype presented at the last Google I/O conference in Mountain View, California.

It now takes the form of a smartphone with just six interchangeable modules, including a second display, a camera, memory, a speaker, etc. The screen, processor and RAM are all grouped together in one core block that cannot be modified. A developers’ kit is due to be released in the fall ahead of a planned consumer launch in 2017.

Another smartphone based on the same idea hails from Finland. However, the PuzzlePhone hasn’t been the focus of anywhere near as much media attention as Google’s concept.

This modular mobile only has three interchangeable blocks: one for the display, another for the battery and one main system block housing the processor, memory and camera. It should go on sale before the end of 2016.

The only modular smartphone currently available to buy is the LG G5, unveiled at the 2016 Mobile World Congress in Barcelona, Spain, back in February.

This handset has a slide-out bottom for changing the battery in just a few seconds. As well as its removable battery, additional interchangeable elements can be added to the phone, such as camera and audio modules. The LG G5 is out now priced at around $650.

Check out Project Ara in this video below:



AFP - RelaxNews

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Dealing with the new abnormal negative interest rate policies with exceptional high debt

Negative rates: ECB president Mario Draghi at the Brussels Economic Forum on Thursday. The ECB and Bank of Japan are already experimenting with negative interest rate policies. – Reuters

HOW can this be normal?

Twenty-nine countries with roughly 60% of the world’s GDP have monetary policy rates of less than 1% per annum. The world is awash with debt, with sovereign, corporate and household debt of over US$230 trillion or roughly three times world GDP.

To finance their large debt and deal with deflation, both the European Central Bank (ECB) and Bank of Japan are already experimenting with negative interest rate policies (NIRP). If these do not work, look out for helicopter money, which means central bank funding of even larger fiscal deficits.

Either way, at near zero interest rates, the business model of banks, insurers and fund managers are broken. Deutschebank’s CEO has recently warned that European bank profits will struggle more as negative interest rates play into deposit rates. No wonder bank shares are trading below book value.

The problem with the current economic analysis is that no one can ascertain whether exceptionally low interest is a symptom or a cause of deep chronic malaise. Exceptionally high debt burden can only be financed by exceptionally low interest rates. The Fed now feels confident enough to raise interest rates, which means that the US asset bubbles will begin to deflate, spelling trouble to those who borrow too much in US dollars, which would include a number of emerging markets.

As Nomura chief economist Richard Koo asserts, the world has followed Japan into a balance sheet recession, with the corporate sector refusing to invest and consumer/savers too worried about outcomes to spend. The solution to a balance sheet (imbalanced) story is to re-write the balance sheet, which most democratic government cannot do without a financial crisis. 

Like Japan, China’s dilemma is an internal debt issue of left hand owing the right hand, since both countries are net lenders to the world. This means that foreigners cannot trigger a crisis by withdrawing funds. The Chinese national balance sheet is also almost unique because the financial system is largely state-owned lending mostly (about two thirds) to state-owned enterprises or local governments. The Chinese household sector is also lowly geared, with most debt in residential mortgages and even these were bought (until recently) with relatively high equity cushions.

Unlike the US federal government which had a net liability of US$11 trillion or 67% of GDP at the end of 2013, the Chinese central government had net assets of US$4 trillion or 42% of GDP. Chinese local governments had net assets of a further US$11 trillion or 123% of GDP, compared to US local government net assets of 45% of GDP. Local governments hold more assets than central or federal government because most state land and buildings belong to provincial or local authorities.

Thus, unlike the US where households own 95% of net assets in the country, Chinese households own roughly half of national net assets, with the corporate sector (at least half of which is state-owned) owning roughly 30% and the state the balance. In total, the Chinese state owns roughly one-third of the net assets within the country, compared to net 4% for the US federal and state governments.

Sceptics would argue that Chinese statistics are overstated, but even if the Chinese state net assets are halved in value (because land valuation is complicated), there would be at least US$7.5 trillion of state net assets (net of liabilities) or 82% of GDP to deal with any contingencies.

Furthermore, unlike the Fed, ECB or Bank of Japan, the People’s Bank of China derives its monetary power mostly from very high levels of statutory reserves on the banking system, which is equivalent to forced savings to finance its foreign exchange reserves of US$3.2 trillion. Thus, the central bank has more room than other central banks to deal with domestic liquidity issues.

What can be done with this high level of state net assets, which is in essence public wealth? My crude estimate is that if the rate of return on such assets can be improved by 1% under professional management, GDP could be increased by at least 1.5 percentage points (1% on 165% of GDP of net state assets).

How can this re-writing of the balance sheet be achieved? There are two possibilities. One is to allow local governments to use their net assets to deleverage their own local government debt and their own state-owned enterprise debt. This could be achieved through professionally managed provincial level asset management/debt restructuring companies.

The second method is inject some of the state net assets into the national and provincial social security funds as a form of returning state assets to the public. People tend to forget that other than the painful restructuring of state-owned enterprises in the late 1990s, which led to the creation of China’s global supply chain, the single largest measure to create Chinese household wealth was the selling of residential property at below market prices to civil servants.

The size of the wealth transfer was never officially calculated, but it paved the way for boosting of domestic consumption by giving many households the beginnings of household security.

The injection of state assets into national and social security funds was not achieved in the 1990s, because the state of provincial social security fund accounting was not ready. But if China wants to boost domestic consumption and improve healthcare and social security, now is the time to use state assets to inject into such funds.

At the end of 2014, Chinese social security fund assets amounted to 4 trillion yuan, compared with central government net assets of 27 trillion yuan (Chinese Academy of Social Science data, 2015). Hence, the injection of state assets (including injection by provincial and local government) into social security funds as a form of stimulus to domestic consumption and more professional management of public wealth is clearly an affordable policy option.

In sum, at the individual borrower level, there is no doubt an ever increasing leverage ratio in China is not sustainable. But the big picture situation is manageable. If the policy objective is to improve overall productivity (and GDP growth) by improving the output of public assets, the timing is now.

By Tan Sri Andrew Sheng who is Distinguished Fellow, Asia Global Institute, University of Hong Kong.


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