www.propertyinsight.com.my
AUGUST 2017
COVER STORY
RISING STAR OF MEDINI
B&G PROPERTY’S DATO’ SOO KAI CHEE HAS HIGH HOPES FOR D’PRISTINE @ MEDINI IN ISKANDAR MALAYSIA
SPECIAL AREA FOCUS: ISKANDAR MALAYSIA
The good, the bad and the ugly Will this economic corridor recover from China’s recent curbs and glut situation?
MAIN FEATURE
Sub-sale transaction do’s and don’ts
AUGUST 2017 RM7.50(WM) RM9.00(EM) KDN PP 18181/04/2013 (033492)
Contents
FEATURED PROPERTY
32 | A Distinctive Development In Johor Bahru
Mayland (Johor) reveals its latest Tower E (Elderberry) @ PARC REGENCY with attractive features and packages to benefit new buyers
INVESTMENT TALK
34 | Singapore REITS: More Long-Term Value FEATURE
38 | Sub-Sale Transaction Do’s And Don’ts LEGAL
40 | Different Types Of Titles In Malaysia STRATEGY
06
42 | Investment Property: Pro And Cons
Consider the advantages and disadvantages before embarking on your investment journey for the best mileage for your property investment
COVER STORY
06 | Rising Star Of Medini
B&G Property’s integrated mixed-use D’Pristine @ Medini development in Iskandar Puteri, Iskandar Malaysia offers a cluster of SoFos, Grade-A office tower, science fiction theme park and 4-star Novotel hotel at the best of the best location
SPECIAL AREA FOCUS: ISKANDAR MALAYSIA
12 | Iskandar Malaysia: The Good, The Bad And The Ugly
Will this multi-billion ringgit city built upon the dreams of emulating the Hong Kong/Shenzhen model linking Johor and Singapore for greater prosperity survive the current glut situation and China’s curbs?
18 | Special Area Focus: Iskandar Malaysia Food Trail
Famous blogger Johor Kaki shares 5 hidden eatery gems at Iskandar Malaysia’s thriving five zones. Check It Out!
DEVELOPER OF THE MONTH
20 | BCB Berhad Clinches Another Green Award
BCB Berhad adds another feather to its cap by clinching yet another green award in the Green Champions Category – Innovative Urban Green Park given by the Institute of Parks & Recreation, Singapore
CELEBRITY CORNER
25 | Creating Inclusive Winning Designs For All AXN Channel’s Apartment finalist Winston See takes as much pride in his own pad as he does when it comes to designing for his clients ENTREPRENEUR INSIGHT
28 | From Zero To CEO
KnowledgeCom Sdn Bhd CEO ST Rubaneswaran’s surprising rise to his present position was the result of saving the company from its heavy debts and transforming it into an award-winning outfit
2 I August 2017
25
Publisher’s Note
EDITORIAL Editor-in-Chief Dato’ KK Chua kkchua@propertyinsight.com.my Editor Yvonne Yoong yvonneyoong@propertyinsight.com.my
S
eth Godin, author of The Purple Cow: Transform Your Business by Being Remarkable shares the idea that the key to success is to find a way to stand out in whatever scenario one finds oneselves in - be it in a job, business venture or even in one’s strategy for property acquisition. Rising above the herd mentality admittedly can be challenging but it is what sets the men apart from the boys. Taking a leaf from the worldwide bestseller, the book delves into the complex world of organisations – addressing issues such as how to add distinction – and avoid extinction – in today’s new economy. What is the secret of standing out from a crowd of property investors or entrepreneurs and how do you separate yourself from the bland sea of mediocrity? The key to standing out in a field of monochrome Holsteins the book states, lies with the idea of being a “Purple Cow” which can also be applicable to the world of real estate where developers’ products need to stand out whether in terms of design or other value-added propositions. Relating back to the unique concept of standing apart, Property Insight celebrates its journey beyond its 4th anniversary with this special 92 pgs, triple cover bumper issue. As we move forward, we hope to deliver many more acute property insights into the market. Despite the gloomy outlook of the property market, challenging times can be viewed as opportunities in disguise. When viewed positively, it could be part of a wake-up call to action. The current glut situation in high-end, high-rise properties in Iskandar Malaysia that are exorbitantly priced could be a signal or wake-up call to halt introducing more such units and focus on producing more affordably priced properties to strike a balance for locals to be able to purchase them. Read about the Special Area Focus: Iskandar Malaysia from pg 12 - pg 17. Iskandar Malaysia, poised to be a rising star, given the many plans for it admittedly, has been facing a host of issues including China curbs on outflow of funds of late. Will the market correct itself? Only time will tell. As one industry expert puts it:- Iskandar Malaysia will take 20 years to fully develop. So, although plagued with current glut issues whereby supply exceeds demand, market forces may correct itself in time to come. Although China investments may not be pouring in as lucratively like before, many of the properties here, especially the high-end, high-rise units hold promise of potential – given their high quality designs. To put it succinctly, patience may be what’s ultimately required, given Iskandar Malaysia is only half-way towards its 20-year goal plan to be completed in 2025.
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CREATIVE Creative Director Sarah Tan sarah@propertyinsight.com.my Designer Megat Khuzamir
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Till the next issue, happy reading! Dato’ KK Chua Editor-in-Chief
On The Cover www.propertyinsight.com.my
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PropertyInsight
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 or 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 consequently 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.
Dato’ Soo Kai Chee
Director, Sales and Marketing, B&G Property
August August2017 2017 I 3
NEWS & EVENTS
Launch of UMLand’s D’Lagoon - Luxury Development By The Lake United Malayan Land Bhd (UMLand) recently launched D’Lagoon - Luxury Development By The Lake, the latest phase of its Taman Seri Austin township in Johor Bahru. The freehold project spanning 6.56 acres of land with a gross development value of RM162 million features apartments priced from RM491,800 and villas starting from RM968,800. UMLand Seri Austin CEO Wong Kuen Kong says its strategic location within Tebrau corridor would boost the capital appreciation of the project which is due for completion by 2021.
Mayland’s Parc Regency Elderberry Tower launched Mayland Projects (Johor) Sdn Bhd, a subsidiary of Malaysia Land Properties Sdn Bhd (Mayland) recently launched Parc Regency Serviced Apartment’s Elderberry Tower. CEO Adam Leow 50 units from its total 360 units priced from RM361,000 per unit have been taken up. Elderberry Tower is expected to be completed by 2019. Before this, Parc Regency fully handed over 1,392 units from its completed Alder, Birch and Dove towers. The project is accessible via the Pasir Gudang Highway, Eastern Dispersal Link (EDL), Jalan Masai Baru and Tebrau Highway.
Ekovest’s Majlis Berbuka Puasa Celebration The Majlis Berbuka Puasa organised by Ekovest Berhad recently at SMJK Chong Hwa on Jalan Gombak in Kuala Lumpur was graced by the Minister of Works Datuk Haji Fadillah Yusof. Ekovest Berhad Managing Director Datuk Seri Lim Keng Cheng was also present at the event in which underprivileged children, guests and members of the media were treated to a hearty meal. Cash tokens were also given to the 250 underprivileged children.
Iskandar Malaysia Iftar Bersama Iskandar Malaysia, in collaboration with Medini Iskandar recently held a gathering for its stakeholders, staff and members of the media at the Aloft Kuala Lumpur Sentral. The event was attended by Medini Iskandar Malaysia Sdn Bhd Chief Executive Officer Dr James Tee and Iskandar Investment Berhad Chief Financial Officer Soh Choo Sen with other influential guests in attendance who were treated to a lavish spread. The event was aimed at fostering closer ties with industry players and stakeholders. 4 I August 2017
Worldwide Search for the Next Design Superstar Ends in Johor Bahru Design reality television series The Apartment: Rising Stars Edition ended its season finale on a high note as the winner was selected after 10 episodes. For 10 gruelling episodes, 12 contestants from around the world competed to be the next interior design superstar, witnessed by viewers from around Asia. United Malayan Land Bhd (UMLand)’s Bandar Seri Alam development in Johor Bahru formed the backdrop of the stunning township where the entire series was filmed. Being one of the co-sponsors, UMLand provided accommodation for the contestants at the residences during the 10 weeks of gruelling filming. Full-time Model Aleksandra Flasz, 26, hailing from Poland emerged as the winner of the USD100,000 (RM428,000) cash prize while Malaysian architect Winston See, 30, landed the second spot.
Seri Austin’s 12th Anniversary and Raya Celebration Seri Austin Township, one of United Malayan Land Bhd’s (UMLand) township developments in Johor Bahru recently celebrated its 12th anniversary and Raya do at its Seri Austin Gallery. Highlights included a live band as well as drum and dance performances, a magic show and lucky draw sessions complemented by a grand fireworks display. UMLand Seri Austin CEO Wong Kuen Kong and the management team mingled with over 500 guests in attendance comprising business associates, authorities, members of the media and Seri Austin residents. Seri Austin, located in the popular growth corridor of Tebrau has bagged more than 50 awards and recognitions. Recently, the township received the inaugural Noble Excellence Awards 2016 for Best Development of The Year and The Iskandar Malaysia Accolades 2016/17 (TIMA) for Corporate Value Champion and Overall Value Champion by Iskandar Regional Development Authority (IRDA).
Topping Off Ceremony for Medini 9 in Iskandar Puteri Medini Iskandar Malaysia Sdn Bhd (MIM) recently held its Topping Off Ceremony for Medini 9, a premium office building with a gross built-up area spanning 500,00 million sq ft. This signified the completion of the superstructure for the Medini 9 office development in Iskandar Puteri. “Medini 9 is the first high-rise premium office building developed by MIM which is located in Medini City, the Central Business District of Iskandar Puteri,” says MIM Chief Executive Officer Dr James Tee. In addition, it was designed and developed in accordance with the MSC Malaysia Cybercentre-status building standards established by the Malaysia Digital Economy Corporation (MDEC). Medini 9 is the third office building developed by MIM after Medini 6 and Medini 7. Director of MIM Datuk Ir. Khairil Anwar Ahmad and Bina Puri Construction Sdn Bhd Managing Director Datuk Henry Tee were present at the ceremony.
August 2017 I 5
MEDINI
RISING STAR OF
Cover Story
6 I August 2017
L
ike a rare glistening jewel awaiting its final polish before being unveiled, D’Pristine @ Medini in Iskandar Puteri, Iskandar Malaysia is poised to be a distinctive cut above the competition once completed. Its coveted location backed by a unique concept and clarity of vision with a cluster of well-thought-out offerings including a Grade-A corporate office tower, two Small office Flexible occupancy (SoFo) towers, an upcoming entertainment-led mall and a four-star hotel about to be unveiled are turning this integrated mixed-use development into a prized reality. More than a case of beginner’s luck, considering this is B&G Property’s maiden foray into Medini, the results are already starting to show with a mix of predominantly overseas buyers snapping up its SoFo units despite the market slowdown. Joining in the cluster of developments in Medini where more established and prominent developers have already made inroads has proven to be an astute decision for B&G Property. The company incidentally has its own construction and development arm. Work on the mixed-use development is undertaken by D Pristine Medini Sdn Bhd, a wholly-owned subsidiary of B&G Capital Resources Bhd.
D’Pristine @ Medini is an integrated mixed-use development promising a vibrant lifestyle
B&G Property’s integrated mixed-use D’Pristine @Medini development in Iskandar Puteri, Iskandar Malaysia offers a cluster of SoFos, Grade-A office tower, science fiction theme park and 4-star Novotel hotel at the best of the best location By: Yvonne Yoong
Under the direction and leadership of B&G Property Director of Sales and Marketing Dato’ Soo Kai Chee, D’Pristine in Medini has been identified as a catalyst and landmark project for the company. Soo relates that the decision to venture into Medini, Iskandar Malaysia correlated with a sense of right timing.
TIMING IS EVERYTHING
“In 2012, Iskandar Malaysia was getting very prosperous so that was the year that many developers in Malaysia tried to take advantage of the situation,” he affirms, adding that B&G Property also had the foresight to plan its development in Medini.
Purchasing a prime tract of land in the heart of Medini proved to be the pivotal point in raising the company’s profile from good to great, heralded by the project’s integrated mixed-use development concept. “There’s a lot of added value to this development. The gross development value (GDV) of D’Pristine is easily about RM1.8 billion although it is located on just a small parcel spanning approximately 8.43 acres of land on a lease nature. The reason we are able to generate this revenue is because it is in a very international metropolis location,” elaborates Soo. “Property developers would always look for opportunity, and property is
always about timing. When the timing is good, you have to act fast. And, when the timing is not good, that is the time you really have to sustain,” he opines. Soo, who has been with the company since 2004, the same time B&G Group ventured into property development, says that the last 13 years have seen B&G Property completing more than 10 niche projects in the Klang Valley. “B&G Group was established in 1995 and ventured into property development in 2004. I grew together with this company since it established its property arm 13 years ago. So, in terms of the history of B&G Property, we are the same age,” he says. “We are actually an integrated August 2017 I 7
Cover Story
“
There’s a lot of added value to this development. The GDV is easily about RM1.8 billion. This is although the development is located on just a small parcel spanning about 8.43 acres of land on a lease nature. The reason we are able to generate this revenue is because it is in a very international metropolis location” - Dato’ Soo Kai Chee
developer and also have our in-house consultancy and construction teams. In the past, unlike our current ongoing developments, all the projects were boutique in nature. “Currently, two of our current major flagship developments which are coincidentally ongoing are what I term as landmark projects by B&G Property. One is D’Pristine @ Medini in Iskandar Malaysia while the other is Kingsley Hills at Putra Heights,” explains Soo. According to him, Kingsley Hills will be completed in phases. “We are really looking forward for these two developments to be completed, one after another. The Johor project, D’Pristine, will be completed next year. For Kingsley Hills, we are talking about another three to four years to complete the entire freehold high-end properties 8 I August 2017
on the hill comprising semi-dees, bungalows and condominiums,” he says.
D’PRISTINE: GAME CHANGER FOR B&G PROPERTY
Soo says D’Pristine will be a game changer for B&G Property as it makes its mark on the Medini map in Southern Johor. The project’s success is already lifting the company’s status from a niche boutique developer to one which is able to compete in the big boys’ property league. “I would think that upon the completion of this landmark project, B&G Property will have a more prominent standing in this industry as the previous projects were too small to be proud of,” he adds. The integrated mixed-use D’Pristine development adopt both the Construction
Quality Assessment System (CONQUAS) and industrialised building system (IBS) employing Korean technology. Already, D’Pristine has recorded over 80% take-up rate despite the downturn in the property market and given the glut situation marked by an oversupply imbalance in Iskandar Malaysia. Many of its buyers are foreigners – namely Singaporeans and Taiwanese forming the majority of the purchasers of its SoFo units as well as Indonesians. “I think we made the right decision as a developer to turn D’Pristine into a mixeduse development. In Medini, those who go into pure residential developments lose their advantage for many reasons, and they might have a problem in getting them occupied. “For instance, you will find that mostly, people have reasons why they want to
Left: D’Pristine SoFo units come semifurnished Bottom: D’Pristine’s Main Entrance
rent a unit. D’Pristine has a choice of commercial components which makes this project vibrant and very lively which is very important as compared to purely residential developments. Therefore, we have the right product mix.”
MOVING INTO MEDINI
“We bought the land in 2012 and developed it one year later as Iskandar Malaysia was booming then. The price of land was not cheap then as compared to buying land in Medini now whereby the cost of land is relatively lower,” he says. He says due to Medini in Iskandar Puteri, Iskandar Malaysia being gazetted, special initiatives apply here until the year 2025. These include exemption from Real Property Gains Tax (RPGT), no minimum purchase price for foreigners and a 10year company tax exemption for selected industries besides flexibility under the Foreign Exchange Administrative rules. “Other than Forest City, Medini is the only zone where foreigners can buy without a price threshold. There are also no squatter areas in Medini,” he elaborates. The special incentives and versatility of its coveted location has seen positive feedback for its SoFo units priced between approximately RM700 psf and RM900 psf. The SoFo units come with built-up areas starting from 644 sq ft for a one-bedroom unit to 1,416 sq ft for the 3 + 1 units.
The semi-furnished SoFo units housed in two 35- and 36-storey blocks are priced from RM480,000 to over RM1.1 million, depending on the size of the units. Currently, the maintenance fee for the upkeep of the cleanliness of the development and SoFo units are kept at a minimal 15 sen psf. Residents can make use of a swimming pool, gymnasium, bistro, ballroom as well as a group and VIP lounge, not forgetting a business centre. Although the pricing of its SoFo units are similar to other surrounding properties based on price psf, Soo opines that D’Pristine has a better advantage due to its concept, highly strategic location
and recent progress development. He anticipates that it will continue to attract the attention of expatriates and young professionals, especially when Iskandar Malaysia becomes even more developed as time progresses. Iskandar Malaysia will also be complemented by Puteri Harbour’s development, hailed as the jewel of Iskandar Puteri for its reputation in promoting world-class waterfront living. Projects already completed which are now operational include EduCity@ Iskandar Malaysia and the Mall of Medini among others, which have attracted more investors – both local and foreign here.
MILESTONE ANNOUNCEMENTS
“We have in the pipeline, a few exciting and important news to be announced to our stakeholders. The first is the signing of the hotel agreement with Novotel from the French-based Accor Group which has a few hotel brands. “This exciting news is important for the owners of the SoFo units who make up the stakeholders of D’Pristine,” he shares of the 32-storey hotel with 285 rooms.
August 2017 I 9
Cover Story
Soo says that these incentives add value to its stakeholders both foreign as well as local. “We have many foreign investors interested in our overall SoFo units totalling 1,182 units. Most of our foreign buyers are investing for rental yield,” he says adding that plans are underway to benefit its stakeholders. Soo qualifies that its stakeholders refer to individual stakeholders as well as its corporate purchasers. “Last year, Pelaburan Hartanah Bhd (PHB) bought the entire corporate 32-storey Grade A Corporate Office Tower from us which was very good news. It is important to have corporate owners as they are also able to bring their multinational corporation (MNC) tenants to us,” he says. “Secondly, we’ve appointed Savills Malaysia as the exclusive leasing agent for our office which is important to us as we need the brand to bring in MNC tenants. This mixed-use development is international so we need tenants who have prominent and renowned names.” Thirdly, Soo reveals that its mall spanning approximately 350,000 sq ft will encapsulate a science fiction concept indoor theme park to distinguish it from other regular malls and the retail space glut situation in Iskandar Malaysia. “The mall is the most challenging component to address. There are too many malls leading to an oversupply situation in Johor so the retail industry is very bad now,” he adds. The retail scene here will see Paradigm Mall being established, with another mall by the Hatten Group as well as Capital 21 and Mid Valley Southkey being planned. In view of one after another mall coming up, Soo says that B&G Property’s strategy is to introduce an indoor science fiction theme park. This three-storey theme park is envisioned to also tap into the lucrative tourist market spanning an average of two million visitors to Legoland annually. “Foreign tourists will go to Legoland and, knowing there is a science fiction theme park, may visit the mall. It will also complement and supplement Legoland because the location is within walking distance,” he says. 10 I August 2017
Envisioning the science fiction theme park as capable of attracting many tourists, Soo says renting its SoFo units out to them will be an attractive proposition since they are much more affordable as compared to staying at hotels.
MAGIC OF MEDINI
“Medini will be transformed into an international metropolis in view of the population there and what’s going to be developed that will make it different from other parts of Iskandar Malaysia. “Medini is a corridor like Cyberjaya, which is new and emerging but the difference is variety-wise. It has tourism, entertainment, financial advisory and healthcare awareness as well as logistics, education and what I term, the Singapore effect. I’m not just talking about a few developments located next to D’Pristine but also within the surrounding 10 – 15km radius which include EduCity, Pinewood and Sanrio Hello Kitty Town in Puteri Harbour,” he elaborates. Soo adds that some catalystic developments are already in existence while others are forthcoming. “Medini is also planned as a smart, futuristic city. It really emphasise other industries as well which make Medini different from others,” enthuses Soo. Elaborating on the Singapore effect, he says its location is a natural attraction as witnessed by the many Singaporean tourists coming over to Johor during the weekends which is an advantage that no other states – not even Penang, can enjoy. “Despite the economic uncertainty, the outlook is robust because of the Singapore effect that is very strong. Why pay double-digit rental in Singapore when you can pay rental in Ringgit Malaysia which is not even RM5 psf in terms of office space rental. “Meanwhile, the workforce in Johor is so cheap in comparison. It’s a trend so it’s just a matter of time for this concept to bloom in terms of the Singapore effect,” he observes commenting that many Singaporean businessmen may choose to relocate their back-end offices here.
“Next is the Shenzhen model of Hong Kong. Many years ago, Shenzhen was just a fishing village but it has been turned into a modern city now because of Hong Kong being so close to Shenzhen,” he adds commenting on the viability of Iskandar Malaysia, being located nearby Singapore to really take off.
BEST OF THE BEST LOCATION
Joining in the cluster of developments in the heart of Medini , D’Pristine boasts easy accessibility in terms of travelling time. It is also located nearby many notable landmarks such as Legoland, the Mall of Medini, Gleneagles Hospital and Afiniti Urban Wellness Centre. “Once you turn out from our project, it’s already the coastal highway and it is just 15 – 20 minutes to the second link. D’Pristine is just 20 minutes’ drive to the causeway and a mere 25 minutes’ drive to Senai Airport. “Although currently there are no plans for a mass rapid travel (MRT) or light rail transit (LRT) system, there is still a bus shuttle travelling to Singapore and Kuala Lumpur and vice versa,” he shares. He opines that D’Pristine will be different with the science fiction theme park mall and Legoland located within nearby distance besides the office tower managed by Savills Malaysia. All these considerations he says will make the project very vibrant. Soo adds that office workers, visitors, tourists and hotel guests will come here so D’Pristine is anticipated to will enhance rental yields. This is in comparison to other projects encompassing just residential and limited retail space components on the ground floor. “Medical tourists comprise the other target audience as Gleneagles is situated just next to us. We are proud to tell everybody that this project is in the ‘Best of the Best Location’ with Legoland and Gleneagles located within walking distance to our project,” he enthuses. “Sometimes, these medical tourists will also come here for entertainment with their family for more than a few days’ stay. The project and location are winners that will attract many stakeholders to Medini,” opines Soo further.
As a developer, Soo says B&G will retain three of its assets; namely the hotel, shopping mall and its 4,900 car parks for future income. This is after taking into account the fact that B&G Property has already sold off a big portion of its SoFo units, apart from the entire office tower. Besides its landmark D’Pristine development in Iskandar Malaysia, B&G Property is also concurrently developing Kingsley Hills @ Putra Heights in Subang Jaya, Selangor. “Selangor is the most developed state in Malaysia while Kuala Lumpur is the capital of Malaysia, so the Klang Valley is still a good location. Besides Johor and the Klang Valley, we also have a total undeveloped land bank of approximately 230 acres located in Kajang, Putra Heights, Seri Kembangan, Kuala Selangor, Rawang and Templer Park - all in Selangor, Segamat in Johor, Genting Highlands in Pahang and Kota Kinabalu in Sabah,” he says. “We are still confident in the Klang Valley. We always feel that the Klang Valley cannot go wrong because it is the most developed state in Malaysia. Therefore, if this is a place where property cannot ‘move’, then it would mean that other parts of Malaysia cannot have other new developments,” analyses Soo.
Naturally, with its ongoing Kingsley Hills @ Putra Heights development shaping up nicely, being the only hillside development in Subang Jaya, Soo says the company is on the lookout for additional land bank. Incidentally, B&G Property’s most recent completed project is V-Residensi 2 @ Shah Alam, a serviced apartment development which presents owners with premium quality finishes and fittings.
KING OF THE HILL
B&G Property’s Kingsley Hills freehold development in Subang Jaya differs from its D’Pristine project in Iskandar Malaysia as it is skewered towards residential landed and high-rise units whereas D’Pristine is a mixed-use development. “Kingsley Hills is a very low density with only 130 semi-dees which was launched two to three years ago. In the pipeline, we plan to sell the 100 units of bungalows in two phases with phase one comprising only 35 units,” he says. The launch of the semi-dees priced from RM2.1 million will be followed by the launch of the bungalow units priced from RM3.8 million and thereafter, the condominiums.
“Kingsley Hills is the only high-end property on the hill in Subang Jaya and the surrounding vicinity. Another selling point is the Kingsley International School which follows the UK curriculum from nursery to Cambridge A- Levels which has shifted its campus here since two years ago,” he adds. Soo believes that following the popularity of transit-oriented developments (TODs), the future trend will focus on elevated living and education as encapsulated by Kingsley Hills with its landed units and three condominium blocks comprising 616 units. Unlike D’Pristine, Soo says Kingsley Hills, located in Putra Heights, will comprise upgraders from the surrounding vicinity who can finally live out their dreams of being the king of the hill in a rare gem of a development. Just as in the case of D’Pristine, emerging as a rare gem in Medini, Iskandar Malaysia.
Kingsley Hills @ Putra Heights, Subang Jaya
August 2017 I 11
Special Area Focus: Iskandar Malaysia
ISKANDAR MALAYSIA:
THE GOOD THE BAD AND THE UGLY
Will this multi-billion ringgit city built upon the dreams of emulating the Hong Kong/Shenzhen model linking Johor and Singapore for greater prosperity survive the current glut situation and China’s curbs? By: Yvonne Yoong
I
skandar Malaysia was once the poster child touted by TIME Magazine in 2012 as “one of the most ambitious development projects in the world”. Since then, the spotlight has shifted to glut concerns, given the breakneck speed China developers have been developing their projects there compounded by launches by local developers. Almost overnight, Iskandar Malaysia became a construction playground. Attracting China developers accustomed to building cities at astonishing turnaround speed, the launch of a series of high-end, high-rises spanning tens of thousands of property units started flooding the Southern Corridor of Johor. The problem seemed to resolve itself for a season when these giant China developers attracted mainland Chinese buyers by the hordes. They were drawn to the many initiatives available in Medini and Forest City’s four man-made islands spanning about 5,000 acres which underwent massive reclamation works.
ATTRACTIVE INITIATIVES
JOHOR Flagship E
ISKANDAR MALAYSIA Flagship A Flagship D Flagship B Flagship C
SINGAPORE
FLAGSHIP A
FLAGSHIP B
FLAGSHIP C
FLAGSHIP D
FLAGSHIP E
JOHOR BAHRU CITY CENTRE
ISKANDAR PUTERI State administration Education and medical tourism Entertainment and recreation Housing
EASTERN GATE DEVELOPMENT Manufacturing Oil storage terminal Education
SENAI-SKUDAI
Financial advisory activities Cultural and urban tourism
WESTERN GATE DEVELOPMENT Logistics Oil storage terminal Tourism
Source: Academic Library
12 I August 2017
Logistics Manufacturing (hi-tech) Knowledge centre Information and communications Tourism
Landserve (Johor) Sdn Bhd Executive Director Wee Soon Chit credits Forest City’s appeal among foreigners to its “prime model of a future city with freehold property at one quarter of Singapore’s prices on a man-made island with its free zone and no foreign restrictions”. “Since Forest City started selling its Phase 1 units in December 2015, over 15,000 units comprising mainly serviced apartments have been sold, with the mainland Chinese accounting for about 75% of the buyers,” says Wee. “This project is a joint venture between Country Gardens which is one of the biggest developers in the world in terms of square footage sold holding a 60%:40% share with the Johor State Government.” Phoenix Hotel with its 200 rooms was constructed at a rapid speed of eight months with the first few blocks of serviced apartments scheduled for completion this year. Enabling buyers to “enjoy the competitiveness of Singapore and the affordability of Malaysia”, Wee says Forest City saw about 1,000 units priced from RM1,200 psf being sold per month.
Courtesy: lanksia.com
CHINA CURBS AND GLUT ISSUES
However, the euphoria of overwhelming sales, including those at Forest City whose market mostly comprised Chinese mainland buyers was short-lived when China imposed curbs on its foreign fund outflow – throwing a spanner in the works for Iskandar Malaysia. Adding insult to injury, the problems of oversupply outstripping demand in Iskandar Malaysia is further compounded by other local developers’ high-rise units coming into completion. “As far as growth rates are concerned, landed properties have increased by about 20% since 2006 whereas nonlanded units have risen by about 70%. The trend shows there are increasing high-rise residential units being built in Iskandar Malaysia covering Johor Bahru and Kulai. There is also an anticipated 200,000 residential units coming into the market in the next one to two years. “Out of this, around 22,000 units of condominiums and apartments are under construction while another 5,000 units’ building plans have been approved but construction works have not yet started,” Wee shares.
This year alone, some 25,000 new serviced apartment units will enter the market. Out of this, about 19,000 units will be focused in the Johor Bahru City Centre and suburb areas while 6,000 units will be concentrated in the Iskandar Puteri area. Dr. Daniele Gambero, CEO and Cofounder of REI Group of Companies anticipates that 70% of properties in Iskandar Malaysia were transacted to investors between 2011 and 2014. This translates to 70% on-stream units that will enter the market almost concurrently in 2018 that will affect rentals. “The recent curbs imposed by the Chinese authorities on the outflow of capitals have affected the sales trend that few Chinese megaprojects enjoyed previously. There is an oversupply of highend properties so the market will take time to absorb the oversupply,” he says adding that holding power is crucial. Sr Samuel Tan, Executive Director of KGV International Property Consultants agrees that the phenomena of Chinese buyers coming in droves to purchase properties seem to have faded. “One must be rational, knowing that the mainland Chinese normally buy from China developers with only a remnant
purchasing from local developers. So, it is incorrect to say that the Iskandar Malaysia property market will suffer as a result of the capital curbs,” Tan says offering an alternative view, adding that the curbs will impact China mainland developers more than local developers.
AHEAD OF ITS TIME
Wee says that only 30% - 40% of Iskandar Malaysia, geographically located next to Singapore and launched in November 2006 covering an area over 550,000 acres has been developed. Therefore, there is still plenty of greenfield there. Iskandar Malaysia’s blueprint that emulates the new economic corridor patterned and conceptualised after the Hong Kong/Shenzhen model is aimed at making it a sustainable metropolis of international standing by 2025. “This will propel Iskandar Malaysia which comprises Johor Bahru and parts of Pontian and Kulai districts into economic powerhouses of the south,” says Tan. To achieve this, the sustained involvement of various agencies, stakeholders and players including the
August 2017 I 13
Special Area Focus: Iskandar Malaysia
Left, top: An artist’s impression of the mixeduse D’Pristine @ Medini in Iskandar Malaysia Left, bottom: An artist’s impression of 8scape in Iskandar Malaysia undertaken by KIP Group of Companies that was launched in 2014 Right: An artist’s impression of BCB Berhad’s Elysia Park in Iskandar Malaysia promises to be a walk in the park for nature lovers
ISKANDAR MALAYSIA: THE GOOD
Federal, State and local Governments, business communities, communities and global industry players are required. “For this intent and purpose, a Parliamentary Act was passed to establish an agency known as the Iskandar Regional Development Authority (IRDA) headed by the Johor Menteri Besar and a Federal appointed Chief Executive to spearhead the development of Iskandar Malaysia,” explains Tan. Six qualified services were identified to spearhead its growth while strengthening its existing advantage as a manufacturing hub including logistics, tourism, finance, healthcare, education and internet technology (IT)/multimedia sectors. Five flagship zones, each having its own economic clusters were identified. Flagship A constitutes the Johor Bahru City Centre for tourism, cultural and financial activities. Flagship B (previously known as Nusajaya and now identified as Iskandar Puteri) targets education, healthcare, 14 I August 2017
multimedia, tourism and housing. Flagship C constitutes the Tanjung Pelepas (PTP) and Tanjung Bin Power and the Pulai Forest Reserve with its emphasis on port activities and tourism. Flagship D comprises the Pasir Gudang Port and Tanjung Langsat heavy industrial area and the Bandar Seri Alam region which concentrates on port activities, manufacturing and education. Flagship E meanwhile comprises Senai-Skudai where the Senai Airport is situated focusing on logistics, tourism and mainly manufacturing activities. “Over the last 10 years, Iskandar Malaysia has undergone an interesting journey. It is now at Phase 3 of its master plan which is to innovate and sustain. “The third phase of investments are expected to enhance the whole ecosystem in Iskandar Malaysia as the spillover effects will have higher impact to the region’s economy,” says Tan adding that it has consistently achieved its target as reported by IRDA.
Although Iskandar Malaysia has been plagued with China curbs putting a halt to sales coming in from mainland China, Gambero says the positive side of the coin resulting from China’s earlier interest in the city brought about global attention to Iskandar Malaysia and Malaysia. He suggests that China’s curbs may eventually be lifted in time to come. “I will not be surprised to soon see some softening of the curb measures limiting capital outflow from China, especially towards Malaysia,’” he opines. Gambero is upbeat about the future of Iskandar Malaysia as he says a huge part lies with its economic drivers, healthy and strong demand for affordable houses and a strong interest by the international community in looking into it as a possible destination for their investments.” He asserts that economic growth which may have slowed down, mostly caused by the last 18 – 24 months of global recession, has not stopped in Iskandar Malaysia. “We shouldn’t forget that Malaysia still has strong domestic demand. This has helped our national gross domestic product (GDP) perform quite well during the first quarter of this year. “Iskandar Malaysia, with its number of incentive packages offered to foreigners and local small medium enterprises (SMEs) and multinational corporations (MNCs), still remains a preferred destination as compared to others in the region,” says Gambero. “MNCs with ‘bigger than average’ investment plans looking for a destination country with good airports, highways and harbours for their next expansion could also consider Tanjung Pelepas situated in south-western Johor,” he adds. Tan agrees that the capital curbs
- Dr. Daniele Gambero
- Samuel Tan
- Wee Soon Chit
is a temporal measure by the China government to “moderate capital flight”. “Being an international powerhouse, it is a matter of time before the measure will be reviewed,” he says adding that the curbs will affect China mainland developers more than local developers as the latter mainly targets locals and Malaysians working in Singapore.
THE BAD
Assessing the situation from another angle, the excessive development by China mainland developers in Iskandar Malaysia Tan opines is not sustainable. “The capital curbs will be an opportunity for China to review its strategies. It also allows the local market to adjust itself to avoid an oversupply of properties to foreigners. The latter scenario will run the risk of developing ghost towns, which are not healthy for Iskandar Malaysia,” Tan says. Property owners in Iskandar Malaysia
have also been reeling from rental yield declines between 15% and 30% due to the glut in properties in the famous southern development corridor. Gambero even goes so far as to say that it is now a “100% tenant’s market”, with completed units poised to flood the market within the next year. Coupled with the weakening market conditions in the next 12 to 20 months, a slide in property rentals and values are inevitable. Capital appreciation of properties he says will take another year or so to recover as incoming units continue to flood the market.
THE UGLY
Of all the issues flooding Iskandar Malaysia, these industry experts agree that probably, the most challenging would be the perception issue arising from the glut situation casting concern there. “Some developers have been slowing down in both their construction and
launching of their new phases and this might further contribute in giving a wrong perception to the market,” observes Tan adding that this is perhaps the most negative aspect of the challenge in Iskandar Malaysia, giving rise to the impression that the property market there is now dampened.
FORTUNE FAVOURS THE BOLD
Having explored the different aspects of the good, bad and ugly, Iskandar Malaysia still holds plenty of opportunities in the long term, observe industry experts. Topmost on the minds of everyone is the perceived glut situation, how the recent imposition of China’s curbs will be resolved and who will take the place of the giant player in Iskandar Malaysia. Tan says “water will have the natural effect of finding its own level”. “Any developments that are not sustainable will have to change course in order to accommodate those which are August 2017 I 15
Special Area Focus: Iskandar Malaysia
16 I August 2017
EXISTING RESIDENTIAL SUPPLY IN ISKANDAR MALAYSIA Terraced
Semi-Detached
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Clusters
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FUTURE RESIDENTIAL SUPPLY IN ISKANDAR MALAYSIA Terraced
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supported by market forces. “Inevitably, in the current challenging environment, developers will have to confront various resistances,” adds Tan. “Affordability is also another major issue. Inability to obtain end-financing coupled with the tightening of lending policies by Bank Negara Malaysia are among the main reasons why developers were not able to fare well in their sales.” Tan believes that inflation resulting in lesser disposable income and high household debt are twin contributors to potential purchasers’ hesitancy to commit to big-ticket commitments such as property investment. Developers also have to contend with higher development cost escalated by increased land price over the years which hinder them from launching cheaperpriced houses. Increased construction and compliant costs also contribute to higher property prices. Such prices are a mismatch to a slowdown market where purchasers are looking for more affordable homes,” he concludes. Gambero opines that foreign buyers have not only been coming from China but also other countries like Singaporea, Japan and Korea who are “still attracted by Iskandar Malaysia”. “In any case, China buyers are only a minority as compared to local purchasers. The latest statistics on foreign purchase of properties in Iskandar Malaysia seem to show that they make up less than 15% of the total transacted properties. “The whole world is available and quite interested in this southern economic development corridor. So, it is mainly a matter of time to let things stabilise first and pick up again soon,” he reiterates. Units in Iskandar Malaysia he adds are also purchased by locals. Gambero says the main driver of Iskandar Malaysia’s property market is the economic development of this southern corridor, which is one of the five identified by the Government for the whole of Malaysia. Others include ECER on the east coast, Corridor Utara in the northern part of Malaysia, Sabah Development Corridor and the Sarawak Corridor of Renewable Energy. “The economic growth in the south is still quite strong and the in-flow of Singaporean and international SMEs
Source: JPPH
and MNCs has not stopped. Demand for housing from both local residents and new families who are migrating to Iskandar Malaysia looking for better working, educational or healthcare opportunities are still on the high side with landed and high-rises priced below RM700,000 still selling at a positive rate. The latest figures he says shows RM200 billion of committed investments in Iskandar Malaysia alone since 2006, of which 55% has already been completed. Gambero says that working in Iskandar Malaysia’s favour is the Hong Kong/
Shenzhen model but on a wider scale as Shenzhen was designed to serve Hong Kong while Iskandar Malaysia addresses regional and intercontinental demand.
TIMING IS EVERYTHING
As in life, timing is everything. Early developers who launched their projects in Iskandar Malaysia include KIP Group of Companies. KIP Group of Companies Director Valerie Ong says its presence in Johor 15 years ago is marked by its KIP Mart
HIGH-RISE RESIDENTIAL PROJECTS (UNDER CONSTRUCTION)
Source: Landserve Research
outlets in Tampoi, Masai, Kota Tinggi and Segamat. “Construction cost is no secret as everybody is operating at about the same rate but the affordable cost of land is our strong selling point as we bought it at a much cheaper rate back then,” she says. The group’s 8scape development was launched in 2014. Situated in the mature neighbourhood of Taman Perling in Iskandar Malaysia, the project spanning 9.2 acres and comprises 1,225 units of serviced apartments she says, is already 35% constructed is faring well. “Our semi-furnished high-rise units are priced much lower at about RM480 psf as opposed to those who bought the land in the last five years at a much higher rate. “We still have land banks in Iskandar Malaysia but looking at the market situation, we want to concentrate and ensure that all our malls are maintaining that kind of yields and rental which is our utmost priority,” she says adding that the group is targeting to launch another two blocks in 4Q17,” shares Ong. She sees potential in this mature area and despite the current slowdown situation, people are still buying for their own occupancy. “We are getting lots of local interest from the surrounding townships of Taman Perling, Taman Sutra and Skudai. “At the end of the day, it will not be a ghost town. We see opportunities in Johor Baru that is not just limited
to Iskandar Malaysia because of the scarcity of land in Singapore,” she adds. Juggling a fine balancing act with its maiden D’Pristine @ Medini in Iskandar Puteri, Iskandar Malaysia development, B&G Property Director of Sales and Marketing Dato’ Soo Kai Chee says its early entry in 2012 gave it its advantage. Its catalytic mixed-use landmark project here with a gross development value (GDV) of RM1.8 billion located on 8.43 acres of land on a lease nature has seen its SoFo (Small office Flexible occupancy) units record 80% take-up. Its buyers comprise mostly foreign buyers from Taiwan, Singapore and Indonesia. Dato’ Soo believes that the property market is cyclical will rebound once again. The Singapore effect he says will benefit Iskandar Malaysia as it is much more affordable to conduct business there, given its cheaper back room services, workforce and labour costs. BCB Berhad Executive Director of Sales and Marketing Tan Lindy opine that for property cycles, booms are usually followed by slumps and then by market recovery. “The stages in the cycle are driven by various factors affecting supply and demand including interest rates, consumer debt-to-income ratios, confidence levels, Government policies.” Thus, any positive changes in these factors she says will bring about its recovery adding that the group has over 675 acres of land bank in Johor mainly in Batu Pahat, Kluang, Johor Bahru and
Pontian. Phase 1 of the group’s Elysia Park Residence in Medini, Iskandar Malaysia that was launched in 2015 with a GDV of around RM650 million has already seen two thirds of its 981 units sold. Meanwhile, Landserve’s Wee doesn’t think the current situation will affect the local market but more so, the foreign market. He believes that Iskandar Malaysia’s role is beneficial in the sense that it will help create jobs. “I tend to believe it’s positive. Imagine when the double sea and land connections take place, Iskandar Malaysia will be more positive in terms of connectivity.” He adds that once the Rapid Transit System (RTS) is completed in 2019 connecting Johor Bahru to Woodlands in Singapore, the connectivity will encourage more people to live in Johor Bahru and work in Singapore. “I hope the High Speed Rail (HSR) will be completed by 2026 which is critical for Johor Bahru and Iskandar Malaysia to grow further,” he ethuses. Gambero says that “time is of the essence” for Iskandar Malaysia. Being a development corridor, Iskandar Malaysia is a long-term game. While demand still exist for high-end products he adds that existing supply of pricey properties might take some time for the market to digest. “My personal take on Iskandar Malaysia is that it will take a good three to four years’ timeframe for it to rebound to a good market situation for all types of products. The affordable market there is also backed by strong demand,” he says. The development of Iskandar Malaysia say Tan, was guided by Comprehensive Development Plan (CDP). Last year, this was succeeded by the Comprehensive Development Plan ii (CDPii) that follows the Circle of Sustainability with its holistic ecosystem anchored by wealth generation, resource optimisation and low carbon, etc. in a continuous cycle. Gambero believes that the saving grace at day’s end would be a properly planned and executed economic growth that will take its time to be completed. “The original CDP for Iskandar Malaysia entails a timeframe of 20 years which is scheduled for completion in 2025. We are only halfway through, so please be patient,” he sums. August 2017 I 17
Special Area Focus: Iskandar Malaysia Food Trail
Famous blogger
Johor Kaki shares 5 hidden eatery gems at Iskandar Malaysia’s thriving five zones Check it out!
Zone A - JOHOR BAHRU CITY CENTRE
Zone B - ISKANDAR PUTERI
This is Johor Bahru’s take of Kacang Pool, a Middle Eastern staple. Abroad, the dip consists mashed broad beans served with unleavened flatbread. In Johor Bahru, the spicy broad bean beefy stew comes with a sunny side up egg and thick toast greased with margarine. This treat is created by Johorean Haji Makpol who owns a restaurant and stalls in Johor and Putrajaya. Original Kacang Pool Haji stall | Gerai 3, Medan Selera Larkin, Susur 5, Jalan Tun Abdul Razak | GPS: 1.485586,103.750205
MAGNUM Sports Cafe is the go-to place to watch the big games while enjoying scrumptious ribs, steaks, burgers and quarts of beers feted by the cool breeze at Puteri Harbour. Make sure to try the signature MAGNUM burger - the juicy double beef burger really lives up to its mighty big name. MAGNUM Sports Cafe | Puteri Harbour, Johor Bahru | GPS: 1.416812,103.658698 |
E
JOHOR
ISKANDAR PUTERI
A
D
B C SINGAPORE
Zone C - WESTERN GATE DEVELOPMENT
Zone D - EASTERN GATE DEVELOPMENT
Zone E - SENAI-SKUDAI
Johoreans and Singaporeans flock to Gelang Patah for seafood. One of the most popular is Chua Kee which is famous for its black pepper crabs. The sauce is sweet, savoury and peppery spicy but we can still taste the crab’s natural briny sweetness in its juicy flesh. Restoran Chua Kee | No 1 Jalan Kacang Panjang, Gelang Patah | GPS: 1.447108, 103.586133|
Rahmat’s deep-fried siakap is one of Johor’s signature food experiences. To eat it, we lift the layer of scales and enjoy the warm white juicy flesh inside. It is sweet with a slight earthly taste but mix in a little of Rahmat’s sambal chili, and the savoury spicy kick turns everything into one delicious mouthful. Kedai Makan Rahmat | 3, Jalan Pantai, Kampung Pasir Putih, Pasir Gudang | GPS: 1.434552,103.931629 |
Restoran Monyet’s specialty is their handmade lou shi fun or “rat tail noodles”. The lou shi fun is either served with black sauce or curry laksa. My favourite is Monyet’s curry laksa which is mildly sweet, savoury yet spicy. But, the star is their lou shi fun which is soft and has a nice rice flavour as it is handmade purely from rice grains without any tapioca starch. Restoran Monyet | 3, Jalan Selesa 1, Taman Selesa, Senai | GPS: 1.604895, 103.639241 |
18 I August 2017
Developer of The Month
BCB BERHAD
CLINCHES ANOTHER GREEN AWARD BCB Berhad adds another feather to its cap by clinching yet another green award in the Green Champions Category – Innovative Urban Green Park given by the Institute of Parks & Recreation, Singapore By: Mages PV Lingam
B
ACHIEVING MILESTONES
B
CB Berhad (BCB) has come a long way as a distinctive developer in the southern part of Peninsula Malaysia with most of their development projects concentrating in Johor. BCB Executive Director of Sales and Marketing Tan Lindy shares the history of the establishment built by her father Group Managing Director Dato’ Tan Seng Leong with his many achievements there earning him the title of Father of Kluang in Johor. Sharing its history, she says the company was incorporated as a private limited company on July 13, 1988 under the name Kemajuan Buditama Sdn Bhd. On August 1995, the company was converted into a public company and assumed its present BCB Berhad name. It was then subsequently listed on the Main Board of the Kuala Lumpur Stock Exchange on Dec 3, 1996. 20 I August 2017
CB has not looked back ever since but has diligently continued on its property journey in building outstanding developments based on its tagline, Building Communities and Beyond (BCB) in line with its vision or concept of providing communities with residences amid greenery and other facilities. Top on its list of achievements was its sterling win attained at Property Insight’s Prestigious Developer Awards (PIPDA) in 2016. The developer was named the Outstanding Developer in the Southern Region during the prestigious PIPDA Awards while Elysia Park Residence was named the Best Hi-Rise Development in the Southern Region. HomeTree was also named the Best Family Living Development. The developer also previously scored two major accolades at iProperty.com Malaysia’s People Choice Awards 2014 when its Concerto North Kiara project in Dutamas, Kuala Lumpur won the Best Luxury High-rise Development award. Meanwhile, Long Branch Residences, the first phase of its HomeTree development in Shah Alam, Selangor was bestowed the Best Luxury Landed Development award.
HomeTree also successfully won the same award in the consecutive year. In 2016, another project of BCB Berhad, the Elysia Park Residence project in Iskandar Puteri, Johor won the Best Southern Development Award, while HomeTree won the Best Residential Landed Development Award. BCB just added another feather to its cap when it clinched yet another green award in the Green Champions Category – Innovative Urban Green Park given by the Institute of Parks & Recreation, Singapore on July 19, 2017. It bagged the Innovative Urban Park Award for the Mahkota Park that was upgraded at a cost of RM10 million by the group. It has adopted the park since 2015. This project falls under the banner of the Elysia Park Residence at Medini. One of its crowing achievements lies with it being recognised and endorsed by the International Park and Recreational Singapore as well as World Urban Park. “We are proud of our latest win for Green Champions Category – Innovative Urban Green Park awarded by the Institute of Parks and Recreation, Singapore,” shares Lindy on its which honoured BCB’s smart and green projects as worthy of recognition.
The prestigious award is also endorsed and recognised by International Green Organizations representing green cities and commercial developments which include vibrant urban parks, open space and recreation sectors.
FUTURE ASPIRATIONS
Lindy shares that there are a few commercial project launches being planned in the pipeline not just in Johor but also the Klang Valley that falls under the Versis series. The Versis series comprise commercial developments including Versis Medini in Iskandar Malaysia, Versis Batu Pahat and Versis Kota Kemuning in Shah Alam. “We have already launched Versis Batu Pahat in June 2017 and target to launch Versis Medini in the 3Q of 2017 once the Coastal Highway Southern Link Road is linked,” adds Lindy.
SPOTLIGHT ON VERSIS MEDINI
The Versis Medini development fronts the coastal highway of the southern link road that is situated within the Medini Central Business District (CBD) right next to Singapore. The project is expected to
bring a gross development value (GDV) of RM520 million for the developer. Phase 1 of its commercial shoplots are priced from RM 2.28 million. Apart from that, the development will also entail 3-storey shops, semi-detached shops, bungalow shops and some condominium units located above Phase 2’s 3-storey shops. “Versis Medini is targeting seasoned investors both locally and internationally as we are giving guaranteed rental return (GRR) of 5 % per annum for four years,” asserts Lindy. However, selected food and beverage (F&B) and other operators might stand a chance to obtain different packages as they do not require GRR. “With this, we can have better control over the tenant mix of the development. In fact, we have started talking to potential tenants even at this stage, while the project has yet to be launched,” continues Lindy. Lindy adds that coordinated control over the tenant mix of the development can be attained after the expected official target launch of Phase 1 of this project that is scheduled to take place either in August or September. The good news according to Lindy is that close to 50% of August 2017 I 21
Developer of The Month
“
As a builder of public spaces, BCB understands there is a need to return to the old way of community interaction and relationships. That is why we build homes, not houses” – Tan Lindy
the units have been taken up following a 70:30 ratio of local and foreign buyers.
PORT FOLIO OF PAST PROJECTS
BCB’s property development projects are mainly based in Johor Darul Takzim and largest rooted in the Batu Pahat and Kluang townships, while others are located in Johor Bahru, Yong Peng, Parit Raja – Johor and Seremban (Negeri Sembilan).The developer has also undertaken project developments in North Kiara (Kuala Lumpur), Senawang (Negeri Sembilan) and Kota Kemuning (Shah Alam). The developer also has about 800 acres of undeveloped land that comprise 125 acres in Kota Kemuning, Selangor and 675 acres in Johor. Past projects launched include Concerto North Kiara in Kuala Lumpur. The high-end condominium development that was launched in January 2012 with 470 units comes with a GDV of RM565 million, was completed in December 2015. 22 I August 2017
“Seated on a hotspot of North Kiara, neighbouring Mont’ Kiara, Bangsar and Damansara, this luxurious project was meticulously planned to give the buyers adequate features and amenities for convenience,” opines Lindy. Meanwhile, the developer has also launched another luxury project in Phase 1 of Elysia Park Residence in Medini, Johor. The development which is currently in progress comprise a highend condominium with a GDV RM650 million which was launched in August 2015. Lindy reiterates that Phase One has three tower blocks consisting of 981 units and is seated on an eight-storey car park podium. The development is encircled by an award-winning park called Mahkota Park which features the iconic Sultan crownfountain perched at the top of the hill park. “This project combines the best of urban living complemented by the green and natural environment. The initial selling price of RM700 psf is now going at about RM1,000 psf,” says Lindy highlighting how people tend to be receptive of residing in sustainable areas with extensive green lungs. Another project that was completed in mid-2016 is Long Branch Residences, being phase one of five phases of
HomeTree at Kota Kemuning, Shah Alam in Selangor that has a GDV of RM274 million. These 101 units of high-end bungalows, designed with a grandeur lifestyle in mind, connects easily to major highways including Shah Alam Expressway (KESAS), North-South Expressway, and the Federal Highway. The HomeTree project was planned with green concept living for its community at large. “Phase 2 of HomeTree is called Broadleaf Residences which has a GDV of about RM620 million. The development comprise 99 units of 3-storey bungalows and 166 units of 3 storey semi-detached units,” she says of the gated and guarded development spanning 40 acres of land fronting the Klang river,” adds Lindy. “It is unique in the sense that it has no main gates or fencing and boasts an open American style concept. This project is expected to be launched in August 2017. The bungalows are priced at about RM530 psf while the semi-detached units are priced at about RM420 psf.
GAINING GREATER GROUND
Despite the current downturn, Lindy says the property market is cyclical hence, the group will continue to build on its strong
presence in Johor. “We believe that long-term players will eventually gain from the growth of Iskandar Malaysia. In the long term, I believe that Iskandar Malaysia in Johor will develop and transform itself into a new economic power house in the region with good growth prospects. Due to people now living in an era of constant change in the near future, Lindy feels that change is the new norm. “The biggest challenge has always been knowing when to embrace change. Many a times, we are not sure if we should be an early adopter or participate late in the game. We need to determine when to embrace the change and when to stay the course. “Therefore, we believe in investing in constant learning for everyone in the group. We make sure that we are always prepared to embrace that change to meet the oncoming challenges ahead which is a strategy we believe in,” opines Lindy.
FORGING FORWARD
The group believes in promoting community interaction and injecting lifestyle elements into its projects. “As a builder of public spaces, BCB understands there is a need to return
to the old way of community interaction and relationships. That is why we build homes not houses,” opines Lindy. She shares that as a developer, it is important to conceptualise and develop from a micro to macro perspective. “From a micro level, we can affect, dictate and even change certain usage patterns in interior spaces. These spaces are more intimate and personal, which allows for customisations and personalisation,” says Lindy. Something as simple as a switch or power point installed at a convenient height or inconvenient height can make a world of difference for the end users. From a micro level, consumption patterns changing to lower consumption would also mean the reduction of utility bills. All of BCB’s future projects have strong emphasis on good layouts, lifestyle and connection with nature. The catchphrase for BCB she says hinges on “Educate, Empower and Enrich” in which community liveability has been a priority for the developer. Emphasising green concepts and the sustainability, she says could introduce self-planting gardens in their landscape designs. She believes this move could foster closer community interaction. Naturally, BCB has an ongoing agenda to encourage Gen-Z or the Millennials to plant their own produce like spring onions or other herbs with the assistance of older family members or the community as the nurturing and learning process
would ultimately educate, empower, enrich their lifestyles.
WORK HARD BUT SMART
In conclusion, Lindy shares her insights on her management style, being involved in sales and marketing of the projects undertaken for BCB. She says to be a leader, “We need each other to reach our goals. We get things done through other people. Firstly, we must get the right people for the job. Secondly, is delegation and finally is the supervision”. To be effective, she prioritises team work and meeting regularly to table the work-plans. This will be cross-checked to avoid losing focus on the implantation and planning stages. She always sets short and long-term goals for herself and the team to evaluate their goals two or three times a year to check on their progress on any forthcoming projects or campaigns. As for her take on the current property market, she says seasoned investors know that “timing the market” is more important than “time in the market”. “One can certainly wait and see. However, property will still inflate over time. When others are not buying, seasoned buyers can get a great deal; and when others are buying, seasoned investors sell and make money. Therefore, the lesson for investors is that they need to run counter-cyclical to the psychology of other people when considering any investments,” says Lindy. August 2017 I 23
Celebrity Corner
Creating Inclusive Winning Designs for All AXN Channel’s Apartment finalist Winston See takes as much pride in his own pad as he does when it comes to designing for his clients By: Mages PV Lingam
P
roperty Insight recently visited Winston See’s condominium in Tropicana Avenue in Kota Damansara, Selangor. See, 31, is no stranger to a vast Asian audience, having battled it out on AXN Channel’s Apartment: Rising Stars Edition, a popular design reality series in Asia. Incidentally, he beat the odds to emerge as the runner-up for the season finale. Matching his colourful personality, See also designed the cosy interior space with a mix of colourful cushions strewn about the blue sofa, with green plants peppered around the condominiums. Taking pride of place in the living room is an interesting triangular-shaped wooden structured ceiling.
25 I August 2017
An architect by profession, See is a bubbly and charming person who studied and worked concurrently during his university days at Robert Gordon University, UK. In 2012, he left the UK after completing his Masters in Architecture and returned to Malaysia. See’s interest in architecture and interior design, saw him starting out his career with BEP Akitek Sdn Bhd for six years; concentrating on commercial projects which he felt limited his personal creativity. On the business front, just six months ago, See and his wife, Amy Ang who is an architect and interior designer, decided to open their own practice called Paperspace
Celebrity Corner and furniture designer as well as US television personality and home product designer Genevieve Gorder. Coincidentally, See shares that his previous work tenure with BEP Akitek saw him designing various townships for UMLand. The developer he explains, strives to be different and is willing to explore new ideas. In addition to this, he has also designed and master planned 48-acres of Senja Residences in Seri Kembangan, a development undertaken by BRDB Developments Bhd which houses 278 units. Apart from that, See has also designed residential projects for Paramount Property Development as well as being involved in architectural project management for Eco City by SP Setia Bhd.
“
For us, the results speak for themselves. I invest 100% effort and ideas into every challenge and do not repeat ideas” - Winston See
Sdn Bhd. Coincidentally, See shares that he started his property investment journey during his early years working at BEP Akitek. To date, he owns a unit at Sunway Geo Residences in Subang Jaya, The Verve Suites in Old Klang Road and Tamarind Suites in Cyberjaya. His latest property acquisition is a unit at Tropicana Avenue in Kota Damansara. He also has an oversea investment which is a studio suite in Makati, Manila, the Philippines. See says he prefers to stay in Tropicana Avenue due to its strategic location. Meanwhile, the other units are being rented out. Being among one of the many who are taking to the current popular trend of AirBnb taking off well, he says the studio unit in Manila, registered as an AirBnB home stay for short stints, is consistently fully booked. The high-rise tiny apartment unit with only 290 sq ft in built-up area he shares costs a whopping RM500,000. However, he admits that he was smitten by it at first sight due to the superb view and location.
HOW IT ALL BEGUN
See’s passion for design was interestingly derived from hours spent playing live simulation games called The Sims which enables players to simulate reality by either building a village or constructing a new life for instance. In addition, over the years, two of his sisters who are also architects themselves inspired him to be more passionate in designing and less motivated by monetary gains. 26 I August 2017
Even his wife Ang was the one responsible for encouraging him to join, the popular Apartment: Rising Stars Edition design reality series. In fact, both of them qualified for the series before learning that it would be an individual challenge. Ang eventually opted out while See continued to battle it out on the design reality series. Though professing to being an introvert and camera-shy at first, the 10 weeks’ spent during the recording session he says changed him to become more outspoken and bold when in the spotlight. See struggled for the first two weeks but continued to have fun as the show progressed. Along the way, he picked up more design skills. Being passionate about creating new designs all the time, he says he tends not to repeat the same ideas for each challenge. Each team was given up to 15 hours to complete a series of challenges. From this experience, he managed to adapt and find solutions for each difficulty faced during the mammoth feat. Each different design challenge would see him utilising different materials for example, ombre hues for the bedroom or marble walls for the kitchen coupled with a few combinations of furniture, ceramics and more. The series was shot at United Malayan Land’s (UMLand) Bandar Seri Alam residences located in Johor, with worldrenowned interior designer LaurenceLlewelyn Bowen presiding as the head judge. The show was hosted by Jamie Durie, an award-winning hotel
WINNING STRATEGY
See attributes his winning moves to ironically not employing any previously though out strategies or plans. Instead, he took one step at a time and came up with new ideas to meet each challenge. “For us, the results speak for themselves. I invest 100 % effort and ideas into every challenge and do not repeat ideas,” adds See. See opines that that the property and architectural industries have slowed down whereby the interior design business is flourishing as people are still
Courtesy: All interior pictures of Winston See’s unit in Tropicana Avenue at Kota Damansara
willing to invest in their properties. Although both industries differ, he still believes in the integrity of the architectural business with the finished products and designs reflecting his dedication and passion for the job. “As a design consultant, I firstly establish the clients’ requirements and then advise them on the pros and cons of a particular design as well as take into account, challenges that need to be faced as I view this as a working,” adds See. See is a person who prefers transparency in his work and personally abhors third party involvements. As such, he wants to dispel the notion that interior design is always seen as only being in the domain of high-end clients.
PERSONAL STYLE
Basically, See prefers a very vintage and rustic design style with a colourful mix of colours and a tinge of tropical style which
is suitable for the local Malaysian climate. “When my personal style interludes with the client’s needs, that is when the magic happens,” asserts See. He admires the work of Deshamanya Geoffrey Manning Bawa, the late renowned Sri Lankan architect and among the pioneer architects of his generation globally known for his tropical modernism works. See says that during the Apartment challenge show, he blended his love for tropical distinctive styles into some of his designs. His winning designs profiled a strong tropical look and feel which is at once casual and has a consistent theme. Staying in a condominium now he shares that his dream home would ideally be a landed property with a garden teeming with landscape features. Personally, See is attracted to Singapore’s architectural design with its innovative designs and thinks that Malaysia has plenty of room to grow in terms of developing a distinctive design style.
Commenting on the property market, he thinks it would take another two years before the property market booms. Having worked closely with various developers here, he says this has enabled him to analyse market movements with a clearer perspective. “Property prices rarely drop but the earning power of prospective buyers do not escalate consistently either. Therefore, the selling margin stays stagnant,” adds See. The cycle as he sees it, involves proper synergies between property developers, owner occupiers who have bought into the property and investors in an ongoing and repetitive mode. With time, the value of the property is bound to appreciate. Imparting a nugget of wisdom to budding designers, See advises them to design with passion. At the end of the day, he says the satisfaction derived from the client’s appreciation of one’s work is the best feeling in the world. August 2017 I 27
Entrepreneur Insight
FROM
ZERO TO CEO
KnowledgeCom Sdn Bhd CEO ST Rubaneswaran’s surprising rise to his present position was the result of saving the company from its heavy debts and transforming it into an award-winning outfit By: Mages PV Lingam
28 I August 2017
P
roperty Insight recently met up with KnowledgeCom Sdn Bhd (KnowledgeCom) Chief Executive Officer (CEO) ST Rubaneswaran over a latte to get his insights on how to be a successful entrepreneur. He was an engineering graduate from Bandar Utama College (KBU) who was unemployed for eight months before landing a sales job with KnowledgeCom during which time he marketed training courses to working adults. Surprisingly, as fate would have it, in 2008, there was a massive turnaround of circumstances whereby he took charge of the company as the CEO and became the brainchild behind the successful recovery of the tech company which underwent massive losses due to a host of issues including unpaid debts, etc. To gauge the company’s success and progress under his capable leadership, in a short time-span alone, KnowledgeCom
was awarded the Human Resource Ministry Awards 2015 and SME100 Fast Moving Companies in 2015 besides having won other awards. Adding another feather in his cap, Rubaneswaran was also named Ernst and Young (EY) Emerging Entrepreneur of the Year 2016 Malaysia. Having climbed the ladder from the bottom up, Rubaneswaran shares his dreams of wanting to see more people equip themselves with an entrepreneurial drive by utilising the facilities provided by the respective state governments. Placing priority in branding via social media and concentrating on business growth plays a part not only locally but overseas as well. Hence, he encourages young entrepreneurs to start early, continuously explore possibilities, adapt to changes and embrace technology training in their businesses.
A SNIPPET FROM ST RUBANESWARAN PI
PROPERTY INSIGHT (PI): WHAT IS YOUR COMPANY ALL ABOUT? ST RUBANESWARAN (STR): KnowledgeCom is all about being technology-savvy. We are changing Malaysia’s Small and Medium-size Enterprises (SME) entrepreneur’s mindset from a 2.0 level concentrating on mass production with assembly lines to a 4.0 level dealing with big data analytics and computing. Massive productivity, less production time and good usage of manpower can be achieved with this change.
PI
WHAT WERE YOUR THOUGHTS WHEN YOU DISCOVERED THE COMPANY WAS LADEN WITH HEAVY DEBTS? STR: At that time, I felt that I am young enough to save it. But if I was in my thirties or forties, I would not have made that move. In 2008, I had the foresight that the company can be revived with the support from some shareholders. I received a Eureka moment when the company ran into nothing less than a RM1.7 million debt with only a mere RM600 in its current account.
PI
WHAT WAS YOUR CLEVER STRATEGY IN BEING ABLE TO RECOVER FROM THOSE CHALLENGES? STR: I had confidence that the company could be salvaged so we strived hard with ten staff on a limited payroll working long hours. Ironically, after taking over KnowledgeCom and operating for three years in the capacity of CEO, my staff and I managed to save company from bankruptcy and also regained the trust of our clients. In order to have a strong mindset to succeed, one needs to work out ways to increase the sales and marketing strategies to win back clients’ trust and deliver on time what was promised. One also needs to manage finances smartly and professionally by inspiring employees to work hand-in-hand together which are the fundamental keys to realise the actualisation of dreams.
PI
HAVING ACHIEVED YOUR MAMMOTH ACCOMPLISHMENT, WHAT WAS THE FEELING OF SUCCESS LIKE? STR: In 2012, the company projected a RM1 million after-tax profit and was debt-free. We continued to offer a wider range of Information Technology (IT), Systems Applications and Programmes (SAP) as well as certification courses for working adults. We also partnered with SAP, Oracle, Pearson, Human Resources Development Fund (HRDF), an agency under the Ministry of Human Resources and more to provide certifications and platforms for our clients to excel in related programmes. Finally, I saw all our hard work being paid off handsomely. We continued to achieve our goals, vision and mission and have never looked back since. However, being grateful as it is has taught us to be persistent and persevere in acquiring knowledge, skills and qualifications - anytime and anywhere.
PI
WHAT ARE YOUR FUTURE PLANS? STR: We are improvising the training modules and giving participants technology-related training to improve their careers. KnowledgeCom is currently working to open 25 site offices called Centre of Excellence in Technology and Academy of Professional and Industry Certification for current and future trainings. Placing priority in branding via social media and concentrating on business growth plays a part not only locally but overseas as well. Hence, I would encourage young entrepreneurs to start early, continuously explore possibilities, adapt to changes and embrace technology training in their businesses.
PI
WHAT ARE YOUR PLANS FOR PERSONAL ACHIEVEMENT? STR: To challenge myself physically by climbing higher mountains and to experience mental aptitude as well as to ward off weaknesses boosted by a never give up attitude. I must know my weak points and also find ways to overcome them. I have successfully climbed Mount Kinabalu and I have no intention to stop anytime soon either! Learning how to face and conquer the mountains in front of me has a lot to do with my endurance and determination to emerge ace in whatever I do in life.
August 2017 I 29
A DISTINCTIVE DEVELOPMENT IN JOHOR BAHRU Mayland (Johor) reveals its latest Tower E (Elderberry) @ PARC REGENCY with attractive features and packages to benefit new buyers By: Mages PV Lingam
S
trategically located on 9.15 acres of FREEHOLD land right in front of Johor Bahru’s TESCO Plentong, PARC REGENCY comprises 2,352 units in five towers with breathtaking panoramic views overlooking Johor Straits and Singapore. Parc Regency has successfully completed and handed over its Tower A (Alder) , Tower B (Birch) and Tower D (Dove) totaling 1,392 units of Serviced Apartments last year. Parc Regency is now launching its new Tower E (Elderberry), offering enhanced packages with upgraded features based on its tagline of “Premium Lifestyle at an Affordable Price”. The limited 360 units of Tower E boasts affordable selling price from RM361,000 per unit with upgraded value added features with its spacious floor layouts with built-up areas ranging from 800 sq ft to 1,000 sq ft. The upgraded value added features includes free air-conditioners, kitchen cabinet etc. Comprehensive range of facilities to enhance the value-added proposition of the Parc Regency includes Grand Courtyard, Jacuzzi and Spa Pool, Sauna Room, Gymnasium, Café, Games Room, Meeting & Multi-purpose Hall. In addition to these facilities, the development also stands apart with its offerings of leisure and outdoor activities including a BBQ Pavilion, Basketball Court, Swimming Pool and Sandpit located within the apartment project. 32 I August 2017
1 The 24-hour security of Parc Regency is backed by close-circuit television (CCTV) cameras installed at strategic areas including the lift lobbies and guard house. Due to its strategic location in the mature neighbourhood, residents of Parc Regency can access and enjoy nearby popular amenities such as AEON Tebrau City, Giant Hypermarket, Tesco Hypermarket, Daiman 18 Golf Club and Sunway College, Hospital Sultan Ismail, Hospital Desa Permas Jaya. The project is also highly accessible via the Pasir Gudang Highway, Eastern Dispersal Link (EDL), Jalan Masai Baru and Tebrau Highway. Parc Regency is also offering enhanced
packages with attractive benefits for buyers at low entry price offers. These include a minimal booking fee of RM2,000, free Sales and Purchase Agreement (SPA) and Loan which covers the Legal Fee, Disbursement and Stamping Fee. Construction of Tower E (Elderberry) has already commenced and slated for completion in the second half of 2019. The development of PARC REGENCY Serviced Apartment is undertaken by Mayland Projects (Johor) Sdn Bhd, a subsidiary of Malaysia Land Properties Sdn Bhd (Mayland) who has also successfully completed the renowned PRIMA REGENCY and PALAZIO serviced apartments in Johor Bahru.
1. 2. 3. 4. 5.
Parc Regency’s Pool View B Plus - Master Bedroom A1 Plus - Kitchen + Dining Area A1 Plus - Living Hall B Plus - Study Room
2
5
PROPERTY DETAILS FOR TOWER E (ELDERBERRY) Property Type: Serviced Apartment Built Up Area: 800 sqft Type A1 Plus 1,000 sqft Type B Plus
3
Price: From RM361,000 Benefits:Free 2 Air-conditioner for Type A1 Plus Free 3 Air-conditioner for Type B Plus Free Kitchen Cabinet Special Features: Strategic Location Units either facing Singapore or the swimming pool
PROJECT DETAILS Address: PTD 101381, Jalan Masai Jaya 2, 81750 Masai, Johor Darul Takzim. Tenure: Freehold Website: www.maylandjohor.my/parc/ Expected Year of Completion: 2H 2019
4 August 2017 I 33
Investment Talk
SINGAPORE REITS:
MORE LONG-TERM VALUE A
ffin Hwang Asset Management Senior Portfolio Manager Chow Kar Tzen presents his findings into the viability of Singapore Real Estate Investment Trusts (S-REITs). • Yield spreads for Singapore-REITs (S-REIT) most attractive in region at 4.4% • Less impact seen from rising interest rates • Higher distribution per unit (DPU) growth potential for office, business parks and hospitality REITs. •
SWITCHING GEARS, BUT DON’T FORGET THE BRAKES
Whilst we are seeing a collective shift globally to a risk-on approach against expectations of higher earnings and a global economic recovery - investors should not neglect to also stack-up on defensive asset-classes, should markets come to an unruly end. Asian REITs are such possible defensive asset classes, particularly S-REITs - as they continue to perform well and offer one of the most attractive yield spreads (Dividend Yield – 10 year Bond Yield) at 4.4% in the region. More distribution per unit (DPU) upside is also seen from further asset rejuvenation projects, redevelopments, and a consolidation theme in the industry.
LESS IMPACT FROM RISING INTEREST RATES
In 2016, S-REITs outperformed the broader Strait Times Index (STI), rallying by over 11% until Sept 16, as prior expectations for interest rate hikes were dialled back due to key risk events that occurred in 2016 like Brexit, a further correction in crude oil prices, 34 I August 2017
and persistent negative interest rates in Europe and Japan. However, with improving economic fundamentals as well as anticipation of further pro-growth policies under the new Trump administration – we saw interest rate expectations starting to pick-up again. Taking these cues, the US Federal Reserve (Fed) raised rates by 25 basic point (bps) in its Dec 16 Federal Open Market Committee (FOMC) meeting – causing equity markets to rally overall post US-elections, as funds ploughed back to riskier assets. Consequently, we saw a correction in the prices of REITs. Generally, REITs do not perform well under an environment of rising interest rates. As US Treasury rates rise, the yield differential (or yield spread) between US Treasury bonds and REITs will narrow. Thus, REITs will appear less attractive as investors will now seek higher yields to offset the risk taken for REITs as compared to treasury bills which are considered risk-free.
Coming into 2017, the Fed raised interest rates in its June 17 FOMC meeting, which was its second rate hike this year despite lower inflation data. The Fed also unveiled further plans to reduce its US$4.5 trillion (RM19.26 trillion) balance sheet which could spell further uncertainty on how markets will react to this big unwind of its largescale purchases of mortgage bonds and government backed securities which it accumulated back in 2008. Notwithstanding, we think there is still some leeway for S-REITs before they see the full impact from rising interest rates. The majority of S-REITs have hedged 75 % – 85 % of their borrowings into fixed debt, with the weighted average debt maturity period ranging between two to three years. For example, in 2017 and 2018, S-REITs have only 9% and 21% of total debt due for refinancing respectively. Thus, the full impact of higher borrowing costs will not be seen until the next few years and DPUs should still hold up.
Singapore REITs Performance
Singapore REIT Yield 8.0%
8.5% 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0%
6.3% 6.3% 4.7% Jan-10
Jan-11 Sector Yield
Jan-12
Jan-13 Mean Yield
Jan-14
Jan-15 +1 SD
Jan-16 -1 SD
Jan-17
MORE UPSIDE FOR OFFICE REITS
Stronger DPU growth potential will be seen from the office REIT segment, as Singapore retains its position as one of Asia’s most attractive financial hubs drawing global multinational companies (MNC) to set-up shop in the island city. Whilst some concerns were raised over the vast ports and infrastructure projects under China’s One-Belt-OneRoad (OBOR) initiative which could possibly displace Singapore’s status as a regional hub. However, it still holds a competitive edge with an intricate network of financial services, physical infrastructure, skilled labour, robust regulatory and tax frameworks which are not easy to replicate. The office segment will also see a lack of new supply additions which would be accommodative for rental rates. After two years of high concentration of supply, where almost 4.5 million sq ft of new office space was added to the market - supply is expected to ease thereafter from 2018 onwards with the completion of major developments like Guoco Tower and Marina One in Singapore. A healthy take-up rate for new office space has also been encouraging with occupancies at Guoco Tower ranging between 85% and 95%, and pre-leasing levels at Marina One recorded at 60%. This factor should relieve pressure in the market for tenants to lower rents.
POSITIVE GDP GROWTH TO BOOST DEMAND FOR OFFICE SPACE
Singapore posted a 2.7% increase y-o-y for its 1Q17 gross domestic product (GDP), with improvements also seen in service-producing industries which grew 1.5% year-on-year (y-o-y) in the same quarter. Employment growth in the financial services, internet technology (IT) and insurance sector was also positive, increasing by an average of 5% compounded annually over the last three years. More earnings upside is seen for the segment overall, coming from CapitaLand Commercial Trust (CCT) and Mapletree Commercial Trust (MCT) owing to full-year contributions from
CapitaGreen and Mapletree Business City which were both acquired last year respectively by the two REITs.
RETAIL SPACE REMAINS WEAK DUE TO COMPETITION AND E-COMMERCE
Meanwhile, weakness is expected to persist within the retail segment, on the back of increasing competition with major malls like Changi Jewel, and Northpoint City slated to be completed by 2018. Rentals have also generally weakened over time while remaining flattish. According to Urban Redevelopment Authority (URA), Singapore’s national urban planning authority – rentals are currently at S$40 psf within Singapore’s central shopping district area, falling 2.9% quarter on quarter (q-o-q) in 1Q17. Shifting consumer preferences to online shopping could also be hindering growth for retail REITs. Latest data shows Singapore retail sales (excluding motor vehicles) inch up 2.6% in April, which indicate consumer sentiment is returning, but not necessarily to traditional retailers
anymore. CapitaLand Mall Trust (CMT) which holds stakes in 16 malls in Singapore reported a 0.5% decrease y-o-y in footfall at its malls, as well as decrease of 0.7% for tenant sales psf.
LESS ACQUISITIONS, MORE REDEVELOPMENTS
Against a rising interest rate environment, the pace of acquisitions is expected to slow down in 2017. REITs are unlikely to increase their gearing further, given the sector is undergoing a consolidation with total number of assets sold in 2016 amounting to S$555 million as compared to S$306 million in 2015. However, further asset rejuvenation or redevelopments are more likely, especially now that the development limit for REITs to undertake property development activities was raised to 25% from 10% previously. So far, we have seen CMT redevelop Funan Mall. CCT also recently announced plans to redevelop its existing Golden Shoe property into an office tower. August 2017 I 35
Feature
SUB-SALE TRANSACTION
DO’S AND DON’TS
S
ub-sale properties are purchased in the open market from previous owners. When purchasing a sub-sale property, it is firstly important to conduct a search on the property at the relevant land office. This is to ensure that the seller is the registered owner of the property. Furthermore, by doing so, one can conduct relevant research and find out whether the property has any encumbrances. Before investing in a sub-sale property, investors need to research what they are actually getting for what they are paying. According to Malaysian Institute of Estate Agents (MIEA) Past President K.Soma Sundram, there is only the sub-sale and new properties market when it comes to classification. Each category has its own strengths and weaknesses in terms of being an investment property. To differentiate whether it is a good investment or not largely depends on the individual, so long as it fits their investment portfolio. Some may look for rental returns pertaining to the condominium market while others may be looking at landed properties for capital appreciation in the long term. “Generally, in a sub-sale condominium market, a rental return of 5% to 6% is considered good while landed properties will be much lower as rentals (in this segment of the market) are low,” says Soma. 38 I August 2017
By: Felicia Soon
However, landed properties, due to their more limited supply and higher demand, he opines tend to command higher capital appreciation in the long run. Here are some do’s and don’ts you need to look out for before you decide to buy a sub-sale property.
WHAT YOU SEE IS WHAT YOU GET
When buying a sub-sale property, you can take a look at the completed unit by visiting it and taking time to ascertain the view, furniture and finishings as well as considering the demographics of the neighbourhood. Macquarie Connect Director of Sales and Marketing Ken Teo says, “I am a sub-sale lover because in the case of sub-sale properties, you can see, evaluate and experience the unit’s overall feel instantly which contributes to the environment factor, making this the most stable investment as compared to new developments.” He adds that sub-sale properties are also very good in terms of cash flow management because one can straight away buy the property and lease it out for cash flow. “I like the sub-sale segment because it is very sexy and there is not much capital that is needed,” says Teo.
ASCERTAIN WHAT YOUR BUYING PURPOSE IS
JLL Malaysia Associate Director for Research and Consultancy Veena Loh says there is no simple formula to ascertain whether the purchase - representing either a sub-sale or initial launch is a good deal as every project has to be assessed on its own merits based on its location, unique selling point, comparative pricing to the market and whether it fits the requirements of the buyer. Teo on the other hand shares that when trying to decide whether a sub-sale property is a good or bad deal, the most important thing to consider is whether the property meets one’s investment objective or not. If it meets the investment objective, then it is a good deal. Therefore, most of the time, whether it is a good or bad deal, depends on the objective of the buyer. For example, if a businessman makes a lot of money in business and wants to build a hedge against inflation, then investing in any property that can achieve this is already considered a good deal. Teo himself prefers to buy something that can generate rental income so that he will not face any challenges in paying off his mortgage while giving him revenue at the same time. “Any property that can generate a healthy rental income is considered a good deal for me,” he says. Property flippers he says may prefer to speculate by buying low and selling high. Therefore, properties that are considered as good deals for them comprise those which have the potential for high capital appreciation. Hence, an investor needs to know one’s objectives first in order to understand what a good deal entails. However, some opine that it is better to buy directly from the developer during the launch phase because one can choose one’s unit and also enjoy the financing schemes given out by the developer.
DO CONSIDER THAT SUB-SALE PROPERTIES ARE LOWER IN RISK
Tentatively, new developments tend to have higher risks. Teo further explains that in the case of new development projects, there is always a certain percentage of uncertainty until the delivery of vacant possession (VP) is confirmed for the new homebuyer. However, for sub-sale properties, everything is already there. The condition of the building can immediately be seen right down to whether the place comes with complete amenities. Lastly, the market and rental price around the area can be ascertained. However, for new developments, you will need to wait until VP to know whether the price has been set at a reasonable rate. Therefore, a lesson to learn is that things can change from the time it takes for the VP to arrive which could be up to three years, 36 months or 48 months. For instance, the policy might change or the government may introduce other cooling measures. These are some of the risks borne by new developments. However, if everything pans out well, these developments could fetch better capital appreciation as compared to sub-sale properties.
“
I am a sub-sale lover because in the case of sub-sale properties, you can see, evaluate and experience the unit’s overall feel instantly which contributes to the environment factor, making this the most stable investment as compared to new developments” - Ken Teo
“
Generally, in a sub-sale condominium market, a rental return of 5% to 6% is considered good while landed properties will be much lower as rentals (in this segment of the market) are low” - K.Soma Sundram
HOW ARE SUB-SALE PROPERTIES DIFFERENT FROM SECONDARY PROPERTIES?
Teo discloses that 5% of new projects tend to not be completely built while 10% to 20% may be under-delivered with the risk being borne by the developer. In Malaysia, it is very difficult for a purchaser with small capital reserves to sue a prominent developer and this is where the homebuyer’s tribunal comes in. However, the homebuyer’s tribunal also has its own challenges whereby they can have the power to award remedies but not have the power to execute it. For example, if someone sues a developer through the tribunal, it can award compensation. However, if the developer refuses to pay the compensation, buyers cannot do anything unless they hire a lawyer to sue the developer by going to the civil court. The problem of going to a civil court is that buyers would need to engage a lawyer first to open a file with a chargeable fee involved. In the end, buyers may win the case but lose money in return. The moral of the story is that buyers should always purchase from reputable developers because of their reputation for integrity and consistency in delivering good quality properties to their buyers. August 2017 I 39
Legal
DIFFERENT TYPES OF
TITLES IN MALAYSIA T
he National Land Code 1965 (NLC) which came into force on January 1, 1966, is one of the key legislations for conveyancing transactions in Peninsular Malaysia. Conveyancing is the process of transferring the legal ownership in property from a vendor to a purchaser pursuant to a Sale and Purchase Agreement (SPA). Sabah and Sarawak have their own respective Land Codes i.e. Sabah Land Ordinance 1930 and Sarawak Land Code 1958. The NLC will not apply to conveyancing transactions involving properties held under master title. However, the NLC will apply to conveyancing transactions whereby the property is held under a separate document of title or a separate strata title. Section 40 NLC among other things, outlines that all state land belongs to the State Authority. Section 76 NLC, among other things specifies that the alienation of State land shall consist of its disposal by the State in perpetuity commonly referred to as freehold land, or for a term not exceeding 99 years which is commonly referred to as leasehold land. 40 I August 2017
LAND TENURE IN MALAYSIA UNDER THE NLC FALLS UNDER ONE OF THE TWO CATEGORIES BELOW:
1.
Land held under freehold title for example, land held in perpetuity pursuant to a disposal of State land under Section 76 (aa) NLC. This is although ownership is not absolute as the State Authority can still acquire it under the Land Acquisition Act 1960 (LLA) for any public purpose among others as provided
for under Section 3(1) of the LLA. Section 76 NLC sets out among other things, to specify the circumstances in which State land may be alienated in perpetuity; or
2.
Land held under leasehold title, i.e. the land is owned by the State Authority but the individual who has acquired a leasehold title in the said land may occupy the land for any time period not exceeding a term of 99 years (the maximum period of lease permitted
under Section 76 (a) NLC ). Upon the expiry of the period of the lease, the land reverts to the State Authority. Section 90(A) NLC provides among other things, that the proprietor of any land alienated for a term of years may apply to the State Authority for the term to be extended and that the application shall be made before the expiry of the term as specified in the document of title. The land rules of the various States in Peninsular Malaysia also govern the extension of lease for leasehold properties. As an example, Selangor is governed under the Selangor Land Rules 2003. The formula for the calculation of premium for lease extension is provided in these rules for various categories of land use. A land title is a document evidencing among other things, the ownership of the person described in the title.
THE NLC SETS OUT THE VARIOUS TYPES OF TITLES INCLUDING THE FOLLOWING: QUALIFIED TITLE: Titles when first issued, are provisional or qualified titles. A qualified title means that the final survey of the land has not taken place. The provisional title numbers are prefixed as Qualified Title (Q.T.) or Hakmilik Sementara (H.S.) which means that it is a qualified title. FINAL TITLE: After the final survey of the land has been done, a final title will be issued. Examples of final titles are Grants (Geran), State Leases (Pajakan Negeri), Mukim Grants ( Geran Mukim) and Mukim Leases (Pajakan Mukim). For example, a person owns a piece of agricultural land under a provisional title covering a land area of 2 acres. After the final survey has been done and the final title issued, the land area may either increase or decrease or remains the same as before. Under Section 83(4) of the NLC, the owner of the land shall not be able to make a claim against the State Authority when the land area under the final title is smaller than the provisional one.
QUALIFIED AND FINAL TITLES CAN EITHER BE REGISTRY OR LAND OFFICE TITLES. REGISTRY TITLE: Section 77(3) NLC sets out the description of the land to be held under a Registry title (among other things). Land here is held under the jurisdiction of the Registry of Land Titles. The owner of this land can make a title search at the relevant Federal Territory Land and Mines Directorate Office (Pejabat Tanah dan Galian). An example of a Registry Title with the prefix H.S. (D) stands for “Hakmilik Sementara Daftar”. The word “Daftar” here means that it is a Registry Title. LAND OFFICE TITLE: Section 77(3) NLC sets out the description of land to be held under the Land office title among other things. Land here is held under the jurisdiction of the Land Office. The owner of this land can make a title search at the relevant Pejabat Tanah. An example of a land office title with the prefix H.S. (M) stands for Hakmilik Sementara Mukim. MASTER TITLE: A master title may be described as a comparatively bigger piece of land which is registered in the name of the developer or the proprietor, as the case may be. The developer or proprietor may then subsequently submit an application for the subdivision of the Master title into either individual titles or strata titles. SEPARATE DOCUMENT OF TITLE: This is the title issued to landed properties including bungalows, houses and factories that are commonly not multi-storey buildings. This title is issued under the NLC. SEPARATE STRATA TITLE: This title is commonly issued for multistorey buildings such as apartments, condominiums, flats and town house issued under the Strata Titles Act 1985. Since the amendment of the said Act in 2007, housing development under the gated community scheme comprising landed properties like bungalows, semidetached and linked houses are now governed under the said Act and are issued with landed strata titles.
About The Contributors
Christopher Chan, BA (NZ), CDipAF (ACCA, UK), MBA (UK), CRS (USA), MMIEA, is a registered estate agent and has been in the real estate industry for 20 years. He is the Associate Director of Hartamas Real Estate Group. He can be contacted at christopherchan@hartamas.com
Ivan Chan, LLM (UM), has been in legal practice for a number of years and is attached to Messrs Amir Toh Francis & Partners, Kuala Lumpur. His main area of practice deals with conveyancing matters and banking loans, both in the primary and secondary property markets. He can be contacted at cphchambers@gmail.com
The Strata Title Act 1985 is modelled upon the Australian New South Wales Conveyancing (Strata Titles) Act 1961 and the Singapore Land Titles (Strata) Act 1967. The ownership and purchase of a strata titled property comes with voting rights. It may be interesting to note that buying a strata titled property is similar to buying shares in a company in the sense that the voting rights of owners in a strata titled property are also regulated by the share unit entitlement of each respective lot. This means that the owner of a lot with a higher share unit entitlement has proportionally more voting power than the owner of a lot with a lower share unit entitlement. August 2017 I 41
Strategy
INVESTMENT PROPERTY:
PRO AND CONS Consider the advantages and disadvantages before embarking on your investment journey for the best mileage for your property investment
I
nvestment property is real estate property that has been purchased with the intention of earning a return. Investment property should then be about increasing your wealth and securing your finances. There is a misguided idea that property investment will always deliver positive returns. While this is true most of the time, merely investing in property is not guaranteed as the instant road to riches. There is one thing you need keep in mind that is, how efficiently you manage your investment will determine whether the property will help you to reach your financial goals. While rental income can help you with the cost of owning an investment property, do bear in mind that real estate is an asset form with low liquidity in comparison to other investments which are highly cash-flow dependent. If these factors are not well-understood and managed by the investor, real estate can become a risky investment.
PROS OF OWNING INVESTMENT PROPERTY LESS VOLATILITY
Every investment has an element of risk. However, property has proven itself over time in being less volatile than most other forms of investments such 42 I August 2017
as shares, and less susceptible to the unpredictable fluctuations of the market. Furthermore, property provides one of the best returns with the least risk factor, even given a weak economic market situation. This is because people from all walks of life need a roof over their heads, whether they rent or own their own home. Property, being a basic necessity, will always have value because one simply cannot live without it. This gives property the advantage over shares - being less risky and possessing greater stability over time. Thus, there will always be demand for housing no matter what the market condition.
CAPITAL GROWTH
When it comes to investing in a property, you should always be looking for strategic locations. Why is this important? For one, if you purchase a property in a good location, that property would normally have high demand. With demand, the value of the property increases so you will benefit from capital gain and generate more profit when you eventually sell it off. In addition, by purchasing property in strategic locations where demand is growing – not only good rental returns - but strong capital growth, are almost assured. Additionally, you can ease your worries by renting out the first home you purchase. The property that you have invested in can thus be incomegenerating. By renting out the unit, the property will continue producing income for you. That means when you own a property, you do not need to immediately sell it in order to obtain income. And, it is fair to say that you will get a regular monthly income. Rental-income properties are also not affected by fluctuating business cycles. Again, having a shelter above your head is one of the most basic human needs. Hence, the demand for property will continue. Although you may lose a tenant today, there will be another tenant tomorrow looking for a property. Those who can’t afford to own property will rent instead. With high rental demand, property rental values will continue to escalate, thus yielding even better returns for the owner.
PHYSICAL ASSET
You are investing in something you can see and touch unlike investing in stocks. Besides, you can always choose to stay in your property should the market become volatile. Once you have invested in an income property, you become your own boss. This is a type of investment which you will have control over. You can choose what type of property to invest in, who you will rent it out to and how you will manage the property. And, should you decide to add value to your property, you can increase its value by undertaking a renovation exercise.
About The Contributor
Dato’ KK Chua is the Strategic Adviser and Managing Director of Armani Media. He is also a registered Real Estate Agent and an investor with more than 10 years experience in the industry. He can be contacted at kkchua@propertyinsight.com.my
CONS OF OWNING INVESTMENT PROPERTY TENANTS
There is a risk that a tenant could damage your property. This could cause significant financial loss when you have to repair the property. Some tenants would not pay regularly, and others would not pay at all. In this unfortunate scenario, several months of rental income can be forfeited. It can also take months to evict such tenants and to resolve disputes.
COST
Real estate is also costly to operate because it is tangible and requires ongoing maintenance. Property ownership have ongoing costs that other investments do not entail such as insurance costs, council rates, mortgage repayments, maintenance fees and the occasional renovations. These extra and ongoing costs may be regular occurances or may come as a surprise when you least expect it. With all these costs, it might take two years of capital growth to break even.
PROPERTIES ARE NOT LIQUID IN NATURE
The biggest flaw concerning real estate is that it is not liquid. It can easily take several months to complete a sale. And, you cannot just sell off your house immediately should you be in need of urgent cash. Furthermore, property cannot be divided or be partially sold. Unlike shares or cash in which a portion can be sold immediately, you cannot sell
a couple of bedrooms to unlock capital. If you need capital, you would need to sell the entire property. It is good to take note that property is not an asset that is designed to be sold quickly.
HIGH ENTRY AND EXIT COSTS
Compared to other investment types, property is expensive to buy, sell and maintain. You would need to put down a 10% of the final purchase price as down payment to start out. If your investment property costs RM400,000, you would need to pay RM40,000 down payment upfront. Expenses such as stamp duty, legal and real estate agent’s fees make buying and selling property expensive. The high entry cost keeps a lot of buyers out and makes it hard to begin investing should one not have a large sum of money to begin with. Therefore, it may seem scary to get an investment property. With investment property, you should think about the long term rather than expecting to make quick money from it. Remember, property investment is typically a more time-intensive investment as compared to other assets. Patience is required for investment property so do all the necessary research needed to ensure you minimise your risks and maximise your potential profits. August 2017 I 43
