DATO’ COLIN TAN JUNE TENG
Group Managing Director, Hatten Group of Companies
There has been a lot of talk that the local property bubble will undergo an epic burst. What are your thoughts on that?
Every year, there is talk about the property bubble. In my opinion, 2015 will not see the bubble burst because, despite the worry over price hikes, the upcoming GST and lower petrol subsidies, Malaysia’s economy is doing well, and is predicted to grow between five and six per cent in 2015. The nation’s GDP growth of six per cent in 2014 is relatively high compared to that of other countries. Malaysia’s property prices are also still relatively low compared to other Asian countries, so there is a large price margin to catch up on. There is room to grow and values will continue to appreciate. If you study the current population demographic, Malaysia is dominated by a young generation between the ages of 25 and 35 years. This points to a demand for property, which is further supported by a strong rural-urban migration of people to major cities looking for jobs, creating a need for more homes in these locations. Moreover, the accessibility of home-ownership is increased with government financial support initiatives such as My First Home (MFH), 1Malaysia People’s Housing programme (PR1MA) and the latest Youth Housing Scheme.
Can this be a realistic scenario, though, considering prices are still going up?
My opinion is that prices will consolidate, which means appreciation will not be as great as in previous years. However, this will be a good situation for first-time house buyers who are losing the income appreciation versus house price appreciation race. Property investors would benefit from the cooling-off period because you cannot liquidate your asset if it is unaffordable to the majority. Residential investment is also a global market and developers are now catering to a wider range of markets as well as diversifying their portfolio based on demand and supply, returns and risk profile of each location.
How would you compare Malaysia’s residential housing market to those of other cities in the region?
Malaysia has seen strong growth of late and this looks set to continue. However, if you compare Kuala Lumpur’s prices with Singapore, Hong Kong and Thailand, we still have room to grow. Nevertheless, we are seeing a rise in high quality world-class developments because of our prime location and relatively low prices. Fluctuations in commodity and currency markets, along with wider economic trends, will affect speculative investments rather than homeowners in general. Moreover, the government has also implemented the necessary curbs, which has seen the adjustment and stabilisation of suburban property prices.
Several urban development researchers have commented recently that Malaysia’s property market is largely, and even severely, unaffordable. What do you think?
Property prices seem to be climbing but this is because of inflation. In Malaysia, property prices have been consistently climbing at about six to seven per cent per year for the past 40 years. There will always be ups and downs in inflationary pressure of property prices but, when averaged over the long term, it maintains around six to seven per cent. Over the past five years, property prices have seen a steady growth but it follows in relation to our rapidly growing economy and this will continue on an upward slope in 2015.
Do you also think Malaysia is in danger of supporting ‘homeless’ generations in the future, generations who can’t afford to own their own homes?
The government is actively addressing this issue with programmes such as My First Home (MFH) Scheme, 1Malaysia People’s Housing Programme (PR1MA) and the Youth Housing Scheme that will waive downpayments and subsidise ownership by up to RM10,000 for 20,000 married couples under 40. These initiatives are put in place to ensure that the necessary financial structures and support channels are available to aid proper housing ownership for future generations.
Lastly, what can we expect from the Hatten Group in the years to come?
The Hatten Group will continue to develop projects that are meaningful to the community, adding to the regional economy as well as creating objects of architectural beauty. In terms of housing development, our SilverScape @ Hatten City, scheduled for completion in Q4 2015, will provide over 750 high-rise homes to cater to the increasing demand for residences in Malacca. Another residential area within Hatten City is Imperio Residence, which will offer 950 units and is scheduled for completion by mid-2017. In fact, Hatten City Phase 1, comprising Elements Mall (for family shopping), SilverScape (high-rise residence), DoubleTree by Hilton (premium hotel) and the Teddie Bear Hotel (hotel with themed suites), is scheduled for completion by Q4 2015.
Our recent project, Harbour City, has also launched the Hatten name into the theme park and entertainment sector, with a massive 500,000 sq ft indoor and outdoor Ocean Kingdom Water Theme Park. It has a total investment value of over MYR800million. Soon-to-be-unveiled also are our high-rise SOHO blocks in Capital City, Iskandar, Johor. More mixed developments are slated for launch soon in Klebang and Ayer Keroh, Malacca. We are also excited about our upcoming 66ac World Trade Hub fronting the Straits of Malacca. This massive development will significantly boost the state economy.
On the hospitality side, we are making great strides. Our flagship hotel, Hatten Hotel Melaka, is the largest premier hotel in the state, with 704 deluxe suites and a multi-award winning record that sees 85 per cent weekly occupancy. Meanwhile, our Estadia by Hatten, a 200-room ‘Peranakan-inspired’ boutique hotel will open its doors in Q2 2015. We are proud to share our global partnerships with acclaimed international hotel conglomerates, namely Hilton Worldwide, Hyatt Group and Marriott International. Overall, our Group Hospitality division is aiming to build and own over 5,000 hotel rooms across Malaysia by 2020.
To enrich the socio-economic landscape, Hatten aims to preserve Malaccan culture with a trio of initiatives to highlight the unique elements of Peranakan Baba-Nyonya culture. There is Terminal Pahlawan, the first Peranakan-themed mall in the region; Estadia by Hatten, a Peranakan-inspired boutique hotel; and Nyonya Memoirs, an immersive live theatre exhibit valued at over MYR10million.
We are also moving towards developing educational facilities and medical infrastructure, convention halls and concert arenas, with an emphasis on creating spaces that aid health and inspire creativity within our community. In terms of growth and expansion, the group is also looking to venture into new areas such as Raub, Pahang.
LOW SU MING
Executive Director, Low Yat Group
There has been a lot of talk about an epic burst of the local property bubble in the offing. What are your thoughts on that?
When analysing the property market for any given location, be it in Malaysia or elsewhere, and as to whether there’s ‘overheating’ or a ‘property bubble’, we need to understand the dynamics of that particular market. Factors such as product, pricing, location, design, marketing and the like are undoubtedly still key determinants for success in any project, but having some luck in timing amidst an extremely volatile and dynamic market, both local and global, is certainly becoming more important .
Can this be a realistic scenario, though, considering prices are still on the rise?
The Malaysian market has shown far greater resilience historically than neighbouring cities like Hong Kong and Singapore, as properties here are still regarded as good value and the current weak ringgit further enhances the attractiveness in investing here. And our infrastructure – roads and highways, especially – are very good and still improving.
Several urban development researchers have commented recently that Malaysia’s property market is largely, and even severely, unaffordable. How would you react to that?
Sustainability of pricing still boils down to supply and demand. As long as land prices continue on an uptrend, I don’t see new launches getting cheaper. You can still get good deals from the sub-sale market but, again, it depends on sector, location and timing.
How would you compare Malaysia’s residential housing market to other cities in the region?
Here, we have a full range of residential property offerings, from landed housing to townships – big and small – and developers today are more conscious of the need to incorporate lifestyle features and facilities into their developments. Even five star-branded serviced residences such as the Four Seasons, Ritz-Carlton, St Regis and the like, are now available at a fraction of the price here, as compared with the same brands in Hong Kong and Singapore. Overall, we are indeed highly comparable and on par with residential offerings. Given a similar product and comparable location in the aforementioned cities, the premium price in Malaysia is still lower than a depressed price there.
Do you also think Malaysia is in danger of supporting ‘homeless’ generations in the future, those who can’t afford to own their own homes?
The government continues to recognise the need for affordable housing but it is important to understand how to meet these goals through accurate feedback and data from credible and recognised industry players. It will not serve the purpose of owning an affordable home in a location that is lacking in basic infrastructure, such as roads and public transport. Both the public and private sectors must play their part in fulfilling this area of demand. But, having said that, prices are still largely market-driven.
Lastly, what can we expect from the Low Yat Group in the years to come?
Real estate will remain a core business for Low Yat. We still possess the pioneering spirit to grow with Malaysia. Our goal for the group is to work towards sustainability in managing both challenges and success. On the international front, we prefer to have presence in countries where we feel confident and comfortable investing in.
SAM TAN
Group Managing Director, Ken Holdings Berhad
There has been a lot of talk that the local property bubble will undergo an epic burst. What are your thoughts on that?
Personally, I feel there is no property bubble compared to the situation in the United States. Malaysia is still facing a shortage of houses and, with that, comes a natural demand. Our population is young and there is an organic growth in the demand for new homes each year.
Can this be a realistic scenario, though, considering prices are still on the rise?
There are many factors affecting the increase in property prices, including rising land costs, construction and labour costs, the GST effect and compliance costs. No landowner will sell his or her land for yesterday’s cost; they are always asking for tomorrow’s price. With that, and the organic growth in demand for housing, it will be hard to imagine the prices of property dropping in the near future.
Several urban development researchers have commented recently that Malaysia’s property market is largely, and even severely, unaffordable. What do you think?
It is true and it’s the same all around the world. As the population in every country grows, there will always be a need for more homes. With the population concentrated in certain locations, not everyone will be able to afford one. In comparison, Malaysia is still very affordable compared even to our Asean neighbours. We need a big boost in per capita income to be able to achieve the reality of everyone owning their own homes.
How would you compare Malaysia’s residential housing market to those of other cities in the region?
Malaysia has ample land with a relatively small population spread out across the country. Concentration of populations in the bigger cities and the lack of new land are what the reasons house prices to go up, especially when there is continued organic growth and demand.
Do you also think Malaysia is in danger of supporting ‘homeless’ generations in the future, generations who can’t afford to own their own homes?
Malaysia still has large tracts of undeveloped land and affordable homes are available, albeit much further out. With the upcoming extension of the MRT system, new areas will start becoming feasible home locations, while providing the opportunity to commute to work via public transport. We have to realign our thinking when talking about affordable homes. We can’t all live in the city centre’s Golden Triangle and expect it to be affordable, right?
Lastly, what can we expect from Ken Holdings in the years to come?
We are looking forward to introducing our Menara KEN @ TTDI by the end of 2015, which will showcase a new breed of platinum-grade office with an F&B hub, and a performing arts theatre and art gallery. This will be the new pulse of Taman Tun Dr Ismail in Kuala Lumpur, and will be a great addition to the neighbourhood.
