Mara bought overpriced properties - PAC

 

Mara Inc overpaid for London & Melbourne properties - PAC, Purchases also not approved by Finance Ministry.

KUALA LUMPUR: Overseas properties purchased by Mara Inc in 2013 and 2014 were overvalued, says the Public Accounts Committee (PAC).

PAC chairman Datuk Mas Ermieyati Samsudin said the purchases involved the Dudley International House, 51 Queen Street and 333 Exhibition Street in Melbourne, Australia, as well as Beaumont House in London.

“The purchases were not approved by the Finance Ministry.

“However, the Rural and Regional Development Ministry (KKDW) appealed the matter later, with it being brought before the Economic Council, which approved the purchases in 2013,” she said in a statement yesterday.

Mas Ermieyati said the matter is currently being investigated by the Malaysian Anti-Corruption Commission and also undergoing a court process.

“PAC recommends that KKDW, Majlis Amanah Rakyat (Mara), Mara Corporation Sdn Bhd (Mara Corp) and Mara Inc ensure that proposed investments both domestic and international – including high-value procurements like properties – comply with the latest government policies.

“Domestic investments should also be prioritised,” she said.

She said the recommendations were proposed following proceedings held on July 30, July 31 and Sept 19 this year.

According to the PAC report, Mara sold four properties between 2016 and 2018.

Three properties, namely 333 Exhibition Street in Australia, Ashley Hotel and Atelier Serviced Apartments in Britain were all sold for a profit.

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However, the 51 Queen Street property, which has been flagged by PAC, was bought in May 2014 for RM70.43mil but was sold at a loss of RM5.30mil.

Dudley International House, meanwhile, generated a return of 38.7% between 2013 and 2023.

It was reported previously that the price of Dudley International House was deliberately inflated by A$4.75mil.

Then MARA Inc chairman Datuk Mohammad Lan Allani was charged with 22 counts of corruption amounting to RM20.45mil over the property deals in Melbourne. He pleaded not guilty to the charges.

Among the witnesses who presented their statements were deputy auditor-general (corporations) Roslan Abu Bakar; KKDW secretary-general Datuk Muhd Khair Razman Mohamed Annuar; Mara director-general Datuk Seri Azhar Abdul Manaf; Mara Corp Group Corporate Planning director Datuk Amir Azhar Ibrahim; and Mara Inc chief executive officer Mohd Fadzil Mohd Idris.

Separately, Mas Ermieyati said Mara Inc’s appeal to convert Premiera Hotel’s existing debt into equity for a second time should not be repeated. The first request was made in 2015.

“KKDW, Mara, Mara Corp, and Mara Inc should make sure that Premiera Hotel has a clear plan to ensure the debt-to-equity conversion generates returns for the company’s sustainability,” she said.

In the report, the PAC also proposed for KKDW, Mara and Mara Inc to see to it that all development projects – including property development, renewable energy projects and marketing plans – are completed on time and within budget, to generate high profits.The report said Mara Corp must also strictly monitor its subsidiaries to guarantee profits, repay debts and pay dividends.

Besides that, a comprehensive standard operating procedure must be established for property rental to prevent arrears.

“Mara Inc must also draft a complete and clear policy on property valuation,” said Mas Ermieyati.

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PAC: Mara bought overpriced properties

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Several overseas properties purchased by Mara Inc were overvalued, says PAC

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[UPDATED] MARA Inc's overvalued property deals in London and Australia under 

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Shrinking homes, rising prices

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PETALING JAYA: More young property buyers, especially those about to start their own families, may be forced to purchase their first homes in the outskirts of the Klang Valley, such as Rawang and Dengkil, as residential properties in prime city locations suffer from “shrinkflation”.

Shrinkflation refers to the sustained increase in property prices even though new units are smaller than they used to be.

While analysts and industry observers generally welcome Budget 2025’s homeownership measures, the consensus is that more needs to be done because many younger generation workers still find it difficult to buy their first property.

Licensed financial planner Stephen Yong said the supply of affordable housing, particularly in urban areas with manageable commutes, is limited.

ALSO READ: Homes beyond the reach of most M’sians

“Buyers would usually need to save up to 25% of the property’s price to pay for costs like down payment, legal fees, renovations and furnishing – all of which pose a considerable financial burden.

“Young Malaysians also encounter hurdles in securing housing loans due to lower income levels, rising expenses and strict debt service ratio requirements.

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“This difficulty is even more pronounced for freelancers and gig economy workers, as banks often impose stricter conditions on applicants without stable, predictable incomes,” said Yong, who is also the executive director of Wealth Vantage Advisory.

The National House Buyers Association (HBA) opined that there is a need to define “affordable housing” to ensure the term is “not abused” by property developers who deem prices of RM500,000 as “affordable”.

ALSO READ: ‘Lock in perks for higher-priced homes’

Its honorary secretary-general Datuk Chang Kim Loong said the government has previously reiterated that affordable housing must meet three criteria: for it to be priced between RM150,000 and RM300,000; must have a minimum built-up of 800sq ft (excluding balcony space) and have at least two bedrooms; and must be located in areas with good public transportation links and amenities.

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“Whatever schemes are introduced will not make houses affordable if prices are not checked and costs (of doing business) are not addressed.

“Let’s face it, owning a house is beyond the reach of most Malaysians. We need to address the root cause and not pander to parties that caused the hike.

“HBA hopes that the current Housing Minister will always put the interest of the rakyat and country first before the interest of housing developers,” said Chang.

Rahim & Co International Sdn Bhd estate agency chief executive officer Siva Shanker said he welcomes Budget 2025 measures to promote homeownership, especially first-time buyers.

“However, the measures announced are not substantial enough,” he said.

ALSO READ: Tax relief timing for first-time home buyers is crucial

Among the measures announced in Budget 2025 was a RM5bil step-up financing scheme introduced under the Housing Credit Guarantee Scheme (SJKP), which offers a lower repayment rate in the first five years of the mortgage term.

SJKP will also guarantee loans for first-time home buyers of up to RM500,000 for homes developed on wakaf land. To support individuals purchasing their first home, Budget 2025 also proposed an individual tax relief on mortgage interest payments.

There is also a tax relief of up to RM7,000 for residential properties valued up to RM500,000, while a relief of up to RM5,000 will be given for residential properties priced between RM500,000 and RM750,000.

This relief can be claimed for three consecutive years of assessment on sale and purchase agreements completed between Jan 1, 2025, and Dec 31, 2027.

Siva said the real problem affecting first-time homebuyers, especially the bottom 40% income earners (B40), is the difficulty in securing a down payment for the housing loan.

“When you apply for a 90% housing loan but the bank only approves 80%, it means you need a down payment of 20% from the house value. Many people don’t have the cash in hand.

“Perhaps the government can consider a policy where banks will provide 100% loans for first-time B40 homebuyers,” he added.

Malaysian Youth Council executive committee member Eow Shiang Yen said Budget 2025’s step-up financing scheme indicates the government’s commitment to easing the financial burden of the youth.

“However, the success of this scheme requires interactions of other relevant components such as improved financial literacy, building passive and secondary incomes, relevant competence development and competitive salaries,” said Eow.“The youth still need to cope with increasing living costs and other expenses. A strict supervision and ongoing enforcement are also required to ensure that initiatives such as People’s Residency Programmes, People’s Housing Projects, and Rumah Mesra Rakyat are not misused.”

Yong concurred with Eow on the need for financial literacy to make homeownership a reality for young Malaysians.

“In addition, incentives like stamp duty reductions, first-time homebuyer grants, and flexible loan structures with extended tenures would make homeownership more accessible,” he said.

Commenting on the proposed tax relief on mortgage interest payments, Chang said it should be given to all existing homeowners with outstanding housing loans, not just first-time buyers.

The three-year tax relief should start from the date of property handover instead of the date of sale and purchase agreement, he said.

“The tax relief on interests should be applied strictly for first-time buyers irrespective of purchasers from housing developers or from the secondary market or sub-sale,” he added.

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STRONG PUSH FACTOR FOR PROPERTY MARKET

 

Country’s higher economic growth a feel-good element that is spilling over to the sector

“Inflation levels are benign at about 2% and with the ringgit appreciating against currencies such as the Singapore and Australian dollar, it indicates increased confidence.” Datuk Ho Hon Sang

KUALA LUMPUR: The property market appears to have several strong push factors going for it in the bigger picture, although developers are by and large still cautious despite any broader positivity.

The Real Estate and Housing Developers’ Association of Malaysia’s (Rehda) Property Industry Survey reveals the market is stabilising, amid continued concerns on rising costs on key core cost components such as building materials.

Survey respondents said there was more than a 10% annual increase in the average price for sand, which is used mainly in infrastructure projects, glass and concrete; while costs for steel appear to have declined or tapered off as at June 30.

Unsold units are featured as among the key highlights in the results of this survey whereby half of its respondents reported having unsold completed residential units.

A third of these unsold completed residential units were more than three years old, while about half of them were less than a year old.

A majority or 46% of the survey’s respondents reported that their unsold completed units were priced at RM500,000 and below.

According to survey respondents, the main reasons for this situation were end-financing loan rejection, low demand or interest and bumiputra lots.

The survey, which was done for the first half of 2024 also includes forecasts based on the survey on the market outlook for the second half of this year and the first half of 2025.

It collated responses from 162 out of over 1,500 Rehda members.

According to Rehda president Datuk Ho Hon Sang, the survey only includes a small number of respondents among its larger count of members and does not reflect all launched projects or sales made within the period under review although it can indicate the sentiment on the ground.

“The higher than estimate economic growth thus far gives the country a feel-good factor which spills over to the property market as well.

“Inflation levels are benign at about 2% and with the ringgit appreciating against currencies such as the Singapore and Australian dollar, it indicates increased confidence.

“There are also huge infrastructure projects that are being announced such as the West Coast Expressway which will open up more economic areas,” Ho said at a media briefing yesterday.

“An example is data centres. From 2021 to 2023, there were more than RM76bil of investments into this area, which attracts the established multinational companies.

“This has a very feel-good factor for the property market – as data centres are not just a one-time capital expenditure but provides opportunities during the operations and maintenance period.

“For example, Microsoft has committed to training up to 200,000 talents to maintain DCs,” he added.

Apart from that, there is the stable government and the coming Urban Redevelopment Act that will be focused on the Kuala Lumpur area which will further spur economic activities.

“All these have a part to play in transforming and influencing the sentiment of the people,” said Ho.

Increased demand may also come from increased foreign participation in the property market, although Ho indicated the price threshold is different in the various states and may be too high in some to spur any meaningful foreign buying.

Commenting on the unsold residential units, Ho noted a third of unsold completed bumiputra lots have aged more than three years, which is an issue that the industry needs to address eventually.

“Developers are still treading carefully when it comes to their business operations, despite the improving industry conditions in terms of launches and sales,” he said.

Ho added that this is expected, given the increase in prices for some building materials, which have hit smaller developers harder than larger property development companies.

Rehda also notes that more environmental, social and governance-friendly construction practices such as pre-cast and industrial building systems will increase costs for smaller developers, although it would help to reduce costs for bigger developments.

“For pre-cast panels, the production is centralised and for developments such as high-rises which feature a standard design, it can help to reduce costs on higher volumes with a standard mould.

“For terrace houses with standardised designs, it would be okay but for customised designs it would be difficult for the pre-cast suppliers to do.

“So most developers would still prefer the conventional building style (traditional construction methods) for landed properties.

“But the bigger developers are proceeding with using pre-cast panels even for their landed developments,” Rehda’s deputy-president Datuk Zaini Yusoff told StarBiz.

Zaini said bigger developers usually have their own in house pre-cast manufacturing capabilities.

Commenting on this new construction technology, Ho said it can increase costs for some developers by up to 10% to 15% based on feedback from Rehda’s members.

“This includes transportation costs from the pre-cast plant to the construction site as these costs (diesel) have gone up now and the deployment of skilled labour, since one cannot use normal manual labour to put these together.

“These causes the cost increase,” Ho said.

The survey also indicated that for the next 12 months, respondents look forward to higher optimism for the first half of 2025 compared with the second half of this year.

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