C OVER STORY
REINVENTING AFFORDABLE HOMES AN EXCLUSIVE WITH
DATUK AHMAD AZIZI
CYBERJAYA: THE NEXT FRONTIER REHDA YOUTH’S ASPIRATIONS FOR 2018
JANUARY 2018 RM7.50(WM) RM9.00(EM) KDN PP 18181/04/2013 (033492)
26 | Cyberjaya: The Next Frontier
Pushing The Affordable Housing Agenda Forward
Syarikat Perumahan Negara Berhad’s Group Executive Officer Datuk Ahmad Azizi Hj Ali shares their aspiration to be different in delivery and focused on quality
Being Malaysia’s capital of creation, Cyberjaya will soon become the first destination choice for work, live, study and play
32 | Revolutionising The Architectural Landscape
How to Build Your Wealth AT Your “Right Time”
From the personal wealth-building perspective, how do we build sustainable wealth during our lifetime with an inflation-proof strategy for the long term?
DMP Architects builds trust with their customers through one-on-one interactions
34 | Property Outlook 2018: Three Predictions for The Market
16 | Knight Frank’s 2017 Round-Up And 2018 Outlook
2018 sees increasing demand in co-working space; rising interest rates a concern for residential investors
36 | The Trilogy Of Guaranteed Rental Returns INVESTOR NEXT DOOR
38 | Double-Up Your Property Investment Value
20 | Charting The Course For 2018
Here’s a glimpse of the next generation who are helping the Real Estate and Housing Association Malaysia (REHDA) Youth. They not only work hard but play hard. In this exclusive interview with Property Insight, they share their plans for 2018 and outlook on the property market and their role at REHDA Youth
Knowing how to invest can ensure a more successful property investment journey
40 | Wah Lau Eh! Will House Prices Drop From RM500K To RM300K?
41 | End Financing, The Games People Play 42 | Don’t Stop Before You Start
Action is what separates those who do and those who dream
12 2 I January 2018
EDITORIAL Editor-in-Chief Dato’ KK Chua email@example.com Editor Yvonne Yoong firstname.lastname@example.org Brand New Year, Brand New You! There’s really nothing like starting the year off on a fresh clean new slate – very much like the feeling one gets after a shower of blessings washes away the impurities of an otherwise daytime polluted by ongoing urban traffic. At the dawn of each New Year, the anticipation of a great fresh start is life’s gentle nudge pushing us forward to embrace once again opportunities anew with the exciting anticipation of a whole new year. Contained within a time capsule of the gift called New Year – is an exciting package - all wrapped up in 365 days of possibilities, to be opened each day at a time. And, indeed what exciting times await us in this day and age. Having soldiered on steadfastly despite the uncertain economy last year, developers have had to put on their thinking caps and become more innovative in their offerings. Despite the mismatch of demand versus supply and the real estate sector being assailed by a host of challenges and issues – notwithstanding the recent curb of properties priced above RM1 million, the concept of the survival of the fittest resounds almost with a gong! Having featured REHDA President Datuk Seri FD Iskandar Mohamed Mansur’s no holds barred interview in December, Property Insight now casts the spotlight on REHDA’s next generation of developers known as REHDA Youth. What more appropriate time than now - being the start of a brand New Year, to have them share their candid takes on their New Year resolutions and what they have planned for 2018. Read about how they work, chillout and their property game plan in the pages to follow. Young they may be but this talented group of next generation developers work hard even as they play hard. Unfazed by the increasingly competitive nature enveloping the current property market climate, this innovative bunch can count on being guided by their elder and more seasoned developer parents with the advantage of tapping into their wealth of experience while others have established their own private practices. Seasoned developer Syarikat Perumahan Negara Berhad (SPNB) continues its streak of launching affordable properties backed by quality offerings that has been gaining it traction in the market. Will 2018 be a great year teeming with increased opportunities? Only if one is quick enough to grab the window of opportunity present can one in part, based on experience and lessons learned in the past, stay two steps ahead of the competition. Although the uncertain economic climate may spillover from 2017, there’s always hope that things will pick up. After all, like life, the property market has its own cycle of boom and bust. And, it’s during the difficult times that wheat is separated from the chaff, gold from the dross, and the go-getters from the pessimists. In summary, the times to come will likely be characterised by survival instinct - akin to that of the survival of the fittest – where the balance of the scales determine, at the end of the day, who survives by upping their game level to an even higher level altogether. With that, here’s wising everyone a very Happy New Year! May you always be able to find that silver optimistic lining amidst what life can unexpectedly throw at you.
Writer Mages PV Lingam Felicia Soon
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Although every reasonable care has been taken to ensure the accuracy of the information contained in this publication, neither the publisher, editors, writers nor employees or agents can be held liable for any errors, inaccuracies and/or omissions. The contents of this publication do not constitute investment advice. It is intended only to inform and illustrate. No reader should act on any information contained in this publication without first seeking appropriate professional advice that takes into account their personal circumstances. We shall not be responsible for any loss or damage, whether directly or indirectly, incidentally or consequently arising from or in connection with the contents of this publication and shall not accept any liability in relation thereto. The views by our contributors expressed here are their personal opinions and do not necessarily reflect Property Insight’s views. The publisher does not endorse any company, organisation, person, investment strategy or technique mentioned in this publication unless expressedly stated otherwise. The publisher does not endorse any advertisements or special advertising features in this publication, nor does the publisher endorse any advertiser(s) or their products/services unless expressedly stated to the contrary. All rights reserved. No part of this publication may be reproduced in any form or by any means, including photocopying and imaging without the prior written permission of the publisher.
REINVENTING AFFORDABLE HOMES AN EXCLUSIVE WITH
Datuk Ahmad Azizi Hj Ali
SPNB Group Chief Executive Officer
DATUK AHMAD AZIZI
CYBERJAYA: THE NEXT FRONTIER REHDA YOUTH’S ASPIRATIONS FOR 2018
JANUARY 2018 RM7.50(WM) RM9.00(EM) KDN PP 18181/04/2013 (033492)
January 2018 I 3
NEWS & EVENTS
4 I January 2018
January 2018 I 5
PUSHING THE AFFORDABLE HOUSING AGENDA FORWARD Syarikat Perumahan Negara Berhadâ€™s Group Chief Executive Officer Datuk Ahmad Azizi Hj Ali shares their aspiration to be different in delivery and focused on quality BY MAGES PV LINGAM
6 I January 2018
Property Insight caught up with an influential figure in the property industry, Datuk Ahmad Azizi Haji Ali, who helms Syarikat Perumahan Negara Bhd (SPNB) as Group Chief Executive Officer. He takes us through SPNB’s 20-year milestone and how the company has set itself apart from other industry players. SPNB is a government-owned company under the purview of the Ministry of Finance. It was established in 1997 with an objective to provide quality and affordable homes, in line with the National Housing Policy. Initially, SPNB was entrusted to develop affordable homes priced at RM100,000, coupled with other government CSR Programmes. In 2014, to achieve bigger objectives, SPNB also formed subsidiary companies namely SPNB Aspirasi, SPNB Idaman, SPNB Mesra, SPNB Dana, SPNB Edar and USL Sdn Bhd.
“There are top three factors that can be attributed to SPNB’s success. Firstly, support from the Government of the day in providing SPNB with assistance in the form of grant, and facilitation fund. “Secondly, SPNB’s range of products following the three programmes under its belt namely; Rumah Mesra Rakyat, Ruham Idaman Rakyat and Rumah Aspirasi Rakyat,” he says. In addition, he adds that SPNB is offering all types of houses (bungalows, semi-detached units, terraced houses, apartments, condominiums and cluster houses) across Malaysia at affordable prices. “We have completed around 96,042 units of houses altogether since its inception in 1997 and are currently building another 12,250 units in several states. “Thirdly, SPNB is also aware of the need to meet the market’s demand.
Almost all of our houses are sold below market pricing by at least 20% to cater to the needs of all income groups including the B40, M40 or T20 requirements.,” he elaborates. Since joining SPNB, Azizi was empowered to deliver, be successful in all endeavours, inspire dedicated staff and delegate teamwork. “I have a high level of tolerance but I’m flexible. I prefer the management to walk with me and my expectation towards the team is to perform on their own capacity. But if they need my guidance to make a decision, then I would be supportive as long as we don’t break any rule,” affirms Azizi.
SPNB’s latest developments are located in Cyberjaya (Selangor), Batu Gajah (Perak), Gurun (Kedah), Seremban (Negeri Sembilan), Tuaran (Sabah) and
January 2018 I 7
8 I January 2018
Miri (Sarawak). In the pipeline, SPNB Aspirasi is targeting to launch projects worth RM2.4 billion gross development value (GDV) in 2018. As for SPNB Idaman, the current development involves five projects comprised of 1,236 units that are located in Kuala Muda (Kedah), Tambun (Perak), Jasin (Melaka), Bentong (Pahang) and Labis (Johor) with a GDV amounting to RM262 million. In the pipeline, SPNB Idaman are going new projects next year involving 2,219 units with a total GDV of RM470 million.
SPNB’s staff retention has been exceptionally impressive with minimal staff turnover yearly. “Our staff turnover is very low. In fact, it is less than 1% from 2001 to date. Most of our staff have served the organisation for more than a decade. I have been serving for the past 14 years in SPNB,” says Azizi. To overcome the challenges SPNB faces on the property and economic front, the company ensures its sustainability by increasing efforts in promotions, sales and collections. SPNB also improvises their approach by forming strategic alliances with reliable business partners. Their most recent involves signing a Memorandum of Understanding (MoU) with MNC Wireless Bhd to address financial issues and digital technology solutions pertaining to a project. Azizi does not deny that they also have to withstand the tough market sentiment, especially when it comes to sales. He says the main hurdle is for his sales team to convert bookings into sales. Due to the high loan rejection rates in past months, SPNB had to increase promotions and marketing efforts. SPNB saw its sales in the third quarter of 2017 increase by 13% from a year ago. Azizi says progress of projects have decelerated but have not stalled, as they have an approach to engage closely with stakeholders. Despite a healthy number of registrations for its projects, SPNB faced challenges with customers securing loans for planned launches. Azizi says that for every three bookings, only one
was managed to be converted into a sale. “We took a calculated risk. We were confident the products could sell fast enough to self-finance the projects. Our sales targets are revised as needed,” he says. One example of a calculated risk taken by SPNB are projects under Rumah Idaman Rakyat which have commenced construction without any bridging loans. SPNB carries out extensive analysis to gauge current property market conditions – which managed to be above par level this year based on a report produced by Valuation and Property Services Department (NAPIC). SPNB hang over products stand at 3% as compared to the national average of 40%.
ONGOING ATTRACTIVE CAMPAIGNS
SPNB has drawn-up strategic initiatives and has since doubled their efforts to further improve their sales – which is to achieve a 80% sales increase in 2018. Some of their marketing strategies include the implementation of the SPNB e-Sales App, a paperless and facilitating payment of bookings and monitoring of the digital sales system management. SPNB also planning to have a Home Ownership Made Easy programme which helps buyers get end-financing by assisting them in credit rating management and maintaining a healthy financial pattern in Credit Tip Off Service (CTOS) and Central Credit Reference Information (CRISS) systems. Meanwhile,
its SPNB Dana Credit Enhancement helps buyers settle the differential sum when the approval of a 100% loan fails. Another initiative carried out by SPNB are through surveys, which helps the company learn how to create more compelling promotions and attract potential customers. SPNB also signed an MoU with UiTM to promote partnerships in research and planning as well as providing learning space for students and technological advancement at design stage continuously in producing high quality products. To attract potential prospects for its Aspire Residence project in Cyberjaya, SPNB would introduce a video and virtual reality box (a 3D show unit). This enables the company to showcase virtual show units during property exhibition events. A sponsorship programme was also introduced to increase brand awareness, promote a positive image and capture a wider demographic. It is hoped that this will bring in an attractive return on investment for the projects. Another upcoming campaign is a collaboration with Grab and Uber services for clients to visit project sites and show units without much hassle. SPNB is also in the works of collaborating with IKEA and Signature Kitchen for furnishing purposes via a fully furnish concept.
January 2018 I 9
SPNB’s aim is to become the nation’s first choice for affordable homes especially for first-time home buyers, with an aspiration to build high-quality affordable homes. “For the first time, we have been accredited to take up the Quality Assessment System in Construction (QLASSIC) technique for our homes even for the show units, and we are going to continue with the method for our houses. We have sent our technical teams in batches to receive full accreditation from the Construction Industry Development Board (CIDB) on the engineering and utilisation in full in the future,” adds Azizi. SPNB has included in their agreements for contractors to be certified with QLASSIC and accredited by CIDB. The company has also sent its staff to attend European Institute of Business Administration (INSEAD) management programmes in Singapore with the aim of transforming its executives to be more impactful in delivery and execution at the management level. The company aspires to have one of its subsidiaries listed on Bursa Malaysia by 2019. SPNB has intentions to be involved in providing homes in the premium sector to cross-subsidise their Rumah Mesra Rakyat 1Malaysia for the bottom 40% (B40) income bracket group too. Many plans are placed on the plate for SPNB to continue soaring higher in the property market in times to come.
10 I January 2018
MILESTONE & ACHIEVEMENTS OF SPNB 21 August 1997
Inaugural of SPNB under the Ministry of Finance (MOF).
SPNB was appointed as implementation agent for the rehabilitation of abandoned projects by Ministry of Urban Wellbeing, Housing and Local Government (KPKT). In 2012, SPNB successfully rehabilitated 14,951 units of abandoned houses across the nation. Formed USL, a joint venture company between SPNB (51% stake) and Armed Forces Fund Board (LTAT) (49%). USL is a design and built contractor which undertook the construction of 6,550 units of army quarters in Klang Valley that were completed in 2008.
Introduced Skim Rumah Keluarga Nelayan Terengganu, designed to assist lower income earners especially fishermen to build houses on their own land. The government subsidized a third of those home prices to ensure affordability. The programme was later named Rumah Mesra Rakyat. SPNB constructed more than 40,000 of such homes.
Agensi Pengurusan Bencana Negara (NADMA), formerly known as Majlis Keselamatan Negara, appointed SPNB as an implementation agent to provide homes for flood and tsunami victims in Kedah, Penang and Acheh.
Program Rumah Mesra Rakyat was expanded to Sabah and Sarawak.
NADMA appointed SPNB once again to develop homes for flood victims in Johor, Pahang, Kelantan and Sabah.
Received endorsement from SIRIM QAS International Sdn Bhd for the implementation of the Quality Management System which complies with ISO 9001: 2008 - QUALITY MANAGEMENT SYSTEMS.
Rebranding of Rumah Mesra Rakyat. YAB Dato Sri Mohd Najib Bin Tun Abdul Razak announced the programme’s change of name to Rumah Mesra Rakyat 1Malaysia (RMR1M) New design was introduced using Integrated Building System (IBS) and IBS Hybrid System. Introduced RMR Online System for online application system.
• 1. 2. 3. 4. 5. 6.
SPNB underwent a business transformation process whereby new subsidiaries were established and existing subsidiaries was strengthened: SPNB Aspirasi Sdn Bhd SPNB Idaman Sdn Bhd SPNB Mesra Sdn Bhd SPNB Edar Sdn Bhd SPNB Dana Sdn Bhd USL Sdn Bhd
Won The Best Affordable House Developer at the Property Insight Prestigious Developer Award (PIPDA) 2016. MOU with CIDB to implement Quality Assessment System for Building Construction Works (QLASSIC) assessment system to measure the quality of construction projects
SPNB Aspirasi Sdn Bhd bagged the Best High-Rise Development award for its Aspire Residence project at the Property Insight Prestigious Developer Award (PIPDA) 2017. SPNB Mesra Sdn Bhd won Best Developer Award 2017 in conjunction with Affordable House Expo 2017 organized by Melaka Housing Board Won People Developer Award – Malaysia International Business Award 2017 (MIBA). SPNB inked MoUs with partners: • Ajiya Bhd, to use Ajiya Green Integrated Building Solutions (“AGIBS”) for the development of housing projects under SPNB group. • FELDA, for the implementation of 20,000 second generation FELDA homes (RMR-FELDA). • MOU with MNC Wireless as the digital technology solutions partner to support SPNB group’s transformation towards digitalization of its business processes.
• • •
January 2018 I 11
HOW TO BUILD YOUR WEALTH AT YOUR “RIGHT TIME”
12 I January 2018
appy New Year 2018! From the personal wealth-building perspective, how do we build sustainable wealth during our lifetime with an inflation-proof strategy for the long term? One of the most highly recommended and proven methods is no doubt via investment in properties. As we are aware, amongst the four basic necessities which are clothing, food, shelter and transportation, most acknowledge that shelter ranks high on the scale - especially focusing on the concept of living on our own and staying in our own property. So no doubt, buying properties has always been the utmost important goal in life for most of us. Nevertheless, there have been numerous discouraging news about the overall slowdown in the property market in the past three years. Some experts in the real estate industry even predicted a continuous decline in property prices due to the supply overhang while some predict that 2018 is expected to be another flat and challenging year for the real estate market due to the issue of unaffordability remaining unresolved. However, some real estate players, while agreeing that the property market will continue to be sluggish, disagree that the property market will crash in 2018. Who is right and who is wrong? All these uncertainties have made potential property buyers who are almost ready to invest to hold back and to be puzzled as to when the best time to enter the property market is. Furthermore, most are hoping to see a further drop in property prices in order to capture a good deal. One must understand that in reality, property developers may not be able to bring their prices down much because their margins are getting thinner due to the overall increase in costs as well as inflation in Malaysia. In fact, if we were to compare the current selling price per sq ft of properties with the sales launch prices a few years ago, we would find that the price per sq ft has not come down. Instead, property developers have redesigned their products into smaller units which are more affordable to meet the market’s requirements. Looking at things from a wider perspective, there is no such thing as “the best time” in life. Instead, one should consider adopting the “right time” principle which largely depends on one’s own affordability and readiness to take on a bigger challenge to achieve one’s long term investment goal. Next, one should consider investing into properties that are located at a reasonably good location as this will help in lowering the risk of the investment.
New RPGT Rates
As we are aware, the new Real Property Gains Tax (RPGT) rates that had kicked in since January 1, 2014, have been increased from the previous rates of 0% to 15% to the new rates of 0% to 30% which are summarised as shown below: Table 1:
Disposal within 2 years
Disposal in the 3rd year
Disposal in the 4th year
Disposal in the 5th year
10% 15% 20% 25% 30%
Disposal in the 6th year and onwards
RPGT rates before 1.1.2014 for all types of taxpayers RPGT rates after 1.1.2014:
Other persons (excluding Companies, Non-Citizens & NonPermanent Residents)
Individuals (Non-Citizens and Non-Permanent Residents)
New rates should not significantly affect long term investors
Although many may have some concerns regarding the higher rate of RPGT, it is important to note that RPGT will only be imposed on any gains arising from the disposal of the property and not on the selling price of the property. January 2018 I 13
In most cases, this exemption should only be used when a significant gain has arisen from the disposal of the property after a short holding period. In view of the above, I wish to summarise that it is unlikely that the new RPGT rates will be considered as the main disincentive for Investors to invest in real properties moving forward. Nevertheless, there is no doubt that the change in RPGT rates will affect short term property speculators who tend to buy and sell their investments within a short holding period.
Conclusion – Start Building Your Wealth
Fennie Lim As such, I tend to believe that some Investors may not regard the change in the RPGT rates as one of their foremost concerns in holding back their investment in properties. This is especially so for the newly launched developments whereby developers require a three to four year construction period to complete the developments. In such cases, if they were to sell their investment in the fifth year after the date of acquisition, then the RPGT rate should only be 5%; and “Nil”% if they were to sell in the sixth year. Even if an individual Investor were to sell his property within three years from the date of investment, he or she may still consider exercising his or her “once-in-a-lifetime” RPGT exemption on any gains arising from the disposal of his or her residential property and avoid paying any RPGT.
14 I January 2018
In summary, despite all of the above less positive circumstances and, after comparing the property prices and environments in the countries around the world, Malaysia is still a very beautiful country for us to build our wealth and invest our properties. Accordingly, one should not be influenced too much by the negative news around us but grab the opportunity at our “right time”. Like what Jack Ma said, “We are never in lack of money. We lack people with dreams, who can die for those dreams”. Hence, “Stay hungry and follow your dreams”. Be brave and have faith! When you do your best, God will do the rest! Wishing you a wonderful year ahead! Fennie Lim heads the Crowe Horwath KL Tax Division and has been in the tax profession for the last 25 years. She has a wide range of experience in tax compliance, tax advisory and indirect tax matters, and has advised many large local and multinational clients on complex tax engagements.
Be Proud To Be A Taxpayer and Build Your Wealth Just as investing in property banks on a fruitful return once capital appreciation materialises, the issue of taxes is another area that cannot totally be ignored.
MIRB is in the News
The Malaysia Inland Revenue Board (MIRB) was in the news in 2017 when a few prominent developers were subjected to scrutiny to increase the overall tax revenue of the country. For those who have been caught by way of a tax field audit or tax investigation, there is no doubt that they would have suffered sleepless nights while some had to endure the painful experience of juggling their cash flow to pay the unexpected additional tax and penalties.
Death & Taxes Are Certain and Inevitable
While no one likes to pay taxes and especially tax penalties, we have no choice but to accept the fact that only two things in life are certain and inevitable, as in death and taxes. Since tax is unavoidable, let’s be proud to be a taxpayer in having done our part in honouring our country’s tax system and paying our taxes accordingly. This is especially so for those who have paid substantial taxes because it is a recognition that they have done well in life by earning well to afford such a high level of taxes. Philosophically, we would rather be someone who is doing well and therefore have to pay taxes than someone who is still struggling to make ends meet. Once we understand this concept of life, we will not be afraid to be a taxpayer but use our after-tax wealth to build our fortune freely without any fear of reprisal by the MIRB. Happy investing!
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KNIGHT FRANKâ€™S 2017 ROUND-UP AND 2018 OUTLOOK 2018 sees increasing demand in co-working space; rising interest rates a concern for residential investors
night Frank, the independent global property consultancy presents its 2017 round-up and 2018 outlook on 10 markets across Asia Pacific.
Nicholas Holt, Head of Research, Knight Frank Asia Pacific
Residential: 2017 has been a relatively calm year for mainstream residential markets in the Asia Pacific region, with some of the strongest performers of last year seeing price growth moderate. China and Australia, most notably, have seen sentiment soften, due to measures including restrictions on mortgage lending, significant new supply, and in the case of China stricter home purchase restrictions. Similarly, India continued to suffer from the fallout from demonitarisation and the introduction of the Goods and Services Tax (GST), with the market spending much of the year re-finding its feet. One of the key themes in the major cities in the region continues to be affordability â€“ and we are seeing both policy and market reactions to this issue. On the policy side, we have seen significant house building programmes in a number of markets, restrictions on foreign buyers introduced in New Zealand; while developers in a number of major cities across the region have responded by trending to developing smaller units. The outlook for 2018 is positive but muted, with interest rate rises and a low
16 I January 2018
ASIA PACIFIC Interested buyers at Sunway GRID observing the scale model of the development
probability of the lifting of restrictions likely to keep a lid on price growth in many markets. There will, however, be pockets of stronger sentiment across the region: Singapore is set for a stronger 2018 driven by the buoyant collective sales market; Manila continues to see strength in demand for condominiums; while the Indian residential market could start to emerge from its slumber as it absorbs the policy, regulatory and tax changes of the last 16 months. Commercial: Commercial occupier markets were buoyed in 2017 by higher than expected economic growth in the Asia Pacific region. Office and logistics markets were especially strong in terms of activity, the former seeing growth in demand from co-working space and technology related companies, and the latter a spill over in demand from online retailing. Traditional retailing formats continued to be challenged in many markets due to the growth of e-commerce, with secondary retail especially under pressure to re-position in order to cater to new market realities. On the investment side of the equation, the capital controls more stringently applied to outbound real estate investment from China have put a brake on the investments deals in key global gateway cities, while the gathering momentum around the Belt and Road Initiative has opened up another key investment avenue for markets in Southeast Asia, Eastern Europe and the Middle East. Otherwise, total regional investment volumes* in 2017 look to be up on 2016, with transactions recorded in the first three quarters of 2017 hitting USD 540 billion, up 31% on the same period of 2016. South Korea, Singapore and Hong Kong were especially active, with South Korea notably gaining more international attention on the back of attractive yields and solid occupier activity. Looking forward to 2018, many eyes will be on Chinese policy makers, as to whether the restrictions on outbound investment are eased. Another interesting milestone will be the introduction of the first REIT in India and the potential this has of bringing more
transparency and liquidity to the sector in 2018 and beyond. With a significant weight of money still looking at real estate, we expect capital from a number of geographies and sources, including sovereign wealth funds and privates, to continue to be actively sourcing deals in 2018. Logistics assets along with office markets with sound fundamentals and strong drivers of growth, are both likely to see increased demand over the next 12 months â€“ with China, Australia and Singapore most notably likely to attract significant attention. * Source: Real Capital Analytics covering Asia Pacific markets
Michelle Ciesielski, Research, Australia
2017. This industry occupies 193,190 square metres across six capital cities, equivalent to 0.6% of total office stock where Melbourne accounts for nearly 50%, followed by Sydney with 38% of the total. Tenants in the Technology, Advertising, Media and Information (TAMI) space and Small and Medium Enterprises (SMEs) will continue to drive demand growth in 2018. The challenge will be availability in the CBD with net supply of office space in Sydney and Melbourne extremely low over the next two years, expected to drive down vacancy and push up both prime and secondary face rents.
Residential: Despite residential price growth cooling across the mainstream markets along the Australian East Coast, the prime residential market has continued to attract the wealthy population in 2017. Latest data on high net worth individual migration has followed a similar trend, confirming the strong and growing desire to live in Australia, with demand for prime property outweighing the limited supply being bought to market in both the established and new supply markets. With recent changes to legislation in New South Wales, itâ€™s likely 2018 will record a further increase in the number of collective strata site sales encouraging the upgrade of buildings not currently reaching their full potential. This reform provides owners of freehold strata lots with an alternative way to end their scheme by allowing for the collective sale, or redevelopment, of their strata complex in circumstances where at least 75% of owners agree. With this reform, there are many potential development sites that could be unlocked across Greater Sydney. Commercial: The trend towards coworking spaces continued to gain traction in 2017. Knight Frank Research has reported the total number of coworking spaces stood at 309 in August 2017, growing 297% between 2013 and
Ross Wheble, Country Manager, Knight Frank Cambodia
Residential: There was a move away this year from developers launching highend condominium projects targeted at foreign investors to launching more affordable units targeting the domestic market, which is needed for the longterm sustainability of the sector. With the number of condominiums scheduled for completion in 2018, there is likely to be downwards pressure on rental prices which, whilst lowering rental returns for investors, will also make Phnom Penh more competitive in terms of the cost of living, which is comparatively high with its regional neighbours. Commercial: The retail sector remains the most dynamic in Cambodia and several new retail formats were introduced into the market in 2017, including container markets. With such a low median population age, the success of these new retail formats underpins the changing face of Cambodiaâ€™s retail sector and consumer spending habits. I believe we will continue to see an increasing number of MOUs announced between international hotel operators and local developers as the tourism sector in Cambodia continues to mature. Historically perceived as a backpacker destination, Cambodia is finally moving up the value chain in terms of attracting high-spending tourist which will have knock-on effects across all sectors.
January 2018 I 17
HONG KONG David Ji, Head of Research, Knight Frank Greater China
Residential: Hong Kong’s luxury residential ranks second in the world after Monaco. It has been a major market for Chinese mainland capital venturing overseas this year despite heavy taxation. In 2018, Hong Kong will see at least three or four US interest hikes that will eventually impact local mortgage interest levels and market demand. Commercial: Hong Kong has topped Knight Frank’s Skyscraper Index for the past five years even though there is no indication that demand is relenting. In 2018, co-working space will take larger share of the Hong Kong office market as tech and small to medium ecommerce firms expand their business.
CHINESE MAINLAND David Ji, Head of Research, Knight Frank Greater China
Residential: Chinese Mainland’s cooling measures are taking effect with house price growth slowing or reducing in major cities and inventory level receding. After the 19th Party Congress, house purchase restrictions will spread to an even wider range of cities. In the meantime, we will see more efforts to be put in developing the rental housing market. Commercial: Authorities imposed strict control on outflow of capital and outbound real estate investment this year, which had a major impact on some of the gateway markets around the world. Domestically, two trends will continue: large retailers embracing online platforms, and ecommerce marching into physical retail.
TAIWAN Andy Huang, Associate Director for Research, REPro Knight Frank
Residential: Taiwan’s home price shows signs of stabilisation this year, but the number of deals constitutes only 50 percent of the level in 2011 prior to the introduction of luxury tax. In 2018, record low mortgage rate and deregulation of LTV will make the market rebound gradually. 18 I January 2018
Commercial: Taiwan authorities continue to apply capital control and new taxes on investment of insurance companies and foreigners. Investors stay on the sidelines and self-use demand underpins the market. New supply of Taipei’s office market is expected to lift rental levels 3% to 5% for prime offices and the land market will perform well.
Dr Samantak Das, Chief Economist & National Research Director, Knight Frank India
Residential: Affordable housing has been the trend that became a reality in 2017. While the government started with a slew of incentives in the segment, developers jumped on to the bandwagon with appropriate supply of projects. In 2018, government incentive-backed affordable housing trend will continue to flourish in the peripheral markets. However, smaller ticket size (house value) units made possible by reducing the unit area (apartment configuration) of residential units will redefine affordability even in city areas where prices are considered high. Commercial: Co-working space is witnessing increasing momentum as seen in not just the volumes of space taken up but also the diversity of players that are now queuing up to serve occupiers in this quality starved office space market. In 2018, shrinking availability of quality leased office assets coupled with yields reaching historic lows will push investors to look at alternative segments like retail and warehousing. On the other hand, signing built to suit deals will become imminent for office occupiers.
Hasan Pamudji, Senior Associate Director Professional Consultancy, Knight Frank Indonesia
Residential: With the ongoing efforts to improve public transportation networks, including the rapid light transit rail line (LRT) and the mass rapid transit project (MRT), we now foresee a growth trend that is primarily based on mixed-use
developments, many of them new, built along transportation lines. New urban development will increasingly follow public transport lines. More and more integration among residential townships in the fringe of Jakarta will be in trend connecting with the upcoming public transportation networks such as highspeed trains, light-rail trains and toll roads. Commercial: The growth of co-working spaces for commercial office because of technology and internet developments. Logistics spaces for warehouses as internet on-line businesses have been growing rapidly. We will see those new sectors being developed and affecting the market trend at a steady pace.
Judy Ong, Executive Director Research & Consultancy, Knight Frank Malaysia
Residential: Housing affordability remains a key issue in Malaysia, particularly in the capital and key cities. House prices which have been trending up since 2010 continue to outpace the rise in income levels and with that, the prevailing median house prices are beyond the reach of most Malaysians. Coupled with the slew of cooling measures implemented progressively since 2012 to curb excessive speculation in the property market, sales volume has continued to decline. To address weaker sales number and falling revenue, many developers have turned their focus to the affordable housing segment, while under Budget 2018, the government has increased allocation to address rising cost of living and affordable housing issues among the lower to middle income segments of the population. In 2018, the recent freeze on four components of the property market that include condominiums and serviced apartments priced RM1 million and above is expected to provide a breather to the challenging luxury residential sector. Developers are expected to take stock of the situation by reviewing and re-planning their proposed products and may further defer property launches. We
expect to see more bite-size units which translate to lower quantum pricing (< RM1 million) coming into the market although moving forward, there may be risk of oversupply in this category of units. Commercial: Completion of the Sungai Buloh–Kajang [SBK] mass rapid transit line (MRT Line 1), with full operations (for both Phases 1 and 2) since 17 July 2017. Together with the existing LRT and KTM lines improving connectivity within the Greater Klang Valley region, we continue to see positive demand for office space in established and upcoming decentralised locations along the rail transportation routes. The development and infrastructure progression at the upcoming international financial district of Tun Razak Exchange (TRX) is expected to revive demand for office space in the KL city. The TRX MRT station is one of the two interchanges between the SBK and the upcoming MRT Line 2 (Sungai Buloh–Serdang–Putrajaya [SSP] line). Kuala Lumpur offers opportunities that parallel other western and regional markets, supported by improving pool of premium and good grade office space and transport infrastructure, a multi-lingual educated workforce and competitive cost of doing business amongst others. With changes in technology supporting flexible working culture, the serviced office and co-working segments are gaining popularity. With strong government-led initiatives by MDec, leading to the launch of Malaysia Digital Hub and the Malaysia Tech Entrepreneur Programme (MTEP), demand for serviced office and co-working space is expected to grow across a diverse mix of industries and professions such as technology start-ups and SMEs. Greater Klang Valley continues to see the expansion of global as well as the emergence of local co-working operators.
Alice Tan, Head of Consultancy & Research, Knight Frank Singapore
Residential: The collective sales fever has gained rapid traction in Singapore since May 2017, with a total of 25 collective sale deals achieving a total of over S$7.9 billion (RM24.02 billion) in sales value. The property developers’ hunger to replenish their land bank amid the record low unsold inventory this year of below 17,500 units for the past two quarters, has further contributed to the wave of investment sales at higher than expected prices. The prospect of a continuing price recovery of private residential properties in Singapore, fueled by high land bid prices, could gradually erase the past price decline of 11 per cent over four years that the government has tried to achieve. We foresee that the price increase of private homes could range between 3% to 7%, year-on-year by 4Q18. Commercial: The office market saw an injection of renewed confidence with the sale of Asia Square Tower 2 for S$2.094 billion to CapitaLand, yet another bigticket deal and a reflection of certainty in the prospects for office property. As the nature of office space needs evolves rapidly with new ways of business operations and engagement, we foresee the demand for flexible, activity-based working (ABW) spaces to gather pace for the office property market in 2018. ABW is expected to be a predominant workplace strategy going forward, adopted not only by the technology sector, but by all organisations looking to foster knowledge sharing, collaboration, staff well-being and productivity in a flexible and inspiring workplace environment. Plans for rejuvenating existing precincts that matter to Singapore’s
image and future could be on the cards in 2018 as the Singapore Government continues designing the country’s map of transformation.
Lalita Siriboon, Valuation and Advisory Manager, Knight Frank Thailand
Residential: Significant growth in the number of domestic developers and foreign investors/developers partnerships boosted demand from abroad. In 2017, the market witnessed more Asian investors purchasing condominiums for capital gain and rental investments. Mainland Chinese buyers have increased considerably in the last few years. This could continue as property market restrictions in China may prompt more mainland Chinese buyers to turn their attention overseas. The extension of mass transit routes will continue to play a big role in supporting urbanisation throughout Bangkok, especially those within the radius of BTS Light Green Line Extension (Mo Chit – Kukot and Bearing – Samrong), MRT Blue Line Extension (Charansanitwong – Petchkasem), MRT Orange Line (Rama 9 – Ramkamhaeng), and SRT Dark Red Line (Bang Sue – Rangsit). Commercial: Growth in community mall supply in Bangkok has seen a marked slowdown since the failures of several community malls have discouraged new development. According to our commercial team, community mall occupancy rates continuously drop, resulting from vacating tenants. To draw more traffic and boost revenue, developers will continue to focus more on mixed-use development where commercial space is considered as a core component. January 2018 I 19
CHARTING THE COURSE FOR 2018 Hereâ€™s a glimpse of the next generation who are helming the Real Estate and Housing Association Malaysia (REHDA) Youth. They not only work hard but play hard. In this exclusive interview with Property Insight, they share their plans for 2018 and outlook on the property market and their role at REHDA Youth. BY YVONNE YOONG
Location : Rama V
20 I January 2018
Creative Director : Jimmy
Photographer : Anthony Wong
Property market outlook for 2018? I am cautiously optimistic about the market for 2018. While we have seen a contraction in sales for the property market throughout Malaysia, I believe there is still demand in certain sectors of the market. Hence, it is a question of meeting the right demand to make sure respective customers get the financing they require. I always believe there is never a right or wrong time to enter the market as long as one enters with the right product. And, if it is within the reach or affordability of our target market, one will always do fine. Which areas do you oversee in your company? Our company is mainly involved in three key businesses namely number one – Property development; number two Hospitality covering serviced apartments, budget hotel, car rental and tours and number three - Real estate consultancy comprising real estate agency, property management and also promoting Malaysia My Second Home Program (MM2H). As the Group Director, I oversee all these three businesses. What projects will you be launching in 2018? We are looking to launch a serviced apartment project in Butterworth, Penang. The size of the units range from 500 sq ft to 1,000 sq ft with the studio and two-bedroom type apartments priced between RM200,000 and RM400,000 respectively. The development will be located opposite the Penang Sentral Project. I believe there just isn’t enough serviced apartments in Penang. We are currently operating one named the Tropics 8 in Penang since last year, and have positive results to date. At times, hotels are too small for bigger families and it doesn’t make financial sense to have the family occupy two to three rooms so this is where serviced apartments come in, with the added kitchen and washing facilities for longer stay. The other project that we will be launching is still in the pipelines which we believe is going to be one of the first products launched in Penang. We will release more information on the project in mid-2018. REHDA Youth’s main aims that have been set in place? There are four pillars in REHDA Youth’s mission namely; LEAD - Leadership, Education, Aid and Design.‘ REHDA Youth is currently involved in a number of Corporate Social Responsibility (CSR) projects. We have built homes for rural families through the EPIC homes programme. We also intend to build an orphanage and are just waiting for the approvals to go ahead with that project. Next up, we are looking to coordinate a build for a school hall in Penang
Dr. Lee Ville, 38, Group Director of New Bob Group • •
REHDA Youth Deputy Chairman (2016-2018) REHDA Youth Member since 2011 and Committee Member (20122016) heading the Northern region
by using makeshift classrooms which can be converted into their hall. We hope to change the situation for them. How does REHDA Youth benefit the overall real estate industry? REHDA was basically set up to develop the next generation of leaders in the property industry. The idea was conceptualised back in 2010 by its senior members. They realised that there aren’t many young REHDA members in the industry and so it was time to bring in the next generation of developers into the fold. The idea was inspired by Chan Kin Meng, our first REHDA Youth Chairman, who shared it with his peers. Together, the six of them started REHDA Youth, and the association has been growing organically to where it is now at 177 members. REHDA Youth now has members in nearly every single state throughout Peninsula Malaysia. I was introduced to REHDA Youth in 2011, and by then, they had about 30 to 40 members. Although I was new to the fold, I was welcomed immediately and had great camaraderie with them. We bounced industry ideas and questions with each other, I learned a great deal from all of them, and this perhaps made my learning curve in this challenging property industry less steep. To me, this is one of REHDA Youth’s greatest strengths. REHDA Youth members are definitely defined by strength through unity. I believe that REHDA Youth, comprising the next generation of professionals involved in property development are able to elevate the industry as a whole by working closer together
and learning from each other via the sharing of skills particularly at this time when the market is purportedly to be challenging for all involved. Together, we can make a difference. How do you relax after working hours? To chill, I occasionally have a nice glass of wine, listen to good music and spend quality time with my family which is ideal for me. Whenever given the chance, we would travel elsewhere and explore different places or different countries together. Sportswise, I love golf. Golf to me is such an intricate and complex game. It’s hard to explain why one loves golf so much - except to other golfers. Just to explain the physical elements of golf is interesting. If one were to compare golf with say tennis, every tennis court is the same anywhere you go, with the same dimension in all its courts with the only exception being the possibility of having different court surfaces. While the same can’t be said for golf, virtually every golf course is different and each course has its own history and character - depending on the design of the golf course. Perhaps it is also because golf courses are surrounded by lush greenery so the scenery on the course is refreshing in comparison to my everyday work in the office or at the construction sites. Whenever possible, I will travel to different courses within Malaysia and on occasions, have travelled to other regions to play golf. When you spend half a day together with a person, it is virtually impossible not to be close friends at the end of the day. January 2018 I 21
Carrie Fong Kah Wai, 39, Director of Hedgeford Sdn Bhd • • • •
REHDA Youth Chairlady (2016 – 2018) REHDA Youth Interim Chairperson (20152016) REHDA Youth Deputy Chairperson (20142015) REHDA Youth Secretary (2010-2014)
Property market outlook for 2018? Our company continues to maintain a rather cautious view for 2018. We will not be aggressive with our launches and have observed that the demand will continue to be generated from the affordable priced segment continuing from the residential trends we see in 2017. Buyers are spoilt for choice these days with generous packages coming out from developers. There is also opportunities in the sub-sale market. With some price correction which has happened over the last two years, buyers may be able to pick up a good deal in good locations. Which areas do you oversee in your company? I oversee project development and marketing for Hedgeford. When we are sourcing and considering potential land for development, we conduct market research and work with the project team to look into the suitable types of products to be launched. This process will also extend into showroom design, sales packages and other ancillary products and service deliverables to end buyers. I am also in charge of the marketing campaigns accompanying the launch and brand direction. What projects will you be launching in 2018? Our future project will be a landed development which is still in the planning and approval stages. The details should be finalised by 2H18.
22 I January 2018
REHDA Youth’s aims that have been set in place? There is an original initiative started by REHDA Youth in 2016 called Future Forward Forum. This is a platform which brings together ideas related to the property industry today that will impact the future also showcasing guest speakers comprising mainly international young entrepreneurs and companies
travel to. Travel and race becomes traveling with a purpose. Or sometimes I’m just the support crew. Which is more relaxing for me of course. I have also been doing Pilates for a long time and recently started on my yoga journey. The two practice couldn’t be more different and yet it compliments each other in terms of improving your body awareness and being mindful about what you seek to accomplish.
How does REHDA Youth benefit the overall real estate industry? REHDA Youth is an association made up of property developers from Peninsular Malaysia with a membership exceeding 1,000 members. REHDA is also recognised as the leading representative body for private developers involved primarily in advocacy and governance of the industry by working and ho;ding dialogues with related government agencies for the betterment of the industry and the nation. The association has been active since 2010 championing a few causes namely CSR, Green Sustainability and Education via knowledge sharing and networking. REHDA Youth is the Youth platform for REHDA whereby members are under 40 and are either business owners and/or have a role in the higher management of their respective organisations. REHDA Youth’s role is about cultivating leadership among its members, educating people about the industry, aiding the less fortunate regarding sustainable living and promoting design whereby the implementation and development of green buildings for a sustainable way of life is key. As part of its advocacy on educating, REHDA Youth organises study trips locally and internationally to study and learn to implement the best practices to adopt to improve the industry either through township planning, local policies on planning related to property developments, building designs, future trends, building technology or green and sustainable developments for its members. It has conducted tours to Singapore, Thailand, Australia, Japan, Hong Kong and its most recent tour to Nanning in China.
Datin Lea Chan, 38, Director of M101 Holdings Sdn Bhd.
How do you relax after working hours? I have a couple of hobbies, most which are inspired by my husband. He runs and I pretty much join him. He’s got me to run half marathons, cycle and go into the trail. It’s pretty awesome to be able to enjoy the outdoors and connect with nature. We do races which have brought us to different locations within Malaysia and also around the region. It also inspires the destinations we
REHDA Youth Committee Member since 2016
Property market outlook for 2018? We are optimistic that the market will pick up in 2018. Upcoming infrastructure such as the extension of the Mass Rapid Transit (MRT) line and the upcoming High Speed Rail (HSR) connecting the major cities here will make Malaysia a very attractive country to invest in. Malaysia has also maintained its position as one of the world’s favourite cities for tourism – one of the factors contributing to the upward trend of the country’s Gross Domestic Product’s (GDP) growth, making Malaysia attractive as an investment destination. At M101, we believe that the location of the product coupled with the concept, branding, right product mix and rightly priced properties will continue to do well as a sound investment strategy. M101 also has a unique product positioning with its Property Tourism business strategy that has been endorsed by the Ministry of Tourism and Culture. For instance, its flagship project M101 Skywheel is an integrated development designed by Studio F.A. Porsche situated in the Kuala Lumpur City Centre which is poised to be the
next iconic landmark which we are confident will continue to do well. Which areas do you oversee in your company? For our property development company, I basically look after the entire back of house operations, finance, legal, Human Resource and Administration areas complimenting my husband who is fronting and spearheading the direction of the company. Recently, I have also spent a lot of time developing our hospitality group and was busy getting our RED by Sirocco. Kuala Lumpur hotel at M101 Dang Wangi - ready to wow the world. What projects will you be launching in 2018? Skywheel is our flagship development and we will continue to focus on making it a success. In line with our Property Tourism Strategy, we will intensify our efforts to make it a recognisable icon around the world. Our project definitely fulfils a niche as now there is a lot of emphasis on brands and buyers are getting more sophisticated. Everyone wants to be part of something unique. Being one of Malaysia’s most iconic buildings within the City Centre of Kuala Lumpur, M101 Skywheel, features three world number ones, and an Asia’s number one. M101 Skywheel is the very first integrated development in the world designed by Studio F. A Porsche. The project will boost a Ferriswheel positioned on the 52nd floor. At its highest vantage point, it will provide a view from a vantage point perched 220-metre above ground level. It will also feature the world’s highest shopping experience with a SkyMall that extends from 50th to 52nd level with over 200,000 sq ft of retail space. Further to this, M101 Skywheel will also have the first ever Planet Hollywood Hotel in Asia. As an added convenience, the development will have an MRT station right at the doorstep of the development. We are also looking at other development projects which we will reveal in due course. As a group, we have kick-started our hospitality arm named Sirocco Hospitality Group as an extension of our property tourism business strategy. We have started taking in bookings for our first hotel – RED by Sirocco, Kuala Lumpur – a hotel housed at our maiden development, M101 Dang Wangi. REHDA Youth’s aims that have been set in place? Every year, we organise local and international tours for educating our members. Our members will also host fellow members for site visits including organising local tours to Sime Darby, Naza TTDI, TA Group developments and more. Every year, REHDA
Youth organises an international tour hosted by top developers whereby we would discover the behind the scenes stories of famous buildings. How does REHDA Youth benefit the overall real estate industry? REHDA Youth is a platform that has given me more leverage than anything any other associations I have joined has given me. On top of making so many new friends who are willing to share each other’s network and experience, REHDA Youth enjoys a strong relationship with the media (resulting in good publicity) and bankers and these relationships I believe, are very important for our industry . As an NGO, REHDA represents developers and handles policies and by laws. REHDA Youth has another purpose based on its four pillars of which we are founded to balance REHDA. These include succession planning and networking; education and learning; green buildings and CSR initiatives. REHDA Youth is the Youth wing of REHDA Malaysia and is a special branch that was created a few years ago. In order to be a REHDA Youth member, one must first belong to REHDA according to one’s respective state. The youth wing members are below 40 and typically comprise the second generation of developers holding key positions in their respective companies. You will discover that most of the members here are heirs of their parents respective companies who are now taking over the show.
Shanaz A Muztaza, 36, Director, Fairview Development Sdn Bhd, one of the companies under Fairview Group of Companies. • • •
REHDA Youth Committee Member; REHDA Selangor - Planning, Policies & Standards sub-committee; and REHDA Selangor - Infrastructure, Utilities & Environment sub-committee
Property market outlook for 2018? This year will be challenging for both buyers and developers. For developers, we found that we would have to spend more time, effort and capital to reach out to potential buyers for existing products, even though we are aware that there is demand for homes by first-time buyers or upgraders from both civil servants and private buyers. For buyers, we discovered that they have difficulty in securing their loans and there is higher demand for a combination of credit payments and private loans in addition to approved loans in order to purchase a house. Combined those elements with abrupt policy changes such as Lembaga Pembiayaan Perumahan Sektor Awam (LPPSA) loan restriction for civil servants announced last month which is still currently in the process of retraction. In the midst of it all, buyers are either cancelling their purchases even after passing the eligibility threshold or placing their interest on hold. Consequently, this uncertainty is affecting the landscape as a whole. That said, there is still much work to be done since there is still obvious demand for homes here. Which areas do you oversee in your company? As the Director of the company, I oversee funding across the property development, construction and engineering and manufacturing divisions while managing the property investment and management areas. Troubleshooting issues from meeting sales target to handling land acquisition matters with authorities, I take on a jack of all trades sort of role. As a newcomer, there is much to learn from the company’s senior advisers and other industry peers. What projects will you be launching in 2018? We have concurrent projects at different stages of development which includes the:i) Mutiara Keruing - landed property in Sg. Merab which is located 10 km from Putrajaya comprising single-storeys, double-storey terraces and double-storey cluster homes of which 80% of the units have been sold with loan approval. ii) A yet-to-be-named townhouse homes project in Central Semenyih, Selangor. iii) A high-rise joint development project in Mont’ Kiara, Kuala Lumpur comprising 640 homes of various sizes which has over 75% registered interest. All the above ongoing projects satisfy the demand for affordable homes with great connectivity. Buyers are keen on purchasing even bare units as they are able to move in and out of these locations which are equipped with January 2018 I 23
infrastructure. These developments are also considered niche because we always develop areas in between townships which we term as “gap fillers” which have their own buyer segments. REHDA Youth’s aims that have been set in place? Most importantly, to draw attention of the younger generation to be the next movers and shakers of this industry. How does REHDA Youth benefit the overall real estate industry? It presents a quick learning curve for the new generation developers, especially those who have earlier experience in other industries. For example, I myself am a former Litigation and Arbitration Lawyer with 15 years’ combined experience abroad and here before joining this industry recently. Meeting like-minded next generation developers for discussions would hopefully help to shape the landscape in future be it in matters of policies, technical knowledge, etc. How do you relax after working hours? Catching up with family and mates. From having a long exhaustive chat over lovely dinner to visiting every tourist spot in the country since I came back home three years ago! May involve diving and rock climbing which is always a delight.
taking a passive approach to new launches, I think 2018 will be a year big on integrated and master developments. With the upcoming Tun Razak Exchange (TRX), Bandar Malaysia, Pavillion Damansara, KL Metropolis to name a few, this will be the new products and lifestyle norm people will be looking forward to. The demand for an eco-systemic mix of work, play, live, eat elements are what home dwellers are used to now and these integrated developments will be the products that complement them most. Which areas do you oversee in your company? I am the Brand and Marketing Manager and my scope covers the sales, branding, marketing and business development components of my company. What projects will you be launching in 2018? After a successful take-up rate of 70% during our phase 1 pre-launch period, we will be looking to officially launch our corporate towers next year. The MET Corporate Towers is the first grade A stratified office in Mont’ Kiara, Kuala Lumpur with building features and specifications that are second-to-none in this area. After studying the Mont’ Kiara landscape in great measure, the team and I were confident that our corporate towers fully complement and supply the niche market’s demand. There is only a total supply of 2 million sq ft of office space in the whole Mont’ Kiara area including Solaris Dutamas. And, all these supplies are currently enjoying a healthy occupancy of 80% - 85% at any given time. The trend of commercial offices and business decentralising out of KL City Centre is eminent for example; the big four, KPMG-1 Utama, Deloitte-Taman Tun, EY-Damansara, PWC-KL Sentral) and Mont’ Kiara being a neighbourhood of affluence and a destination address with its seamless infrastructure, excellent amenities and the new trade and exhibition presence of KL Metropolis is something I am very excited about. REHDA Youth’s aims that have been set in place? In my opinion, the main aim of REHDA Youth is to bridge the gap for the new generation of young developers in the property industry.
James Yam, 30, Brand and Marketing Manager of Triterra Sdn Bhd •
REHDA Ordinary Member since 2014
Property market outlook for 2018? We had a quiet 2017, with most developers
24 I January 2018
How do you relax after working hours? After work hours is usually spent with my family or my partner. Socially, I enjoy playing golf, soccer and catching up with my friends for a hearty meal.
How does REHDA Youth benefit the overall real estate industry? The REHDA Youth community really gives me the support and platform to exchange thoughts and experiences with other developers who share a common goal of building for the nation.
Tan Pei Jun, 24, Director of Pavilion Projects Sdn Bhd and Project Executive of Low Yat Group. •
REHDA Youth Ordinary Member
Property market outlook for 2018? As a free market, developers will continue to build as long as there is demand. However, with more supply coming into the market, developers will need to continue put in more effort to differentiate themselves in order to remain competitive. I believe in the emphasis of marketing feasibility studies in order to develop the right project for the right location. Which areas do you oversee in your company? Having graduated from interior architecture I have been tasked with, especially in the past year, the role of orientating myself with the group’s culture and processes in both the property and the investment portfolio, engaging in fundamental procedures with more emphasis on sales and marketing. What projects will you be launching in 2018? We have some major projects under active planning and will be launching them once we feel the timing is more conducive. Most of our projects are situated in strategic locations with established markets in the city and Klang Valley. At this point, any major project launch locally will not be any earlier than 2019. Meanwhile, the focus will be on upgrading and renovating the group’s hotels and properties as well as the launching of a boutique luxury apartment in the Eastern Suburbs of Sydney.
REHDA Youth’s aims that have been set in place? REHDA Youth’s aim is to connect individuals in the property industry and to share insights on different aspects of the industry. It represents a good opportunity for people to learn from one another. How does REHDA Youth benefit the overall real estate industry? REHDA is still a key body representing the voice of the real estate industry in Malaysia. As Low Yat Group continues to be a key player in the local real estate scene, it is important that we connect and gain current insight and knowledge into the local property scene. This will also help us seek the right balance with our overseas portfolio. How do you relax after working hours? After work I usually spend my time catching up with friends and family, checking out new restaurants and bars as I love exploring and finding new places with interesting interiors and concepts. Other than that I occasionally enjoy baking as I find it very destressing and it’s always fun to try out new recipes.
softening phase. However, there are always opportunities in all markets and the key is to provide accurate products and services in today’s dynamic market especially with the disruptive trends that we have witnessed from the younger uprising of the Millennials.
Yeow Jie Xiang (JX), 32, Project Director/ General Manager of Tan & Tan Developments Berhad •
REHDA Youth Member since 2013
Property market outlook for 2018? The local market outlook in year 2018 has its challenges. There are various factors which contribute to this situation but in summary, all economic cycles in history undergo this similar cyclical growth. The Malaysian property market has been in an upswing phase for the past few years and I believe the market has started entering the gradual
Which areas do you oversee in your company? I’m currently part of the management team in the company, in particular in the Project department. Areas where I’m involve in include business development, land acquisition, project planning, project implementation, sales and marketing as well as property management. I also oversee all the developments in Australia and am a Director for the group’s Australia Entities. What projects will you be launching in 2018? A majority of the new projects that are in the pipeline for 2018 are commercial properties both locally and internationally which comprise offices, working spaces and hotels. These properties shall be held by the group and there are no plans yet for these units to be made available for sale. The reason for the focus on commercial properties instead of residential is due to the challenging residential market outlook that we are all experiencing at this juncture.
REHDA Youth’s aims that have been set in place? To bring collaboration amongst the Stakeholders in the property industry with the aim of developing, improving, innovating and bringing further advancement to Malaysia’s property sector with the ultimate goal of making Malaysia properties well known to the world as market leaders. How does REHDA Youth benefit the overall real estate industry? The purpose of joining this group is to learn and gain know knowledge among market leaders and at the same time, to be able to contribute humble ideas, thoughts, and knowledge to the group. With the right focus and implementation strategy, I believe this dynamic group will achieve all of its objectives and goals which will in turn, provide an opportunity for the team to contribute to the property industry in Malaysia and raise its bar to be more competitive, innovative and outstanding at the global forefront How do you relax after working hours? My favorite past time is basketball (trying hard to play basketball twice a week) and also organising gathering with friends, colleagues and business associates. I do hit the cinemas quite often as well as I’m a huge movie fan.
January 2018 I 25
CYBERJAYA: THE NEXT FRONTIER
A panoramic view of present-day Cyberjaya
yberjaya was once an old palm oil plantation representing one of many swathes of monoculture leftover from Malaysia’s agricultural days. Having celebrated its 20th anniversary last year, Cyberjaya is now maturing into a township that has come of age. Being the country’s first intelligent city, it has not experienced a smooth ride over the past two decades because its steady growth was interrupted by the 1997 Asian Financial Crisis and the slowdown of the property market way back then. Today, despite the current softening of the market, prices of properties here have generally not flunctuated much. And, although 2016 was a slow year for 26 I January 2018
the property market, developers here are cautiously optimistic about the growth potential of Cyberjaya even though sceptics have opined that the city has not taken off as rapidly as expected. Others opine that time is what is needed for Cyberjaya to really take off. In May last year, in conjunction with its 20th anniversary, 11 major announcements were announced by Prime Minister Datuk Seri Najib Tun Razak which included the establishment of a Research and Development (R&D) as well as Innovation hub and a regional centre for big data to accelerate the growth of this city. The announcements highlighted brand new projects, investments and funds
aimed at strategic collaborations to accelerate Cyberjaya’s transformation into a global technology hub. In fact, in the last 20 years, Cyberjaya underwent major transformations from being an Information Technology (IT) Hub under the Multimedia Super Corridor (MSC) into a Global Tech Hub. It has also become a critical contributor to Malaysia’s digital economy with the city having generated more than an increase of 28% in terms of revenue from 2016. This contribution comes hand in hand with the city’s attractiveness as a base for innovations. Cyberjaya’s 486 Multimedia Super Corridor (MSC) companies for instance, employ 40,000 high-value knowledge workers and houses 60% of
Malaysia’s data centres. Cyberjaya has also been declared as a Smart City - propelling the nation towards achieving goals expressed in Transformasi Nasional 2050 (TN50). which cover brand new projects, investments and funds aimed at catalysing strategic collaborations and accelerating its transformation into a global technology hub. Another key highlight was the announcement of the Cyberjaya Innovation Fund For The Future that will be channelled through a co-investment model for innovation and smart city related projects located in Cyberjaya.
Property Prices Generally Stable
A check with industry experts regarding Cyberjaya revealed that property prices there remained generally stable without a huge dip in prices. There were slight price adjustments going downwards in the range of 2% to 3% but generally, developers were hopeful that it would be a matter of time before an increase in population growth and other initiatives would boost the value of properties here. “Cyberjaya has just celebrated its 20th
anniversary last year and we have seen relatively good growth over the last few years,” says Savills (Malaysia) Sdn Bhd Managing Director Datuk Sr. Paul Khong. “It is a city on a growth trajectory pattern attracting various developers both established and niche speak about its potential. Although it may have had several hurdles taking off especially during the Global Financial Crisis in 2008 previously, we hope 2018 and 2019 will be a better opportune time for its growth especially if the property market improves after the 14th general election (GE14),” he adds. According to InvestCyberjaya.com Executive Director Timothy Low, within the southern Greater KL region, Cyberjaya is considered one of the “more developed” city whereby people are looking to work and live here. This is as it has all the right elements comprising affordable housing for small and medium-sized families. Stakeholders he says are aware of this and they are moving towards this direction as well. “Property prices have definitely increased over the last 20 years and some of the better examples can be seen
in developments such as The Domain by EMKAY Group where the original purchase price has doubled,” he says. “As for the current selling price, the average price per sq ft ranges from about RM600 – RM700 which is comparable to some of the property prices in Petaling Jaya, Selangor.” He adds that although the market has been quiet late last year, he believes there are new launches to look forward to in 2018, particularly affordable landed homes and family-size high-rise residential units. “Approximately 10 years ago, Cyberjaya comprise several office buildings with small pockets of retail shops scattered around its 7,000 acres of land. “There were not much choice of food, housing or even public transportation services. Today, there are more than 20 gated and guarded housing communities to choose from, hotels, shopping malls, 1 GB internet services and more. “Medical centres, private and international primary and secondary educational institutions as well as modern transportation systems are being built as we speak. So it is true that
January 2018 I 27
CBD Properties Head of Project Marketing Timothy Low
Setia Haruman Chief Operating Officer Wendy Li
Savills (Malaysia) Managing Director Datuk Sr. Paul Khong
Cyberjaya has evolved,” opines Low. Setia Haruman Sdn Bhd Executive Chairman Ahmad Khalif Mustapha Kamal says that Cyberjaya has come a long way since its inception. He concurs that to date, it has attracted many developers, both big and niche which have launched their prized land banks here. According to him, Setia Haruman as a Master Developer, aims to elevate the city’s image to not only a technology and start-up hub but also a liveable city with a population of 500,000 people by 2035. Setia Haruman is majority owned by the EMKAY Group. Already, more than 1,300 affordable homes have been handed over to their respected owners and more than 4,000 affordable homes will be completed in the next two years. The Cyber 10 mosque with a dialysis center integrated inside it that is fully funded by the EMKAY group is also at the final stages of construction and will represent the second biggest mosque in Cyberjaya.
grow exponentially in the coming years. In addition, the upcoming Mass Rapid Transit (MRT) Line 2, High Speed Rail (HSR), MEX 2 Highway, Cyberjaya hospital and Cyberjaya City Center are going to be the next game changers for Cyberjaya besides attracting more people to stay and work here. The fast development of the 4th industrial revolution globally will see Cyberjaya’s eco-system development recording significant growth. Setia Haruman Chief Operating Officer Wendy Li says that as the “City’s Builder”, the company’s role is to ensure that Cyberjaya continues to grow and evolve as the master developer - turning it into a vibrant city for people to work, live, study and play in. “Together with one of our stakeholder, Cyberview - the Global Technology Hub enabler, we are jointly responsible to promote to Investors and the public, the opportunities and liveability of Cyberjaya as the Capital of Creation. “We dedicated the whole of 2017 on Cyberjaya’s 20th Anniversary with a lineup of fun events that not only brought the community together but also the public who experienced what Cyberjaya can offer. We will keep the momentum of the celebration going in 2018 with a good mix of events quite similar to the ones we had in 2017,” she shares.
ahead of its time with a comprehensive range of infrastructure already in place. “Cyberjaya has most of the amenities that you would expect from any established township,” says Li. The latest announcement of the Mass Rapid Transit (MRT) Line 2 and two (proposed) stations in Cyberjaya which will be complete by July 2022 as well as the accessibility within Cyberjaya is expected to grow exponentially in the coming years. Connectivity will attract added population growth here with people relocating from traffic-congested areas elsewhere. Setia Haruman, being the master developer also created a completely conducive eco-system for new developers to thrive in Cyberjaya which in turn encouraged major developers such Setia Eco Glades Sdn Bhd, Syarikat Perumahan Negara Berhad (SPNB) and Mah Sing Group to venture into Cyberjaya.
Impending Population Boom
Ahmad shares that Cyberjaya’s population has soared past 95,000, thanks to an eco-system based on innovation and technological advances from stakeholders including Cyberview Sdn Bhd, Malaysia Digital Economy Corporation Sdn Bhd, Sepang Municipal Council and Malaysian Global Innovation and Creativity Centre. “Cyberjaya has reached a population tipping point of over 100,000. It has most of the amenities that one would expect from any established city so Cyberjaya has the foundation and eco-system to 28 I January 2018
Cyberjaya is unique in the sense that all the developers who are congregating in this township, have to be engaged in friendly competition because if one fails, the others will fail as well. Furthermore, Cyberjaya is unique in it being a city built
Attracting Big Players
The Setia Eco Glades freehold mixed development was first launched in Cyberjaya in August 2012. It will be the first residential development in Malaysia to use the AgilFence security system which is the same system being used in Singapore’s Changi Airport as security is the developer’s top priority. The entire township which is scheduled for completion in 2024 will entail an overall master plan that was conceptualised based on the Green Building Index (GBI) certification criteria. The township has its dedicated interchange that links to major highways for example the NorthSouth Expressway Central Link (ELITE),
Maju Expressway (MEX) and the South Klang Valley Expressway (SKVE). The gated and guarded Setia Eco Glades enclave has ushered in higher standards of living in Cyberjaya with facilities such as five specially designed Hammock Clubs which include facilities such as swimming pool, gymnasium, half basketball court and social spaces to encourage interactions among its residents. The main highlight of the development comprises its Isle of Kamares based on Mediterranean architectural design priced from RM550 per sq ft onwards. Meanwhile, the Island Villa Suites comprise namely the Agalia and Harmonia with a total of 240 units that is scheduled to be completed in 2018. All units are semi-furnished and are equipped with five units of air conditioners, dry and wet kitchen cabinets, refrigerator, 2-in-1 washer and dryer. The group’s latest launch of Jewels of Grasmere’s design is based on an English countryside living concept and comprises two types of double-storey link-villas. Greendale comes with an average built-up area of 2,300 sq ft while Langdale comes with an average built-up area of 2,118 sq ft. A total of 117 units launched in 2017 are expected to be completed in 2020. Mah Sing Group also has its Garden Residence freehold mixed development comprising Precinct 1, 2, 3 and 4; Clover@ Garden Residence; Garden Plaza Lifestyle Suites and Shops. Launched in 2010, Precinct 1, 2 and 3 of the development have already been sold out. Group Managing Director Tan Sri Leong Hoy Kum says that Cyberjaya is vibrant and teeming with life, complemented by various developments that continue to bring with it the promise of future lifestyle comforts for residents of the city. “Ultimately, its young demographics, a strong presence of white collar workers and its student community as well as the continued base of MNCs and higher institutions of learning all
Limkokwing Univeristy of Creative Technology is a private international university with global recognition across Africa, Europe and Asia.
in Cyberjaya which will be ready by 2021, accessibility will likely boost the area’s growth exponentially in the coming years.
The Future of Cyberjaya
As the master developer, Setia Haruman encourages developers to work closely with the Government to increase the construction of affordable homes as well as the occupancy of completed units in order to grow the population in Cyberjaya. It wants to also promote more amenities and facilities such as private hospitals, library and recreational facilities. “Eventually, Cyberjaya will transform from a predominantly investors market to an own-use market especially on the residential front,” says Li adding that where once Cyberjaya used to be considered just as a work and study destination, these factors are now becoming an integral part of this township. “Affordable housing and the selling of completed units will be the short-term plan for property development. We want to encourage increasing the occupancy of completed units via community engagement and attracting people to live in Cyberjaya by way of facilities, events, education and job creation,” she says. The focus by stakeholders of Cyberjaya in enhancing the ecosystem will also attract investment. “Being the first MSC ahead of its time, Cyberjaya will become a space for start-ups to create and innovate. Here, tech giants can make new discoveries while small businesses can conquer the world one market at a time. Entrepreneurial minds can call it home. Cyberjaya, Malaysia’s capital of creation will become the first destination choice for work, live, study and play,” concludes Li.
fuel the growth of Cyberjaya,” says Leong. Paramount Property Development is also not to be left out of the equation. The developer launched its maiden freehold high-end landed Sejati Residences in Cyberjaya in January 2013 comprising 249 bungalows, semi-detached and super-linked units situated on 40 acres of land. Low-density living and tranquility is greatly emphasised in the development here which is surrounded by greenery. The development is located in close proximity to the city centre with its strategic positioning in the Cyberjaya Flagship Zone (CFZ) also making it a great place to stay and invest. Cyberjaya has most of the amenities expected from any established township. With the latest announcement of the Mass Rapid Transit (MRT) Line 2 and two (proposed) stations January 2018 I 29
“There are a lot of efforts to ensure that Cyberjaya attains the Smart City status. We look to our counterparts in Singapore, Songdo-Korea and Barcelona-Spain as inspiration. These are cities that have attained Smart City status,” Wendy Li Cyberjaya is also the first city to have the LoRa network in Southeast Asia. LoRa stands for Long Range low power wireless technology mainly targeted for Internet of Things (IOT) applications. SH Tech has also introduced Malaysia’s first super-fast broadband at 1Gbps available to all businesses and homes in Cyberjaya. It utilises 250km of dark fibre on an open access network throughout Cyberjaya for faster and more affordable internet possiblities in Malaysia. With all this infrastructure available, the implementation of more IOT solutions especially solutions that help to improve the quality of life of Cyberjaya citizens will be made possible. Setia Haruman works very closely with its fellow stakeholders to employ the best strategies to improve and increase its talent pool by encouraging more educational institutions to open up in Cyberjaya. To date, there are five universities and four colleges including King Henry VIII school, a co-educational boarding and day originally from Wales, the UK targeted to be operational by September 2018. The Malaysian Global Innovation and Creativity (MAGIC), Cyberview and MDEC as stakeholders also have great programmes to develop start-ups in Cyberjaya.
Ceria Condominium is a low-density and gated high-rise residence in Cyberjaya that will cater to larger and growing families
Affordable Housing Initiatives In Cyberjaya
There are currently four affordable residential projects - two initatives by Perumahan Rakyat 1Malaysia (PR1MA); one initiative by Syarikat Perumahan Negara Berhad (SPNB) Rumah Mampu Milik (RUMAWIP) and another initiative in Rumah Selangorku in Cyberjaya totalling over 4,000 units. Out of this, so far, 1,300 units of affordable homes have been completed and handed over to their respective owners. A Project called MasReca n19eteen (MasReca-19) for instance, is an affordable housing development under the Selangorku program that has been completed in Cyberjaya to cater to the needs of low- and middle-income buyers. The project is developed by Sterling Prima Sdn Bhd representing a joint venture initative between the EMKAY Group and Areca Properties Sdn Bhd. The project introduces a compact, community-living concept 30 I January 2018
Start-ups are welcome to operate in Cyberjaya especially in the Global Business Services, Information Technology, Animation and Creative industries. Once the talents flow in, Venture Capitalists will invest more in Cyberjaya. As a Master Developer, Setia Haruman aims to encourage the construction of affordable homes and increase the occupancy of completed units to make it an attractive destination with comprehensive amenities and facilities such as private hospitals, aged care developments, sports facilities, library, tourist attraction and creative hubs and placemaking venues.
Setia Eco Glades, the latest incarnation of S P Setia’s unique expertise combines luxury residential living with eco-consciousness, scheduled to complete in 2018
which focuses on public spaces within the development where residents can meet for various communal activities. MasReca-19 also has units for the disabled as well. The price of one apartment ranges between RM200,000 and RM250,000. There is an extra RM30,000 cost for selected units that will include a kitchen cabinet, cooker hood and hob, refrigerator, built-in microwave oven, washing machine, two units of fans and air conditioners, and wardrobes for all bedrooms respectively. By providing affordable housing, Setia Haruman hopes that more young people will take the opportunity to own a home and work in Cyberjaya. In addition to the above, Cyberview, through Gadang Land has also completed one phase of its PR1MA housing. This project is part of the Laman View development which comprises different housing types and prices.
CYBERJAYA CULINARY DELIGHTS CHECK IT OUT!
Tokio Cafe is a favourite eatery among the local crowd atCyberjaya as the food here is simply mouth-watering. If you want to indulge in a hearty meal, do order the Beef Yakiniku Don. The beef is tender and finger-licking good. If you are a cheese cake lover, then you are going to love the Chef’s recommended Macadamia Cheesecake. Be sure to also try out the Red Ruby drink. This soothing juice is made up of pineapple, beetroot, watermelon, lime, grapes and chia seeds. The eatery also serves other authentic Japanese food along with popular Western Dishes such as fish and chips and chicken chop. Team Rating: 7.5/10
This quintessential restaurant offers a substantial range of halal Chinese-style dishes. It is the only halal Chinese restaurant in Cyberjaya that offers a range of food, that appeals to both the Muslim and Non-Muslim crowd. Some of their best dishes included Deep Fried Beancurd with Fried Shallots, Stir-Fried Hong Kong Kai Lan with Garlic and Deep-fried Chicken with Salted Eggs. The beancurd was savoury, topped with minced meat and mixed with shallots while the kai lan was fresh and not overcooked. The chicken was succulent and crunchy. Team Rating: 7.5/10
Kung Fu Restaurant (Non Halal)
This family-friendly coffee shop serves a comprehensive range of daily meals along with small treats, making it a worthwhile place to dine at. We ordered their breakfast set – Chicken Ham Croissant, with the croissant being freshly baked and homemade. The owner was also kind enough to recommend a house specialty to us which was the Wild Mushroom Aglio-Olio. Fried with garlic and chilli flakes, and mixed with a dash of olive oil, bite-sized mushrooms added enhanced flavour to the Aglio Olio. The spaghetti was delicious and not too dry for taste. It was indeed a healthy dining experience at Chubbies. The staff were friendly and accommodating. On top of that, they served a power-packed freshly brewed Caramel Latte and Mocha. Team Rating: 7/10
The first thing that caught our attention about this restaurant was that it had a very catchy sounding name to it. The food here is delicious and served in big portions at a reasonable price. This Chinese restaurant which has been around for four years has a nice interior with an ancient Chinese look and feel to it. We ordered their Chef recommended steamed Giant Grouper Fish served Hong Kong-style. The fish was fresh and well-prepared. The whole fish was very tasty and we enjoyed the sweet, tender and juicy white flesh of the fish. According to their crew, their Giant Grouper Fish hails from Sabah’s deep seas and we definitely found it to be simply delicious! Team Rating: 8/10
January 2018 I 31
REVOLUTIONISING THE ARCHITECTURAL LANDSCAPE DMP Architects builds trust with their customers through one-on-one interactions BY FELICIA SOON
uilding close relationships with your customers is critical for ensuring your business is sustainable in the future. The enhancement of human interaction will contribute to the development of many businesses and result in economic prosperity. Jay Yeunh from DMP Architects shares that in order to stay relevant in this competitive industry, the one thing he has learnt from his working experience is that it is important to provide oneon-one service to clients regardless of whether you are involved in the architectural or interior design business. “It is all about meeting clients’ expectations as most of them expect the partners of the architectural firm to be involved throughout the whole design process. For some of the bigger architectural firms, their partners are mainly present at meetings during the initial part of brainstorming for the design and henceforth, are not involved in other parts of the progress,” says Yeunh. He adds that some partners of architectural firms will generally leave the decision-making to the staff and not address the core needs of their clients. Yeunh goes on to explain that DMP Architects uses a different approach whereby it firmly states that partners must be involved personally in the projects that they are assigned to, all the way till completion and handover. Yeunh graduated from the University of Melbourne, Australia with a Bachelor of Architecture Degree in 1978. He then spent the next five years working with an architectural firm in Melbourne where he was involved in design work on many hospitals, retirement homes and commercial projects. In 1983, he returned to Malaysia and worked as a Senior Architect at DP Architects Sdn Bhd in Kuala Lumpur where he oversaw the designs of larger commercial projects. Due to the economic recession in the late 90s, Yeunh started to get involved with furniture, food and beverages (F&B) and entertainment club businesses. From his entertainment club businesses, he met an old client who asked him to be involved in the interior design works for the former Hilton Hotel which was initially located in Jalan Sultan Ismail, Kuala Lumpur. Having completed the Hilton Hotel project, he went on to set up DMP Architects Sdn Bhd in Bangsar, Kuala Lumpur where he is currently the Managing Director of the company, a position he has held since 1998. Today, the number of people working in the firm has expanded to 38 employees. DMP Architects Sdn Bhd has completed some major projects such as the Marc 32 I January 2018
Dang Wangi LRT Station Redevelopment
A 42-storey mixed commercial development comprising SoFo, service apartments, offices and a boutique hotel at the top floors
Service Apartments and Hampshire Residences in Kuala Lumpur and First Subang, a high-rise commercial building located in the heart of SS15, Subang Jaya. The firm’s recent projects include being involved in two major Transport
It is important to provide a one-on-one service to clients regardless of whether you are involved in the architectural or interior design business” - Jay Yeunh
A brand new landmark in Kuala Lumpur complemented by great views of the city centre’s skyline
An ideal place for Investors who are seeking rental yield as it is conveniently located close to private colleges
A forward-looking, modern lifestyle development which includes aquatic themed designs with various facilities
Oriented Development (TOD) projects which include designing the Dang Wangi and Kelana Jaya Light Rail Transit (LRT) Stations with Crest Builder Holdings Bhd as the developer.
In overcoming the challenges of his business, Yeunh shares that in the beginning, the firm did not have a solid customer base and had to portray themselves differently from others whereby the partners of the firm would explain in great detail the idea of the design and guide clients throughout the entire process of the design. “My approach to handling clients back in those days when I was assigned to do the design for the old Hilton Hotel saw me sharing my proposed designs with the clients, explaining to them in detail how the design would work and navigate them through the process of the design.
I even built small-scale models for them to have a better look and feel of the design in order to boost up their confidence. Yeunh went on to explain that the clients were pleased with his approach and decided to give him a try in doing the renovation for the shopping arcade in the old Hilton Hotel. They were happy with the process once the renovation was completed and then following the success of the shopping arcade, they started to give him more projects which eventually helped Yeunh to grow his firm. Having previously achieved success in interior design, Yeunh’s firm started to receive more architectural projects which shifted the company’s concentration from interior designing to focusing on architecture. This he opines was a goof thing because architecture projects are bigger in terms of the size of the projects and longer to execute in duration.
Yeunh shares that one of the firm’s biggest achievement was when they won a design competition and were appointed as the Architect for Marc Service Apartments located near the Kuala Lumpur Convention Centre. “We gained a lot of publicity from designing this project and started to receive higher end projects to design,” says Yeunh adding that this achievement is one of his fondest memories as it was the impetus that propelled the company to go to the next level. As someone accountable for overseeing the design and management of the office, Yeunh believes that it is also important to contribute to society. He was a Council Member of the Planning and Development Committee of University Tunku Abdul Rahman (UTAR) from the early days of the University and oversaw the development of the main campus in Kampar, Perak. This was a voluntary position that he was involved in since the past 15 years with him retiring in 2017. He was also awarded an Honorary Doctorate of Architecture from UTAR for his voluntary services as well. January 2018 I 33
Property Market Activity by Sub-Sector 1H17 Development Land 6% Agriculture 24% Total Volume: 153,729
Property Market Value by Sub-Sector 1H17 Development Land 16%
Transaction Value (RM Bil)
Total Volume: RM67.82 Bil
Residential 48% Industrial 8% H1 2013
Transaction Value per Volume (RM) $441,165.95
34 I January 2018
5.35 Mi l Existing Stocks
0.49 Mi l
0.41 Mi l Planned Supply
Low Cost Flat 10%
Apartment / Condo 69%
Landed Properties 69%
January 2018 I 35
THE TRILOGY OF GUARANTEED RENTAL RETURNS T
here are many reasons why people buy properties. Broadly, those who buy for their own stay or use are known as owner-occupiers while those who buy for future gains in capital appreciation or for rental yields are recognised as property investors. One is both an owner-occupier and an investor when he retains ownership of more than one property in which he stays in one of the properties and the other properties are tenanted to generate passive income or kept and sold at opportune times for capital gains. Just like many other products or services, sales promotions are introduced to attract buyers and speed up the buying decision process. Property developers too will initiate sales promotions to entice prospective property buyers – from low entry packages to discounts and giveaways, including guaranteed rental returns for certain selected projects. First of all, just out of curiosity, here is a simple explanation should you wonder why “Guaranteed Rental Returns” is a Trilogy... To begin with, each of these three words by itself, carries its own meaning:1. Guaranteed = Assurance or promise 2. Rental = Payment to owner for temporary use of the property. 3. Returns = Income or earnings These three words put together, form a related meaning .Therefore, together, they represent a trilogy:4. Guaranteed Rental Returns =
36 I January 2018
Assurance of income from property rental Now that we have the title and definitions clarified, this article serves to highlight the essence on Guaranteed Rental Returns (GRR) as succinctly as possible – contemplating its key issues and attempting to present a balanced view of this trilogy, which continues to worry some investors despite it being in the market for almost three decades. Nevertheless, based on feedback, investors who have benefited from this concept remain supportive. Over the years, GRR has earned itself quite a reputation among the property fraternity in a less favourable light though - as a result of inappropriate practices or broken promises by unscrupulous parties. However, on the other side of the coin, GRR can also benefit investors if executed professionally and ethically by trustworthy industry players. However, allow me to add a note of caution - unlike the Sales and Purchase Agreement (SNP), GRR is not governed by the Housing Development (Control & Licensing) Act. The scheme falls under the Malaysian contract law, which is governed by the Contract Act (1950). This means, should there be any breach of contract by the parties, affected parties may refer to the competent jurisdiction of the Malaysian Court. Originally, GRR was proposed by property developers as an off-plan sales package by way of an assured rental income in the form of a percentage of the purchase price or a fixed sum for
a certain fixed period of time after the completion and delivery of the project. In recent years, GRR has been offered pertaining to both under-construction projects and completed properties by property development and property management companies. The duration can be as short as two years or as long as 20 years or more. And, GRR rates can typically range from 5% up to 12% per annum or more. Generally speaking, GRR fits investment-grade properties and is applicable to residential and commercial developments located in heavy human traffic areas, especially within vibrant business and commercial centres or popular tourist hubs or in close proximity to Mass Rapid Transit (MRT) stations. This enables investors to buy into an easily lettable property and enjoy some peace of mind, including ease of cash flow by covering part or a full sum of the loan repayments to cushion against the disadvantage of reselling the property during the first five years of investment which will incur higher tax on Real Property Gains Tax (RPGT). For example, a property development project, which will be completed in three years, could offer a GRR of 6% per annum for two years upon the delivery of the property unit. The investor could enjoy the two years of rental income and resell his property with zero RPGT thereafter or continue to retain and rent the property at prevailing market rates for passive income - whichever is considered more financially beneficial to the investor.
EXAMPLE 1 GRR advantage for a project under construction in relation to RPGT for an individual buyer: Year 1
Construction Period RPGT30%
GRR 6% per annum x 2 years 20%
About The Contributor
Years 6 onwards Sell or Rent at Prevailing Market Rates -
EXAMPLE 2 GRR advantage for a completed property in relation to RPGT for an individual buyer:
EXAMPLE 3 A simple surplus computation: 1. Property purchase price at RM 2,000,000. 2. GRR 6% per annum is RM 10,000 per month 3. Loan repayment for 90% end-financing at 4.15% p.a. over 30 years is RM 8,750 per month. 4. Surplus: RM1,250 per month EXAMPLE 4 A simple top-up computation: 1. Property purchase price AT RM2,000,000 2. GRR 5% Per annum is RM 8,333 per month 3. Loan repayment for 90% end-financing at 4.15% over 28 years is RM 8,750 per month 4. Top-up: RM417 per month Although a premium may have been added to the selling prices which is an open secret, from the investor’s point of view, GRR still remains an attractive scheme. The disappointment is mainly due to the integrity of the vendor.
TIPS FOR INVESTORS Here is a checklist of 10 key questions to ask before accepting a GRR package: 1. Is it an investment grade asset? Are there any lifestyle elements that can enhance its value? 2. Is it located in an easily lettable area? What about accessibility and amenities? 3. What is the current rental for similar properties in the area and competitive advantages available there? 4. What is the real potential rental income after the GRR period? What are the growth drivers? 5. Who pays the GRR? Property management company or property developer?
Jennifer Chow is Founder and Director of Just Jen Connections Sdn Bhd, a marketing and consultancy firm in Kuala Lumpur.
6. If the property management company is offering GRR, why is this coming from their end and not from the developer? Is the property management company an independent company or a subsidiary of the property developer? 7. What is the track record of the company in terms of delivering on its GRR promise? Does the property developer, property management company or CEO have a strong reputation for integrity? 8. What is the frequency of payment? Monthly, quarterly or upfront? 9. Can the owner use the property during the GRR period? 10. Is it a straightforward GRR scheme or a leaseback with the property or hospitality management company whereby there are other costs payable by the owner? Are these additional costs deductible from the GRR payment or can they be treated separately? Last but not the least, a gentle reminder to the buyer:- Please understand the terms and conditions as well as read the fine-print in the contract before signing the document and be responsible for your decisions. And, to the vendor – Do the right things correctly and be responsible for your actions. Allow me to conclude with Warren Buffet’s quote, “It takes 20 years to build a reputation. It takes five minutes to ruin it. If you’ll think about that, you’ll do things differently.”
January 2018 I 37
Investor Next Door
DOUBLE-UP YOUR PROPERTY INVESTMENT VALUE Knowing how to invest can ensure a more successful property investment journey BY FELICIA SOON
ean Teo dreamt of owning a house but being a foreigner working in the oil and gas industry in Singapore back then, he had to either settle for a private condominium or have two Permanent Residency (PRs) before he can be entitled to buy a HDB. In the end, he decides to return to his hometown, Malacca and start with a new career as a property investor.
DURING THE EARLY DAYS
Teo, a graduate from Mechanical Engineering background worked in Singapore for two and a half years in the Oil and Gas industry before returning back to his hometown, Malacca. When he was working in Singapore, he used to dream to have his own house. However it is not easy to buy a property in Singapore especially when you are a foreigner working there. Either you need to buy a private condominium, or have two Permanent Residency (PRs) before you can be entitled to buy a Housing and Development Board (HDB) or in the worst case scenario, you have to wait until the age of 35 years old to get yourself a HDB under your own name. Hence, it was only a matter of time before Teo started questioning himself, “What is my plan for the future? Am I happy living based on a monthly pay cheque basis?” Eventually he decided to quit his job and came back to his hometown at the age of 26 years old. He bought his first property which was a double storey landed house in Malacca. “After working for two and a half years in Singapore, I managed to have some savings for the down payment. At
38 I January 2018
that point of time, I didn’t have much knowledge in this sector yet. However, I have a close friend, Daniel (we make investment together) who has been in this industry for some time. He gave me a lot of insights about the property market and what strategies to apply for example Acquire, Hold and Sell. As I was clear on what my plan was from the beginning, it made me made wiser decisions compared to the others,” he shares.
FACING THE CHALLENGES AHEAD
It has been about four years since Teo has ventured into property investing which he opines has neither been a long journey nor a short one either. “The biggest challenge for me is when it comes to selling off my own properties. Actually, I don’t really consider it a challenge, but somehow it becomes a dilemma for me. This is due to the reason of being passionate when I invest my money into a property and feeling really reluctant to sell it off when the value of the property appreciates over the years, even though I can make good money from it. But now I understand the saying which goes “sometimes we just have to let go in order to have more”.
ADVICE FOR PROPERTY INVESTORS
Teo’s advice for people who wants to get started in property investing is to start small rather than not starting at all. He also suggests for investors to start it off with a flipping strategy before they proceed to keeping strategy. These are the sequence and strategies that he is
It is not just about doing research online through the online property portals. You have to mingle around with property negotiators or agents, bankers, lawyers and even your neigbourhood aunties and uncles as good deals usually come from organic or offline network” - Sean Teo
applying to his investment portfolio right now. “Everyone has a different game plan and no one is right or wrong though. It is just a matter of personal preferences. The reason I started off with flipping strategy is for me to acquire more capital for my next property investment. Once I have enough capital, I could diversify and also have stronger holding power in case of any unforeseen circumstances. For an example, I sold my first property and make about RM 150, 000. With this capital in hand, I reinvested and diversified my investment portfolio further,” says Teo. One good advice that Teo shares in terms of being wise financially is that we ought to have both active and passive income so that we can have a stronger profile to get a mortgage loan. This is because active income will allow you to buy more properties and passive income will ease your burden along the way.
BUILDING RAPPORT AND KNOWLEDGE
Teo also acknowledges on the importance of networking when it comes to investing in properties. “It’s all about networking when it comes to investing in properties. In other words, your NETWORK will determine your NET WORTH. It is not just about doing research online through the online property portals. You have to mingle around with property negotiators or agents, bankers, lawyers and even your neigbourhood aunties and uncles as good deals usually come from organic or offline network,” Teo explains. He further encourages those who wants to start investing in properties to read more property investment related
books or attend some property related courses. There are many books and courses out there. It is good to attend those free previews first and then decide later on whether those strategies suit your characteristics in doing investments. “Always invest in yourself first before you invest in other things! Get yourself a mentor as well. It does not need to be a professional property investment guru, it could be your parents or relatives who have more insights into property investments or who have invested in many properties themselves. Talk to them and seek for their advice. For the younger generation or fresh graduate, it is better to start now before it is too late. If you invest early in properties, you will be a step ahead of your peers even if it is just a small one,” says Teo.
Main entrance of the double storey house
Spacious layout inside the doube storey house
PLANS FOR THE FUTURE
Teo’s next investment plan will be getting some properties for long term rental income purpose since he already has some properties meant for flipping. He also shares that he might be looking for some close partners to invest together with him to diversify his portfolios further and at the same time leverage on each other’s strength.
Second property under construction
PROPERTY 1 Location: Property type: Nett Price: Sold: Holding Period: Appreciation:
Malacca 22 x 70 Double Storey RM329, 800 RM480, 000 3 years 45%
*Another two properties are under constructed and have not been handover yet
Third property under construction
January 2018 I 39
About The Contributor
WAH LAU EH! WILL HOUSE PRICES DROP FROM RM 500K TO RM 300K?
Mark Chua is the bestselling author of the book “WHO SAYS”. He was a former Senior Vice President of a bank. He is living proof that one can be successful in one’s career and property investments. He can be reached at email@example.com or www. facebook.com/MarkChuaMY
can then afford to be like Warren Buffet and buy properties at bargain prices? My humble opinion is no.
IMBALANCES IN THE PROPERTY MARKET •
Recently, there was a controversial article from a Property Expert predicting that average Malaysian House prices will drop from RM500,000 to RM300,000. I think that this article received a lot of controversy and I’d like to give a balanced rebuttal.
WHAT IF PRICES REALLY DROP TO RM 300K? YOU’VE ALREADY GOT OTHER ISSUES TO WORRY ABOUT! •
Well, let’s assume for the sake of argument that prices will drop from RM500,000 to about RM300,000. Should we be excited and prepare ourselves for Jualan Murah? Research by the University of Chicago in the UK indicates that for each RM100,000 drop in the value of your property, consumer spending will decline by RM3,000 per year. Furthermore, most of our wealth is tied in with the value of our property. After all, the average Malaysian retires with merely about RM50,000 in their Employees Provident Fund (EPF) account. Direct translation? If property prices really drop from RM500,000 to RM300,000, buying a property will be the least of one’s concerns. We will have other problems to worry about; namely plummeting consumer confidence, lower retail spending and a higher rate of unemployment! Do you think the average Malaysian
40 I January 2018
To be fair, I do see some risks appearing in the property market. Projects that give excessive rebates of 20% to 30% for instance, should be handled with care. Remember – there is a distinct difference between ease of purchase and investment viability. Life isn’t a race. Think twice before engaging in 10 multiple submissions or being enticed by the cash rebates and having to deal with an overpriced and unrentable unit upon completion. In the end, there’s always a price to pay. Bank Negara Malaysia (BNM) has announced that the number of unsold units stands at 130,000 units - the highest in a decade of property market performance. Out of htese units, 83% of the units comprise higherend products. My view is that risks are highly concentrated in high-end condominiums priced above RM800,000 and revolving aruond projects that give excessive rebates. Therefore, the risks are not systemic in nature that warrants a general crash in the housing market.
CREDIT IS THE OXYGEN THAT FUELS A FIRE •
House prices have increased by a modest 5.3% in 2017 as compared to the 11% increase during the 2010 to 2014 bull run. Back then, financing was a lot more liberal and banks were handing out loans like candy to a baby. Since then, BNM has stepped in and tightened the supply of credit. There is now a 70% margin of finance ruling for the third property purchased and above, coupled with the abolishment of
the Developer Interest Bearing Scheme (DIBS), Debt Servicing Ratio (DSR) checks and regulations on fees and tenures. Housing loan approvals registered in 2014 was a mind-boggling RM121 billion. For 2017? It is a more subdued RM96 billion. The credit measures has proven effective. So, if loan approvals were going up like Donald Trump’s hair, perhaps there may be a stronger basis for a bubble followed by an impending crash. Direct Translation? Credit is the “oxygen” that fuels the “housing bubble” or “Fire”. Limit the oxygen supply, and the flames die down. As such, in my view, the probability of a crash is reduced.
MORAL OF THE STORY? •
The probability of an all-round crash in prices is low because credit has been more tightly regulated in recent years. To be fair, BNM did the right thing by controlling credit. Statements like prices dropping across the board from RM500,000 to RM300,000 should be examined. My view is that risks revolve around highend condominiums and projects that give excessive rebates. Consistency is key. I’d rather be a turtle and buy “boring” properties in lacklustre areas which may go up by 2% to 3% per year instead of opting for the latest fads, hotspots and trends. So, have a multidecade view and gain over the long run.
END FINANCING, THE GAMES PEOPLE PLAY A
sk any developer, real estate sales people, investors, etc. about the real estate market, and you would invariably arrive at the topic of end financing and the challenges facing the new development market. It’s not uncommon to hear property players lamenting that they can sell but then the sale would fall through because of the difficulties of getting a loan from the banks. The question many may have is:- What’s happening to the banks and why are they not disbursing loans even for people who seemingly qualifies? Who is to blame? There would be obviously many more sales or much less unsold units, if the number of people who failed to get a loan were successful. Nevertheless, the demand are a lot healthier than the figure shows. Firstly, I’ll examine how this happened and what each industry player could have done and how we could work together to correct this. We all know what happened with the stricter ruling from Bank Negara and so on, which I believe started around the time of the 2013 Budget in Malaysia. However, such practice is common everywhere including Singapore as borrowings grew greater per household. Yet the end financing situation got in Malaysia has been somewhat different. What happened after the tightening of loans, turned into a game of cat and mouse of sorts that developers and bankers got themselves trapped in. In the end, everyone became losers, especially property buyers and homeowners. From my observations, I believe the problem lies with a lack of communication between the industry players through constructive dialogues. Initially, again from what I gathered, the banks became more conservative
than necessary and started to approve loans with much lower loan amount to selling price. It didn’t take long for the developers to find ways to counter this by increasing the contracted selling price to maintain a viable lower cash outlay for its buyers to push sales. As much as everyone pretended that the banks may not know, even though the uncles and aunties buying properties knew and wanted packages that would allow for them to invest in properties with lower cash outlay, this went on.Soon the banks countered these actions by reducing loan quantum further and impose stricter assessment criteria which also affected their own mortgage bankers who have targets to meet but aren’t helped to meet those targets either. Soon, because of these seesaw actions that were being played out, contract prices very quickly hit ceiling levels. Legitimate homebuyers were very quickly pushed out of the market. Even those who were able to get loans, would now be having much higher monthly commitments. The bankers and valuers very quickly caught on to this and completed developments started to have value adjusted downwards to the loss and dismay of homeowners. As much as loan clawbacks are not common in the industry and rarely happens as long as the buyers remain a good paymaster, a little downturn could cause many of the loans not matching the value of the properties and increases the risks of loan clawbacks in an economic downturn. All in all, the buyers are the biggest losers in this end financing tango between the developers and bankers. It’s time we sit down and reset the market.
About The Contributor
Colin Tan is the Founder of ColinTan Training International, one of the leading real estate companies in the region. He is also a Consultant for sales and marketing for some of the large real estate developers here
At the beginning of 2016, while playing the role of Group Director of a major development company, i tried to do just that. With the blessings of the Deputy Chairman, I invited the bankers from most of the major banks for a dialogue. I shared with them about the need to start over as mentioned above. I proposed to the banks to work with us and value property prices fairly and correctly before we launched, we shared that we wanted to help the property investors and homeowners buy properties at the right price with the support of the banks. That in such instances, the banks would then commit to providing maximum allowable loans based on the sustainable valuation of the properties we market and credit worthiness of the buyers. It was a positive dialogue, we sensed the willingness of the banks to support such an approach but we were just one company. Ultimately, we need more dialogues and a collectively effort from all industry players to normalise the markets and in the long run, help all homebuyers and owners. At the same time, Developers cannot be afraid to find ways and means to build better and cheaper homes and previous buyers must also be prepared to have property prices correct lower for the benefit of the future generation and the overall good of the society.
January 2018 I 41
DON’T STOP BEFORE YOU START Action is what separates those who do and those who dream
nvesting in property is enormously exciting but it can also feel overwhelming. It involves a lot of money and requires you to take risks. It will also test your business skills in ways that may have not been challenged before. For many Investors, there is a desire to know as much as possible before getting started. Knowledge is fantastic and you will need as much of it as possible. However, there comes a point when your quest for information is actually just a “procrastination process” rather than the basis of a do-able action plan. The only way you can really get started in property investment is to begin. It is that simple. Once the research has been done and the funds are in hand, there is no reason not to do it. Unless of course, you don’t want to or decide it’s not for
42 I January 2018
you. Property investment is not without its problems and if you don’t want to take any form of risk or have additional responsibility, then this is not for you. However, if you are prepared to take some risks and spend a bit of money, time and effort to build a business, then the best time to start is now. The more you delay making a decision or buying a property, the more you will delay your future rewards. You will never know everything but need to know enough to get you started even as you will always be learning more about the business and work on improving and developing new ways and ideas for things to work better. Success does not arrive on day one - it is a more gradual and incremental process that develops over time.
About The Contributor
Dato’ KK Chua is the Strategic Adviser and Managing Director of Armani Media. He is also a registered Real Estate Agent and an Investor with more than 10 years experience in the industry. He can be contacted at firstname.lastname@example.org
In fact, the more problems you meet and overcome, the more successful you will become. Challenges will make you grow. Reading books, attending talks, seminars, conventions and going for courses are all great ways to boost your knowledge and help you feel you are “fast-tracking” through the process. But, taking the first step is the only way to really start the process. Find out as much as you can, research every angle and make yourself as knowledgeable as you possibly can, and then act. Action is what separates those who do and those who dream. And, once you have started, you will see a big change in your mindset; you will no longer be an explorer, you will be an Investor. This, in itself, will put you mentally in a different place. You will have proven to yourself that you can do it. And then, when you know you can do it once, you will most likely look to do it again and again. Each time, you will learn and grow more. You will develop ways of doing things that you previously never thought was possible. You will know what works for you, what makes you happy and what helps you to achieve your goals. And then you’ll wonder why you didn’t do it earlier. And you’ll say:- I wish I had started sooner ... if only. So, don’t delay. Start today and act now. Action plan:- Find a property you like and book an appointment to view it. Once you have seen it, you’ll know if you want to do anything more about it.
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