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COVER STORY
A Vertical City
SPOTLIGHT
Southern Prosperity
SPECIAL REPORT
Poised for Growth
INVESTOR PREFERENCES
The China Report
POLICY
Its All a Question of Intention
IN A NUTSHELL
Growing Retirement Savings
Through Property
GRAPHICALLY SPEAKING
Landed Property Price in 1Q2011p
Compared with 1Q2010
A VERTICAL CITY
The transformation of what was once plantation land into one of Kuala Lumpurs premier
high-rise residential enclaves offers a development model worthy of emulation
Who would have thought that what was
previously part of a rubber plantation
would one day become a sought-after
high-rise residential address? The tale
of Mont Kiaras evolution is one worthy
of note, not just because its a true blue
Malaysian real estate success story, but
also because of the lessons it offers
both developers and property investors
alike.
by Afiq Syarifuddin
Figure 1: Map of MontKiara
COVER STORY
Gross Floor
Area (sq.ft)
Amarin Group
4,073-6,141
Asia Quest Holding
1,347-4,100
Bukit Kiara Properties 2,090-3,732
Bukit Kiara Properties
633-1,213
Dijaya / Sunway
1,235-4,573
Tian Gloval
1,615-5,490
Sunrise Bhd
931-2,147
Sunrise Bhd
1,787-4,487
Sunrise Bhd
2,272-11,000
Sunrise Bhd
798-2,300
Nikmat Kuasa
1,961-7,335
Subsale Price
(RM/sq.ft)
600
400
600-800
800
430
455
520
650
590
500
456
2.89
3.00
3.20
6.00
2.50
2.62
2.50
2.50
3.00
3.00
3.04
5.78
9.00
6.40
9.00
6.98
6.91
5.77
4.62
6.10
7.20
8.00
Jan-08
2004
Mar-08
Ongoing
Apr-06
2006
Jan-04
Jan-09
Jul-04
Oct-02
2005
SPOTLIGHT
SOUTHERN
PROSPERITY
by S.Sulocana
Professor Joe Choo is not what you
expect of a feng shui expert. The first
thing that startles you upon making
Prof Choos acquaintance is the fact
that this feng shui master is in fact a
feng shui mistress. And a petite, pretty
one to boot. All thoughts of greying,
bearded sages ruling the feng shui world
fly out of the window the minute she
begins to speak. She is witty, charming
and chatty, and very modern in her
outlook to life. She has the ability to
make one feel totally at ease in her
company within minutes of meeting
her.
The diminutive President of the
Malaysian Institute of Geomancy
Sciences was recently awarded a
Professorship by the Shanghai Jiao
Tong University in China. She works
with some notable listed companies
in Malaysia and acts as consultant to
various development projects. She
also contributes articles on Real Estate
Feng Shui for a number of publications
in Malaysia.
SPECIAL REPORT
POISED FOR
GROWTH
10
10,000
Receipts (LHS)
Legend:
Arrivals (RHS)
No. of hotels
(in 000)
180
2.6
2.4
150
2.2
120
2.0
90
1.8
1.6
60
1.4
30
1.2
2010
2009
2008
2007
2006
2005
2004
2003
2002
1.0
2001
Legend:
2010
20,000
2009
15
2008
30,000
2007
20
2006
40,000
2005
25
2004
50,000
2003
30
2002
by S.Sulocana
60,000
2001
Tourist Arrivals
(in million)
SPECIAL REPORT
Hotel
Rating
No. of Rooms/
Facilities
Location
Completion
Date
DoubleTree by Hilton
Hotel
Rating
No. of Rooms/
Facilities
Location
Expected
Completion Date
INVESTOR PREFERENCES
THE CHINA
REPORT
Malaysia-China diplomatic and trade
relations are on a strengthening
momentum with a timely visit from
Premier Wen Jiabao to Kuala Lumpur,
April this year
Tianjin
Beijing
Chengdu
Bohai Rim
Shanghai
Chongqing
Yangtze
Delta
Guangzhou
by Chan Tze Wee
In terms of bilateral transactions, China
is Malaysias largest trading partner,
second largest export destination
and largest source of import in 2010.
Malaysia has also been Chinas largest
trading partner in ASEAN for three
consecutive years since 2008. Despite
the global economic crisis, Malaysias
export to China registered double digit
growth of 14.5% valued at RM80.60
billion in 2010. During Premier Wens
visit on 29th April, a total of eight
agreements and MoUs were signed
between Malaysia and China. The list
includes:
Pearl River
Delta
Source: www.chinasuccessstories.com
presence in China.
INVESTOR PREFERENCES
Malaysia
6,187,400
6,000,000
3,000,000
1,000,000
500,000
200,000
Source: WSJ Research, The Shao Center at Ohio University, CIA World Factbook
Factbox
The many angles of potential Chinese interest into Malaysian real estate:
Shanghais high concentration of Malaysians offers the opportunity of
tapping into an accessible database as well leveraging on Shanghais
extensive business networks
Hong Kongs corporate community includes China mainland companies that
have larger exposure to foreign markets by virtue of being listed in Hong
Kong
The Pearl River Delta Region is made up of Chinas southern coastal cities
and provinces. Familiarity with Malaysia is highest in this part of China.
Malaysia is the 4th largest population within the Chinese diaspora around
the world (Wall Street Journal, July 2010).
Showcase, Shanghai
POLICY
ITS ALL A
QUESTION OF
INTENTION
S. Saravana Kumar discusses the
distinction between income tax and
real property gains tax
chasing the property was not the In one case [1], the Courts held that
the gains arising from the disposal of
expectation of profit by sale.
the land were subject to RPGT. It was
So how does one distinguish between commented that the evidence showed
a property held as trading stock or that the property was the only property
investment? The Malaysian Courts have bought and kept by the taxpayer for
decided in a number of recent cases that investment. There was no evidence
the distinction simply depends on the to show that the taxpayer had been
intention of the taxpayer.
dealing in land before they acquired the
property. In fact, there was no evidence
The Courts have held that the mere to show that the taxpayer had other
realisation of investment is not income transactions in property before. There
under the ordinary concepts and usages was also no evidence to show that the
of mankind. However, profits arising taxpayer was a developer before the
from the sale of any property acquired transaction. The purchase of the said
for the purpose of trading are subject property was the only transaction
to income tax. In these circumstances, carried out by the taxpayer. In those
the focal point of enquiry by the Courts circumstances, the Courts held that
is the dominant purpose for which it could not be said that dealing in
the particular property was originally land was the principal activity of the
acquired.It is encouraging that the taxpayer.
Courts have commented that the mere
presence of an intention to sell property Similarly, the Courts had also held that
at a profit at some future date is not of where a taxpayer takes no serious effort
itself, sufficient to cause the profit to to obtain a loan facility from a financial
be taxable if the dominant motive in institution and has no capabilities to
purchasing the property was not the develop land [2], such land is held to be
expectation of profit by sale.
the taxpayers investment. The gains are
then subjected to RPGT.The mere fact
The Courts are guided by the badges of that a taxpayer made a gain because
trade as the criteria for distinguishing the land was near the main road or a
between profits subject to income tax good location does not automatically
and those subject to RPGT. The main make the gain liable to income tax. In
badges of trade are the dominant another interesting case [3], it was held
purpose of acquiring the property, that the taxpayer had invested in the
subject matter of transactions, property by reason of its proximity to a
period of ownership, frequency of nearby town. The value of the taxpayers
transactions, circumstances for sale, land merely appreciated in the course
motive or intention of taxpayer and of time due to the development of the
methods of sale.
surrounding areas.
Often, it is necessary to ask further [2] Au How Cheong Sdn Bhd v Ketua Pengarah Hasil
questions: an investment may be sold Dalam Negeri (No.R(3)(1)-14-02-2006
in order to acquire another investment [3] E v Comptroller-General of Inland Revenue (1950thought to be more satisfactory and 1985) MSTC 106
that does not involve an operation of
trade notwithstanding whether the Next issue: What are the factors that
first investment is sold at a profit or at allude to trading?
a loss.
The Courts have held that a purpose
so qualified and suspended does not
amount to an intention to trade. At
best, it is a mere contemplation until
the materials necessary to a decision on
the commercial merits are available and
have resulted in such a decision.
IN THE NUTSHELL
Figure 8: Total Assets in US$ trillion and Annualised Growth in Asset of Top 20
Funds, 2010 (Split by Fund Domicile)
Total Asset
(US$ trillion)
1.6
50
40.6
1.4
40
1.2
1.0
30
0.8
0.6
11.7
0.4
0.2
3.5
3.6
5.0
11.8
20
14.7
10
Legend:
China
Denmark
Singapore
Canada
Malaysia
Korea
Netherlands
S. Africa
14.0
6.3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
12.8
Japan
Annualised
Growth
(%)
USA
GROWING
RETIREMENT
SAVINGS
THROUGH
PROPERTY
Japan
Norway
Netherlands
Korea
USA
USA
Japan
USA
USA
Netherlands
Singapore
Canada
USA
China
Japan
Denmark
USA
South Africa
Malaysia
USA
1,315,071
475,859
299,873
234,946
234,404
198,765
164,510
130,461
125,692
123,390
122,497
122,067
114,663
113,716
113,364
111,887
111,669
110,976
109,002
99,200
Major demographic
changes in Asia will see Asian
pension funds reassessing
their current conservative
asset allocations. Increased
levels of real estate in their
portfolios offer an important
asset class for Asian pension
funds to achieve portfolio
diversification and meet their
significantly increasing future
liabilities in an effective riskadjusted manner
Professor Graeme Newell,
University of Western Sydney
early 70s, pension funds began investing
in real estate, predominantly in the
office, retail and industrial sectors. Over
the last 40 years, more than a hundred
billion dollars have been injected into
the property market through a number
of investment modes such as direct
acquisition, real estate investment
trust (REITs), unlisted real estate funds
and joint-ventures.
In Asia, however, real estate has not
traditionally made up a significant level
in most portfolios. Asian pension funds
focus mainly on domestic low-yield
assets, particularly fixed income and
equities.
IN THE NUTSHELL
10
With greater
institutional involvement in
direct real estate
investment in Asia, more
income producing properties
are now being traded
US$ 8.02
billion
GRAPHICALLY SPEAKING
11
PENANG
Island: +5%
Seberang Perai: +3%
SELANGOR
Petaling: +12%
Kelang: +5%
Gombak: +8%
Hulu Langat: +12%
KUALA LUMPUR
Central: +7%
North: +9%
South: +17%
JOHOR
Johor Bahru: -4%
Batu Pahat: +5%
Muar: +1%
Kluang: -4%
Segamat: +11%
+9.5%
+8.8%
+8.3%
12
ABOUT US
Malaysia Property Incorporated is a Government initiative set
up under the Economic Planning Unit to drive investments in
real estate into Malaysia.
As the first port-of-call for real estate investment queries,
Malaysia Property Inc. connects interested parties through
an extensive network of government agencies, private sector
companies, real estate firms, business councils and real estaterelated associations.
MPI has two core objectives; to create international awareness
and to establish connections between foreign interests and
Malaysian real estate industry players, ultimately contributing
to real estate investments into the country.
Disclamer: This report contains information that is publicly-available and has been relied on by Malaysia Property Incorporated on the basis that it is accurate and
complete. MPI is not liable if the case proves to be otherwise. No warranty or representation, express or implied, is made to the accuracy or completeness of the
information contained herein, and the same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any
special listing conditions imposed.