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EMAIL info@decentrum.com.my 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.

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EDITOR’S NOTE Publisher KK Chua Editor Zuhaila Sedek-De Booij Writers Rachel Joseph (Rachel@propertyinsight.com.my) Aidil Mohd Noor (aidil@propertyinsight.com.my) Viknesh Ashley Clarence (vikashley@propertyinsight.com.my) Junior Writers Imran Roslan Eleyinnina Sahim Contributors Olivia Lim Rachel Lim Dr. Ibrahim Mohd@Ahmad Khai Yin KC Lau Graphic Designer Lam Jian Wei Junior Designer Muhammad Azmi Photographer Nur Afiqah Anissa Bt Azharuddin Sales & Advertising Andy Fam 012-6019 938 (andy.fam@propertyinsight.com.my) Marketing Cassandra Wong (cassandra@propertyinsight.com.my) Annand A/L Arivalagan (annand@propertyinsight.com.my) 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

T

he past few months have been quite challenging for all Malaysians, don’t you think? Apart from the water woes, unpredictable weather and dengue outbreak, we were hit by two major tragedies – the dissappearance of airliner MH370 and the downing of MH17 flight. It was a sheer coincidence that we featured a picture of an airplane on our last month’s cover page. But most importantly, we would like to take this opportunity to pass our sincerest condolences to the family members, loved ones and friends of the passengers and crew members and do know that all Malaysians are with you in these trying times. Remember that, ‘In the night of death, hope sees a star, and listening love can hear the rustle of a wing’. With regards to these unfortunate aviation tragedies, we feature an article on dealing with the home loans of the departed which we hope can help provide the affected family members the answers to some of their queries on the matter. This article is on page 48. On a more positive note, this month’s cover piece is definitely a good read for avid investors out there (page 8). In fact, it is a subject many investors around the world might have in mind. In the article, we share with you the different perks of investing in commercial and residential properties and find out which type of property best suited for you and which can maximise your investment capital. The main idea here is to make your money work for you and not the other way around. Complementing our wide range of topics this month are some fun subjects among which include; why women shouldn’t wait for their men to start investing (page 16) and ways to motivate Gen-Y to start investing (page 24). We also pay homage to one of the country’s big boys in property development, UMLand (page 28) and the prospects in Puchong for investors (page 34). Lastly, we would like to invite the public to visit our Property Insight Property Showcase taking place this September 3 to 7 at IPC Shopping Center in Mutiara Damansara, Selangor. If you’re scouting for a property of your choice, don’t miss out on this event and you may also stand a chance to bring back home some free gifts. We hope to see you there.

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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.

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CONTENTS

SEPTEMBER 2014

76

WHAT DOES OPR DO? - PAGE 14 Get to know the impact of Overnight Policy Rate’s increment by Bank Negara Malaysia to you as an investor. WHAT’S HOT AND WHAT’S NOT - PAGE 56 Our guest writer, Khai Yin, shares with Property Insight’s readers the 101 of prospecting an area. THE SOUTHERN TOUCH - PAGE 28 With its strong Johor presence, UMLand wishes to spread more innovative and iconic townships as well as niche property developments all over Malaysia. Viknesh Ashley and Zuhaila Sedek- De Booij write.

PUCHONG : HEADING FOR THE PINNACLE PAGE 34 Back in the day, Puchong may carry a lot of stigma, but now, the area is slowly evolving into a residential and commercial haven for investors. THE ORIENTAL PEARL OF PENANG - PAGE 61 Once abandoned, a stretch of shop lots built in the 1880s is now a vibrant, classic Chinese-style hotel. Zuhaila Sedek-De Booij pays a visit to 1881 Chongtian Cultural Hotel to witness its beauty. CELEBRITY CORNER - PAGE 76 Actress Maya Karin talks to Property Insight about her property investment venture and the life lessons she learns from it.

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NEWS

EPIC 2014 PLEDGES S$20 MILLION IN DEALS

S

ingapore based CoAssets recently organised Asia’s first major crowdfunding event dubbed EPIC 2014. The two-day event that brought together over 500 delegates saw a total amount of real estate crowdfunding pledges in excess of S$20million (RM51million). The event offered over 22 hours of talks from finance and real estate industry experts and achieved good traction among industry and public stakeholders showcasing over 21 exhibitors across seven countries offering up to S$70million (RM179million) worth of real estate properties at the event. Amongst the high profile delegates whom turned up at EPIC 2014 were Chairman of Singapore Venture Capitalist and Private Equity Association (SVCA), Dr Jeffrey Chi and CEO of iProperty Group,Mr Georg Chmiel. Architect and CEO of 8 Inc, Mr Tim Kobe, Author of New York Times bestseller Real Estate Riches, Dr Dolf de Roos and CEO of Australian Small Scale Offerings Board (ASSOB), Mr Paul Niederer also graced the event. Chief Technical Officer of CoAssets, Dr Seh Huan Kiat stated, “Although 500 delegates may not seem much as compared to some of the more established events, our focus was on quality and not quantity.” Seh added, “We had Tim Kobe, a world renowned architect and CEO of 8 Inc as a delegate and conference speaker. Tim worked with the late Steve Jobs in conceptualizing the first Apple store. He is presently exploring the possibility of using real estate crowdfunding as well as CoAssets to crowdfund a portion of his developments in Boracay, Philipines.” “The fact that he and other high profile delegates are willing to be a part of EPIC shows that more 4

people are becoming more aware of the potential real estate crowdfunding holds. By choosing to work with us, it is also a form of recognition that CoAssets is one of the best real estate crowdfunding sites around,” Seh said. Chief Executive Officer of CoAssets Getty Goh commented, “We think that the event was very successful on several fronts. As real estate crowdfunding is still in its infancy stage, face time between Opportunity Providers (OPs) and Funders is needed to establish some trust before any deals can be done online.” Goh mentioned, “Epic 2014 was not only intended to engage stakeholders on the potential of real estate crowdfunding, it was also an avenue for the OPs to meet up with the Funders to discuss deals.” “Akin to our online process, the onus is now on the OPs to follow up with the Funders. Even if not all online deals materialise, this clearly demonstrates the potential of real estate crowdfunding and the outlook is definitely exciting,” he concludes. Next year, the organiser will be bringing the expo to Hong Kong in March. Dr. Dolf de Roos

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NEWS & EVENTS

NEWS & EVENTS Turner Construction FROM US eyes Greater KL

With the property industry skyrocketing, US based company; Turner Construction Co. has established its roots in Greater Kuala Lumpur to tap this ever expanding locale in Malaysia. Vice-president and regional manager, Asia Turner International Malaysia Sdn Bhd Jack Cummisky mentioned, “Our current focus is in South East Asia, particularly Malaysia, Indonesia and Vietnam, where we carry our assignments through a regional and country focused management structure.” From Turners perspective the edge Greater Kuala Lumpur presents is the strength of the property development sector itself. “While regional neighbours are also experiencing impressive growth, the business and living environment in greater Kuala Lumpur make it a very easy place to attract our best professionals to the scale and quality of developments such as Merdeka and Tradewinds Square are quite rare and unique globally giving us yet another excellent recruiting tool,” said Cummiskey The company is currently focusing on infrastructure work on the Tun Razak Exchange, involved in the construction of the Warisan Tower and the Warisan Merdeka Mall, the Four Seasons Place KL, Tradewinds Square, Menara Tun Razak and the Etiqa office tower, a 38-storey office tower in Greater Kuala Lumpur.

Guocoland has RM2.5billion in plans for Selangor

Property arm of Hong Leong Group, Goucoland Bhd is planning an RM2.5billion project that will take place over a course of 3 years in key areas in Selangor. Managing Director, Tan Lee Koon said the projects include a township project in Rawang along with a mixed development in Sepang as well as the addition of a commercial component in Petaling Jaya. As of now Guocolands latest development, Damansara City is the developer’s flagship project in Malaysia as well as being the first integrated development project in the exclusive Damansara Heights enclave. DC City is a development consisting of two luxury condominium blocks, two corporate office towers, a lifestyle mall and an international-class hotel. 6 SEPTEMBER 2014

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KL outdoes its southern neighboUr in Prime Global Cities Index

Kuala Lumpur clinched the 19th spot at Knight Frank’s Prime Global Cities Index for Q2 2014 as prime residential prices in Malaysia city rose 3.1 percent in June 2014 as compared to the same period last year. Jakarta leads the index with a year-on-year price growth of 27.3 percent followed by Dublin (23.5 percent), New York (18.4 percent), Los Angeles (17.8 percent) and Miami at 17.2 percent. Other Asia Pacific cities with a better standing than Kuala Lumpur are Bangkok (6.4 percent), Bengaluru (5.5 percent) and Shanghai (4.8 percent)

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NEWS & EVENTS

Greenland Group plans RM10billion project for Iskandar

Iskandar Malaysia will welcome a newest and largest addition by Chinese developer, Greenland Group located in Danga Bay, Johor Bahru. The development will stand over a plinth of 13.96 acres acquired from Iskandar Waterfront Holdings (IWH) for RM600million. The entire development is reported to hold a GDV of RM2.2billion. This will be Greenland’s first project developed via a joint-venture with IWH. The Shanghai based company plans to increase it’s GDV to RM10billion after settling a number of transactions that will take place over the next couple of months. According to industry executives the purchase of two more parcels of land is yet to be finalized. These plots of land are located close to the Permas Jaya Township where Tropicana Corp Bhd is amongst the many landowners in the locale.

Russian property owners in London to reap rewards following MH17 tragedy

The Malaysian Airlines tragedy will continue to put pressure on the rouble benefitting Russian property owners in the UK capital. Foreign exchange expert and managing director of HiFX, Chris Towner explains, “Arguably, growing uncertainty around the Russia economy and the Ukrainian issue will continue to put pressure on the rouble.” He adds, “We have seen a surge of capital flow out of Russian and into London this year due to the unpredictable nature of the RussianUkraine conflict. The Russian central bank needs to step in to help address the weak rouble and rising inflation to help entice Russians not to take money out of Moscow and tame inflationary pressures.” While the weakening rouble will benefit Russians whom already hold assets in Mayfair, Belgravia, Knightsbridge, Kensington and Chelsea, more punitive sanctions will prevent new Russian buyers snapping up central London.

The biggest Hollywood celebrity home flippers

Hollywood, the neighborhood of stars and the factory of dreams is a rich man’s playground. With multi-million dollar abodes lining its streets, celebrities look into investing here increasing their assets for double and at times triple. Celebrity investor Ellen DeGeneres is business minded at heart. When she sold her Brody House to billionaire Sean Parker for an astonishing $55million, she made a profit of $15million for herself. Friends’ television sitcom star, Jennifer Aniston similar to Ellen when she put up her Midcentury Beverly Hills home on the market for $42million. Jennifer eventually sold the abode to Pimco billionaire Bill Gross at $35million. The house was initially bought in 2006 for only $13.5million. Coldwell Banker Previews International, Jane Gavens says, “The key to Aniston’s success was all about timing, getting on a Midcentury craze, celebrity cachet and frankly doing it right.”

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COVER STORY

Commercial vs. Residential : Which Makes More Money?

Between commercial and residential properties, which offers better returns? Imran Roslan and Eleyinnina Sahim write.

W

hen it comes to investing in property, many often wonder if they are making the right decision while others usually question if they should venture into the property investment scene via the purchase of commercial or residential properties. Some may think that one may top the other with regards to its investment return. Here, we help you determine which property is a better bet for you as investors.

GENERAL VIEW

Experienced investor and property negotiator Steven Yong, who is also a property investment millionaire, shares his take. “Commercial properties tend to enjoy the best of both worlds – capital appreciation and rental increment due to limited supply in prime locations,” says Steven who invented the 5-Step Property Investment System. “Due to land scarcity, landed residential property enjoys better investment returns in capital appreciation. At the other end, highrise residential with property lifestyle facilities has more potential to enjoy higher rental yield,” he says. Despite the similar investing principles, one

should be aware of the merits and demerits investing in commercial and residential property. These differences may be on cash flow, rentals, tenancy, property value, lease documents and financing.

Investment Returns

Chief Executive Officer of SkyBridge International Adrian Un states that the investment return factor depends on the buyer’s objectives. “Commercial properties generally give better returns but the entry point is usually higher, which means higher down payment and bigger ticket size loans are required,” he says adding that some investors and home owners prefer to invest in residential because commercial properties take a longer time to mature. He reckons that commercial property may cater more to seasoned and experienced property investors. “But it depends on other main factors such as location and product type too. In view of high cost of ownership of commercial properties, many business owners opt to rent instead,” he continues. Steven adds, “Within a short term, residential properties are more manageable... either to sell or

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COVER STORY

Residential

Commercial

Tenants

Tenants

Residential tenants are available regardless of the economic condition. • As there is a ready tenant demand, replacing them won’t be a problem. • Tenants usually wait for the property owners to repair and maintain the smallest of glitches in rented properties.

Cash Flow

Investing in homes also guarantees available cash flow and easier to rent.

• Commercial tenants are mostly business related. Therefore, it relies on the situation of the economy. • Could take 6 months to replace tenants. • Tenants in commercial properties usually take care of repairs and maintain tenanted properties.

Cash Flow

Commercial properties tend to be more lucrative than residential because of steady returns and bigger cash flow.

Lease

Lease

Rental lease is fairly standard, short and easy to understand. • The length of lease is short (1 or 2 years) and tenants can extend their stay or leave when the lease expires. • Some tenants even buy over properties that have been rented over a longer period of years.

Lease periods are longer, which translates into guaranteed long-term cash flow. Landlords can lease to a tenant for a specific length of time and then have the option exercised by the tenant to renew the lease. • Lease documents are lengthy and contain many clauses. • Leases are reviewed at the end of the period for renewal or termination. • Another advantage for commercial leases is that you can add clauses and conditions when necessary, provided condition benefits both parties.

Value

Value

House rentals are determined by comparable market rates of similar houses in the area. Tenants pay their rents on monthly basis. • Value is calculated by comparing the market price of similar properties at that location.

Loan

Possible to buy a residential property with a small down payment and getting 90% or more mortgage financing from the bank.

rent out due to the lower entry cost. For commercial property, it takes time before it matures for owner to be able to sell or demand for high rental in maximising the property’s returns.” One of the main reasons people seek out commercial property as an investment is because

• Leases determine price, value, and most importantly the rent of the property. Tenants who have long-term leases can significantly improve the value of the property. • Since most commercial tenants run their premises for business purposes, a drop in the economy may cause problems, resulting in loss of income and value.

Loan

Most banks are willing to loan less for commercial properties. (80% or less) • When it comes to mortgages, residential and commercial loans are also different with various financing options catering for each type of investment. of the higher rental returns. A house could provide a rental return of between 4 % to 5 % return. In commercial property, the rental yield is much better. A retail shop could promise a 6 % yield and an office property 7 % yield while industrial property may provide a yield of 8 %. Note that these

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COVER STORY

percentages of rental return are just a guideline to investors given that some properties have a much higher or lower rental return, depending on a number of factors such as location, quality of the building and quality of the tenant. Currently, residential property is under-supplied with regards to its demand indicating that residential investments will continue to enjoy capital growth for the time being. Although residential leases are shorter than commercial ones, residential properties are generally easier to let, meaning that residential property tenants are easier to be replaced when left vacant. Whichever way you choose to put your investments into, the more you know about the market, the safer your investments will be.

The Benefits

The first and outmost advantage of investing in residential properties is the smaller amount of capital required. With a smaller capital, you only have to pay a small deposit, which can still be significant if it is your first investment. Depending on your credit history and income, you can borrow up to 100% from the bank on the purchase price. Unlike commercial property, its mortgages require a deposit of at least 20%. Other than that, financial institutions are much stricter with the borrowing criteria. The commercial property market can also be less predictable than the residential market (properties tend to double up in value every 7 to 10 years). There are also different kinds of commercial property to consider such as commercial, industrial and retail. Recently, Bank Negara has imposed some measures to ‘cool’ off the market one of which is to tighten the lending. According to the central bank’s website, stricter lending measures are to improve the efficiency of the intermediation process in providing financing to productive economic activities, as well as to enhance the efficiency of the operations of the money market. This is to allow interest rates to reflect underlying liquidity conditions. With regard to this, Steven thinks that people who invest in commercial properties will benefit more compared to residential property owners. “From a leveraging perspective, commercial property investors can enjoy Loan-To-Value (LTV) ratio up to 85% compared to those who have more than two existing

mortgage loans (LTV of 70%). In order to enjoy better Cash on Cash Return, commercial property investment would be a better option compared to residential,” he cites. One of the main benefits of investing in commercial property is the leases tend to be much longer, anything ranging from three to 20 years. The longer lease is usually secured by bank guarantees, which makes them a secure and worthy investment in the long term. Do bear in mind that the ROI (Return of investment) in commercial properties can be achieved in a shorter period due to the high rental yield. The return of invested capital on commercial properties ranges between 7% and 10% net after all costs. Last but not least, commercial property investors enjoy quality tenants. As commercial properties are mostly bought or rented by companies, the tenants tend to maintain the property better - because appearance and looks of the property are important to their business. However, commercial leases also include protection for the owner in the form of making good clause, maintenance clauses and management clauses and this is not apparent in residential leases.

Investment Risks

Residential and commercial properties both have their unique attraction points. In comparison, both are different in terms of value, the market and also the customers. “The core risk of investing in commercial properties is buying at the wrong location where accessibility is a major issue. In property investment, location is the foremost factor to consider, whilst amenities or accessibility to follow subsequently,” says Steven. “What newbie investors do is; buying low priced shop offices in the new township that is not matured yet, hoping to speculate it for big gain,” Adrian adds.

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COVER STORY

Residential properties have a relatively low risk and as a consequence, give low returns, compared to commercial properties. On the other hand, commercial properties produce higher return but come at a higher risk due to the high vacancy rate in commercial plots. Tenants in residential properties are easier to replace and vacancy periods usually lasts for a few weeks only. Different for commercial properties, it may take months or even years before you can find a tenant to occupy the building. Most commercial tenants are involved in business. Besides relying on the rental income and quality of the tenant, it is also heavily reliant on the health of the economy. A healthy economy generally means healthy business and vice versa. Besides that, buying commercial properties are often much more expensive, complex and more difficult to maintain than residential properties. The risk of investing more and spending more is greater on commercial properties. Maintaining a commercial property can also greatly affect your cash flow. For example, renovating a commercial property won’t be a simple task and involves an even larger scale of renovation compared to residential properties. Adding to that, the high utility and maintenance fees will also affect your cash flow if not managed properly. While owning a commercial property may seem like an ideal platform to generate returns, investors must also manage their properties well, allowing these properties to appreciate in value. A well maintained property will receive capital appreciation as well as increment in value.

GST Implementation

While evaluating the benefits and risks, we should never ignore the implication of Goods and Services Tax (GST) next year. It is expected to play a major

role in determining the investment returns. Although GST may not impact residential units directly, it will lead to minor price adjustments to the cost of construction. GST may impose higher cost of construction due to the higher cost of building materials. As a result, developers may increase the costs of their projects. “The high cost of construction they will surely be passed down to consumers,” says Adrian. Steven then adds, “This happens when the developer is unable to claim the tax exemption for construction materials. In order to maintain healthy cash flow and ensure smooth property development, it is most likely that the developer will factor this amount into selling price.” As for commercial properties, the GST will definitely impact the tenants as they have to pay an additional 6% of the GST imposed. For investors purchasing a commercial property, they have to fork out 6% more on top of the other costs they have to bear in acquiring the property. Unfortunately, the 6% tax is not inclusive in the amount of borrowings they get from the banks. For example, if you are buying an office building at RM1,000,000, you will have to pay an extra RM60,000 for its GST. This money has to come out from your own pocket, of course. “In anticipation of price increase after GST implementation, the demand for both residential and commercial properties is likely to surge prior to the effective date. Subsequently, the market is expected to slow down for a while for residential property. Nonetheless, the demand for commercial properties in prime locations may not be impacted,” Steven thinks.

Conclusion

Property investment is a long term venture and it surely helps to reduce your investment risks, whether you are investing in residential or commercial properties. For that reason, it is vital to obtain advice and seek the help of industry experts, such as from commercial agents and read up books on property investments or attend seminars or workshops to guide you through the process. Once you take the time to understand the ins and outs of real estate investment, the reward can be extremely satisfying, both financially and personally. However, success in property investment does take time and experience. So, what’s important is; you ‘ought to be patient.

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COVER STORY

Percentage of Transaction By Price Range for Principal Property Percentage of Transaction By Price Range for Principal Property Sub-Sector (Kuala Lumpur, 2012) Sub-Sector (Kuala Lumpur, 2012) 30 30 25 25 20 20

No. No.

%%

15 15 10 10 5 5 0 0

Residential Residential Commercial Commercial No of Residential No of Residential No of Commercial No of Commercial

< 50, <000 50, 000 4.8 4.8 1.3 1.3 1161 1161 79 79

< < 100, 100, 000 000 12.6 12.6 4.1 4.1 3028 3028 243 243

< < 150, 150, 000 000 9.4 9.4 5.2 5.2 2258 2258 309 309

< < < < < < < < 200, 250, 300, 400, 200, 000 250, 000 300, 000 400, 000 000 000 000 000 12.4 9.2 8.4 11.3 12.4 9.2 8.4 11.3 6.3 5 6.2 10.8 6.3 5 6.2 10.8 2984 2214 2011 2718 2984 2214 2011 2718 375 294 370 642 375 294 370 642 Price Range (RM) Price Range (RM)

< < 500, 500, 000 000 7.5 7.5 11 11 1796 1796 652 652

< 1, < 1, 000, 000, 000 000 14.7 14.7 25.6 25.6 2532 2532 1519 1519

> 1, > 1, 000, 000, 001 001 9.6 9.6 24.5 24.5 2308 2308 1451 1451

Residential Residential Commercial Commercial No of Residential No of Residential No of Commercial No of Commercial

4000 4000 3500 3500 3000 3000 2500 2500 2000 2000 1500 1500 1000 1000 500 500 0 0

No. No.

%%

Percentage of Transaction By Price Range for Principal Property Percentage of Transaction PriceLumpur, Range for Principal Property Sub-SectorBy (Kuala 2013) Sub-Sector (Kuala Lumpur, 2013) 35 35 30 30 25 25 20 20 15 15 10 10 5 5 0 0

3500 3500 3000 3000 2500 2500 2000 2000 1500 1500 1000 1000 500 500 0 0

< 50, <000 50, 000 1.2 1.2 1.1 1.1 188 188 45 45

< < 100, 100, 000 000 9 9 1.7 1.7 1414 1414 70 70

< < 150, 150, 000 000 7.4 7.4 3.7 3.7 1162 1162 157 157

< < < < < < < < 200, 250, 300, 400, 200, 000 250, 000 300, 000 400, 000 000 000 000 000 6.4 6.1 7.2 13.6 6.4 6.1 7.2 13.6 4.3 2.6 4.2 11.2 4.3 2.6 4.2 11.2 1006 956 1131 2146 1006 956 1131 2146 181 111 178 471 181 111 178 471 Price Range (RM) Price Range (RM)

< < 500, 500, 000 000 11.1 11.1 10.3 10.3 1741 1741 432 432

< 1, < 1, 000, 000, 000 000 23.4 23.4 30.4 30.4 3682 3682 1279 1279

> 1, > 1, 000, 000, 001 001 14.8 14.8 30.6 30.6 2325 2325 1289 1289

Source: JPPH Property Market Report 2013 (Kuala Lumpur) Source: JPPH Property Market Report 2013 (Kuala Lumpur)

Dates:

Venue:

1st & 2nd November 2014 (Saturday & Sunday) 9AM - 7PM

Malaysia International Exhibition & Convention Centre (MIECC@THe MINES)

ORGANIZED BY:

OFFICIAL BOOKSTORE:

12 SEPTEMBER 2014 www.propertyinsight.com.my

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COVER STORY

Percentage of Transaction By Price Range for Principal Property Sub-Sector (Selangor, 2012) 25

14000 12000 10000

15

8000

10

6000 4000

5 0

Residential Commercial

No.

%

20

2000 < < < < < < < < 1, > 1, < 50, 100, 150, 200, 250, 300, 400, 500, 000, 000, 000 000 000 000 000 000 000 000 000 001 7.3 15.5 15.3 12.7 8 7.2 10.3 6.6 12.3 4.9 2.4

7.2

8.9

8.7

5.2

6.4

10.9

8.8

0

22.5 19.5

No of Residential 5450 1164911439 9486 5965 5390 7732 4930 9240 3677 No of Commercial 235

702

865

781

507

620 1061 852 2180 1892

Price Range (RM)

30

12000

25

10000

20

8000

15

6000

10

4000

5

2000

0

< < < < < < < < 1, > 1, < 50, 100, 150, 200, 250, 300, 400, 500, 000, 000, 000 000 000 000 000 000 000 000 000 001

Residential

3.9

Commercial

3

13.8 12.3 12.2 5.8

5.8

5.1

7.7

7.3

11.8

7.6

16.6

4

6.1

10.9

8.7

25.9 24.8

No.

%

Percentage of Transaction By Price Range for Principal Property Sub-Sector (Selangor, 2013)

0

6.7

No of Residential 2052 8901 7889 7871 4955 4679 7565 4901 10682 4324 No of Commercial 211

411

410

360

281

435

769

617 1834 1755

Price Range (RM)

Source: JPPH Property Market Report 2013 (Selangor)

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SEPTEMBER 2014 13


FEATURE

WHAT DOES OPR DO?

Get to know the impact of Overnight Policy Rate’s increment by Bank Negara Malaysia to property investors. Last week, during my visit to the Freemen office, I brought some mangosteens from my hometown for the people there. While chatting with someone, she asked me as to what I think about the Overnight Policy Rate (OPR) hike of 25 points announced by Bank Negara Malaysia (BNM) last July. She said, “Why don’t you write an article about how this increase affects property investors?”. And that is why this article has came about. As a fulltime property investor for the past five years, l always tell people “If I stop investing in property it’ll mean I’m J.O.B.L.E.S.S.!.” So, this is why the raised OPR points matter to my JOB!

BNM HAS RAISED THE OPR BY 25 BASIS POINTS TO 3.25% ON JULY 10, 2014. WHAT DOES THIS MEAN?

BNM sets the OPR which is the interest rate in which a bank lends to another bank. By adjusting the OPR, BNM as the Central Bank of our country, can control the money circulation in our banking system. In general, when BNM wants more money in circulation, it will reduce the OPR. When it wants less money in circulation, BNM will raise it.

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This rate has an effect on the country’s employment, economic growth and inflation. It is also an indicator on the country’s overall economic health and banking system. What usually happens is; the banks will start adjusting the BLR (Base Lending Rate) for their loans in tandem with the adjustment of the OPR, which means the bank will adjust it upwards and we, the borrower, will have to pay more for the interest of our bank loan.

IS THIS A GOOD THING?

From the economist point of view, BNM’s increase on the OPR is meant to tackle inflation based on the current scenario that economic growth in Malaysia is very strong and it is expected that our country’s overall economic growth momentum will sustain. For property investors, the BLR is cyclical in nature and it will adjust in accordance to the performance of the country’s economy and property market. If it the market gets too ‘hot’ then the BLR will tend to be higher. Thus, looking at the situation of the global and domestic market, the increase is expected as the BLR has remained at its lowest point for the last couple of years.

www.propertyinsight.com.my

8/12/14 6:22 PM


FEATURE

This year, at the last BLR of 6.60% and at the spread in which the banks are offering - at an average of minus 2.30% (-2.30%)- we would get an average net interest rate of 4.30% (6.60% - 2.30%). So, with the difference of only 0.05%, the net interest rate of 4.25% in 2009 is not much different as the net interest rate of 4.30% in 2014 (until the new adjustment kicks in).

HOW DOES IT AFFECT ME AS A PROPERTY INVESTOR?

WHAT WILL HAPPEN NEXT?

Usually, every time there is an increase in the OPR by BNM, the banks will adjust upwards the BLR for their loans so they can transfer the increase of cost to the consumers. At the point this article is written, the BLR has generally gone up to 6.85% from the previous rate of 6.60%.

These scenarios may also take place next: A. Banks will adjust and lengthen the loan tenure If this happens, borrowers will still have to pay the same monthly installment but in a longer tenure. You may need to refer to your bank for the changes of your mortgage tenure due to the increased of BLR. a. Bank will increase the loan installment and maintain loan tenure.  If this happens, loan borrower will pay higher monthly installment but with the same loan tenure.   b.Bank will lower down their interest spread The banking industry is truly competitive. In order for the bank to give out more loans, it has to offer attractive rates. With regards to that, they tend to lower the interests spread to match the market rate and attract more customers.  For example, looking back at year 2009 when BLR was at its lowest (5.55%), the interest spread was around -1.30%. If we take up a mortgage at that time we would get a net interest rate of 4.25% (5.55% - 1.30%).

a. If you had bought a property for your own stay, then you will have to expect a higher monthly installment or longer tenure for your housing loan. Ultimately, you will have to pay more for the loan. However, this increase of 0.25% in OPR is considered marginal by many and is not expected to impact mortgage monthly installment payments significantly. If the increase does not bode well with your plan, then you may want to check what is the current BLR and the current interest spread offered by the banks and see if it is worth to refinance your house. b. If you had invested to buy a property for flipping in the short term, then the impact of the increase should not be too significant except for the slightly lower profit margin when you sell the house. c. If you had invested to buy a property for rental, then the increased in OPR will have the same affect on you, as it will for the homebuyers. However, if the rental market for your property is good, you can increase the rental and pass the additional cost to the consumer which is your tenant. In summary, the adjustment in OPR by our BNM is a sign that our economy is doing well and is going towards the right direction. This upward adjustment on the other hand will increase the cost of financing for property purchase. However unlike the interest rate hike in the 90’s (which went up as high as 10.50%), the increase at this stage is considered marginal and is not expected to impact mortgage installment payment significantly.Thus, the increase in OPR by 25 basis points is not expected to have significant negative impact on the property market in general.

ABOUT THE CONTRIBUTOR Rachel Lim has more than 10 years of property investment experience. She is a trainer and coach for “Making Your Millions Through Buying and Selling Property” which has helped a lot of investors. She can be contacted at rachellim_fly88@yahoo.com.

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FEATURE

WAIT NO MORE! E Property investment offers a lot of perks for anyone regardless of their sex. So, why are there women out there who still wait for their man to start investing? Property Insight looks into it.

very woman has individual reasons as to why they rely on men to call the shots when it comes to deciding on property investment, though more often than not, investments made by women have repeatedly proven to lead to success and wealth. Could it be that men and women are treated differently in the property industry or could it be that women are merely intimidated by their more masculine counterparts? We speak to some female and male industry experts about the issue. “Of the many women I have come across, most are introverts. I feel it isn’t merely about investments but also matters such as finance and making household decisions that women surrender to their spouses,”

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says Prudence Wong who is a property entrepeneur. In short, with regards to property investment women prefer for men to take the lead. Experienced investor, property guru and author, Prudence Wong

www.propertyinsight.com.my

8/12/14 12:34 PM


FEATURE

Renesial Leong

Dr Renesial Leong thinks, “I believe that the time has come for women to take financial matters such as investments and retirement plans into their own hands, just as men would.” “Twenty years ago, women were treated differently to men. But today, the property market is unlike how it was when I started two decades ago,” Renesial who has more than 20 years of experience adds. Property expert and chairman of DSR Group of Companies, Dr Shah Razali states that women should be given the freedom to decide, create individual opportunities and execute plans with regard to their property investment. “It is definite that women should be treated as equals to men however, both genders need to firstly understand the objectives of investing in property and that proper planning and sufficient knowledge in finance is key,” he says.

Dr Shah Razali

terms that must be understood regardless whether it is during purchase or tenancy periods. Another reason is probably due to the natural characteristics of women who mostly love spending time at home.” For Renesial, she highlights that most beginners in property investment prefer purchasing residential property irrespective of sex. “This is because the entry into the investment of residential properties is a lot easier compared to commercial properties.” Residential properties usually require less cash paid upfront compared to commercial properties. Young investor, Chloe Wong Huey Mang says, “I believe, most investors are interested in residential properties as it is the most relatable thing to our everyday lives. Plus, residential property also has higher demands as well as trading rates in the market.Commercial property on the other hand requires powerful understanding of rules and regulations and familiarisation as to what makes for a sustainable and successful commercial investment,” says Chloe. Chloe adds, “Both residential and commercial properties are wonderful options to invest in

Chloe Wong Huey Mang

What Type of Properties Women Love Most?

Understanding what type of properties women prefer, Prudence believes that this depends on the set of skills as well as the financial affordability of the investor. “For the ladies, ask yourself if you are able to afford a commercial or a residential property before making any decisions,” she says. Shah adds on to that by saying, “Women love residential property due to commercial properties being much more complex to own, and it involves several documentations, rules as well as managerial

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FEATURE

however, a decision can be made based on which type of property suits individual investor’s styles best.”

Manage the Emotions

Each investor has an individual set of beliefs when it comes to property investment. Studies about female investors have proven that women are usually more emotional in making decisions. “There are women who simply follow what their friends would do. For example, by investing in a property along with their buddies without first checking the viability of the chosen development. What these women should do is to do a little research about the selected development and comparing it to similar properties as well as learning to recognise risks and potentials before the purchase,” mentions accountant and property investor Chermaine Poo. Prudence agrees and says, “Some women have an emotional attachment to properties that they find more beautiful or unique as compared to the next. Women also easily fall prey to these emotions and may result in making an ultimately bad decision. Women should always focus on numbers as compared to heartfelt emotions.” Similarly, based on her observation, Chloe thinks that Malaysian female investors lack the purpose as well as belief to their investment. “Many purely invest to reap gains, forgetting to ensure that money isn’t lost during the process. The idea of investing in property should be widespread amongst women

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in order to allow them to reap the benefits that the property market but first equipped with wisdom, purpose as well as beliefs,” she tells. From a man’s point of view, Shah explains, “Women usually hold a sentimental value for properties that they had prior to the purchase for investment hence halting them from selling their properties. “The ladies must remember the core reason as to why they initially bought these properties,” states Shah.

Chermaine Poo

www.propertyinsight.com.my

8/12/14 12:35 PM


FEATURE

Cheers to encourage

According to Consultant Psychiatrist and Psychotherapist, University Malaya Medical and Specialist Centre’s Faculty of the Mind, Prof. Dr Stephen Jambunathan says, “I feel that the perception of women having to depend on their spouses is in fact a thing of the past. Today, gender equality is very much balanced. “Women have increasingly plunged into property investments and are doing an excellent job at it. I find both males and females being equally good at money management, though different personalities may result in different outcomes,” he reckons. Equality amongst the sexes may have found its way into the property industry with several women investing in their first properties, long before tying the knot. Stephen shares, “Women get to enjoy a sense of freedom by owning their very own properties, creating a feel of good self-esteem almost instantly.” Agreeing to this notion is Prudence. “It is agreeable that women are prudent and detailed emotional multi-taskers and are able to manage a number of properties probably based on their intuition. From my experience, I have seen a good number of women blessed with being able to ‘sniff’ out a more worthy property as compared to the next,” she thinks. Lastly, Renesial shares to the investors out there to constantly understand and to closely monitor market trends to stay ahead in the world of property investment, regardless of their gender. “The golden rule is to make your money work harder for you and in time as your game plan is set then you can finally call it a day,” she concludes.

WhAT I THINK ABOUT WOMEN WHO INVEST VKA Wealth Planners licensed financial planner Kevin Neoh “I think women are way more attractive when they start to invest in property market. When she can take control of her financial decisions on her own it proves that she is independent and knows what she wants. This shows her good character.” Skybridge International CEO and founder Adrian Un Kok Keong “There’s no way women are less attractive when they start investing. Instead, men will see them as independent women who are able to make good living and know how to make investment decisions and this is beautiful. There will hardly be any man who say ‘NO’ to her and property investment can definitely make them more attractive and sexy.” Freemen Founder Michael Tan “I feel that female investors are way more independent. Whenever I see a female investor investing, it is very empowering and it inspires me a lot. Not only that, whenever a woman, doesn’t matter someone I met on the street or at my seminars, speaks about property market, I admire their guts and this is attractive.”

Dr Stephen Jambunathan

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TIPS

HOW TO MAKE YOUR KIDS EXCITED TO MOVE Although moving to a new home can be a thrilling experience for the parents, it may not be so for their children. They’ll probably be upset about leaving their friends, schools and beloved old home. To help ease the process of moving to a new place for children, we suggest some to-do things for parents.

1 LET YOUR CHILDREN KNOW EARLY

BEFORE MAKING ANY BIG MOVE

First of all, it’s important to let children know that you’ll be moving as soon as you can. For older children, get them involved in the decision itself, helping you weigh the pros and cons of moving. The sooner you involve them, the more they’ll feel in control of the move and that they’re part of the process.

2

GET THEM INVOLVED IN THE MOVE

No matter their age, you can involve them in the move by giving them tasks to do. For younger children, ask them to create a list of all the things they want to take with them and for older children, ask them to research the new city or town you’ll be moving to so they can start thinking about all the great things they’ll find at the new place. This also creates a spark which the children will learn to value once they grow up and when they look back at their younger days.

3

HOUSE-HUNT TOGETHER

If it’s practical, take your children to see prospective houses with you. If you’re searching online, bookmark

your favorites so your kids can take a look. Let them see the choice you made and ask their opinion about it.

4

INTRODUCE THEM TO THE NEW HOME AS WELL AS THE AREA.

If possible, it’s a good idea to show your kids where they’ll be living, including the neighborhood and new home. This is more difficult if you’re moving to another state or county. But even if you’re moving far away - too far to visit - buy some travel guides, download photos and dig up as much information as possible so your kids can start to imagine what they’re new life will look like.

LET THEM PACK THEIR OWN ROOM

5 AND ALSO LET THEM PLAN HOW

THEIR NEW ROOM WILL LOOK.

With a child’s wild imagination, it shouldn’t be a problem to ask them to plan out their own room. In fact, they might come up with ten plans. You should also let your children consider which stuff they want to bring to their new place. By doing so, they will have a rough idea of how they want their room to look like.

6

THROW A FAREWELL PARTY.

Ask your children to gather their closest friends, teachers, coaches and even the people from their favourite ice cream shop to a gathering. It doesn’t mean you have to spend big bucks, a simple barbeque, or a potluck party will do. After all, the aim of it is to let your children have a good and memorable time with their loved ones.

20 SEPTEMBER 2014 www.propertyinsight.com.my

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EXPERT’S COMMENT

WHERE IN MALAYSIA SHOULD YOU INVEST IN? DATO’ DR. EDWEN YEW

Chief Executive Officer of OZ Property

“Other than locations, most investors prefer to go for well-known developers in Malaysia because the end finishing of their product is better than those from smaller developers. Plus, the appreciation is much better if you buy from well-known developers in Malaysia. I will go for Mont Kiara because it is a place most expats call their home, which means the rental market there is strong, due to the large number of expat families there. Next is Iskandar, Johor. With massive investment towards Iskandar, the location is undeniably an important hub after KL. With its geographical advantage (next to Singapore), it has attracted a lot of foreign ownerships.”

DATO’ SRI GAVIN TEE

Founder & President of SWT International Investment Alliance

“There are certain times the property market is steady and sometimes slow but at times it rises. I usually look at where the foreigners would invest here in Malaysia. Places like Greater KL because the property market there is steady and of course Iskandar Malaysia because it will be the next Kuala Lumpur. Other than that, I think of Malacca and Penang are good too. I believe within the next couple of years, there will be a sharp increase of foreigners there.”

NORMAN SIA

International Property Expert/Guru, Founder of NS Global Singapore

“Well, it depends on where the investors are from. If you are looking at the situation now, the hotspots would be in Kuala Lumpur, and I am talking about the Greater KL. With the MRT line soon to be completed it will be one of the landmark developments that will attract the investors to invest in Malaysia, Greater KL will be the best place to invest in. Now, if you are looking at the foreign investors such as the Singaporeans, they will definitely invest in Iskandar Malaysia. The reasons I will say this is because Iskandar is a lot similar to KL.”

JEFFERY LAM

Gen-Y Property Investment Coach in SIC, Co-Partner at Smart Investor Club (SIC)

“Location is important because our investment success depends a lot on picking the right location. If you’re talking about the Peninsular, the hotspots are mainly in Greater KL, Subang and Iskandar Malaysia. I think Greater KL is a good location to invest in because it is the capital city, which means the city won’t ‘die’. There are a lot of job opportunities there which means if I invest in commercial properties such as office buildings, I do not have to worry much. Also, the amenities like MRT, LRT, shopping malls and other attractions complement the investment environment there.”

MICHAEL GEH

Senior Vice-President of Raine&Horne International Zaki+Partners Sdn Bhd

“I personally like matured area. There are matured areas all over Malaysia. I like Puchong, where chances of investment are good. The reason is that because the township is stable. Next is the Kota Damansara. Kota Damansara is quite successful nowadays. With the extension MRT line, I am sure it is a best place to invest in commercial properties. As for home buyers, they might want to buy around Puchong area, where the property market there is stable. Stable in the sense that the property market is not going to rise and fall easily.”

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SEPTEMBER 2014 23

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FEATURE

As Gen-X retires from the market, Gen- Y is expected to replace their position in the industry. But how much do we understand Gen-Y as property investors? Rachel Joseph writes.

O

ver the years, there’s been a lot of debate on the personality traits of Gen-X and Gen-Y with some rating Gen-X as orthodox while Gen-Y is more progressive. These descriptions are understandable given the differences of each generation’s upbringing. For many years, Gen-X has been the major player of the property market but as they aged, it is inevitable that Gen-Y will to take over their spot to keep the industry going. Gen-X in definition are those born post World War II period (1946-1964) while Gen-Y are people who are born between the 1980s and early 2000s. Commercially, Gen-X is called baby-boomers and similarly, Gen- Y too has its own commercial names. They vary from the millennials, tech-savvy, attention cravers and achievement-oriented people. The market where Gen-X is exposed to is so dissimilar to what Gen-Y’ers are facing now. In simple words, the market was much simpler back in

24 SEPTEMBER 2014

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the day. Unlike today, there are many challenges for Gen-Y that make their entry into the industry rather tough.

Challenging Road Ahead

After speaking to a few Gen-Y investors, most agree that the biggest issue facing them at the moment is affordability. They conclude that affordability is an issue to deal with as most of the Gen-Y are fresh graduates, young executives and newly married couples. So, sufficient savings as well as good cash flow are a conundrum. One of them, namely Jeremy Ng Wee Heng who began his investment at the age of 27 with a low cost residential property says, “I am 30 now and I find in today’s property market, affordability is a big issue to consider. Inflation hits us without an inch of mercy, living expenses are rising unstoppably and the expected salary and increments are not materialising.”

www.propertyinsight.com.my

8/13/14 12:07 PM


FEATURE

Mohd Fariz Helmi Husain

unnecessarily. In case if you are really tempted, take advantage of discounts or incentive programmes,” he adds.

Can You Afford it?

Justin Ling Lee Hoe, 25 who started his investment journey at the young age of 22 says, “Indeed, the property market has become a challenging market for young investors who are thinking of investing in property market. This is due to the increasing property prices which do not par with the income earned and it is way too difficult for the young investors to get bank loans simply because their income rates are not meeting the banks requirements.”

Save It Up

Saving money is one of the tasks easier to say than to do. Generally, everyone knows it is smart to save your money and especially in property market, that will be your wrecking ball. Not forgetting that Gen-Y are big spenders, CEO of Far Capital Sdn Bhd Faizul Ridzuan, 25, says, “It is hard to save money when Gen-Y spends RM30 per day just on coffee and other drinks. In addition, this youngsters love to buy the most expensive car they can afford and this mentality only makes things worse.” Actually, such expenditures aren’t advisable and they’re not worth thousands of Ringgit as you don’t receive any return. Another young investor, Mohd Fariz Helmi Husain shares, “I do think that Gen-Y have a very costly lifestyle and they tend to spend a lot on unnecessary purchases such as fancy cars, gadgets, clothes and entertainment which will increase their debts. They realise that it is important to own a house but due to their unnecessary expenses, their out-cash flow will be higher and this directly affects their financing capacity when they want to buy a house.” “The best way to save your money is to keep track of your spending and don’t be tempted to spend

“Less than two years ago, it was very uncommon to have those below 35 owning two or three properties. Today, owning two to three properties by 30 is no longer a big deal,” says Faizul who began his investment at the age of 24 by purchasing a RM140,000 priced condominium in Petaling Jaya. To date, Faizul has bought over 30 properties comprising of high-rise residential, landed and commercial offices. “For my worst performing completed properties, they have gone up by 70% in value and rentals yield of 8% per annum. My best performer has gone up to 300% in value, with over 15% annual yields,” he says. For a success story like Faizul, affordability, can be managed by saving up more especially among the young generation is a misconception. “There is a misconception going on about affordability which I hope to address. If affordability is an issue, then it not possible for Gen-Y to be able to own properties at a young age,” highlights Faizul adding that what’s important is managing one’s finances.

Why is it Important for Gen-Y to Invest in Properties? “I started property investment because I can see property prices are increasing tremendously and I don’t want to miss out on the opportunity,” says Wong Kia Leh, 26, who started her first property investment at the age of 24 by investing on an

Faizul Ridzuan

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SEPTEMBER 2014 25

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FEATURE

apartment in Johor Bahru which she bought at 22% below market value and has a 7.8% rental yield. She continues, “I believe the reasons why most people want to buy a property is simply because of the sense of security, belonging and ownership. As a property investor, I see property investment as a business. My role in this business is to provide a comfortable and a convenience place for my tenants.” The millennial generation is aware of the struggle to keep a balanced cash flow. So for some, property investment is done to achieve financial freedom. “For me, the reason to do property investment is to make more money other than my working income. Let money work hard for me than me working hard for money,” says another Gen-Y investor Jackson Wong Hoi Leong. Jackson,33, began his investment at the age of 27 by investing on a retail lot in KL city centre and his current portfolio includes a unit of 520sq ft size of retail unit, 3,000sq ft size of landed property and 900sq ft size condo. He says, “Property investment will provide security and control over your financials. Do what you love, love what you do and the best thing here is you don’t have to work a single day through property investment!”

How different is Gen-Y’s Attitude in Acquiring Property Compared to GenX’s?

According to Jeremy, Gen-X’s attitude in acquiring properties is more towards for their own stay compared to Gen-Y’s attitude who like to acquire properties for investment purposes. “In actuality, Gen-X is playing an important role in their children’s (Gen-Y’s) lifestyle. When parents are the property investors, their children, Gen-Y will get more knowledge in property investment, seeing their parents practising it. So much so, the exposure makes property investment, easier and a natural call for Gen-Y with such exposure,” adds Jeremy. Sharing the sentiment is Faizul who then says, “I think Gen-X is slightly more cautious than Gen-Y as they have gone through multiple recessions. So, they have the tendency of buying properties with a lot more cash compared to loan. One dangerous mentality that worries me today amongst the Gen-Y is that they think property prices can never go down and they tend to maximise borrowing whenever possible. This will be all fine provided there are solid buys (purchase with good return). But that very same attitude will be a disaster when they buy properties based on speculation.”

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Wong Kia Leh

On another note, Wong Kia Leh comments, “I think Gen-X prefers to minimise their leverage compare to Gen-Y and Gen-X goes for a long term investment while Gen-Y tends to expect fast cash return.”

Since Affordability is a Big Issue, Should Gen Y Consider Investing in the Outskirts Rather than in KL City Center?

“I advise the youngsters to go for city-like area. For example, there are options for smaller units if they want to buy in KLCC. You can still find properties for RM500,000 around KLCC if you look hard enough,” says Faizul.

Justin Ling Lee Hoe

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FEATURE

Jeremy Ng Wee Heng

In addition, Wong says, “I too, would advise Gen-Y to buy their first property for investment purpose because currently, Gen-Y’s seed money is limited even after they start to work. What Gen-Y could do is to use the seed money on a property for investment sake and make money out of it; such as through renting. With income coming from invested property, they should roll it and grow their capital. In the end, they’ll be able to buy their own dream home and the money they receive through the investment can also be a source of extra income for them.” For Faizul he thinks otherwise. “I will say buy a property for your own stay first. Try buying the cheapest property and that property should make your life easier, not harder. Then you can focus on investment. Learn the rules of the property game first before making the plunge. The most expensive advice one can get in property investment is the free ones. Always look at facts and not opinions.”

Conclusion At the same time, Fariz who began his investment at the age of 23 and has dealt with 13 properties says, “Recently, more affordable homes have been introduced with properties nearby the proposed mass rapid transit (MRT) and light rail transit (LRT) extension lines are set to gain popularity. So, here are the chances for Gen-Y to invest. Personally, I do encourage the youngsters to invest in the outskirts but, city areas will do just as well.” On the other hand, Justin tells his peers to not underestimate certain outskirt areas that are booming such as Nilai in Negeri Sembilan. He says, “I never restrict my investment opportunity to only at the KL City Centre as I think the properties there only invite big players. Massive residential projects such as the one from Sime Darby have advanced to Nilai because this area has become an educational hub. There are a lot of universities and KLIA and KLIA2 are located just 10km away from Nilai, hence adding value to the area. So, these are the areas Gen-Y should invest in.”

Gen-Y is fully aware of property investment’s benefits, but it is a matter of having a stable cash flow to loosen their restriction in investing. Also, it can be a mistake for Gen-Yers to buy properties before getting themselves educated or buying properties beyond their affordability. That is why Gen-Y is advised to do thorough research and act based on the facts. Remember it is never too late to start early as a property investor.

Jackson Wong Hoi Leong

Buy to Stay or Invest?

In this fast moving age, should Gen-Y buy their first property to stay or for investment sake? “I would advise Gen-Y to invest in their first property rather than buying for own stay because buying a house for investment will allow you to receive good rental income. This will strengthen your cash flow and will allow you to expand your investment capacity on properties,” says Fariz.

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DEVELOPER OF THE MONTH

THE SOUTHERN TOUCH With its strong Johor presence, UMLand wishes to spread more innovative and iconic townships as well as niche property developments all over Malaysia. Viknesh Ashley and Zuhaila Sedek- De Booij write.

U

nited Malayan Land Bhd or famously known as UMLand is well known for its success stories in Johor. Born in Johor, UMLand back in the day was conceived via three main shareholders; Chee Tat Plantation, Singapore, Capital Land, Singapore as well as Tradewinds Malaysia Bhd. Given its prominence in Southern Malaysia, the developer began carving its name in niche luxury properties across central Klang Valley since 2001. Among these niche products include Seri Bukit Ceylon located along Jalan Bukit Ceylon, Suasana Bangsar in the mature Bangsar enclave, Suasana Central Loft adjacent to KL Sentral as well as Suasana Bukit Ceylon that is perched majestically in Kuala Lumpur City Centre. In 2012, the company ventured into the development of hospitality, building hotels in the city and in strategic growth areas of Medini and Bandar Seri Alam in Johor. What triggered the expansion? UMLand Bhd’s

Group Chief Executive Officer, Charlie Chia explains. “Our Company started off as a township developer, creating bread and butter products to the east of Johor Bahru in 1991 and Selangor in 1997. This success has subsequently brought us to niche developments, building multi-storey luxury apartments within the Klang Valley as well as in selected areas in Johor Bahru to strengthen our position.” Viridea Residences

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DEVELOPER OF THE MONTH

UM Land Bhd’s Group Chief Executive Officer, Charlie Chia

With a Gross Development Value of RM 10.8billion, the Malaysia-Singapore owned company has blessed the Selangor state with a number of iconic developments although a vast majority of the developer’s portfolio as well as its future launches lie in Johor. And in effort to continue developing innovative properties, UMLand develops its projects in compliance to Qlasik and Conquas systems of product quality so the brand can earn a good reputation and be trusted in the industry.

Against All Odds

After the financial crisis in 1997 which resulted in drastic sales drop for many developers, UMLand had re-strategised its organisation to ensure a long term re-positioning. This re-strategising involved cost-sensitive management and the delivery of a better and more efficient construction. “At that time, the acute shortage of labour and rising cost

of building materials, made the development of real estate very challenging. There was a need to manage cost well and to seek out alternative construction method as well as managing building materials better and introducing more efficient designs,” Charlie tells. Today, the challenges facing the company differ. Known for its stronghold in Johor, some property purchasers dread investing in Johor due to the common belief that the state may soon face an oversupply and this can be very troubling for property buyers. What’s more, there are also reports stating that Johor only offer good paper profits. Is this true? To this Charlie answers, “When it comes to property it is always about location, and if properties in Johor face an oversupply, the investment outcome will rely on where the property purchased is developed. Take Medini for example, in this locale, investors can enjoy not having to pay tax for any development including the profits made up to ten years or till the year 2025. And this is very good. Developers are banking on this offer.” With a lot of the big boys from China entering the Johor market, the market observes a trend of bulk development. To top it off, a lot of developers are www.propertyinsight.com.my

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DEVELOPER OF THE MONTH Star Residences

especially in Nusajaya. For example, a Jurong-based company Ascendas Pte Ltd has set up factories so there’ll be more space for field work to be carried out as well as to accommodate the number of workers that service the company. These workers who are currently living in Jurong are expected to relocate to Nusajaya. As this materialises, the amount of Malaysians commuting to Singapore for work should be reduced significantly and more migration of Singaporeans into Malaysia will take place.”

The Projects

Out of the five planned flagship townships UMLand had set for Johor, three have already been realised with the first township dubbed as Bandar Seri Alam located in Pasir Gudang. This is followed by Taman Seri Austin that is strategically situated in the Tebrau growth corridor of Johor while the third and most Jade@Tebrau, Johor

launching thousands of residential units at the same time with most of them sharing similar completion dates. Could this be a recipe for disaster? Charlie explains the situation. “Having a number of developers jointly developing a locale is actually a preferred situation as compared to relying on a sole developer to develop an area. For example, if investors in Pasir Gudang expect land values to increase, more developers should be invited to participate in developing the area, thus drawing traffic into the area. Developers do not want a case where they are sole developers at a designated locale as it may take a longer to cater to the increasing demand required by the market.” Charlie enlightens, “Looking at the transformation of Iskandar, I believe that Iskandar will eventually become like Shenzhen. Shenzhen 35 years ago was unknown to the world as it was only a small village back then. Today, Shenzhen is blessed with a bounty of developments and there are properties covering every nook and corner of Shenzhen”. This notion is supported since there is a spillover effect from Singapore. “Singapore is running out of lands to develop. The lion city will eventually relocate their industrial parcels to make way for more residential projects. You would already notice that some of Singapore’s industrial companies are slowly making their way into Johor and as a result, developers in Nusajaya are prepping this locale to function as major industrial zones,” Charlie says. He adds, “Many industrial parks are being set up

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DEVELOPER OF THE MONTH Suasana, Iskandar Malaysia

Sommerset Puteri Harbour

recently developed is a serviced residence called Somerset Puteri Harbour in Puteri Harbour Marina, Nusajaya. Of all its townships, Bandar Seri Alam is perhaps the brand’s most celebrated. The concept of Bandar Seri Alam was to serve the need of quality properties and community living for Johoreans and Singaporeans alike. Thereafter, the developer decided to recreate their success in Pasir Gudang by tapping into the Tebrau growth corridor of Johor Bahru by developing a 700-acre second flagship development called Taman Seri Austin. Both these townships offer a wide variety of landed properties, have significantly matured and are now are very much established. The two townships have also won accolades in green environment “Smart Healthy city and Communities” by the local municipality of Majlis Perbandaran Johor Bahru and Apartment Putra 1

Johor State Economic Planning Unit. These townships have also greatly boomed in sales due to Johor Bahru’s density in high rise properties. Charlie explains, “Bandar Seri Alam and Taman Seri Austin have both been launched to focus mainly on landed properties. We found that people in Johor are more confident buying landed properties compared to high rise developments in Johor.” According to Charlie, there is a ready demand for landed properties and Johor currently has a shortage of supply for such property. Hence, this is the best time to launch landed properties in Johor as this type of properties is more popular and is more sellable now. Another prominent township by UMLand is its Bandar Seri Putra in Bangi. The township displays all the hallmarks of a UMLand township development with the optimum mix of residential, commercial and recreational facilities intended to house a population of 35,000 over a sprawling 898 acres.

The Future

With land banks in Iskandar amounting to 1,336 acres and 199 acres in the Klang Valley (as of March 2014), UMLand has a lot of exciting plans ahead of them. UMLand owns a parcel of land in Medini that is referred to as the B Zone. This zone holds plinths of land that are partially commercial and residential titled. UMLand is in the midst of developing the

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DEVELOPER OF THE MONTH

Sapphire 8

parcel into a product called UMCity at Medini Lakeside. This part of Medini was named as such due to an existing lake that softens the geography of the development area as well as making this vicinity stands out compared to other zones within Medini. Within UMCity, there’s a plan to build UM Residences - a mixed development comprising hotels, serviced apartments, shopping malls and alfresco food components that would surround the lakes’ waterfront in Medini. Upon launching UM Residences, UMLand will be launching a second project called Viridea at Medini Lakeside. According to Charlie, this waterfront project is poised to be a location for concerts and will have iconic features that have yet to be finalised. Another offering by UMLand in Johor is their latest addition to the Suasana brand called Suasana Iskandar. This development will stand proudly opposite Komtar Johor Bahru City Centre, Johor Bahru City Square and JB Sentral. This development will be linked to JB Komtar where pedestrians can

Suasana Bukit Ceylon

UM Land Bhd’s Group Chief Executive Officer, Charlie Chia

FUTURE PROJECTS Star Residences @ Yap Kwan Seng, Kuala Lumpur Price: From RM 947,809.81 (RM1,500psf) No. of Units: 557 units Floor Area: 625sq ft to 2,262sq ft Tenure: Freehold Expected Rental: N.A Expected Date of TOP: 2018/2019 Developer: United Malayan Land Bhd & Symphony Life Bhd

Suasana Iskandar, Johor Price: RM824, 000.00 – RM 1.6 Million No. of Units: 535 in total Floor Area: 644sq ft to 1,238sq ft Tenure: Freehold Expected Rental: Not Completed Expected Date of TOP: September 2017 Developer: Exquisite Skyline Sdn Bhd subsidiary of United Malayan Land Bhd

Viridea Residences@ Medini Lakeside, Johor Price: RM 670k – RM 840k No. of Units: 120 Floor Area: 763 -880 sq ft Tenure: Leasehold Expected Rental: N.A Expected Date of TOP: 2017 Developer: United Malaysian Land Bhd

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DEVELOPER OF THE MONTH

walk across the road from Komtar and arrive at JB Sentral. Charlie mentions, “MRT lines will soon come into Johor Bahru, passing through Tanjung Puteri first and finally arriving at JB Sentral. Home owners of Suasana Iskandar need to walk a mere 5 to 10 minutes from their residences and they would be on their way right into Singapore.” Also, complementing Bandar Seri Alam is Bandar Seri Alam 2 located in Pasir Gudang that is located approximately 15km to 20km away from Pengerang – an area that holds the major oil rig plan by Petroliam National Berhad (Petronas) Project called RAPID. This township will offer about 400 acres of land focusing on industrial and residential properties. “This upcoming township is most likely to be snapped up by expats, who work in the oil terminals, oil rigs, storage and refineries there. Currently, most of them live in hotels within the vicinity,” says Charlie adding that other products in Johor by UMLand include a number of apartments that will soon be launched in a parcel within Puteri Harbour, one of which is called The Waves. “We are also expecting some affordable landed properties tagged from RM500,000 onwards to be launched in Bandar Seri Alam and Taman Seri Austin,” Charlie cites. Over in Selangor, UMLand has prepared two very contrasting properties. The first is called Star Residences that would be jointly developed with Symphony Life Bhd based on a 50-50 joint venture. Star Residences is set to take shape in Jalan Yap Kwan Seng with units selling from RM1,500 to RM1,600psf. Charlie mentions, “The Star Residences project is selling very well with the first tower practically sold out with a mere balance of 15% to 20% percent of units left for sale.” In Bangi, UMLand has launched the Putra 1 apartments situated within the Bandar Seri Putra township. The apartment has favourable take up rates as parents staying in Bandar Seri Putra are investing in these apartments for their children. Aside from these confirmed launches, UMLand is now scouting for more land across the country and Asia. “Our company is open to development opportunities, for example in areas such as Sabah and Sarawak as well as economically emerging countries in the region like Vietnam and Myanmar,” Charlie explains. Before ending the interview, Charlie tells us about an exciting and interesting project that the company has in mind. “We would also like to provide more amenities for the aged community in Malaysia in terms of quality aged living. For that, we would like to focus on developing aged living residences for example the retirement villages and retirement resorts at our Key Result Areas,” Charlie shares in the end.

CURRENT PROJECTS Suasana Bukit Ceylon, Kuala Lumpur Price: From RM450,000 (launch price) No. of Units: 310 Floor Area: 729sq ft to 5,618sq ft Tenure: Freehold Expected Rental: RM3,000 and above Expected Date of TOP: Mid 2014 Developer: Exquisite Skyline Sdn Bhd subsidiary of United Malayan Land Bhd

Apartment Putra 1 Price: RM331,000 onwards No. of Units: 505 units Floor Area: 854sq ft to 1,224sq ft Tenure: Freehold Expected Rental:RM1,500 Expected Date of TOP: November 2017 Developer: Bangi Heights Development subsidiary of United Malayan Land Bhd

Sapphire 8@Bandar Seri Alam, Johor Price: from RM620,900 No. of Units:  121 units Floor Area: 1,897sq ft to 2,659sq ft Tenure: Freehold Expected Rental: RM2,500 – RM3,000 Date of TOP: 28 May 2014 Developer: Seri Alam Properties Sdn Bhd subsidiary of United Malayan Land Bhd

Jade @Taman Seri Austin, Johor Price: from RM 676,800 No. of Units: 120 units Floor Area: 2,209sq ft to 2,552sq ft Tenure: Freehold Expected Rental: from RM1,800 Expected Date of TOP: March 2016 Developer: Dynasty View Sdn Bhd subsidiary of United Malayan Land Bhd

UMCity Medini Lakeside – Business Suites Price: Starting from RM600k – RM1.5mil No. of Units: 96 units Size: 683sq ft-2120sq ft Tenure: Leasehold 99years + 30years Expected Rental: Estimated Rental yield 5%-6% Expected Date of TOP: December 2017 Developer: UMLand Medini Lakeside Development Sdn Bhd

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AREA FOCUS

PUCHONG:

HEADING FOR THE PINNACLE Back in the day, Puchong may have carried a lot of stigma, but now, the area is evolving into a residential and commercial haven for investors. Aidil Mohamad writes.

P

uchong is no stranger to Malaysians, especially to the people of Klang Valley. Historically, the area was a rubber estate and tin-mining town off the old Kuala Lumpur-Klang road in the 1960s. In those days, it was basically a backwater area of Kuala Lumpur. Serviced by a single two-lane road then, access to Puchong from Kuala Lumpur was via the old Kuala Lumpur-Klang road and Jalan Puchong, all the way towards the Ayer Hitam Firdaus Musa of Firdaus & Associates Property Professionals (FAPP)

Forest Reserve area. From the 1960s to the mid-1980s, Puchong served as the residential area for three major towns - Kuala Lumpur, Petaling Jaya and Subang Jaya. In the early and mid-1990s, new townships such as Bandar Puchong Jaya, Pusat Bandar Puchong, Puchong Utama and several others under the prefix name of Puchong were all developed on ex-rubber, ex-oil palm and mining lands. As of 2012, Puchong has gained a population of 300,000 people, covering an area of approximately 19,768 acres.

Whatâ&#x20AC;&#x2122;s in Store

There are several notable developments currently under construction in Puchong. Among them is a landed property development by Hillcrest Gardens Sdn Bhd called Passiflora. Passiflora is a Freehold Semi-D homes project developed in Taman Puchong Utama. It consists of a built-up area of 3,533sq ft, with 5 rooms and 5 bathrooms. The projectâ&#x20AC;&#x2122;s selling price starts from RM1,730, 000 to RM3,712, 233 with 7% discounts for Bumiputera. The project

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is expected to complete in 2016. Another landed development is by I&P Group called Astana, a project featuring bungalow homes with built-up from 5,394sq ft to 7,940sq ft. The price range starts from RM3,476,888 to RM5,493,888. Puchong offers plenty of stratified developments too, among which are Titijaya Land Berhad’s 3Elements @ Puchong South. The mixed development has units with a built-up size of 504 sq ft (for it’s SOFO) and from 659sf to 1,018sq ft (for it’s Nouvo Serviced Apartments). There are a total of 342 units and they are selling at RM280,075 to RM530,570. Another developer, Mutiara Johan Group, is also developing a freehold high rise project called Tiara Mutiara 2. The units there have a built-up size from 800sq ft to 1,110sq ft and are priced at RM 540,000 onwards per unit. For commercial developments, there’s I&P Group’s Kinrara Niaga that offers a lot size of 22ft x 80ft and a built-up of 5,649sq ft to 13,857sq ft for its offices. They are available from RM1, 995, 888 to RM4, 924, 888. Another commercial development in Puchong is by SP Setia, namely Setia Walk - an integrated residential and commercial development occupying 21 acres of prime land in Pusat Bandar Puchong. Setia Walk will house Shop Office Units (Retail), Service Apartments & Luxury Residences, Entertainment Centre, Hotel, and SOHO. According to the Managing Director of Firdaus & Associates Property Professionals (FAPP),Firdaus Musa, there are not much risks investing in Puchong as the area is an occupier’s market. “The capital rental markets over here are much slower compared to Kuala Lumpur and Petaling Jaya. The sentiments for investments for growth in property values in the area, however, are not 100% equal to or as strong as the sentiments for owner occupation,” says Firdaus. The valuer also thinks the location makes as a good place for semi-retirees and Gen-Y who are

keen to buy properties for short-term investment or for their own stay. “This is because Puchong has a relatively slower growth rate in terms of capital and rental values compared to other areas like Kuala Lumpur and other parts of Klang Valley. This makes Puchong a good location for the younger generation of executives and the older folks. Plus, retiring in the capital can be costly as there are higher assessment rates for the properties there,” Firdaus explains. He foresees that in three years’ time, property values in Puchong can rival those in Kuala Lumpur.

What the Future Holds

With a lot more developers coming into Puchong, some developers such as Prima Nova Harta Development Sdn Bhd is embarking on a new condominium development known as Elevia Residences in Taman Tasek Prima, Puchong. It is scheduled to be completed in 2016. The 2.85-acre leasehold project consists of 162 units of three and four-bedroom condominiums with built-up areas between 859 sq ft and 2,357 sq ft, constructed within a single block of 22-storey building. Another developer, Hillcrest Gardens Sdn Bhd, is also joining the bandwagon of future development in Puchong, within Taman Puchong Utama. The project comprises 38 freehold units of two-storey semi-detached houses and is expected to be completed by the first quarter of 2016. The 4+1 bedroom units, with built-up areas between 3,533 sq ft and 5,885 sq ft, are priced from RM1.73million to RM3.712million each. Another project within the same scheme under the same developer called Aster offers double storey linked houses, that are priced between RM768,000 and RM1.278million each. The project consists of 133 freehold terraced units of 4-bedroom linked homes. A freehold serviced apartment project by Bukit

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Hitam Development Sdn Bhd called Epic Suites @ BP: Newtown, Bukit Puchong, comprising 300 units of serviced apartments, is being planned by the developer and is scheduled to be completed in 2017. The strata units, spread over a 2.3-acre site with built-ups between 624sq ft and 2,475sq ft, are priced from RM348,048 to RM1.017million. Some of the amenities include an infinity pool, wading pool, children’s playground, gymnasium, multi-purpose room, crèche and a library. AT esco hypermarket is also located nearby. Another development set to take shape is a gated and guarded project consisting of threestorey leasehold detached homes in Ambrosia@ Kinrara Residence to be developed by Legend Grand Development Sdn Bhd. It boasts 79 units of 6+1 bedroom-bungalows which are named as Asteria, Begonia and Camelia and is scheduled to be completed in the first quarter of next year. The built-up areas range from 5,688sq ft, 5,908sq ft and 5,658sq ft respectively. These bungalows spread over a parcel of 27.54 acre-land in Kinrara Residence. Besides the macro amenities, some of the micro amenities the purchaser of these units will enjoy include a residents’ clubhouse, swimming pool with children’s wading pool, gymnasium, a multi-purpose hall, BBQ area, a clubhouse café and convenience store and lounge area. Then, there’s Bandar Puchong Jaya that will soon be home to a three and four-bedroom condominium development called Parc Ville which comprises 280 freehold units with built-up areas between 1,226sq ft and 1,323sq ft and. These units are priced from RM652,000 and are slated for completion by end 2016. The residents are expected to enjoy a myriad of commercial centres such as Puchong Financial Corporate Centre, Setia Walk and One Puchong Avenue business hub. Another project features two-and-a-half storey

terraced houses called Abadi Heights. The project comprises 272 leasehold units by Abadi Man Nien Sdn Bhd and boasts 4+1 bedroom units with builtup areas between 2,045sq ft and 2,590sq ft priced from RM668,800 to RM773,800. To be completed in December 2015, the project is situated midway between Kuala Lumpur city and the federal administrative capital at Putrajaya, Abadi Heights is sited next to Bukit Puchong 2. “Puchong has changed a lot over the years. A few years back, there was a stigma that Puchong didn’t possess good investment potential due to its laid-back agricultural background and low property values and there was this misconception that it was a crime-infested area. But now, Puchong is where the big boys are,” Firdaus adds.

Facilities and Amenities

There are a wide variety of facilities and amenities in Puchong. Residents need not worry about shopping for daily items as there are Tesco, IOI Mall, Giant, Jusco, Puchong Parade and Puchong Plaza to serve that purpose. There’s also a business centre known as IOI Boulevard for those in search of a commercial units and Columbia-Asia Hospital at Bandar Puteri Puchong to cater to their residents’ medical needs. But if there’s anything, Puchong has a long list of schools among which are secondary schools - SMK Bandar Puchong Jaya A, SMK Bandar Puchong Jaya B, SMK Pusat Bandar Puchong 1, SMK Puchong Utama 1, SMK Puchong Perdana

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and SMK Seksyen 1. There are also primary schools namely SK Puchong, SK Puchong Jaya, SK Puchong Perdana, SJK(C) Han Ming, SJK(C) Yak Chee, and SJK(C) Ladang Harcroft, just to name a few. Puchong also houses international and private schools such as Rafflesia International School and Sekolah Rendah Rafflesia. In the near future, Taylor’s International School will be added to the list. For colleges, there are RIMA International College, Heriot-Watt, Bioscience, Binary University College, Putra Intelek International College. In terms of accessibilities, Puchong is well-linked to other parts of Klang Valley via the DamansaraPuchong Expressway (LDP) and Puchong-Sungai Besi Highway. Puchong is also accessible via Federal Highway (exit at Motorola); Shah Alam Expressway and New Pantai Expressway (NPE). Currently there are several road infrastructures

being planned for Puchong that are expected to enhance the growth and economic potential of this once under-developed town. “Many property developers are eyeing Puchong for future developments and have started acquiring land banks there. You have the proposed LRT extension and IOI Properties’ 80-acre IOI-Vivo City. The proposed Ampang LRT line extension starts from the Sri Petaling Station and runs through Puchong and ends at Putra Heights,” Firdaus tells. There are bus services by RapidKL and Metrobus connecting Puchong to Kuala Lumpur, Subang Jaya, Petaling Jaya, Putrajaya and Cyberjaya. As of now, Puchong is not served by the RapidKL Light Rail Transit (LRT) services but, the Ampang Line is scheduled to be extended to Puchong by 2015 and the stations will be near IOI Mall, Tesco, the Rakan Muda headquarters and the DHL/Tractor Malaysia building.

PUCHONG’S TRANSACTION DATA LANDED

2012

2013

Average Price Change (%)

Type

Name

Single Storey Low-Cost Terrace

Bandar Kinrara

3

50

160,000-188,000

175,000-200,000

7.5

Single Storey Terrace

Taman Lestari Puchong

3

72

200,000-210,000

215,000-230,000

9.5

1 ½ Storey Terrace

Taman Puchong Jaya

3

120

400,000-420,000

440,000-480,000

9.5

Taman Puchong Utama

10

100

360,000-450,000

370,000-460,000

5.7

Perumahan Kinrara

4

196

820,000-938,000

888,0001,120,000

9.7

Bandar Puteri Puchong

3

169

645,000-770,000

760,000-790,000

13.1

Taman Puchong Perdana

3

95

285,000-290,000

310,000-325,000

9.5 5.2

Double Story Terrace

JPPH Selangor Property MArket Report 2013

Price Range (RM)

Average Floor Area (s.m.)

Sample Size

2 ½ Storey Terrace

Double Storey Semi Detached

Town House

Bandar Sierra Puchong

2

171

645,000-648,000

7000,000708,000

D’Alphina

2

178

600,000-645,000

650,000-670,000

5.3

Bandar Puchong Jaya

3

231

730,000-750,000

800,000-830,000

8.9

Taman Meranti Jaya

3

240

850,000-920,000

890,000-970,000

3.8

D’Alphina

2

179

750,000-780,000

750,000-790,000

Stable

Taman Tasik Prima ( Lower )

8

129

450,000-480,000

460,000-500,000

3.2

Taman Tasik Prima ( Upper )

10

140

470,000-490,000

470,000-500,000

Stable

Bandar Sierra Puchong ( Odora Parkhomes )

3

110

NA

530,000-540,000

ND

Taman Tasik Puchong

4

81

270,000-310,000

285,000-305,000

2.7

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AREA FOCUS

HIGH RISE Type Low-Cost Flat

Sample Size

Average Floor Area (s.m.)

2012

2013

Average Price Change (%)

6

61

60,000-75,000

65,000-82,000

7.4

4

54

63,000-80,000

68,000-95,000

13.4

6

72

172,800-190,000

150,000-235,000

5.4

4

56

53,000-80,000

55,000-80,000

Stable

4

60

63,000-80,000

56,000-80,000

Stable

5

65

60,000-95,000

60,000-110,000

3.8

3

69

80,000-103,000

80,000-113,000

3.7

4

70

98,000-120,000

80,000-135,000

Stable

5

73

75,000-118,000

78,000-120,000

5.0

4

74

70,000-105,000

75,000-128,000

5.0

Bandar Puchong Jaya

4

74

150,000-178,000

180,000-187,000

12.8

Pusat Bandar Puchong

6

84

265,000-270,000

275,000-318,000

12.2

4

110

515,000-550,000

550,000-625,000

10.9

3

85

289,000-295,000

270,000-330,000

Stable

Name Taman Puchong Permai Pusat Bandar Puchong Bandar Bukit Puchong

Medium-Cost Flat Taman Putra Perdana

Apartment

Condominium

Casa Tropicana Bandar Bukit Puchong

Price Range (RM)

COMMERCIAL Type Single Storey Shop 2 ½ Storey Shop 3 Storey Shop

JPPH Selangor Property MArket Report 2013

3 ½ Storey Shop 4 Storey Shop

Name

Average Floor Area (s.m.)

Bandar Bukit Puchong Puchong Getaway Bandar Bukit Puchong Bandar Puchong Utama Bandar Puchong Jaya Bandar Puteri

Price Range (RM)

Average Price Change (%)

2012

2013

108

527,000-545,000

550,000-560,000

3.5

371 108 399 539 676

840,000-1,000,000 380,000-422,000 850,000-900,000 2,000,000 2,250,000-2,500,000

930,000-1,100,000 425,000-500,000 890,000-950,000 2,000,000-2,230,000 2,530,000

8.0 13.8 5.1 5.8 6.5

PRICES OF INDUSTRIAL PROPERTY Type

Name

Average Floor Area (s.m.)

Single Storey Terrace

Taman Industri Puchong Bandar Bukit Puchong Bandar Puchong Jaya Pusat Bandar Puchong Taman Mentari Jaya

1 ½ Storey Terrace

Price Range (RM)

Average Price Change (%)

2012

2013

118

598,000-670,000

670,000-690,000

20.0

371 296 264 253

1,330,000-1,450,000 1,000,000 1,000,000 850,000-880,000

1,450,000-1,650,000 1,250,000-1,300,000 1,200,000 850,000-868,000

8 27.5 17.6 Stable

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JPPH Selangor Property MArket Report 2013

AREA FOCUS

average price change (landed) % 10

9.5

8

9.5 8.0

7.5

6.4

6 4

2.2

2

1.2 single storey low-cost terrace

single storey terrace

1 ½ Storey Terrace

Double Story Terrace

2½ Storey Terrace

Double Storey Semi Detached

Town House

type

average price change (high rise) % 14 12 10

12.5 10.4

8

6.3

6 4

3.3

2 type low cost flat

medium cost flats

apartment

condominium

AGENT’S SAY AGNES ALOYSIUS REAPFIELD GROUP Real Est ate Agent The market in Puchong is vibrant, due to its location and price, but most importantly, the location, is good. Puchong is located at the fringe of Kuala Lumpur and being near to KL, it is a convenient location for people to live and provides a good alternative to city living too. The travel cost to KL is countered by the lower price of property there and that’s what attracts people to invest in Puchong.

Aden Foo GS Realty SDN BHD Looking back, no one wants to live in Puchong, since it was a mining land. But, ever since the government brings in Putrajaya and Cyberjaya, it started to boom. With multiple highways, connectivity is made simple for Puchong. Although most of the developments in Puchong are covered by IOI Properties, a lot of other developers are coming in and one example on that is SP Setia. They are bringing in a niche development called Setia Walk which will enhance the living quality of Puchong. The worrisome factor of Puchong is the traffic congestion, especially along LDP Highway. But, the extension of Ampang Line LRT to Puchong will help in reducing the traffic congestion. www.propertyinsight.com.my SEPTEMBER 2014 39

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LEGAL

Building Residential on Commercial Development Land

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wenty years back, we have familiarised ourselves with residences branded as flat, apartment, condominium, terrace, semi-detached house and bungalow. With the evolution in the world of real estate, the concepts of residences have now developed into new variations among which are SoHo, SoFo, SoVo, SoLo, serviced residences and serviced apartments. The ideas behind these newly introduced models are motivated mostly because these “residences” are built upon commercial

40 SEPTEMBER 2014

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development land. Many may think that commercial land is strictly for commercial purpose only. However, the truth is; commercial land is not restricted for commercial purpose per se and can be used for residential development as well. Prior to HDA Amendment Act 2007 coming into operation on 12 April 2007, the residential properties built on commercial land do not come within the purview of the Housing Development (Control and Licensing) Act 1966 (“HDA”). Thus, Developers are keen into building

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the latter as the sales and purchase agreement does not need to adhere with the prescribed sale and purchase agreement under the HDA which is viewed to offer more protection and/or advantages to the homebuyers rather than the Developers. This explains the birth of these creative home concepts in the real estate sector. Nonetheless, the legislation has acknowledged such loopholes and made amendments to the HDA in 2007 in view to tighten the gap by amending the definition of â&#x20AC;&#x153;housing accommodationâ&#x20AC;? to cover such residential properties. However, the effort of the legislation to protect the homebuyers did not halt the development of residential properties on commercial lands as there is demand still for these sorts of properties. The concern for homebuyers nowadays are more focused on the convenience, connectivity and facilities such as having eateries, shops and public transportation right beneath or within stones throw distance from their place of stay. Not to mention the location for such commercial land is usually more strategic compared to residential land.

On the other hand, has it ever crossed your mind the implications of these residential properties built on commercial development land? Despite the effort of the legislation to regulate such situation, the Developer may present to the authorities that the development it is planning is for commercial usage such as office, SoHo, SoVo and SoFo, despite presenting the development to the homebuyer as fit for residential. As a result, Developer will be selling the units of the development as office to the homebuyer who will then buy and use the unit as a residential space. Do note that the sale and purchase agreement for such property is not as per the prescribed format (under the HDA) and the terms are set by the Developer, which naturally favour the Developer. In such case, the delivery of vacant possession may exceed 36 months period, defect liability period may be lesser than 24 months period, forfeiture of deposit amount upon any default may be much above 10% or 20%, payment of quit rent and assessment may not be from the delivery of vacant possession and the list goes on. The purchaser has minimal bargaining power if he is to buy the property. On another note, for residential property built on the commercial development land, not only the quit rent and assessment are to follow the rate of commercial property but also the water and the electricity bills which further burdens the homebuyers. Meanwhile, while anticipating the implementation of Goods and Services Tax (GST) on 1 April 2015, it is worth to take note that there will be no GST charged on residential properties but the GST

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shall be imposed on commercial properties, ie. SoHo, SoVo, and SoFo are categorised as standard-rated supplies whereby GST will be imposed. Homebuyers will also need to check if the Developer is GST registered if GST is being charged for the progressive payments. Subsequently, when the homebuyer intends to sell the property into the secondary market, he will not be able to sell with GST unless he is a registered person under the GST regime. On the contrary, even though it is stated that GST will not be imposed for residential properties, there is no clear indications that GST will not be charged for labour and material during the construction stage. Rationally, developer will not be willing to absorb the cost for GST and will pass on this burden in the selling price. Thus, in any event the homebuyer still remains the one absorbing the impact of the GST in both residential and commercial development. One may realise that the occupancy in a residential area is lesser than those within a commercial development. This is due to the units of the residential premise in a residential development is measured by the density whereas for commercial property is calculated based on gross floor area (GFA). Hence, in a commercial development, the

Developer may build massive amount of units with smaller floor area per unit as long as it is within the GFA permitted by the local authority and homebuyer may purchase a smaller size unit with an abundance of neighbours. Furtherance to the above, the area for designated parking for each unit may also be added into the floor area of the residential unit on commercial land. Having said that, there are still benefits of connectivity, convenience, infrastructure and/ or facilities that are offered by developers in such development which may balance with the implications and homebuyer should be clear of, and should understand the type of property that they are seeking to purchase.

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 Datoâ&#x20AC;&#x2122; 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 FIABCIâ&#x20AC;&#x2122;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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FINANCE

How to Be Sure if a Property is Worth Investing and Worth Financing?

T

he author of New York Times Bestsellers: Rich Dad Poor Dad, Robert T. Kiyosaki, has challenged and changed the way millions of people around the world think about money. In his series of personal finance books and the CASHFLOW® board game, he has been emphasising the importance of cash flow in all types of investment, particularly real estate investments and businesses. However, none of his books or the CASHFLOW® board game explicitly teaches people how to calculate cash flow of an investment, especially when options of finance or loans are involved. He probably skipped the part of calculation in order to keep the contents of his books and the board game easy to understand. Simplicity normally sells better. In real investments, the missing part of Robert’s work is as imperative as knowing the importance of cash flow in investment itself.

What is the most important calculation in an investment evaluation?

Many individual investors let good opportunities slip through their fingers without knowing it, mainly because they fail to identify if an investment is generating enough cash flow or not. This happens commonly in real estate investments as most of them involve finance. Moreover, calculation of cash flow becomes more sophisticated when there is a loan involved in an investment. How is the real return if you borrow a lot of money to finance your property purchase? Will the return rate go up if you fork out more money out of your own pocket? How about paying 100% cash? How will the actual return be affected? These are some of the questions novice investors just cannot answer. Many individual investors are also not aware that their existing investments are not properly

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leveraged for the maximum return. Unlike institutional investors who have a professional team to perform the computation, most individual investors do not know how to calculate return on their financed investments. You want to know exactly how much return you will get according to different financing scenario. But how do you do that? The answer is that if you want to evaluate a property investment and maximise the return, you need to calculate based on at least two different scenarios: • Scenario 1 - Use the highest leverage or in other words, maximum financing possible (70%-100% financing). • Scenario 2 - Use low leverage or no financing (pay 100% cash or up to 20% financing) Then you calculate the cash-on-cash yield. These different scenarios produce different yield. That difference in yield show you a graph shape. You can use an Excel spreadsheet to deal with this. Put in the formula, input the variables and voila! You can plot a graph showing you the yield trend instantly.

Methodology Explained with Sample Calculations

Let’s put this method of evaluation in numbers so you can understand it better. Here is the scenario: • • • • • • •

Property Name: One Damansara Condominium Asking Price: RM405,000 Legal & Brokerage fee estimated: RM18,225 Monthly Maintenance Cost: RM180/month Furnishing Cost: RM10,000 Mortgage interest: 4.3% per annum Loan tenure: 30 years

Let’s do some calculations to see if this property is worth investing, with the objective to rent out the place for a steady monthly income. • Scenario 1: 90% LTV, installment RM1803.81/month, rental - RM1,200/month The cash you need to fork out for this investment includes: • • • • •

10% down payment = RM40,500 Legal and brokerage fee = RM18,225 Furnishing cost = RM10,000 Total cash capital = RM68,725 Monthly cash flow = rental income (installment and maintenance) = RM1,200 - (RM1,803.81 + RM180) = (RM783.81) This shows a negative cash flow. Since it is sucking money out of your pocket every month, it is not worth investing. • Scenario 2: 90% LTV, installment RM1,803.81/month, rental - RM2,200/month In this scenario, let’s assume that you manage to find a tenant who are willing to pay RM2,200/month. Your total cash capital is still the same as Scenario 1, RM68,725. But you will generate a positive cash flow now. • Monthly cash flow = RM2,200 - (RM1,803.81 + RM180) = RM216.19 Cash-on-cash yield or return on cash investment is the annual cash return in percentage of total cash capital invested. It is computed by dividing total monthly cash flow of a year by the total cash capital.

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investment that we are looking for – an investment that’s worth investing. For a real estate investment, the actual return should be better than indicated by cash-on-cash yield. Each month, the mortgage loan repayment comprises of two portions: principal and interest. The loan is being paid down by principal payment, although the paid principal is not spendable (it is like money in the bank when investor sells the property). • Scenario 3: 30% LTV, installment - RM601.27/ month, rental - RM2200/month Let’s calculate the Cash-on-cash yield: • Cash-on-cash yield = RM216.19 x 12 / RM68,725 = 3.8% Now this property will be worth investing because it is generating income every month. The return is even higher than putting the money in Fixed Deposit.

What’s Considered Worth Investing? A real estate investment that generates monthly cash flow effectively puts money into our pocket every month, while equity in the real estate investment increases and the value of the real estate appreciates. This is the real estate

This case is similar to Scenario, but this time you just borrow 30% loan and not the maximum of 90%. So, the total cash capital increases because you need to pay 70% of the property value with your own money. • Total cash capital = RM311,725. • Total monthly cash flow = RM1,418.73 • Cash-on-cash yield = 5.5% If you were to compare the yield to Scenario 2, it is higher here. This means the less you borrow, the higher yield you get. Although this property is providing RM2,200 of rental income monthly and appears to be worth investing, it is not worth financing. The more you finance, the lower the return you get.

Here is the table showing the result of all the relevant calculation: LTV

Cash-on-cash Yield

Pay cash

6.15%

10%

6.17%

20%

6.20%

30%

6.23%

40%

6.28%

50%

6.33%

60%

6.42%

70%

6.55%

80%

6.77%

90%

7.27%

100%

9.17%

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Now, let’s look at Scenario 4, which is the most exciting part. Everything stay the same, but the rental income increases to RM2,400/month. • Scenario 4: Rental - RM2,400/month Using the same calculation method as above, we found that when you finance 30%, the COC Yield is 6.23%. But when you finance 90%, the COC Yield is 7.27%. If you manage to finance 100%, the COC Yield is even higher at 9.17%

What’s Considered Worth Financing?

In Scenario 4, you can see that the more you borrow to buy this property, the higher yield you are getting from the deal! This example shows that the property is not only worth investing, it is also worth to finance the investment. The more money you borrow for this investment, the better return you get! If you can spot this kind of property, it is better to keep the cash to yourself and borrow as much as you can.

Most knowledgeable investors, large or small, experienced or beginners, rely on this type of system to determine if a property meets their investment requirements. It also serves as a convenient way to analyse various ways of purchasing the same property and choosing the best one. It gives investors an easy way to compare several properties, using the same formula on each of them. The problem is that, you really need to do a lot of calculations and many people just don’t really know how to make the best use of Excel spreadsheet. Therefore, there is a great need for a tool such as GoFinanceTM that helps individual investors to make these computations easy. That’s why we created this methodology and called it GoFinanceTM to serve this purpose. Now we have shown you the methodology behind how these calculation work and the logic behind the calculations. You can take out your computer and build this tool for yourself too. Remember this numbers don’t lie!

About the Contributor KCLau is a serious financial educator. He had published 6 books and co-created a dozen online financial courses. Dr. Ong Kian Leong is the master trainer of Property Method and a property blogger. Both KCLau and Dr Ong are the co-founders of the first ever online property investment course for Malaysians, www.PropertyMethod.com.

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FINANCE

THE UNFORGOTTEN MORTGAGES

I

How do you manage the home loans of the departed? Property Insight asks the experts. f there’s anything in this world that we can’t control, it would be our passing. Our departure from this life is inevitable and as opposed to its meaning, death is ironically part of life. When a death of a person occurs, he’ll not only leave behind his legacy and loved ones, but his assets and loans too. So, for the living, what do you do with the home loans of the deceased? In light of the recent unfortunate MH370 case, the plight of the family members of the passengers was highlighted in the media. They were reported to be unsure on the ways to deal with their loved ones’ home loans. Some even claimed that the banks began to enquire them on the follow up payments. Similar outcome may be faced by the family members of MH17 passengers. But are you obliged to pay your deceased family member’s home loan? Partner at Raja Eleena Siew Ang & Associates Ash Ang Saik Hoon tells Property

Insight, “Family members are not liable to repay or be responsible to service the loan of a deceased borrower. Only the estate of the deceased will be liable and if the estate has insufficient funds to service the loan instalments or repay or redeem the loan, then the consequence is that the property will be foreclosed by the bank. The family members are under NO legal obligation to continue paying the loan except that if they don’t, they will lose the property if the bank forecloses the property which may be their home. The bank has no rights whatsoever to claim any payments from the family members unless they are joint borrowers with the deceased or they are appointed as the executor or the administrator of the estate of the deceased. Even as an administrator or executor, the liability is not personal, the payments will be from the estate of the deceased.

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“Based on my experience dealing with a lot of banks, death is normally an event of default. Where death has occurred (or in case of MH 370, where a presumption of death has occurred), the bank has the right to recall the loan but if someone steps up to service the loan, then, even though an event of default has occurred (by virtue of the death of the borrower), the bank may not trigger a default if someone continues to service the loan. Therefore, where banks ‘chase’ the family members as in the case of the family members of the MH370 tragedy, what the bank may be trying to do is probably to discuss with the family members to find a solution to the problem,” Ash explains. Affected family members can also appeal to the bank based on goodwill, for a grace period of six months to a year to suspend the payment and to give them a chance to sort out the estate issues. In the case where the deceased died intestate (i.e without a will), the family members can apply to Court for the Letters of Administration to administer the estate of the deceased or if the deceased died with a will, to apply to Court for a Grant of Probate. Once the Grant of Probate or Letters of Administration are granted by the Court, the executor or the administrator of the estate can then gather all the assets of the deceased, which will include the property mortgaged to the bank and other assets, if any, like his savings, cars or funds in his Employee Provident Fund, insurance proceeds or other assets, dispose the same and utilise the proceeds to pay the mortgage to the banks. If the deceased borrower has no other assets or monies in his estate and the family members can’t continue to service the payment, the bank has the right to foreclosure and dispose off the property to recover the outstanding loan. If there is a guarantor involved, the Bank can also sue the guarantor simultaneously to recover the loan if the proceeds of the sale are insufficient to repay the loan.

Head of Secured Lending at OCBC Bank (Malaysia) Berhad Thoo Mee Ling

FinanceDeceased.indd 3

Partner at Raja Eleena Siew Ang & Associates, Ash Ang Saik Hoon

Accordingly if any family member is a guarantor, he may then become personally liable to pay the loan as a guarantor. To avoid delays in the administration of a deceased’s estate, Ash highly recommends that a will be drawn up by an individual as a form of his final say as it gives the testator the power to appoint a trusted person after his passing, the right to manage his estate to inter alia settle his liabilities and to distribute the balance of his estate, if any, according to his wishes. According to the Head of Secured Lending at OCBC Bank (Malaysia) Berhad Thoo Mee Ling, if there’s no joint borrower in the loan agreement, the loan status will be ‘downgraded’ to non-performing and the next-of-kin may become the administrator of the estate. She says that if the loan is a joint loan, the surviving borrower has to notify the bank by completing the bank’s ‘Deceased Customer Notification’ form and attaching a copy of the death certificate. “The bank will check if the loan is covered under any mortgage insurance. If it is, then the bank will liaise with the insurer to cover the loan. If the borrower dies intestate, the bank will liaise with the next of kin who contacts the bank and advise them to appoint an administrator for the deceased estates, without disclosing any details of the loan,” she clarifies. “In the event where the customer’s account became non-performing before the bank is being notified of the death, the standard reminders will continue to be sent to the customer. This is why it is advisable for the next-of-kin to alert the bank,” Mee Ling adds. Mee Ling says the bank may send debt collectors to meet the next-of-kin if he or she is the joint borrower of the deceased or if the person has been appointed as the Administrator of the estate. “The customer’s family members may request the bank’s debt collector to show any relevant authorisation

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and supporting documents to prove they are representing the bank,” she declares. Ideally, for any financial institutions, managing the debt of their deceased customers must be done with utmost care to respect the grieving families. This is to ensure that the process will run as smooth as possible. But there’s still a possibility for problems to arise. Mee Ling says banks at times do face an issue where the next-of-kin refuses to apply for a Grant of Probate (to become the administrators of the estate), or when the next-of-kin chooses to continue paying the monthly repayment on the deceased customer’s behalf leaving a small outstanding loan balance. “Here the bank is unable to foreclose the property due to the small balance accounts. Technically, once the bank has confirmed that the customer is deceased, the loan will be automatically downgraded to nonperforming status. Here, the bank would advise the next-of-kin to apply to become the administrator of the estate in order for them to ‘redeem’ the property from the Bank,” Mee Ling says. To protect the next-of-kin from any liability, subscribing to an insurance covering the mortgage is highly recommended. “We recommend mortgage insurance in the form of Mortgage

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Reducing Term Assurance (MRTA) and Mortgage Level Term Assurance (MLTA) to our home loan customers. Customers may also opt for Mortgage Reducing Term Takaful (MRTT) under the Islamic financing package. The mortgage insurance is a term life insurance that provides a lump sum to pay off your mortgage in case of unexpected death. So, it is always prudent to be prepared for wherever life may take us,” she reckons. A mortgage insurance can greatly help a family to avoid their home from being repossessed, especially if the house is still under the loan obligation and is purchased under the deceased’s name. In fact, getting mortgage insurance should always be a serious consideration to a home loan borrower, especially for households with sole bread winners. “This is significant as, in the event of the untimely death of a home loan borrower, the greatest problem facing the surviving households is their inability to pay off the remaining home loan. We have encountered numerous instances where the surviving family members resorted to selling off their property at less-than-competitive prices in order to pay off the outstanding amount. By taking up mortgage insurance, surviving family members will not be left with such a ‘sudden’ burden as it covers part or the entire unpaid portion of a home loan,” Mee Ling says in the end.

Did you know?

Any individual can write his own will, at his own convenience, as long as he is an adult of sound mind and there are two adult witnesses present to attest his will provided the witnesses are not the beneficiaries in the will.

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SAFE

Plan a safe exit of your investment even after your passing so your loved ones and assets can be protected

I

n the financial services industry, people sometimes joke about the two certainties in life that we cannot run away from. The first thing is of course, the taxes and second on the list would be death. Given these uncertainties, it is wise to be wary of any potential risks that could face your investment in real estate.

What do you check before you invest?

A property investor will not only look at the location alone in making their investment decisions. They will need to consider how much of a down payment they need to fork out, which bank can offer them the most attractive package, the property price and its potential rental yield, among others. These factors if

considered properly will enhance the returns of the investment. Many a time, despite considering all the other factors, people still do overlook their exit strategy in an investment. This lack of clear and concrete exit plan can be extremely dangerous especially when the unforeseeable event takes place, such as death. When one person passes away, any assets that are registered under the deceased name will be â&#x20AC;&#x2DC;frozenâ&#x20AC;&#x2122;. This includes money in bank accounts, investment money in mutual funds, stock markets; the scope of frozen asset is not exhaustive and extended well to cover immovable assets such as motor vehicles, properties and others. Basically, when our assets are frozen, we are denied the right to transact on the

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assets, hence making it impossible to sell or exit our holdings. As such, we have the Distribution Act 1958 to govern how to distribute the deceased assets. Distribution Act 1958 is applicable when a person passes away without leaving behind a will. A will is a document made in accordance with the law, and has legal effect only after the demise of the will’s maker. Simply put, with a Will, we can decide how to distribute our assets after our passing. Without a will, the distribution of our estate will be made by following the provisions set under Distribution Act 1958.

There is Already an Exit Plan for You

Actually there is already an exit plan for everyone. It is either we adopt the exit plan outlined by government namely Distribution Act 1958, or use our own exit strategy through a Will. Some may ask, ‘what are the advantages of not using the Distribution Act 1958 route?’. Well, there are many. When someone dies without leaving a will, it is called intestacy. In order to release the frozen assets, we need to obtain distribution order. There

are basically two main routes, that is the High Court route or the non-High Court route. If the deceased has estate with a gross value of less than RM 600,000 (wholly moveable such as cash, stocks etc), the beneficiary can apply for Distribution Order (DO) under the Public Trust Corporation Act 1995 by going through public trust such as Amanah Raya Berhad (ARB). This is also applicable even for Testacy (dies with a will). If the deceased estate consists of gross value of RM 2,000,000 (combination of moveable and immoveable assets

Table 1.0: Distribution according to Distribution Act 1958 (Amended 1997). Intestate with Surviving

Entitlement

Spouse only - no Parent(s), no Issue(s)

Spouse only - whole estate

Parent(s)+Spouse, no Issue(s)

Parent(s) : 1/2 Spouse : 1/2

Issue(s) only - no Spouse, no Parent(s)

Issue(s) only - whole estate

Parent(s) only - no Spouse/ no Issue(s)

Parent(s) only - whole estate

Spouse + Issue(s), no Parent(s) Parent(s) + Issue (s), no Spouse

Spouse : 1/3 Issue(s) : 2/3 Parent(s) : 1/3 Issue(s) : 2/3 Parent(s) : 1/4

Parent(s) + Spouse + Issue(s)

Spouse

: 1/4

Issue(s)

: 1/2

Brothers and Sisters in equal shares Grandparents in equal shares Uncles and Aunts in equal shares If no Parent(s), Spouse, or Issue(s)

Great grandparents in equal shares Great grand uncles and aunts in equal shares Government *[In descending order of priority]

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such as property), the beneficiary can go to District Land Administrator, and this is the provision under Small Estate Distribution Act 1955. District Land Administrator provisions are only applicable for intestacy. When the gross estate values exceed the provision given by the two acts above, the alternative is to go through High Court, where the beneficiary will have to apply for the Letter of Administration (LA). The court will appoint among the beneficiaries to be the estate administrator and granted the LA to the estate administrator. Before the LA is granted, the estate administrator must obtain two sureties who have assets worth the equivalent of the estateâ&#x20AC;&#x2122;s value. For instance,

if the estateâ&#x20AC;&#x2122;s size is RM 2,500,000, then the administrator will have to look for two persons who have a combined assetâ&#x20AC;&#x2122;s values of RM 2,500,000 to become the guarantor. Most of the time, this represents a huge challenge as no one in their right mind would agree to become a surety. However, take note that we can also apply to the High Court to waive this requirement, at the expense of time, and more paper work. As soon as DO or LA have been granted, the administrator will be able to distribute according to Distribution Act 1958. The whole process could take from a year to two years, depending on circumstances. Can you imagine how your family and loved one who are dependent on your income can get through this two-year period when all your assets are frozen.

The Easier Route

When someone passes away and leave behind a will, the executor of the Will has to apply to the High Court for Grant of Probate (GP). When probate is granted to the executor, the executor can then distribute the estate according to the instructions outlined in the will. Therefore distribution follows the intention of the deceased instead of following the one-size-fitall distribution act 1958. Clearly, testacy has an easier route than intestacy. The whole process

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could take only six months to a year depending on circumstances. Apart from saving time, it also allows us to dictate who should inherit which assets we have and also avoid disputes amongst our loved ones.

My Experience

Mr. Tan has a father, wife and a son who is 8 year old. He also owns a house under his name. When Mr. Tan dies of an illness one day, he has no Will so his ownership of the house is distributed according to the provisions in Distribution Act 1958. The wife inherits ¼, his father ¼ and the son would stand to inherit ½ of the assets. As soon as the father inherited the share of ownership, he passed away leaving no children or spouse but only two siblings who are in their 70s. The ¼ ownership of the house will now be inherited by these two uncles of Mr. Tan. Now the house is owned by Mrs. Tan (¼); Son (½); and Uncles (¼). If this happens, how can Mrs. Tan sell the property? Does Mr. Tan really intend to allow the uncles to become part-owner of the

house? If the uncles shall one day die, does Mr. Tan want his cousins to become new part-owner? All these complications could have been avoided should Mr. Tan have had a Will in place. In short, a Will allows us to enjoy the following benefits: • • • •

Appoint our own executor; Appoint the trustee; Appoint the guardian of our children; Protect your assets and preserved it for your loved ones; • Maximise estate values by minimising leakages and costs; • Save time from long legal procedures and disputes; • Get to decide how to distribute our assets. When you engage a professional financial planner to help you construct your estate plan, you will also be guided on how to create a comprehensive and holistic estate plan that will cater and address your concerns.

About the Contributor Kevin K.M. Neoh RFP, MBA is a Licensed Financial Planner who is licensed by the Securities Commissions Malaysia and Bank Negara Malaysia. He believes that families of all income levels should have access to professional financial planning assistance and that the financial world is too complex to shoulder alone. He actively seeks to assist people on the street to live a financially confident life. He is a financial planner at VKA Wealth Planners Sdn. Bhd. Kevin can be contacted at kevinneoh@vka.com.my.

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WHAT’S HOT AND WHAT’S NOT Khai Yin shares with Property Insight’s readers the 101 of prospecting an area.

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lot of property talks and seminars often offer nothing more than anecdotes about “upcoming hot property areas”. You can in fact do the prospecting for an area rather accurately – simply by running a set of simple numbers. In fact, you can be assured that most savvy investors are more analytical in their approach. They do not completely “rely on (their) gut” as much as regular folks would think they do. I’ve asked my mentor over last weekend’s tea and scones session at his sprawling estate in Nilai about his opinion on the subject of “gut vs numbers”, and his answer was simple. “Trust your intuition, but make sure the numbers add up,” he said. I was thinking of writing a short guide on prospecting an area when this email came in from my website’s regular reader – “Khai Yin, Good talking to you again.

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I’ve since shifted my strategy now to look at locations outside KL – because prices in the city are just too high now. But… how will I know if an area is gonna be hot? It’s just too much of a gamble. Now I’ve seen big time developers going outside the city (like Tropicana in Kajang and Mah Sing in Rawang), but for the small time buyer like me is there anything I can do to “forecast” if an area is gonna pay off in the long run? Christopher”


STRATEGY

arranged from possibly the strongest to the weakest:• • • • •

Growth in population. Adjacency factors. Availability of jobs. Income levels. Ease of doing business.

This list may not be exhaustive, but is sufficient for those who want a “screener” of sorts to quickly identify good areas to invest in. Now let’s go through these factors one by one.

STEP #1: CHECK POPULATION GROWTH I get more than 30 emails per day from my readers on a variety of questions and one of the top questions I received is, “how hot is this area?”

THE FUNDAMENTALS OF AREA PROSPECTING Remember that prices of properties, like everything else, are a function of supply and demand. When demand exceeds supply, prices go up. Obviously, the reverse is also true. And so, to figure if a place will be “hot” – and assuming that “hot” here means that prices go up – then you’ll only need to look at the drivers of supply and demand. You will therefore want to invest in places where supply lags demand, which then pushes up prices and rent levels. If you know the elementary techniques of property valuation (if you need a guide, download a freebie for Property Insight readers here – http://goodplace.my/blog/pi/), you will be able to ballpark the increase in prices of property in a particular area. Also, the steps outlined in this short guide are relevant whether you are investing for the long term, or if you have the intention to flip. Now let’s first look at the drivers of demand. The following are some macro factors that drive demand,

Identify if the population in your area is growing or declining. Are more people moving in or out of the area? Especially in the case of “fringe” townships in the Klang Valley, it’s good to check where the heaviest growth is, and the possible reasons, too. For example, Cyberjaya was (is?) growing because of multinationals setting up IT shops and the blossoming of colleges which attract local and international students into the area. Also, be wary of “dying” townships, too. In the US, for example, I’ve seen a 2,400+ sq ft landed property being advertised for sale for $1 (yes, one buck). Don’t believe me? Go to Trulia.com and search for properties in Detroit, Michigan. The property I mentioned above was on Saint Clair Street in Detroit. The city’s population has fallen from 1.9 million in the 1950’s to merely 700,000 in 2012, and the declining trend is set to continue. By looking at the number of people moving into and out of an area, you will get an idea of how “hot” (or not) an area is.

STEP #2: ADJACENCY FACTORS Often, when an area is “bursting at its seams” the adjacent areas will get the (positive) spillover effect. You can easily identify upcoming (adjacent) areas by looking at the evidence that the area is reaching its limit:-

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GOODPLACE PROSPECTING CHECKLIST BASED ON SECTOR SECTOR

• • •

DESCRIPTION

EXAMPLES

GOVERNMENT

Centres of government which draws in tax Ringgit throughout the country. Also, government led initiatives and growth corridors.

Putrajaya, Cyberjaya, to some extent, Iskandar.

TOURISM

Travel and tourism hotspots are almost a good bet. Look for new travel destinations.

Certain areas in Melaka and Penang.

MANUFACTURING

Increase in manufacturing activity (or FDI) usually correlates to property price growth.

Penang

EDUCATION

Look out for new education hubs; colleges, universities AND international schools.

Cyberjaya, and certain areas in Petaling Jaya (Subang Jaya, for example).

RETAIL

Large shopping malls and warehouses.

IOI Resort City and its surrounding areas (with the impending IOI City Mall)

Are there traffic jam problems? Are the prices or rental rates going (shooting!) upwards? Is there a perception that “land is running out” in this area?

Emerging adjacent areas often attract people who want to avoid the escalating prices in the “main” area as well as worsening living conditions resulting from rapid growth. An example would be the “North Kiara” as well as the rest of the Segambut area which is adjacent to Mont Kiara. As a quick exercise, do a shortlist of areas which are experiencing rapid growth for the past 24 months, and map out the adjacent areas which may get the spillover.

STEP #3: ARE JOBS AVAILABLE? As the ‘fringe’ townships begin to grow in the Klang Valley (think Puchong South, Cyberjaya, Putrajaya,

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Nilai, Equine Park, Seri Pajam, Rawang, Kajang) we expect that jobs will be more “localised”. This means that workers will have stronger preferences for jobs which are near (within 30 minutes) from where they live. Traveling to downtown Kuala Lumpur to work may not be feasible anymore especially when you are in the aforementioned fringe areas. It took me two full hours to reach Pusat Bandar Damansara for a meeting from SetiaWalk last week; to say that the traffic was horrendous would be an understatement. I could never bring myself to spend hours on the road each day to commute to work, and this means that I will always choose to live near where my office is (in this case, the HackerHub in central Puchong). And with more “self-contained” townships in development (as well as integrated developments such as Solaris Dutamas in Mont Kiara) we expect people to want to stay off the roads as much as possible. This means that they will want to live near where they work. For an upcoming area, there must be employers that bring the money flow INTO the area. My Mentor has got a handy checklist that he uses when he assesses the economic prospects of a new area which you can also use above.


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As such, an area’s “friendliness” to business could make or break its long-term prospects. No city (or, to a larger extent, country) can increase its wealth unless it enables the entrepreneur to freely innovate and grow.

TO SUMMARISE…

STEP #4: CHECK INCOME LEVELS Income levels are obviously related to availability of jobs, and in a broader sense, the primary sector which drives the local economy. For example, if you are considering a condominium in Cyberjaya next to a cluster of colleges then you’ll most probably be renting out to students. On the other hand, if you’re buying a Mont Kiara or KLCC apartment unit then your return on investment will be largely determined by the expatriate sector. Cyberjaya used to attract technology companies looking for employees who want to live in an area with a relatively lower cost of living (compared to central Kuala Lumpur). Now with the escalating property prices in Cyberjaya it no longer offers cost advantages, which means that there will be a few “adjacent” hot spots for high tech in the future. Where will these be? Your guess is as good as mine.

Analysing “technicalities” like population growth and income levels may be boring to some, but unless the buyer does some simple due diligence like this he or she is just gambling with money. You may have had success without doing the homework, but you might not get that lucky the next time. Trust me, I am speaking from experience. The Malaysian property market is predictably cyclical, and it’s possible to somewhat “predict” its direction by looking at the demand and supply. Be on top of the market by tracking the LEADING demand and supply indicators (and not make the rookie mistake of looking into past trends), and you’ll be at a better place than most property investors. I have a simple framework which anyone can use to estimate the SUPPLY side of the equation in a simple Excel spreadsheet. I can share the template with Property Insight readers for free - just email me at khaiyin@goodplace.my.

STEP #5: IS IT EASY TO DO BUSINESS? “Brain drain” does not only happen on a national level. Cities or towns suffer from economic decline because entrepreneurial individuals leave to look for places which are conducive for business. I would stay away from investing in areas outside the major economic centres (Klang Valley, Penang and Iskandar) simply because young people are moving into the cities, not out. For an area to prosper, the entrepreneur’s drive to create and capitalise on opportunities is as essential as the presence of a qualified workforce in the area.

About the Contributor Khai Yin is the founder of the KLCC Condominiums Database which you can visit at http:// klcccondominiums.com.my/ . Property Insight readers can download a free copy of the “How To Value A Property” digital report at http:// goodplace.my/blog/pi/

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THE ORIENTAL PEARL OF PENANG Once abandoned, a stretch of shop lots built in the 1880s is now a vibrant, classic Chinese-style hotel. Zuhaila Sedek-De Booij pays a visit to 1881 Chongtian Cultural Hotel to witness its beauty.

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here’s something about 1881 ChongTian Cultural Hotel that is so invigorating but yet is very comforting to the eye. My perspective turns black and white and the atmosphere seems to bring myself back to the time when you would see a lady dressed in a traditional Qipao (Cheongsam) walking graciously with a flowery handkerchief in her hand. That’s exactly the sentiment I had after setting foot in the hotel. Located at Jalan Pintal Tali in Georgetown, Penang, 1881 ChongTian Cultural Hotel champions the beauty and richness of Chinese culture through its design concept. Its owner Seah Kok Heng says it has always been his dream to have a hotel as such. He shares the background story of the property. According to him, the original building was built in the 1880s as a hotel for merchants and tradesmen. The status of the hotel was high end at that point of time. But towards the next few decades this image

faded and eventually in the 80s, the hotel, famed for its well-known visitors, had to shut its door. It was abandoned for many years until one day Seah laid eyes on the lots and saw the potential that beams from the location of the property. “I’ve always wanted to start an area similar to a Chinatown where the community gets to relish upon the many colours of Chinese culture. One of the functions of the hotel is to bring people together in realising

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FEATURED PROPERTY

THE FACELIFT

Before

After restoration

this dream,” Seah says adding that his hotel is the first Chinese cultural hotel in the country. Ever since 1881 ChongTian Cultural Hotel took shape, the Jalan Pintal Tali has been attracting more visitors making the area livelier. Previously, the stretch had a lot of storage units but now more vendors are opening their businesses there. Seah had witness the popularity of the area himself when he organised the biggest Chinese cultural event called Heritage Day Event in July where thousands of people thronged the area. The event was a collaboration with the Penang Chinese Clan Council From an investor’s point of view, Seah thinks that the hotel is a great investment as it has excellent return of investment. “From my observation, the appreciation of the property in this street will increase at least five time withing five to 10 years’ time,” he explains. The heritage element of the hotel further adds value to the property hence the high appreciation rate. “This area has benefited a lot from the presence of the hotel and I hope it will continue to bring the community together,” Seah feels.

1881 Chongtian Cultural Hotel owner, Seah Kok Heng

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Comprising of three linked heritage buildings, Seah started the hotel in November, 2011. The property was acquired at an approximate RM2million but the restoration works cost Seah about RM10million to be completed. Given that the property is a heritage building, Seah is obligated to retain the original look of the building. “The property was in such a bad shape. It was full of wild plants and was truly dilapidated,” Seah says while showing me a photo of the property at that time. The transformation is indeed remarkable. “This property is the only three-storey connected heritage shop lots with a strong Cantonese façade, which you can see from the design of the entrance door and the window panels. Visitors, who stood in front of the doorstep, will be greeted by a sign with Chinese characters that if translated into English says “whatever you have in Europe, you can find it here too”. The sign originated from one of the businessmen from the olden days, Seah tells.

GOOD QI

Atop the window panels are butterfly-shaped air vents. In the Chinese culture, butterflies symbolise transition, resurgence and celebration. The design of the entrance is very traditional and inviting and the large doors, allow good ventilation. In the interior of the hotel, wood panels which Seah collected from other heritage properties are fitted at the front office and the concierge. The animal and floral motifs of the panels, painted in gold, give these panels a whole new look. Another oriental feature of the hotel is the moongate entrance. A moongate entrance has many meanings, but the basic idea is to create an inviting entry and exit point. According to Seah it is a sign of wealth too. “It’s a must-have design for rich Chinese homes in the old days,” says Seah. There’s a golden moongate decorating a section of the hotel where it fronts a water fountain. “The water flow symbolises good flow of wealth, happiness and well-being. Hopefully, it’ll bring good luck and wealth to our guests too,” wishes Seah. A classic Chinese interior style can be seen at the water feature through the broken pottery used to design this fountain. Complementing the water feature is the bamboo and gold fish in the pond – two elements in Feng Shui study believed to attract good health, wealth and happiness. Perhaps, another striking feature of the hotel is the courtyard – a regular feature for old Chinese homes. Based on the Chinese culture, a courtyard has the ‘power’ to increase the flow of Qi in a building as it


FEATURED PROPERTY

provides a tunnel for the rain water to flow in. With minimal plants filling up the space, the courtyard offers not only fresh air but a sense of tranquillity too. Surrounding the courtyard are walls painted in deep blue shade and on one side of the walls, Seah hung gold carvings of mythical animals – a phoenix and a dragon which are a symbol of power and auspiciousness. Next to the courtyard is the hotel’s Chinese restaurant where diners get to feast in a calm and peaceful surrounding.

THE ROOMS Bringing forth the idea of exclusivity, 1881 ChongTian Cultural Hotel offers only 11 suites. The suites are named as Chan Khoo, Chua, Ong, Yeoh, Tan, Koay, Ooi, Lee, Lim and Loh, after famous Chinese families in Penang. The presidential suite is called Seah, after the hotel’s owner. The vibrant colours of the suites – green, orange, red, blue – worked really well to ignite excitement for the guests. The Seah Suite for example, is painted bright green and is tastefully decorated with Chinese wall decorations. The living hall is spacious which in Chinese tradition symbolises wealth and class. “But more often than not, when the hall is big, the toilet is usually very small,” Seah quips. Unlike Seah Suite, the Chan Khoo Suite has a smaller hall and a bigger outdoor bathroom equipped with a jacuzzi with gold taps. The design is really an embodiment of classic regal look. The grey floor tiles blend well with the white ceiling and more bamboo plants are placed in a corner. The Lim Suite comes with two beds, one of which is an antique wedding bed. Flowy orange string curtains separate the beds and it is as if a bride is sitting there, waiting for her groom to arrive. Meanwhile, the Yeoh Suite uses wooden door partitions for the bed post. Lanterns are hung on the ceiling and the use of big mirrors gives the impression of expanded floor area.

ANTIQUES HAVEN Amplifying the classic Chinese décor is the antiques that can be seen in every nook and corner – thanks to Seah’s interest in collecting antiques. All the antiques at the hotel, which worth millions,are from Seah’s own collection and are utilised to decorate the suites and hotel spaces. There is a designated museum located on level two of the hotel that was created specifically to house Seah’s other precious antiques collection. This collection comprises of antiques aging back to centuries ago, for example the porcelain vases that dated back from the Ming Dynasty, an antique opium pot and a 300-year-old Emperor’s ink plate. The concept, the story of the building as well as the décor of 1881 ChongTian Cultural Hotel make it a must-visit spot in Penang. The hotel has received a few accolades namely the Certificate of Excellence by TripAdvisor (2014) and AsiaRooms’ Most Cultural Award in (2013). The hotel is now on its way to win the World’s Luxury Hotel Award that is set to take place next year. The award is based on client’s voting. There is this wonderful feeling floating in the hotel that proves the presence of good Qi in the ambiance. “The hotel is more than just a business. It acts as a centre to bring the Chinese community together and to celebrate the many factions of the Chinese culture, which should be preserved,” Seah says in the end.

FOR DETAILS VISIT WWW.1881CHONGTIAN.COM OR EMAIL INFO@1881CHONGTIAN.COM

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ISSUE

SOLUTIONS TO AFFORDABLE HOUSING

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ousing affordability in Malaysia has been a focus for the past few years as property prices in the city continue to grow on a year-to-year basis. Based on the country’s Housing Department, ‘Affordable Housing’ is deemed as housing that is affordable to an average household income person. A reasonably acceptable affordable housing should meet the minimum standard of quality living and the location should not be too far from a city hub where it does not cost too much for the household to travel to and from their workplace. In

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Malaysia, our affordable housing on an average, is 20km away from the city hub and this can be costly for the middle to lower incomers to travel, especially when there’s a lack of infrastructure for public transportation.

Understanding Home Affordability

Commonly accepted guidelines for housing affordability is a housing cost that does not exceed 30% of a household’s gross income. The rule of thumb is; if the monthly costs of a home exceed 30–35% of their household income, then the housing

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is considered unaffordable for that household. Based on the statistic announced in 2012, median income groupâ&#x20AC;&#x2122;s income is ranged between RM4,900 to RM5,000 per month. By using backwards calculation, each individual aged between 2832 should be able pay for a housing repayment of RM1,500 per month for a RM250,000 loan within 25 years. This figure concludes that the affordability of each individual includes property valuing at RM300,000. If a married couple with each contributing RM1,500 to service their housing installment via joint purchase, the household affordability for housing in Kuala Lumpur should range between RM550,000 to RM650,000 per property. That is why there are a lot of new launches of property priced between RM550,000 to RM650,000 in location such as Wangsa Maju, Setapak, Ampang, Cheras and Kepong have been snapped up by the public because these properties are perceived as affordable. It is absolutely not realistic to see property developers continue to build at the same range to cater for the demand as the annual income growth rate was reported to be at an average of 7.2% from year 2009 to year 2012 while property prices in the

urban area was growing at an average rate of 10%20% according to Market Property Report 2013. As a result, property price growth rate has surpassed the income growth rate in Malaysia.

Creating Micro Living

The property developers, especially those in Kuala Lumpur, need to find solution to the escalating land price that eventually affects affordability. They have to think of brilliant ideas to create practical homes for city folks. Of late, micro housing is viewed as a

Figure 1 : Mean Household Income by Strata, Malaysia 2009 & 2012

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good choice to cope with the problem and is seen as the future for Malaysia, with reference to major cities like Hong Kong and Tokyo. But how small should a home be without compromising comfort? A minimum of 108sq ft per person in a household is “probably ideal” or 320 sq ft should be “adequate” for a sole occupant, taking into consideration the provision for a kitchen somewhere and communal spaces. With that regard, designers and architects have to come out with the innovation in ‘cutting edge’ design. Downsizing to more affordable spaces makes financial sense these days, and is more environmentally responsible. When we quote ‘environmentally responsible’, it means we are reducing carbon footprint by minimizing the use of building material. Micro-living is a present model for city living because of factors such as limited water resources,

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deforestation, food shortages - all of which are challenges the society faces today due to climate change. Such a concept involves building in smaller built-up sizes and producing smart designs to cope with the scarcity of land spaces. According to a World Bank research, two-thirds of the world’s population will be living in cities by year 2050. If more developers are building vertically, then we have to find new ways to increase the density inside the buildings. This is possible by finding an effective design. There are more people deciding to stay single and at the same time, a lot more married couples are heading for divorce. When they get divorced, they will buy another smaller home and this is one of the reasons why more city folks are going for smaller homes. Design of micro homes is not limited to only the play of the layout of a home, but to furniture use

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space open, can impress more buyers for sure. I strongly believe this is the future of property for Kuala Lumpur.

Mobile Homes and More

too. One of the ways to maximize a home design is by fitting transformable furniture into the home. If the size of an apartment is extremely small, built-in furniture may just work as an excellent idea. What’s more, transformable furniture does not compromise practicality. The Kuala Lumpur city folks always have this question in mind; ‘Is micro home a healthy and good lifestyle for our generations?’ The answer is depending on the disposable income level and family structure. If the trend is to go solo or small family structure, this is the future. But one thing that we will lose out, Malaysian is definitely losing our Asian community living culture. Property with well-featured furnishings that can transform, be tucked away or reconfigure, for example a bed concealed in the wall behind the couch, a closet that swings out and a coffee table cocooning a complete set of stools to leave the floor

There are other solutions to affordable housing. An instance is for land owners to set up a park where people could have mobile homes in the form of caravan for a short period at a specific fee. This benefits the car industry too and can help the land owners to earn more returns in their investment. The future integrated rail transport services will further complement this concept of mobile homes. The mobile micro homes work wonders for young generations who do not favour a 9 to 5 jobs anymore. The trend of living in a small space and travel freely will surely be the future of this younger generation given that their job’s flexibility and the work-from-home trend. Other than these, we also hear ideas from architects on utilising logistic containers to be converted into cost-effective living space. How effective and practical is this? We have no idea until there are enterprises carrying out the concept into the market. Given that young people today have different cultural exposures, are well-travelled and are educated abroad, these two concepts (mobile homes and container homes) might just be well accepted. And of course there are measures to curb speculations – a method to allow more middle and lower income group afford a home. Among these measures are the Monetary and Fiscal Policy intervention (where the period for ‘investors’ to sell and buy again is restricted), higher stamping duties, to sell and to buy within the same income group (as

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communities too. Based on this, it is important for affordable housing to carry such good values so thereâ&#x20AC;&#x2122;ll be happier communities that are healthy and socially connected enjoying a quality living within an affordable housing scheme. A classic and successful model in Asia that we should observe is the public housing scheme in Singapore. Public housing in Singapore has achieved its merits by providing a comprehensive affordable housing and yet it meets the social and psychological health and quality lifestyle. The Housing Development Board housing in Singapore has self-contained satellite towns with schools, supermarkets, clinics, hawker centers, and sports and recreational facilities where it meets the affordability of middle and lower income group requirement. And the most successful model is Singaporeâ&#x20AC;&#x2122;s LRT and MRT system connecting people from one area to another in an efficient manner. Also, public housing in Singapore is generally not considered as a sign of poverty or lower standards of living, as compared to public housing in other countries.

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Although they are cheaper than privately built homes in Singapore, they are also built in a variety of quality and finishes to cater to middle and upper middle income groups. In conclusion, affordable housing is a revolving issue that requires not only Monetary and Fiscal Policy intervention but also architectural input, psychological consideration and master planning consultation. Private owned property developers must also come in to support affordable housing in urban areas of Malaysia. Meanwhile, the Malaysian Housing Ministry must review whether privately owned property developers should upgrade the provision for low cost flats to affordable housing which is a more holistic approach.

About the Contributor Olivia Lim is the Chief Operating Officer of Persatuan Akitek Malaysia (PAM) since 2012. She can be contacted at olivia@pam.org.my.

www.propertyinsight.com.my

8/12/14 10:35 AM


BEEF UP YOUR

HOME & LIVING

BALCONY Balcony can be considered as one of the most prime sections of a home but many take for granted its many potential. Aidil Mohamad talks to some architects on ways to maximise the beauty of a balcony

The late Michael Jackson had once made headlines when he dangled his baby precariously from a hotel balcony in Berlin, Germany. Argentina’s pride Eva Peron was well remembered by her monumental speech that she gave on a balcony.

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hese are two very different stories but what they have in common is; both incidents took place on a balcony. In many parts of the world, a balcony can be considered as an important feature of a property. In Malaysia, balcony works wonders as it provides some shading especially with our all-year-round sunshine. It also offers homeowners a semi-outdoor experience, where families can hang out together and for individuals to enjoy some personal time alone too. Ken Wong from UnitOne Design and Che Wan Ahmad Faizal from Chewan Architecture share with Property Insight some tips to create that perfect balcony for you.

THE VARIATION There are a wide variety of balconies available out there. Often, we are exposed to Standing Balconies that are normally built on stratified properties. standing balcony, due to its small size, doesn’t allow much furnishing and residents can only stand on

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it. To beautify the spaces, ornaments can be used to fill up these areas. With a size of between 3 to 4ft, Standing Balcony is known worldwide as ‘False Balcony’. “Standing Balconies are usually used for homeowners to get a breather or just for a quick cigarette session. People don’t spend much time at Standing Balcony,” says Ken. He adds that False Balcony can also give a spacious illusion as it is often accompanied by a glass sliding door, and can provide good air circulation for the house too. “In a way, it can also be considered as a “big window” for the house,” adds Ken. Che Wan then explains that landed property often


HOME & LIVING

has liveable balcony - a balcony big enough to be equipped with furniture and is about 8 to 10ft in size. As opposed to standing balcony, liveable balcony are termed as “True Balconies”. “The purpose of the balcony is for it to be able to provide us with a space to relax and enjoy the view outside of the house,” says Che Wan. He also mentions that a small liveable balcony (about 5ft) will not serve its purpose. “The selection of balcony should depend on desire and purpose. The size will reflect the purpose. Most balcony ends up underutilised due to its size, view, and orientation. They usually end up as drying yard which is an eyesore,” Che Wan tells. Adding to Che Wan’s explanation, Ken says that there is another type of balcony which is called the Lookout point balcony. It is shallower than a standing balcony and functions to give a visual impact to a building. “This balcony can also be called “Faux Balconies”. It covers the windows and can help to protect the children from climbing over the windows,” Ken cites.

THE IDEAL DESIGN Where is an ideal location for a balcony? “A balcony must not face the West, because some residents may want to avoid the evening sunlight, which can be very striking than the morning sunlight. We

also would not want it to face a lake, as the light reflection from the lake can be too glaring when in contact with direct sunlight,” Che Wan tells. He also thinks that in Malaysia, people prefer their home’s balcony to not face their neighbour’s house. “Plus, if a balcony faces another house, there won’t be much of a view to enjoy at a place designated for relaxing,” adds Che Wan. Size of a balcony may vary according to the homeowners. Some who are blessed with bigger space may be able to build bigger balconies and vice versa, but there are a few guidelines to follow. “For a balcony without columns, there are specific sizes to follow. This is to ensure a strong base for the balcony. As for balconies supported by columns, any size is fine, as long as it does not enter other people’s home, within the allowed setbacks,” Che Wan reckons. Balconies must co-exist with different elements of the home so it can blend well with the whole look of the house. To achieve this, homeowners can fit in railings, which most often than not, makes a balcony looks ‘complete’. Railings protect the residents’ safety and its design must support the balcony’s function. Also, it is important to note the railings’ height.

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HOME & LIVING

Regular railings are about 1.1m in size, but for those who want to emphasise more on safety can opt for railings that are 1.5m in height. The latter is suitable for high rise buildings. “1.5m railings are not so practical for balcony with the purpose of relaxation. There’s no comfort in holding on to a high railing,” Ken says. Railings that are 900cm in height are a much better option. “The difference between the sizes determines how we put our hands when standing at the balcony. A 900cm-tall railing allows us to copy the stature we normally have while on an escalator, in which we can rest our arms below our chest’s height, and the one with 1.1m height is where we put up our arms at the same level as our chest,” Ken shares with Property Insight. It is important to note that with railings, we need to consider the type of blockage the railing needs. The most common form of railing is made of metal bars but there’s also glass blockage. There are safety regulations that need to be followed with both types of railing blockages. Ken explains that for metal bars, residents can’t have them horizontally fitted. Horizontal metal railings can pose a threat to our safety, especially when there are a lot of children occupying the home. “Horizontal bars provide steps for them to climb over the balcony. So safety is really an issue if kids can actually climb it. For vertical bars, we need to calculate the distance separating one bar to another. There are cases where a child’s head was stuck in between the bars. The distance between the bars should not be big enough for a child to put his or her head through it,” Ken explains. For glass railings, the builder must ensure there are some spaces for the wind to pass through. “Because of the wind factor, glass railing cannot cover the whole balcony. The absence of a passage for the wind to go through can cause the glass to break due to heavy pressure. What designers

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generally do is they separate one glass block from one another. “But glass railings are easier to maintain and last longer unlike metal bars that can rust and require painting over a period of time. Also, glass railings provide homeowners with unobstructed views,” Ken says. The experts also believe that a balcony should be designed at a level lower than the inside of the house, to prevent water from flowing in when it rains. If a homeowner wants to design his balcony at the same level as the house, he has to set up a channel for the water to flow out. For Che Wan, he thinks that homeowners have to also consider touching up their balcony with the right type of finishes. Different type of finishing can give different type of effects for the home. For example, timber floor can give a warm effect, while stone gives a cold effect. “Normal finishing homeowners often choose is tiles, since it is practical in term of cleaning. We also have terracotta tiles. The colour gives a cool and nostalgic effect to a balcony, and we normally see such tiles being used in a bungalow,” he says in the end.


TOP PICKS

PROPERTY: Binjai on the Park, KL BUILT-UP AREA: 2,228sq ft SELLING PRICE: Asking for RM2, 500 per square foot QUALITIES: Prestigious condominiums in KL, access the city center park AMENITIES: The Mandarin Oriental Kuala Lumpur, Suria KLCC, KL Convention Centre, Prince Court Medical Centre, Aquaria KLCC FACILITIES: LRT, public transportation CONTACT: Janice 012 3232752

PROPERTY: Ferlane, Denai Alam BUILT-UP AREA: 3,000sq ft ASKING PRICE: RM1.28 million QUALITIES: Corner lot, freehold, low-density area ACCESSIBILITY: Guthrie Corridor Expressway, NKVE, ELITE highway. KESAS highway AMENITIES: Kelab Golf Sukan Abdul Aziz Shah, Bukit Cahaya Seri Alam Agriculture Park CONTACT: Janice 012 3232752

PROPERTY: Pangsapuri Suriamas, Bandar Sunway BUILT-UP AREA: 1,245sq ft RENTAL PRICE: RM 2,500.00 FACILITIES: Gym Room, Swimming Pool, Tennis Court, Indoor Badminton Court, 24 Hours Security, CCTV AMENITIES: Partially furnished, Sunway Pyramid and NKVE Toll, Sunway Medical Central and SJMC, Education institutions such as Taylors College, INTI College CONTACT: Celine 016-2030965 PROPERTY: New Double Storey Shop lot Seksyen 4@ Kota Damansara TENURE: Leasehold BUILT-UP AREA: 1440sq ft, 2160sq ft 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), NKVE toll, an established commercial area CONTACT: Stacy 014-9340571 PROPERTY: Casa Indah 1 @ Kota Damansara TENURE: Leasehold BUILT-UP AREA: 1089sq ft SELLING PRICE: RM 750,000.00 (Partially furnished) FACILITIES: 24 Hours security, mini market, swimming pool, gym room, laundry, multipurpose hall QUALITIES: Future MRT, Driving Distance 5 minutes to Giza mall, Banks, The Strand Mall CONTACT: Stacy 014-9340571 www.propertyinsight.com.my

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CELEBRITY CORNER

INVESTMENT SWEETHEART Award-winning actress Maya Karin tells us why she loves investing in property

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CELEBRITY CORNER

more and yes I just looked at all the logical aspects and figured out which property is the best to buy.

What’s the story behind the first property you ever bought?

Well it was an apartment with 3 bedrooms, priced at about RM350,000 at the time when I bought it in the Damansara area. But now I have sold it.

Were you scared or worried when you first started investing?

S

he’s gorgeous, talented and most of all she is a believer of property investment. At 34 years old, movie star Maya Karin Roelcke, has invested in residential (two big apartments), commercial (a shop lot) and even in a plot of land! Maya started investing at the age of 21 and she not only invest locally but she also co-owns a flat in London, which she bought with her sister. Maya considers this purchase in London as her best investment to date. “When I first started investing, there were not many challenges… I mean I didn’t do it as a main career, I just invested whatever money I had in property,” she says adding that one has to be mentally prepared before jumping into property investment. Here, she shares more of her property investment adventure.

Well, you may always be a little scared or worried when you give away your money, but like my mother said, money has to make money and for me I have to admit I’m not much of a gambler. So, if I’m going to give away a lot of my money, I want it to be on a safe bet. And investment is an area where you usually don’t lose money although you still can, under some circumstances.

Why did you choose to invest in London?

I just bought a flat in London, not a big house though. My sister asked me if I would co-invest with her, because she can pay off the mortgage. But she didn’t have enough money for the down payment. And we worked together sharing the benefits 50-50. She made the decisions and I trust her completely. She’s a very intelligent lawyer. She knows what she’s doing and she’s great at researching too. So, even though I didn’t know London very much at the time but I trust her completely that she makes smart decisions.

What motivates you to invest in property?

My mother!! She’s a dragon. She was the first one who told me when I had sufficient income from my first endorsement, and then she looked at my account, she said, “Maya don’t let the money just sit there. Let’s go buy something.” So, I bought my first property which was an apartment.

How do you decide which property to invest in?

I used to decide with my mum helping me out and talking to the sales people. I didn’t know much about property at that time, but I used common sense and I listened to people’s arguments and made my decisions from there and now obviously, I know a lot

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CELEBRITY CORNER

Can you tell us more about this property?

Well it’s in Zone 2, it’s a beautiful flat, and it’s a part of an old family house - a bungalow that is turned into 6 different flats. So, one of them is mine. It’s right in front of Clapham and its right in front of a park. And it’s already gone up in value since we last bought it, considerable amount I must say and I’m so very happy.

Are there any local properties you are currently eyeing? Yes, I’m working on a property, a smaller property one which is in an apartment block in Cheras. Why? Just because it’s a good deal.

Why do you think today’s market is challenging?

Well it’s always going to be challenging for somebody. The market is always going to be easy for certain experts. It was challenging for me before, now it’s a little bit easier but again I’m not an expert in the economy so I can’t say much.

Do you think Government Service Tax (GST) will affect your property investment decision making?

No, I still have to decide, I still have to look at property and the future, future development and potential of certain properties that I’m looking at. If there’s high potential, I will still buy the property even though I have to pay the GST.

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Throughout the years, what are the life lessons you’ve learned from property investment? Well I suppose that goes in line with what I just finished off with; property investment is a responsibility. You have to plan for it for a long

www.propertyinsight.com.my

8/13/14 12:48 PM


CELEBRITY CORNER

term and then you have to continuously pay your mortgage. So, for me I have to think 3 or 5 years ahead in the future. Financially, I am secured and I can pay everything off, I won’t default alone, I will not become bankrupt and my house will not be auctioned off. I have to ask myself these questions - will I have a job?, will it be alright if I don’t make money as a celebrity?, should I start saving? And how much money do I need in 3 or 4 years’ time?. These are very important factors to think about.

You know, you have to be responsible about these things. Some people get excited about buying a house and they put down the deposit but they don’t do proper calculations for the mortgages. Within 12 to 24 months, they will face problems with the bank. So, you know you got to plan your life well. Be responsible and do your job.

Why do you think it’s important for celebrities to invest in property?

In Malaysia I suppose, it’s important for anybody to invest in property. Ideally, everyone should have their own little home when they’re old that’s under their name. Not just celebrities. Celebrities in Malaysia should invest in property because we don’t have security such as insurance, EPF, any other benefits that might come along with our contract. Malaysian celebrities are completely on their own. There are many cases where ageing Malaysian celebrities end up with no home. They are still renting in cheaper areas. They have no property that’s under their name, so, it’s important, if you can and if you have enough money to invest earlier on in life. First buy yourself a house before anything else. Don’t buy a car and don’t go on a big holiday. Buy a house when you have the money and then work hard to pay off your monthly mortgage. Try not to get your property auctioned where you’ll lose everything. It requires long term planning when it comes to property investment.

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