Houses prices hardly fall

HOUSING INVESTMENTS By THEAN LEE CHENG 

 On a per sq ft basis, it has risen

THERE was a lot of talk late last year that property prices will tumble in 2012 after the steep rise in the residential sector over the past few years. So far, we have not seen any of that.

What we are seeing is:

● Bank Negara's tightened guidelines on consumer lending have started to work. Loan applications and loan approvals have fallen in January;

● In certain locations, house prices and rental have started to ease; and

● Developers are offering very enticing terms since the beginning of this year.

Keep your finger on these three factors and let us now take a look at today's launches. In some of these launches, buyers need only to pay about 1% downpayment of the property price instead of the required 10% on signing of the sale and purchase agreement. The stamp duty and legal fees are also waived and they need not pay anything else until after the property is completed. Such schemes have attracted many buyers.

The question to ask is: If the market is as good as many claimed it to be, why are developers offering such schemes? When a property is sold, it is registered as a sale. But the absolute revenue of the unit is yet to be paid.

For easy calculation purposes, 10% of a RM500,000 property is RM50,000. If the first 10% is paid, this RM50,000 is registered as revenue by the developer, but in the sales column, a sale of RM500,000 is recorded. That is why the sales and revenue figures vary considerably.

If a developer allows a buyer to pay only 1% of the purchase price, this does not mean he “loses” that other 9%. He will get it back after a certain period of time. The same goes for the waiver of the stamp duty and legal fees. The developer has to pay the lawyers for services rendered. All these charges and fees are packaged into the deal which the buyer will have to bear in due time. In this case, later rather than sooner.

Developers are offering such attractive terms in order to make a sale. Many of these schemes are offered in condominium projects because there is generally a glut in this segment. While such schemes may attract genuine buyers who need a roof over their heads and who are thankful that they can defer payment, it also attracts those who have no problem forking out that 1% downpayment and take a gamble that they will be able to offload it when the project is completed.

If one were to drive around certain parts of the Klang Valley today, there are some completed high-rise with large mobile numbers plastered on windows. It may not be so easy to offload units when there are so many of them.

What is noticeably absent, and which many would like to see are more launches of landed housing. But this is unlikely to happen. Only the secondary market is offering landed units, which may explain to a certain degree why the secondary market was rather robust last year. It applies not only for the Klang Valley, but for Penang as well and is a reflection of strong domestic demand despite the many negative predictions for this year.

When a developer considers a piece of land, he thinks of how much he can make from it. If he were to build a condominium and throw in various facilities, he can sell more houses than if he were to build landed units. That is why most of the launches today are high-rise projects, be it condominiums or serviced apartments.

Developers are also limited by what they have. Increasinlgy, land in city centres and popular areas are getting smaller. Which explains why in highly dense areas, condominium projects continue to be sprout up in the most congested of areas.

The development of landed units can only take place when there is large tracts of land, which also explains why the big boys like Mah Sing and SP Setia are venturing further away from city centres.

The other obvious factor in today's launches are the size and price of the condominium units. Most of the units are small. Studio apartments may be in the 500 sq ft range or thereabouts while those targeted at families may be three-bedroom units with built-up areas of 1,200 sq ft onwards. Most of the launches today are priced close to RM700,000 onwards. On a per sq ft basis, the price is still going up, whether it is a Petaling Jaya address or a Bukit Jalil one.

So, while sales volumes may stagnate in newly-launched projects (which explains why developers are offering units for sale with a 1% downpayment), on a per sq ft basis, prices does not seem to be stabilising. Developers are trying to maintain affordability by having smaller units, deferring payment and leveraging on low interest rates.

Assistant news editor Thean Lee Cheng is glad that Bank Negara is monitoring the household debt and lending in the property sector closely as this year promises to be an exciting one.

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Secondary property market set to soar 
The fear factor in property 
Malaysian High-end property expected slower 
Property developers – the real landlords!

Secondary property market set to soar

By DAVID TAN davidtan@thestar.com.my

THE sub-sale prices of landed property in the prime locations of Seberang Prai are expected to increase by 5% to 10% this year.

Henry Butcher (Seberang Prai) senior manager Fook Tone Huat said this was because there was stronger demand for landed property in the secondary market.

“In the secondary market, a terrace property in prime locations such as Bukit Mertajam, Simpang Ampat and Jalan Raja Uda is priced around RM385,000 now, about 10% higher than a year ago but relatively reasonable,” Fook said.

The stricter conditions of bank lending, a weak global economy and a higher pricing of new landed property would see transactions in Seberang Prai rising only slightly in 2012 over 2011.

Fook said: “However, we expect more property transactions in the sub-sales market due to the attractive prices,” he said in an interview.

He added that last year, there were about 18,000 transactions of new and old property in Seberang Prai. About 50% of the transactions were for new property, while the sub-sales comprised about 30%, he said.

Fook said that in general, the Seberang Prai property market for 2012 would be challenging in view of the uncertainty in the global economy and the new set of financing ruling imposed by Bank Negara.

“The take-up rate for those high-end categories is expected to gradually slow down but for those in the medium categories, the sales rate should still maintain,” he said.

“Prices would still be on the upward trend for landed houses priced below RM500,000 and for development land in the prime areas, but the rate would be at a slower pace.

“For those high-end property, prices are expected to be flat. Nevertheless, property prices are not expected to decline in view of the relatively resilient domestic economy and the long-term impact from the new economic transformation programmes,” he said.

Related post:
The fear factor in property

Lawyers must constantly improve skills

By Roger Tan

The Bar Council will be advocating the CPD scheme at the 66th annual general meeting of the Malaysian Bar, and we, as lawyers, must not be averse to change.  

TOMORROW at the 66th annual general meeting of the Malaysian Bar, the Bar Council will attempt for the fourth time, after failing in 2003, 2005 and 2006, to introduce a mandatory Continuing Professional Development (CPD) scheme for all practising lawyers and pupils in Peninsular Malaysia.

Under the proposed CPD scheme, a lawyer will have to chalk up 16 CPD hours or points in each 24-month cycle commencing July 1.

A pupil, on the other hand, has to accumulate eight CPD hours during his nine months of pupillage 
(training). The CPD points can be earned from participating in a variety of CPD activities - ranging from attending courses and seminars, lecturing, writing law books and articles (such as this I hope) to attending Bar’s general meetings and activities in accordance with a set of CPD Guidelines.

This scheme will be implemented on a voluntary basis for the first two years. After that, failure to accumulate the requisite CPD points within the stipulated period may result in the lawyer not being able to renew his practising certificate for the following year and the pupil not being able to be admitted to the Bar.

In addition to this, the non-CPD compliant lawyer may also face disciplinary proceedings as this may be tantamount to a “misconduct” within the meaning of section 94(3)(k) of the Legal Profession Act 1976 (LPA).

It appears that the main reason why the Bar Council is advocating the CPD scheme is that other Malaysian professionals like architects, engineers, company secretaries and accountants as well as other major legal jurisdictions like Australia, Britain, Hong Kong, Ireland, the Netherlands, the Philippines, Singapore, South Africa and the United States all have a mandatory CPD scheme.

However, to me, there must first be in place a proper legal framework and infrastructure for implementing the CPD scheme before it is made mandatory. Perhaps, the Bar Council can successfully come to grips with these matters in a matter of two years.

In this respect, we have much to learn from Singapore how it prepares the legal profession there for the CPD scheme which is expected to be fully implemented by April.

Its CPD scheme will be administered by the Singapore Institute of Legal Education (SILE). No lawyer will be exempted as of right from the scheme, but those who seek exclusion from it may apply to a Waivers Committee established under the SILE.

For this purpose, the Legal Profession Act of Singapore (SLPA) was amended. Section 10(2)(i) of SLPA empowers the Board of Directors of SILE, after consulting the Singapore Minister of Law and Council of the Law Society, to make rules to “prescribe the requirements relating to continuing professional development that must be satisfied by advocates and solicitors … and the measures which may be taken to verify whether those requirements have been complied with and to enforce compliance with those requirements.”

Currently, our LPA does not have a similar provision, albeit it can be argued that such rules can still be made under section 77(1) LPA with the approval of the Attorney General.

Further, if Sections 32 and 10 of the LPA are not respectively amended, it may be unlawful for the Bar Council to deny a lawyer his practising certificate or prevent a pupil from being admitted to the Bar for non-compliance with the CPD Guidelines.

Further, it is arguable whether a resolution of the Bar of this nature can be treated as ‘law’ within the meaning of Article 5 of the Federal Constitution which provides that no one should be deprived of his life (which our courts have interpreted to include livelihood) save in accordance with the ‘law’.

In any event, it is hoped that before the CPD scheme is made mandatory, the Bar Council will resolve these issues as well as consider the idea of incorporating a special purpose vehicle wholly owned by the Malaysian Bar to administer the CPD scheme.

Apart from the above reservations, I would declare my support for a mandatory CPD scheme. In coming to my decision, I find support in the words of Singapore Chief Justice Chan Sek Keong and the then Law Society vice president Wong Meng Meng spoken on May 29, 2010 at a ceremony admitting 248 new lawyers to the Singapore Bar.

“The law is a profession of life-long learning and the best lawyers are those who learn all the time. Unless you work at it continually, it may still not be very much at the end of your career. A lawyer can never truthfully say that he has learnt enough, and the day he says that is the day he should retire from practice,” Chan said.

“If a lawyer thinks that he has absolutely not enough to learn then that is the beginning of his downfall. And that is also part and parcel of arrogance,” added Wong.

Of course, there are various opposing views to making the CPD scheme mandatory, for example, that there should be no interference with a professional’s independence and neither should they be forced and treated like children. Life-long learning is a personal choice and if the lazy and egotistic ones do not improve themselves, they will soon be consumed by market forces. In other words, one can lead a horse to water but one cannot make it drink! The scheme is introduced essentially to address the problem with poor attendance at the Bar’s annual general meetings and law seminars and conferences.

Also, compelling lawyers to attend courses cannot guarantee that they will be attentive during the entire exercise. The CPD points can be easily manipulated as there is no effective mechanism to ensure that members who sign up for the relevant CPD activities will stay on until completion. For practitioners from small firms and in remote areas, they are genuinely concerned about the costs involved and the accessibility to CPD activities in and near the areas where they practise. Most of all, it is not fair to say that those who are against CPD are not for continuing professional development when the whole scheme has not been thought through carefully.

Some of the above views are not without basis. But they are not new. The list will go on for those who are just not interested in it. They had all been employed in the last three mentioned annual general meetings to shoot down this proposed scheme. Of course, in the light of the last three unsuccessful attempts, had the Bar Council gone ahead to legislate and introduce it without first reverting to the members, the entire Council will most likely be hauled up to answer a motion of no confidence in an extraordinary general meeting.

But that should not mean that this time we should resign to fatalism as if we are flogging a dead horse simply because a voluntary scheme would never work. We must not be averse to change and must have the courage to show that we can self-regulate in our interest as well as in the public interest. To my mind, acquiring knowledge is just like drinking water. No doubt, there are bound to be teething problems in its initial implementation, but unless we bite the bullet and go ahead with it, we would never to able to realise its potential benefits.

In fact, this minimal means of maintaining and improving lawyering skills is hardly a painful process. In Singapore, in addition to meeting the requirement of CPD, a lawyer who now intends to practise as a sole proprietor or a partner of a law firm must also successfully complete the Legal Practice Management Course conducted by the Law Society. Section 75C of SLPA also states that only a lawyer or a legal officer of more than three years of experience is allowed to set up or join a law practice as a sole proprietor or a partner. Similarly, in most other jurisdictions, all new law graduates are also required to sit and pass a common Bar examination.

Favouring a mandatory scheme will show that we lawyers are committed to maintain and remain professionally competent in the public interest.

I am sure experience tells us if it is to be left to the individuals to undertake continuing professional development, little will be done. There is also no point to bemoan the declining quality of new entrants to the legal profession if we the current practitioners do not lead the way in raising the bar towards excellence.

It is for this same reason that we say lawyers practise law because we can never be perfect in it, and we have to keep on practising with the hope that someday we will become perfect in what we practise. Hopefully, that day will be day when we retire from law practice.

That said, the biggest concern now is actually how many lawyers will bother to turn up for the meeting tomorrow. With the 2006 amendment to the LPA, the quorum is now set at 500 out of 14,000 lawyers. It is anticipated that not more than 1,000 will attend, and by the time the vote is taken on the motion, there will probably be not more than three to four hundred lawyers left to make a decision that will affect all these 14,000 learned lives.

In those years before 2006 when it was mandatory to meet the high quorum requirement without which the new Council could not be formed to issue practising certificates, thousands of lawyers would somehow with the fine spirit of camaraderie make an effort to meet this mandatory requirement. But tomorrow, when attendance is almost entirely voluntary, will tell whether this motion will be killed for the fourth time or carried for the very first time. Let us hope that the insouciance and ‘tidak-apa’ attitude of majority of members of this honourable profession will not once again take the blame.

Finally, may all lawyers draw wisdom from these inspirational words of Maimonides (1135-1204) in the Daily Prayer of a Physician before Visiting a Sick Man: “When wiser men teach me, let me be humble to learn; for the mind of man is so puny, and the art of healing is so vast … May there never rise in me the notion that I know enough, but give me strength and leisure and zeal to enlarge my knowledge. Our work is great and the mind of men presses forward forever.”

*The writer is a former member of the Malaysian Bar Council.