City&Country: Cover Story-- King of villas

'Second generation property king'

How much house would close to RM500 million get you in the Klang Valley, Malaysia’s prime real estate hub?

Seri Pilmoor, an exclusive 108-unit semi-detached and detached development coming up on 28-acre prime freehold land in Ara Damansara in Petaling Jaya, was launched recently by Sime Darby Property Bhd. Some RM469 million would buy you the entire project.

In the heart of Kuala Lumpur, at Bukit Ceylon, DNP Holdings Bhd has unveiled a 423-unit freehold serviced apartment project called Verticas Residensi. When fully sold, the project will rake in RM700 million. So, with RM500 million, one could probably buy 300-odd units in the project.

In the older and heritage-rich part of KL, meanwhile, are pre-war shops with lot sizes ranging from 1,600 to 2,200 sq ft on Jalan Tun H S Lee, Lebuh Ampang and Jalan Hang Lekiu. Since these are on the market for RM1.8 million to RM2.2 million each, with RM500 million, you could end up owning 250 or so units.

Up north in Penang, one would need “only” RM400 million to be the proud owner of all 808 units (built-ups: 856 to 2,333 sq ft) in four blocks of the All Seasons Park Condo launched by Belleview Group in early December 2009.

How about in China, Shanghai in particular, where real estate is red hot? Prices have been chased up so high there is fear in certain quarters they are heading for a housing bubble, similar to that in the US.

A report early this year with statistics from Goldman Sachs showed that over the past six years, housing price hikes have outpaced income rises by 30% in Shanghai and 80% in Beijing. In Beijing, the cost of housing on a per sq m basis is as much as  a resident earns in seven months on average.

To cool the market, China on April 15 raised mortgage rates and down payment requirements. The official Xinhua news agency, citing the outcome of a meeting of the State Council, announced that the down payment on first homes of more than 963 sq ft will rise to 30% from 20%, while that for second homes rises to 50% from 40%. It was also reported that banks must set mortgage rates on second homes at a minimum of 1.1 times the central bank’s benchmark interest rate. Banks currently have flexibility in the rates they charge, depending on their assessment of credit risk.

Against this real estate backdrop, what can one buy with RM500 million in Shanghai? Try a villa in the Sheshan area, which is now on the market for a whopping RMB1 billion or RM470 million!

Investment holding company Shanghai Ledao Investment Co Ltd, through Shanghai Best Land Properties Ltd, has unveiled the completed super luxurious villa called Villa 99, named after its address in the Sunville residential development. The leasehold property, according to the media centre at Shanghai Municipal Government’s official website, was built by Shanghai Best Land Properties, a Singapore-funded entity.

Villa 99
altWhat is so special about Villa 99 that it is worth almost half a billion ringgit? Dubbed “The Bund Impression” by its developer, the building boasts a massive built-up of close to an acre — about 43,413 sq ft to be exact. The 3-level building sits on a sprawling 24.85-acre tract (including the waterway).

The building design is inspired by the modern classical architecture of the exclusive and popular The Bund area in central Shanghai. One of Shanghai’s most famous tourist spots, the height of buildings in The Bund is restricted. There are 52 buildings of differing European architectural styles such as Romanesque, Gothic, Renaissance, Baroque, Neo-Classical, Beaux-Arts, and Art Deco.

How big is 24 acres? An international football field is almost two acres in size, so Villa 99 takes up 12 football fields or so.

altThe villa is perched on gently undulating grounds, with a view of the famous Roman Catholic Sheshan Basilica on the horizon. It has an outdoor international tennis court and an indoor swimming pool.

Completed last year, the villa is said to have more than 20 rooms, which the owner can utilise for whatever purpose he wishes, from bedrooms to a study or anything else that takes his fancy.

The north-south orientation is a favourite with the Chinese; so Villa 99 has it. The property is built with natural super-thick granite, according to Shanghai Best Land deputy CEO Zhou Guo-ping. The main hall alone has a built-up of 18,945 sq ft.

“The main hall on the ground floor is decorated with two crystal chandeliers. There are 10 hand-carved pillars, each 12m in height. One thousand people worked for a year carving the pillars,” Zhou tells City & Country in an email.

Down in the basement is a boat-shaped multi-use hall. The developer says it can be used as an entertainment area, wine cellar, coffee bar, tea room, gym, his and hers closets and storage.

The basement has seven exits, and it leads into the e-nuo (elegant in Mandarin) swimming pool.

Zhou says the indoor swimming pool has been rated a “top international private pool” as it has been built in strict accordance with international design and construction standards. It has a depth of 1.9m and is 25m long and 7.5m wide. At the base of the pool is a portrait of a woman, created from colourful ceramic tiles. The roof has what the developer describes as an automatic controlled ventilation system.

altThe sandstone feature wall would be hard to ignore. It is made from stone imported from France. This is not the only French feature of the house. Two De Dietrich automatic boilers to maintain the temperature of the pool were imported from France, too.

The exterior of the property is equally over the top. The 9,150 sq ft garden called “Tao Ran Plaza” has a path leading to it paved with 5,000 natural granite slabs, each 15cm thick.

Villa 8
Locals in Shanghai have dubbed Villa 99 the “Second Generation Property King” because of its price tag. Holding the title of the “First Generation Property King” is the 24-acre Villa 8, also located within the Sunville project. Villa 8 was sold, before its completion, for RMB130 million (RM61 million) in 2003 to an overseas Chinese businessman.

Compared with Villa 99, Villa 8 has a smaller built-up of 36,000 sq ft. According to news reports from Shanghai, the building’s value has risen to RMB300 million (RM145.5 million) since its completion in 2006.

Skyrocketing prices

Property prices in both Mainland China and Hong Kong have skyrocketed in recent years. Hong Kong’s South China Morning Post reported that a 3-storey house on The Peak, with a view of Victoria Harbour, changed hands on March 16 at HK$280 million (RM115.3 million). With a gross area of 4,650 sq ft, the transaction has priced the property at HK$60,215 psf, making it the most expensive home in Hong Kong in terms of price per square foot.

Prices of high-end residential properties in sought-after locations in Hong Kong surged 50% last year, before rising another 10% in the first two months of this year, the report said.

A Reuters report in The Sydney Morning Herald on April 12 said several plots of land in downtown Beijing recently fetched record prices — bought by state-owned companies with core businesses that have nothing to do with real estate

On March 19, the state-owned Asset Supervision and Administration Commission of the State Council directed 78 state-owned firms with no core business in real estate to withdraw from the Chinese property market after they have completed their current projects.

In Shanghai, meanwhile, a news report on March 10 said two villas in the Sunville development were transacted earlier in the month. One, with a gross floor area of 12,615 sq ft, was sold for RMB247 million (RM120.2 million). The other, with a gross floor area of 34,262 sq ft, went for RMB180 million.

Quoting the latest data from China Real Estate Information Corp (CRIC), Shanghai Business described the former as a record-breaking residential transaction in Shanghai in terms of total selling price.

The average price-to-income ratio in Beijing has reached 27:1, five times the world average, according to data from the Bureau of Statistics of the Beijing Municipality. The average price-to-rent ratio neared 500:1 in the city, far above the international alarm threshold of 300:1 — sending out a strong  signal that the foundations of the real estate boom could be losing stability.

The latest data from the National Bureau of Statistics showed that despite the government’s efforts so far to curb gains, real estate prices in 70 cities in China rose in March at a record pace of 11.7% from a year ago.

Interestingly, it was reported recently that the Shanghai property market saw lower sales volumes in the first two months this year. Sales of new homes, excluding those designated for relocated residents under urban redevelopment plans, plunged 54% to 3.44 million sq ft in February — the smallest volume registered by Shanghai Uwin Real Estate Information Services Co since it began to track the local market in 2005.

Still, against this backdrop, property prices in Shanghai have managed to stay buoyant. In February, the average price of new homes in Shanghai dipped 1.3% from January to RMB19,696 psm, but that decline mostly reflects sales of more homes in the cheaper outlying areas of the city.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 803, Apr 26 – May 2, 2010

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