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EMAIL firstname.lastname@example.org WEBSITE www.decentrum.com.my De Centrum is a registered trade mark under the Protasco Berhad Group of Companies. All information contained herein are intended for general marketing purposes only and should not be relied upon by any person as being complete and accurate. The information contained herein are not statements or representations of fact and are not intended to form part of any offer or contract for sale. Visual representations like pictures, art renderings, depictions, illustrations, photographs, drawings and other graphic representations and references are only artistic impressions and merely conceptual. The information on project including but not limited to the proposed facilities, measurements, distances, plans, descriptions and specifications are merely indicative and are subject to amendments by the developer without notifications as may be required by the authorities or the developer’s consultants. The developer does not guarantee, warrant or represent the correctness or accuracy of any information provided herein and does not accept any liability for negligence, error, misrepresentation, discrepancy in relation to the information or for any reliance on the information stated herein. The developer excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damage arising from it. Developer License: 10293-2/06-2016/0593 (L). Advertising Permit: 10293-2/06-2016/0593 (P). Validity: 21/6/2014 – 20/06/2016. Minimum Price: RM575,400.00. Maximum Price: RM1,259,653.00. Total Units: 320 units. Building Plan Approval No: MP.SPG.600-34/3/58 (8). Approving Authority: Majlis Perbandaran Sepang. Land Tenure: Freehold. Land Encumbrances: Charged to RHB Bank Berhad.
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Publisher KK Chua Editor Zuhaila Sedek-De Booij Acting Editor Jad Mahidin Writers Aidil Mohamad Noor (email@example.com) Viknesh Ashley Clarence (firstname.lastname@example.org) Contributors Alec See Swee Hock Dr Matt Benson Chris Tan KC Lau & Dr. Ong Kian Leong Senior Designer Lam Jian Wei Junior Designer Azmeera binti Azman Photographer Nur Afiqah Anissa Bt Azharuddin Sales & Advertising Janet Loh 012-2050 911 (email@example.com) Steven Teng 012-2075 828 (firstname.lastname@example.org) Andy Fam 012-6019 938 (email@example.com) Marketing Adeline Zariah Mohd Sedek (firstname.lastname@example.org) Annand A/L Arivalagan (email@example.com) Publisher Armani Media Sdn Bhd (1032085-H) No. 32-3, Jalan Pekaka 8/4 Sec 8, Kota Damansara 47810 Petaling Jaya, Selangor Tel : +603 6156 3366 Fax : +603 6156 3399 Printer KHL Printing Co Sdn Bhd (235060-A) Lot 10 & 12, Jalan Modal 23/2 Seksyen 23 Kawasan Miel Phase 8 40300 Shah Alam, Selangor, Malaysia www.propertyinsight.com.my
n my 20s, I’ve never really was that interested in the country’s budget. I guess things were much simpler at that time and affordability was never really a major issue. So, whatever the Government introduced, I welcomed it with open arms. Little did I know, during that easy period, troubles were lurking, just waiting to unveil its face. Today, I came to understand what these troubles are. They range from the rising prices of petrol, escalating house prices, the slow growth of personal income and just when the list should have stopped there, GST implementation is set to be introduced next year. In many other countries, these problems may be common. But Malaysians are only beginning to experience all these now. So, when the budget was announced, I became very intrigued, reason being is, these troubles really do affect my life as a Rakyat. Following the announcement of the budget by our Prime Minister Dato’ Sri Najib Tun Razak, I tried to analyse the situation from the point of view of a home buyer, especially now that home affordability is everybody’s issue and you can read a feature on this on page 10. On the budget, as much as it is rooted on the wellbeing of the people, and I sure do applaud this, there is this uneasy feeling that tells me, something is missing somewhere. For a lay man, the many subsidies and tax relief may appear to be like a good catch for them. But if you were to really delve in it, you will come to see the hidden meanings behind the measures introduced. But like any other budget, it is a mere plan to direct us to a bigger vision. So, a plan can always change – for the better or for the worse. My advice is; keep your head in the clouds and feet on the ground. Keep dreaming but be realistic at the same time. On that note, I would like to end my last editor’s note for Property Insight Malaysia. With today’s high cost of living, I’m embarking on something bigger for my career. My days at the magazine have been coloured in many ways and I urge you, our loyal readers to keep reading the magazine. If you are a loyal reader, you know that our magazine offers something so much more than just ‘what property to buy’ and that is ; property investment knowledge. My ‘throne’ will be passed to a seasoned journalist, Jad Mahidin, and I can assure you the magazine will be bigger than ever under her leadership. Till our path crosses again.
www.facebook.com/propertyinsight.com.my www.youtube.com/user/propertyinsightmy www.twitter.com/propinsightmy Disclaimer
Although every reasonable care has been taken to ensure the accuracy of the information contained in this publication, neither the publisher, editors, writers nor employees and agents can be held liable for any errors, inaccuracies and/or omissions. The contents of this publication do not constitute investment advice. It is intended only to inform and illustrate. No reader should act on any information contained in this publication without first seeking appropriate professional advice that takes into account their personal circumstances. We shall not be responsible for any loss or damage, whether directly or indirectly, incidentally or consequentially arising from or in connection with the contents of this publication and shall not accept any liability in relation thereto. The views by our contributors expressed here are their personal opinions and do not necessarily reflect Property Insight’s views. The publisher does not endorse any company, organisation, person, investment strategy or technique mentioned in this publication unless expressedly stated otherwise. The publisher does not endorse any advertisements or special advertising features in this publication, nor does the publisher endorse any advertiser(s) or their products/services unless expressedly stated to the contrary. All rights reserved. No part of this publication may be reproduced in any form or by any means, including photocopying and imaging without the prior written permission of the publisher.
2 NOVEMBER 2014
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THE POLISHED PEARL-PG 26 Penang continues to be one of the country’s most lively property markets. Zuhaila Sedek-De Booij finds out the Pearl of the Orient’s property outlook. BUY, FIX AND SELL FOR PROFIT-PG 32 Despite needing extra resources to trade in secondary market, investing in this category has it’s plusses. Aidil Mohamed Noor pens. MULTI-FACETED EDUCATION CENTRIC DEVELOPER-PG 40 Paramount Corporation Bhd (Paramount) is a developer that hails from the northern region of Malaysia and has now established itself as a quality developer producing a variety of property products.
BATU KAWAN: FROM AGRICULTURAL TO SATELLITE CITY?-PG 46 Once an agricultural hub, Penang’s Batu Kawan area is turning into a real gem for property developers. Property Insight’s Aidil Mohamad Noor writes. THE WINNING PORTFOLIO-PG 66 Becoming a property investor can promise a lucrative and exciting journey towards financial freedom. One of the secret ingredients to achieve this is to have a good portfolio. Aidil Mohamad Noor finds out more. INVEST WITH LITTLE MONEY DOWN-PG 72 A lot of people do wish to be property investors, but they may not have enough cash in hand to realise the dream. Viknesh Ashley finds out ways to invest in property when you’re short on cash.
www.propertyinsight.com.my NOVEMBER 2014 3
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NEWS & EVENT LOW YAT GROUP UNVEILS GARDEN HEIGHT’S PHASE 5 PROJECT
SURIA RESIDENCE TARGETS 60% TAKE-UP RATE
The recently launched Suria Residence in Bukit Jelutong by Sunsuria Berhad is expecting a 60% take-up rate following 30% bookings on its launching. Sales and Marketing Director Simon Kwan explained that the unique selling point of the project is its 6-tier security and garden-inspired landscape. The units vary from single-bedroom to three-bedroom units and come in sizes of 600 sq ft, 800 sq ft, 1,000 sq ft and 1,200 sq ft, while the ceiling height is nine ft. The project has a Gross Development Value of RM265million and sits on a 3.55-acre land comprising of two towers. There are 545 units with prices starting from RM428,000 and there are two parking lots made available for every unit. The project is expected to be completed in the third or fourth quarter of 2017.
One of the country’s top developers, Low Yat Group, recently launched the Phase 5 of its Garden Heights development, which is part of the Bandar Tasik Puteri (BTP) township in Rawang. The new phase is one of the last few landed property phases of BTP. The new phase offers 82 units of 20ft x 75ft double storey link houses that come with a built-up size of 2,214sq ft onwards. The launch also marked the opening of the property development’s new 9,999 sq ft sales gallery and its new website for the BTP township. With contemporary design and a concept to convey a sense of comfort and space, the development is located just five minutes away from Low Yat’s centrepiece in BTP, the Tasik Puteri Golf and Country Club, and the Central Park. Low Yat’s Director of Project/Construction Management Lee Kok Wah says, “We also have our premium residences, such as villas for the golf club.” The property developer has invested about RM30mil into developing BTP’s infrastructure, such as roads, street lights and drainage to meet the projected 100,000 population in the area by year 2020.
CELEBRITY HOMES YOU CAN RENT
Ever fancy living a celeb’s home? Well, now you can. With RM814,750 per month you can live like a rock star at Billy Joel’s Hamptons home designed by Nate Berkus. The beach house was designed to look more like a resort. And for RM89,622.50 per month, you can live in Pamela Anderson’s contemporary Malibu pad, which has a breezy floor plan, and minimalist decor, which design interprets California living. But if you have RM61,921, why not rent Kate Moss and Johnny Depp’s former home? The gorgeous carriage house has two bedrooms, heated floors, a two-story garden, and a floating bathtub. Another Hollywood celebrity that opened her house for rent is Vanessa Carlton. Located in the New York neighbourhood, the 2,500sq ft apartment has been listed for RM58,499 a month. And last but not least, for RM114,065 a month, you can rent Helen Mirren’s California villa. The gated house is 6,700 sq ft in size and has a guest house and a pool, complimented with incredible view of Los Angeles and there’s a caretaker living on site.
6 NOVEMBER 2014 www.propertyinsight.com.my
NEWS & EVENT TROPICANA CELEBRATES GREEN LIVING
Tropicana Corporation Berhad, in continuation of its green campaign called ‘Tropicana Green Carnival’ in Sept, had organised some green-related activities with its customers in effort to promote a healthy lifestyle among the public. This public campaign ended last Oct 19 and saw the introduction of a series of green related activities such as tree-planting held at Tropicana signature development’s sales gallery, Tropicana Metropark. “Tropicana believes that healthy living starts from home. We always strive to give our customers something that is more than just a HOME. We give our customers a lifestyle, one that is balanced, that promotes well-being and provides plenty of lush open spaces. Tropicana Metropark aims to do that through an environmental-friendly and above all, communal approach,” Tropicana’s Executive Director of Marketing & Sales Pam Loh said. The event was also an avenue for the developer to introduce its Tropicana Metropark’s 9.2-acre Central Park. The Central Park has a bio-filtration system that harnesses energy generated from a windmill installed in the park’s man-made lake (which uses a self-sustaining circulation system) that minimises water wastage and defects smelly odours. The park is also designed with security in mind, using an open space concept design and clear vistas as an avenue of passive crime prevention. Other features of the Central Park include a dedicated cycling & jogging track, detailed flora and fauna area and a 1.3-km strip consisting of integrated elements such as F&B outlets and an alfresco strip.
EFFORTS TO LOWER SABAH’S HOUSE PRICES
ISKANDAR GETS NEW TOWNSHIP
Iskandar in Johor Bahru welcomes two new projects by EcoWorld called EcoSpring and EcoSummer. EcoSpring is an upmarket township of cluster homes and semi-detached houses designed with world-class outdoor and indoor facilities, including gymnasium, floating stages, skating rink, outdoor pavilions, viewing decks, basketball courts, and resident-exclusive clubhouse with a lap pool. EcoSpring’s double-storey residences ranges from 32’ x 80’ cluster homes to 50’ x 80’ semi-Ds. EcoSummer on the other hand, is separated only by a stream from EcoSpring. The township consists of 1,255 garden homes, is safeguarded by 24hour security and CCTV surveillance with Western Country Homes inspired living. The homes offer comfortable wide open living and dining areas, with a 10ft backyard garden and a 40ft back lane. The first phase of EcoSummer is completely sold out, but the launch of North Gardens as a new phase allows buyers with the opportunity to own a double-storey garden home in EcoSummer.
Media reports revealed that measures are being implemented to lower Sabah’s house prices that are not increasing in tandem with income growth. It’s been reported that the price of a double storey house in Kota Kinabalu in 2007 was about RM210,000 but a similar unit in the city’s outskirts can now reached up to RM450,000. The increase in house prices became more apparent since the past five years due to a hike in land, building material and labour costs. It was reported that the ministry is trying out various administrative procedures to curb increasing house price. The Sabah government also wanted utility firms to do their bit in lowering house prices by decreasing their capital contribution rates for housing projects. This could help the developers from extending the high costs to house buyers.
NOVEMBER 2014 7
NEWS & EVENT
PRISM 2014 IS BACK!
alaysiaâ€™s leading property event and media company Armani Media Sdn Bhd (Armani Media) will be hosting Malaysiaâ€™s largest property summit called PRISM 2014, at the Malaysia International Exhibition and Convention Centre (MIECC) this Nov 1 to 2. The event came following its huge success last year at The Palace of the Golden Horses. The event is expected to attract more than 15,000 expo visitors and 2,500 seminar participants where they will enjoy talks covering a wide array of topics ranging from investment strategies, solutions to better financing, investment hotspots to property market outlook. There will be a series of seminars providing useful advice on the local and international property market as well as effects on the policies introduced such as the most anticipated GST implementation
8 NOVEMBER 2014 www.propertyinsight.com.my
NEWS & EVENT next year. Other interesting topics include tips to make the banks say yes, how to qualify a deal, how to start investing when you are short on cash and many others. The talks at the seminars will be presented by more than 15 speakers from various backgrounds and expertise and the talks will not be product-centric – a value that sets the summit apart from the others. The star speaker of the summit will be Dr. Dolf de Roos, who wrote New York Times best seller “Real Estate Riches” and “52 Homes in 52 Weeks”. Dolf who is also Robert Kiyosaki’s Rich Dad, Poor Dad series advisor said, “The expo promises to be the signature property event of the year. The participation of so many developers makes it a great opportunity for Malaysians and overseas investors to take an exclusive first look at newly-launched and awardwinning developments from all over Malaysia. We’re confident that there will be something for everyone at this event.” Other speakers to grace the summit are Christopher Boyd (CBRE Executive Chairman), Siva Shanker (MIEA President), Ishmael Ho (Representative of Ho Chin Soon Research), Elizabeth Siew (Famous Real Estate Lawyer / Investor), Tan Yang Po (Singapore No.1 Property Guru), Faizul Ridzuan (Malaysia’s Top Property Guru), Adrian Un (Malaysia’s Loan Expert), Dr. Daniele Gambero (REI Group of Companies – CEO) and Tai Lai Kok(KPMG – Executive Director, Corporate Tax), among many others. PRISM 2014 strives to be an avenue for true investors to learn the tricks and trades of property investment, especially with the challenging market ahead. According to KK Chua, the Chief Executive Officer of Armani Media, “We were pleased with the response of our first PRISM installment in 2013 where we managed to help our participating developers market their properties and generate sales worth millions. The results were very encouraging and we hope that we will get a similar response, or better, in this new instalment.” He adds, “For property buyers, apart from learning the skills to invest in property, they will also stand a chance to win lucky draw and other prizes.” PRISM 2014 is Armani Media’s annual event apart from its many property road shows and study tours which include the IPC Shopping Centre Property Showcase, Tropicana Property Fair, The Cyberjaya Property Study Tour and the Terengganu Property Showcase. This annual expo presents a unique chance for Malaysian and International investors alike to see the country’s best upcoming property developments
all gathered for the first time under one roof. Sixty per cent of the expo features Malaysian residential, commercial, industrial and retail developments by some of the most prestigious developers, such as LBS Bina Group, Country Heights Holding Berhad, MCT Consortium Berhad, OSK Property, UMLand, YBK Group, Sunsuria Berhad, Ayala Land, DA Land, Setia Haruman Property, Tropicana Property, Putra Perdana, KLK Property, i-City Properties and Andaman Property, to name a few. PRISM 2014 offers a perfect platform for both international and local real estate players to showcase their residential, commercial and mixed-use products and to conduct serious transactional business. PRISM is poised to become the most exciting show yet, providing consumers and real estate professionals from around Malaysia and the region with a one-stop-shop opportunity to explore, invest and benefit from the best property deals. For more information visit www.prism.my.
www.propertyinsight.com.my NOVEMBER 2014 9
BUDGET 2015: FOOD FOR THOUGHT Zuhaila Sedek-De Booij identifies what the budget has to offer property investors.
10 NOVEMBER 2014
INALLY! The highly anticipated Budget 2015 was announced by Prime Minister Dato’ Sri Najib Tun Razak on 10 October recently. A lot of sentiments from industry experts and the public alike rose with some expressing satisfaction, some showing disappointment and some feeling somewhat ‘in-between’. A public budget, for any nation, holds a very strong importance for the people. It is the very pillar that supports the nation’s growth economically and the progress of the people as a civilised community. The fundamental goal of Budget 2015 is to amplify the potential of capital economy and people economy for the betterment of the Rakyat. To help realise this objective, the deficit next year has been reduced to 3% from last year’s 3.5% and this, when paired with the revenue attained from the GST, could just realise
Vision 2020. But, how much are property investors affected by this budget?
GOODS AND SERVICES TAX (GST) IMPLEMENTATION
The GST is perhaps the most talked about subject of the budget. Managing Director of C H Williams Talhar & Wong Sdn Bhd, Foo Gee Jen, says there was however very little mention of GST in the budget. “Although residential properties are zero-rated for GST, materials and services supplied in the development process will be subject to GST and are likely to be passed on to home buyers, but the extent of its effects are unclear,” Foo mentions. In the budget announcement, Prime Minister Najib mentioned that the revenue from GST, which
NOVEMBER 2014 11
COVER STORY is slated April next expected but after the sales exemptions back to
to be implemented in year at a rate of 6% is to be RM23.2billion, allowing the abolition of and services tax, and and funds channelled people through assistance programmes, the net revenue collection is expected to be only RM690million. According to Kenanga Investment Bank’s economist Wan Suhaimie, RM3.8billion will be lost on exempted items and RM13.8billion forgone from abolishing the Sales and Services Tax. “Out of the RM5.6billion left, RM4.9billion will make its way back to the people through 1Malaysia People Aids or BR1M,” he says in his report. According to Universiti Malaya’s Department of Economics’ Dr Zarinah Yusof, although the revenue is not large it is acceptable and good considering that total revenue has increased compared to the previous year. “GST collection is expected to increase in the future when more goods (that are zero-rated) are included in the basket,” she says. In the budget, the list of GST exempted items has been widened. But what’s the extent of its effect? Tax consultant Ong Yih Ching explains, “The additional exempted items do not have significant impact on investors as they are not directly related to investment cost.” He adds, “The small businesses (non-GST registered persons) will be affected by the GST as they will not be able to pass down the GST imposed
12 NOVEMBER 2014
on them. In addition, with GST, all other businesses will have to bear a higher compliance cost and administrative work for doing business.” For founder of legal firm Chur Associates, Chris Tan, he believes the cost of doing business in Malaysia will increase due to the GST. “2015 is a year of uncertainties as the effect of GST is unpredictable and of course unprecedented. Uncertain times also mean greater opportunities… investors should keep their eyes open and act swiftly when a gap appears. Property investment is and always will be a long term game,” Chris shares. Founder and Managing Director of Trinity Group Sdn Bhd, Dato’ Neoh Soo Keat shares the same concern. “Although residential properties are GST-exempt, the building materials are not. Developers will still have to pay this tax on nearly all areas involved, especially on the materials, to construct a home,” he says. “Property prices in the local market are expected to rise due to cost-push inflation and the shortage of workers especially when there are a lot of construction and infrastructure works going on. At the same time, the cost of construction materials may increase after the implementation of GST in April 2015,” “We will see an increase in house price after the implementation of GST. However the increment will depend on the state of the market at that time. Some home buyers may also try to complete their property transactions before April next year,” he adds.
COVER STORY Zarinah thinks people in the low income group are less affected by GST compared to the middle and high income group due to the differences in their spending. According to Ministry of Finance, the upper-middle and high income group’s expenses (with GST) are 14 times higher than the lower income group. “In Malaysia there are many goods and services that are zero-rated and this makes GST a progressive tax,” she says. She further explains that the strategies designed and initiatives given under the budget are aimed at increasing people’s participation, incomes, assistance, skills and property acquisition. “This move will make the economy more resilient and prepare the nation towards achieving a higher productivity,” she tells. Founder and Managing Director of Trinity
There is limited tax relief in the budget which reflects the rising cost of living. Apart from the income tax reduction, there were little measures introduced for the middle-income group. “Individual tax relief lacks punch. There should have also been some reassurance of the individual income tax rate for 2016 as was given to the business sector,” Wan Suhaimie says. The budget also announced tax exemptions of 70% to 100% for a period of five years, for the management of industrial estates. “This should encourage better management and gated and guarded industrial parks and attract more logistics operators. Better managed industrial estates will also encourage more industrial developments and investments in general,” Foo tells. Real Property Gains Tax (RPGT) will now be selfassessed. Industry experts advise the public to seek experts’ assistance and guidance on the market value prior to completing a sale in order to minimise the risks on undervaluing a property and being penalised for under-payment of RPGT.
Group Sdn Bhd, Dato’ Neoh Soo Keat
the government will provide new housing to about 1% of the population per annum for the next four years, compared to current population growth rate of 1.3%,” Foo explains adding that the need for affordable homes is about 330,000 units. “Looking at the population aged 25 to 29 years (of about 12% of total population), 30% of these households are potential first time buyers,” he says. Foo reckons, although the home affordability issue for first time home buyers was addressed in the budget, the next step is to ensure actual delivery of the homes is being met. “We note that of the 126,000 units proposed in 2013, only 10,000 were built in 2014 and to bring the plans on-track, commencement of
Under the PR1MA scheme, the People’s Housing Programme (PPR) and Syarikat Perumahan Negara Berhad (SPNB) 143,000 affordable homes have been planned. “Together with the 130,195 homes proposed in 2013,
NOVEMBER 2014 13
COVER STORY affordable homes construction in 2015 will need to be stepped up to 120,000. Our concern is that the actual number of affordable homes constructed may fall far below target,” he shares. The same concern applies to the Youth Housing Scheme. According to Foo, this introduction is targeted at addressing the capacity of meeting initial payment requirements and to service the home loan among the home buyers. In the scheme, a 100% financing is possible, supported by 10% government guarantee and buyers will enjoy a RM200 monthly grant for two years. In the scheme, married couples between the ages of 25 and 40 with a monthly household income not more than RM10,000 and houses priced less than RM500,000, are eligible to apply. “Although this is a good move, its availability to only 20,000 units is a major limitation of this scheme. This number should be doubled,” Foo says. Honourary Secretary General of National House Buyers Association (HBA) Chang Kim Loong shares similar views. HBA also urges the government to impose a restriction that such properties under the Youth Housing Scheme cannot be disposed off for the first 10 years, similar to that of the PR1MA housing. As for Chris, the expanded group of Malaysians qualifying for these schemes only suggest the fact that Malaysians cannot afford their own homes without the help of the Government. He suggests for the banks to play a better role in housing the nation, especially in the sector termed as ‘affordable’. “By the way, do we have a common understanding of what ‘affordable’ is in term if housing? A clear guideline can certainly help all the stakeholders,” Chris says. Chief Executive Officer of REI Group of Companies Dr Daniele Gambero agrees with this notion. “I am very surprised that the Government still generalises the definition of ‘affordability’ on a National basis instead of looking into it from a State point of view.
Founder of legal firm Chur Associates, Chris Tan
14 NOVEMBER 2014
The range of values for affordable housing must be well understood and we need the Housing Ministry to elaborate further on the value of affordability,” he says. He adds that despite addressing the affordable housing issue, the Government has not at all considered other classes of property buyers. “I hope the Federal Government together with every State Government will enforce proper instruments to ensure only a specific category of buyers will enjoy the introduced subsidies on a National basis. The Youth Housing Scheme will satisfy the demand of houses valued at RM500,000 and below but only for the first 20,000 applicants… when in reality we have a much higher number of Malaysians who should be enjoying it,” Gambero thinks. A lot of industry experts agree that there’s a bigger question for the Government to answer in improving people’s affordability for a home – how do we tactfully address the issue of balancing escalating property prices with the growth of income? According to
COVER STORY National Property Information Centre (NAPIC) data, since 2011, house prices have risen between 9.96% and 12.3% annually, on average. Another announcement in the budget is the Rentto-Own Scheme plan, which is applicable to those who are unable to obtain bank financing through the PR1MA housing. This introduction is welcomed by the public but more information on the scheme and its mechanics must be made known to all. “This is very important especially when the ‘tenants’ require a larger home after a few years due to a larger family. The ‘tenant’ may also be unable to break the tenancy agreement and risk the loss of the option to purchase at the end of 20 to 30 years,” Foo warns. There is also an extension of the 50% stamp duty exemption on instruments of transfer and loan agreements and the increased purchase limit (from RM400,000 to RM500,000). Ong responds on this by saying, “By adjusting the purchase limit, the government is making the incentive more relevant to the current property market condition. This encourages young investors to own a property.” “Why can’t they just waive it (the stamp duty) completely? This can be better than any subsidy as it will reduce the cost of purchase,” Chris comments. Gambero adds on by saying that the 50% subsidy will surely give a positive impact on the industry but purchasers must know that is not automatic and they have to request and apply for it through their lawyer.
Honourary Secretary General of National House Buyers Association (HBA) Chang Kim Loong
Chief Executive Officer of REI Group of Companies Dr Daniele Gambero
SUBSIDIES, FINANCIAL ASSISTANCE AND IMPROVING HOME OWNERSHIP
Though there are many perks from the subsidies and monetary assistance by the Government, Zarinah feels that there is a chance for people not using the aid effectively. “Irresponsible firms and suppliers may take advantage on the monetary assistance too by raising the price level,” she thinks. In Budget 2015, the BR1M hand-outs have also been increased (Table A). Wan Suhaimie thinks that even though these cash hand-outs are to be given in instalments, the programme has to be adjusted to make it more targeted, to ensure there will be less abuse of it. Similarly, Chris finds the BR1M hand-out a temporary solution to address the income gap. This is not the way to make Malaysia a high-income nation. “All high income nations would have relatively high cost of living so the Government has to take that into consideration too,” he tells. To promote homeownership, some developers suggest the re-introduction of the Developers’ Interest Bearing Scheme (DIBS). Prior to the budget announcement, there was a rumour going around among industry players on the re-introduction of DIBS for first-time homebuyers. Chang applauds the government’s move to continue banning the DIBS or any variation that entails interest capitalisation. “Developers being entrepreneurs have to be responsible and bear the risks that come with their investment. They should not be allowed to
NOVEMBER 2014 15
enjoy profits at the expense of house-buyers bearing the risks on their behalf. Thus, when developers claim that DIBS is good because they “assist new purchasers”, they should be asked to use the BuiltThen-Sell (BTS) 10:90 concept instead. Developers being profit driven, merely want to sell their products by whatever means, even recommending DIBS for ‘first time house buyers’ on the guise of ‘assisting
them’. HBA is glad that the developers did not succeed in making the Government be their sales agent,” says Chang. DIBS prohibition was made in last year’s budget in an effort to curb uncontrolled escalation of house prices. For Chris, DIBS should not be prohibited but regulated. “In any capitalist societies, it is always good to increase options and choices. Furthermore, the fundamental of having DIBS is that the selling price backed by the end financiers is good enough for the developers to sacrifice part of the profit to support DIBS,” says Tan. Gambero says he was hoping for DIBS to be reintroduced. “It would surely ease the decision making process of first time buyers as it represents a savinsg of about 4.5% to 5.5% of the total purchasing value. At the same time, a proper re-introduction of DIBS would have stimulated the quantitative offer of affordable houses by property developers,” he says.
INFRASTRUCTURE AND MNCS
As expected, the budget addresses a few plans on hard infrastructure (ie: highways, public transport) and soft infrastructures (ie: education system and R&D). Progress of several important highways such as the SUKE Highway, West Coast Expressway, DASH
16 NOVEMBER 2014
COVER STORY Household Income RM3000 Household Income RM3000 – and below RM4000
RM 700 BR1M 3.0
(RM 650 cash + iBR1M RM 50) RM 950 at three phase
RM 750 at three phase
(January & May – RM 300, September RM 350)
(January & May – RM 200, September RM 350)
Highway, EKV Expressway were announced other than the MRT2,LRT3 and 50 electric busses project to take shape in selected urban areas. All these will definitely pump up the property supply in the affected areas. Highlights of next year would be the LRT3 project linking Bandar Utama to Shah Alam and Klang as well as the Second MRT Line that connects Selayang to Putrajaya. Experts see the properties with easy access to the train terminals around the areas will appreciate well in value. Another highlight is the RM27billion Pan-Borneo highway that stretches 1,633km across Sarawak and Sabah. This mega project is likely to benefit the local
construction players there and improve the tourism industry in the states. The project will add vibrancy to the states’ property market and draw the attention from industry players to capitalise on it. Previously, it was reported that UEM Group Bhd might partner MMC Corp Bhd for the works of the highway. The partnership might be focusing on the works in Sabah while works in Sarawak might be taken up by the local firms there. The government also announced the bespoke incentives for Principal Hubs under Budget 2015, as part of its plans to attract more multinational corporations (MNCs) and encourage them to set up their global operational centres in Malaysia.
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COVER STORY Other than boosting the capital’s competitiveness that could rival other nearby metropolitans, the move is also set to further enhance infrastructure and the business ecosystems of the cities. This means the city centres could now use more Grade A office buildings with MSC status.
From the Rakyat’s point of view, the budget is comprehensive, expansionary and truly is peopleoriented. It covers a lot of aspects with the consensus of promoting growth, people’s well-being and fiscal sustainability. However, a lot of measures touched only the surface of a much bigger issue. I wonder, how are we planning to improve home affordability when the cost of living is so high? How do we teach people to be independent when subsidies are given out but at the expense of GST implementation? How do we make sure the Bumiputra discount reaches the Bumiputras who really need it instead to those who don’t require it? The list of questions could go on and on.
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As much as the budget is progressive, it needs better clarity but I am hopeful in bracing the tough fronts ahead of me. Plus, that’s about the only thing I could do right now.
HOW TO BUY BELOW-MARKET PROPERTY? JERRY TANG, GROUP MANAGER OF DEBANCCO SOLUTIONS BERHAD
Below-market property always comes from either sub-sale or secondary market. You can’t find any from the newly launched projects. To obtain these below-market properties, investors must understand good negotiation skills, to be made by the agents or themselves with the owner of the property. The ones that normally sell their property below-market value are the ones that are in need of quick cash, or those who don’t really need their property anymore such as migrating people.
ENOCH KHOO , PROPERTY HUB
Anything that is below-market price can be considered a good investment. For anyone to get the right information regarding below-market properties, I’d suggest them to befriend a property negotiator, since negotiators are the ones who know market values well. With this knowledge, they can negotiate with the seller to come to a good price. Get in touch with the lawyers too because they usually have clients who might want to dispose of their property for some quick bucks without being concerned much about the price.
SIVA SHANKER, PRESIDENT OF MALAYSIAN INSTITUTE OF ESTATE AGENTS
I don’t think there are many below-market properties or fire sales out there. But for interested individuals, below-market properties can be found at auctions, from people who would want so sell off their property quick due to cases like migration, or from owners who do not wish to own the property anymore. Then again, such cases are quite rare… even though auctioned properties are quite popular today, the prices offered at the auctions will only be slightly below the market value, which is insignificant. In some cases, auctioned properties can also go to the same level as the market price.
SERENE SEW, PRINCIPAL OF PORTFOLIO ASIA PROPERTIES
To find below market property, you really have to do your homework. You need to first learn about the market value of an area that you are interested in. By doing that, you’ll know how much below-market price really is. To help you with that, always check with bankers for the valuation price. These below-market properties can come from auctioned properties, and often, the ones that normally would be below-market value are those that are auctioned more than once. Value of a property that has been auctioned more than once will definitely go down by folds.
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READY TO REVIVE
What’s in store for property investors when city centres are revitalised? Find out from Dr Matt Benson.
COMPACT LIVEABLE CITIES
“(The) acceleration of sprawl has surfaced enormous social, environmental and economic costs, which until now have been hidden, ignored, or quietly borne by society. The burden of these costs is becoming very clear. Businesses suffer from higher costs, a loss in worker productivity, and underutilised investments in older communities” (Beyond Sprawl, Charter for New Urbanism, How Cities Work). “Young workers and retirees are actively seeking to live in densely packed, mixed-use communities that don’t require cars; that is cities or revitalised outskirts in which residences, shops, schools, parks and other amenities exist close together” (Back to the City, Harvard Business Review, May 2010). These two quotes provide insight into contemporary thinking in urban planning. Perhaps, what is even more revealing is that they are sourced from the Tenth Malaysian Plan. There is an acknowledgement that past urban development patterns cannot be sustained.
20 NOVEMBER 2014
Infrastructure and environmental costs aside, there is a recognition that if Malaysia is to make the transition to a high-income nation with a skilled workforce supporting knowledge based industries, it needs to enhance the liveability of its urban centres. “Liveable cities are cities that are vibrant and attractive places to live. In today’s global and mobile economy, professionals and high-skilled workers have many options of where to live and work. The attractiveness of cities is strongly related to their liveability and wealthy cities are also typically cities that perform better on measures of liveability” (Tenth Malaysia Plan: 20112015, Page 250). Best practice planning suggests a key to liveability is compact, mixed use urban centres that are pedestrianfriendly and accessible to public transport. While government policy is certainly critical, taking account of the ‘natural’ evolution of cities is also important if private investment is to be harnessed in a collective endeavor to revitalise, re-energise and repopulate city centres.
FEATURE THE DONUT CITY
The ‘Donut City’ is a term used by urban planners and geographers to describe the way cities evolve spatially overtime in response to changing economic conditions. As the name suggests, investment intensity often flips between the central city core and the urban periphery. For example, in the 1960s, 70s and 80s the city centres of many Western, and to a lesser degree Asian, cities were abandoned – ‘hollowed out’ in favour of new housing estates and business parks on the outskirts. This was compounded by the construction of express highways channeling traffic and people out of city centres to large scale suburban shopping complexes. Adding to the flight of capital were decisions to relocate government offices. In more recent years, downtown city cores have attracted new waves of capital investment. Much of this is tied to economic shifts especially those associated with knowledge based services jobs. Associated firms move into partially abandoned city cores. Gentrification occurs in tandem, in some instances the result of government-led revitalisation initiatives. While the ‘suburbs’ aren’t abandoned, high fuel costs, infrastructure inefficiencies and traffic congestion can take the heat out of these markets. Middle suburbs which are initially ‘squeezed out’ by competition between the city centre and periphery, find favour (at least in Western cities) especially those with ready access to public transport and mixed used town centres. For example, in Australia’s two largest cities, Sydney and Melbourne, the middle suburbs have seen higher price increases and rental returns in recent years than the inner city. Of course this is a vast simplification. Cities are far more complex, especially in Asia where urban areas tend to be more polycentric. Here the ‘donut effect’ occurs across the city at different times, at different scales, in different locations and at different intensities – creating a patchwork of investment and disinvestment. Nevertheless, the concept is still instructive for understanding how investment ebbs and flows in a city overtime.
CITY CENTRE COMPARISON
The ‘state’ of the ‘donut city’ at any given time is also different in different regions. In Asia-Pacific cities it is evident that following a period of decline the city centres of American, Australian and New Zealand cities have seen population increases in the last two decades. While in Singapore, Malaysia and Taiwan, inner cities are still going through a phase of
FIGURE A: THE DONUT CITY Inner City ‘hollows out’ followed by ‘revitalisation’ and ‘gentrification’
Middle suburbs initially ‘squeezed out’ but then find favour
Outer suburbs prosper until inefficiencies make them less inviting
population decline (Table A). TABLE A: SELECTED ASIA PACIFIC INNER CITIES RECENT POPULATION GROWTH RATES
Annual Growth Rate
George Town (Malaysia)
*Note: this data is from different sources and over different time periods. Most figures represent average growth rates in the last decade or less. While Asian inner city populations have generally been declining, an interesting difference with Western cities is that they generally support a broader demographic, with a relatively higher proportion of both the young and elderly. However, this is shifting. If we take the George Town World
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FEATURE Heritage Site as an example, of the net loss of nearly 800 residents (of 10,500) since heritage listing in 2008, 60% of them are children under 15 and those aged 60 and above.
REVITALISING MALAYSIAN CITY CORES
Around the world there are countless examples of transformative public and private sector investments in city centres as part of broader revitalisation initiatives (e.g. Melbourne, Perth, Glasgow, Belfast, Seattle, Singapore, Shanghai, Haikou, Utsunomyia). There are numerous lessons that can be drawn on as both market forces and government policy seek to create more compact, liveable and efficient urban centres. In summary: • • • • • •
The character and function of the area must relate to the surrounding neighbourhood Successful centres have housing diversity with configurations catering to families, students, professionals and artists There is retail diversity that caters to local residents and attracts people from outside There is an active public domain and enhanced cultural facilities There is a mix of locally oriented service and higher end knowledge jobs The centre is pedestrian-friendly, safe and accessible by public transport
The challenge for Malaysia is best illustrated through the George Town World Heritage Site. Since heritage listing there has been a considerable investment in building restoration. Vacancies are down. But property prices have almost doubled and as mentioned earlier the resident population has continued to decline. There has been a considerable shift in the local economy, away from business and household services, towards hospitality and tourism. In one sense, the ‘hollowing out’ of the city centre has been reversed, but it has come at the expense of traditional business and residents. The challenge for Malaysian urban revitalisation
efforts is finding a balance between retaining remnants of the old – older residents and traditional businesses that give an area its character and sense of community – and creating the conditions necessary to attract private sector investment and new economic activities that fit with broader national objectives. Creating housing stock in city centres that caters to the Malaysian market mindset may also prove challenging. In Melbourne a specific programme, Postcode 3000, was established with incentives to attract residents back into the city centre and improve housing options. There is no doubt of the potential demand for housing and new economy businesses in Malaysian urban centres, but it needs to be harnessed and marketed by innovative and creative property investors and policy makers. Those with the foresight to see how any given part of a city is evolving and to tap into the emerging opportunities. Hopefully this article offers some insight.
ABOUT THE CONTRIBUTOR Dr Matt Benson is the co-founder of Geografia, an Australian based social and economic planning consultancy. He has a long association with Malaysia, having been an exchange student at the University Sains Malaysia in 1996. He established Geografia’s Malaysian office (trading as Perkhidmatan Perundingan Geografi Sdn Bhd) in 2013 and is currently based in Penang. Contact email@example.com
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10/14/14 2:59 PM
Penang continues to be one of the country’s most lively property markets. Zuhaila Sedek-De Booij finds out the Pearl of the Orient’s property outlook.
ho doesn’t love Penang? Almost all Malaysians and even foreigners will give the state the thumb up. It’s a famous tourist spot (thanks to Georgetown’s UNESCO’s World Heritage Site status), a world-renowned retirement haven, has fantastic ocean view, has two gigantic bridges and the food is just excellent. Penang also has one of the most active markets for property investment in Malaysia, other than Klang Valley and Johor, which is why a lot of the big boys in the industry are there to do business. Comprised of the mainland and island, the state offers a myriad of property offerings ranging from residential to commercial which promise property investors profitable returns.
THE MAIN CANVAS
Penang State Exco for Housing and Town & Country Planning Jagdeep Singh Deo in an interview told
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Property Insight that Penang’s current performance in the real estate has a lot to do with the state’s governance system. “Penang’s governance emphasises on anti-corruption and business people find it easier to do their business here. Hence, demand for properties here are very high,” Jagdeep says. “The vision for Penang is to transform it to an international and intelligent city. When we (Pakatan) came to Penang in 2008, we practise a competent, accountable and transparent system of administration. On top of that, we have established an aim to make Penang cleaner, greener, safer and a healthier city. This is our main basic underlying tones which will affect everything else in other sectors such as the property industry,” he adds. The administration also hopes for Penang to be a smoke-free city in the effort to foster a cleaner and greener environment. This, Jagdeep believes, helps attract people – both locals and foreigners – to the
FEATURE state. For foreign investors, Jagdeep says that from 2001 to 2013, 2.2% of property investment comprises of foreign purchases. These acquisitions are mainly made by the Singaporeans, Indonesians, Japanese and Chinese. In Penang, foreigners are only permitted to buy properties starting from RM1million upwards. For stratified properties in both Penang Island and Seberang Prai the price cap is set at RM1million. The limit differs for landed properties where foreigners are only allowed to buy properties priced at RM2million upwards for Penang Island and from RM1million for Seberang Prai. Additionally, foreign buyers have to pay a 3% levy on the purchase price of the property bought after obtaining the state’s consent.
According to Resident Director of Knight Frank Malaysia (Penang branch) Tay Tam, although the state consists of mainland and the island, the latter tends to have limited vacant land for development. “With scarcity, prices for properties, especially landed ones, have all gone up. As a result, demand in recent years has spilled over to the mainland where property prices are much lower,” Tay shares. He adds that there is more land available for development on the mainland compared to the island. Tay also says the price that one pays for a stratified property on the island is sometimes equivalent to that of a terraced or semi-detached house on the mainland. “People often go for the stratified properties in Penang island… but by circumstances rather than by choice because there is a limited supply of landed properties. Plus, prices for landed properties are much higher on the island,” he mentions. City Valuers & Consultants Sdn Bhd’s general manager CY Lim Land explains that in Georgetown, for instance, land is considered very scarce. He says that most of the land available for development is situated in the South-West District namely in Balik Pulau, Sungai Ara, Batu Ferrigghi and Teluk Bahang. “The vacant lands in Batu Ferringhi, Sungai Ara and Tanjung Bungah areas are mostly hill land and needs to be converted before development can take place. The general guideline is; land that is 250ft above sea level and hill slopes with a gradient of more than 25 degrees cannot be developed. However, there are exceptions to special projects,” he tells. Currently, the prices of vacant land in Georgetown is about RM300psf to RM500psf for residential properties and about RM1,000psf for commercial
Penang State Exco for Housing and Town & Country Planning, Mr. Jagdeep Singh Deo
properties. Some areas experienced a significant land price increase following the opening of the Second Penang Bridge. Among these areas include Batu Maung on the island and the Batu Kawan vicinity on the mainland. The land prices in these two areas have gone up so much so, the landed properties in Batu Maung such as a two to three storey terrace house can cost up to RM1.2million. Prior to the announcement of the bridge, the initial price of such property was only RM450,000.
MORE AFFORDABLE HOUSING
With the market currently ‘heating up’, Jagdeep believes that it is timely for the Central Bank to impose some cooling measures to ‘cool off’ the market. “On our part, we have come out with some measures to tackle the issue, one of which is to produce more affordable housing in the low cost and low-medium cost sector. One of the reasons the market became so ‘hot’ is because of speculations. Speculators come and spoil the market. So for low cost and low-medium cost property, we introduced a moratorium period of five years where you cannot dispose of the property,” Penang-born Jagdeep says. “We did a joint venture project with the Penang Development Corporation where 10 projects to provide affordable housing are in the pipeline. About
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FEATURE 20,000 units of affordable housing in the next five to 15 years are underway,” the Penang state assemblyman tells. There are three types of price categories in Penang’s affordable housing – RM200,000 and below, RM300,000 and below, and RM400,000 and below and the sizes range from 750sq ft and 850sq ft to 900sq ft. “On the mainland, affordable housing is priced at RM250,000 and below because the land cost there is not as much as the island’s, but we wish to have some affordable housing delivered on the island too,” Jagdeep hopes. One of the affordable housing projects progressing currently is a Private-Public Partnership development that is taking shape in Bandar Cassia. “We would like to continue encouraging private sector to build more affordable housing in Penang. So far, at least four developers have submitted plans to build 10,000 units. The units are mostly high-rise properties,” the Datuk Keramat assemblyman says.
Asked on the top locales for investment in Penang, Jagdeep says these areas are most concentrated in Seberang Prai. “With the Second Penang Bridge opened, the south island and south mainland are well connected and with such connectivity, the market will be more vibrant and thriving than ever,” he says. Perhaps, the area with the most potential at the moment is Batu Kawan. For Lim, he thinks that the soon-to-be-built Penang Designer Village by PE Land Sdn Bhd and an integrated shopping mall with residential components by Aspen Ikano (anchored by an IKEA Store) in Batu Kawan will be the
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catalysts to the area’s strong growth. “Other areas include Simpang Ampat, Jawi, Sungai Bakap and Nibong Tebal,” he shares. Tay concurs with the notion that Batu Kawan is the area to look out for. He adds, “Other ‘goldmines’ in Penang are Batu Maung and Teluk Kumbar – thanks to the improved accessibility via the Second Penang Bridge and the State Government’s effort to promote the areas,” he reckons. Other hotspots are Bayan Baru, Jesselton and the Inner City areas. “Properties in Bayan Baru area are mainly affordable terrace and semi-detached houses while Jesselton offers bungalows. For the Inner City, it comprises of mainly heritage buildings. With the repeal of the Rent Control Act, these buildings have been refurbished and are being sought after by many investors. Ever since then,
heritage buildings have witnessed a steep increase in terms of value,” Lim says.
IMPROVED INFRASTRUCTURE AND FACILITY
To tackle the road traffic issue in Penang, there are a few road expansion projects being planned, among which are the cross city link starting from Jelutong to Ayer Itam called Jelutong-Ayer Itam bypass, the North Coast pair road Batu Ferringhi bypass and the Ayer Itam-Relau pair. “We hope these three roads will get us in shape. On top of these, we will have the undersea tunnel planned in the next 15 to 20 years,” Jagdeep reveals. The monumental opening of the Second Penang Bridge has also contributed to the growth of property market in Penang. For Tay, he reckons that the second bridge has spurred a lot of interest and speculations in the Batu Maung area and its vicinity
on Penang island as well as on Batu Kawan and a few localities on the mainland. There is also the much awaited electrified doubletrack rail project underway which is primarily planned for the mainland. “Properties nearer to the train terminals with better accessibility would fetch better prices compared to those with poorer access,” Tay states. This RM12.485 billion project is expected to be completed by November 2014 and will provide a terrific economic multiplier effect in not only Penang but for Perak, Kedah and Perlis. Complementing this connectivity is the Penang Sentral project by Malaysian Resources Corporation Bhd that was announced recently. The RM230million project on the mainland of Penang is slated for completion by the end of 2017 and will function to ease the movements of commuters of ferry, rail, taxi and bus services. Jagdeep is optimistic that in 10 years’ time, Penang will be credited as an International City. “With all the big projects materialising, and with the Business Process Outsourcing practised, many of the world’s big companies will choose Penang as their base, where they can communicate with the rest of the world and do their businesses. “We also wanted to concentrate on the delivery of the Halal hub in Penang as well as developing more education-based areas where world-acclaimed colleges and universities can call Penang their home,” Jagdeep says in the end, looking eager to embrace Penang’s bright future.
PRICE RANGE TYPES 1T
SECONDARY MARKET (RM)
NEW LAUNCH (RM)
400,000 – 700,000
500,000 – 1.7mil
700,000 – 1.5mil
1SD 2SD 3SD
400,000 – 1.8mil 600,000 – 2.8mil 1.5mil – 3.1mil
(Balik Pulau Area) 678,000 – 1mil (Balik Pulau Area) 2mil – 3.1mil
NOVEMBER 2014 29
FEATURE SECONDARY MARKET Stratified Apartment Condo Super Condo
PRICE RANGE (RM)
350,000 – 450,000 450,000 – 1.5mil 2.5mil – 3.5mil
500-650 500 – 1,000 400 – 1,100 NEW LAUNCH
PRICE RANGE (RM)
600,000 – 2mil
600 – 1,200
Source: The office of Penang State Exco for Housing and Town & Country Planning
AFFORDABLE HOUSING IN PENANG No
Low Medium Cost
1 2 3 4 5 6 7 8 9 10
S.P Cheliah Teluk Kumbar Jelutong Pintasan Cecil Bandar Cassia Kampung Jawa Ampang Jajar Bukit Mertajam Juru Mak Mandin GRAND TOTAL
DTL DBD DTL DTL SPS SPU SPU SPT SPT SPU
770 346 556 298 3, 372 353 600 484 800 7, 579
Affordable Housing Scheme 1, 130 348 8, 428 354 600 484 800 12, 144
Total Units 1, 900 694 556 298 11, 800 707 1, 200 968 1, 600 250 19, 973
Number of RESIDENTIAL Property Transac:ons According to District in Penang, 2012 S.P Selatan; 2622; 11%
S.P Tengah; 4399; 19%
Timur Laut; 10376; 45%
S.P Utara; 2990; 13% Barat Daya; 2879; 12%
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FEATURE Number and Value of Residen.al Property Transac.ons by Category of Market in Penang 35000
No. of Transac.ons
Source: The office of Penang State Exco for Housing and Town & Country Planning
Number of Transac2ons in Primary Market
Number of Transac2ons in Secondary Market
Total Number of Transac2ons
Value of Transac2ons in Primary Market
Value of Transac2ons in Secondary Market
Total Value of Transac2ons
Value of Transac.ons (RM Billion)
Value of Residen.al Property Transac.ons by Category of Market in Penang, 2012 (RM Billion)
Number of Residen/al Property Transac/ons by Category of Market in Penang, 2012
Primary Market; 1.84; 26%
Primary Market; 7302; 31% Secondary Market; 15964; 69%
Secondary Market; 5.26; 74%
NO. OF TRANSACTIONS
Primary Market Secondary Market TOTAL
7,302 15,964 23,266
31 69 100
Primary Market Secondary Market TOTAL
VALUE OF TRANSACTIONS (RM BILLION) 1.84 5.26 7.09
% 26 74 100
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BUY, FIX AND SELL FOR PROFIT Despite needing extra resources to trade in secondary market, investing in this category has it’s plusses. Aidil Mohamad Noor finds out more.
he world of property is so very exciting. One can invest in many ways. Some go for only primary markets while others go only for secondary markets. Some become selective investors in that they invest only in certain types of property ie commercial units and/or houses only. Others prefer the safe way – play property stocks. In terms of facing the risk of an abandoned project, the secondary market literally has 0% risk since the property is already completed. But there are, however, cases of abandoned homes in the secondary market category. These are properties considered an investment mistake, and owners try hard to look for buyers for these types of property. These types of houses or property are usually wrecked up and need fixing. But they are also
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usually much cheaper than normal. Some investors actually go for these types of properties. They but the unit, fix it up and then sell it off quickly.
It is no brainer that in the secondary property market category, one need to fix or carry out some renovation to the property to make it attractive enough to entice buyers quickly. They buy, they fix and they sell. This concept is getting more and more popular among investors since the prices of houses nowadays are very high. So a cheaper one is almost a sure fire money maker. “A lot of people in my circle are actually doing this (investing in secondary market properties such as buying abandoned houses), since the properties can be bought for a cheap price. Occasionally
FEATURE one can find same abandoned types of houses in primary markets too. These would be the newly built properties that have various flaws and defects,” says sesoned property investor Kenny Chia. He explains that these much-cheaper-than-normal abandoned properties may also not be attractive to others. An example is a house that may be facing a T-junction. This usually is not attractive to buyers. But since the house is not owned for so long, its price goes down and often investors get attracted to go for it. Of course, it goes without saying that additional element is required as to give added value to that property. Another reason why investing in abandoned properties is getting more popular is that in buying a secondary market property, the renovation cost can be calculated together with the house price, meaning that loans can be applied together with the renovation or fixing costs. Buyers then would not need to cough up his own cash to fix the property upon acquisition. “This is not as simple as it sounds. One really does need to know the details about the property before deciding to do it,” reckons Chia. He puts doing personal homework as priority before making any decision to purchase. Chia explains that the most important part is to know the demands in the particular area. In any investment criteria, location is always the most important part be it primary or secondary market. If the demand in the respective location is not so great, fixing an acquired property could be a waste of time. Such a situation can be offset with possible future development that can help an area. If the demand of the area is currently low but there are future developments like an MRT line, a mall, or
other infrastructures, one may see that buyers may become more interested. “Apart from that, we must have the know-how of fixing and renovating. Different from buying from primary market, we have to know how to calculate the cost so that we may come up with a realistic price that can be charged afterwards,” he explains. The price factor is important. We need to charge a price that can be competitive with other newly launched properties in the market. Whatever the net profit that we gain must be calculated minus the renovating or fixing cost. “Rule of thumb is that only basic renovation and fixing should be done. Enough to make the property looks good again,” he adds.
FINDING THE PROPERTY
“The most effective way of finding this type of property is through networking. Get to know agents, bankers, negotiators, other property investors, and etc. Also, don’t discount your own experiences if you have any,” he mentions. He also mentions auctioned property, but advices that such types should not be depended upon too much because
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of its popularity among investors; and pretty much everybody knows about auctioned properties. This scenario creates competition amongst investors and it is not easy to grab the property nowadays. So in order to get these properties and to make higher profits, we need to work harder to find such abandoned properties ourselves.
“The risk usually stems from our excitement in renovating or fixing the property. We put too much into it, even the unnecessary items, and now the unit price is higher because we need to cover back the costs,” Chia explains. He mentions one example of his student, a contractor, who was offered units by the developer in the place of payment for their construction. Thinking that they are already a contractor and the costing would be cheap, they put in too much into the unit and later found it hard to sell. This is because the unit now cost more than the regular units and no matter how attracted people are to the renovated one, they still
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would not buy it. “So after a year of being unable to sell it off, they finally had to price their property the same as others, and the renovation cost was considered a loss,” he says. Besides excitement in renovating and fixing the property, another is when the end product of the house is not something likeable to everyone. We may renovate and fix based on our own taste which actually may differ from prospect buyers’ expectations. This is only logical as personal preference is a subjective matter and that is why some time too much fixing can be devastating. “I would advise newcomers to property investment who want to try fixing and selling to get the proper knowledge first. Your first property might encounter some mistake here and there in costing but the second time onwards you would have learnt the stuff to get higher profit,” he reckons.
“There is no specific formula per se as it depends on the market price and market value. But for me, a good investment return is a margin of not less than 20% than the acquisition price plus the renovation or fixing costs,” he says. He also adds that the sale of the said property should be done within a year after acquisition. Asked about maximising returns, Chia replies that it is better to sell the property off rather than renting it out. This is because for rental, we have to factor in the time to get back the cost of fixing it. Rental is a long term income, but, being a secondary market, the area most likely already built up, meaning there are risk of no new development in the particular area. “We wouldn’t know how long the demand in that area can be sustained. Maybe in a few years the area will not be popular anymore, and finding tenants could then be difficult,” he adds. So, he suggests that the property be sold off and start anew with another property to keep the money rolling, and getting bigger over time. “But, if the property is in a prime area such as the heart of KL, it may be a different case,” he adds. In such a situation, long term investment plan might give a better return if the renovation is done correctly. “For example, we fix a building and turn it into a student hostel, or a hotel. Since it’s in a prime area, you can expect to keep getting returns from it,” he adds. The returns (if one was to turn a property into a hotel) can be much higher than normal units because the room rental is using a daily rate, instead of monthly. He also mentions that it can be a business opportunity, since making
FEATURE it into a hotel, you create a brand for yourself and business opportunist might look into the opportunity of franchising the newly formed hotel or hostel. Also, it is advisable for the investor to buy secondary market properties on cash term, since we would want the ownership process to be quick. As mentioned earlier, this type of investment should be within the period of 12 months. Thus, if one is buying using a bank loan, it would take him some time to get approvals and qualification to own the property. This would cut into the time needed to later renovate or fix. Besides, cash terms can reduce other expenses such as legal fees for the loan. So by buying using cash term, the ownership change can be fast. Kenny also adds that some people actually sell the property before fixing it, giving only ideas to the prospective customers on how it would look like once renovation is completed. “Some people buy this into idea, since it goes without saying that after the property is completed, more people will get interested in the property and in the end the property will go to the highest bidder,” he adds. He also suggests that if this is being done, try for a high booking percentage deposit to offset some expenses needed in looking for another buyer in a case that the first one changes his mind. For this concept, Kenny advises newcomers for property investment not to try it out since there are a lot of calculations needed for these
situations. And being new in the industry, mistakes in calculation is bound to happen which can put in extra cost on them rather than giving them extra returns. Also, different from buying primary market property, where the developer has already absorbed costs of Sales & Purchase Agreement (SPA) and stamp duty, buying secondary market would put you through such necessary payments. “Of course, buying secondary market would mean that there are absolutely zero chances of the developer quitting on the project, since the project is already completed. Secondary market is for those with extra funding, and primary market is for the ones with lesser funds,” he concludes.
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IN PROPERTY INVESTMENT
Good deeds reduce risks in property investment. Property guru KC Lau and Dr Ong Kian Leong write.
n the venture of property investment, we closely observe what is happening around us in both local and global economies for the reason to stay informed of the latest changes in aspects such as finance, legal, market, etc. The most important thing we want to know is if these changes will affect our money! Social responsibility? Who cares, some may think. This is a very common misunderstanding among the public â€“ that being socially responsible costs money. Not many people realise that by being socially responsible, there is a significant reduction of potential risk particularly in property investment. Renowned investors like Robert Kiyosaki and Warren Buffett know this very well. It is not easy to explain the reasons
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behind it and for many years it remains one of the many secrets of success in investing. Here we will try to use some examples in property investment to show you how it is so.
OLD PROPERTY VS. NEW PROPERTY
It is a known fact that investing in a property that is currently generating cash flow has relatively lower risk than investing in a new property. The main reason is investing in an old property has less uncertainties in factors affecting return on investment such as neighbourhood, competition for rent/sale, rental demand, quality of maintenance, valuation, etc. Most of the things can be seen, touched, felt by investor. So you donâ€™t have to predict, assume or pray for your
while we evaluate from a different angle, say social responsibility, we will find that the decision made is consequentially prone to the side of lower risk. How? Letâ€™s look at the choice between old and new properties again, but this time we assess the effects of the choice to property market.
AN IDEAL CASE
Ideally a new house is for a home buyer to own it as a home. Imagine an ideal market where only home buyers are buying new houses while investors with extra capital invest in old properties. In this market, developers or builders would build new houses according to the demand of home buyers only. So there would be less chance to have an oversupplied problem in the market. This enhances the stability of home prices and prevents prices from skyrocketing because home buyers buy houses merely for their essential needs. Builders would also have the least motivation to take higher risk but concentrate on the delivery of existing on-going projects. In the long term, builders would enjoy lower overall costs (especially marketing cost) investment to turn out great. It is already as good as you can see. However, many investors are constantly attracted by new properties because they can expect a potentially higher return with the same amount of capital, even though they have to wait for a longer time to see the return materialise. So do they really have a bigger stomach for higher risk? In real life we can always see many cases around us that show otherwise. When a new project goes wrong, most of the buyers tend to panic especially those who have overstretched themselves financially. When people place money as their very first priority in property investment, they easily lose sight of their own risk appetite. If we put the concern of money aside first,
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and suffer insignificant numbers of unsold units. This leads to a healthy and robust market supply. We would hardly see any unsold unit left deserted and run down in our neighbourhood. On the other hand, when investors invest only in old properties, more properties in poor condition would receive attention and stand a chance to go back to the pool of supply in the market. Other properties
could benefit from constant maintenance since the overall demand on old properties is supported largely by investors. Prices of old houses might then become higher than new houses but such situation is in favour of first time home buyers who are generally not so loaded but yet are most in need of the new properties. In this ideal market everyone is a winner. Whether we are a home buyer, a property investor, a builder or other personnel in the supporting industries of real estate, we take the lowest risk in a stable market where everyone finds it affordable and comfortable to get what he/she wants, be it a home, an investment property, a deal or a sustainable profit of sale. A real life example very close to the above model is the public housing in Singapore implemented by Housing Development Board (HDB) since the 1960s. Today, as much as 82% of Singaporeans live in public housing provided by the HDB. The success story of Singaporeâ€™s public housing has attracted countries like China to send their leaders to the small city state to learn how to resolve housing problems in big cities. One of the HDBâ€™s policies restricts purchase of new flats to first- and second-time home buyers only.
WHY IT IS JUST AN IDEAL?
In a world where democracy has become more and more widespread, everyone enjoys the right to pursue wealth and happiness. But are we doing it in a manner
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FEATURE that at the same time hinders others from doing so? In a democratic system, authorities and governments have intrinsically very limited control to avoid people from pursuing wealth and happiness at the expense of others, which has been one of the typical reasons why disparity between rich and poor keeps widening. And we all know that the width of this gap is proportional to other social conflicts and problems, such as the crime rate, which in return risk our property. So it has become pathetically (or prestigiously?) a kind of social responsibility for us who are in the game to reduce that risk level. Now, let’s examine the case in Malaysia where our government is really working hard to have more lowcost and medium-cost houses built. In the midst of catching up with the demand for affordable housing, there are unscrupulous investors who acquire these properties which they are not entitled to. This snatch the opportunities of the needy and of course, will cause more untackled social problems. If you happen to know any of these unethical investors, kindly forward this article to them.
A society is like a human body and each individual is like a body cell, closely connected to and supported by each other. Social responsibility is thus held by each of us regardless of what we are doing because all actions come with consequences. A butterfly flapping its wing may eventually cause a climate change in the other side of the world, in a matter of time. What about an individual’s action in a world where it is now totally flat? “The world is flat” described by Thomas L. Friedman in his international bestselling book The World Is Flat: A Brief History of the TwentyFirst Century (publisher : Farrar, Straus and Giroux, 2005), that globalisation has changed the world into a level playing field in terms of commerce, where all competitors and individuals have an equal opportunity and the perceptual shift required for countries, companies, and individuals to remain competitive in a global market where historical and geographical divisions are becoming increasingly irrelevant.
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DEVELOPER OF THE MONTH
MULTI-FACETED, EDUCATION CENTRIC DEVELOPER Paramount Corporation Bhd (Paramount) is a developer that hails from the northern region of Malaysia and has now established itself as a quality developer producing a variety of property products.
aramount’s roots come from its two business forte, property developments and education that has resulted in its current focus of creating university townships such as the Utropolis in Shah Alam’s Glenmarie, an avenue where property buyers can invest their hard earned cash for what is gauged as guaranteed returns.
PILLAR OF THE NORTH
Like many other developers Paramount started off humbly in Sungai Petani, Kedah. Its maiden mixeddevelopment product then consisted of residential and commercial properties. It was 1981 and the locale was Taman Patani Jaya in the rice state. Back then, Taman Patani Jaya was considered by homebuyers as a benchmark in township design and planning. It had set the tone for many of
Paramount’s sprouting future developments that can today be spotted across the mentioned area. Having developed such trendy products as the ones found in Taman Patani Jaya, Paramount has since earned a steady loyal following amongst Malaysians in the northern region as well as those across Malaysia, looking for homes that are built in the northern locale. Aside from developing in the north the developer of good quality homes has always produced property in prime areas across Malaysia such as the ones in Shah Alam, Glemarie and Cyberjaya, all of which have constantly been enjoying steady appreciation in property value once complete.
THE EVOLUTION Paramount’s acting Divisional Chief Operating Officer, Beh Chun Chong
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Paramount’s acting Divisional Chief Operating officer, Beh Chun Chong, explains that the company’s initial development strategy began with producing large
DEVELOPER OF THE MONTH The residential and commercial components complete the live-andlearn, work-and-play environment in Paramount Utropolis
Bukit Banyan Azelia Elite II
townships. “Initially, Paramount focused on township developments, with addresses like the 173-acre Taman Patani Jaya, 493-acre Bandar Laguna Merbok and 520-acre Bukit Banyan in Sungai Petani, Kedah, as well as the 524.7-acre Kemuning Utama in Shah Alam,” he said. This style of development has changed over the years though as availability of land parcels in central areas shrink and demand for different types of property has sprouted amongst buyers and investors. “Paramount has increasingly expanded its range of developments to include high-rise buildings and luxury residences on top of commercial, industrial and integrated developments,” Beh explains. As Beh reminisces about the planning stages of some of the developments by Paramount, he shares that currently two monumental developments hold a special place in the hearts of members of Paramount. The first is a 493-acre township in Bandar Laguna Merbok while the second is Paramount’s Utropolis with the latter being one of the more recent masterpieces developed by developer. “Bandar Laguna Merbok was a first award-winning township in the Sungai Petani locale measuring 493 acres. This 1996 township is unique as it was the first gated and guarded township to be established back then. It is a riverside development hugging the borders of Sungai Merbok and set an industry benchmark for resort-styled township developments in the northern region,” Beh says. Beh adds, “The development also garnered the FIABCI-Malaysia’s Best Residential Development Award in 2004, the first residential development in the Northern region to receive such a recognition and accolade.” The next of Paramount’s gems that Beh speaks of is Paramount Utropolis, located within the Klang Valley. Chong elaborates, “The second development that we at Paramount find significant is the Paramount Utropolis project located close to Batu Tiga , Shah Alam”. Beh adds, “The development is unique to us as it brings together, for the first time ever, two different businesses involving property development and education that we as a developer have both mastered at separately prior to it. So it is a very special project as it demonstrates the synergies that both our businesses can enjoy.” Paramount Utropolis is said to be highly sought after as it will pose as the only standing University
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DEVELOPER OF THE MONTH metropolis in the Glenmarie vicinity complemented by residential, commercial and retail components. The 21.7 acre integrated development has also been recently anchored by a 10-acre flagship KDU University College (KDUUC) campus. This should provide a ready supply of tenants for the properties offered within this development. “University and school-based towns like Paramount Utropolis contribute towards the nation’s growth via the availability of a constant influx of new students coming in, which indirectly would support local businesses. The schools in turn become a hive of social and cultural activities, adding life and entertainment to local communities,” Beh adds.
NEW BEGINNINGS AND TESTS OF TIME
“Aside from Paramount Utropolis, we are currently working on our Sejati Residences and Sekitar26 business components located in Cyberjaya and Shah Alam respectively,” Beh says. Paramount Utropolis Lifestyle Suites
The high ceilings featured in these unique residences add hints of luxury in every home offered
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Paramount Utropolis Lifestyle Suites pool view
Sejati Residences is a high-end residential development which marked the developer’s move into the premium segment of the property market while Sekitar26 is a business component poised to be an integrated development designed to be Shah Alam’s vibrant urban hub. When asked how Paramount competes within an industry that has an endless entourage of competitors and to this Beh replies, “It is a fact that the property market is competitive. However, our edge is that we have a strong pool of followers helping us to stay afloat.” Beh adds, “Aside from that, we constantly ensure that we continue to bring products to the market that will meet our followers’ needs via providing added value through high standard maintenance and aftersales service to customers. Adding to that we are also researching new lifestyle concepts that we can introduce to the existing market.” Beh mentioned that there are four things that make Paramount a truly unique developer that even other developers talk about. These include their strong focus on high quality Bandar Laguna Merbok Clubhouse overlooking the lake
DEVELOPER OF THE MONTH A 6-acre lake completes the Mediterranean-style resort living at Bandar Laguna Merbok
standard as seen in their Sejati Residences, Cyberjaya development and functional as well as practical designs that withstands the test of time. One can see this testament in their Bandar Laguna Merbok that won an award years after its establishment. Beh adds, “We also always listen to our clients’ needs while being sensitive to our carbon foot print while at the same time keeping to our promises to deliver products based on stakeholder values.” Beh assures, “All the addresses that we have built continue to be thriving communities today, with owners enjoying significant appreciation in values
for their properties. We build enduring addresses that stand the test of time and this is what makes Paramount Property the People’s Developer.”
CHALLENGES OF 2014
Beh mentions that compared to 10 years ago the property market differs greatly and many challenges have followed suit, especially this year. Beh states, “Today, land is scarce and development costs are high. As a result, developers are building on smaller tracts of land or further away from major property hotspots or centralised locales.” Adding to that Beh says, “This has resulted in a migration of buyers, who are increasingly choosing more affordable developments further away from the city or those that also provide them the lifestyles that they want.” On the cooling measures implemented by the Government and its agencies since last year, Paramount’s acting CEO says, ““2014 is definitely a challenging year for the property market due to tightened loans and financing, new RPGT rates, abolishment of DIBS and rising cost of living.” Beh adds, “These factors have impacted especially the high-end market and we at Paramount believe that this will be mitigated over time with the rising demand for more mid-priced homes in accessible locations.” When asked on the imposed cooling measures Beh replies, “We could witness a knee-jerk reaction
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DEVELOPER OF THE MONTH Sekitar26 Business features a boutique concept facade with practical layouts within
possibly resulting in slower sales but, over the long term, we should be able to look forward to upward growth in the property market again because the need for housing will always be there.” “The Central Bank has its reasons for abolishing DIBS which is mainly to curb housing debts, a growing problem that our nation currently faces,” Beh states. He adds, “These stricter lending restrictions have impacted lower income home buyers and those looking to up-grade their properties, which in turn has resulted in both the Government and developers looking at innovative ways to make housing accessible to them.” Paramount has always focused on affordable
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housing offerings since the beginning of their first few developments in Kedah. The development now offers Utropolis in Glenmarie creating affordable housing options for students as well as young executives. When asked about the implementation of GST Beh says, “As mentioned earlier, measures such as these would result in buyers showing a short term reflex-like reaction. For example, a rush to buy property before the implementation and taking a period of adjustment immediately after implementation. However, over a longer term, we expect the property market to move upwards again, as there will always be a need for housing.” Beh laughingly tells Property Insight, “We have several land banks to develop in locations such as Sungai Petani (Kedah), Kota Damansara (Klang Valley), Batu Kawan (Penang) as well as several other locations across Malaysia amounting to an approximate 781 acres.” Paramount’s strategy in acquiring land, Beh adds, is similar to other land acquisition exercises where developers look at the intended location as well as surrounding areas, accessibility, catchment areas, amenities and any future developments as well as juxtaposing these against what the company believe market demands would expect. In Beh’s opinion the land banks close to today’s
DEVELOPER OF THE MONTH property hotspots are certainly scarce. However, there are many opportunities with respect to expanding further away in locales such as Klang, Kajang, Sungai Buloh, Bangi, Semenyih, Nilai, Rawang and even in Seremban. Beh explains, “Today many Malaysians are living in addresses that were once considered too far for easy access into the city like Seremban, Nilai, Rawang, Sg Buloh, Kajang, Klang and more.” Today, the many highways and the availability of train networks have made these addresses more accessible. Beh assures, “Cyberjaya is a good example of an address that would once have been considered too far for most, but which is now a mere 20-minute access from Kuala Lumpur City Centre, traffic congestion free via the Maju Express (MEX) Highway.” “The basic rule of thumb considered by homebuyers today is that any commute into the city that can be completed within 60 minutes is considered a reasonable commute and Paramount personally believes that there are many more opportunities that fall within this radius both inside and outside of the Klang Valley,” Beh enlightens. When asked about overseas investment by this
developer, he says that currently it may not be the best of times for the company. He adds, “We believe there are still untapped opportunities on our home turf aside from holding sufficient land banks in hand. We will focus on bringing new projects and attractive offerings to the market in its time of need.” Currently Paramount has its hands full with completing its last development in Kemuning Utama (in Selangor) called KU Suites that are selling from a mere RM300,000. Completing the last two phases of the Paramount Utropolis residential components as well as launching a retail mall are also keeping Paramount busy indeed. The mall is Paramount’s first ever retail property in Malaysia and it is being developed and launched in the market within the Utropolis project. According to a sales representative Paramount would also be completing its first phase of Sejati Residences in Cyberjaya early next year with phase 2 expected to be launched this month (November) aside from putting together the master plan and launching the rest of the Sekitar26 development in Shah Alam. Also on its plate, Paramount will also soon focus on its future developments in Klang (Selangor) and Batu Kawan in Penang.
Paramount Utropolis, Glenmarie’s only university metropolis
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AREA FOCUS Highly anticipated Aspen Vision City in Batu Kawan
FROM AGRICULTURE TO SATELLITE CITY? Once an agricultural hub, Penang’s Batu Kawan is turning into a real gem for property development. Aidil Mohamad Noor talks to Penang Development Corporation’s General Manager Dato’ Rosli Jaafar, Ivory Properties Group Berhad’s Group CEO Dato’ Low Eng Hock and Aspen Group’s CEO Dato’ M. Murly to get their views.
ue to the scarcity of land in Penang, Batu Kawan, once considered the state’s agricultural hub, has now turn out to be one of the key development locales in the eyes of property developers. One major factor for this change is said to be the opening of the 24km Sultan Abdul Halim Muadzam Shah bridge, or otherwise known as the once controversial-laden Penang Second Bridge. This second road gateway connects the Batu Kawan town on the mainland with the island’s Batu Maung area. To the locals too, Batu Kawan is considered an “island” on the mainland – being separated by both Sungai Jejawi Rivers and Sungai Tengah. Between the 19th and 20th century, Batu Kawan was known for its sugarcane, coconut, rubber and palm oil plantations. The area was only accessible via ferry then but all these have changed and the place is fast developing into a major industrial site on mainland Penang. Since the 21st century Batu Kawan has seen
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several new industrial sites, commercial components as well as residential offerings that have been established. More developments are expected in this locale such as the Government’s ambitious plan
10/17/14 10:59 AM
AREA FOCUS to build 11,800 medium-cost housing units under its RM2.7billion Bandar Cassia Affordable Housing Scheme which is modelled after Singapore’s Housing and Development Board (HDB) housing schemes. Currently, Batu Kawan’s residential price is reported to be anywhere between RM280 and RM350 per sq ft and price of commercial property is from RM550 to RM650 per sq ft.
CURRENT AND FUTURE DEVELOPMENTS
“The growth on the mainland is now a different ball game with the opening of the Sultan Abdul Halim Muadzam Shah Bridge, coupled with the expensive land cost and scarcity of land on the island,” says Ivory Property’s Dato’ Low. Agreeing with Low, Penang Development Corporation’s (PDC) General Manager Dato’ Rosli mentions that Batu Kawan has been identified as the PDC’s third satellite town after Bayan Lepas and Seberang Jaya. It is Penang’s major industrial site on the mainland and a growth centre for the State. The opening of the Second Penang Bridge on 1st March 2014 augurs well for Batu Kawan to become a development hotspot. The domino effect that stemmed from the second link is that property prices have greatly appreciated since 2007. “Land prices in areas leading to the bridge in Penang and Seberang Prai have risen significantly. Vacant land prices are now hovering around RM50-RM70 per sq ft compared to RM8-RM9 per sq ft (prior to 2007),” Rosli adds. For example, Rosli mentions that prices for landed properties such as double-storey terraced houses have more than doubled - between RM350,000 and RM400,000 nowadays compared to RM150,000 and RM200,000 prior to the second bridge. Low then adds that we are
looking at 4% to 6% of rental yield and in terms of value creation, the buyers may be expecting a 30% to 40% appreciation upon completion. Since the second bridge was opened, Batu Kawan is fast becoming a hotspot among property investors. In the area, among the properties offered are PDC’s commercial SME Village Phase 1, launched in January 2014. The project comprises of 4 semidetached and 40 terrace factory units. The project, expected to be completed by Q4 of 2015, has a Gross Development Value (GDV) of RM47million and offers a 60-year leasehold. For residential development, PDC offers Suria 1, located inside Bandar Cassia. This high rise project presents three blocks of apartments for leasehold tenure. What lies ahead is a different case. Batu Kawan is evolving into a multiple developments area. Paramount Corporation Berhad is reported to have bought a RM67million land from PDC to build a University College with other mixed development. Sultan Abdul Halim Muadzam Shah Bridge
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AREA FOCUS Aspen Vision City presents to the public the second IKEA in the country
The project will be the first University metropolis in Batu Kawan. Anchoring the project will be KDU Penang, owned by Paramount’s KDU Education Group. Another exciting development is a joint project by Aspen Vision Land Sdn Bhd (a division of Aspen Group) and Ikano Pte Ltd to develop Aspen Vision City. In the project, they are bringing in the famous IKEA store to lead the regional integrated shopping haven. It will be the second IKEA in the country, after the one in Damansara, Kuala Lumpur. This mixed development project comprises of residences, offices, medical facilities, a 20-acre park, an international school, standalone retail outlets and an integrated central transportation hub for Seberang Prai. “The shopping mall will be a regional shopping centre offering the best of shopping, dining and entertainment. It will be a one-stop shopping and leisure destination and anchored by IKEA store,”
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says Aspen Group’s Chief Executive Officer Dato’ M.Murly. The project is expected to start by the end of next year, with completion is scheduled for 2018. Other sections of the 10-year development scheme will be carried out in subsequent phases. Murly adds, one of the reasons the company chooses Batu Kawan is due to its great accessibility and connectivity to the Sultan Abdul Halim Mu’adzam Shah Bridge and its close proximity to the North-south Expressway, the Northern states as well as the Southern part of Thailand. “Aspen Vision City is only a green field at this moment. This commercial hub will cater to everyone in the region and to all sectors. We hope that this commercial hub will have local retailers’ participation and can provide local contents as its activities,” Murly says adding that he foresees the mixed development to be the ‘Mid Valley’ of the Northern region.
“ON AVERAGE, PROPERTY PRICES IN BATU KAWAN HAVE APPRECIATED APPROXIMATELY 220%” Another mixed development yet to take off is a project by PE Land Sdn Bhd. It is called the Penang Designer Village and boasts a GDV of of RM1bilion. An outlet shopping mall tenanted by luxury international brands, a 300-room hotel, cafes and F&B outlets, landscaped garden with a children’s playground and residential units are all part of the plans. The shopping mall, hotel and related developments are expected to be completed
AREA FOCUS Master key plan for Aspen Vision City
within 36 months from the date of the purchase and development agreement, while the residential development is expected to take 72 months.
AMENITIES & FACILITIES
The Second Penang Bridge is definitely a catalyst to Batu Kawan’s growth. Not only it promotes Batu Kawan as a commercial haven, it also improves Batu Kawan’s educational facilities. Currently the area has one primary and one secondary school, Sekolah Kebangsaan Batu Kawan and Sekolah Menengah Kebangsaan Batu Kawan. In the future, tertiary education will be made available with University of Hull by PKT Logistics Group Sdn Bhd and KDU University by PDC. University of Hull will be the first international college in Seberang Prai and the second one within Penang itself. The student intake is expected to start in 2017. According to PDC, KDU University is one of the policies to promote and sell land parcels to attract catalyst projects, mainly in education and services, to complement the rapid industrial and housing development sectors in Batu Kawan. The project is expected to be set up within 5 years, and comprises 10 acres of institutional land set aside for the development of a new university college and future university, plus a 20-acre land for mixed development. Batu Kawan is also not all work and no play. The place is home to Penang’s state stadium, a multipurpose building with a capacity of 40,000 built specifically for the 8th 8th Sukma Games in 2000.
has commenced in Dec 2013 and is expected to be completed by August 2016,” Rosli says. He adds that due to the shortage of industrial land and land in general on the island, far greater industrial expansion is happening on the mainland. More job opportunities are expected in Batu Kawan as industrial businesses shift their operations there. Low supports by saying, “There will be continuous development in Batu Kawan in the next 3 years with more promising mega development completed by then. We also foresee the market to be on a bullish trend in 3 years’ time and Batu Kawan is expected to be the new satellite city on the mainland, thanks to the Second Penang Bridge as a catalyst, and the effort put in by the state government in bringing theme park, premium outlet, university etc. to the area,”. For Murly, he is confident that Batu Kawan will turn into a major capital city in 15 years’ time given its many potential. “On average, property prices in Batu Kawan have appreciated about 220%. These prices will have a gradual upward trend too. To top it off, the investment risks in Batu Kawan are relatively low, provided that the country’s economy is doing well,” Murly says in the end. Aspen Vision City will be the centralised integrated commercial hub in the Northern Region
“Batu Kawan is undergoing rapid development. Construction works on the State-initiated affordable housing programme under Phase 1 Bandar Cassia
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AREA FOCUS LANDED Development
Moonlight Bay Aston Villa Island Resort
3,800 5,700 2,850 3,250 4,200 7,500
Selling Price (RM)
HIGH RISE GDV
Penang TimesBirch Regency
950 - 1,981
The Peak Residences
Selling Price (RM)
Tanjung Park Plaza Ivory
2,002 4,574 958 - 2,260 900 - 1,765
1,018,0002,224,000 347,300-1,480,000 294,000-736,000
The View Twin Towers
Penang TimesBirch The Plaza
As provided by Ivory Properties Group Berhad
Selling Price (RM)
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AREA FOCUS Location
Taman Nilam Tanjung
Crescentia Leasehold Park Dedaun Bungalow Freehold Village Teratai Idaman Freehold Villa Tanjung Permai
Taman Intan Cempaka
Land Area (sq ft)
Built-up (sq ft)
235,000 – 500, 000
1,690 – 1,730
868 – 1,581
Single-Storey Terrace Double-Storey Terrace
AVERAGE RESIDENTIAL PRICE
Info taken from Propwall.my
AVERAGE COMMERCIAL PRICE
AGENT’S SAY DAVID ANG CHOON KOK INLAND HOUSING BUTTERWORTH New industrial sites, commercial areas and residential scheme are expected to be developed in Batu Kawan. It is heading towards a bustling industrial hub just like Bayan Lepas Free Industrial park and Prai industrial area. Also, completion of Penang Second Bridge which links Batu Kawan and Batu Maung has created easy accessibility and convenience to both side of the island, many people from Penang Island are buying properties in Batu Kawan since the price is believed to be cheaper than on the island.
ADRIAN LEE OZ PROPERTY Basically the location of Batu Kawan is very strategic in terms of logistics with regards to people going to and coming from Penang Island to connect with mainland Penang. The area of Batu Kawan is wide and has a lot of potential in terms of growth in commercial and residential property offerings as the locale caters for various industries including the transportation industry. Adding to that lately many large scale developers for example Penang Development Corporation (PDC) and Aspen Group have developed in the locale and continue to develop here. It is no doubt that within the next few years that Batu Kawan will definitely face a population boom.
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SURVIVING THE UNDONE
Know your legal rights when a property you purchased is not completed.
bandoned projects are the nightmare for all buyers especially those who have spent their hard earned money but not getting their dream house in return. Not only that, the worst part is the buyers will still be required to serve the loan interest payment towards housing loans even though the housing project is long abandoned. In the event the buyers refuse or default in payment of the housing loans, legal actions will be taken against them. Many fail to realise that repayment of housing loan is a separate issue from the abandoned projects. Generally, an abandoned project is defined as a project whereby the construction work has been continuously delayed, suspended or ceased without any physical works on site for a period of 6 months or
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more beyond the delivery of the Vacant Possession period stated in the Sale and Purchase Agreement (SPA) and the Ministry of Urban Wellbeing, Housing and Local Government (“the Ministry”) views that the developer is unable to complete the project. Some of the reasons behind the abandoned projects are as follows:• Poor management by the developer; • Financial problems faced by the developer; • Delays from Local Authority on the building plans approval and any other authority matters which resulted in the property price escalating; • Construction does not follow stipulated specifications and cause undue delays; • Building materials cost escalates during the construction period which cause the contractors
to pull over due to the financial hardship; Poor coordination between the main contractor and sub-contractor which resulted in the tender being awarded after the price has escalate.
Browsing through the website of the Ministry, one will be surprised with the number of abandoned projects record. From the year of 2009 to 2014, the record shows that a total of 212 projects were abandoned. No matter which party shall be hold accountability on this matter, this issue should be NO. 1
Applicable to developer and buyer
taken serious. Nonetheless, what can the buyers do if the project is abandoned? Pursuant to Section 8A of the Housing Development (Control and Licensing) (Amendment) Act 2012, statutory termination of the Sale and Purchase Agreement (SPA) by the buyer is introduced. As a result, the buyer has the right to lawfully terminate their Sale and Purchase Agreement. After the law was introduced, the buyer is provided with better protection and security. The table below shows the comparison between the old law and the NEW LAW
Applicable only to the buyer
Under what circumstances can the SPA be terminated?
• Within 6 months from the date of the first SPA; • ≥ 75% of all buyers that entered into the SPA agree to the termination
• Developer refuses to carry out construction works for a period of 6 months continuously after the SPA was executed; • Buyer has obtained written consent from the end financier; and • Controller of Building (COB) has certified that the developer has refused to carry out construction works for 6 months continuously after the SPA has been executed.
If the buyer intends to terminate the SPA:-
Housing developer shall not unreasonably withhold consent; • Written consent of all buyers who have agreed to terminate not earlier than one (1) month from the date of application; • Any other documents to show the developer’s capability to refund
End financier shall not unreasonably withhold consent; Developer will refund money paid within thirty (30) days from the date of termination.
Minister may grant or refuse the approval for termination:-
• Decision of the Minister is final, • Decision is not questionable in court, • No injunction applicable to the said decision • Is binding on all buyers
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new law in relation to statutory termination:Furthermore, pursuant to Section 18A of Housing Development (Control and Licensing) (Amendment) Act 2012, once the developer is convicted for abandoning the project, the developer shall be liable to: â€˘ â€˘ â€˘
A fine which shall be no less than RM250,000 and not more than RM500,000; OR Imprisonment for a term not exceeding three years; OR Both
Nevertheless, one should take note that the
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effective date of the Housing Development (Control and Licensing) (Amendment) Act 2012 has yet to be announced therefore the said Amended Act is not applicable until further notice. Apart from the abovementioned reasons regarding the abandoned projects, many of the abandoned projects was due to the illegal developers who do not possess any valid developer license to commence the development in the first place. As at September of 2014, there are a total number of 82 developers without the valid license in the record of the Ministry. Although it is not wrong for the public to believe that in the event a housing developer puts up a project, the project shall deemed to be lawfully complied with the authorities and the relevant laws. However,
the buyers are advised to take a further precaution by checking the credentials and background of the developers before entering the Sale and Purchase Agreement to minimize the chances of becoming the next victim of abandoned projects. In the age of World Wide Web, the buyers would be amazed by the amount of information available online. The buyers can check whether their developers are blacklisted on the website of the Ministry. Besides, the buyers will be able to check through the developer’s website or even the forum regarding the project they are eyeing for. The buyers can get a better understanding from the review and feedback on the developer and their previous projects. Although it is not advisable to trust everything on the internet but this will definitely be a good kick start for the buyers. Moreover, the buyers should personally conduct a ground check on the development site to have a better observation and comprehend the progress
of the development. The buyers can further browse through the signboard at the entrance of the development site regarding the details of the development, developer, landowner, contractors and the completion date. This is vital for the buyers to have a closer look on project before they enter their life long commitment. The lawyers or bankers will play an important role before the buyers entering any Sale and Purchase Agreement with the developer. The lawyers shall conduct company search, CTOS search and even winding up search towards the developer to ensure the validity of the developer and that the project is in good hands. The buyers are worst affected by the abandoned projects hence the buyers are advised to take extra precautions when comes to the house purchasing. A necessary due diligence is needed to prevent themselves from falling into the trap of the rogue developers.
ABOUT THE CONTRIBUTOR Chris Tan is the Founder and Managing Partner of Chur Associates, Advocates, & Solicitors. He is deeply involved in the real estate industry, having assisted Dato’ Alan Tong as the World President of FIABCI (International Real Estate Federation) in 2005/2006. Chris is now the Honorary Legal Advisor for FIABCI Asia Pacific Regional Secretariat on regional concerns. Chris was elected to serve FIABCI’s Malaysian Chapter for two terms, from 2006 to 2010, as its National Council Member, and in 2009, he was appointed to the Board of Directors of FIABCI International to preside over the portfolio of Young Members aged 35 and below for the term 2009/ 2010.
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Considering investing in Melbourne? Zuhaila Sedek-De Booij tells you what to expect
ith tighter lending measures implemented by local financial institutions, more Malaysians are looking to invest globally. Capitalising on international investment is a good alternative now and it also allows Malaysians to leverage a higher currency exchange rate, return yields and policies applied in other countries – all of which can help them to successfully spread their property wealth around the globe. But, which market to look at? For many Malaysians, Australia is definitely a preferred choice. The country has close proximity to Asia so it provides a convenient access for Asian investors. And in this land of the Down Under, there are many metropolitan areas namely Sydney, Perth, Adelaide and Melbourne that promise decent returns in property investment. This time around, we will be exploring Melbourne in Victoria following a recent media trip to the city courtesy of Jalin Realty International. The visit was to commemorate the opening of Jalin Realty Australia’s office in Melbourne.
LIVING CONDITION AND WELL-DESIGNED INFRASTRUCTURE
Melbourne’s liveability is undeniable and this is supported after the city was named as the world’s
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most liveable city for the fourth year in a row last August by the Economist Intelligence Unit’s liveability survey. The survey rated cities out of 100 in the areas of healthcare, education, stability, culture, environment and infrastructure. In the survey, Melbourne received an overall score of 97.5 out of 100 while Adelaide, Sydney and Perth scored 96.6, 96.1 and 95.9 respectively. Chief Executive Officer of Jalin Realty International Ian Chen when met in Melbourne, says that the outlook for foreign investments remains positive with a strong demand. “The love affair remains strong still with the Australian property and its great lifestyle,” Ian adds. Attending the launch of Jalin Realty International’s office in Melbourne was Parliamentary Secretary to the Premier of Victoria, Craig Ondarchie. He claims that major expenditure in new infrastructure is underway. “A$28 billion (about RM80 billion currently) is allocated for the upcoming infrastructure upgrade of the train lines to the airport. We are also widening the Tullamarine Freeway, a new tunnel to take you from the East to West of Melbourne and a new underground rail loop. This all goes to show that it is a good time to invest in Victoria,” Ondarchie tells. The Australian government promotes good infrastructure as it is a key indicator to attract foreign
investments; hence the road system, rail and marine transport are being continuously improved. Over the past decade, the Australian government’s spending on infrastructure has doubled with investment in roads, public transport, health, schools and etc throughout 2014 to 2015 estimated to reach A$6.1 billion (RM17 billion currently). A Malaysian living in Melbourne, Elyas Ezanee, says he loves the infrastructure in Melbourne. “It is extremely easy for me to move around and if a train breaks down I know I can still walk home. The trains here are superb and they reach many points around Melbourne, which is why everyone gets to go around at an ease.” He adds, “Apart from the fast and reliable transport system, the cost to enjoy it is quite affordable as well.”
Melbourne offers investors an easy-to-invest environment as the procedure to do business is made efficient with proper protocols in place to stimulate transparency. It’s been reported that in Australia, it requires just two days for regulatory procedures to start a business and all relevant data is easily accesible online. The transparency in legislation makes investment efficient and most importantly safe for international investors who need not worry about being cheated. After a discussion with one of the developers in Melbourne, they vouched that there is no way for any party to go around the system for their own personal gain and this makes investment setting there very secure hence fostering confidence among foreign investors.
FINANCING, INTEREST RATES, TAX AND RETURNS
Victoria is the only state or territory, including the Commonwealth, apart from New Zealand, to have an AAA credit rate. Australia’s currency is fully internationalised and this led to less restrictions on
Parliamentary Secretary to the Premier of Victoria, Craig Ondarchie
Chief Executive Officer of Jalin Realty International Ian Chen
access to credit or loan facilities as well as on capital flows. A recent property expo held in Singapore, Australasian Property Group’s Director Dr Maya Purushothaman mentioned that in Australia, potential property investors can obtain financing assistance up to 80% (only from Australian banks), with a 10% deposit to be laid down upon off-the-plan purchases, and another 10% upon construction completion. The interest rate for Australian banks (depending on fixed or variable rates) is currently at 4.8% to 5.1% The financing is also dependent on the size of the property and lenders will want to see the borrower’s overall financial standing to determine the total debt servicing requirements. According to current Australian banking policies, if the purchaser is based in Malaysia and plans to take a loan from the local Malaysian banks, the borrower’s credit history will be looked at. Direct property investment in any parts of Australia is a long term play. The entry and exit cost can add
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up to about 7 per cent a year and growth tends to happen over two to three years within a 10-year period. “Every seven years, your property can double in value but this doesn’t happen all the time,” Maya says. As for tax, the Australian government has removed the eligibility for the 50 per cent discount on Capital Gains Tax (GST) earned after May 7, 2012 by foreign individuals on taxable Australian property, such as on real estate and mining assets. However, foreign investors will still be entitled to a discount on CGT accrued before the Government’s Budget night (after offsetting any capital losses), provided they choose to value the asset as at that time.
price growth rate of 14 per cent. Malaysians considering to invest in Melbourne must also do their due diligence. One of it includes understanding the tax implications on their investment. It is advisable for Malaysians to request for a deposit report on the property they acquired that is deductible on their tax. According to Jalin, there is no minimum price cap for Malaysian investors planning to purchase a property in Australia and they can only sell their AL E RENT AVERAG ELBOURNE M YIELD IN
Like many property markets around the world, Australia too, has its own cooling measures that were introduced in effort to ease the ‘heating’ market, supposedly due to an ‘impending bubble’. But this claim is quite subjective given that the existence of a bubble is hard to be proven in the first place. The Sydney Morning Herald reported recently that the attempts by the Reserve Bank of Australia (RBA) which includes macroprudential tools in cooling down the overpriced housing market in Sydney and Melbourne is starting to show some positive impacts in terms of the trend in property purchase. For Melbourne, the city’s year-on-year price growth was at 8 per cent, much lesser than Sydney that has a
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Projected price of property in the CBD is determined upon settlement
INTERNATIONAL MARKET property to locals. This implies the importance for Malaysians investing in Melbourne to understand the needs of the local people. So, spending some time in Melbourne and speaking to agents or brokers is highly recommended to understand the market. For properties in the Central Business District (CBD) areas of Melbourne, the projected price of properties is determined upon settlement. Most CBDs do have a high supply of properties but there are some that face dwelling shortages. Getting the assistance of an agency or broker is imperative to ensure that potential foreign investor is well-equipped with the right information on their investment.
YOU KN MELBO OW? URNE IS MULTIC ONE OF ULTUR THE MO ED CIT ONE IN ST IES IN T TWO M HE WO ELBUR BORN O RLD. NIANS VERSE IS EITH AS, OR ER HAS A P WAS BO ARENT RN OVE W HO RSEAS .
Logically, Malaysians would buy a property in other parts of the world in search of something they could not find back home. And Melbourne is a good choice as it offers a bounty of investment opportunities in real estate – thanks to Australia’s stable economy and excellent living condition. Ian says, based on the Foreign Investment Review Board it is reported that the approved investment in Melbourne’s real estate was A$51.9 billion last year.
UPCOMING GROWTH SUBURB NEAR MELBOURNE INCLUDE MELBOURNE NORTH AND WESTERN SUBURB, WITH RESPECTIVE MEDIAN HOUSE PRICES FOR HOUSES OF A$447,500 AND A$615,000.
“Out of this sum, A$17.15 billion was invested in residential property while the remaining $34.75 billion was in commercial property. This is understandable given that Victoria has the most prosperous economy anywhere in Australia,” he shares. For Malaysian investors who are keen to upgrade their investment portfolio outside of Malaysia, Australia makes a perfect ‘trial’ location for their global investment venture as the city’s prospect has been long tested and proven.
Among the top developers in Melbourne are Lend Lease and Salta Properties
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Bukit Suburban Living
Within the City
INVESTOR NEXT DOOR
WORK LESS, EARN MORE
Johor-based investor Bowie Tan shares with Property Insight how property investment changed his life, at such ease.
be a lot of fun too!,” he says. Now, at 36 years old, Bowie is a successful investor with many properties under his belt. “What I learnt is; property is only a channel, it’s what I want to do with my life that matters. In my previous job, I’ve been chasing money, sacrificing my quality time with my families and friends, and that’s not how I want to live my life,” he tells.
owie Tan used to be just an ‘ordinary’ man. He was born to an average family and was an average student during his studies. After he tied the knot, he moved to Kuala Lumpur* and found a job as a programmer. Quite an ordinary story, isn’t it? When he first came to the city, he started as a low-level programmer and worked his way up to a high-level programmer. As a high-level programmer, Bowie earned a huge five-figure salary but this came with a heavy price – he had to work ALL the time. After 13 years, he asked himself what’s next? Is he going to work like a ‘slave’ forever? So, one day he made up his mind and quit his job. He reckoned that there is no point in earning much when he had to jeopardise his own life quality and at the same time he was constantly stressed. Then, just two years back, he stumbled upon an opportunity to get to know a company called Freemen. The establishment was the one that provided him with property investment knowledge he needed and it was the first trigger to his excitement in exploring more about property investment. He then realised that property investment is his way out of a stressful office work and to achieve financial freedom. “Initially, I did like my job. But, overtime, it all became like a routine where you deal with clients, deliver products and it was always about meeting the deadlines. In property investment, it’s about the return. I enjoy the passive income and sharing of knowledge with other property investors, which can
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His first investment was a shop lot in Ipoh which he acquired for RM500,000. “A senior member at the organisation found it and it matched my requirement so I invested in it,” he explains. He was not scared to fork out money for his first investment because he was filled with excitement to make money through property investment. Plus, the price was affordable for him and he had done his research and was confident that the property will increase in value. He chose Ipoh because it is considered a tourism spot. “During the holidays, we always see people going to Ipoh. It happened that this development (the shop lot) is governed by the state government and it’s the only one with MSC status. And there is Mydin mall there, which is the biggest in Malaysia, which was just built recently. Not to forget that there’ll be a new theme park in progress there called Animation Theme Park, by the Sanderson Group. With all these, after two years of purchasing the shop lot, I managed to sell the property at RM700,000,” Bowie shares of his first victory. Bowie does invest in a lot of commercial properties. To him, there are some upsides and downsides of commercial property investment. “By investing in commercial property, an investor might lose some holding power. Different from residential, it may require a longer buffer time to fill up the units in a commercial property. That’s why we often see empty lots within a mall or shop lots. During the first two or three years, tenants might not come in, but you still have to pay your monthly instalment,” he says, adding that tenant management for commercial
10/16/14 8:46 PM
INVESTOR NEXT DOOR and construction coming along and this is the stage where I will start investing,” he mentions. “We need to study the market first before we make an entry. No offense, but I think 80% to 90% of investors do not do their research,” he mentions. He adds that investors nowadays are more interested in knowing how to keep on buying and owning a lot of properties, rather than how to find good properties and make a valuable long term investment. “Buying itself won’t promise a good investment, it’s also about adding value to the property. Nowadays, investing isn’t about how big your portfolio is, but about how solid your investment can be,” the man thinks.
Wrong Move in Investment
properties is however easier than residential. To equip him with the skills to overcome challenges in property investment, Bowie seeks out more knowledge in property investment from his peers in the industry.
“Apart from location, populations, amenities and what not, what’s important is the upcoming development, and that is what we call the boom factor,” says Bowie about the main criteria of his investment. Bowie always looks for the ‘boom factor’ when scouting for an investment location. To him, a boom factor is closely related to the future amenities and facilities of a place. So far, after almost three years in property investment, Bowie has accumulated over 50 properties altogether. They are spread all over Kuala Lumpur, Ipoh and in Iskandar Malaysia. To have a good portfolio, Bowie believes that one has to be open to borrowing money from the banks. Bowie feels that one should not be scared of owing money to the banks. “I used to hate borrowing money from the banks but after learning about the industry and doing my due diligence, I managed to find the confidence and learn to make profit from the money I borrowed,” says Bowie, adding that a good investor will always make prompt payment to the banks. Over the years, he also learned to manage his risks by making his own judgement and not listen to rumours. “In property investment there are two stages. The first is where the news and rumours will come in and there will be no acknowledgment to the future infrastructure of the location. In the second stage, we will start to see the infrastructure
Any investor is bound to make some mistakes in his investment journey and so did Bowie. He admits to having done some bad investment decisions in the past. One of which he recalls took place some years back. “I bought a residential property in Equine Park and although the area is currently booming, it did not during the time of my investment. The whole area was like a ghost town. Even when asked for a rental of RM300, nobody wanted it. In the end, I had to sell it at RM170,000… and I bought it for about RM200,000,” says Bowie. To his surprise, a year or two after he had dispose off the property, it’s price went up to RM300,000 to RM400,000! “That’s property investment. It can be scary, which is why knowledge is key. You just have to learn from your mistakes and move on,” he adds.
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INVESTOR NEXT DOOR
BUILDING INDEPENDENCE VIA PROPERTY INVESTMENT
enerally speaking, a young adult of below 24 is not expected to know much about the property market. Meet Chloe Wong Huey Mang, a 23 year old born into a middle class family with practically no change in her pockets when she entered the big bad world but has since accumulated properties worth RM8 million in total. Her entry into property investment came in her late teens when her brother gave her a book by global property master Robert Kiyosaki and later a chance to attend a Freemen Education Sdn Bhd seminar. “Reading the book made me realise property investment could be my calling. The seminar, meanwhile, showed me how property investment can be done in a team as well as individually. Of course, I prefer the first option,” she says. For this KL-bred single lady property investment provided the ticket to be highly independent.
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Apparently, she becomes uncomfortable when she has to depend on others for monetary help or other types of assistance. Chloe’s independent streak started when she was just 13. She explains, “Together with my younger brother, I was enrolled at the Chinese Boarding Independent High School in Jalan Ipoh, KL. If you know boarding schools, you know that that is where situation forces you to do everything for yourself. After her Sijil Pelajaran Malaysia (SPM) school examinations, Chloe was just not interested to pursue her studies anymore. Unsure of a direction in life, Chloe then tried every job she could land, finally ending up at her alma mater high school as a tutor. That was also when she realised she should at least complete her secondary education by sitting for the Sijil Tinggi Pelajaran Malaysia (STPM) exams which she aced. Along the way she toyed with various ideas of how
INVESTOR NEXT DOOR to make money without depending on other people. That is what property investment has given her. The Freemen seminar she attended had paired her with some like-minded people and together they made a team of property investors that has lasted until today. “Ours is a great team. I really look up to those who are much older than me. They are very experienced in this field and most are also financially stable. As a starter I find their passion in property investment contagious, and I have learned so much from them and the work we do together. I’m pretty sure I have matured well in this area and have become more knowledgeable generally,” she enthusiasts. To Chloe, property investment helps her to learn how to control debts and profits. “For me, this is like a stepping stone towards financial freedom,” says Chloe. She shares that in this field, money should not be considered as a major problem because expenses for this type of investment will not last long but the profits can be enjoyed for a lifetime.
Chloe’s first property was through her own proficiency, before knowing her property investment team or mentor. Her first buy was a 980 sqft condominium in Taman Maluri, Cheras that was priced at RM280,000. “My first property is a good one because I am earning very decently from it. Since acquiring it two years ago, the house gives me RM1,000 monthly,” Chloe says. According to Chole, that unit was not just a source of income her, it also boosted her confidence and has since become her “encouragement pillar” in her journey in property investment. She then continues,
“I still consider myself very new in this field, and will advise anyone to first try and understand the market before venturing into to. I you have no idea about the property market, get a mentor to guide you as this will help minimise the risks. I am not shy to say that I have experienced losing money in bad deals. That is why a team or mentor can really help.”
THE BEST INVESTMENT
“My best investment is the one I made with my property investment team. The property is a 3-storey shop lot near Ampang Point which cost us RM1.08 million,” mentions Chole who now has 9 properties to her name. The current rental yield for that commercial lot is between 6.2 and 6.3 per cent. She says, “To me, that venture was not only about the property or the area we managed to get. It was also about the team work and trust that we built among ourselves. We practically held and worked together for smooth loan applications and we become tighter as a team when we had to face many challenges from the seller. We all ended with good returns and better friendships.”
WHAT DO YOU THINK ABOUT CURRENT PROPERTY MARKET?
Chole shares that in 2012, the property market was not as hot as it is now. There was space for developers to keep on building properties. “Now, things are a bit more difficult. There are many new rulings implemented. Even our base lending rate (BLR) has increased from 6.6 to 6.85 per cent,” says Chole. To the new and aspiring investors, she advises to never let your eyes off the property market and always keep yourself updated about the happening in the market itself. “The current situation now is that demand for properties is decreasing while the supply is are overloading. This is actually a good time for investors because property prices will be reducing too. This is the right time for investors to go into the property market and have cooling negotiations,” says Chole.
As a young investor, Chloe says the property market is an easy investment to make as it is very transparent compared to other types of investment. “Literally, the trading trend doesn’t fluctuate all the time. If you can be cautious about what you’re doing and be constantly aware of what is going on in the field, it will be is easy for you to be a successful investor. I encourage everyone, especially the Gen-Y to give this field a serious thought,” she says.
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THE WINNING PORTFOLIO
Becoming a property investor can promise a lucrative and exciting journey towards financial freedom. One of the secret ingredients to achieve this is to have a good portfolio. Aidil Mohamad finds out some basic guidelines from the experts in putting up a good property portfolio.
must for every successful property investor is a good portfolio. It is said a good one can give an edge to an investor. A solid one will also help to improve investor’s reputation especially with the banks. However, not every property investor knows how to put up a good portfolio for his investment. Most investors would create their own portfolio based on locations, sometimes on prices, and even on the types of properties they have. Many a time, a lot of these investors succeeded in getting as many properties as they can under their belt but failed to utilise the power that comes from the combination of these purchases. But, what is a good portfolio?
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THE BASIC STRUCTURE
“On the subject of a property portfolio, we’re actually really looking at a set of properties that match a certain criteria,” says IM Global Property Consultant’s Managing Director Haji Ishak Ismail, adding that the target of any investment should match the budget and affordability of an investor. This is because one’s preferences are different than another’s due to factors such as their career, or from their social standpoint - married, single, or whatnot. So, an investor should adjust his portfolio accordingly towards his vision in what he hopes to achieve. For Ishak, a good portfolio must not stray away from five considerations; location, accessibility, features or the condition of the property, legal
interests, and price. He says a good portfolio is one that fulfils these criteria, which can later have subdivision consideration of their own. For Portfolio Asia Properties’ Principal Serene Sew, it’s much simpler. “A good portfolio is one that consists a good balance of property types. There’s a saying, don’t put all your eggs in one basket, it’s pretty much the same for investment portfolio,” she says. It should comprise of every type of property and just like Ishak, Serene also emphasises on keeping to one’s budget. “The right location can increase chances for a great deal, and I consider this as the most important criteria. For example, if I have conducted my research and put up a set of 10 hotspots, I will then distribute my investment throughout all these hotspots so that I can get the most revenue and reduce my risks in only investing in one place (in case the location later turns unfavourable),” he explains. He advises investors to also consider the location against the target market. Each segment in the community prefers different scenario, he believes. Serene then adds that a good location must also be surrounded by multiple amenities. “Are there any schools, shopping malls, hospitals and etcetera
in the area? These are all the key elements buyers always look out for,” she says. Another key indicator in choosing a property for one’s portfolio is by considering the accessibility factor. A good accessibility means an ease to access and exit to/fro the property. Some property buyers see good accessibility of a house as it being right next to a highway. “If the property is located in somewhere remote and hard to be reached, it can be tough to get a good bargain out of it,” he says adding that accessibility can also mean being close to public transport systems. “Some people prefer their property to be accessible by car, so they would rather have it close to a highway or expressway. Others meanwhile, prefer to use public transportation to get to places, so they would love for a property to be nearby a transit line,” Serene tell. She also mentions that having a close proximity to the LRT line is very important too, especially in Kuala Lumpur, since it’s one considered one of the easiest ways to commute in the city. Feature of a property can affect its selling price; hence this element should be factored in your portfolio. Does the house have its own swimming pool? Or does the apartment have a good balcony with a fantastic view? More features mean more value for the property. What about the condition of the property itself? Scraped paint, wall cracks, jutting plaster works – all of which can have an effect on how one values the property. Ishak cautions that the properties in one’s portfolio should not have such issues. Then there are the legal interests to consider when building a good portfolio. “We’re not just buying the
IM Global Property Consultant’s Managing Director Haji Ishak Ismail
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property; we are actually buying the grant. The value can vary from the standpoint of the grant, whether it is leasehold, or freehold, whether the property is a Malay reserve or non-Malay reserve units, or even conflict of interest in the sense whether the selling of the land has to have any consent of the state and whatnot. All these criteria play the some role in the value of a property,” he mentions. Last but not least is the price - an aspect that cannot be ruled out from any portfolio. Whether the property is valued against the market value, or against the rental value, what matters would be the yield it brings. Ishak provides the formula of calculating the yield as follows:
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YIELD = RENTAL (PER ANNUM) / CAPITAL (SELLING PRICE) The formula is also supported by Serene. She advises investors do their homework on the supplyand-demand to get the highest return based on the current market trend of the area.
THE IMPORTANCE OF A GOOD PORTFOLIO
“Ideally, we want our investment to be an asset that allows us to enjoy a passive income, so in that respect we should avoid from making any mistake in an investment,” Ishak tells. He mentions that a good portfolio means one that has good properties paired with good renters or a profitable selling price. For a portfolio that contains commercial units, it is highly advisable for property owners cum investors to scout for established brands as their renters, which could vary from the fast-food chains to wellknown supermarket brands. Most often than not, popular businesses such as these make reliable renters. Having them as tenant means property owners need not worry about delay in collecting their monthly rental. This further strengthens their property portfolio. Another good reason for having a solid portfolio is that it can help in term of loans with the banks. “The banks like it if the properties in our portfolio have continuous prospect to grow. All in all, we would want our cash flow to stay positive, and to
LEASE / FREE
Property A Property B Property C
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make sure the capital appreciation stays high,” Ishak shares and Serene shares the sentiment too. “And of course, from the investor’s personal benefit, one can live stress-free knowing that the properties can do him good him since everything has been made simple with rents and whatnot,” he adds. Ishak also says that a good portfolio increases one’s social status among other investors as they stand a chance to be approached by other investors or developers. In some cases, your social status gets elevated when interested parties start asking for advice. This can also increase his credibility.
HOW DO YOU DO IT?
“It has to start with knowledge. There is no other way to get the best of the best. What comes from knowledge? Information. What’s important is the statistics that you can get from government departments or by attending seminars. The statistics of population, current and future developments, everything that can relate to a property should be taken into account. And then the property cycle itself, whether it is a good time to buy or a bad time to buy. Sometimes, even in bad times, we can make a good profit, so this is why knowledge of the industry is imperative,” he reckons. After that comes the market trends, the current price, the market value, and also the rental yields. For Ishak, this is a common sense when creating a good portfolio. To get such information, Ishak Portfolio Asia Properties’ Principal Serene Sew
suggests networking with people who have the information such as valuers, developers, lawyers, and also mentors (since mentors are the persons who have succeeded in investing and may actually have a good portfolio). At the end of the day, every information and analysis done must be translated into action. Ishak mentions that making mistakes is not a problem, for we can learn from them. Also, if we follow the thought process of making a good portfolio, the final product that is created will turn out good too. He gives an example of how investors can better interpret the properties in their portfolio to ease their thought process by making some simple comparison as follows: For newcomers, Serene advises, “Whatever it is, and you should start slow, one by one. Don’t overgear yourselves, unless you have the necessary funds. Go according to your capital. Sometimes, it is perfectly fine to not take any risk at the start of an investment. “Try to start with residential properties, since commercial properties are a bit harder to do,” she reckons adding that commercial properties often require more time to manage. She also suggests to the newcomers to opt for secondary market, given that it is easier to analyse the market trends and demands in the current area. “From there, you can carry out your trial investment and learn from it bit by bit and eventually make your own portfolio based on your preferences,” she concludes.
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INVEST WITH LITTLE MONEY DOWN
A lot of people do wish to be property investors, but they may not have enough cash in hand to realise the dream. Viknesh Ashley finds out ways to invest in property when you’re short on cash.
any of us clearly know, today’s property prices are not quite as favourable as we would like them to be. The revered economist Tan Sri Dato’ Dr Lin See Yan in an exclusive interview with Property Insight last month had highlighted that during his time (about 30 years ago), buying a RM20,000 bungalow with an annual earnings of RM10,000 is very possible as the property was only one and a half to two times the salary of a working person.
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Nowadays however, the property prices can be hundreds (if not thousands) of times the salary rate of an average person. The inability to afford a property due to escalating property prices is made worse when aspiring investors have very little cash in hand. Gen-Y may be able to relate to this well especially when they don’t earn much and such a situation delays the process for them to kick start their property investment journey. Nancy Ng, a renowned property investor,
understands this situation. She too, was once in such predicament. She reminisces about securing her first property, “I can totally relate to today’s young executives with respect to the difficulty in securing their first property and I know that such condition is far from easy to handle.” Ng tells that she was once on a tight budget, having only RM60,000 in hand (through diligent monthly saving) to start her property investment. “RM60,000 back in 1994 was not much to buy properties for investment,” she says.
The investor adds, “My first option was to take a FAMA loan (that’s Father-Mother loan). Many youngsters today have and will continue to resort to this method in owning their first properties. I did that as I did not have enough for my first house. So I worked out a repayment schedule with my mother for the loan that I had taken from her,” Ng explains. She managed to pay her mother the loan within a year. Ng cautions the FAMA loan ‘applicants’ to always be realistic and never ask for all that your parents may have. “Resort to this method only if you know your parents have the cash to spare and would not be needing to use it in the near future.”
If taking a FAMA loan does not work best for one that is trying to secure their first property, another option may be to look into buying a property via jointpurchase. Although it is most recommended to do so with siblings, parents or loved ones, Ng does agree that the joint-venture can also include close friends and highly trusted colleagues. “Always make sure that those you choose to carry out a joint purchase with, regardless of the
number of people involved, have the same direction as you when you opt to enter into an investment via this route. This is due to the long term nature of property investment,” Ng explains. Ng shares, “Although some may view this sort of investment style negatively, at times, it may be better to pool together your resources with those that you trust, and own something together, rather than being unable to own nothing at all.” Increasingly, many renowned property gurus are teaching the desperate first time buyers how exactly to work out a zero down (payment) deal or to even spot out deals like these. “There are many books written by our very own Malaysian property gurus that reveal the art of purchasing property via a zero down deal,” Ng mentions. Zero down deals have also become a popular means of purchasing first properties, usually mooted by motivated seller groups. “Some developers have used the zero down deal method to aid first time property buyers today,” states Ng. Ng explains that some developers have gone to the extent of giving almost up to 20% in discounts for early bird buyers of commercial properties. When an opportunity like this strikes, she reckons, a buyer that secures a loan of 80% does in fact get a zero down deal!
Ng tells, “The DIBS scheme truly helped many people with their cash flow especially in longer two to three years payment instalments.” She adds, for those with a little cash in their pockets there is still a
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STRATEGY silver lining. “When I first started investing my cash into property on a full time basis, I bought properties priced between RM80,000 and RM250,000 only,” says Ng. This style of breaking into the property market to Ng can be termed as ‘starting small’. “How I used to apply this method of property investment was to wait until my earning capacity increases before biting into bigger bait.” For example, she would buy a number of smaller properties and ensure that they have all been rented out before pursuing the next property purchase. Ng’s advice is never to plunge into purchasing expensive properties when your finances are exhausted, even if you think you can make a real kill for it. “Never act in an over ambitious manner targeting higher priced property products when you may not be ready,” she cautions. A key guideline to follow to buying lower priced property, according to Ng, is to always go for basic property offerings that guarantee tenancy. “I have advised many new investors to buy ‘bread and butter’ properties first such as walk-up apartments,” Ng says. She adds, “This type of property can be obtained for about RM100,000 to RM120,000 and in a period of two to three years, it can be sold for almost double the price! An excellent investment don’t you think?” Ng proposes excitedly.
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FIND UNDERVALUED PROPERTIES
In line with starting small, new property buyers as well as investors should master the art of finding undervalued properties. Ng states, “Working with real estate agents is a good way to start. You can start off with telling them your requirements.” Ng adds, “Another tip that early home buyers who are short on cash can look into is the long list of over 20,000 undervalued properties available in Malaysia, made accessible with the help of experienced real estate agents.” Deals like these can be found on both online and offline. Also, have you ever seen small advertisements hung on homes all over the country that says “room for rent”
STRATEGY next six months to a year before the new owner is able to sell or rent out the particular property. Ng concludes, “When you have tried everything and yet nothing works, what one could do at a time like this is simply wait and hold on investing until you are ready with at least some cash in hand.” Ng says, instead of buying a property and to be burdened by it, it is alright to wait for a year or two while saving up cash and then start investing on a solid property product when you are truly ready. The property products, assures Ng, will always be in the market. The key is to know where to look.
SWIPE AND INVEST
or “master room available for twin sharing”? They may just be advertisements of homeowners subletting their properties to others. Ng explains, “If you have a small family and you own a three-bedroom condominium, one of the rooms unused can be rented out for cash. Renting out that room for, let’s say, a mere RM500 could afford you the instalment for an additional walk-up apartment unit. Wonderful, don’t you think?.” If you are on a tight budget but really want to secure a property for the future, opt for one that is tenanted instead of one that is still under construction. Ng explains, “If one is short on cash, this kind of property will suit their situation better because when you buy a tenanted property, you get tenants to pay for your instalments immediately instead of making the payments out of your own pockets.” Compare tenanted properties to newly launched ones. Ng states that a buyer would have to service bank interests for over a period of between two and three years. This (burden) may even continue for the
Founder of Freeman Education Sdn Bhd, Michael Tan explains the pros and cons of investing using credit cards. “Some people start investing with no cash by purchasing using credit card. It is a much safer method of investing as it requires not carrying large sums of physical cash around as well as carrying around chequebooks,” Michael says. Michael adds, “Some people resort to this sort of investing method to leverage on the cash that one may have in a certain period of time.” “For example for an individual that would like to buy a property priced at half a million when the down payment required is RM20,000 and he only has RM5,000 in the bank, what would the individual do when faced with a situation such as this? Well what this individual could do is to use his credit card to make this payment and pay the repayments over a period of 12 to 24 months,” Michael explains. Michael cautions though that there are downsides to investing in this manner, “Always remember that the amount paid via credit card must be paid back and that too with an interest though balance transferring could cancel the interests that you may have to pay.” “Using a credit card to invest is not the best leveraging tool, as the worst case scenario could lead to buyers ending up in a state of bankruptcy. Before using a credit card loan to take up a short term loan may it be for the purchase of a property or even for a car always make sure that you have low existing loans as well as always being prompt with your loan repayments.” Michael concludes, “Young investors are increasingly using this method of payment for their investments as they can leverage on their future money by buying now and paying back later however, the golden rule here is that these instalments must be paid back and that too promptly as things can go really sour. In this case housing loans are a much better bet.”
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PROFITABLE DESIGN Apply the right interior design to increase your property’s value.
elling your property to enjoy the returns of your investment can be a daunting task. And, with the current Malaysian property market in the midst of slowing down, it is imperative to hit two key goals; sell your investment property quickly AND to get as much as you can. These are no easy feats, as many of our clients can attest to, but with some of these design tips and strategies, you may just close your deal faster.
A Good First Impression
First impressions are important. As your potential buyers are driving up your home, you will have 30 seconds to impress them. By this time, they would already have made up their minds. If you have a garden or yard, make sure it looks clean and tidy. Invest in landscaping to create a perfectly manicured lawn with perfectly trimmed hedges. Arrange potted plants in strategic locations and install small water features to create a charming atmosphere. Cracked walkways and broken porch tiles will need to be replaced. Remember, if the exterior of your home is not right, it can completely take away from all of the modifications you have
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made to the interior of your property. Even with a new coat of paint, some potted flowers, and thriving plants, you can welcome your buyers to enter and experience what the house has to offer on the inside.
Before you embark on “sprucing” up your investment property, it is highly recommended you familiarise yourself with designs that are current or in vogue. No one wants to purchase a property that is dated and drabby. Seek decorating inspiration from designoriented magazines, books, shows and websites. Tear out or print out these ideas you want to try and start your design board or to-do list. If there are property listings in the area you are selling, why not drop in and have a look at the design and layout of the home. You may be able to gain some valuable design tips and ideas that you could implement later in your own investment property.
Its in the color
Color is amazing! One of the easiest, and most cost-effective improvements of all is paint! Freshly
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painted rooms look clean and updated — and that spells value. Never play with colours. Don’t paint the walls orange just because you love orange. When selecting paint colors, keep in mind that neutral colors appeal to the greatest number of people, therefore making your home more desirable. With that in mind, your best bet is to settle with colours like white, grey, and earth colours. Be consistent, too. You can paint a feature wall if you like but don’t be tempted to mix and match to avoid turning your wall into a canvas. And remember, a quick trip to the local paint store can give you new ideas and open you up to new color possibilities.
The right Furniture
In relation to wall colouring, you also have to consider the colours of your home’s furniture. Imagine this: a green sofa against a red wall. You know when colours are mismatched between your walls and your furniture if you get bothered at the mere sight of them. Again, always remember to select furniture with neutral colors to appeal to a wider audience. Select pieces that are simple and minimal as they are versatile and can go together with just about any setting. Accessories are also another tool you can use to give your investment property a boost in appeal and value. Small finishes like a stainless steel door knob or a delicate soap holder can really give your property a luxurious feeling. Framed mirrors are also an excellent way to add space and depth to an empty corridor or room. Carpets and rugs accent any room and give a cosy feeling.
Storage, storage, storage
Potential buyers love it when they know that they have a place for all of their stuff in your investment property. So while you’re renovating, identify spaces where storage areas can be added. The areas you
need to focus on are the kitchen for drawers and cabinets; the bedroom for closets; and the study for drawers and racks. Another strategy to add more storage is to choose key furniture pieces that have integrated storage space. Beds that come with drawers beneath, side tables with storage compartments and even benches with hidden storage are always a welcome sign to any potential home owner.
One of the key selling points of any investment property is the kitchen. It is essentially the hub of any home and where all the daily activity happens. If you have a dated kitchen, it makes sense to upgrade to a more modern and contemporary design if you want to appeal to your potential buyer. New, clean cupboards and bench-tops, new electrical appliances, ample storage and lighting is key to deliver that appealing factor. An island bench can give you that much needed wow factor and tiles can add a dose of style and glamour. However, be careful not to go overboard.
A beautiful bathroom is an important room in any house. Outdated bathrooms may put off a potential buyer or tenant so it is important to get this space right. To maximise the value of your property, ensure you renovate your bathroom with tiles that are light and reflect light. It gives the impression of cleanliness, opens up the room and makes it look larger. Another thing that can give your bathroom that WOW factor is the use of a grand mirror that reaches the ceiling. Framed in wood or tile, a tall, expansive mirror with lighting installed on top of it, or hanging in front of it, will double the light’s impact and make the space grow. Upgrading your bathroom fixtures can also evoke an atmosphere of luxury. Try adding
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stainless steel towel racks and faucets for that extra oomph!
One of the key deal breakers for an investment property is the floor. Hardwood floors are highly coveted, and the installation will increase the value of home as well as make it easier to sell. For cheaper flooring options, you may like to try engineered wood floors and the floor laminates. These options also look strikingly similar to wood floors but will give you a similar boost in the value of your home. Some of the cheaper materials look so good that its hard to differentiate them from the more expensive solid hardwood. Tiles offer another great option for your floors. Nothing looks more appealing than the shine and gloss of new tiles. They are especially great for kitchens and bathrooms and are extremely flexible. Lighter coloured tiles can make a room seem bigger while darker tiles can add contrast and shade. Smaller tiles are great for featured patterns, and larger tiles help a space feel expansive.
working. Soft lighting is recommended to create that cozy and appealing environment. Table lamps and floor lamps can add character and charm to an otherwise plain room; so do also consider adding this into your mix. We hope these design tips help you achieve success in selling your investment property quickly and at a higher rate of return. Ultimately the key here is to add as much value as possible to your property, and to show your potential buyers that they are getting a great deal. Good Luck in your endeavors.
Light it up
Lights set the mood and ambience in any setting. As a property investor, your aim is to create an appealing atmosphere to â€œwooâ€? your potential buyer. To achieve this objective, try to open up your property to as much natural light as possible. Open up your windows and curtains. Remove blinds or any fixture that blocks natural light. Letting in more natural light actually opens up your space and makes it look larger. Also remember to ensure that all the lights are
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About the Contributor
Alec See Swee Hock is a practising interior designer with 10 years experience in the design industry. He runs his own agency called Alecc Interior Design
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