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PERILS OF OVERGEARING MORE REASONS TO INSURE YOUR HOME! + START YOUR CHILD’S EDUCATION FUND VIA PROPERTY INVESTMENT KDN PP 18181/04/2013/(033492) ISSN 2289-4233
7/11/14 3:13 PM
THE PLACE TO BE
ENJOY THE BEST OF MODERN LIVING
MORE SPACE. GREATER FLEXIBILITY. A SMARTER INVESTMENT. Striking the perfect balance between city life and green living, as well as excitement and relaxation, De Centrum Unipark Condominium opens the doors to exciting new lifestyle possibilities. All within De Centrum, a smart, green, urban living environment where rest, work, play and everything in between coexists in harmony and is conveniently located within walking distance. So, be charged by the vibrancy of this lively 100-acre urban city in the Southern growth corridor of Greater Kuala Lumpur, with its promise of connectivity, modern-day conveniences and interactive socialisations. De Centrum – the place to be.
De Centrum Unipark Phase 2 Now Launching
De Centrum Mall Opening in 2016
De Centrum SOHO 90% Sold
De Centrum Residences 100% Sold
TOLL FREE 1 800 88 8299 MOBILE +6017 779 1688 +6012 263 5583
Another quality development by
EMAIL email@example.com WEBSITE www.decentrum.com.my De Centrum is a registered trade mark under the Protasco Berhad Group of Companies. All information contained herein are intended for general marketing purposes only and should not be relied upon by any person as being complete and accurate. The information contained herein are not statements or representations of fact and are not intended to form part of any offer or contract for sale. Visual representations like pictures, art renderings, depictions, illustrations, photographs, drawings and other graphic representations and references are only artistic impressions and merely conceptual. The information on project including but not limited to the proposed facilities, measurements, distances, plans, descriptions and specifications are merely indicative and are subject to amendments by the developer without notifications as may be required by the authorities or the developer’s consultants. The developer does not guarantee, warrant or represent the correctness or accuracy of any information provided herein and does not accept any liability for negligence, error, misrepresentation, discrepancy in relation to the information or for any reliance on the information stated herein. The developer excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damage arising from it. Developer License: 10293-2/06-2016/0593 (L). Advertising Permit: 10293-2/06-2016/0593 (P). Validity: 21/6/2014 – 20/06/2016. Minimum Price: RM575,400.00. Maximum Price: RM1,259,653.00. Total Units: 320 units. Building Plan Approval No: MP.SPG.600-34/3/58 (8). Approving Authority: Majlis Perbandaran Sepang. Land Tenure: Freehold. Land Encumbrances: Charged to RHB Bank Berhad.
Protasco Land Sdn Bhd (324329-DD) Corporate Block, Unipark Suria, Jalan Ikram-Uniten, 43000 Kajang, Selangor Darul Ehsan, Malaysia.
EDITOR’S NOTE Publisher KK Chua Editor Zuhaila Sedek-De Booij Writers Rachel Joseph (Rachel@propertyinsight.com.my) Aidil Mohd Noor (firstname.lastname@example.org) Junior Writers Imran Roslan Eleyinnina Sahim Contributors Daniele Gambero Chris Tan KK Chua Kit Au-Yong Dr.Norazmawati Md.Sani @ Abd.Rahim Graphic Designer Lam Jian Wei Junior Designer Muhammad Azmi Photographer Nur Afiqah Anissa Bt Azharuddin Sales & Advertising Andy Fam 012-6019 938 (email@example.com) Marketing Sofia Alyna (firstname.lastname@example.org) Annand A/L Arivalagan (email@example.com) Cassandra Wong (firstname.lastname@example.org) Publisher Armani Media Sdn Bhd (1032085-H) No. 32-3, Jalan Pekaka 8/4 Sec 8, Kota Damansara 47810 Petaling Jaya, Selangor Tel : +603 6156 3366 Fax : +603 6156 3399 Printer KHL Printing Co Sdn Bhd (235060-A) Lot 10 & 12, Jalan Modal 23/2 Seksyen 23 Kawasan Miel Phase 8 40300 Shah Alam Selangor, Malaysia
orld-renowned theoretical physicist Michio Kaku in his best-selling book Physics of the Future, foresees a future of mankind where flying cars and space travel would become common. And in this brave new world, people could also control their genetic coding and achieve that idea of ‘perfection’. If we would have talked about all these 50 years ago, people might have thought we are a little crazy. But today, it is not mere wishful thinking. Scientists have already started working on it and more. Thinking about the future can bring plenty of excitement. So what’s in store for the property world? What would its future be? Well, having well-planned and sophisticated Aeropolises is probably one of it. In this issue, we write extensively about Malaysia Airports Holdings Berhad’s aspiration to build the country’s very own airport cities and how such developments can impact the nation (page 10). In a few more years down the road, the airport’s locality will never be the same and it will be regarded as a commercial haven that could even rival the capital city. And talking about modern cities, Oxley Holdings Malaysia, which mother company is Singapore’s Oxley Holdings Limited, hopes to change Kuala Lumpur’s skyline into a place of choice for world’s top companies to work in. The feature on this young developer’s big dream can be read on page 18 where the company’s CEO Dato’ Othman Omar talks about the exciting future that awaits them. Apart from these two main stories, we also pen on the importance of valuation data in making property investment decisions (page 28), the perks of insuring your home (page 32), Rawang’s potential as an investment hub (page 40), why parents should consider starting their children’s education fund through property investment (page 56) and the benefits of joint purchase (page 62), among many other interesting topics. I truly feel this issue is one of our most informative editions to date. If you are considering property investment, waste no time get a copy of our magazine, now! And to all our Muslim readers, Selamat Hari Raya Aidilfitri, Maaf Zahir dan Batin.
www.propertyinsight.com.my www.facebook.com/propertyinsight.com.my www.youtube.com/user/propertyinsightmy www.twitter.com/propinsightmy Disclaimer
Although every reasonable care has been taken to ensure the accuracy of the information contained in this publication, neither the publisher, editors, writers nor employees and agents can be held liable for any errors, inaccuracies and/or omissions. The contents of this publication do not constitute investment advice. It is intended only to inform and illustrate. No reader should act on any information contained in this publication without first seeking appropriate professional advice that takes into account their personal circumstances. We shall not be responsible for any loss or damage, whether directly or indirectly, incidentally or consequentially arising from or in connection with the contents of this publication and shall not accept any liability in relation thereto. The views by our contributors expressed here are their personal opinions and do not necessarily reflect Property Insight’s views. The publisher does not endorse any company, organisation, person, investment strategy or technique mentioned in this publication unless expressedly stated otherwise. The publisher does not endorse any advertisements or special advertising features in this publication, nor does the publisher endorse any advertiser(s) or their products/services unless expressedly stated to the contrary. All rights reserved. No part of this publication may be reproduced in any form or by any means, including photocopying and imaging without the prior written permission of the publisher.
2 AUGUST 2014
Editor's Note .indd 1
ZUhaila Sedek email@example.com
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The Value Builder – pg 18 To make a development memorable, it has to have the special added value. Aidil Mohamad learns from Oxley Holdings Malaysia.
England and Affordability – pg 52 Dr.Norazmawati Md.Sani @ Abd.Rahim uses England to study the relationship of life expenses to home affordability.
Gear it Right – pg 24 Over-gearing is dangerous and property investors must always be wary of it. Imran Roslan finds out more.
Sell-When-Building – pg 68 Lawyer Chris Tan writes on the legal aspect of selling your under-construction properties.
The Malaysian Scenario – pg 36 Dr. Daniele Gambero explains the mismatch between affordable demand and supply, based on Malaysian example.
How Property Investment Gave Me My BIG Break –pg 72 Property millionaire Michael Tan tells us how property investment provides him the life he desires.
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The Appeal Of Crowdfunding The Walkability
Primarc Development Factor (M) Sdn.Bhd offers your dream home in Rawang
Perks Of Subsale Property
Expectations are running high with MRT Line-2 at the forefront
MAN ON A AREA FOCUS Taman Melati Utama , Setapak
Nilai: A Gem In The Southern Corridor
MISSION FINANCE GST in Real Estate: What you need to know
Understanding Slope Management + 6 House-Flipping Don’ts
STRATEGY The Art of Subletting
There’s no giving up for Mah Sing Group’s CEO Tan Sri Leong Hoy Kum in achieving his many dreams
KDN PP 18181/04/2013/(033492) ISSN 2289-4233
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KAJANG SOUTH’S LATEST CONDOMINIUM UNVEILED
rotasco Land Sdn Bhd, a wholly-owned subsidiary of Protasco Development Sdn Bhd, unveiled its new residential development, De Centrum Unipark Condominium. The freehold residential development comprises of two 20-storey towers with 320 units of single and duplex units. The condominium offers residents luxurious, smart and green city living atmosphere paired with good connectivity and modern day facilities. What sets De Centrum Unipark Condominium apart is the spacious built-up size of the units. The condominium units feature a four-bedroom design with a built-up size starting from 1,297sq ft while each of the duplex units has eight bedrooms and a built-up size of 2,594sq ft. All the units have been designed in such a way they accommodate renovations, for example, a four-bedroom unit can easily be converted into a three-bedroom unit for a larger living and dining area. To top it off, every bedroom comes with an en-suite bathroom.
“A significant amount of time has gone into the engineering and design of De Centrum Unipark Condominium as we understand the needs of investors and future residents. They want ‘more’ so we crafted De Centrum Unipark Condominium with more space options and greater flexibility which makes this a smart investment”, says Dato’ Sri Ir. Chong Ket Pen, Executive Vice Chairman & Group Managing Director of Protasco Berhad at a press conference held recently. He adds that the development can cater to students from three universities within the vicinity. Apart from the unique design, De Centrum Condominium is also surrounded by excellent expressway connectivity. Soon, the area will have an MRT station nearby. Sitting in the heart of a 100-acre master planned De Centrum City, Unipark Condominium makes a perfect place-to-be for business, leisure, shopping, dining and entertainment. De Centrum City is strategically situated at the intersection of the North South Highway and the South Klang Valley Expressway (SKVE) Silk Highway. De Centrum Unipark Condominium is just minutes away from Kuala Lumpur, Kuala Lumpur International Airport (KLIA) and Putrajaya. De Centrum Unipark Condominium units are available from RM 575,400 to RM 1,064,950 (duplex units). There are one covered car park bay for condominiums and two for the duplex units. The development is the Phase 2A of the De Centrum City master plan, which first phase was launched in 2007 (featuring Unipark Condominiums A and B). Its mixed development De Centrum Phase 1 was launched in 2011. For more details visit www.decentrum.com. www.propertyinsight.com.my
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Thousands Throng National Achiever Congress Malaysia 2014
he National Achiever Congress Malaysia 2014 (NAC2014) which was held recently at the Mines Exhibition Centre (MIECC) was a big success with a crowd of about 5,000 people showing up at the event. The seminar was graced by world-class motivational speakers. among them were the highly-respected motivational speaker Nick Vujicic, one of the world’s top marketing trainers Brendan Bouchard, world’s leading authority on sales Tom Hopkins, masterful illustrator and international speaker Andrew Matthews, Rich Dad Education Property Investor and Coach Caroline Claydon and popular wealth coach J.T. Fox, just to name a few. With the tagline “Success Without Limit”, the 3-day seminar was designed to focus on providing the public with financial education, knowledge on systems for success, learning on investment opportunities as well as to deliver some words of wisdom to Malaysians. Perhaps, the highlight of NAC2014 would be the session by Vujicic. The Melbourne-born Vujicic who was born without all four limbs (a condition called tetra-amelia syndrome) shared with the Tom Hopkins
audiences how he discovered his purpose in life and understood that he was the only one who could determine his path in life. Thanks to his positive thinking and determination, Vujicic, who is now a married man and father, travels the world to inspire millions of people from all walks of life. During NAC2014, he spoke to participants who didn’t mind waiting for hours to attend his session. “You can either be sorry for what you don’t have, or be thankful for what you have, it’s your choice”, one of Vujicic’s quotes. One of the participants of NAC2014 who wished to remain anonymous said, “This seminar has opened my eyes. Now I know what to do with my investment and this was a wonderful opportunity and I was very much inspired by the success stories of the speakers. It motivated me a lot.” NAC2014’s organiser, Success Resources Global Ltd, was established in 1992, with the aim to support and create succesful individuals, enterprises and organisations through educational programmes. To date, it has impacted thousands of people in over 35 countries among which include those in United Kingdom, Spain, Canada, Italy, Brunei, Indonesia, India and Singapore. Those who have missed this year’s NAC will have to wait for the event’s next instalment slated for next year.
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Bukit Suburban Living
Within the City
NEWS & EVENTS
NEWS & EVENTS Ireka Presents its First Upscale Mid-Range Development in Nilai
Ireka Corporation Berhad introduces a green-inspired community living development called Rimbun Kasia in Nilai, Negeri Sembilan. The project, which consists of five residential parcels, a 2.3-acre Central Park and Lifestyle Commercial Hub offering a mix of condominiums as well as town villas, is considered Ireka’s first upscale mid-market project (the developer has been synonymous with high-end developments primarily in the Mont’
Kiara area of KL). The development’s first parcel is called dwi@Rimbun Kasia and showcases courtyard-inspired homes. What’s special about these homes is their flexible 2-in-1 homes concept also termed as Dual-Key homes. This concept allows homebuyers the flexibility of staying in their own home while at the same time renting out a portion of their residence to earn a monthly income. The development targets young adults who are starting a family, young professionals as well as students. dwi@Rimbun Kasia is built with most sides facing north and south, instead of east and west. This is to reduce the amount of heat gain from direct sunlight. The single-loaded and breezy open corridors limit the use of electricity and allow residents to enjoy natural sunlight, and to save energy. “Nilai is increasingly gaining a reputation as a strategic location for educational establishments to be based in and also for its proximity to many famous addresses namely Sepang F1 Circuit and Kuala Lumpur International Airport. It is also part of the Greater KL coverage” said Ireka Corporation Berhad’s Group Executive Director Lai Voon Hon. “Currently, property prices in Nilai are still affordable and I feel this gives an edge to the vicinity,” he said and added that accessibility to Nilai is made easy with the ERL in Salak Tinggi and the nearby KTM commuter station.
Mah Sing Gets a New CEO
Mah Sing Group Berhad has recently appointed Ng Chai Yong as its new Chief Executive Officer-cum-Executive Director. According to news reports, Ng will be assisting Mah Sing‘s Group Managing Director and Group Chief Executive Officer Tan Sri Leong Hoy Kum in steering the company towards greater heights. With close to three decades of experience in civil engineering, banking and property industry, Ng will provide strategic advice to the board of directors, share insights for employees’ performance improvement and preside over the organisation’s day-to-day operations, said a statement released by the developer. Following his return to Malaysia in 1993, Ng joined S P Setia Berhad where he served in numerous capacities for a duration of 11 years. His last position as the Director and General Manager of Bukit Indah Johor Sdn Bhd and CEO of Setia Eco-Park Sdn Bhd saw Ng handling large property developments in both Central and Southern regions of Malaysia. Upon leaving SP Setia Berhad, Ng subsequently joined FCW Holdings Berhad as an executive director of one of its subsidiaries, FCW Property Management Sdn Bhd. 8 AUGUST 2014 www.propertyinsight.com.my
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NEWS & EVENTS
Guocoland among Top 10 Developers in Malaysia
GuocoLand (Malaysia) Bhd, the property arm of the Hong Leong Group, has been named as one of the recipients of the BCI Asia Top 10 Developer Awards 2014 in Malaysia.The BCI Asia Award is the second award won by GuocoLand Malaysia Bhd. The award is credited to GuocoLand Malaysia as its commitments to developing quality and innovative homes and developments that surpass all prospects. “Indeed, we are truly honoured and privileged to join the ranks among the 10 property developers in Malaysia,” said GuocoLand Malaysia Managing Director Tan Lee Koon. “2014 has been a turning point for us on the back of several major launches – the Damansara City integrated development in Damansara Heights and The Rise boutique bungalows in the Emerald township in Rawang,” he added. The Clermont Kuala Lumpur, located within the landmark Damansara City development, a luxury 5-star hotel is expected to open its door in 2016. The hotel won the title of 5-star Best New Hotel Construction and Design Award (in Malaysia) at the Asia Pacific Property Awards 2014-2015. Now in its 10th year, the BCI Asia Top 10 Awards recognizes the work of top developers in seven key Asia markets, covering Hong Kong, Indonesia, the Philippines, Singapore, Thailand and Vietnam apart from Malaysia.
OSK Property plans to launch RM 3bil properties in Sungai Petani OSK Property Holdings Bhd plans to launch some RM3bil worth of properties in Sungai Petani over the next 10 to 15 years via subsidiary OSK Properties Sdn Bhd. “The project consist of 5000 units of landed, high-rise and commercial properties developed on a 405ha site, with its GDV of RM 3bil and part of Bandar Puteri Jaya project”, said OSK Property head Paul Tan. The RM3bil GDV includes an RM300mil shopping mall and 400 units of landed properties with an RM240mil GDV that plan to launch next year and scheduled for completion in 2016. “We are also planning to launch high and mediumend condominium properties in the future. “The plan is now awaiting approval from the local authorities,” he added.
Dr.Dre sells his Bird’S Streets HOME
Well-known headphone moguls/ producer/ rapper, Dr.Dre has decided to sell his 2001 contemporary mansion in Bird’s Streets for $35million (RM112 million). The house, on a cul-de-sac, has a large lawn and an infinity pool. Inside, there’s a library, den, and wine cellar and has an “all in total serenity. concept” Back then in December 2011, Dr.Dre bought the sixbedroom and nine-bathroom house for $15.4 million (RM49 million). He decided to sell the house as he had just bought football star, Tom Brady and supermodel Gisele Bundchen’s massive chateau for $40 million (RM128 million) in Brentwood Country Estates. The massive chateau, designed by mega mansionmaker Richard Landry, is bedecked in limestone and has some major “Old World charm” points for having a combination moat and koi pond in front of the house. Inside, there are loggia, a gym, a sauna, five bedrooms, and nine bathrooms. The view across the infinity pool from inside the covered patio almost makes it look like a very small, natural body of water. In total, the property stretches over nearly four acres. www.propertyinsight.com.my
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The Rise of
Aeropolis Malaysia is pioneering airport cities in the region and there are plenty of reasons for Malaysians to be excited about it. Zuhaila Sedek and Aidil Mohamad write.
or the uninitiated, the name ‘Aeropolis’ may sound like an ancient Roman city. But it is merely a term to describe an airport city, in which its main element includes having an airport at the centre of an expanded city development. In the country, building an aeropolis is perhaps Malaysia Airports Holdings Berhad’s (MAHB) most monumental plan it hopes to realise. We delve into the many wonders of aeropolis by speaking to MAHB’s chairman Tan Sri Dato’ Sri Dr. Wan Abdul Aziz Wan Abdullah.
multiplier effect on the economy as airports usually host a full range of businesses and industries, namely retail and hospitality as well as cargo and logistics. This impact becomes even greater if the airport is developed as an airport city. “An airport city development is normally driven
World-Class Airport Cities
An airport is a critical component in a nation’s infrastructure, serving as a gateway into the country thus facilitating trade, commerce and tourism. An airport is also a major job generator and has a strong
MAHB’s chairman Tan Sri Dato’ Sri Dr. Wan Abdul Aziz Wan Abdullah explains to Property Insight the idea of Aeropolis
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MAHB’s chairman Tan Sri Dato’ Sri Dr. Wan Abdul Aziz Wan Abdullah
by the accessibility, speed and agility factors that the airport provides to time-sensitive supply chains and corporate connectivity nationally and globally. Infrastructure and connectivity are key success factors for an airport city, as much as the population base,” explains Wan Abdul Aziz. “We feel that this is the best time for us to focus on developing our very own Aeropolis,” he adds. The status or type of the airport is also very crucial in the making of an airport city. A hub airport would naturally serve a wider range of use, gravitating towards business and industry, in addition to the leisure market. Components of an airport city would include seamless connectivity to and within the airport city, commercial business districts, free commercial zones, air logistics parks, conventions and exhibitions centres as well as retail and hospitality
offerings. By incorporating residential development for differing levels of population, it helps to ensure a sustainable population base remains within the airport city, hence supporting the range of offerings and activities throughout the day and week. The concept of a Malaysian Aeropolis would be similar to the leading Aeropolises around the globe. Typical development components include traditional focus areas such as air logistics parks and e-commerce distribution centres to leverage on the air connectivity, especially for high value, time sensitive products. “Today, we are increasingly seeing a wider range of offerings at the Aeropolis which services industry new trends where corporate and regional headquarters as well as professional services choose to locate offices within the proximity of airports, especially around a hub or gateway airport given the wider business context and reach which often characterises these types of set ups,” says Wan Abdul Aziz. In the case of KLIA Aeropolis, MAHB has in its plans to transform KLIA into a successful major regional hub for Asia Pacific and a multimodal, multifunctional enterprise that will eventually become a diversified city with significant employment opportunities, shopping, trading, exhibition, business
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meeting and leisure as well as becoming a touristic destination in its own right. The development of KLIA Aeropolis spreads over 24,000acres of land surrounding KLIA. Within the enclave, 6,750acres is designated for commercial development, one of which is gateway@klia2 — a terminal-linked suburban mall opened recently with approximately 350,000 sq ft of retail space which also functions as an integrated transport hub. “The plans for the KLIA Aeropolis are progressing very well with a few developments in the pipeline,” says Wan Abdul Aziz adding that Malaysia’s airports are definitely among the best in the region, if not the world. While KLIA is considered the nation’s premier Aeropolis, the Sultan Abdul Aziz Shah Airport in Subang too, can be considered an established airport city, centred on aviation and aerospace related activities. The airport also serves as a bustling city airport, surrounded by commercial, industrial and residential development.
on the periphery of land borders due to noise and other issues that may come with it. These days, airports are seen as catalyst to economic development and this layout is no longer applicable. “Take KLIA for example, the airport was developed on a site 60km away from the city centre (Kuala Lumpur). However, over the past years, real estate development has been moving towards KLIA and its surrounding area such as Putrajaya, Cyberjaya, Science Park, Bandar Baru Nilai, Kota Warisan, Bandar Enstek and Kota Seriemas all of which have developed tremendously as the city centres get more congested. “Today, aircrafts have combatted the noise issue that has long been a problem for residential surrounding the airport. Aircrafts nowadays are less noisy and more environmental friendly,” Wan Abdul Aziz reckons. Adding to this is the recent conception of klia2 that is expected to strengthen the presence of Aeropolis, acting like a magnet attracting more residential development around the airport vicinity. klia2 with its retail-focused concept, is turning as a focal point of a much bigger set of surrounding developments. “klia2 is an embodiment of MAHB’s commitment to the airport cities vision. It has a terminal-linked mall and a transport hub that reflect its seamless connectivity. A pre-identified land use plans for the larger klia2 footprint encompasses hotel lots, ground handling, cargo and maintenance, repair and operation
Not Your Average City
With millions of local and international airline passengers utilising the land-air connectivity as a way of travelling into and outside Malaysia, an international airport can work as a backdrop to various businesses and entertainment area that not only adds exclusivity, but creates a very practical base of operations for various businesses and attractions too. Around the world, airports were historically erected
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facilities,” Wan Abdul Aziz explains.
A key challenge facing MAHB in developing Aeropolis is the relatively short lease land tenure of 25 years rendered to it in 2009. “The Government is very supportive of the overall KLIA Aeropolis development as they are aware that the airport city will bring about great benefits to the nation such as spurring economic activity and creating job opportunities. In any case, there are sufficient,
transparent mechanisms in our arrangement with the Government to allow a longer lease period,” Wan Abdul Aziz shares. MAHB confirms that the land tenure with the Government is 25 years and approval for developments is up to 60 years, on a case-to-case basis. KLIA Aeropolis development is based on generating sustainable recurring income through land lease or property leasing. The common development model for KLIA Aeropolis is the Build Operate & Transfer model, where the investor or developer leases a parcel of land from MAHB to develop and operate for a specific timeframe. “In certain cases, MAHB formed partnerships or joint ventures with potential investors, both local and foreign, in developing and managing projects, such as the case for gateway@klia2 and Mitsui Outlet Park KLIA. Such development is of course is based on specific determinants and is largely pursued if it fits within the spectrum of our business focus areas,” Wan Abdul Aziz tells.
In the past, it has been a major challenge to attract investors to capitalise the land area within KLIA, as it is located far from the KL city centre. Fortunately, with a huge passenger catchment passing through KLIA and the rapid growth of population in Putrajaya and Cyberjaya, there is a lot more interest coming from potential investors and developers to mark their presence in KLIA Aeropolis. Apart from klia2 development, which is the world’s largest terminal purpose-built for low cost carriers with a capacity of 45million passengers per annum, the adjoining gateway@klia2 integrated transport hub
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gifts. Designed to be environmentally sustainable, the overall retail architecture and interior recreates a vibrant holiday atmosphere, with a mix of warm and soft lighting to spark a state of relaxation and contentment.
and mall will surely be a game changer. The integrated retail complex gateway@klia2, located between the drop-off and pick-up point and the Main Terminal is incepted based on a concept known as a ‘mall-within-airport’. Not only a breather-location for flight passengers, it serves as a neighbourhood mall to the public living in Putrajaya, Cyberjaya, Nilai, Bangi and Sepang, among other nearby places. It is the only mall that operates 24 hours and welcomes about 30 million people. With a total net-lettable space of 350,000sq ft, it spans over four levels. Expected to be a bustling integrated complex consisting of a 6,000-bay multi-storey car park, it is seen as an integrated transportation hub for all-in-one travel experience and a full-fledge retail mall. With a total 250 outlets, visitors can dine at the mall, shop at a supermarket, window-shop for fashion items & accessories, visit perfume & cosmetics boutiques, find the latest electronic gadgets, look for their essentials at a drug store as well as buying last-minute
Complementing gateway@klia2 is the soon-to-becompleted Mitsui Outlet Park KLIA and cargo/logistics centre that are expected to be the other key catalysts in attracting investments. The Mitsui Outlet Park KLIA project and conversion of the 650,000sq ft LCC terminal into a cargo-handling terminal are anticipated to further enhance the setup of a successful Aeropolis. Due to MAHB’s huge land bank, it gets to deliver the full concept of lifestyle destination that is not limited within the terminal building. The Mitsui Outlet Park KLIA will be developed within a 44-acre land in Sepang, It’ll feature off-season top retail and fashion brands sold at discounted prices and will be the largest class compared to its sister-establishments in Japan. Tenants of the outlet will include brands from Europe and the United States, Asia and Japan that comprise a wide variety of business categories centred on luxurious brands, casual brands and specialty boutiques. Mitsui Outlet Park KLIA will open its doors to the public in mid-2015 offering 140 outlets over a commercial space of 25,000sq m under its Phase 1. With a concept themed “Paradise Village”, Mitsui Outlet Park KLIA is poised to be the largest outlet park in Southeast Asia showcasing entertainment and shopping, complemented by recreation and relaxation. The Final Master Plan, which covers development of Phase 2 and 3 by 2018 and 2021 respectively, will result in its commercial space to expand to 46,300 sq m, whilst housing 260 shops. The total investment value over the three phases
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is RM335 million. Mitsui Outlet Park KLIA is 70% owned by Mitsui Fudosan and 30% owned by MAHB. It is an initiative listed under the Entry Point Project (EPP) by the Malaysia Economic Transformation Programme, registered under the Tourism’s EPP3 of ‘Establishing premium outlets in Malaysia’ that has projected a Gross Domestic Product and Gross National Income of RM235 Million and RM220 Million respectively by year 2020. The outlet park will be complemented with developments namely a theme park, a golf course and an indoor arena suitable for conventions and concerts. These developments will attract people to KLIA, turning KLIA Aeropolis into a destination in itself. “The population is expected to grow rapidly as KLIA Aeropolis will function as a cargo and logistics hub that houses learning and medical institutions as well as hostels for the working population. The impending transformation into a global airport city shall provide a complete experience to our guests in addition to creating enhanced, sustainable stakeholder value,” Wan Abdul Aziz cites.
Perhaps, the area to be most affected by KLIA Aeropolis would be Sepang. Since the development of KLIA in the 1990s, Sepang is progressively developing into one of the key destinations in Malaysia. Formerly known as a sleepy district, Sepang is now a vibrant area with good network of roads. The district is easily accessible via Elite Highway, the South Klang Valley
Expressway, the Damansara-Puchong Highway and Maju Expressway. Thanks to the Sepang International Circuit, Sepang has also become a centre for motor racing activities in the region (F1 Grand Prix and MotoGP). And soon, with Mitsui Outlet Park KLIA, the area will turn to be the only location in the Greater Klang Valley to have a world class factory outlet.
What the Future Holds
MAHB has grown by leaps and bounds since its early operations. With a recorded Total Shareholder Return increase of 750% from May 2004 to Dec 2013, MAHB is considered as one of the most successful Government Linked Companies in Malaysia. It has successfully expanded its footprint overseas and is also recognised among the world’s best airport operators. “Going forward, we aim to work harder to continuously ensure the services provided are of the highest quality. I am also hopeful and confident that with the support from our stakeholders and partners as well as the government, we will be successful in making our new vision “To be the Global Leader in Creating Airport Cities” a reality,” Wan Abdul Aziz says optimistically. He believes that the concept of airport cities is gaining strong traction in Asia as a slew of airport developments and upgrades set to take shape around Asia. Airports in Asia are now transforming from just a primary air transport infrastructure to multifunctional enterprises with considerable commercial developments housed within and beyond its boundaries. “There are strong indications that Malaysia will have successful airport cities in the future. This can be achieved by leveraging on MAHB competitive advantages, such as the huge land bank at its flagship KLIA, thanks to the Government’s foresight in the 1990s. “Malaysia is blessed with a stable socio-economic and political environment which I hope could give potential investors the confidence to invest in our future pride – the Aeropolis,” Wan Abdul Aziz shares in the end.
Did you know? Aeropolis is an area located within an airport operator’s control - typically within a 5km radius from the airport. Aerotropolis refers to a much wider area that is not within the airport operator’s control, but its development is influenced by the presence of the airport.
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healthy and what’s important is your love relationship and not the money. When facing any disagreements, try to give constructive comments. Remember that in a relationship, if one party wins, the relationship fails.
5 TIPS TO START INVESTING WITH YOUR SPOUSE Your spouse may be the love of your life but does it mean they make good investment partner? Property Insight shares some tips to invest successfully (and happily!) with your life partner.
SHARE CLEAR VISION
When you decide to start investing with your spouse, you are reaching another level in your relationship. But with any big commitments, come big risks too. So, it is very important to set a clear vision on why you decide to do the joint investment with your life partner. You may want to carry out the investment to ensure a secure future for your children or it could be an investment to finance the children’s education. With a clear vision, both of you may be able to reason with each other especially if a conflict arises.
When you were single, all your financials were under your own care but as a married couple you not only share lives but financial commitments too. Thus, it is imperative for you to be open and honest about your financials. This way, there won’t be any unpleasant surprises when both of you apply for a bank loan to purchase a home. It’s better to be safe than sorry. Keeping your financial secrets from your spouse may also affect the trust your partner has for you.
LEARN HOW TO LET OUT WITHOUT FIGHTING
Criticism is toxic in any relationship. But sometimes, as husband and wives we can’t run away from criticising and condemning each other. This can be dangerous because most often than not, we end up saying mean things to one another and don’t even mean it. Expect these days to come and be prepared. Keep the discussion on any disagreement
USE YOUR DIFFERENENCES TO MAKE YOU STRONGER
Sometimes, the hardest part to agree on is which property to invest in. And when you’re in a relationship, the line of doing business and keeping your personal bond would becomes blurry. So, the key here is to always direct your attention to the facts. Do your due diligence and do this together. Keep in mind that positivity is the number one factor when discussing property investment with your husband or wife. Don’t disagree just because you feel the need to be right and make sure you do your deliberation rationally, not emotionally. If the couple manages to come to an agreement, this could benefit them and strengthens the relationship. The best part about joint purchase is that your finances are stronger and you can leverage on each other’s strengths.
BE HONEST ABOUT YOUR FINANCIAL STANDINGS
YOU WIN TOGETHER AND LOSE TOGETHER
In any type of investment, there’ll be some risks involved. This means, your investment may bring you wealth and at times it may flunk. If you benefit greatly from it, then revel in the profits together. But if the latter happens, avoid putting blame on each another. The best way to deal with the mishap is to evaluate the incident, learn from it and move on. The thing you have to realise is, you lose together and you win together - there is no in between.
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DEVELOPER OF THE MONTH
BUILDER To make a development memorable, it has to have the special added value. Aidil Mohamad learns from Oxley Holdings Malaysia.
s I open the doors of Oxley Holdings Malaysia’s (Oxley Malaysia) office in Jalan Ampang, I became awed with the look of it. Filled with white walls, it looks serene and the purple Oxley logo adds some special touch to the ambiance. From this, I can quickly estimate the type of developer Oxley Malaysia is. Its mother company, Oxley Holdings Limited, is no stranger in Singapore. It is listed on the Mainboard of the Singapore Exchange with a market capitalisation of about S$2billion (RM5.14billion). Tagged as a lifestyle builder, Oxley Malaysia’s presence is backed by the ultimate dream to change the property landscape of the country. Although the brand had just entered the Malaysian property scene, it had managed to secure a gross development value (GDV) close to RM10billion (GDV) within 10 months of its entry. Oxley Holdings Malaysia’s chief executive officer,
Dato’ Othman Omar who was previously with the Selangor State Development Corp (PKNS), shares with Property Insight the company’s aspirations and hopes.
Adding Value to Life
A good developer will always strive to make its development memorable by adding value to it. “Nowadays, it’s all about how you make people feel. When customers are given added value in what they buy, they’ll appreciate it more and this can benefit the developer even after years of purchase. We always have the desire to provide the customers with what they really need and want,” says Othman about Oxley Malaysia’s motto. He mentions that sometimes, people tend to pay more for what they believe in, based on elements such as culture. This can transpire into the added value factor he deems important. “Some customers may want to follow the concept of Feng Shui when
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getting that niche in the market. You ought to ask yourself; is there a long term value for buyers from purchasing this product? If not, there’ll be a holding on overpriced products when the market is down and you’ll lose out,” he says. Oxley is involved in a few joint collaborations too - a way Othman thinks could create more value in the products. But Oxley is very selective in whom they collaborate with. Their partners are those with excellent track records and possess the ability to bring something more than just a home to the customer. “That way, we can save up on our cost land and provide more values through projects that can capture people’s heart. It’s a win-win situation,” he mentions as he speaks about the joint ventures projects.
The Right Brand
buying a house, and as a seller you have to comply with such need, even if you don’t believe in it yourelf. You have to anticipate what the customers want,” he says. As a young company, Oxley Malaysia has created a business model that focuses on three items; highquality residential developments that focus on lifestyle, providing unlimited experiences within limited spaces; injecting modernity and vibrancy not only to residential, but also to commercial and industrial projects; and developing mostly freehold properties located in stable, highly accessible precincts and districts that house public transport options and amenities. “We want people to buy a house that can give them an idyllic life. This is possible only if they buy what they love,” Othman adds. He believes that as a developer, creating the desired values through properties can be done if a customised ‘formula’ is in place. “It is about getting the right mix and
The added values can only be conceptualised through the right type of branding. “But branding is very subjective to people. What appears expensive to one may be cheap to another. Take Jumeirah (the most expensive hotel, located in Burj AlArab) for example. When I mention Jumeirah, the MiddleEasterns will be very happy and have the confidence to stay there because they can relate to the lavishness of the brand. The brand is like the Louis Vuitton of hotels. But if I mention Jumeirah to the Chinese, the effects might differ. “That’s why we’re bringing in different brands to cater to different target markets. After creating the right brand for the right segment, we will then add value to it,” he cites. At Oxley Malaysia, the end buyers are its preferred market, as opposed to bulk buyers. By reaching out to end buyers, the company’s brand presence could be further
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Oxley Holdings Malaysia’s Chief Executive Officer, Dato’ Othman Omar
enhanced. According to Othman, Oxley Malaysia focuses on affordable luxury developments, built for comfort living that is sustainable in the long run. In Singapore, Oxley is known as the shoebox king and the builder aspires to utilise the same concept in Malaysia too. “Our developments are mostly mixed developments where we can add the right retail component, offices and theme park - all in one place - creating that special lifestyle. I think this concept works well among Malaysians,” Othman says. In effort to deliver the best brand to the market, Oxley Malaysia will perform branding audits to find out the market’s preferred location, types of development as well as the favoured developer, among other things.
Othman says. With an emphasis on integrated development for quick turnaround, Oxley Malaysia’s current landbanks sprawled over many areas, mostly in Kuala Lumpur and Petaling Jaya. The landbank includes parcels on Jalan Ampang worth between RM2.5billion to RM3billion in GDV, Section 16 in Petaling Jaya (RM900million), Beverly Heights in Ampang (RM900million), Seputeh (RM120million), Medini in Johor’s Iskandar Malaysia (RM1billion) and Fettes Road, Penang (RM1.5billion). The selection of landbanks are made carefully to ensure future success. Last November, Oxley made headlines when it acquired a high-value plot of land along Jalan Ampang from the Loke Wan Yat estate for a staggering RM450million and at RM3,300 per sq ft. “People want a home that is near to LRTs, close to various facilities and amenities like good school. But sometimes, it’s not about where it is, it’s also what’s in it,” Othman reckons. Under Othman’s leadership, Oxley Malaysia plans to bring KL city to greater heights making it an investor-friendly city. “Compared to other cities in the region, KL properties are undervalued. We have a lot of foreign investors who would love to invest in KL but there’s no Grade A offices here that they prefer. What they want is an A-grade office with at least 85% of efficiency,” Othman tells. With more Grade A buildings, more multinational companies will set foot in KL city. To rebrand KL, Othman thinks it is key to bring in international retail brands and hotels to realise
To maximise land use, the developer chooses to build upwards. “By building upwards, you get more units and are able to use the rest of the land for parks and more greenery features. Say that for one acre you can build eight units of landed house and with three acres can get you 24 units. But if we use that three acres to build upwards, (apartments or condominiums) we can produce 60 unit per acre or more, hence the land cost can be minimised,”
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into a cityscape befitting the future. Adjacent to the world-renowned Petronas Twin Towers and KLCC along Jalan Ampang, these new iconic towers will gracefully soar over 350 meters into the sky and house some of the best names in the world for retail, fashion, entertainment, services and hospitality. It will prove to be a grand statement of Oxley’s introduction to the Malaysian property scene.
In Malaysia, there are a total of eight projects in Malaysia with total estimated GDV of RM10 billion. “Our motto is speed to build and sell, that’s what people like, and what banks prefer. Even in
Oxley @ Medini
the dream of making the city metropolitan for international companies. “And paired with the right brand, price and location the development will definitely succeed,” he says. Its signature project, Oxley Tower, is set to transform KL’s Central Business District skyline
The proposed Oxley Triple tower @ KLCC www.propertyinsight.com.my
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Singapore, Oxley has undertaken 30 projects in 20 months. We want to be able to sell fast, so we make the projects as attractive as possible,” said Othman. All its projects are progressing simultaneously throughout KL, Penang and Medini Iskandar, Johor. Oxley is slated to launch a plethora of new exciting luxurious developments across the country, with the first few projects landing in Johor Bahru, Kuala Lumpur, Selangor, and Penang. With the philosophy of creating prestigious property landmarks and providing quality living in desirable locations, Oxley has so far acquired more than five prominent sites all of which are located in popular districts. In Petaling Jaya, Oxley will be introducing a mixed development project in Section 16 that fronts the KGPA and KL Golf & Country Club. It will feature sleek contemporary glass and steel architecture with its façade dominating the view along the LDP Expressway. Buyers can expect modern business hotel, SOHO, serviced suites and service apartments in this project. “Our Seputeh project is an impressive highend and exclusive residential project promises to introduce international standards in property design, global brands, top-notch services and unsurpassed value to this part of KL,” says Othman. After the success of Beverly Heights in Ampang, Oxley Malaysia takes on its latest phases (Phases 8 & 9). These new landed properties are set to once again establish Beverly Heights as the most opulent property in the Klang Valley. In Medini Iskandar, Johor, Oxley Malaysia is set to launch an exciting 4.26-acre mixed development. Located adjacent to the Pinewood Studio and the PJ @ Section 16
Oxley SG Tower
famous Legoland Malaysia theme park and only mere minutes away from the Tuas Second Link Bridge to Singapore, it will complement the demand for a high-end SOHO, serviced apartments and a hotel. This development will house three distinctly iconic edifices towering over 60 storeys, announcing its presence as the landmark gateway to the future metropolis of Medini Iskandar Malaysia. In Penang, the developer is going to have a brand of luxury residential development up north in the form of an ambitious urban redevelopment along Fettes Road. The communal cluster of modern condominiums, townhouses and limited retail units sprawl over a rolling landscape, with access to great views and greenery at the edge of the thriving Penang city.
Oxley’s international presence has always been prominent. Their developments stretch across United Kingdom (UK), Cambodia, Myanmar and Vietnam, just to name a few. Their project in UK is called “Royal Wharf ”, an exciting new 363,000m2 waterfront development in one of the greatest cities in the world, London. Boasting a 500m south-facing riverside walk along the River Thames, the Royal Wharf comprises 22 AUGUST 2014 www.propertyinsight.com.my
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of 3,400 apartments and townhouses, as well as approximately 15,000m2 of office space and 5,000m2 of retail and F&B spaces. With over 45% of designated open spaces and play areas, the development also features a riverside park linking the Royal Wharf Pier, Royal Wharf Amphitheatre and Riverside walk. “We’ve already become a trusted brand in Singapore and London. People buy our products for different reasons; some go for the developer’s brand, some for quality, and others for location. For Oxley in London, we’ve grown into a trusted brand where if an investor hears of us, they’ll buy it straight,” he adds. Being an investor himself, Othman shares that investing in a matured market such as London can be such an ease. “The agents will handle everything for you, including looking for tenants and maintenance. They even offer you some design options and all you have to do is to pay them a certain premium for their service,” he says. The Royal Wharf also offers quick access to central London via the Underground, Docklands Light Railway and the future Crossrail (much like MRT), as well as excellent international connectivity via London City Airport. It would also be a good investment proposition by virtue of its close proximity to the future 35-acre Asian Business Park located just a stone’s throw away at the Royal Albert Dock. Another international project they have is in Cambodia is called “The Bridge” - a freehold, mixed residential and commercial development and it is a joint-venture of two prominent property developers – Singapore-based Oxley International Pte Ltd and Cambodia-based Worldbridge Land (Cambodia) Co., Ltd. The development is a 45-storey tall building located in the heart of Phnom Penh. The Bridge promises to be the icon of the district. This majestic development occupies a land area of 10,090m2 and consists of a five-storey retail podium with two distinct tower blocks interlinked by two sky bridges. A bright future awaits Oxley Malaysia
Projects in Singapore VIBES @ UPPER SERANGOON 488 Upper Serangoon Road Singapore 534519 No. of Units : One block of 5-storey residential apartments (Total 60 units) Floor Area : 388 to 883 sq ft Features : Mechanised carpark, Swimming pool & Gymnasium Tenure : Estate in Fee Simple (Freehold) Expected Date of TOP : 31 December 2016 Developer : Oxley Global Pte. Ltd
THE PROMENADE @ PELIKAT 183 Jalan Pelikat, Singapore 537643 No. of Units : One block of 3-storey Commercial & Residential Development with Attic & 3 Levels of Basement comprising 164 residential units and 270 shops (Total 434 units) Shop Floor Area : 151 to 1,571 sq ft Residential Floor Area : 452 to 1,625 sq ft Features : Carparks, Swimming pool & Gymnasium Tenure : Estate in Fee Simple (Freehold) Expected Date of TOP : 31 December 2016 Developer : Oxley Vibes Pte. Ltd.
Devonshire Residences 55 Devonshire Road, SINGAPORE 239855 No. of Units : One block of 25 storey Residential Apartments (Total 84 units) Floor Area : 495 - 1,055 sq ft Features : Swimming Pool & Communal Facilities at 2 levels of Sky Gardens and Mechanised Carparking System Tenure : Freehold Expected Date of TOP : 31 Dec 2015 Developer : Orchard Suites Residence Pte. Ltd.
PRESTO @ UPPER SERANGOON 528 UPPER SERANGOON ROAD, SINGAPORE 534543 No. of Units : One block of 5-storey residential apartments (Total 36 units) Floor Area : 420 to 915 sq ft Features : Mechanised carpark, Swimming pool & Gymnasium Tenure : Estate in Fee Simple (Freehold) Expected Date of TOP : 31 December 2016 Developer : Oxley Global Pte. Ltd
VIBES @ EAST COAST 308 TELOK KURAU ROAD, SINGAPORE 423858 No. of Units : One block of 5 storey residential apartments (total 117 units) with 1st storey commerical shops (total 28 units) Shop Floor Area : 280 - 840 sq ft Resiential Floor Area : 344 - 850 sq ft Features : Basement Mechanical Carparks, Swimming Pool & Communal Facilities Tenure : Freehold Expected Date of TOP : 31 Dec 2015 Developer : Oxley Module Pte. Ltd.
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GEAR IT RIGHT F Over-gearing is dangerous and property investor must always be wary of it. Imran Roslan finds out more.
or any knowledgeable investors, the word over-gearing is quite an uncomfortable term to utter. Overgearing in simple words means overbuying property. As much as overgearing in property investment is known to pose some dangers to investors, the practice isn’t uncommon at all. Investments at times can be considered very much like gambling, in a way. Once you start cashing in, it’s easy to be overpowered with greed in the hope of making more investment returns. Over-gearing takes place when you buy beyond your income capacity. As property purchase involves big monetary commitment, once one
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over-gears, it is tough to make an exit strategy. The result is; you end up in huge pile of debt.
When Greed Takes Over
Over-gearing becomes a big problem when investors start buying too many houses, too fast, and they end up not being able to pay for them. With a lot of temptations such as attractive rebates and bonuses out there, buyers can easily fall into the trap of over-buying. Property website (GoodPlace.my) writer and administrator Khai Yin thinks there’s a reason for people to over-gear. “There’s one reason only and that in misinformation. People who over-gear
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Yin cites adding that often, the demographic that practices over-gearing includes people with higher propensity for risk taking.
tend to have inflated, unrealistic expectations of the potential returns when it comes to property investments. Misinformation and a ‘get rich quick’ mindset is the recipe for over-gearing disaster,” he says. He then adds, “There is a niche within the property sector which thrives on spreading misinformation. People who make money by teaching others how to make money (through property mainly) largely make up this niche,” says Khai Yin. He recalls that some people had even asked him if it’s a good idea to buy a property that takes up 50% of their monthly salary for their loan servicing. Such mentality is madness to him. Over-gearing is highly related to property bubble and just like any investment sectors, over-gearing can affect the property market. The availability of cheap financing resulted in an over-inflated demand, which in turn increases property prices. When the prices are not getting sustained with the leveling of demand, banks call in the loans. In the end, the property will be up for foreclosure. Without any control mechanism, over-gearing may overheat the market. “Any fully functional market should self-correct, and while this may sound cold, people should be allowed to fail if they make mistakes. Bank loans are now closing to 50% rejection rate. As the over-gear problem worsens, we will see higher rejection rate and this will restore some balance into the system,” Khai
“People generally accept the fact that higher yield investments come with higher degrees of risk. Property investment tends to be ‘safe’ in the long run, but can be volatile in relatively shorter periods of time. People who over-gear think they can ‘time’ the market by predicting entry and exit points that will give them high returns. Market timing is a fool’s errant,” Khai Yin thinks. For finance, loan and planning specialist from Golden Millennium Consultancy, Miichael Yeoh, more local investors are over-gearing now compared to years ago. “Over-gearing can be good or otherwise. It depends on how the person manages his or her property portfolio. I have come across some property investors who did not prepare themselves financially end up getting into trouble as they do not have excess fund to pay for the monthly installment when their property is completed,” says Miichael who thinks that people who over-gear are mostly young investors. “The only benefit I can think of is people get to make a handsome profit. This is because the risks involved are much higher, so it makes sense for the returns to be high,” Miichael reckons. Similarly, Khai Yin believes that over-gearing may make sense in order to gain an upper hand, especially when one wants to lock out competitors. “This tends to be over a short period of time before the returns exceed the cost of financing and results in a positive Return of Investment,” says the property market enthusiast. “But for a regular homebuyer, I don’t see any good in over-leveraging,” he adds.
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Realistically, we should only own and buy properties that we can afford. Home owners should think of the amount of loan that they have to pay afterwards including its interests and also the maintenance of the property. When one overgears, there’s a question of finding a buyer. In the interim, the bank loan still needs to be serviced. Given the unprecedented nature of property market, the property owner may not be able to know when he’ll find a tenant to start renting the property. The situation may worsen if the property is high priced. When it concerns high-end property, a niche market is targeted, hence selling it becomes tougher. Some also resort to expensive properties, thinking that they’ll gain a more profitable return. But if they are unable to sell them, they end up paying more for the loan. Plus, the property needs to be maintained too. With too many houses to maintain, too many loans to pay, and at the same time having some mouths to feed, home owners who are over-geared will be heavily stressed. Worse, due to their bad credit record, they might end up bankrupt.
If you’ve made the mistake of over-buying, the best way to deal with the consequences is to unload the property, take the loss and move on. By getting rid of the properties, you’ll get to
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reduce your monthly repayment and focus on recovering. There are many cases in which the investor suffers a huge loss from a failed investment. What’s best is to accept the downfall and settle for what they can truly afford. It is vital to keep their spirits high in order to avoid depression. Take the losses and mistakes as a learning experience and be sure to be strong enough to invest again in the future. Always make room for improvement and be aware of changes, especially in the property market. An experienced property investor who wishes to remain anonymous says that those who have no knowledge or experience should not even think of over-gearing. “Learn from other people’s mistakes and try not to repeat it ourselves,” he says. “Know your budget, and also know how to manage not one, but a few properties at once without being caught up in debt. Most importantly, buy properties within your means and don’t aim too high,” the investor from Kuala Lumpur adds. I personally believe that self-control is important. As a young potential investor, I feel we need to know our limits and capability. Most importantly all investors must learn and understand the risks of over-gearing. Everything in this world works in a way where there are two sides to it – the good and the bad side. In property industry’s case, these are profits and the risks. Thus, it is better to be safe than sorry.
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It’s All ‘Bout the Numbers!
Zuhaila Sedek-De Booij speaks to Valuation and Property Services Department’s director general Datuk Abd Hamid Abu Bakar on the power of valuation data and what it does to property market.
an you imagine a property market without valuation data? No, I can’t. Valuation data can be considered the holy grail of property investment. With it, investors get to furnish themselves with the market forecasts based on facts. And for any investor, seasoned or novice, this aspect is imperative to assist them in their property investment activities.
More Than Meets the Eye
On our home ground, Valuation and Property Services Department (JPPH) – a government body under the Ministry of Finance – is responsible to provide transaction data to industry players and investors alike. The department’s director general Datuk Abd Hamid Abu Bakar when met says JPPH plays an important role in collecting, collating, publishing and disseminating property information for the government and private establishments. “Property valuation is not merely numbers even though it involves calculations. The process of valuing properties is an art and science that requires a lot of critical thinking,” says Abd Hamid. He adds that with valuation data, one gets to understand the market value hence helping them
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to make investment decisions. “Valuers do not create or determine the market value of a property. The market value is determined by market forces such as i.e. demand and supply. However, the government may control the price of certain categories of properties in the primary market (sales by developers) such as low and medium-cost houses.” “The job of a valuer is to establish the market value of a property based on market evidence such as sales and rentals,” he says. Valuation is vital for home buyers because the amount of loan given by a financial institution is generally dependent on the valuation carried out by the property. This is generally referred to as the loan to value ratio (LTV). For instance, assuming a LTV of 80%, then the higher the valuation, the greater will be the amount of the loan in absolute term. “In that sense, if valuations are lower than the asking prices then a potential buyer may not able to purchase the property due financing problem. To proceed with the transaction he has to come with more of his own funding to cover the shortfall from the financial institution,” Abd Hamid explains.
The Market Trend
When asked about the country’s property market,
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Abd Hamid begins with the market’s performance in year 2012. He says that since two years ago, the market has been performing in moderation. He says the department observed that the total number of transactions started to soften with reduction in the total number of transaction in 2012 by 0.7%. In 2013, the market experienced a bigger reduction of 10.9% which indicated that various cooling measures introduced by the government since 2010 (such as revision on RPGT rates, LTV ratio and responsible funding where loans were based on nett income) has impacted the market. In the first quarter of 2014, the volume of transaction registered decreased by 6.1% compared to the last quarter of 2013. In terms of number, in the first quarter of 2014, the total transaction stood at 92,943 units as opposed to 98,990 units in the third quarter of 2013. “The trend of Malaysian property market had a peculiar pattern where, market was on a downward trend during the first quarter. Property dealings were less active in the month of January, February and March due to festive seasons and the beginning of schooling session, among other factors. Normally, market activities tend to pick-up during the second and third quarter of the year,” Abd Hamid says.
Table 2: Malaysia All House Price Index & Annual Change
to ease in the next couple of years as more supply of houses injected into the market through PR1MA housing and other measures imposed during the 2014 Budget,” explains Abd Hamid. With a myriad of PR1MA homes set to flow into the market, some have expressed concerns over the supply of the affordable homes. Abd Hamid believes that if a substantial number of a particular type of units is built in an area, it will affect the total supply in the market and this will in the long term effect the market prices of that type of property in the area. “Therefore, PRIMA has to build in the right location, right type of houses, right number of units according to demand and right pricing according to affordability,” he says.
What It Means
Despite the slight moderation in market activities, Malaysian property market will continue to sustain and contribute to the country’s economic growth. The present slowdown in the activity is temporary in nature, as most industry players are in their ‘wait and see’ mode. This is due to the cooling measures and several other initiatives introduced by the government. JPPH tells Property Insight that the residential sector will no doubt continue to dominate the property sector. As for the other sub-sectors, it is expected that the ‘business will go on as usual’. As for the office sub-sector, especially in the Klang Valley, there is a crucial call for close monitoring on the supply side, especially for the private sector’s development. In the recent Property Market Report 2013, released by the department, there are currently more than three million sq meter of office space available for occupancy, of which around 50% of
So what about the market value? According to the Malaysian House Price Index, it had indicated value corrections as illustrated on Table 2. In the table, one can observe that the country’s residential property prices began to escalate in the last quarter of 2009 with an annual increase of 5.6%. Prior to that, the increase was quite small and gradual. Double digit increments were observed in the second quarter of 2011 until the third quarter of 2013 (between 10% - 12%). However, in the fourth quarter of last year, the price increase started to mellow down with 9.6% increase and as at 2014’s first quarter, preliminary analysis had shown that the property price growth was even smaller, at 8.0%. “I anticipated that the market price will continue
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escalate is high,” Abd Hamid says. He adds that the young working force also needs to put ‘buying a house’ on top of their wish list to ensure homeownership. “In making purchase decisions, buyers have to be rational in terms of price and quality. They also need to take early steps in controlling their spending and borrowing for non-property items so they can secure the funding from financial institutions,” he reckons.
the space is in Kuala Lumpur with another 1.2 million square meter under construction. The occupancy rate of office space at the fourth quarter of 2013 was reported at a respectable rate of 79.2% inclusive of government offices, which is normally fully occupied. The private offices occupancy rate, however, stood at 78.2%, a figure that building owners, managers and policy makers should be concerned with. The new office supply normally comes with dedicated features, such as, green technology, multi-media status (MSC) and state-of-the art design. In such competition, the older building will likely be affected, unless these buildings go for refurbishments and up-grading. With such market trend, how should investors respond? “To the investors, I would say that they continue to invest in the property sector. After all, their main objective is making money out of their investment. As we all know, property has its advantage, particularly being hedge against inflation. This means that investment value typically increase with inflation. “However, my advice to them is that they should be wise and dig for more and reliable information pertaining to where, what type and when the investment is to be made. Through our observation, Malaysians tend to have this ‘herd syndrome’, where they have a habit of to follow the crowd. For me, this does not create a healthy environment, as it gives the opportunity to the developers to inflate prices. The basic principle is; the market is determined by demand and supply. When there are over demand, against limited supply, the tendency of price to
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Incepted in June 1957, JPPH has long been a driving force that provides valuation and consultancy services and the dissemination of information in the field of real estate which are reliable, timely and professional to its clients. Within JPPH there are three main activities (core businesses) namely Valuation and Property Service, National Institute of Valuation (INSPEN) and the National Property Information Centre (NAPIC). Aside from advising the Malaysian Federal Government, state governments, statutory bodies and local authorities on matters relating to the valuation of real estate and property services, the department also provides specific advice with regard to the valuation of plant machinery/equipment and furnish specific information and transaction data to valuers, appraisers and registered estate agents. Abd Hamid who has been with JPPH since 1979 recalls how much the department has evolved over the years. “I first started as a valuation officer and back then the department was relatively small. Data wasn’t computerised so everything had to be done manually. The market wasn’t as vigorous as now so the areas had to be covered were quite limited. However, we had to travel a lot and went on the ground even though the cases we dealt with were much simpler. “Because of the exposure, most of the young valuation officers back then matured quite fast as they had to be independent. Today, the young officers are IT-savvy so they get to move at a faster pace,” he says. Abd Hamid who is in his last year of his tenure before he retires has a lot of admiration for his industry. He for one loves mathematics and doing valuation suits him well. “But like I said, valuation is very much like an art,” he says. Over the years, JPPH had taken various initiatives to improve its delivery system. Taking valuation for stamp duty as an example, Abd Hamid says it used to take 14 days for its delivery and it had been reduced to 10 days in 2006. Subsequently the period came
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down to eight days in 2009. “Currently, it is five working days. As of March 2010 all standard property received online will be valued in one day for stamp duty purpose. All these improvements had been achieved without sacrificing quality,” Abd Hamid assures. Going forward, JPPH will in due course expand the various types of property that are defined as standard property. It will also work closely with Inland Revenue Board of Malaysia to enhance data transmission and case management. JPPH envisages the implementation of an Automated Valuation System to further improve the delivery system in the future. Abd Hamid feels that the department is tasked with a very challenging responsibility. This resulted in everyone working around the clock. He says that the negative perceptions people may have towards working in government’s agency are inaccurate. “For the department, the workload is much bigger than the private sector’s. On average one person has to do around 60 to 75 valuations monthly, depending on their location. In a year, we can deliver up to 700,000 valuations. This is not easy but we help each other to get through it,” says Abd Hamid. He agrees that the department seldom receives media exposure resulting in some unfavourable assumptions of the department’s performance. “I’m very proud of my department. About 99% of the stamp duty valuations is completed within five days while 60% to 70% within three days. “We’ve never had any big issues hence the lack of media exposure. But many do not know that we are involved in many huge developments in the country such as the MRT project where we help deal with the land issues facing the developer,” he shares adding that within ASEAN nations, Malaysia and Singapore are considered pioneer in the industry. “In the near future, JPPH will be embarking on
intellectual property valuation. We are currently carrying out valuation involving about 25,000 federal properties for the purpose of accrual accounting which we have to complete by year end. The government is changing the accounting system from cash accounting to accrual accounting. We are on track,” Abd Hamid emphasises.
Drawing the Curtains Abd Hamid who is turning 60 next year is filled with contentment when he recalls his years in the department. “I got into this profession by accident. After high school, I could have joined the police or the army but I decided to further my tertiary education. I count my blessings for making the right decisions,” Abd Hamid tells. Growing up in a Felda Settlement in Kuala Pilah, Abd Hamid had a humble beginning. He shares that back in the day, Felda settlements weren’t like todays. “It was tough. My parents would go out in the morning to tap rubber and come back in the evening only to earn $2.10 to $2.90. But the government did help to provide us with a few grocery items such as sugar, flour and cooking oil. But everyone else’s life was similar to ours so we didn’t feel that it was that difficult. Everyone was in the same boat,” he shares. Abd Hamid stumbled upon the job as a valuer which was considered quite ‘foreign’ at that time. But given his interest in mathematics, he decided to give a go and the rest is history. Looking back, Abd Hamid feels proud on how much his department has changed. He has faith that with the healthy environment the department promotes, his successor will be just fine to perform to the best of his or her ability.
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INSURE TO BE SURE Insuring a home has never been a culture among Malaysians, unlike some nations. Rachel Joseph writes.
hat do you do after buying a house? Most probably you will do some repair works, fit in the electrical components, do some paint job and finally decorate it with some furniture. But, what’s missing here? A home insurance maybe? Often, we take for granted the importance of having our home insured because many of us tend to think that bad things couldn’t be happening to us. But in today’s world, anything is possible and thinking in that manner may just be the first mistake you made while you jeopardise your safety. As an investor, it is vital to always be fully prepared in case the unthinkable happens and to ensure there’ll be a safety net to fall on to.
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Property Insight talks to AIA Life Insurance group sales manager Wong Hong Hiang and the National House Buyers Association’s (NHBA) honourable secretary Chang Kim Loong. Given that property purchase is a lifetime big commitment, it makes sense to protect it. “It is important for you to protect the property and the valuable assets in it so any future complications and unnecessary burdens, both financially and emotionally, can be evaded. Having said that, even if the property is fully paid, its home insurance should be continued,” says Wong. In Malaysia, home insurance was first introduced via the UK insurance system as the nation was ruled by the British back then. Then, in the early 1960’s Malaysia insurance agencies had to be shut down one-by-one due to low business
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performance. Subsequently, the government proposed the Insurance Act 1963 covering the regulation and supervision of the insurance industry, which is under the control of the Governor of Bank Negara. Later, the Insurance Act 1963 was replaced with Insurance Act 1996 in which major changes were made to the legislative framework enhancing the supervision and regulation of the insurance industry in terms of operational and financial discipline, transparency of policies and practices as well as protection of all policy owners. “The increasing number of property units in Malaysia provides an opportunity for insurance companies to provide fire insurance coverage for property owners. Also, the development of the Internet and literacy level has led to a significant rise in awareness and well-informed insurance buyers,” says Wong. The Valuation and Property Services Department (under the Ministry of Finance) has reported that the incoming supply for residential units has increased by 10.8% from 628, 655 units to 696, 557 from year 2012 to 2013. Wong then adds, “If you were to lose your home or your house content in a fire, natural disaster or theft damage, it will cost a lot of money and time to restore it. Even the wealthy insure their home and contents for good risk management. Why would you want to spend more money when
AIA Life Insurance group sales manager Wong Hong Hiang
there’s a better way to handle unfortunate events?” Often, some of us may neglect our responsibility in insuring our home because we don’t see it as important, unlike having ourselves insured. To be more receptive towards home insurance, homeowners must make an effort to study it, so they can better understand its necessity. Home insurance is categorised into two types of coverage namely physical property insurance and house holder’s insurance. Physical property insurance is specified to provide coverage and replacement cost over losses and damages to the insured property, which might be destroyed due to fire, lightning, explosion, damage caused by aircraft and road vehicles, pipe bursts, flood, windstorm and earthquake. Also, one may opt for additional coverage such as riot, strike and malicious damages with an additional premium. Differently, house holder’s insurance is tailored to protect losses, damages and theft to the insured content of a property to the same perils mentioned above. Generally, the major contents are listed as furniture, fixtures and fittings, personal effects, household goods such as kitchen cabinets, beds, cupboards, sofa sets, dinner tables and the rest are closed-circuit television (CCTV) system, alarm system, (light-emitting diode) LED televisions, kitchen hob, stereo system, desktop and so on. To decide the ideal selection for an investor in insuring his home, Wong says, “If you are the owner residing in your own property, you may want to take on physical property and house holder’s insurance as they cover the property and the property’s contents itself. However, if you let out your property than you as the house owner, could just suffice with the physical insurance as it will be a enough coverage
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for you and you can leave the decision to your tenant to take-up house holder’s insurance coverage in order to protect the tenant’s own house contents.” Unlike life or medical insurance, home insurance are way cheaper and affordable. For example, the basic fire insurance can cost as low as RM0.008/per thousand based on the insured value. For house holder’s insurance, it is best to renew the policy once a year. Given that some items in the list may appreciate or depreciate, the value should be adjusted to reflect the current insured value. Physical Property Insurance is based on the indicative current market value of a property. “Very often, property appreciates over time and the value needs to be adjusted and revised. As a rule to the thumb, always take 60% to 70% of the indicative current property value for insurance purpose. Only the physical property will need to be insured as the land on it not certified to suffer from losses or damages, which explains the lower percentage of insurance,” Wong explains. Some may argue that a home insurance is not quite a necessity. Home insurance is intended to protect a property as well as its contents. “Questions that we need to ask ourselves are; are we financially and emotionally prepared to face incidents such as fire? Or are we prepared to face the nightmare that all our fancy contents in the house are stolen after returning back from
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a joyful vacation or holiday? Only when such events take place,will we start realising that home insurance is a necessity. Home insurance should no longer be a mere option but, should be part of risk planning and management,” Wong reckons. The importance of owning home insurance is undeniable but acting on it will in the end boil down to two major factors - ignorance (and this type of attitude is self-destructive and affects others) and taking things for granted, hoping unexpected things will never happen. “Whether one realises it or not, risks touch nearly every aspects of one’s life and the person may be unable to stop the risk. But he can mitigate it through insurance to minimise financial and emotional stress,” Wong highlights. Wong mentions that there are some misconceptions surrounding home insurance. Many have assumed that home insurance covers almost everything. “Not all losses or damages are covered and exclusion clauses do exist in home insurance agreement. Under the house holder’s insurance, the benefit for burglary or theft in the house must be evidenced by forceful entry before the claim disbursement is made. “However, if one momentarily steps out from his or her house and suddenly, out from nowhere the burglar follows and enter into the house leaving without any evidence, then, for such claim the theft will be denied as no-force entry,” said Wong.
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A H E A D
V A L U E
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the malaysian scenario Dr. Daniele Gambero explains the mismatch between affordable demand and supply based on Malaysian example.
A dangerous misperception of basic economic principles USA
Gov. Difecit as % of GDP
Balance of Current Acc in USD Billion
GDP Growth Gov. Debt as % of GDP
hen I give presentations on the Malaysian Property Market I always start explaining the main drivers that justify the balancing between offer and demand, the Malaysian economic current performance and possible outlook. This is a fact that has to be very clear for both developers and purchasers.
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Real Estate is not an economic driver or, we can also say, it is not generating economic growth of a country. It comes in as a logical and natural consequence of the economic development of the Nation. Economic drivers are manufacturing, services (such as financial services, high quality health services supply â€“ i.e. properly developed third age healthcare system and so on), education,
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tourism, O&G and more. Malaysia has been performing pretty well in the past decade and the outlook for the next few years remains positive as all the indexes are showing ample improvement opportunities. By looking at a steady growth of the economy and comparing some of the indexes with other fully developed economies in the world Malaysia should be proud of the achievements and look at the future in an optimistic way as there are many signs of for improvement (Chart 1). How this applies to Iskandar Malaysia is easy to say. In the last eight years IRDA has been able to attract more than RM133 billion of committed investment within the 9 economic cluster defined by the 2005-2025 Comprehensive Development Plan. As we speak more than 55% of this has been already realized (Charts 2 and 3). Important is that 65% of the amount above has been generated locally with a mere 35% coming from oversea. Looking at a possible 2020 outlook we can find very positive signals coming from our neighbour Singapore. The recent state visit of the Singaporean Prime Minister Lee Hsein Loong and his speech in Putrajaya are confirming the very high interest that Singapore has in Iskandar Malaysia, not from a “propertyspeculation” point of view but more as an “industrial and manufacturing facilities supplier”
with the big plus of attractively valued skilled labour cost. The results of a recently conducted “public opinion survey” are highlighting how little the Iskandarians are aware of the IRDA’s growth achievements. The local authorities and in general all the stakeholders of Iskandar Malaysia should be looking with concerned eyes at this and provide better and more widely spread information. Let’s talk about Pinewood Studios and the collateral business and economic growth that it has been and will be generating. Making a movie is not only matter of superstars but an inducted army of hundreds of professionals and general workers that are normally involved (i.e. carpenters, makeup specialists, tailors, F&B, accommodation, transportation just to mention a few). Most of the committed investments above have the same “collateral added value” with IT, logistic, specialised and skilled labour demand constantly on the rise.
Housing offer and current/future estimated demand
Having said that, we can now look into what has happened in Iskandar Malaysia from a property point of view but again, let me stress; let’s not look at today but at three to four years from today! We cannot wait for the new residents to come in and only at that point look into a “provisory accommodation” solution while everybody will be running to supply houses which prices, because of the basic rule of demand and offer, will skyrocket at even more unaffordable levels. For sure, the last 24 months have seen the property market in Iskandar Malaysia gain a tempo that appears to be not sustainable. Again,
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CREDITS AND SOURcES: NAPIc PROPERTY MARKET REPORT 2011 AND 2012, GOVERNmENT DEPARTmENT OF STATISTIcS (HOUSEhOLD INcOmE AND BASIc AmENITIES SURVEY REPORT 2012), IRDA, REI gROUP ARchIVES, HO ChIN SOON RESEARch mAPS
we need to look into the real numbers. Even though it seems that too many high end unaffordable projects have been launched, by comparing the numbers in the chart below we can see that houses with more reasonable pricing and low / medium-low cost flats will be abundantly supplied. If we consider that the biggest number of units in one single project is 9,600 dwellings in the Country Garden Danga Bay and we even multiply this number by three (other projects are normally launching less than 500/700 units each) we still have more than 70,000 houses that are not highly priced (Chart 4 sourced at Napic and further elaborated by REI Group Research division). The outlook can be understood from the chart 5 below which shows the estimates of actual needs of houses (estimates have been calculated using very conservative parameters).
Demographic growthmigration and wealth distribution
Demographic growth and wealth distribution are also extremely important factors when it is time to make decision on purchasing a house for either investment or own use. We also need to consider that the Malaysian rural population is consistently moving towards cities/urban areas with a stable 3.5% ratio (on the total Malaysian population) per year. This means that we will really see Klang Valley hitting an estimated 10 million inhabitants as far as Iskandar Malaysia reaching the expected 3
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ESTIMATE NEED OF HOUSES BY 2015 AND 2020 TOTAL JOHOR POPULATION AS AT 2012 CURRENT DEMAND OF HOMES (3.5 members per household)
AVAILABLE STOCK AS AT 2012
CURRENT NEED OF HOUSES as at 2012
TOTAL JOHOR POPULATION AS AT 2015 (Est +3.5% yr) ESTIMATE DEMAND OF HOMES IN 3 YEARS TIME (3.5 members per household) INCOMING SUPPLY BY 2015 (Inclusive of existing stock) ESTIMATE NEED OF HOUSES BY 2015 TOTAL JOHOR POPULATION AS AT 2020 (Est +3% yr) ESTIMATE DEMAND OF HOMES BY 2020 (3.5 members per household) INCOMING SUPPLY BY 2020 (Inclusive of existing stock and supply by 2015) ESTIMATE NEED OF HOUSES BY 2020
3,976,374 1,136,107 803,520 332,587 4,722,685 1,349,338 1,001,411 347,927
million residents by 2025 (Johor State almost 5.5 million). In terms of wealth distribution, the statistics are showing how Malaysia has improved consistently towards the current 20-5/60-58/20-37. The meaning of these numbers is that, on a Malaysian basis, the poorest 20% of the population in 2012 (year whom the statistics are referring) is sharing 5% of the nation wealth, the richest 20% shares 37% of it while the middle 60% shares the remaining 58% (Chart 6). At this point, everything goes back to the unanswered question: what does affordable means? Can there can be a nationwide realistic parameter for affordability?
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Chart 7 illustrates very clearly where we are today on a state by state basis (listed are the major states and property hot spots) and how impossible is to have a nationwide parameter of affordability for homes as what is affordable for the middle class of Selangor is totally out of reach for a Pahang citizen. The next step is then to calculate on a state by state basis the average affordable value of homes and define a proper “making sense” value.
The real affordability
my personal take is that affordable values should be looked at those between RM200,000 and maximum RM450,000 or, if you prefer RM250 to RM450 psf at livable spaces of 850 to 1,100 sq ft. Maybe I’m wrong but, I am aware that there are several development projects which are offering livable houses within these values. For sure, purchasers shouldn’t be looking for their dream-home near Danga Bay or in JBCC but widen up north and east their range of search in what I define as the Iskandar Malaysia Affordable Corridor of growth (Chart 9).
With the next table, we are able to see how different the perspective and mind set of lawmakers, buyers and developers is when addressing the affordability issue. The results may open the door to a new and interesting scenario for state rulers, developers and eventually investors (Chart 8).
Two explanations on how these values have been calculated: the monthly loan repayment takes into consideration the newly revised, by Bank Negara, rules on DSR (Debt Servicing Ratio) and some average commitment that every household normally has while the step from “per capita” to “per household” uses a 1.5 ratio only considering both couple’s commitments and normal differences in payout between husband and wife. I hope these numbers will help all readers to better understand the meaning of affordability and how it differs on a nationwide basis. These values are median and if we look at Johor state and try to extrapolate real values for Iskandar Malaysia, looking into the major economic developments that the “special region” has been going through,
About the Contributor Dr. Daniele Gambero, CEO and co-founder of REI Group of Companies, he welcomes feedback at: Daniele.firstname.lastname@example.org
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What used to be known as a sleepy town is now a prosperous property development hub. Property Insight discovers what Rawang has to offer.
wenty years ago, knowing someone who lives in Rawang might be a rare find. But today, this is no longer the case as Rawang has blossomed into a thriving town with plenty of ‘space’ to offer. Back in the 1800s, Rawang was recognised as a tin mining area. In those days, there were only a few rows of shops and the number of residents living there too, was quite humbling. Based on Malay dictionary, Rawang means swamp indicating its origin as a swamp area. History has it that Rawang was previously called ‘Wang Ra’ by the Hakkan Chinese community there. Another interesting fact of Rawang is that it is part of the Gombak district and was the district’s capital until 1997. Today, Rawang is under the supervision of Selayang Municipal Council (MPS).
the opening of this highway, more developers began to notice Rawang and this resulted in more investors gaining the confidence to invest in this once-dead town. Henry Butcher’s chief operating officer Tang Chee Meng says, “The MPS has plans to beautify and upgrade the infrastructure of two main roads namely, Jalan Wellman and Jalan Maxwell in Pekan Rawang as the council wants to turn this area into a heritage town.”
In the mid 1990s, Rawang started to become a busy commercial and residential area - all thanks to the development of PLUS North-South Expressway. The highway was like a big bang for Rawang. Following 40 AUGUST 2014 www.propertyinsight.com.my
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Complimenting this is the government’s Economic Transformation Programme (ETP) that will gradually increase Rawang’s appeal as a future township complete with efficient public infrastructure, modern amenities as well as facilities and good livability standards. Today, various projects are taking shape in Rawang to further develop the industrial town. According to a source, Rawang today has more than 400 commercial lots to benefit its growing population of about 121,000 people. “Rawang is a suitable location for families as well as retirees because of the inexpensive living cost. Purchasing a house in Rawang is a lot cheaper than buying one in KL, Petaling Jaya or other city-like areas. Also, this area is seeing rapid growth over the past decades with improved infrastructure and amenities,” Chee Meng says. Apart from that, the richness of green pastures in Rawang too, is a strong appeal for the area. As one travels to Rawang, his view may be feasted by Hutan Lipur Kanching and the Commonwealth Forest and Park, one of which is the well-known Templer Park located mere six kilometres away from Rawang and 22 kilometres from Kuala Lumpur. There’s also the Kanching waterfall that embodies the beauty of this natural backdrop and it serves as a recreational spot for members of the public too. Last year, another highway called LATAR was opened in June further enhancing the connectivity to and fro Rawang. The dual carriage expressway links the road of Jalan Sungai Buloh and Kuala Selangor (Federal Road 54).
Centre (NAPIC), Rawang has the fourth highest value of transactions out of nine districts in the state of Selangor. In fact, the year-on-year change of townhouses and bungalows in the district of Gombak stood at 22.22% and 16.8% respectively and this proves that Rawang is undergoing a rapid growth. An instance is Mah Sing Group Berhad that had acquired a 226-acre land along Jalan Tasik Puteri in Rawang to develop a township called M Residence@Rawang. The project offers the masses 2-storey link terraces, super link homes and SemiDs. Its group managing director Tan Sri Dato’ Sri Leong Hoy Kum says, “Many years ago, Rawang was seen as a slow developing area, but now, this perception slowly but surely is changing. There are many growth opportunities in Rawang supported with strong socio economic factors,” he says. “When M Residence@Rawang was acquired, we had in mind to create an integrated township that can provide rapid access to the Central Business District (CBD) and offer comforts and joy of suburban living. It is in our belief that with the right land, right concept and right product, the development will do well,” adds Hoy Kum. Adding to the list of developers is Glomac Berhad
Current and Future Projects
Going through major transformations, Rawang is set to receive a myriad of developments from various developers, so much so, the town is turning into a new playground for property developers. According to National Property Information
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that introduced a gated and guarded township called Saujana Rawang. Spreading over 345-acre land, the concept of Saujana Rawang is a tropical haven set amidst low-density terrace houses targeted at those looking for affordable green living. Investors may also be interested in townships such as Bandar Country Homes, a mixed development project by Tanco Holdings Berhad. It sprawls over 700-acre freehold land with properties ranging from bungalows, semi-Ds, terraces, low and medium-cost apartments as well as shop houses. Then there are also residential development, Bandar Tasik Puteri, by Low Yat Group which consists of double-storey terraces set inside a gated and guarded community. Over the years, commercial developments too are beginning to take shape in Rawang. Among them are the Rawang Integrated Industrial Park, the soon-to-be-built 3-storey shop offices at Medan Puteri Commercial of Garden Heights in Bandar Tasik Puteri as well as the Rawang Commercial Central. Adding to these commercial accolades, property developer DA Land Sdn Bhd has announced to develop a RM5billion indoor and outdoor worldclass theme park on a 50.18-acre site in Rawang, which is expected to be completed in 2018. The mega development named The Two is designed to be a three-in-one theme park resort, wholesale city and a mall outlet. It’ll feature a concept where tenants get to enjoy a constant stream of neighbourhood, non-neighbourhood, local and international tourist shoppers. The most-awaited project comprises of two phases – Phase 1A and Phase 1B. Phase 1A is planned to be a tourist hub focusing on food & beverages as well as products for tourists. There’ll
also be wholesale outlets and indoor/outdoor theme parks in this phase. The latter is proposed to house a hotel, serviced residences and showroom offices. Complementing all these are the outdoor and semi-outdoor/indoor parks and gardens. All these combined, the project is slated to be one of a kind in the world.
Facilities and Amenities
Regular commuters living in Rawang wouldn’t have to worry about mobility as there are few mode of transportations available namely the KTM Komuter that serves passengers commuting withing the Rawang - Seremban route and public buses. Rawang is also a main stop for KTM Intercity trains. In April 2007, a shuttle service between Rawang
WHY I LOVE RAWANG S.Sathes Rao Years in Rawang: 19 I like Rawang because it is a small town which has all the facilities anyone would need, like shopping malls, greenery surroundings, public transportations and safe residential area. I can clearly reminisce the days I travelled to school, climbing and falling from the tall trees with friends, and spending time with my precious family while enjoying delicious dinners in restaurants at Rawang. I’ve spent my whole life in Rawang and it feels great to see the area ‘growing’ together with me.
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and Rasa was launched and was later extended to the Keretapi Tanah Melayu (KTM) Komuter track by 22km, covering three new stations - Serendah, Batang Kali and Rasa. Thereafter, in 2008, the KTM tracks were extended to Kuala Kubu Bharu and another extension took place in June 2009, and this time was to Tanjung Malim via the Rawang-Tanjung Malim Route. Earlier in June this year, Deputy Transport Minister Datuk Abd Aziz Kaprawi announced that up to 7,000 parking bays will be built at a few rail stations in Klang valley, including Rawang’s rail station by 2016. The move is to benefit the regular park-and-ride commuters. Rawang is also recognised for its bus services by Metrobus Nationwide Sdn Bhd and SJ bus. These buses travel from Pasar Seni or Kota Raya in Kuala
Habibah Abdullah Years in Rawang: 8 Ever since I moved in Rawang last 2006, I’ve seen so much growth in the area. The traffic in Rawang is relatively manageable, unlike big cities. Also, Rawang is a very good industrial area and my family members get to find a job easily in this location while at the same time live in the same area. My husband works in Rawang too. Staying in a landed house in Rawang has a lot of appeals and I look forward to celebrate Hari Raya Aidilfitri here. Selamat Hari Raya Aidifitri to all!
Lumpur to USJ and Rawang. To top it off, there are over seven medical centres in Rawang among which are KPJ Rawang Specialist Hospital, Klinik Kesihatan Rawang, Aniza Medical Centre, Ganesan Medical Centre Sdn Bhd and Menarah Islamic Medical Centre. Adding to that, shoppers in Rawang have nothing to worry about as the area has an abundance of malls and hypermarkets among which are Aeon Rawang Shopping Centre, NSK super market, Tesco, Giant, Mydin Rawang and many others. There are numerous schools in Rawang ranging from primary and secondary schools such as Sekolah Jenis Kebangsaan(SKJ) Tamil, Sekolah Kebangsaan Rawang, SKJ Cina SanYuk, Sekolah Menengah Rawang and Sekolah Menengah Kebangsaan Seri Garing. Soon, the Tenby International School will add to this long list of schools.
With Kuala Lumpur and Petaling Jaya heavily congested, more people are opting for an alternative beyond the borders in search for more ‘space’ and nature-friendly townships. And this notion is made stronger especially with the skyrockering property prices in both Kuala Lumpur and Petaling Jaya. Rawang is no longer a sleepy town especially with a lot of developers thronging the area.Plus, the availability of both residential and commercial developments means that Rawang can also be a location to work and live in and to some extent stands a potential to rival Putrajaya, Shah Alam or Cyberjaya. “Rawang will see the rise of many new townships bringing in relevant and critical need for services and products, and commercial businesses will grow in tandem with the maturity of these townships,” Hoy Kum believes. Located in the northeast of Kuala Lumpur, plenty of developments are underway in Rawang. Poised to be a good locality for both singles and families to live in, Rawang is just 15-30 minute drive away from the CBD connectable via road and rail making it a highly attractive locality for all. So, what are you waiting for?
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Current development Building type
Dolomite Corporation Berhad
Guocoland (M) Berhad
Mah Sing Group Berhad
Price psf (rm)
Min built up
Max built up
RM379psf - RM558psf
RM381psf - RM477psf
RM282psf - RM347psf
24-Hour guarded homes with parameter fencing, Clubhouse, sport complex, community hall, kindergarten, green foothills, recreation park, pedestrian walkways, blue lakes.
Gated and guarded concept, Barbecue Area, Club House, Covered Parking, Gymnasium, Jogging Track, Mini Market, Playground, Swimming Pool, 24hr Security.
Gated and guarded concept, Barbecue Area, Club House, Covered Parking, Gymnasium, Jogging Track, Mini Market, Playground, Swimming Pool, 24hr Security.
Terrace / Super Link M Residence
High volume ceiling floor, fully extended backyard, Pond, solar hot water system, auto gate, multi-tiered intelligent security system, gated and guarded, cctv, access card system, multi-purpose hall, swimming pool.
RM563psf - RM593psf
Anggun 2 Residence
Hong Bee Land Sdn Bhd
Grand Entrance Signage, Grand Entrance Water Feature, 1 Acre Park, Landscape With Water Feature, Green Lawns, 2.3m Height Security Perimeter Fencing And/Or Wall, Guard House & Equipment, Security Control Room & Equipment, Visitors Car Park At Central Park, Vehicles Access And Barrier System, Children Playground, Green Street Concept.
Mah Sing Group Berhad
Clubhouse, Canal garden, Grand entrance statement, Gated and guarded concept, Barbecue Area, Club House, Covered Parking, Gymnasium, Jogging Track, Mini Market, Playground, wSwimming Pool, 24hr Security.
Gated & Guarded, Ample ground, Rain harvesting system, central vacuum cleaner system, electrical points for Auto Gate & alarm system.
MCT Consortium Berhad
RM270psf - RM301psf
Infinity pool, Jacuzzi, Child pool, multi-purpose hall, cafetaria, viewing deck, low density, Furnished condo.
Mah Sing Group Berhad
24-hour security August 2013
Past Project LANDED
Type Single Storey Terrace Double Storey LowCost Terrace
Location Taman Bukit Rawang Jaya Bandar Tasik Puteri Taman Bukit Rawang Jaya Taman Rawang Perdana
Data provided by Henry Butcher Malaysia
Bandar Country Homes Double Storey Terrace
Kota Emerald Taman Rawang Perdana Bandar Tasik Puteri
Double Storey Semi Detached
Bandar Country Homes Kota Emerald Bandar Tasik Puteri
Average Land Area (s.m.)
Average Floor Area (s.m.)
Price Range (RM) 2012
Average Price Change (%)
129, 000 – 188, 000
130, 000 – 168, 000
104, 900 – 150, 000
143, 000 – 160, 000
65, 000 – 67, 000
65, 000 – 70, 000
73, 000 – 95, 000
80, 000 – 100, 000
12 18 7 2 6 7 12 11 6
92 102 131 153 121 130 97 109 154
95 120 137 141 109 96 98 104 141
128, 000 – 180, 000 160, 000 – 265, 000 320, 000 – 475, 000 405, 000 – 475, 000 150, 000 – 225, 000 170, 000 – 280, 000 100, 000 – 165, 000 93, 200 – 167, 000 120, 000 – 320, 000
165, 000 – 210, 000 150, 000 – 300, 000 395, 000 – 485, 000 465, 000 – 495, 000 200, 000 – 277, 000 260, 000 – 355, 000 130, 000 – 160, 000 140, 000 – 195, 000 190, 000 – 240, 000
26.6 22.2 19.8 12.2 24.6 27.2 9.5 9.7 6.8
250, 000 – 410, 000
300, 000 – 430, 000
680, 000 – 800, 000
888, 000 – 950, 000
195, 000 – 220, 000
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HIGH RISE Type Low Cost Flat
Average Land Area (s.m)
Average Floor Area (s.m)
47, 000 – 49, 500
45, 000 – 70, 000
68, 000 – 85, 000
74, 000 – 88, 000
74, 000 – 80, 000
75, 000 – 88, 000
75, 000 – 85, 000
85, 000 – 90, 000
73, 000 – 98, 000
Taman Rawang Perdana Bandar Country Homes Bandar Tasik Puteri Taman Bukit Rawang Jaya Taman Tun Teja
Price Range (RM)
Bandar Baru Rawang Double Storey Taman RawaShop ng Perdana Taman Hijau Two and A Half Bandar Baru Storey Shop Rawang Bandar Baru Rawang Rawang Three Storey Shop Commercial Centre Bandar Country Homes Bandar CounFour Storey Shop try Homes
Average Land Area (s.m.)
Average Floor Area (s.m.)
Price Range 2012
Average Price Change (%)
620, 000 – 750 , 000
1, 350, 000
620, 000 – 777, 000
1, 400, 000
450 , 000 – 900, 000
640, 000 – 685, 000
748, 000 – 800, 000
700, 000 – 850 , 000
Future Launches Landed Project Saujana Rawang Emerald West Bandar Tasik Puteri M Residences Puteri Height
Developer Selling Price (RM)
Current Transacted Price (RM)
Terrace (Phase 3 - Divya) Terrace (Amoda) Terrace (Ebony Parkhomes) Terrace (Garnet 2) Terrace (Fabula) Terrace (Phase 1) Terrace (Aster)
1,560sf 1,940sf 1,745sf 1,582sf 1,723sf 1,650sf 1,820sf
260,000 - 439,265 280,000.00 339,680 - 577,280 143,800 - 261,900 276,870 - 409,645 360,800.00 158,000 - 253,000
355,000 - 575,000 454,000 - 510,000 515,000 - 560,000 430,000 - 500,000 440,000.00 500,000 - 650,000 330,000 - 390,000
May-2010 Aug-2007 Apr-2010 Aug-2005 Jun-2009 Dec-2011 Dec-2006
May-2012 Sep-2009 May-2012 Jul-2007 May-2011 Dec-2013 Dec-2008
Data provided by Henry Butcher Malaysia
High Rise Project
Bandar Tasik Puteri
Developer Selling Price (RM) 72,000.00
Current Transacted Price (RM) 88,000 - 100,000
Launch Date Dec-2007
Reef Sunshine Business Park
3 Storey Shop Office 2 Storey Shop Office 1 Storey Shop Office 2 Storey Shop Office 3 Storey Shop Office
1,170sf - 3,765sf 2,605sf 1,170sf 2,800sf - 3,080sf 5,688sf
Bayu Permai Emerald Square
Developer Selling Price (RM) 788,000.00 300,888.00 179,800.00 296,820 - 323,820 885,000 - 985,000
Current Transacted Price (RM) 890,000 - 1,880,000 569,974.00 360,000.00 479,800 - 562,780 1,300,000 - 1,800,000
Launch Date May-2008 Nov-2009 Nov-2007 Nov-2007 Dec-2011
Completion Date Nov-2009
Completion Date Jun-2011 Dec-2011 Dec-2009 Dec-2009 Dec-2013
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estled in the excellent locale that is Seri Kembangan in Selangor, Cube @ One South is the One South master development’s final block of SoHos (Small Office Home Offices). One South is Seri Kembangan’s first mixed development which comprises a street mall, retail lots, serviced apartments and SoHo units. Cube @ One South consists of a total of 270 units which are 80% furnished and have flexible, easy-to-maintain and functional layouts and liveable spaces, making them perfect for those with busy city lifestyles.
Iconic SoHo – The Evolving Urban Lifestyle
Cube @ One South is offering four designs with built-up sizes of 445 sq ft and 449 sq ft. The units boast functional and modern layouts which allow for an ample flow of natural sunlight and excellent ventilation. Built with innovation and style in mind, Cube @ One South features an elegant façade fashioned out of several panes of window glass, modern symmetrical red cube and a good spread of greenery at the facilities floor – a unique blend of both natural and futuristic elements that reflect the city lights whilst preserving a homely setting.
children’s playground, function room, cafeteria, lounge/ dining area, water fountain, multipurpose area, mini market, salon, laundry, multipurpose hall and many more.
A Sense of Security
Security is also another key feature of the development. Each unit is equipped with a 3-tier security system that encompasses security card access to the car park, lift lobby and the owner’s floor with 24-hour CCTV and surveillance. One of the more notable features is the Smart Door Lock that is an added security enhancement. It offers an array of convenient safety features such as automatic locking, anti-theft mode and double authentication for twice the security. Controlled by a small and portable remote, it Building facade - day scene
Modern Facilities to Pamper and Inspire
The sophisticated 2-storey structure boasts a wide array of fascinating in-house facilities catering to every need possible such as a 25m half-Olympic lap pool, wading pool, pool deck, pool bed, outdoor shower, water spouts, spa pool, BBQ area, fitness centre, rest area, yoga and dancing room, meeting rooms, discussion room, nursery,
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FEATURED PROPERTY Lap pool with water curtain feature
Artist Impression Artist Impression Gym
comes with a wide touch-pad screen and user-friendly accessibility. Keyless and safe, residents are ensured peace of mind with this device.
Strategic Locale and Convenient Accessibility
Cube @ One South is a strategic development that offers a myriad of amenities and is surrounded by a wide choice of conveniences which include shopping malls, commercial business centres, healthcare facilities and education hubs. Its close proximity to highways, world-class facilities and a thriving community cements it as the Southern Gateway of Kuala Lumpur, so much that One South will
be the most eye-catching icon for all traffic to and from the South. Priced from RM372,600 onwards, Cube @ One South is targeted at fresh graduates, new entries in the workforce, single working adults, professionals, smallsize entrepreneurs, investors and retirees looking for small living spaces for the benefit of easy maintenance. The project is expected to launch in July 2014 and is to be completed 36 months from the S&P date.
About the Developer
Cube @ One South is a distinguished development by Prop Park Sdn Bhd, a wholly-owned subsidiary of Hua Yang Berhad which has more than 35 years’ experience in the property industry and is committed to quality, innovation and reliability. Visit One South Sales Gallery at : D-G-3A, One South Street Mall, Jalan OS, Taman Serdang Perdana, Seksyen 6, 43300 Seri Kembangan, Selangor. Show unit open for viewing Opens daily from 10am - 6pm For more information on Cube @ One South, please contact 03-8953 8886 or visit www.huayang.com.my.
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HOW DO YOU SURVIVE A BANK FORECLOSURE? AKPK tells Property Insight’s readers their rights, obligations, and defences when dealing with foreclosure.
e have been reading in newspapers and been informed by our counsellors that apparently there are complaints by borrowers, whose properties are mortgaged without their knowledge, that they had not been served with notice. Normally, when a person takes up a loan from a bank, it requires the borrower to provide a security (collateral) for the loan. In the case of housing loans, the security is usually the subject property, where the value of the property should be higher than the loan amount granted by the bank. The property that is offered to the bank as security will then be “charged to the bank”. The National Land Code 1965 (NLC) gives the right to banks to foreclose properties of their defaulting borrowers. When a borrower defaults payment for four (4) consecutive months, the bank will proceed to apply to the High Court or Land
Office for an “Order for Sale” to sell the subject property that is charged to the bank by way of a public auction to recover the loan amount. The rights of borrowers facing foreclosure proceedings are also provided for in the NLC. However, there are very stringent statutory rules that banks must comply with before foreclosure takes place. If there is a non-compliance of these statutory rules, the bank will fail in their attempts
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to foreclose and sell the property. Below are some legalities that a borrower can look out for when the bank attempts to foreclose property: Was the borrower personally served a ‘Default Notice’ in Form 16D? After defaulting four consecutive instalment payments, the NLC requires the bank to issue a “Default Notice” in Form 16D to the borrower. It is mandatory that Form 16D is served on the borrower in person through the bank’s lawyers as expressly stated in Section 254 of NLC. All subsequent foreclosure proceedings will be irregular and cannot be enforced on the borrower in the event of non-compliance of this requirement as Malaysian courts uphold the doctrine of ‘Strict Compliance’ with Section 254. Is the ‘Default Notice’ in Form 16D or Form 16E? Does it matter if Form 16D (issued under Section 254) of Form 16E (issued under Section 255)? The answer to this question is Yes, it does matter. Form 16D is a default notice issued when the loan granted by the bank to the defaulting borrower is repayable in instalments over a specified period. For example, a housing loan repayable in instalments over a period of 20 years. Form 16E is a default notice issued when the loan granted by the bank to the defaulting borrower is repayable on demand in one payment like an Overdraft granted to businesses. Obtain a copy of the Valuation Report on your property The Valuation Report on your property will be prepared by the bank’s valuer and it will state the market value of the property as at the date of the report. This can be acquired by your lawyer from the bank’s lawyer. The definition of Market Value as adopted by the Board of Valuers, Appraisers and Estate Agents Malaysia is “the estimated amount for which an asset should exchange on the date of valuation
between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.” Upon receiving the Valuation Report, the owner of the property that is being foreclosed may challenge the accuracy and correctness of the Valuation Report prepared by the bank’s valuer. He may also challenge the valuer’s opinion on the market value of the property that is being foreclosed. Extension of time to settle balance purchase price When the bank has successfully obtained an Order for Sale against your property or sold your property at a public auction, monitor the progress of the sale closely. The usual requirement under the Proclamation of Sale is that the Purchaser at a public auction is required to settle the balance 90% of the purchase price within 90 days after paying the requisite 10% of the purchase price. The borrower must consent to an application for the extension of time to settle the balance of the purchase price. The bank cannot grant the Purchaser the extension of time applied for without the borrower’s consent. On the 91st day from the date of the public auction, go to the Bank and ask if the Purchaser has paid the remaining 90% of the purchase price which should have been paid to the bank the day before.
About the Contributor AKPK is a body to educate people from all levels of income to ensure all Malaysians are equipped with sound personal financial management skills. AKPK offers three (3) core services free of charge, which are financial education, counselling and Debt Management Program. For more information, downloaded a guide via this link http://www.akpk.org.my/ services/debt-management/self-help-guide.
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What do you do when the banks say no? Adrian Un Kok Keong CEO and Founder of Skybridge International Sdn Bhd Try to apply the loan solely under your loved ones name, even though the real purchaser is you. This is possible via the 3rd party loan where the evaluation of loan eligibility is based on your loved ones’ income. Also, you can opt for an application under investment holding company where the assessment of loan eligibility is based on incomes of all directors of the company. Do note that for housing loans, maximum financing is limited to 60% under investment holding company. No such limit imposed if borrowing for commercial properties. Consider settling your outstanding credit card balances as it hinders the loan application because banks do use 5% of total credit card outstanding balances when deriving the Debt Service Ratio. If you have a habit of taking up personal loans, please stop it. Banks generally dislike loan applicants with existing personal loans especially since it appears in one’s CCRIS (Central Credit Reference Information System) report. Banks deemed this segment of customers as high risk profile market and likely to default first in the event of an economic downturn. So spread your purchase over a period of time. Do not overgear yourself.
MiIchael Yeoh CEO of GM Training Academy PLT When a bank rejects you, you must firstly find out why. Each bank has different approval criteria. A rejection from one bank does not mean your application to all other banks will be rejected too. Borrowers must also know their own Debt Service Ratio (DSR) as banks will use this to determine your credit approval (DSR = Debt/Net Income X 100%). Each bank has its own DSR ranging from 50% to 85%. The next thing you should do is to photocopy your financial documents and submit them to as many banks as possible, hoping that at least one will grant you the approval. Now, the dangerous part here is; banks can track your loan submission, approval and rejection in a system called CCRIS. This might reduce your chance of approval in a way. Let’s say Bank A rejects your application, and the same goes for Bank B and Bank C, there will be a record in the CCRIS to indicate this repetition of rejection.
Chris Tan Founder and managing partner of Chur Associations “Banks wouldn’t say no to a customer unless if there’s an obvious reason. At times, it can even be because of the property itself. All you have to do is find the issue, address it and get rid of the reason. Investigate the issue by asking why and how? Don’t give up when the bank rejects because you can always find a way to purchase your dream property via other platforms such as insurance companies, Malaysian Building Society Berhad (MBSB), license money lender and many more. Another idea is, try lending cash from your family and friends or try to buy the property under joint purchase with them. Manage your credit balance well and the property is yours!
KK Chua Publisher of Property Insight magazine and a registered real estate agent “Try to recheck your loan application documents and spot what you have missed and include your other incomes such as fixed deposit, rental income, and so on to strengthen your financial record. Always remember to manage your debt service ratio to 70% of your net income. How do we do that? Get a copy of CCRIS report from Bank Negara and check it thoroughly. It is free of charge. Bank will also say no when your credit card balance or personal debt is left unpaid. Settle the problem. Also, try to apply to other banks as each one of them has its own requirements and you may get your loan approved at any one of these banks. Lastly, you can also try joint purchase to own the property you have been eyeing on.”
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AFFORDABILITY Dr.Norazmawati Md.Sani @ Abd.Rahim uses England to study the relationship of life expenses to home affordability.
ousing is a basic need for every individual. Whether acquired by purchase or through lease, housing affordability is not merely home ownership but it involves tenancies too. The term ‘affordable housing’ describes housing that assists lower income households to obtain and pay for appropriate housing; without experiencing undue financial hardship (Milligan et al., 2004). The main variables which affect the ability of the lower-income group in Malaysia to own a lowcost house, include household income, household expenditures, occupation, education level, whether household members work and monthly payments for housing (Norazmawati, 2013;2012a;2012b;2007; Abdul Malek et al., 2013; Norazmawati et al., 2010; Norazmawati et al., 2006). If an individual’s income is adequate to pay for a house and other household expenditures, then that person can be described as having home affordability. In every five year Malaysian plan, the policies, guidelines and legislations have continuously stated that housing must be affordable for every person; especially for the lower income group of Malaysia (2010). One of the objectives of the housing policy, formulated by Malaysia’s Government is that of home ownership. The National Housing Department was established under the Ministry of Housing and Local Government, to take responsibility for and 52 AUGUST 2014
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ensure that every household in Malaysia lives in a comfortable house. In line with a concept inspired by the Prime Minister of Malaysia, Datuk Seri Najib Tun Razak; “1Malaysia: People First, Performance Now”, the Government is committed to the provision of adequate, quality and affordable housing to improve people’s welfare. Perhaps, if there’s anywhere we can study affordable housing, it would be in England. Historically, England has had much of its affordable housing developed, managed and maintained by large housing associations. Recently, though, authorities have encouraged and explored the establishment of community land trusts. The establishment of community land trusts in England has emerged from the dual concerns of developing and preserving affordable homeownership and retaining peri-urban and non-urban agricultural lands. Social housing is let at low rents on a secure basis for those who are most in need or struggling with their housing costs. Normally, councils and not-for-profit organisations (such as housing associations) provide this social housing. In England, social housing is considered as affordable housing. This is because the key function of social housing is to provide accommodation that is affordable to people on low incomes. Limits to rent increases (set by law), mean that rents are kept affordable. Yorkshire and Humberside region (particularly
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Sheffield) was chosen as the case study to determine housing affordability for Malaysian students. Housing affordability is a crucial issue in terms of house prices and rents. Based on the Table 1, house prices in Yorkshire and Humberside had increased by 53% between 1998 and 2013, from £54,812 to £115,480. Table 1: Average house prices by region Region East of England East Midlands London North East
children’s school location, local neighbourhood communities and accessiblity of raw food materials (Nurul et al., 2012; Norazmawati and Abdul Ghani, 2007). Approximately, 40% of the respondents had five family members staying together, 54% with 3 or 4 person occupancy and the remaining 6% had six family members as shown in Figure 1.
Average house Average house Average house price, all price, all all dwelling dwelling dwelling types, price, types, types, Mar 2012 Mar 1998 Mar 2013 £70,038 £172,811 £173,366 £55,612 £123,520 £122,033 £121,178 £341,541 £369,372 £49,693 £102,657 £96,472
West Midlands Yorkshire & Humberside
Source: Calculated from figures published by Land Registry Office
In England, Malaysian students can either pay housing rental weekly or monthly (as shown in Table 2) in Yorkshire and Humber, the average social rent set by the Council is £60.55 compared to an average social rent of £66.20 set by Housing Associations. This means that the rental price set by Housing Associations is £5.65 more than the rent set by the Council. However, the actual rental cost for private housing in Yorkshire and Humber indicate that weekly rental fees are almost double that set by both the Council and Housing Associations. Therefore, average housing rental rates in the Private Sector which are payable by the majority of households in England are two to three times higher than social household rental fees set by the Council. Table 3: Average private rents by region (median, monthly) Region East of England East Midlands London North East North West South East South West West Midlands Yorkshire & Humberside
Private sector, 12 months Private sector, 12 to end of March 2013 months to end of (monthly) March 2013 (weekly) £600 £150.00 £500 £125.00 £1,250 £312.50 £450 £112.50 £495 £123.75 £750 £187.50 £615 £153.75 £525 £131.25 £485
Figure 1: Household Number of Respondents
The analysis of housing affordability for Malaysian family students in Sheffield, indicate that households with four members rent houses with an average monthly instalment £435 if their overall minimal income of £1,300 is obtained either from sponsors or through part-time work. In practice, the Malaysian government has sponsored a monthly subsistence allowance of £1,012 for each student enrolled in a higher degree program in the United Kingdom since 2013. This allowance is expected to be utilized by students for all expenses in the United Kingdom for housing rental, food, transportation and study-related expenses. However, if both husband and wife pursue a higher degree program together concurrently in the United Kingdom, the allowance is paid for each individual; giving a total allowance of £2,024. For privately funded students, the subsistence allowance ranges from £880 to £1,571. Some students (approximately 50%) choose to work for extra income as cleaners, giving an additional gain of between £250 and £500 a month. However, for the purposes of
Source: Valuation Office Agency, DCLG
The selection of house location for Malaysian family students in Sheffield depends on house rental rate, accessibility to the University, number of family members, transportation convenience,
Figure 2: Household Income from Allowance
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this analysis, actual household income will not consider any additional income from part-time work. Figure 2 shows the household income obtained from the subsistence allowance provided for Malaysian family students in Sheffield based on the data collected. Approximately, 57% of Malaysian family students earned a total allowance ranging between £1,001 and £1,500 and 20% of the respondents managed to earn a higher income of between £1,501 and £2,000 monthly. However, 13% made less than £1,000 and 10% managed to earn more than £2,000; while enrolling in full time studies in the United Kingdom. To investigate the relationship between subsidized allowances and household expenditure for Malaysian family students, a regression method was used in this research (the results of which are shown in Figure 3).
Figure 3: Relation between Allowance and Household Expenditure
Malaysian family students earned less than £1,000 of their total household income. Table 4: Average Income and Household Expenditures for Malaysian Family Students in Sheffield
The average income and household expenditure data gathered from the 30 Malaysian family students respondents living in Sheffield is shown in Table 4. With total average expenses of £1,243 a month, the subsistence allowance from the Government of £1,012 is less than the actual expenditure. Table 4 shows that the average income required (for a sufficient expenditure with minimal saving) are £1,300 per month. This indicates that with a £1,012 allowance, Malaysian family students need an extra £300 per month which is obtainable from part-time work of approximately 2 hours daily. This statement confirms that approximate 50% of Malaysian family students participate in part-time work (as previously mentioned).Figure 5 shows that the overall expense patterns of Malaysian family students sub-divided into eleven (11) categories i.e. house rent, water bill, gas bill, electricity bill,
Figure 4: Total Household Expenditure
Figure 4 clearly shows that 70% of Malaysian family students spent £1,001 to £1,500 each month for their overall household expenditures compared to 57% of Malaysian family students that earned a total monthly income of £1,001 to £1,500 (as shown in Figure 2). Meanwhile, 17% of Malaysian family students spent less than £1,000 a month as their monthly commitment compared to earlier records (as shown in Figure 2) that only 13% of 54 AUGUST 2014
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Figure 5: Total Expenditure in GBP £
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clothes, telecommunications, food, entertainment, medical, education and transportation. The highest allocation of monthly spending generally went to house rent (35%) and food (24%). These were followed by transportation (11%), entertainment (6%) and education study-related expenses (5%). Household utility bills i.e. gas, water, telecommunications and electricity accounted for a total 14% of the household expenditure; which are considered as compulsory allocations for comfortable living which became constant parameters that normally needed to be paid for in each household. Meanwhile, medical and clothes sub-categories accounted for 2% and 3% respectively. This research circumstantially discovered that of the 30 Malaysian family students interviewed, 12 faced a deficit in their monthly budget; where the household expenditure was more than their household allowance (as shown in Figure 6). Seventeen respondents disclosed a household income surplus ranging from £0 to £500 monthly. One (1) respondent managed to have a surplus of more than £501 to £1,000 a month. However, it was detected that ten (10) respondents faced a deficit of between £0 and £500 a month and two (2) respondent had a deficit of between £501 and £1,000 a month. This family budget surplus was generally used for savings, travel planning and long-term planning to buy luxury items such as a car, imported furniture and branded electrical appliances which they aimed to bring back to Malaysia after graduation. Budget deficit were usually compensated for using existing savings, family contributions from Malaysia or shortterm loans; which were settled within one or two months.
In conclusion, since housing is a basic family necessity, allocations for housing are a fixed expenditure and the other sub-categories expenses are considered as variables which can be adjusted and lowered when the family’s spending pattern is achieved (Norazmawati and Abdul Malek, 2012). With 18 respondents having a monthly budget surplus, the average household income minimum required is £1,300. This proves that Malaysian family students are afforded to rent a house with an average allocation rental of £435 a month. The spending pattern in the United Kingdom needs to be realized as quickly as possible by Malaysian family students so that wise monthly budgetary allocations are prepared for comfortable living whilst producing a surplus for future planning. The findings indicate that Malaysian family students in Sheffield with 4 household members are afforded to rent a house with an average monthly instalment of £435 if a minimal £1,300 overall household income is obtainable either from their sponsors or through part-time work. The pattern of their expenses shows that their most significant monthly expenditure goes towards housing rental (at 35%) and food (at 24%). For a monthly subsistence allowance of £1,012 for each student, provided by the Malaysian government, Malaysian family students are considered lessafforded to have a moderate living experience in Sheffield; whereby an additional income of approximately £300 from part-time work is required to support their living expenditures. About the Contributor Dr.Norazmawati Md.Sani @ Abd.Rahim is a Senior Lecturer at the School of Housing, Building and Planning, Universiti Sains Malaysia Pulau Pinang, Malaysia. She can be contacted at email@example.com.
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FUND FOR EDUCATION How property investment can be an excellent way to start an education fund for your children.
ost people that choose to invest have a certain objective in mind, either specific or general in nature. Generally people invest to generate financial return, but sometimes they have a more specific goal in mind such as a retirement fund, extra monthly cash flow, hedge against inflation or more. In fact, it might be very useful to have a specific objective and time frame for your investment. Some property investors have as goal to fund their childrenâ€™s future education, which is actually a good idea. But like any investment that focuses on risk and returns there is never a sure positive gain. If we look around, we still see enough abandoned projects, underutilised properties, lower than expected returns and in some cases even considerable losses. Letâ€™s take a step back and look at the basic nature of property investment. Firstly, the horizon of
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property investment is of medium to long term from 3 to 5 years for a mid-term and 30 to 50 years for a longer term view. People buy houses to stay, office for their business operation, warehouses to keep goods, which all are for longer term usage. Thus, being a landlord mostly means one has to be there for the long haul. Secondly, real estate consists of bricks and mortar that is tangible. Categorised as a fixed asset class, this investment is viewed as much more stable in value and therefore more in favour by financiers. As a result, most property purchases can be financed and the purchases can be easily leveraged with their income capacity rather than buying with full cash amount. Thirdly, property is a high priced asset and highly legalised and secured with title. Hence, it is much less liquid than stocks and shares. It also means that it takes more time and ancillary costs to acquire and dispose off them before the cash is
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Easy leverage and high cash-oncash return Investment in real estate can be financed easily since it is stable for the longer term period, thus, it is easier for many to fund the property investment, unlike other forms of investment like stock and shares. In other words, it provides a good “cash-on-cash” return. To illustrate the point here, you can buy a condominium of RM500,000 with RM100,000 cash with the assumption of the 80% balance of the purchase price financed by the bank. If the condominium appreciated 20% in value to RM600,000, the owner will be earning a RM100,000 gross profit with a “cash-on-cash” return of 100% from his initial cash upfront payment. being transacted. With time and additional cost of transaction, one needs to do a little more planning compared to other forms of investment. Property is a stable fixed asset that generally generates stable rental income with a certain level of return yield. Current rental yields for high-rise apartments and condominiums in Klang Valley are around 4-6%, landed residential properties fall within the band of 2-3%, commercial properties of shops and offices are hovering around 3-5% and industrial properties offer rental yields of about 5-6% percentage point. The rate of yield moves in tandem with the market and depends strongly on demand and supply together with the fluctuation of interest rate which is a major determinant of the cost of funds for investment. Property is an income generating asset. So, it is a good hedge for inflation which means inflationary pressure will push the rental income higher as well as the property price. This is unlike keeping cash for which the interest earned may not be able to outrun the inflation or depreciation of the value of money.
Good hedge against inflation Property is a fixed asset and it is generally stable in value. It may not be a good idea to risk a child’s education fund onto a high risk investment as it is an essential need for a family. Over time, rental increases, at least in tandem with inflation rate, and the property value appreciates. From a historical point of view, we know that education cost will also increase, so using property investment as a hedge against inflation is a good choice. For example, cost of tuition fees for a local medical degree is about half a million Ringgit and 10 years down the road, it is projected to increase in tandem with the inflationary rate or more without taking into consideration any unforeseen circumstances. Therefore, holding on to a half a million ringgit worth of property will probably be able to finance the tuition fees of a medical student.
Long term stable investment Property investment is always a good form of investment and in this case it works well to fund your children’s education. It is a well-matched kind of investment since the parents will need the money to fund their children tertiary education in 10 to 15 years’ time. This fits well with the requirement of long term investment in property that allows the investors to collect rental on a regular basis to pay off the bank mortgage and at the same time, enjoy capital appreciation at the end of the investment horizon when disposing off the property.
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Easy to manage Being a landlord is a relatively easy job as long as you keep things simple and address tenants and their requests promptly. In fact, some say renting out your property is a rather boring or nonchallenging task. The landlord just needs to carry out regular maintenance and repair work, ensure timely collection of rental and cover the legal and risk management aspects of the real estate. Alternatively, the landlord can engage professional services such as property managers and other professionals for assistance. Caution I: Sometimes it is just not for everyone However, there are some possible downfalls to look out for if one wants to use property investment to fund their children’s education. Firstly, property investment or any type of investment for that matter, may not be for everyone. There are people who do not like taking any form of risk and in this case mainly financial risk. I know of people that can’t sleep well if their properties are not rented out for two consecutive months or if their tenants are not paying on time. Some people get frustrated and stressed over these matter and they just don’t like to deal with problems of loan financing, cash flow management, repair and maintenance and delinquent tenants. This is a long term investment, if anyone find property management work is not for them, better leave it to the expert or just invest
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into Real Estate Investment Trust Funds which is a form of property investment via a trust fund system with a relatively stable income. Caution II: Financial risk Property investment is just like any other investment that comes with risk. Hence, the investor should assess the financial risk they are able to assume when venturing into the investment. As discussed earlier, one can get a loan to finance the real estate investment but it is also a double edge sword if one depends too much of loan financing. Property markets have proven many times to have a cyclical pattern in the long term with swings of ups and downs adjusting to the market conditions. Thus, investors should have some form of contingency in place to weather the slowdown of property market conditions such as suppressed property prices or lower rental demand. It is recommended to keep some additional cash flow to cover the loan installments instead of solely relying on rental income from the investment property. One of the rules for successful property investment is “holding power” of the investors. He or she should have the liberty to choose the best time to sell rather than be pressured to sell due to deteriorating market conditions. Being over leveraged on investment with tight cash flow can also lead to such situations as selling at a low price or renting out to the wrong tenant with compromised rental rates.
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Caution III: Troublesome of managing property and tenant As I mentioned, investing in property requires not too much of an effort but this may be still a chore for some people. I know of clients who gave up when meeting challenges of delinquent tenants and contractors. This can be a major challenge to many small time investors who start venturing into it while not knowing what to expect. They might have bought the wrong property at the wrong place or rent to the wrong tenants. It is important to know oneself and match your investment to your capability. I have clients who only invest in residential properties favoring its stable demand while others only invest in commercial properties not wanting to deal with hassles of petty maintenance works such a small pipes leakage or air condition unit breakdowns which are being taken care of by the commercial tenants. Otherwise, engage a professional property manager to handle all these matters from maintenance to collection of rental with a fee. Caution IV: Investing in a wrong property Just like any investment, one can go wrong by buying a property that is not able to generate the income needed to finance the children education fund. Investing into the wrong property has a repercussion on the return of investment. Most of the time investors end up in such a situation when they were given the wrong advice or by taking up
a position of investment expecting high return yet disregarding the higher risk attached. In the real estate business, there are many properties that hardly increase in value and somehow end up being rented out to the least favorable tenant with low rental. It is important to study the situation when entering into a purchase and assess realistically the risk and return of the investment. From time to time, investors should also assess their investment choices since the investment spans over a time of many years with market changes and various opportunities presented to them. Conclusion To sum up the matter, I strongly believe property investment is a good option to finance your children education funds. If you are considering doing it, it is important for you to purchase the right property, putting in some effort into managing it, assessing the financial risk, and not to over leverage. At the same time, one should realistically project the amount of funds needed and match it to the investment value that is required to eventually finance its education fund purpose. As parents, we have various financial needs other than children education funds such as current living expenses, medical contingency, old age retirement, thus appropriate allocation of resources is very essential.
About the Contributor Kit Au-Yong is attached to Laurelcap Sdn Bhd, a property valuation, consultancy, auction, real estate and property management firm with HQ in KL and branch in East Malaysia. l www.laurelcap.biz l Tel: 03-5637 0233 l Email: firstname.lastname@example.org
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5 SIGNS YOU SHOULD NOT BUY A HOUSE
f there’s one thing we learned from the past few years about property investing, it would be that it doesn’t always come without risk. Buying a property is a very personal decision based on your financials and current personal need. You have to look at your financial situation in a big picture. Don’t try to time the purchase based on the current market. You need, and must, be comfortable with your own decision. So, to answer the question that many of you may have in mind, “Should I buy or not?” the answer is; it depends. But the signs below can give you an indication on whether you should proceed with the purchase or settle for renting instead. No money To buy a property, you need to be well aware of exactly how much money you need to fork out to complete the sales. Besides the down payment, you also need to allocate money for transaction expenses like Sales & Purchase Agreement, Loan Agreement, Stamp Duty, Monthly Maintenance & installment and some savings for emergency fund, among other things. Make sure you have enough money to go ahead with the deal. Unstable Career By putting your signature on the Sales & Purchase agreement, it means that you are committed to pay the monthly installment throughout the tenure of the loan (unless if you buy cash!). If you have a job that you love and your company loves you as much, it’s great. But if you are unsure of whether you will still have the job for the next few years or maybe you are thinking of changing job, you may want to hold on. You should also
know whether your company is hiring or in the midst of restructuring to cut down on head count so you can assess your own job’s security. Not Settled in Life You have been working for a few years and you decide to migrate overseas or you want to take a break and go backpacking for a year to ‘see the world’. Or you just survived a divorce and realised that you don’t need a 2500sq ft house to stay by yourself. All of these will affect you. The house you bought will hinder you from relocating and if you did move, there might be some loss incurred. No Knowledge or Refuse to Do Your Research Before buying a house, spend some time to do some research on the location; for example if there’s any new developments coming up, what are the amenities on site, the accessibility factor and the future of the area. On top of that, do a couple of rounds on the properties around the area that you are interested in. Also, make sure the valuation reflects the selling price and get a preliminary check on your ability to take up a loan (DSR). Do go through a proper house inspection and estimate the renovation cost, to do up the place. Don’t rush into making a decision without a proper research. Very Fearful Nothing should be feared but fear itself. But if you are scared to buy a home and it makes you so nervous that you get sick or having trouble sleeping, you need to explore the reasons before you move forward. Maybe you are not sure this is the right time or the right house for you. Maybe you don’t want to take on a long-term loan like a mortgage or you worry about being tied to one location. Before you take on a mortgage, it might be best to determine what is truly bothering you. So when should you buy then? If you’re sure you’ll own the property a long time, then it’s probably a good idea to buy at any time. Just make sure you can comfortably afford the payments along with all your other bills. And do ask yourself this, “Am I sure my ownership will be for the long haul?”
About the Contributor KK Chua is the publisher of Property Insight magazine. He is also a registered real estate agent and an investor with more than 10 years of experience in the industry. He can be contacted at email@example.com
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PerKS of Joint Purchase
Ardent investor Vincent Ng shares the bonus points of joint purchase to secure a property.
n property investment, homebuyers have the privilege to choose various modes of purchase and one of it is via joint purchase. For some, purchasing a property solo might be a better option as they need not worry about finding a candidate whom they can trust. But for 41 years old Vincent Ng, joint purchase (sometimes called joint ownership), if done right, can bring about plenty of wonderful returns that transcend monetary gains. What You Stand to Gain “To me, joint purchase will give a lot of benefits to each partner compared to investing on your own as you get to share resources and leverage on each other’s strengths,” Vincent says. In the current situation where approval for financing is made tighter, joint purchase may just give an edge to an investor as they are sharing resources when applying for a loan. “My first joint purchase was in 2007 where I and my
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partner acquired a unit at the Empire Subang. I came across the project and was interested in the soho units and offices available in the mixed development. However, I just started investing at that time and was a bit hesitant to commit on a big scale investment. So, I invited a friend and a relative to have a look at the project. They too became interested so we all decided to buy the units together and share the investment returns,” Vincent tells. Joint purchase is a great way for first-time homebuyers to own a property. Despite having to share the cut of cake with more people, the risks are well distributed too making the investment more secure. With such acquiring method, investors get to join forces to buy a single property, multiple properties and buy under individual’s name or company. The number of individuals involved in a joint purchase starts from two onwards. “There’s no limitation of the number of people to
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benefits. “Sometimes, by having a partner who is a seasoned investor, you get to improve your rapport too and if he trusts you he will share good deals with you that you probably would not have been exposed to. Plus, joint purchases allow more brains to work on a deal hence minimising the mistakes and maximising the returns. And you get to learn new tricks and skills from each other too,” explains Vincent.
do joint purchase with. But for me, the maximum number I’d go with is usually four or five,” Vincent says. For married couples, most often than not, joint tenancy (most often than not is a figure of speech, whilst joint tenancy can take place after a couple signed a joint ownership) is what suits them. In joint tenancy, the individuals signing the deal do not have a particular share but own the whole property together. If one owner passes away, the other owner will automatically become the sole owner. (joint tenancy doesn’t involve shares, hence the rule applies). For friends or business acquaintances, it is advisable for them to practise joint purchase on the base of profit sharing, which can be predetermined. In such an agreement, if one owner dies, his or her share will be transferred to the name he specifies in a will. If a will is absent, rules of intestacy (someone dying without a will) have to be followed. Alternatively, the partners may buy up the shares of the departed party, which may be indicated in the joint purchase agreement. To avoid any complications, it is wise for individuals in the agreement to create a will prior to signing the deed of the property so time and money could be saved. This ensures a smooth transition too. Vincent whose portfolio includes 34 properties (27 of them acquired via joint purchase) truly believes in the power of joint ownership. Throughout the years, he notices that he gets to share and leverage resources, enjoy having a team to market the property, be more accessible to more good deals, and he also possesses stronger bargain power to negotiate for a better deal if he wants to carry out bulk purchase, among many other
Knowing the Technicalities Having experienced joint purchase for some time, Vincent emphasises the importance of understanding the technicality of any joint agreement. “Before entering into a deal, all the partners have to establish the pre-understanding, intention as well as exit strategy, only then you should sign the agreement. In some cases, people set up a trust but I don’t do that. What’s important is everyone in the deal has to sort out the technical matter and interests up-front so everything is made legit. “It is also highly important to hire a proper administrator to handle miscellaneous tasks which includes the paper work, book keeping/accounting, filings, updates for the partners, planning, managing and liaising with funds and payments. There are plenty of important but tedious matters to follow through such as on loan and banking, communicating with developers, rental, assessment, utilities and tax, among other tasks. This is why an administrator is essential,” Vincent reminds any potential investor. Blessed with properties valuing up to RM43.6million, he iterates that due to the nature of joint purchase, a capable administrator (can be outsourced or done by a member of the partnership) is required as the investment involves the interest of many people and it is not advisable for one partner to handle all the miscellaneous
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himself. “It can be overwhelming at times. So, to save you from all the hassles, do get an administrator,” he adds. Apart from the shared profits, some joint purchasers do allocate a special percentage as a form of special contribution. “Such special contribution is attainable if you initiate the purchase by introducing a fantastic deal, is willing to handle administrative works, contribute extra capital or agrees to carry out the marketing duties for the property,” says Vincent who currently has a personal property book value of RM18.5million and equity of RM9.4million (solely his), minus the others’ shareholder portion in his joint purchase portfolio. The Initiator According to Vincent, investors can have as many teams as they wish in joint partnership and within those teams, they can opt to be the initiator. As mentioned above, in most joint partnerships, the initiator gets to enjoy a special extra percentage due his contribution in finding the good deals (property). “But it’s not just about identifying the property. You need to be able to secure and lock the good deal. Once that’s done, you need to present the selling point of the property deal and ‘package’ it to the potential partners. I’d suggest for the initiator to offer the deal to more than one group and go with the team that gives you the first nod. But of course you need to make all the teams aware that the deal goes by ‘first come, first serve’ basis,” Vincent tells. After getting the partners for the proposed acquisition, the initiator has to quickly conclude the list of owners, establish the deal and determine the understandings within the agreement, transfer
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the names of purchasers, appoint the administrator and proceed with any relevant standard operating procedures. “I really do feel that investors get to leverage on joint purchase as they are able to utilise each other’s strengths especially when it concerns the borrowings. You get to negotiate for a better deal from the developer too, if it involves bulk acquisition. Remember that the fundamentals of joint purchase are having the exceptional strengths, skills and knowledge to do it as well as finding the opportunity and being able to contribute monetarily. Most importantly, you need to establish the trust among your partners. Joint purchase if done right, with the right people can definitely expand your investment portfolio,” says Vincent who aspires to achieve RM100million personal equity/net worth at the age of 50.
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THE UPSIDES OF JOINt PURCHASE: You share the monthly mortgage payments You share the initial costs of buying a property (solicitor’s fees, etc) For first time homebuyer, when you sell the property acquired jointly, you will have more capital to put down on a place of your own as the property may have appreciated. It is a good way to kick-start your investment journey. You share responsibility for the maintenance, repair and redecoration of the property Stronger bargain power when buying on bulk Stronger purchasing power You can leverage on partner’s strength to market the property in term of sale/rent You can leverage on partner’s networking to engage better professionals to handle the miscellaneous
THE DOWNSIDES OF JOINt PURCHASE: • You need legal documents, including wills, to protect your investment, which means additional costs alongside the usual property-purchase costs • No pride of sole ownership. • There’s a potential for partnership issues to rise (such as misunderstanding, miscommunication, not corporative or conflict of interest) • The process is quite bureaucratic (this merely means there are a lot of administrative and rules to be followed) and you will need records to keep track of payments, etc.
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+6012 263 5583 +6012 371 8831
WHAT GST DOES TO THE MARKET? “I will advise investors to ensure they have a long investment horizon of at least 5 years, so to minimise the effect of RPGT. Apart KEVIN NEOH from this, it is important for investors to have holding power so that they can ride out any ups and downs of the market and can withstand shock such as when having troubles finding tenants. Investors should Financial Planner also be mindful about having proper asset allocations done for their personal investment portfolio that is not only exposed to real VKA Wealth Planners Sdn Bhd estate only. Your personal financial situation may need to have asset allocation mixture of paper asset such as stocks, bonds, real assets like property, gold etc.”
“I think property developers will be affected by the GST as they will have to add up the price of the new properties. The house buyers will BOWIE TAN not have to pay GST for new properties when they purchase it, but the developers will try to build additional costs for the commercial Director of Core ones. Commercial property buyers will likely be affected as they have Investors to fork out more money. But I anticipated that in 2 years’ time, people will adapt to it, eventually.”
“There will be certain difficulties for mixed development. As for residential properties, investors don’t need to worry so much unlike those who are investing in commercial properties because residential housing is actually exempted from GST. Property investors in any Managing way have to absorb all the difficulties, unfortunately. In general, Director of GST is a good way to mend leakages in the current consumption tax Tax and Malaysia collection and can result in extra profits.”
FAIZUL RIDZUAN Author and high rise property investment expert
YAP SHIN SIANG Partner of YYC Advisory
“Immediate impact will be an increase in selling prices for primary market properties. Developers will have to factor GST for all their developments since Q4 2013, hence we’ve noticed an increase of property prices for all launches this year. I don’t think we can generalise that all commercial property price will rise due to this impending GST, unless you are referring to only the primary market. My advice to property investors is to stick to our long term investment objective and GST should be viewed as a non-event. They can also find better values in the sub-sale market where the impact of GST won’t be felt as much.”
“In my opinion, it is good and necessary for Malaysia to have GST implementation because it is one of the measures for the government to overhaul the financial system of the country to find new sources of revenue and to improve the efficiency of tax collection, besides reducing corruption and helping to reduce waste. As for investors, residential are exempted from GST whereas commercial are chargeable.”
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Lawyer Chris Tan writes on the legal aspect of selling your under-construction properties.
roperty investment is becoming a trend in Malaysia and everyone is looking for ways to multiply their wealth in order to encounter the aftermath of inflation. Investing in property is the most popular investment not only among the locals, but among foreigners too. Foreign investors are eyeing on property in Malaysia mainly due its potential in maximising their future return of investment and the lower entry cost compared to other Asia Pacific regions like Shanghai, Hong
Kong, Singapore and Tokyo, among others. Often, investors aiming for speedy returns are eager to flip their properties at the shortest amount of time. Some investors even attempt to sell their properties that are under construction, especially if the construction takes years to be completed. Below is a simple illustration on the typical timeframe from signing the sale and purchase agreement (SPA) up to delivery of vacant possession for property that is under construction.
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RESIDENTIAL COMMERCIAL NON-STRATA STRATIFIED 24 months. 36 months. Developer to set the time frame. From the date of SPA. From the date of SPA. Developer to set the commencement date. Governed by Housing Development (Control and Licensing) Regulated by the agreement entered into. Act 1966 (“HDA”). As illustrated, SPA for residential property is governed under the HDA and the time period for delivery of vacant possession of the property shall be 24 months for non-strata development and 36 months for strata development. Whereas, for commercial property that do not fall within the ambit of HDA, the investors are required to determine the period for delivery of vacant possession based on the terms in the SPA. Again, SPA for commercial property is not governed by the HDA, thus the developer will have the liberty to set out terms which it may deem fit. It is worth to note that property market as SOHO, SOFO, SOVO and SOLO may be treated as commercial or partly residential, hence investors are advised to take extra precaution on the type of property they are investing in. Apart from the timeframe for delivery of vacant possession, investors who aim to sell off the property as quickly as possible for a fast turnover also need to be cautious whether he is allowed to sell the property before the completion and delivery of vacant possession. This is a key question that
most of the investors are trying to figure out. To those who are still wondering the stand of the law on the matter, Section 22D of the HDA 1966 provides that: (1) … an absolute assignment in writing, … of which express notice in writing has been given to the housing developer by the assignor … shall be deemed to have been effectual in law to pass and transfer the proprietary right, interest, chose in action and all legal and other remedies for the same to the assignee, from the date of the receipt of such notice by the housing developer, and the concurrence of the housing developer shall not be required. In other words, selling property under construction is possible provided that the conditions set out above can be complied with. Notwithstanding that there is no prohibition by the legislation, the practicality of implementing such sale is another issue. The major issues include:The reluctance of the developer in interpreting the law on selling property under construction is possible due to the following:• Prior to the delivery of vacant possession, the developer is still the valid owner of the property (as the purchase price is not fully paid); and • It is also provided in the HDA that the developer is not allow to accept advance
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The typical charges that the developer imposes are as follows:
COMMERCIAL Not regulated. Normally, Developer reluctant to grant consent during construction; charge 1% of the purchase price/ market value whichever higher as admin fee.
Governed under HDA. Prior to April 2007, RM500 for admin fee for consent. Normally, Developer will not grant consent during construction. After April 2007, RM50 as admin fee. payment for the later stages, as indicated in the progressive billing. Even if the developer is willing to accommodate the above, the new buyer will have difficulty in obtaining financing from financial institution simply because the seller is not quite the owner yet. Therefore, the buyer has to fund the purchase price with his own fund, by cash. If liquidity is an issue, this left the new buyer with one possible way, which is to allow novation of the first SPA to replace the first buyer (seller) with the new buyer. However, the difference in pricing will then need to be addressed differently, resulting in further complication of the matter. Apart from the above, the developer will normally charge the investor intends to sell the property prior to issuance of individual/strata title, whether under construction or completed. From the above, it is obvious that selling of property under construction requires much more effort. Understanding and co-operation between the new buyer, the seller and the developer as well as the bankers is important to make sure the
success of the whole transaction. On the other hand, the investors who wish to dispose off their under construction property need to be aware of the Real Property Gains Tax (RPGT). RPGT is the tax levied on gains derived from the disposal of real property. The sooner the property sale takes place, the higher the rate of RPGT. For the investors who tend to dispose off the under construction property should expect a higher rate of RPGT. Therefore, the investors are advised to choose their move wisely before entering into any transaction. In the next issue, I will share with you the implications of residential build on commercial title. Stay tuned.
“Selling your under construction property requires much more effort. Understanding and co-operation between the new buyer, the seller and the developer as well as the bankers is important to make sure the success of the whole transaction. “
The current rates of the RPGT are as follow:-
Period from Acquisition to Disposal
Malaysians and Permanent Residents
Within 1st to 3rd Year
Within 4th Year Within 5th Year
6th Year and thereafter
Ab out The C ontributor Chris Tan is the Founder and Managing Partner of Chur Associates, Advocates, & Solicitors. He is deeply involved
in the real estate industry, having assisted Dato’ Alan Tong as the World President of FIABCI (International Real Estate Federation) in 2005/2006. Chris is now the Honorary Legal Advisor for FIABCI Asia Pacific Regional Secretariat on regional concerns. Chris was elected to serve FIABCI’s Malaysian Chapter for two terms, from 2006 to 2010, as its National Council Member, and in 2009, he was appointed to the Board of Directors of FIABCI International to preside over the portfolio of Young Members aged 35 and below for the term 2009/ 2010.
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4 WAYS TO PREDICT THE RATE CYCLE A property cycle can be seen as a logical sequence of recurrent events reflected in demographic, economic and emotional factors that affect supply and demand for property, subsequently influencing the property market. Don’t stress yourself! There are ways that you can predict the rate cycle to make your next investment a success. 1 THE SHARE MARKET The Share market is haywire most of the time but is definitely worth watching in a general sense. If it trends upwards, and then continue to do so, this will ultimately tell us that the rate cutting cycle is at, or near, its lows. Share markets are a good barometer of global and economic confidence to come – they don’t tell us what is happening now but are usually a good guide of what is about to happen down the track.
2 GLOBAL ECONOMI
If there is less bad news coming out of Europe and America, this can be a sign rate cuts will be fewer in the future. For an average Malaysian, keep an active eye on your nightly news flow, and note stories that
talk of a continued housing recovery in the US and stronger growth coming out of China. When bad overseas news slows down, we know we are closer to the bottom with our rates.
3 RISING COMMODITY PRICES This is another guide that we’re reaching a low point in interest rates. On the contrary, a drop in commodity prices can signal more rate cuts to come.
4 AUCTION CLEARANCE RATES Usually weekend auction clearance rates are reported in the media around Sunday and Monday, and are worth keeping an eye on. Housing isn’t the guide for everything, but auctions can be a good indication of whether interest rate cuts are doing their job and homebuyers are re-entering the market. www.propertyinsight.com.my
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PERSONALITY OF THE MONTH
how property investment gAVE me my big break Property millionnaire Michael Tan is enjoying the life he always wanted, thanks to property investment.
e is full of energy and his hunger for property investment shows from the way he talks. At only 38 years old, Michael Tan may sound quite young to be a seasoned investor but his perseverance and will to be successful have brought him to where he is today. After multiple business failures, Michael finally found his true passion in property investment. Today, he is a well-known figure in the property world and he is also a property speaker, coach and mentor. This is his story. In Search of True Passion “I have achieved what I have been dreaming of through property investment… When I retire, it will lead me into a satisfactory life,” Michael says. Michael grew up in Kuala Lumpur and after completing his Malaysian Higher School Certificate (STPM) he went to further his tertiary education where he majored in engineering. He then decided to try his luck working in Singapore where he worked as an engineer for three years. But throughout the years he spent as an engineer, he felt like he had to work hard at something he didn’t truly enjoy. He felt that engineering is not giving him the life he wanted. “I wanted to be rich and I hoped to enjoy a passive income and engineering couldn’t give me that,”
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Michael tells. Realising that, he began searching for a new passion. So, one day he decided to read a book titled ‘Rich Dad, Poor Dad’ by Robert Kiyosaki for some insights. Michael realised that by reading books, his eyes became more opened to many different ways of making money. Feeling upbeat on changing his life course, Michael returned to Malaysia to try his hands on running his own business. Big Fall “I wanted to be wealthy and ventured out of my usual job scope. Initially, I thought property investment was too expensive to do so I decided to start my own business. Because of my lack of experience in running a business, I invested RM3,500 monthly to hire a well-known mentor who was also a business coach to teach me how to be a successful and rich businessman,” Michael says.
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PERSONALITY OF THE MONTH
Before his success in property investment, he ran a water vending machine business and in the beginning everything went smoothly. “In 2004, I went into a joint venture deal with a marketing company and this was the beginning of my fall,” shares Michael. The joint venture was the biggest mistake he had ever made and Michael called it a ‘total nightmare’. In the first few months of the joint venture, things were going well and Michael’s old company was making millions. However, towards the end of the first year, he discovered millions of Ringgit worth of transactions unregistered, with the money nowhere to be found and goods yet to be delivered to the paid customers. He realised that his business partners had embezzled a large sum of money through deposit taking and other methods throughout the duration of their partnership. “I lost about RM6 million worth of cash… and the worst part is my customers thought that I was behind it. It was such an enormous problem for my company. During those trying times, I turned to my then directors, managers and the marketing company (which I joint ventured with) to solve the problem and these were the people I trusted. But no one came to help,” Michael recalls the incident. “I went through multiple lawsuits and my life went downhill and had to close down my company. My biggest mistake was letting the marketing company handled my customers and trusting the wrong people to handle the products. I spent half-a-year investing in suing them but there’s only so much I could do. Eventually, I gave up,” Michael shares. Suddenly, there is a pin drop silence in the interview room. He continues and says that for six months, he was in major depression. Not knowing what to do and where to begin, he was stuck in a situation he never asked for. “I was lucky enough to have an awesome wife who was with me all the way. I had to reboot my life and had to sell my condo unit, my BMW sports car and lived in a low-cost small apartment in Puchong. At that time, I’ve no confidence to do any business or to find a job. But in front of my wife and son, I pretended to go to work,” he expresses. He managed to find some courage to start over and went into mortgage business. “I dealt with a lot of rich people. Working with them I can’t help but to ask myself, how did they do it (becoming rich)?,” Michael says. After researching, he found out that the rich individuals were actually property investors. Seeing how these investors made money from property gave him insights on how he could make it rich again.
returns, if not more. I also have another portfolio which is properties for sale, meant for capital returns and the properties can give me 30% or more profit margin,” he explains. In the beginning of his involvement in the property world, Michael played two roles – as a mortgage agent in the morning and property hunter in the evening. “I learned to master property scale and buying property with no money down. I began purchasing properties and renting it out,” he says. Michael’s first property was a low-cost apartment he bought from an old lady for RM60, 000. The house was vacant for two years and he bought the property with no intention of selling it, but to rent it out. Years gone by and from that one property, his portfolio has expanded to 21 properties. His many successful acquisitions were done through solo purchase and joint ventures. “I’m pretty much focused on commercial stratified offices and commercial landed properties now. There are around eleven commercial properties under my company’s name and nine of them are in Bangsar Trade Center,” he reveals. His property portfolio comprises of low-cost apartments, condominiums, and shop lot some of which include office suits, landed properties in Bayan Baru, Penang as well as two houses in Iskandar Johor. “I also invest in international markets; having tried out Singapore and also investing in a property in Thailand for which I bought under RM100,000. Thailand market is a great place to invest. However, unlike Malaysia, Thailand has policies restricting foreigners to own freehold landed property.” Michael explains With RM10million worth of property portfolio, Michael shares that he hires a good property manager and work with a team in managing his investments. “I never work alone. In my team, my job is to seek and close the deal after which my team, including my wife, will look after the back end,” he says. In his investment, he prefers buying commercial
Property Lover Now Michael is an avid investor. In his investment style, he will either keep or flip his properties. “If I keep, it will be for rental and that essentially could give me 6% to 8%
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PERSONALITY OF THE MONTH
To help you in your property investment, use this equation to benchmark your property worthiness: Rent/month X 12 months PROPERTY VALUE (RM)
x 100% = 6%
properties because he finds them easier to manage. “It is easier to manage tenants who reside in commercial properties. They are business people and are less fussy. They tend to function very independently and do not bother the landlord much on maintenance matters, unless these are major issues. “I guess it is in their best interest to handle the small issues, as it will affect their business more if they wait for me to do it for them. For example, you’ll find it rare for a commercial tenant to call you and ask you to change a light bulb for them,” shares the friendly investor. Michael finds property investment a vehicle that can offer him the highest form of leverage. In property investment, he thinks his money can stretch the longest and given the longest repayment terms, paired with the low interest rates, he is able to get the highest percentage of loan. “Also, property is easily accepted as a form of collateral to the banks. Almost every bank will give me a loan, so long as I am eligible. This might not be the case if it was a business loan,” he says adding that he also loves investing in the sub-sale market because it is easier to make predictions. Why Property? The property guru thinks property market is slow and predictable. “So far, I cannot relate to stock and shares and I hate sitting in front of a computer the whole day, looking at graphs moving up and down. In property market, it’s not rocket science, you just have to be in the market long enough,” Michael tells. But of all reasons that brought him to property investment his favourite is being able to add value into people’s life. “It is more than just properties… I have to be a responsible landlord and provide shelter or a good place to work or do business, in order for me to earn profit. It is a symbiotic relationship. The more creative I am in adding value, the higher the returns. Therefore, I constantly challenge myself to see what I can do, to add more value to my properties so that my tenants feel better,” he cites. After many years, Michael sees the market changing a lot. “I’ve never experienced property prices going up so high in my life (referring to now). Since 2009, developers have been rushing to launch their projects and this has definitely been a push for the property prices to go up. I
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will not sugar coat my words. These launches have been the key factor why our property prices are increasing so much,” Michael believes. Property market to him, like many others, is cyclical. There will be times when the market is up, and there will be times when the market is down. He feels that despite current phenomena, there will be a time where the market will adjust itself. “This, I am certain of. The question is; how much will the adjustment be and for how long or how much will the price drop,” he says. But Michael figures that property investors can still make money regardless of where the market is. He for one will still be in the market and continue investing. Sharing the Knowledge Realising the need to help others, he feels the urge to share his experience and knowledge through a property investment coaching centre called Freeman Education Sdn Bhd. The aim of his coaching lesson is to encourage people to take steps towards achieving financial freedom. “There’s this foolishness in this world where we are taught to compete to be successful and it is ‘absolutely normal’ to step on another person to do so. I was from that world and the truth is; it doesn’t work that way at all. That’s why I started this centre, to teach people on working as a team, especially in property investment and eleven of my students who are now millionaires used my methodology. The secret to be rich is by building trust in a team you are in, before focusing on the money. That’s what I teach,” he mentions. When asked about when is a good time to buy properties he says that timing is a strategy and that any time can be a good time. “Time is all about the strategy we create,” says Michael. “If you want to be a successful investor, there’s one thing you must always remember, don’t dream of becoming a billionaire or tycoon before you embark on your property investment journey. You have to ask yourself; who and why you are doing this for. The most successful investors are the ones that are driven by strong purpose and belief. You need to hold yourself true to your purpose, and not just chase money.” Michael says. “Also, you need to educate yourself because this field is not something you can simply spend more money, in order to receive more. It is more than meets the eye. Lastly, never ever be afraid to ask for help in property investment. Learn, sharpen your skill and be humble,” Michael advises Property Insight readers.
7/14/14 2:48 PM
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Property: Panorama Residence Property Type: Condominium Built-up: 1164sf Land area: 1164sf Tenure: Freehold Selling Price: RM500k Bank Value: RM540k Rental Price: RM2000-RM2500 Qualities: Newly completed freehold condominium at Sentul. KLCC view. New development with similar quality at Sentul. Launching price RM650psf onwards. Easy access through MRR2, DUKE and 10 minute drive to Jalan Ipoh, Sentul West. Facilities/Amenities : 24 hour security system, swimming pool, gym, futsal court, squash court, badminton court, multipurpose court, children’s playground. Walking distance to cafeteria and grocery stores. Contact: Fion Chong, Real Estate Negotiator, 0123857203, firstname.lastname@example.org, www.utopiaroof.iagent.my
PROPERTY : Double Storey Shop @ Kepong Entrepreneur’s Park Address : Jalan Metro Perdana Timur 7. Kepong Entrepreneurs Park. 52100 Kuala Lumpur Built up Area :1627 sqft (22x76) Selling Price : RM 1 Million Qualities : Walking distance to AEONBIG, Banks, Restaurant, Speedmart. near to NKVE toll, easy parking, near to KTM Kepong. Contact : Celine 016-2030963, Stacy 014-9340571
PROPERTY : New Double Storey Shop lot Seksyen 4@Kota Damansara Built-up Area : 1440 sqft (24x60),2160 sqft Selling Price : RM1.6 Million (negotiable) Rental Price : RM4,500, RM6,500 (Floor by Floor) Qualities : Near to MRT Station, Near NKVE toll, Easy parking for customers, Near to Giza Mall, Near to Segi College and KDU. Established commercial area. Contact : Celine 016-2030963, Stacy 014-9340571
76 AUGUST 2014 www.propertyinsight.com.my
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PROPERTY: Salva Apartment @ Kota Damansara TENURE: Leasehold BUILT-UP: 800sqft MARKET PRICE: RM300, 000 SELLING PRICE: RM290, 000 AMENITIES/FACILITIES: Giant Hypermarket, Banks, Aeon, Future MRT, Gizamall, The Strands Mall QUALITIES: Playground, One car park, Lift CONTACT PERSON: Stacy, 014-934 0571
PROPERTY: Prestij @ Kota Damansara PROPERTY TYPE: Semi-D Shop with lift BUILT-UP: 5000sqft (25’ x 67.5’) LAND AREA: 45’ x 105’ BANK VALUE: RM4.5 Million SELLING PRICE: RM4.3 Million RENTAL PRICE: RM2000, RM2500, RM8000 (Floor by floor) RENTAL FOR WHOLE BUILDING: RM15, 000 – RM20, 000 QUALITIES: Future MRT, Banks, JPN, Minimarket, 99 Speedmart, 7-eleven CONTACT PERSON: Celine, 016-203 0965
Property: New Double Storey Shop lot Seksyen 4@ Kota Damansara Tenure: LEASEHOLD Built-up Area: 1440 sqft, 2160 sqft Bank Value: RM 1.4 million Selling Price: RM 1.6 million Rental Price: RM 4500.00, RM 6500.00 (Floor by Floor) Qualities: Near to new MRT Station (under construction). Near to NKVE toll. Many housing estates and schools. An established commercial area. Easy park for customers . Near to Giza Mall. Near to SEGI University and KDU College. Near to Kota Damansara residential area. Contact: Stacy 014-9340571
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Property: Casa Indah 1 @ Kota Damansara Property Type: Residential Condominium Tenure: LEASEHOLD Built-up Area: 1089 sq ft Selling Price: RM 750,000.00 (Partially Furnished) Facilities: 24 Hours security with smart card access lift and parking, mini market. Swimming pool, gym room, laundry, multi-purpose hall. Qualities: Future MRT, Driving distance 5 minutes to Giza Mall, Banks, The Strand Mall Contact: Stacy 014-9340571
Property: 3 Storey Shop lot @ Tropicana Sungai Buloh Tenure: FREEHOLD Built-up Area: 1540 sqft Land Area: 4620 sqft Selling Price: RM 1.9 million Bank Value: RM 2.0 million Qualities: Various Banks, The stores, Cafeteria, Minimarket, Future MRT, Keretapi Tanah Melayu (KTM) Contact: Celine 016-2030965
Property: Cascades Corporate @ Kota Damansara Property Type: Commercial Tenure: LEASEHOLD Built-up Area: 710 sqft, 960 sqft, 1100 sqft Rental Price: RM 2900.00, RM 3500.00, RM 4300.00 Qualities: 24hour Security with Smart Card Access, Covered Parking, Future MRT, Beside Giant Hypermarket, 5 Minutes walking distance to the Strand Mall, Minimarket, Cafeteria, Banks, Giza Mall Contact: Stacy 014-934 0571
Property : Prestij @ Kota Damansara Property Type : Semi-D shop with Lift Built-up Area : 5028sqft (25’x67.5’) Land Area : 45’x105’ extra land Selling Price : RM 4.5 million Qualities : Fully grass wall, Nice building, Private lift and own car park.Future MRT, Banks, JPN, Pusrawi Hospital, Minimarket, 99 Speedmart, 7 Eleven, nearby Giza mall, The Strand Mall Contact : Celine 016-2030965
78 AUGUST 2014 www.propertyinsight.com.my
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