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KDN PP 1818/04/2013(033492) | JANUARY 2015



JANUARY 2015 RM7.80 (WM) RM9.80 (EM)


Unique Challenges Opportunities Mentoring

SINCE 2005

Prosper Realty is currently recruiting real estate negotiators both new & experienced Head Office: No. 32-3, Jalan Pekaka 8/4, Kota Damansara, 47810 Petaling Jaya, Selangor. Tel: 03-6156 3366 Fax: 03-6156 3399 II JANUARY 2015 |

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PUBLISHER MESSAGE Publisher KK Chua ( Editor Syamil Zahari ( Sales & Marketing Janet Loh 012-2050 911 ( Andy Fam 012-6019938 ( Chia Kee Woon 017-662 0600 ( Chong Wei Yeen 012-627 2863 ( FOR ENQUIRIES:

Publisher Armani Media Sdn Bhd (1032085-H) No. 32-3, Jalan Pekaka 8/4 Sec 8, Kota Damansara 47810 Petaling Jaya, Selangor Tel : +603 6156 3366 Fax : +603 6156 3399 Printer KHL Printing Co Sdn Bhd (235060-A) Lot 10 & 12, Jalan Modal 23/2 Seksyen 23 Kawasan Miel Phase 8 40300 Shah Alam, Selangor, Malaysia

s we usher in the New Year, we place our renewed focus on the financial year ahead while keeping in mind the year 2014 has brought us and investment lessons we have learned. Malaysian real estate market is going through a preventive period right now, and looks to continue upon that path for some years forward.


Malaysians are increasingly unable to afford their own homes. Partly, they share the blame for their appetite for luxury living due to cheap money and plenty of liquidity, resulting in an alarmingly high debt-to-income ratio. Partly also, our economy is not on a level playing field, with the growth of income of the highest 10% earners far outpace the languid increase of low rung people’s income. With inflation set to rise when the Goods and Service Tax kicks in, and interest rate expected to increase, consumers will be squeezed further and in all likelihood the real estate market will see continued slowdown. In perspective, all this is nothing new. The market is not as frighteningly bad as we have experienced before. The cycle continues. A good investor recognises that in times of difficulties, there are opportunities lurking. It takes a discerning eye to know when and where to invest. This is when past lessons are invaluable to investors. To quote a saying of Confucius: “Study the past, if you would divine the future.” Be a smart investor, and may year 2015 bring you good fortune. Happy New Year! Disclaimer

Although every reasonable care has been taken to ensure the accuracy of the information contained in this publication, neither the publisher, editors, writers nor employees and agents can be held liable for any errors, inaccuracies and/or omissions. The contents of this publication do not constitute investment advice. It is intended only to inform and illustrate. No reader should act on any information contained personal circumstances. We shall not be responsible for any loss or damage, whether directly or indirectly, incidentally or consequentially arising from or in connection with the contents of this publication and shall not accept any liability in relation thereto. The views by our contributors expressed here are their personal 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.


JANUARY 2015 |

KK Chua Publisher Armani Media Sdn Bhd



Vietnam sanctions further foreign property ownership


CTOS new scorecard allows borrowers to negotiate interest rates



When Tun Mahathir Speaks Our esteemed former Prime Minister of Malaysia talks about the property industry, his concerns and the ideal time for home ownership



Recapping the Property Market In 2014


The Burden of Households

25 26 30 34 38

Despite relatively a quiet year, 2014 brought several new developments in the property industry

Study indicates greater disparity between income and home affordability

Experts’ Comments Rent-to-Own? With most Malaysians unable to buy a house, an alternative exists to fit their budgetary needs and help solve myriad of affordability problems

How to Deal with Unscrupulous Agents

What to do, and not to do, before and after you spot a property investment opportunity

Prices and affordability of houses in Penang

DEVELOPER OF THE MONTH Big Dreams For Rawang Local developer bets big on an up-and-coming area with affordable resort living development


Sungai Long: Luxurious Peace By The Hills

The Highest Price Yet

Peeking through Hong Kong property market



Deal or No Deal?






72 74 76 78

The Sweet Taste of Property Investment

A young culinary entrepreneur shares the ingredients of her property investment journey

FINANCE More Misses Than Hits

STRATEGY Fair And Square

How do you distribute properties fairly in your will?

How Feng Shui Works in a Business Environment 2015: Hanging in, Hanging On

In an uneven property market, how will Malaysian real estate sector perform this year?

HOME PLUS Beyond Colors | JANUARY 2015




JANUARY 2015 |




MORE SPACE. GREATER FLEXIBILITY. A SMARTER INVESTMENT. Striking the perfect balance between city life and green living, as well as excitement and relaxation, De Centrum Unipark Condominium opens the doors to exciting new lifestyle possibilities. All within De Centrum, a smart, green, urban living environment where rest, work, play and everything in between coexists in harmony and is conveniently located within walking distance. So, be charged by the vibrancy of this lively 100-acre urban city in the Southern growth corridor of Greater Kuala Lumpur, with its promise of connectivity, modern-day conveniences and interactive socialisations. De Centrum – the place to be.

De Centrum Unipark Phase 2 Now Launching

De Centrum Mall Opening in 2016

De Centrum SOHO 90% Sold

De Centrum Residences 100% Sold

TOLL FREE 1 800 88 8299 MOBILE +6017 779 1688 +6012 263 5583

Another quality development by

EMAIL WEBSITE De Centrum is a registered trade mark under the Protasco Berhad Group of Companies. All information contained herein are intended for general marketing purposes only and should not be relied upon by any person as being complete and accurate. The information contained herein are not statements or representations of fact and are not intended to form part of any offer or contract for sale. Visual representations like pictures, art renderings, depictions, illustrations, photographs, drawings and other graphic representations and references are only artistic impressions and merely conceptual. The information on project including but not limited to the proposed facilities, measurements, distances, plans, descriptions and specifications are merely indicative and are subject to amendments by the developer without notifications as may be required by the authorities or the developer’s consultants. The developer does not guarantee, warrant or represent the correctness or accuracy of any information provided herein and does not accept any liability for negligence, error, misrepresentation, discrepancy in relation to the information or for any reliance on the information stated herein. The developer excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damage arising from it. Developer License: 10293-2/06-2016/0593 (L). Advertising Permit: 10293-2/06-2016/0593 (P). Validity: 21/6/2014 – 20/06/2016. Minimum Price: RM575,400.00. Maximum Price: RM1,259,653.00. Total Units: 320 units. Building Plan Approval No: MP.SPG.600-34/3/58 (8). Approving Authority: Majlis Perbandaran Sepang. Land Tenure: Freehold. Land Encumbrances: Charged to RHB Bank Berhad.

Protasco Land Sdn Bhd (324329-DD) Corporate Block, Unipark Suria, Jalan Ikram-Uniten, 43000 Kajang, Selangor Darul Ehsan, Malaysia. | JANUARY 2015


NEWS & EVENTS Kempinski Hotels announces the signing of ‘8 Conlay’ with KSK Land empinski Hotels and KSK Group Bhd, via its property development arm KSK Land Sdn Bhd, announced the signing of a management agreement for the high-profile large-scale luxury development ‘8 Conlay’ in the heart of Kuala Lumpur’s Golden Triangle. The ground breaking for the project is scheduled to take place early this year and expected to complete in 2020. Residences comprising the first residential tower are scheduled to be available for sale from March 2015 onwards. ‘8 Conlay’ is a multi-use property development covering a land size of 3.952 acres with gross development value of RM4 billion. The building will feature three towers, The Kempinski Residences (towers A & B) and The Kempinski Hotel, which are connected via a central retailed podium. The project will be accommodating


260 units of hotel, 403 units of serviced residence and the two serviced apartment towers will accommodate 576 units in Tower A and 516 units in Tower B, with size ranging from 682 sqft to 1,295 sqft. “This unique project marks Kempinski’s entry into the important Malaysian market and underlines our commitment to expansion in Southeast Asia. We are excited about bringing the Kempinski brand to Malaysia, and demonstrating the value of five-star luxury services to branded and serviced residences at 8 Conlay,” said Alejandro Bernabé, CEO of Kempinski Hotels.

Vila Seni celebrates property milestone in Johor Bahru nother prestigious residential area is completed in Johor Bahru. The luxurious Vila Seni offers 92 units of semi-detached villas and four exclusive units of bungalows with a GDV of RM250 million, and utilises the build-then-sell concept advocated by professionals and experts in local and global property markets. Also, the architectural quality is benchmarked with the established CONQUAS (Construction Quality Assessment System) which serves as a widely accepted global standard assessment system on the quality of building projects. The project provides purchasers with standards exceeding Malaysian expectations for innovative residential villas and bungalows homes par excellence, the developer announced. “As an investment beginning from


Vietnam sanctions further foreign property ownership he Law of Housing in Vietnam has recently been revised, allowing expansion the foreign ownership of residential properties. According to the National Assembly, the three foreign subjects now granted access to buy a property in Vietnam are foreign individuals and organisations that invest in building houses under projects in Vietnam; foreign-invested enterprises, branches and representative offices of foreign businesses, foreign investment funds, and branches of foreign banks operating in Vietnam; and foreign individuals. In communist Vietnam, all land belong to the state government, but the loosening of foreign property ownership rule was seen as vital to boost for the country’s sinking real estate market. The construction ministry



reported that Vietnamese property inventories dropped 13% to VND82.3 trillion (RM13.45 billion) as of Aug 20, 2014, from a year earlier. Nationwide, unsold apartments numbered about 17,000 units in the same period. “Expanding the criteria for people to buy and own houses in Vietnam aims to create favourable conditions to draw foreign investment,” National Assembly’s vice chairman Uong Chu Luu said in a statement released at the legislature. The law is the latest measure move to help bolster the property market, following a housing stimulus program and a low-cost home loan package worth VND30 trillion. The new rule, however, only allocates a maximum of 30% of the flats in any apartment building, or 250 houses in a ward. Foreigners who buy, inherit or are given houses in Vietnam

JANUARY 2015 |

Ho Chi Minh City

are limited to a term of 50-year ownership, which can be renewed under a Government regulation. Vina Capital Group Chi Minh City-based chief economist Alan Pham told the media, “It is a very helpful move, a good change of policy to open up the real estate sector not only for overseas Vietnamese, but also for foreigners.” He added, “It projects an image of an opening of the economy to foreign capital, and it might help the bad debt problem.” Vietnam seeks to boost its economic growth to 5.8% in 2014 and resolve bad debts in the financial system, some of which are tied to property.

RM2.4 million and also a home, Vila Seni property owners can enjoy a rare gem making its mark in Plentong, especially with the well-equipped 40,000 sqft clubhouse and high 5-tier security with trained Gurkha guards, plus concierge facilities offering par excellence 5-Star services,” said Taipan Eagle director Michael Tham, whose company helmed the Vila Seni project. Furthermore, Vila Seni’s central location means that it is just a short drive to the JB city centre, Danga Bay, major arteries such as Tebrau and North-South highways, and also to Woodlands via the Causeway as well as Senai and Changi International Airports.

Group: Exempt GST on stratified properties oods and Services Tax (GST) on stratified development properties needs to be re-examined, urged property-related professional bodies. The National House Buyers Association (HBA), The Royal Institution of Surveyors Malaysia (RISM), the Malaysian Institute of Professional Property Managers (MIPPM), and the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) said that GST is expected to affect about six million stakeholders in the 15,000 stratified development areas in peninsular Malaysia alone. HBA Secretary General Chang Kim Loong said the group has petitioned the government to exempt all categories of stratified properties from GST on management fees. “We urge the government to grant the zero-rated status to all joint management bodies and management committees,” he told reporters. PEPS advisor Wong Kok Soo explained residents low cost and medium cost stratified developments would still be exposed to GST passed on to them from the services providers such as technicians and repairmen. “So the net effect is residents will be paying 6% of their maintenance charges to the government as tax,” Wong said, when in fact residents use their own monies to maintain, upkeep, refurbish, upgrade and safeguard their own common properties.


CTOS New Scorecard Allows Borrowers to Negotiate Interest Rates redit reporting agency CTOS Data Systems (CTOS) will unveil a new credit scorecard system by Q1 2015 that it hopes will set a benchmark of borrowers’ credit evaluation. “But we hope to launch it earlier, because I believe that there is a need in terms of consumers understanding of their creditworthiness,” CTOS CEO Eric Chin spoke during a press briefing. The scorecard, dubbed CTOS-FICO score, is a jointly-developed system between CTOS and a pioneer in credit bureau scoring technology and data analysts Fair Isaac Corp (FICO). CTOS manages about 10 million individual records and two million company credit records, and the new system will be a more sophisticated way of assessing credit profile of individuals and companies. FICO Asia-Pacific senior director (Scores) Leong Mun Tong said the scorecard will examine “an abundance of data” with more in-depth credit evaluation to determine potential borrowers’ eligibility for loans. Full details of the credit scorecards are yet to be finalised, but Chin revealed that the scorecard will assign a three-digit number that indicates a loan borrower’s repayment probability. Hence, a borrower with a strong score could potentially leverage for better interest rates from banks, Chin said. The new system will also provide greater access to “under-banked” segments, maintain a robust credit market and keep household debt in check by discouraging over-indebtedness, Chin added.

C | JANUARY 2015


NEWS & EVENTS Under the GST Act 2014 (Act 762) Section 3 (1) and (2), joint management body (JMB) and management committee (MC) are deemed to be carrying on a business whether or not it is for pecuniary profit. Yet, according to Wong, the Income Tax Department recognised maintenance collection in strata developments as mutual income and not subject to income tax. “So why are they subject to GST?” He asked. He added that strata developments always have insufficient collection of maintenance fees. A typical mediumcost apartment, for instance, has a collection rate of only 40% to 60%, Wong pointed out. GST, however, needs to be paid based on 100% billing and not actual collection. The effect of higher maintenance costs would mean that levels of maintenance especially for the lower category of strata developments would decline due to lack of funds, he said.


Sunway Adds Education to Iskandar Community unway announced its upcoming Sunway Iskandar plans with the introduction of the Sunway International School (SIS) Sunway Iskandar. “With 40 years of expertise in the property industry, Sunway is continuously working towards developing liveable townships and sustainable quality living in a community,” said Tan Wee Bee, Sunway’s Executive Director for Property & Construction, Southern Region and Singapore. He continued, “With SIS Sunway Iskandar, we are confident that residents at Iskandar will have the privilege of world class education which will in turn shape the holistic lifestyle of the community.” Scheduled for its first intake in 2017, SIS Sunway Iskandar will be the only school in Iskandar, Johor to offer the Canadian (Ontario) curriculum – rated as one of the world’s best school systems. The School is also a candidate school for the International Baccalaureate Diploma Programme (IBDP). Pre-enrolment for the new campus will begin in January 2015 onwards for pre-school right up to pre-university. SIS Sunway Iskandar will also provide the International Baccalaureate (IB) education framework for its preuniversity students. During the event, both Sunway Property and Sunway Education Group collectively announced its special bursary programme, presenting attractive benefits to early birds of the property and School. Children of any Sunway Iskandar buyers will be entitled to a bursary programme upon qualifying all the terms and conditions. SIS Sunway Iskandar will offer a special bursary of RM10,000 to all student enrolment. The bursaries are valid for 24 months from the date of the School’s opening and applicants are eligible to both special bursaries upon qualifying all the terms and conditions. With English as the medium, SIS Sunway Iskandar will be fully taught by Canadian certified teachers and IB certified educators. SIS is also the first


JANUARY 2015 |

international school to implement a full laptop-programme. SIS Sunway Iskandar is a candidate school for the IB Diploma Programme pursuing authorisation as an IB World School. IB World Schools share a common philosophy – a commitment to improve the teaching and learning of a diverse and inclusive community of students by delivering challenging, high quality programmes of international education that share a powerful vision.

Tan & Tan Developments Launch Park Manor, Sierramas an & Tan Developments Berhad (Tan & Tan) announced the launch of its latest development today. Located in the award winning Sierramas residential estate, Park Manor comprises 41 villas that provide residents a private urban oasis nestled amongst lush greenery and beautifully landscaped gardens. These homes are the largest that Tan & Tan have built in Sierramas. Designed to accommodate todays modern family and their evolving needs, Park Manor offers elegant 5-6 bedroom, three storey family homes with built-up areas of between 5,000 sq ft and 7,000 sq ft. Buyers can choose from three typical designs, each benefitting from generous and well-proportioned living, dining and kitchen areas on the ground floor, as well as spacious bedrooms with en suite bathrooms upstairs. Additionally, each upper floor boasts ample common areas that can be used as family or hobby rooms. A home that accommodates the whole family, each villa also has an annex, which is wheelchair accessible from the main house, containing the guest or parent’s suite. With a covered porch for 3-4 cars and a home lift within the villa to facilitate vertical travel between the three floors, Park Manor truly caters to the varied and evolving needs of today’s modern family. Tan & Tan head of Sales and Marketing Fern Chong, said, “Park Manor is the latest addition to the exclusive Sierramas community, offering residents large family-sized homes


in a gated and guarded development. With direct access to the city, close proximity to a wide range of amenities, and with selling prices ranging from RM4.0 million to RM5.2 million, we expect to see strong interest from local buyers and residents in the Sungai Buloh vicinity.� Unique also to Park Manor is a design concept rooted in sustainability. In addition to each unit having its own water harvesting system for the irrigation of their private garden, each villa benefits from bright, natural lighting as well as ventilation, allowing for a comfortable living space and lower energy consumption. Complementing the greenery and private meandering foot paths are common facilities for residents to enjoy. These include a beautifully landscaped jogging path, a clubhouse, children’s wading pool, as well as an infinity edge lap pool and lounge deck.

Artist Impression of Streetscape

RESULTS FOR Q3 2014 KNIGHT FRANK ASIA-PACIFIC: PRIME OFFICE RENTAL INDEX INCREASED 1.2% IN THE THIRD QUARTER OF 2014, FOLLOWING A DROP IN THE PREVIOUS QUARTER Vacancy rates fell or remained steady in 15 of the 19 markets tracked, leading to a 0.2% drop in the regional vacancy rate, which now stands at its lowest level since Q4 2008

Tightening vacancy rates across the region are spurring a more widespread rental recovery. Downside risks remain in the region, including the Chinese slowdown, deflation in the EU and the impact of tightening monetary conditions in the US and the UK. - Mr Nicholas Holt, Knight Frank Head of Research for Asia Pacific | JANUARY 2015



10 JANUARY 2015 |

When Tun Mahathir Speaks Our esteemed former Prime Minister of Malaysia talks about the property industry, his concerns and the ideal time for home ownership By: Zuhaila Sedek-De Booij

hen he was a boy, Tun Dr Mahathir Mohamad shared, there was no property industry. Back then, after Independence, people preferred to live where they were doing business. It was common for people to live on the top floor of their shop houses and ran their businesses on the lower floor. There was no property being developed as such. “People didn’t expect that they should be in different places to do their business or to live. As they became more prosperous as business traders and retailers, they preferred to live away from their business. That’s how it all started,” he said. Tun Mahathir, many may not know, was among the first property developers in his hometown Alor Setar, Kedah. In 1964, he built a string of semi-detached houses - about 24 of them. “I was the second developer in Alor Setar… the first was a religious teacher named Ali Mukhsin,” he told. Tun Mahathir’s stint in property development was inspired by the religious teacher’s initiative. At that time, his sisters owned a piece of land in Alor Setar and he managed to persuade them to transfer the land to him. “In return, I gave them each a pair of semi-detached house,” Tun said about his debut in real estate. To him, as people became more affluent, they would want a better living condition so the industry picks up as there is demand and this, overtime, improves the quality of properties. “Today, property business has become a very big business and everybody wants to go into it because they can make good margins in their profit,” Tun Mahathir said, adding, “I should make money too when I was a developer but I am not good at collecting money. I borrowed money to build the houses, but some [tenants] didn’t pay,” he said and laughed.

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REAL ESTATE, PEOPLE AND THE ECONOMY Property development is a profitable industry and Tun Mahathir believes this is what attracts many to enter as a player in the industry. “Because everyone wants to be in the property market, there have been many instances where they overbuilt. This has happened in Tokyo, Hong Kong and recently in Dubai. Their governments did not regulate the industry. They allowed private sector to make Government’s decision and of course, the private sector seeing the profit they can make, they go and take the risk and hope to make a good return. My one fear is that we might overbuild in both commercial as well as housing. That is dangerous,” he shared. The ex-Prime Minister said that although there is a shortage in affordable housing, that is not the case in luxury developments. “That is because affordable housing by implication is not as profitable as luxury houses. If you have a piece of land and you can make a lot of money, why should you limit your profit? So, developers choose to do luxury homes to make money over affordable housing which gives you a lower return,” he said. He added that the government must be a little bit forceful in the delivery of affordable housing and make sure all the development plans submitted include affordable houses. “But you see when you are building very high-end houses or luxurious developments, you do not want it to be next to low cost flats. That is the problem… they must find a way to solve that. And when you mention affordable housing, people question whether it is affordable or not. Of course, it is not affordable for some people and affordable only to some others,” he said. Tun Mahathir is a strong believer that low income people should only buy a house if they can afford or are able to borrow the money for it. He opposed to the idea of ‘house-owning democracy’. “People should not always

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NOT EVERYBODY SHOULD THINK ABOUT OWNING A HOUSE UNTIL THEY COME TO A STAGE WHERE THEY HAVE SUFFICIENT MONEY TO OWN A HOUSE. YOU CAN’T HAVE A COUNTRY WHERE EVERYBODY LIVES IN A ‘HOUSE-OWNING DEMOCRACY’. I DON’T BELIEVE IN THAT. – TUN MAHATHIR own houses. You should wait until your income has increased. Some used to think that the moment you graduate, you should have a house of your own. You should learn to live in rented premises first. And when you have enough capital, only then you should buy a good size house that you can afford. But we have people who keep on saying that we must buy houses. “If everybody owns a house, who is going to rent the houses in the market? There is a need for houses to be built for rental and there is a need to own houses but only at a later stage in your life, when the income is sufficient. In many instances, when the income grows people need to get rid of the old houses in search of a better house,” he mentioned. “This is why I said not everybody should think about owning a house until they come to a stage where they have sufficient money to own a house. You can’t have a country where everybody lives in a ‘house-owning democracy’. I don’t believe in that,” he reiterated. He believed that to expect young people to own a house when they are just beginning in life is not realistic. “It is like owning a car. If you don’t have money, you don’t own a car, you have to own a bicycle. If you don’t have money but you still insist, then

you get into debt and then you have problems,” he advised young people. “Learn to be content to live in rented premises first. Later on, when you accumulate enough money, then you can buy your own house,” he added. To developers, Tun Mahathir implored: “Please be careful and not to over-build. You must always look at the statistic and look at the demand, because if you build and there are no buyers, that will cause the bubble to burst. This happened recently even in Dubai. Over there, what happened was, the moment they announced a project people would buy - because the price was low. Then as they build and the price goes up, they will sell it. They are all speculators who don’t want to live in the property. In the end, all the buildings were empty.” Tun Mahathir admitted that during his tenure as Prime Minister, he did talk about the Build-Then-Sell system. “Of course it is a burden to the developers because they have to bear the cost of financing. I must say, during my time, I tried to have progress payment from the buyers and the buyers were not very happy to do that. They wanted to buy at the end of it. But it is a good system… it is a way of expediting the construction,” he reflected. Rent-to-Own scheme, he thinks, is a good idea too. “It depends on how long it takes, because if you pay no rates, then it takes time before the payment is finished and you can begin to own the building. Recently, the government has introduced a program where people who can’t afford to buy can rent for the time being until they are able to move

out. Such system could be done quite nicely. People can rent there before they get married, or even after they get married and are waiting to have children,” Tun Mahathir shared. When one owns such rental flats it is imperative to contribute in terms of the management of the common usage. “You see, I have a house in The Mines and in Country Heights and I pay for the maintenance. Otherwise they [tenants] won’t cut the grass and won’t

look after the place,” he said. “We should also have more housing property-managing companies. Working individuals are usually not capable of looking after their property,” he added. To improve people’s affordability for a home, they need a pay rise. Tun Mahathir cautioned that a pay rise must be accompanied by increase in productivity. “If you just give a pay rise without increasing productivity, it will create inflation. Higher productivity can come through investment in new facilities through turn-around schemes and all that. Then the company and the government make money and then the Government will have the money

to give pay rise. But when you give pay rise without the consideration of productivity, then you will have a problem,” he warned. “There are not enough opportunities for people to make money. The increase in income must be accompanied by higher productivity and greater effort. This is entirely possible,” he said optimistically. “I would like to support the [2015] Budget and everybody says it is good, but the emphasis is not on productivity. The emphasis is on high income and a good life. High income comes not from productivity but by raising the income without any regard to productivity,” he believed. When asked about Bumiputera discounts, on whether it should reach Bumiputeras who really need it and not otherwise, the former Prime Minister answered, “Normally, there are not enough Bumis who can take up this (discount) and even with the discount they still cannot afford it. This is why Khazanah was created to own up properties that the Bumiputeras cannot buy. This has been a problem that has not been resolved except if you boost the wealth of the Bumiputeras. They must have wealth, maybe not as high as the Chinese community. They must have the wealth so they can buy property. This is why we introduce the New Economic Policy (NEP). If the Bumiputeras have as much wealth as the others, then they may not even need the discount in the first place. We can do that for them. For me, it is far better rather than giving them money. | JANUARY 2015



“This is why it is better to give them opportunities and train them. Some of them have done really well. I met this chap, he produces chocolate and he is rich. He is a Bumiputera and he has succeeded. Others can do well too provided that we train them, give them opportunities that are within their means,” he said. There were cases where citizens who were trained then decided to leave the country. This resulted in a brain-drain for the nation. “We have to accept that some people may have to migrate, some may have to stay in the country. But at large, they have benefited the country. Today the disparity between the rich and poor is much less. And between races also… foreign ambassadors had asked me, there are so many races in the country, how is it we are able to stay stable? I said, because we share the wealth and political


power in this country. That is why there is no open fight, there is some tension but to take to the streets and kill, this doesn’t happen here,” Tun Mahathir said.

Transforming City Centres Tun Mahathir’s aspiration towards city centres is progressive. This is evident when it was during his administration when he brought about many iconic developments and projects such as the Kuala Lumpur City Centre (KLCC) and

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the MRT project. He thinks that such developments could bring more people to live in the cities. “Our policy before is to have people living in the city because we noticed in America, for example, their Central Business Districts will be empty after 5 p.m. and this is dangerous. When the place is empty, you may have to be cautious when you’re there. We want the central area to have people day and night. They can live there and they don’t have to go far to work, they can even walk even to work and the town would become lively. Otherwise, by 5 p.m. everybody goes home. “This is beginning to happen in Putrajaya. There used to be only government buildings there but now the area is changing. Not in Japan though, because the Japanese work until 9pm. That’s why everything is bright,” he shared. He agreed that it is extremely expensive for majority of Malaysians to live in the city centres. “That is quite right. Only people who can afford it should live in city centres because. But, even if they build housing estate that is five miles away from KL, for example, it can still be expensive and people still cannot live there. So we have to expect that, in life, you move up. As you earn more, you move far and eventually you sell what you have and buy a better one and maybe you live in the city centres,” he argued. KL city centre has expanded and evolved to become the Greater Kuala Lumpur but there are parts in KL city that could be improved, he thought. A

Tun Mahathir with Property Insight Malaysia publisher KK Chua

good example is Kampung Baru. “It is so difficult to develop Kampung Baru because you can’t trace the owners of the land, but you can still develop the area. Maybe you can have an escrow and give them (land owners) some of the buildings that have been developed. They can live there and own some shop houses and still have an income. To have Kampung Baru in the middle of a city like KL is shameful – you look up and you see all these zinc roofs. I used to tell my visitors when I was Prime Minister that those (Kampung Baru residents) are millionaires because they put up a hut on a piece of land that costs RM3,000 per sqft. A piece of land that costs that much should be used for luxury developments or high rises. Unfortunately, because of their (land owners) attitude, they make it difficult to develop. “Instead of giving them money, you give them property and they can stay there. At the very least they can rent out and run their businesses.

The problem is the people, because you can’t trace them in the first place. Some may have probably deceased or might have dispersed elsewhere. But for me that is something that can be solved through legislation. You legislate that if you can’t trace the owner after a certain time, you can acquire the property and put the money in an escrow, in a fixed deposit, where the money can grow,” he believed.

Satisfaction Over KL Among Malaysians, Tun Mahathir‘s name is etched as the ‘Father of Modernisation of Malaysia’. When asked about how it makes him feel to look at KL today, he said, “I didn’t dream for KL city to be like this at all. This progress happened rightfully by itself. As people become richer, they are going to build buildings. Before 1981, very few high rise buildings were built. There were only Standard Chartered bank, Federal Hotel, Merlin Hotel and American International - simply because a lot

of projects didn’t get approved. I told the then-Datuk Bandar, ‘You have to approve these projects and if you don’t approve, you must explain to me why.’ “Suddenly you see all these cranes all around KL. There was not a single crane prior to that. Even today, you can still see cranes everywhere. If you make it easy for people to get approvals, then there is growth. I didn’t dream, in fact this is beyond my dream. I never thought KL would grow like this,” he shared. “You can’t help but to feel happy that what you hoped for has materialized,” he reflected. “I believe in job satisfaction, not in money that I earn. You know the money I used to earn as a Prime Minister was very little compared to private sector. When I became Prime Minister my pay was RM8,000 in 1981….Money is not everything. Seeing something grow is satisfactory. You cannot help but to feel satisfied to see these buildings come up,” he said. | JANUARY 2015








Despite relatively a quiet year, 2014 brought several new developments in the property industry he year of 2014 has been filled with developments in the property market that have impacted developers, businesses, investors and home buyers alike in both positive and negative ways. The second round of subsidy cuts for RON95 petrol and diesel took place a year after it was first taken on Sept 3, 2013. Subsidies were cut by 20 sen per litre for RON95 petrol and diesel from Oct 2. Petrol was later left to a floating market price beginning Dec 1. With two rounds of increases in petrol and diesel prices come the ripple effect of increasing not just the cost of transportation, but also other costs associated with petrol and diesel. The rise in cost of living is expected to have an impact on the disposable income of home buyers. Likewise, the rise in the cost of doing business is also expected to have an impact on the profitability of businesses, assuming they are unable to pass over the increased costs to their customers.


18 JANUARY 2015 |

Combined with the increase in the overnight policy rate (OPR) by 25 points to 3.25% in July by Bank Negara Malaysia, these measures are expected to reduce the risk appetite of home buyers and investors, and they could behave more conservatively when making property purchases.

Curbing foreign purchases On a different note, the policy to raise the floor price of properties for purchase by foreigners from RM500k to RM1million was first proposed during the Budget 2014 announcement in October 2013. Since then, the policy was implemented and took effect from March 1, 2014, in Kuala Lumpur, Labuan and Putrajaya. The policy took effect from May 1 in Johor to give more time to developers to sell their residential properties offered to foreign buyers at the previous minimum floor price of RM500k per unit. Foreign buyers were exempted

from the minimum price threshold of RM1 million in Medini. Furthermore, the state government of Johor had introduced a two percent levy on foreign property buyers in May. This was followed by new guidelines for property purchases by permanent residents, foreigners and foreign companies within Selangor, which took effect from Sept 1, 2014. Outlined in a circular that was dated Aug 28 and signed by Department of Lands and Mines Selangor director Datuk Kamarulzaman Jamil, the new guidelines generally restrict foreigners from acquiring all types of properties costing less than RM2 million in most of the state’s districts. Under the new guidelines, commercial, industrial and residential properties are divided into three zones. Zone One includes the districts of Gombak, Petaling, Sepang, Klang and Hulu Langat, while Zone Two encompasses Kuala Selangor and Kuala Langat. Zone Three covers the districts of Sabak Bernam and Ulu Selangor. In Zone One and Two, foreigners, permanent residents, and foreign companies are permitted to acquire properties with a minimum price of RM2 million, while in Zone Three, the minimum price remains at RM1 million. Media reports had also indicated new barriers on the type of properties that foreigners, permanent residents and foreign companies may buy. Foreigners, permanent residents and foreign companies are only permitted to acquire strata and land strata properties only. In the case of the commercial and industrial property sub-sector, foreigners, permanent residents and foreign companies are only allowed to acquire properties priced from RM3 million in all three zones. They are prohibited from acquiring properties set aside for bumiputras. For non-bumiputra units, they can acquire not more than 10 percent of the said units. They are also barred from buying Malay reserve land, agricultural land, non-strata landed residential, and auction properties. While these measures are intended to curb foreign investment into affordable housing for the low and

With up 75% of Malaysian Households in the Klang Valley able to afford to buy properties at prices not exceeding RM200,000 (2013 prices) any Malaysian Federal Government Affordable Homes Scheme that aim to assist buyers to purchase properties at prices exceeding RM200,000 will not succeed and will fail. - Cheong middle-income populace, such measures may send the wrong signal to foreign investors who are keen to invest in the Malaysian property market. Such investments could contribute to the country’s economic growth. In addition to this, such measures may deter foreign talent from settling in the country, and such talent is sorely needed to drive economic growth.

Silver lining among the grey clouds However, several measures that could give a positive impact to the real estate industry and promote home ownership were introduced during the recent Budget 2015 announcement. The government had extended the 50% stamp duty exemption on the instrument of transfer and loan agreements, and increased the purchase limit from | JANUARY 2015


FEATURE RM400,000 to RM500,000, to enable more people to own their first home and reduce the cost of purchase. The exemption will be given until Dec 31, 2016. In line with this development, My First Home Scheme, under the purview of Cagamas, has been improved with the ceiling price raised to RM500,000. Home buyers should be pleasantly surprised with the introduction of friendly home-buying schemes. The Youth Housing Scheme, which involves a smart partnership between the government, Bank Simpanan Nasional, Employees Provident Fund, and Cagamas, offers a funding limit for a first home not exceeding RM500,000 for married youth aged between 25 and 40 years with household income not exceeding RM10,000. The maximum loan period period is 35 years. Under the scheme, the government will provide monthly financial assistance of RM200 to borrowers for the first two years to reduce the burden of monthly instalments. The government will also give a 50% stamp duty exemption on the instrument of transfer agreements and loan agreements. The government will also provide a 10% loan guarantee to enable borrowers to obtain full financing including cost of insurance. Borrowers can also withdraw from EPF Account 2 to top up their monthly instalment and other related costs. The scheme is offered on a ‘first-come

20 JANUARY 2015 |

first-served basis’ for 20,000 units only. In addition to building 80,000 residential units under the 1Malaysia People’s Housing Programme with an allocation of RM1.3 billion and raising the ceiling of household income to RM10,000 for applicants of the programme, a rent-to-own scheme has been introduced specifically for individuals who are unable to obtain bank financing. Rent-to-own schemes are available in countries such as the United Kingdom, and they help to encourage home ownership for those who are less well-to-do. REI Group CEO and co-founder Dr Gambero is optimistic of the announced Budget 2015. “I keep on saying to people, when you go and invest or buy property for investment, you make sure you look for those projects where there are three to five of the primary banks financing, and where the margin of financing is 90% or about. The one that is 80% or 70% margin of financing is because the developers are marking the price up too much,” Gambero says. The most important is that developers must be more responsible in what they are produce and offer to match the demand with supply. According to him, “If they are saying they are giving anything for free, it is because the house price has been marked up. If they say, for example, “I give you a unit of fully furnished for free,” it’s because it has been marked up. If they pay for your

legal fees and stamp duty on the loan agreement, it’s because it has been marked up. Now, if you look at the statistic over the price index during the last of 24 months, you will see that once you clean up the value of this freenot-so-free things, the house price index smoothly goes up with one digit, not two digits, as the real values are actually showing.” Gambero claims that the price of the properties in Malaysia is indeed increasing, but in a slow pace and healthy way. The unhealthy part is when those irresponsible people mark up the price too high, and the “flipping habits of the unscrupulous speculators we’re having.” He hopes that the rent-to-buy scheme in Malaysia should be more for the medium low cost than low cost unit, and hopefully it will be properly targeted in terms of the market segment. Veteran property consultant and former MIEA president Dr Ernest Cheong tells Property Insight, “As the name suggest, any ‘Affordable Home Scheme’ initiated by the Malaysian Federal Government must be affordable.” He adds, “With up 75% of Malaysian Households in the Klang Valley able to afford to buy properties at prices not exceeding RM200,000 (2013 prices) any Malaysian Federal Government Affordable Homes Scheme that aim to assist buyers to purchase properties at prices exceeding

RM200,000 will not succeed and will fail.” Cheong calls for private sector developers to be released from their obligations to build and sell affordable homes at unprofitable ceiling prices or even below their cost as a condition for granting them Approvals for their Land Use Conversion Applications and Approval for their Development Plans. “Thus released of their obligations to build and sell affordable homes at unprofitable ceiling prices or even below their cost, private sector developers would then be free to carry on with their property development activities and accordingly reduce the selling prices of their high priced properties because they no longer have to subsidise the building and selling of affordable homes at below cost and a more equitable and sustainable housing market for Malaysians may emerge,” Cheong says. | JANUARY 2015



The Burden of Households

Study indicates greater disparity between income and home affordability


hazanah Nasional Bhd recently rolled out an unflattering report on the state of Malaysian households. The study found that 74% of Malaysian households earn less than RM6,000 per month and house prices in general have gone up beyond the affordable levels of most households. A household with an RM6,000 monthly income is unlikely to be able to afford a home costing more than RM400,000. The commonly accepted definition of affordability is three times median income, but Malaysia’s houses on average cost much more than that. “In median income terms, our houses are more expensive than those in Ireland and even Singapore. At 21%, the profit margins of our property developers are high – almost 2x those of the US (12%), 1.2x those of the UK (17%) and higher than Thailand (14%), although Singapore has higher margins (25%),” the report said. “Over and above their usual expenses, households also have to make loan instalment payments, which are approximately 18% of their income at current interest rates. The recent hike in interest rates has increased the monthly loan instalment for households by 2% and they remain susceptible to further interest rate rises,” it added. Data from investment fund Amanah Saham Bumiputera

(ASB) last year also revealed that the bottom 71.4% of account holders have only an average of RM554 in the fund, the report noted. The study’s conclusion was reinforced by the national household income survey (HIS) data on individual income registered with the Employees Provident Fund (EPF) in a joint paper released earlier by the University of Malaya (UM) and Khazanah Research Institute. According to data provided by the EPF on employees’ total income, 74% the active EPF members earn less than RM6,000 per month. About 55% earn less than RM4,000 per month and 23% of its active members earn less than RM2,000 per month. “We obtain evidence of steadily rising earnings inequality in both private and public sectors in the 2000s,” said UM department of development studies senior lecturer Dr Lee Hwok Aun and fellow author Khazanah Research Institute director of research Dr Muhammed Abdul Khalid. “Property sales also show rising concentration in the upper rungs,” they noted on the development of luxury buildings, and pointed out the top 10% of property buyers controlled more than 40% of the total value of property purchases in 2011, up from 35% in 1997. The share of the bottom 20%, however, hovered at just below five percent throughout that period. Khazanah’s State of Households report also revealed that

Housing Affordability of Malaysians in 2012

Bottom 40%

Middle 40%

Average Income (RM)




Median Income (RM)













Affordability Data

Affordable price @ 3x annual median income (RM) No. of months to save a 10% deposit in EPF a/c 2 Monthly loan instalment (25 years @ 4.45% p.a.) (RM) Instalment/median income Source: Khazanah State of Households Report 22 JANUARY 2015 |



Malaysia median


Data of Active EPF Members EPF Members Household Income

Source: Khazanah State of Households Report

Malaysia has one of the highest household debts as a percentage of gross domestic product (GDP) in Asia with the ratio exceeding 86%. According to Khazanah’s findings, households earning less than RM3,000 have debts at seven times their annual income, rendering them vulnerable to fluctuations in interest rates and inflation. Economists are expecting both interest rates and inflation to hit Malaysia in 2015. Inflation, which results in lesser disposable income, is projected to rise due to the implementation of the goods and services tax (GST) in April. An interest rates hike next year is anticipated in tandem with the expected rise of interest rates in the United States after an end of US Federal Reserve quantitative easing programme in October last year.

Housing Prices as a Multiple of Annual Median Income Source: Khazanah State of Households Report | JANUARY 2015


FEATURE No. of Household Income Category in 2012 ( thousand) Bottom 74%

No. of Households per Household Income Category (thousands)


Top 10%

Others Indian



600 Bumiputera



10k and above

8k - < 9k

7k - < 8k

6k - < 7k

5k - < 6k

4k - < 5k

3k - < 4k

2k - < 3k

1k - < 2k

< 1k


Household Income Categories in RM 48

DoS (2011b) and (2013a), KRI calculations

Median and Average Monthly Household Income and GDP per Household per Month in 2012 (RM)






N. Sembilan



























Average Monthly Household Income

Source: Khazanah State of Households Report

24 JANUARY 2015 |















P. Pinang












K. Lumpur


GDP Per Household Per Month


Median & Average Monthly Household Income

Median Monthly Household Income, actual


FLOATING FUEL PRICE Beginning Dec 1, the Malaysian petrol is priced to market value. How will the new mechanism affect the bottom line of property buyers?

Elizabeth Siew

Chris Tan

Jeffery Lam

Gary Chua

Uncertainty Factor

Budget assumptions

Be smart

Financial management vital

Floating fuel price means that the price will go up and down – it’s uncertain. When property buyers want to invest, they need to look at the three to five years to come. They also have to look at where the prices will go in about five years to come. So the floating fuel price also affects the property buyers, because they have to wait to buy the properties. They become uncertain whether to buy or not. It’s the uncertainty that will affect the property buyers.

Floating fuel price will affect the cost of doing business and for construction that relied quite heavily on fuel in logistic and powering the equipment. Developers need to make feasible assumptions on this item in their budget to ensure their pricing remains competitive. My view is that it would have an effect on the pricing but would be negligible in the greater scheme of things for the property buyers. After all, the key drivers in pricing anything are the market force: the demand and the supply.

In my opinion, the fuel price whether it is subsidised or not, life still has to go on. Don’t get distracted too much. As smart property buyers, the most important matter is that we need to understand our own financial situation before purchasing any property. Only GO when you are ready! And, find more ways to generate better income to overcome all these challenges. When you have a solid income, you just read that [fuel prices] as news, and it won’t affect you much. Be a smarter property buyer!

Floating fuel mechanism leads to the fluctuation on fuel price, which means petrol price may go up or down. This indirectly causes inflation when fuel price increases, the price of goods and services will also go up in tandem. However, when fuel price decreases, price of goods and services will normally remain status quo. Consequently, we will need to tighten our belts in the face of tougher days ahead. A good command and knowledge of financial management skill will help you to ride with the tide.

Advocate and Solicitor

Founder and managing partner of Chur Associates

Co-Partner at Smart Investor Club

Property Investor | JANUARY 2015



Rent-to-Own By: Syamil Zahari

With most Malaysians unable to buy a house, an alternative exists to fit their budgetary needs and help solve myriad of affordability problems ffordability has increasingly been a major issue in Malaysia’s property industry. The recent Khazanah’s State of Households report further reinforces the view that low to middle income earners in Malaysia are falling behind in their ability to purchase affordable homes. The federal and state governments have announced several measures to tackle the problem. Prime Minister Dato’ Seri Najib Tun Razak in his Budget 2015 speech outlined several measures to assist low income and first time home buyers which included, among many, a rent-toown (RTO) scheme. Last December, the State of Selangor followed suit with an announcement on its own rent-to-own programme through the launch of DanaSel, even though at a smaller experimental level, targeting only a handful of low income folks. REI Group of Companies CEO and co-founder Dr Daniele Gambero has been a consistent voice in Malaysia’s housing affordability issue. “I’ve written previously about how the government can stop putting the burden of low-cost housing on the shoulder of developers. Low cost [housing]


26 JANUARY 2015 |

should be handled by the government on a rent basis, or rent-to-buy basis,” he told Property Insight. Government should reconsider selling low-cost flat and apartment units, and simply rent them out, Gambero suggested an alternative. The renters will enjoy a more livable environment while paying more affordable prices compared to the loan repayment and the rental will allow a more flexible monthly family budget, according to him. However, not much is understood – by buyers and owners/developers alike – about the mechanism of a rentto-buy structure and how both parties can benefit. Wealth Mastery Academy speaker BK Khoo, author of the upcoming book ‘The 9 to 5 property Millionaire’ and one of the first property investors to implement Lease Option strategies in Malaysia, said that rent-to-own is quite simply a two-part agreement between a landlord and a tenant. “The first part is related to the ‘Rent’, where the tenant rents the property from the landlord via a regular lease or tenancy agreement. The second part is an additional condition, which is the option to buy the property in the future or, in other words, allows the tenant ‘to Own’ the property in the future,” he explained to Property Insight.

Therefore, in a RTO arrangement, the landlord is now not only a landlord, but a ‘Landlord-seller’. Similarly, the tenant is not just a tenant, but now a ‘Tenant-buyer’, he said. HOW DOES IT BENEFIT THE LANDLORD-SELLER? RTO, Khoo believed, can solve one of the biggest challenges faced by investors in Malaysia at the moment, which is low rental yield. Property prices have been appreciating significantly since 2009, and unfortunately for investors rentals have yet to keep up, hence the reduction of rental yield over time. “With this reduction of rental yields, loan repayments are now commonly higher than rental income and as a result many landlords are now having to pay the bank out of their own pocket and are in a negative cash flow situation every month,” he said. “A negative cash flow situation is not ideal for an investor because it then puts a limit on how many properties you could own. Also, an investor who has negative cash flow needs to ensure that he/she has income from another source, whether from employment, business, etc to be used to pay the bank,” he added. In the unlikely and unfortunate event that the other income source is not sufficient to offset the negative cash flow from the property, landlords then run the risk of missing repayments which damages their credit rating or worse still run the risk of having the property



repossessed, Khoo explained. One of the key differences between RTO and property purchase is that a Landlord-seller agrees to sell to a Renterbuyer at a fix current price. “In exchange for giving the tenant-buyer the opportunity to purchase the property at a fixed price in the future, it is fair for the tenant-buyer to pay the landlord-seller rental that is higher than the current market rent. And the excess amount becomes the ‘rent credit’. The higher rental should now create a positive cash flow for the landlord-seller,” Khoo added. Additionally, since the repairs and maintenance of the property now fall under the responsibility of the tenantbuyer, the landlord-seller does not need to worry about being | JANUARY 2015




How Rent-to-Own works By: BK Khoo he part that is new to most investors is the â&#x20AC;&#x2DC;optionâ&#x20AC;&#x2122;, which is the part that gives the tenantbuyer the opportunity to purchase the property in the future. For an option to be valid, there need to be three elements that must be agreed up front. These elements are the option price, the expiry date, and the option fee or sometimes called the option consideration. The first element, the option price, is the price that the tenant-buyer would need to pay to purchase the property from the landlord-seller in the future. This price should be fixed to allow the tenant-buyer the certainty of the price and protects against any significant increase in property value. At the same time, the landlord-seller is guaranteed a reasonable profit on the property when the tenant-buyer purchases the property in the future. The second element is the expiry date, which is the date when the agreement will terminate. Once the agreement expires, the tenant-buyer then no longer has the right to purchase the property at the option price. This then sets a time frame for the tenant-buyer to work towards owning the property. The third element is the option fee, which is sometimes called the option consideration and is a requirement to make the contract valid. This will be discussed again later on as it is linked to the next part of the Rent-to-Own agreement. The next part of a Rent-to-Own agreement is quite straight forward, which is the tenancy/lease agreement. In general, the terms and conditions are similar to any other


28 JANUARY 2015 |

lease or tenancy agreement but with three main differences. The first difference is that in the case of a Rent-to-Own agreement, instead of a paying security deposit, which is refundable, the tenant-buyer pays the option fee, which is non-refundable. The exact sum is flexible and can be equal to two- or three-month rental or can even be a fixed percentage of the agreed purchase price. This fee should be credited to the tenant-buyer when the tenant-buyer exercises the option to purchase in the future. In other words, this option fee will be considered as part of the payment when the tenant-buyer purchases the property. The second difference is that the tenant-buyer is now responsible for the repairs and maintenance of the property. As the tenant-buyer is now renting to own the property, things such as broken windows, clogged drains, leaking pipes, peeling paint, all must be fixed by the tenant-buyer. Of course, in cases of very major repairs that affect the structure of the property, then the both parties need to work together to resolve it. The third difference is that in a Rent-to-Own agreement, the tenant-buyer can accumulate what is called rent credit, which means the rent is credited towards paying for the property in the future. This allows the tenant-buyer to build up the required down payment over a period of time. Of course, it is important that the tenant-buyer pays the rent in a timely manner, otherwise the landlord-seller is not obligated to give any rent credit. Furthermore, if the tenantbuyer is constantly late on payments, then the option to purchase the property should be declared null and void.

called at an inconvenient time for minor issues, Khoo said, and owners with highmaintenance properties may therefore also find RTO an attractive alternative. “On top of that, as the tenant-buyer needs to pay on time to accrue rent credit, it becomes very unlikely that the landlord-seller needs to chase the tenant-buyer for payment. So, ultimately, the landlord-seller does not need to actively manage the property other than monitoring from time to time that the rent is being paid and the property is maintained in good condition,” he added. As an added bonus, as “Rent-toOwn” agreements tend to be long term agreements, Khoo said, and this could help the Landlord-seller plan his taxes since Real Property Gains Tax is only applicable for properties that are owned for less than five years.

HOW DOES IT BENEFIT THE TENANTBUYER? To best understand how it will benefit a tenant-buyer, it is best to understand who is a tenant-buyer. A tenant-buyer is someone who wants to own a home but is unable to purchase a property at the moment. The reason for being unable to purchase a home varies and is specific to each individual, but the two most common reasons are because he/she does not have enough savings to pay for the down payment, or because the buyer cannot qualify for a home loan. The biggest challenge for a buyer is actually time and inflation. Inflation causes property prices to increase over time, and this becomes a moving target for the buyer. The specific challenges differ depending on the specific circumstances of the buyer, so let’s look at some examples on how time and inflation affects a buyer’s ability to purchase a home.

For Rent-to-Own to be properly implemented, there are two key criteria that need to be fulfilled, according to Khoo. “The first key criteria is that both parties fully understands the concept of Rent-to-Own” before entering into the agreement. At the very least, the landlord-seller must be able to explain it clearly to the tenant-buyer when they are negotiating the terms of the agreement. It is quite uncommon for a tenant-buyer to be competent enough to explain the concept to the landlordseller, unless the tenant-buyer is an investor,” Khoo said. The other key criteria is that once terms are agreed, the agreement must then be properly documented in a contract that is prepared by a lawyer specializing in Rent to Own

transactions and signed by both parties, Khoo suggested. “This is done to protect the interests of both parties and avoid unnecessary disputes from coming up in the future,” he said. While RTO measures from the federal government and the Selangor state government will only, at least for time being, focus on low income earners who are unable to apply for loans, the general idea of RTO itself is a feasible alternative for certain owners and developers to attract middle-income home buyers. It is yet to be seen, however, whether the Rentto-Own scheme as widely practiced in the Western world will be adopted as a permanent measure in Malaysia as an innovative solution to home ownership.

Example 1 is in the case of a buyer who does not have enough money for the down payment. As the buyer does not have the required down payment today, he/she will need time to accumulate the required RM50,000. However, due to inflation, property prices will normally rise. So, assuming the buyer is able to put aside RM10,000 per year, he/she would need five years to accumulate RM50,000 However, during that time, the property price could have increased to RM600,000 (or maybe more), and the down payment required has now increased to RM60,000. The buyer therefore cannot purchase the property but needs to continue saving more money. It is quite clear though, that for someone who does not have required down payment today, it is a big challenge to accumulate the required down payment for the future. Example 2 is in the case of a buyer who does not qualify for a loan due to insufficient income. For a loan of RM450,000, the monthly repayment is RM2,320 assuming interest rate of 4.65% (BLR-2.2%, with BLR = 6.85%) and loan term of 30 years. To qualify for this, the buyer needs to have a net

monthly income of more than RM7,000 based on the limit of repayment must be less than 33% of borrower’s net income. Assuming a similar scenario that it takes the buyer five years to achieve a net income of RM7,000 per month, this would not be sufficient if the property price has increased to RM600,000 and the maximum loan is RM540,000, which now requires a net monthly income of more than RM8,400 (assuming the same interest rate or 4.65%, loan term of 30 years and limit of 33% of borrower’s net income). From this, it is clear that the buyer needs to increase his/her net income quickly and hope that other factors, such as interest rates and maximum loan terms, at the very least remain unchanged. Therefore, in summary, the tenantbuyer in a Rent-to-Own deal pays a higher rental each month and an option fee up front in exchange for a fixed purchase price, which protects against rising property prices. At the same time, the higher rental is not lost as the excess amount is converted into rent credit which is then used to purchase the property when the time is right. | JANUARY 2015




UNSCRUPULOUS AGENTS By: Aidil Mohamad Noor & Fara Aisyah

30 JANUARY 2015 |

n Malaysia, one has to be registered with the Board of Valuers, Appraisals and Estate Agents (BOVEA) in order to legally carry out estate agency practice. Once registered and given an authority to practice by way of an official Certificate, a registered estate agent is regulated by the Board of Valuers, Appraisals & Estate Agents Act 1981, the Rules 1986 and The Standards. The objectives of The Act, the Rules and The Standards are to ensure that all registered estate agents to conduct their estate agency practice in an ethical and professional manner whereby the image of the profession will be upheld at the highest level and the interests of the general public will be protected. But, there are certain cases where the agents are so-called ‘unscrupulous’, in which these kind of agents are those who “pretend” to be an agent, when they are not. Property Insight talks to a few real estate principals to find out more about unscrupulous agents.


WHO ARE UNSCRUPULOUS AGENTS? Unscrupulous agents are those who conduct their estate agency practice in breach of the provisions of the

Board of Valuers, Appraisals & Estate Agents Act 1981, the Board of Valuers, Appraisals & Estate Agents Rules 1986 and the standard of practice set out in The Malaysian Estate Agency Standards, with total disregard to the interests of their client for their own selfish gains. “In my opinion, the bulk of these unscrupulous agents are made up of persons who are practicing estate agency business without the authority from the BOVAEA,” Property Hub resident manager Wan Choy Heng explains. “These people are commonly referred to as “illegal brokers”. Unsuspecting public engaging the services of these illegal brokers run the risk of being left high and dry in the event of a dispute in the middle of a transaction,” he says. These illegal brokers very often will disappear without a trace in the event of a dispute, sometimes together with earnest deposit, leaving behind both the vendor and the purchaser helpless with no recourse because the business operations of these illegal brokers are not authorised by the BOVAEA, according to Wan. Because of their illegal status of business operation, unscrupulous agents are being irresponsible putting their client’s interest at risk in the event of a legal dispute during the


process of a property transaction. In pursue of their selfish gains in the expense of their client’s interest is a gross breach of ethic in any business sense, Wan says. Fong Wai Choon, director of Reapfield Properties (Hartamas), agrees. “With effective from 1 June 2014, all negotiators will also need to register with the Board via their companies they work with and they will be issued an Authority to Practise Tag after undergoing the necessary training. The public can ask the agents/ negotiators to show them their tags before engaging them to provide the real estate services,” she says. According to Fong, “Unscrupulous agents are those that do no act in their clients’ best interest. They will conduct their business with deception and

TIPS ON DEALING WITH AGENTS As a consumer, what must you do? ⚫ Always deal only with Registered Estate Agents ⚫ Insist only on dealing with the Agency itself ⚫ Never deal with individuals ⚫ Never pay deposits in cash

⚫ Always insist on a receipt ⚫ All offers made should be on official letterheads ⚫ Try as much as possible not to agree terms on the “Offer to Purchase” ⚫ Insist on REN number ⚫ Always ask for their tag ⚫ NO TAG NO TALK

⚫ As much as possible seek the services of a properly qualified real estate professional ⚫ Continuously study the market so you learnit’s ebb and flow ⚫ don’t be greedy.No quick riches.Property a long term play

Source: MIEA | JANUARY 2015


FEATURE unethical manner to their prospective customers and other fellow agents and negotiators. Unscrupulous agents will claim they represent the owners/ landlords when in fact they have no such authorisation to market the property from the owners/ landlords. They could also give misleading information about the prospects.” Fong also mentions that nonregistered agents commints an offence for providing real estate services. If caught and convicted of

the offence, they can be liable to a fine not exceeding RM300,000.00 and/or imprisonment for a term not exceeding three years and further penalty of RM1000.00 for each day during the continuance of such offence. Real estate business is a very lucrative business involving hundreds of thousands to millions of Ringgit Malaysia in every transaction. “Hence, inevitably, it attracts a lot of unqualified and unauthorised persons into conducting this business in an illegitimate way. These people are commonly referred to as ‘illegal brokers’,” adds Wan, whose agency won the 2014 Residential Real Estate Agency of the Year (Medium Size). The easiest way to identify a legitimate agent from an illegal broker is the ID Tag. All estate agents registered with the BOVAEA are given a white ID card. This white ID card will be replaced with a striking blue ID tag at next renewal. All real estate negotiators working with estate agencies regis-

tered with the BOVAEA are issued with striking red ID tags. “A legitimate agent is the one with the BOVAEA ID tag!” Wan emphasises. won the MIEA 2014 Real Estate Agency of the Year (Small Size) award, and its principal Amanda Goh reminds people to check whether the agent is working for a properly licensed agency, i.e. one with an E or V number. Goh also says to check the agency’s website. “Some agencies display their negotiators’ names and REN numbers on their company’s website. If still in doubt, they can call the agency’s office to check,” she adds. CBD Property, which bagged the MIEA’s 2014 Real Estate Agency of the Year, via its executive director Adrian Wang suggests another trick of these unscrupulous agents. He also agreed that to avoid these agents, we have to call the agency and check the status of the agent, whether he is still working with the agency or not. “This is because some agents sign into an agency and gets a tag, and then they quit and become independent agent. They use their old tag and numbers; and become an agent on their own. This is also called an unscrupulous agent,” says Wang.

unscrupulous are: • Misrepresentation of information; • Misleading; Concealment of material facts; • Misappropriate clients’ money • Slandering the counterpart/ competitor with malicious intent and selfish gains


A few examples of “promises” that are usually given by an unscrupulous agent are: • High selling price; • Able to sell the property in short period of time; • Ready buyer for your unit; • Introduce you a lawyer who can give more than 50% discount; • Offer to help unsuspecting buyer to get good unit or good discount by inducing the buyer to offer under-counter money to middle man for a supposedly upcoming project

Wan compiles the signs of an unscrupulous agent, whether of a legitimate agent or an illegal broker as: • Not well-versed with the current market trend when conversing with client; • Not being updated with the latest policy affecting the property market when being asked by the client; • Not familiar with the entire process of property transaction; • Suspicious character, always convey information in ambiguous way; • Avoiding phone calls; Some of the factors that can contribute to an agent, whether registered or non-registered, to be

32 JANUARY 2015 |

Goh adds to the list by saying that they will usually ask the buyer/ tenant/vendor/landlord to pay the agency commission directly to them, for example having cheques payable in their personal name. Hence, all payments should only be made to a licensed agency’s name. The payer should always request for a receipt for the payment made, Goh says. “These agents will undercut the licensed agents,” Wang interjects. For example, the licensed agent and unscrupulous agent sell the same properties with the same price, but the unscrupulous agent will undercut the licensed one by offering lower commission rate or even ‘commission rebate’ to the buyers. They will take higher commission from the seller to rebate the commission to the buyer.


WHAT TO DO WITH THEM? If you ever get caught up with one of them, Wan suggests you withdraw yourself totally and quickly from whatever dealing you have had with him/her. You don’t want to have

any business dealing with either an unscrupulous agent or an illegal broker, whom would likely to either rip you off or left you in a lurch. In any event that you have gone too deep to withdraw, then it is suggested that you put your experience in proper written records, and report the incident to the BOVAEA. “I assure you that your report to the BOVAEA will be attended in a very orderly and professional manner,” Wan says. “If I am going to look for someone to help me to sell or buy a property for me that worth hundreds of thousands Ringgit Malaysia, or even millions of Ringgit Malaysia, I would be very careful and diligent in checking around at the target location for a well-known and established estate agency for initial help,” Wan suggests. Checking through the listings of the respective agency and talking to the active agents in the target location will properly give you an idea of how reliable and competent they are in their respective field. Adds Goh, “Make a police report, and bring it to the attention of the press so that the public is informed. If the matter was with a registered agent who’s unscrupulous, they can complain to the Board of Valuers, Appraisers and Estate Agents or the Malaysian Institute of Estate Agents.” Wang meanwhile proposes that the government should make it compulsory


for the Sale and Purchase Agreement (SPA) to be also signed by the licensed agent who is handling the transaction. “In other countries like Australia, the Sale and Purchase Agreement (SPA) also needs to be signed by the agent, other than the seller, buyer, and lawyer.” In his opinion, this measure will immediately eliminate those unscrupulous agents and improve this real estate industry.

COMPETITIVE MARKET AREA? Consumers these days are smart and learned. Most of them these days know there is a market price for everything, may it be goods or services. When there is a ‘good buy’ at below market price comes our way, most of us will assess its true value before we jump in.

“If there is a ‘below market price’ property that comes our way, we will surely assess and verify the true value doing some back ground check quickly ourselves before we decide to take it or not,” Wan gives his opinion in the issue. Wan also explains that if an agent offers to sell your property for a low commission, you should not worry too much about the mind-set thing, but to be focused at the said objective: (a) Have you priced your property too low? Or is this agent offered to sell your property at a too low price that he is going in for a ‘quick kill’? (b) Is this agent in dire desperation for business? If yes, would you ready to give him/her a try? (c) There is always genuine ‘good deal’ around if we stay focused and be informed up to date. If there is a qualified and competent registered agent who passes your tests offers to sell your property at an agreed market price for a lower commission, you are in luck. I say you should accept it gracefully! There is always a genuine reason behind every good thing that happens! “Real Estate Agents, especially the registered ones, are all friendly and fun loving people. Pick up a phone and call us anytime! You don’t have to check your dairy, or perform certain rituals before calling us! Ask us anything you want to know about real estate or property. You will know you have found a right one straight away when the one you talk to answers all your queries, and you actually feel comfortable talking to him/her at all time,” Wan concludes. | JANUARY 2015



What to do, and not to do, before and after you spot a property investment opportunity

DEAL OR NO DEAL? 34 JANUARY 2015 | 34 JANUARY 2015 |

By: Aidil Mohamad Noor & Syamil Zahari roperty buying can be an exhausting experience, and still abound with risks. If a supposedly golden opportunity arises, what can investors do to minimise their exposure to a deal gone dud? Property investment firm SkyBridge International’s CEO Adrian Unfirstly recommends that investors investigate developers’ track records in the primary market. “Check their experience and reputation to see if there are any risks of abandoned projects,” Un says. Next, investors should study thoroughly at the surrounding area of development, the pricing around the area, and the general demographic information such as age ranks, income group, and so on. “The study will affect your investment prospect,” he says, for instance investing for the long term or for flipping.Check through the accessibility of the development, he further advices, and find out how visible the area is and how easy to go in and out to nearby city or town. Un urges investors to study the neighbouring area, too. “If the area surrounding is vacant, be sure to check out if there‘ll be any development coming up. For example, if you bought a property with a vacant neighbouring land, and the land eventually got a high-rise property, your view to the


other side will be blocked. One of the ways to check the land surrounding it is through [property analyst] Ho Chin Soon’s map,” he explains to Property Insight. Observing the trend in the area in equally important, according to Un. “Say that you are buying a SoVo or SoHo, will it become a trend in the future? Or will the trend in the area focus more on condos? Different area has a different trend and you need to carefully study the population of the area to get the right trend,” he counsels. For investors’ own self precaution, Un says, make sure to examine the scheme offered by developers. Something might be wrong if the discount is too high, he cautions, and as the old adage says: If a deal is too good to be true, it’s probably not true. Un recommends investors understand their own financial status. “Do you have enough capital? Will your current status enables you to qualify for a loan?” he inquires. Try not to put too high an expectation on rental yields, Un says. “Agents might promise a good number, but again, if it’s too good to be true, then it’s not true.” Investors also need to set their exit point or objective. “Follow your objective carefully,” he says, whether it be buying and selling, holding for longer term, rental, and | |JANUARY JANUARY2015 2015



so forth. “Don’t be greedy, and don’t be too quick on the judgement,” he adds. “As example, you buy a house for RM1million, and someone offered to buy for RM1.3million, which means 30% profit margin. Would you be okay with that? In time, there might be someone who would pay more than that.” Cheap prices don’t necessarily mean good deals, Un says. “Do not follow the rumour. Make sure you study the area and property carefully. There are many cases where people buy just because someone told them that they will not get the property at a price that low in the future, so they bought it. You need to eliminate that mentality.”

Even show houses can be deceiving, Un adds. “The sales person will always oversell the product, especially when the show house looks really good. When it comes to you decorating it, it might not look as good.” Investors should take it upon themselves to know about the rules and regulations that govern the property industry. “It’s very important. If you don’t know the law, and if a case like your loans does not get approved, the developer might consider your deposit payment as a case of forfeit, in which you will not get your money back. Study the law well to make

sure you can get 100% amount of deposit money that you put on the property.” Finally, Un advises, “Make your decision in a calm and comfortable environment.Go back home, take a shower, sit on your couch, and then give it a thorough thought. If you think that it’s okay, then go on with it.” CY Leong, a 21-year full-time property investing veteran who now owns more than two dozen properties, opines, “The first property is the most challenging. You’ve got to save enough outlay for your first property. Actually there are many deals out there that are structured in such a way that you can go in and buy with little money down. But, of course you’ve got must be able to service the loan.” Investors need to do their own due-diligence, Leong tells Property Insight. “Buying a property is not that difficult because developers will help you. There are deals out there that pay you 10% in terms of credit loan or 20% rebate. Developers want to sell and they know getting loan is very challenging now. “But it has to be a good investment. Just because developers throw in good deals, you shouldn’t go and buy. You must know that, at the end of the day, you can make money off it,” he advises. How can people spot a good investment? “From experience,” he concedes. “You actually have to get into it. There is no point in only reading books, or going to seminars. Action is very important. Go out and do it,” he emphasises on learning through experience. A lot of investors want to buy properties but they may not able to, Leong adds. “In order to qualify for a loan, you have to know how banks evaluate your loan. If your income level is not high enough, you can actually get rejected, even for first time buyers.” To buy a house nowadays, a lot of them need assistance from someone – parents, friends, or families – to be their guarantors. “If you cannot buy a property alone, you may need to do it in a group,” Leong says. “But I seriously don’t advice people to do it in a group because


36 JANUARY 2015 |


it’s messy. In my experience I have seen so many people fighting over properties.” The better way is to form a company, he recommends. “If you form a company, and you don’t like it anymore, you just sell your shares with lesser transaction cost, whereas in a group, some people may not want to sell. Nowadays we have what is called ‘limited partnership’ and the fees are very cost-effective. I think people should think about this sort of way to qualify for a deal and acquire loan.” Secondary market, according to Leong, can be just as attractive. “For new purchases, I think it would be quite difficult unless you look for deals that developers throw in a lot of freebies. If you can qualify for a loan, maybe you can go for those. Or for the other alternative, a lot of investors are looking at secondary markets. Leong observes that investors often find that, for the primary markets, the prices are far too high. “Secondary markets, if you know where to look, there are a lot of cheap properties around,” he says. “The principle is the same with developers giving you discounts. If you are

buying a 20% undervalued property and the bank gives you a 100% loan, basically you are paying 20% less. A lot of people going that [secondary market] route now, because new properties are expensive and the risks are quite high.” Property investment requires a lot of groundwork in order to be successful, Leong stresses. “It’s a full-time job. You must know a lot of people, know where to find the markets, look for locations, engage many real estate agents to help find properties. Do your homework,” he urges, “and I think you can win.” | JANUARY 2015



Prices and affordability of houses in Penang

By: Dr. Norazmawati Md. Sani @ Abd. Rahim

he price of a house is the first thing to be considered before deciding to buy a home. There are many factors to be considered before buying your dream house, including the price of the house, household income, household expenditure, monthly house payment, location, the distance from home to the place of work, occupation, level of education, number of children and so on. With so many factors to consider, it takes time to come to a decision to buy a house and it is something that must be given careful thought. Often the decision to buy a house is made after discussions with a partner, namely between a husband and wife, or perhaps by seeking the opinion of parents, siblings, relatives or even friends, especially for prospective buyers who are still single. Owning a home is a basic need of every individual and family. There are various types of houses on offer in the market. The choice of the type of house is certainly linked closely to whether the individual can afford to purchase


a house that meets the desired requirements and quality. There are three methods of home ownership, namely owning a home through purchase, rental or from parents as a gift or in the form of an inheritance. Having a house to live in is every man’s dream and we are able to exercise some control to ensure we will be able to afford our dream home. However, we must accept the fact that we cannot control the prices of houses. This fact must be accepted and faced by everyone at any time no matter where. This is because house prices will increase from year to year based on the demand and supply rates for houses in certain locations. In addition, the increase in house prices resulting from increased property values is due to the increase in population (through birth rates and migration), the scarcity of land in urban areas, the lack of quality building materials, rising prices of building materials and so on. This situation has caused real estate prices in the country to surge dramatically, thus pushing up house prices.

Table 1: Annual Growth Rate of House Prices In Malaysia Average Growth Rate (%) Year (2001 –2009) Year (2010 – 2012) Malaysia 3.2 9.1 Kuala Lumpur 4.0 12.2 Selangor 2.4 11.3 Penang 4.3 8.9 Sarawak 4.1 5.1 Source: National Property Information Centre (2013).

Source: National Property Information Centre (2013) 38 JANUARY 2015 |

Furthermore, the land area for the construction of houses is limited because the land has been allocated for other uses such as for industries or agriculture. This has indirectly caused land prices to shoot up, resulting in an increase in the prices of all types of real estate including homes. In addition, the rise in house prices is due to the effects of the high economic growth rate of the country and the rising prices of daily necessities. This has resulted in a percentage increase in house prices on a wide range of housing available in the market. This research aims to explore the relationship between house prices and the affordability of the population in Bertam, Penang with regard to home ownership, especially among the urban middle and high income earners.

Furthermore, the housing sector is a major contributor to the economic development of the country in general and the life of the urban community in particular.The rise in house prices is evident in Table 1, which shows that the average annual growth rate of house prices in Malaysia from 2010 to 2012 was 9.1%, an increase of 5.9% over the past 10 years. Two states recorded average annual growth rates in house prices of more than 9.1%, namely Kuala Lumpur and Selangor, with each recording an average annual growth rate in house price of 12.2% and 11.3%, respectively. This suggests that house prices in both states concerned have soared out of control above the average growth rate in house prices for Malaysia. Meanwhile, in Penang and Sarawak,

the average annual growth rate of house prices is below 9.1%, i.e. at a rate of 8.9% and 5.1%, respectively. This shows that in every state concerned there has been an increase in house price, the only difference being whether the rise in house prices exceeded the average annual growth rate of house prices in Malaysia (9.1%) or not, and whether the increase was sudden or gradual. All aspects of rising house prices depend on the circumstances in a particular place, the time and the lifestyle of the people in the area. Homeownership in Bertam, Penang, is still dominated by the Malays (95%), followed by the Chinese (3%), Indians (1.9%) and others (0.1%). This situation clearly shows that in Bertam, the Malays still have a monopoly over di-

Distribution of Household Income In Malaysia 8586 8101


7023 6317 5055 4759 4658 4576


4293 4013 3967 3745 3548 3538 3425 3168

Customer Profile - Income

Resident Income in Bertam, Penang 1%

> RM 20,000 RM 15,001 - RM 20,000

1% 3%

RM 10,001 - RM 15,000 RM 5,001 - RM 10,000 RM 2,501 - RM5,000 RM 1,001 - RM2,500 < RM 1,000

Source: Bertam Properties Sdn Bhd

9% 46% 39% 1% | JANUARY 2015


FEATURE verse factors such as land prices and house prices, which are still within the scope of their income capabilities. In addition, in Bertam, the residents are still provided with an open area of land in front of their homes. With this available land, the Malays, in particular, feel more at ease as they are able to take advantage of such land for small-scale agriculture. The types of plants that can be cultivated include lemon grass, turmeric, lime, chilli trees, banana trees, spinach, mustard greens and so on. This activity not only provides the Malays with agricultural products for their daily consumption, but can also be a form of exercise that can lead to better health. In addition, this available land and the agricultural activities make them feel as though they are in the village. We can see in the residential areas in Bertam, examples where a bit of the village atmosphere has been brought into the urban areas, so much so that it comes as no surprise that these areas are dominated by the Malays. This matches the capacity of the residents in Bertam, Penang, to own homes, where 46% of them earn incomes of approximately RM 2,501 to RM 5,000, and 39% earn incomes of RM 1,001 to RM 2,500 per month. Furthermore, the poverty rate for Penang was 0.6% in 2012, making it the fourth state after Melaka, Selangor and Negeri Sembilan, which also recorded poverty rates of less than 0.6%. These statistics clearly show that the residents in Penang can afford to purchase their own homes and that income is not their main issue.

Homeownership by Ethnic


MALAY 95% Source: Bertam Properties Sdn Bhd

Poverty Rate In Malaysia

Proverty Rate 2012 (%)


Poor Household Income : < = RM 760 Hardcore Poor Household Income : < = RM 460 Low Income Household Income : < = RM 2,000

0.4% 0.5%


0.6% 0.8%

0.1% 0.1%



1.1% 0.2% 0.2% 1.5%



1.7% 1.7%


1.9% 2.4%

0.5% 0.3% 2.7% 0.3% 8.1%



Source: Household Income Survey Finding (2012) 40 JANUARY 2015 |



Bukit Suburban Living


Within the City | JANUARY 2015



BIG DREAMS FOR RAWANG Local developer bets big on an up-and-coming area with affordable resort living development


42 JANUARY 2015 |

ype Park City Sdn Bhd, a subsidiary of DA Land Sdn Bhd, has high faith in Rawang. “Da”, which in Mandarin means big, shows that Hype Park City and DA Land keep a big dream and heart for the area. Since the launch of LakeClub Parkhome in December 2012, the dream has finally come true. DA Land Sdn Bhd or formerly known as Golden Masterpiece Sdn Bhd was incorporated on 11 February 2011, and Hype Park City Sdn Bhd is established to develop residential properties.

H By: Fara Aisyah Firdaus Petial

According to DA Land director, Sip Mun Yee, “I think Hype Park will have more residential development in the future. But under the DA Land group, Hype Park is the arm that we create to build more residential development. DA Land will concentrate more on commercial properties, for the time being. But Hype Park is not just for LakeClub Parkhome. I think it’s more on long term residential.” The developer has some 40.46ha of land banks that are located in Kuala Lumpur, mostly in Rawang. The focus of their development plans is in Rawang, given the potential of the area. | JANUARY 2015




Central Park

44 JANUARY 2015 |

The other small parcels of land are in Kota Damansara and downtown Kuala Lumpur. Hype Park City upcoming project is the Phase Four of the LakeClub Parkhome. The development consists of 13 acres of the land and is adjacent to the original development of LakeClub Parkhome, and will be developed by Hype Park City alone. On the other hand, the other 63 acres of Phase One to Phase Three is a joint venture between DA Land and Mahumas Sdn Bhd. What makes LakeClub Parkhome unique? Sip tells Property Insight that it is all about the name itself. “The name itself tells you straight that there’s a lake, there’s a club, there’s a park, and the home is within it. Imagine, how do you visualize your home is within a lake, club, and park?” He said. The 222 units of two- and twoand-a-half storey terraced homes are priced from RM280 to RM290 psf, of which the Phase One has been totally sold out. Currently, Hype Park City is

registering interest from buyers for Phase Two and has already built show units. Phase two is about to launch early in 2015, while Phase Three is scheduled to be launched in the fourth quarter of 2015. At under RM300 per square feet, the project packs more comfortable living than comparable RM1 million homes. “If you ask, why have houses become so expensive? Expectation. That is a demand and supply, it’s a circle. In those old days, we just want a shelter to live under, something that feels safe. That’s your expectation, just a roof above your head. But today, the expectation is different. That expectation has caused a small revolution in the development industry in Malaysia.” Yet, given the integrated lifestyle resort concept of ParkClub Lakehome, the selling prices of the units are remarkably quite affordable. “Because our built-up is big, if we price it at RM400 psf, I think our so-called villas

will cost beyond RM1.5 million. And that’s beyond affordability! So we are lucky enough to be able to joint venture with Mahumas, who is the original land owner. In other words, we have the advantage of lower land cost. With that, we actually have advantages in term of our pricing. So that’s why we feel that this is really a good concept and a good buy,” Sip explained. Excluding Phase Four, LakeClub Parkhome has a gross development value (GDV) of about RM500 million and expected to be fully completed in 2017. As for Phase Four, there are no solid plans yet. However, Hype Park City is planning something that is different from the original development. Sip said that “We might consider something very interesting to add in to this residential area. We haven’t gotten the operating license, but we actually planning to put an international school and incorporate with it maybe some stratified units like condominium and apartment.” This is because Sip thinks | JANUARY 2015



ParkClub Lakehome interior

that in the future, landed properties will be increasingly unaffordable Hype Park City is proposing international school because “it will complement the whole township of Rawang, not just LakeClub Parkhome but rather to bring the whole Rawang town, even all the way extent to the Sungai Buaya, Serendah, and all the way up to Batang Kali.” Furthermore, there are already two developments of international schools that have been approved in the newer side of Rawang. Hence, Hype Park City wants to be the first and only developer that builds international school in LakeClub Park Home neighbourhood. Sip personally thinks that international school will be a demand in the few years to come because of the current policy of international school that is not only available to expatriates. Conjointly, the locals can also sign up to international

school as they wish, according to Sip. DA Land is well-known for their landed properties in Rawang. In Sip’s opinion, the demand in Rawang

properties is still the gated-guarded concept. Thus, the property buyers in Rawang have started to expect something that is different from what is being offered nowadays. Buyers

46 JANUARY 2015 |

who are willing to travel for an extra of 15 minutes to their homes in Rawang because they want something better. Hence, the idea of LakeClub Parkhome was born. It is designed to be different. The idea was to create something that reverts the typical and conventional type of terraced houses in Malaysia. Sip explains, “A typical terrace you walk in, you’ll see the living room, then followed with the dining, follow with the kitchen at the back. That’s typical, conventional. What we do is we revert, a reverse of it. Our living room is way at the end of the layout of the house, and that’s actually facing the linear park.” The park is the key component of LakeClub Parkhome, according to Sip. “When you walk out from your linear park, just next to your living room, you can actually walk through it and link to central park. The linear park is a linear of 30 ft to 80 ft

park between two rows of houses, but when you walk to the end of it, most of it actually connected to the central park,” he said. Another offering that makes Hype Park City and its project different is that they have engaged security specialist GDSS Systems Sdn Bhd since Day One of their project development planning. “GDSS Systems also advises the top-notch commercial properties in Malaysia, like KLCC, The Curve, and Bangsar Shopping Center,” Sip said and the security consultants specialise on how to design residential homes in order to prevent or set some deterrents to avoid intruders, by thinking and designing the security measures based on the criminal mindset. “It is the sense of security that I want to give to my LakeClub Parkhome residents in the future,” said Sip. The security measures are not planned when the development is done, but instead was incorporated while the development is being planned,

according to Sip, which further demonstrates that LakeClub Parkhome is indeed a well-designed and wellplanned residential concept. In addition, all LakeClub Parkhome buyers will have to sign a perpetual deed of mutual covenant, which requires them to get approval from the township’s management before they can carry out exterior renovations. This is to ensure that the development preserve its overall look, Sip said, because the developers want to “maintain the uniformity” in hope that residents will retain the feeling of respect for the open environment and for each other. The design of LakeClub Parkhome also “encourages neighborhood interaction,” added Sip. “This is already a safe environment, and we designed it with a linear park. The car porch is also very open. We don’t do a big fence higher than your height. We do a very low fence; practically you can just jump over the wall so there’ll be more interaction among neighbours.” When

asked about the target market of the LakeClub Parkhome, Sip said that he would foresee more on upgraders who wish to find a more comfortable and relaxed living environment without breaking their savings. In few years to come, Sip believed that Rawang will rise as one of the successful new city development in Malaysia. He explained, “I would say Rawang will become one of the largest guarded landed property environments in Klang Valley. Right now if you think of Klang Valley, it has to go either north or south. And Rawang, not just us, there are many big developers already getting into development in this region. So, as you can see, there are a lot of these good potential and very respectable sort of developments that will come out in five to 10 years come. The key right is that there are many first tier developers are working on this region at the same time. So if you ask me, how do I feel 5 to 10 years of Rawang? Exciting. If people today still don’t see it, you’re probably too late”.

Club House | JANUARY 2015


Sungai Long AREA FOCUS


Sungai Long Golf & Country Club 48 JANUARY 2015 |

Sungai Long

nuggled up amongst nature and developed beside Malaysia’s very first Jack Nicklaus signature golf course, Bandar Sungai Long is a splendid township reflecting the beauty of its surrounding, built on freehold land. A mini-city all on its own, Bandar Sungai Long not only has architecture of all forms, ranging from high-rise condominiums to semi-detached houses and even exclusive bungalows; it also has amenities such as schools, a hospital and a university to cater for its residences, on top of its signature Sungai Long Golf and Country Club.


GORGEOUS DEVELOPMENTS Among the many developments that are on-going in Bandar Sungai Long is Sutera Pines @ Sungai Long by Smart Niche Sdn Bhd. The project, which was launched on July 12, 2014 and comprises of two condominium blocks with a total of 424 units, sits on an approximate six acres of freehold residential land. Sutera Pines sets itself apart from other residential developments with its 24 hours, 3-tiers gated and guarded community, not only having a luxury of well-equipped clubhouse, but also a spacious 60,000

sqft Nature Trails and Forest Walk exclusively for their residences. The project is expected to be completed on the second quarter of 2017. Another development is by Wira Cheras Development Sdn Bhd named ‘Wira Mutiara’. Launched in October 2014, the project consists of 37 exclusive bungalows units set in a private and secluded enclave, with build ups ranging from 5,187 sqft to 8,249 sqft. Coupled with its top notch security and safety programme consisting of well trained personnel and modern safety measures, the project is made to safeguard the privacy of its residences and to provide them with a peace of mind. Yet another is the growing development by Singapore-originated Lum Chang Group, Twin Palms @ Bandar Sungai Long. The project which started with Palmyra and followed by Aria @Areca which was launched on October 2007, has now progressed to their third phase with their semidetached home developments Seirra and Maya as well as their Westiara bungalows. Sprawled over 126 acre of freehold land, the development has an estimated gross development value (GDV) of RM800 million. Twin Palms boast not only of its 232-meter long linear park as well as four man-made

ponds, but also of its observation deck situated on the highest point of its estate, commanding a scenic view of the neighbourhood as well as the surrounding area of Bandar Sungai Long. Tropicana Corporation also plays their part in the development of Bandar Sungai Long with their project known as Tropicana Cheras. The development comprises of two phases of freehold, mixed residential development with a total of 180 units. Having completed its first phase of development with 66 units of semi-detached houses and 22 units of bungalows with build-up areas ranging from 3,366 sqft to 5,838 sqft in 2013, Tropicana Cheras now aims to develop its second phase with seven units of bungalow lands and 85 units of link villas which comes with 5+1 bedrooms and 5 bathrooms, with buildup ranging from 3,378 sqft to 3,997 sqft. The completion of this phase is targeted to be in 2015. Development of a new phase is also aimed by Tanming Properties Sdn Bhd after having completed not only the Tanming Mutiara @ Sungai Long Project, but also the first phase of their new Tanming Indah 2 project which consisted of 88 units of freehold, 3storey super linked houses with buildup ranging from 3,623 sqft to 4,186 | JANUARY 2015






Sierra & Westiara @ Twin Palms

Fabulous Range Sdn Bhd

Site clearing, earthworks and ancillary Bandar Sg. works (Phase 3) for proposed residential Long development

Desa Budiman

Pujangga Budiman

Wira Mutiara

Wira Cheras Development Sdn Bhd

Taming Indah 2

Tanming Properties Bandar Sg. Sdn Bhd, Long Powerville Sdn Bhd

Goodview@ Sg. Long

Hao Residence

Palm Walk






Lot 990 & Lot 1308

Current development - by phase

From Bandar Sg. 75 units of double storey superlink houses RM458,800 Long (24â&#x20AC;&#x2122; x 75â&#x20AC;&#x2122;) RM928,625


Current development - by phase

Bandar Sg. Plans to build 22 units of 3-storey houses (RS) Long

Lot 48812, PT 56971

Current development

Plans to build housing: i) 82 units of 3-storey superlink houses, ii) 68 units of 3-storey superlink houses, iii) 1 unit of electrical substation, and iv) infrastructure works


Lot From 1478 RM1,430,000 & Lot RM3,120,000 1448

Current development - by phase

Sejati Avenue Sdn Bhd

Plans to build 166 double storey housing units with: i) 66 units of low cost terrace house Bandar Sg. ii) 66 units of medium cost townhouse Long iii) 34 units of medium cost townhouse and 1 unit of guardhouse and 1 unit of electrical substation

From RM988,800

Lot 1482

Current development - by phase

Sin Heap Lee Development

Beside Sungai Long Golf & Country Club

35 units of two and three storey semidees & bungalows



New completed

Sin Heap Lee Development

Within 5 minutes to Sungai Long Golf & Country Club

From 670 units of double storey terrace houses RM566,300 and 44 units of double storey town houses RM608,800


New completed

Source: Oregeon Property Consultancy

Bandar Sungai Long Commercial Property Prices 2010





Land Area


















1.2 mil

1.4 mil

1.45 mil

1.5 mil

1.68 Mil


1.2 mil

1.4 mil

1.45 mil

1.5 mil

1.68 Mil





No. Of Transaction

Price Change (%) Since 2010




Source: City Valuers

50 JANUARY 2015 |

Prices of Residential Properties Sample Size

Avg Land Area (m2)

Avg Floor Area (m2)

Bandar Sg Long



Bandar Sg Long


Taman Bukit Sg Long Two and a-half Storey Semi Detached



Price Unit (RM)

Avg Price Change (%)


















Twin Palm, Sg Long







Low-Cost Flat

Bandar Sg Long





65,000 - 72,000


Middle-Cost Flat

Bandar Sg Long




55,000 - 75,000



Bandar Sg Long







Bandar Sg Long







Bandar Sg Long







Double Storey Terrace



Rentals of Residential Property Type


Double Storey Terrace

Bandar Sg Long


Bandar Sg Long

Avg Floor Area (m2)

Rental Range Per Month (RM/Unit) 2012

Avg Rental Change (%)

Avg Gross Yield (%)













Rentals of Ground Floor Shop Location

Avg Floor Area (m2)

Bandar Sg Long


Rental Range Per Month (RM/Unit) 2012




Avg Rental Change (%) 12.5

Rentals of Office Space in Shop Rental Range Per Month (RM/Unit) Location

Floor Level

Floor Area (m )

% Change




Bandar Sg Long






Bandar Sg Long






Source: JPPH | JANUARY 2015



Tropicana Cheras

Sutera Pines



sqft. Phase 2 of the development would see an additional 68 units of the same properties in the area and it is targeted to be complete in October 2015.

THE UNIQUENESS OF BANDAR SUNGAI LONG On top of the lush beauty of its surrounding nature and hills, Bandar Sungai Long also caters to safety concerns of its residences. “The developers in Bandar Sungai Long are doing what the purchasers want, and that is to provide calm living environment and this can be seen with the gated guarded community that is part of the planning of the development as compared to in the past,” property valuer Oregeon Property Consultancy Sdn Bhd director Kok Chin Yee says. City Valuers and Consultants manager Sdn Bhd Gan Boon How meantime explains that, “not only are freehold lands becoming less available, it is also very hard to get free hold landed property for a reasonable price nowadays. But this can be found in the new developments in Bandar Sungai

– KOK CHIN YEE Long.” It terms of accessibility, Bandar Sungai Long is connected to major highways such as the SILK highway and Kajang Highway. It is also an estimated 15 minutes away from the Kuala Lumpur City Centre. As for leisure, Bandar Sungai Long is the home of Sungai Long Golf and Country Club with its Jack Niklaus signature golf course – the very first in Malaysia. There are two pre-schools in the area: Tadika Kinder Kids Pre School and Little Inventor Pre School. For higher learning, University Tunku Abdul Rahman (UTAR) will open its Bandar Sg Long campus in 2015, bringing in about 10,000 students and staffs in the vicinity in need of housing. The Bandar Sungai Long Hospital stands ready at the southern corner of the neighbourhood. “With there being a scarcity in the right area and Bandar Sungai Long is now amongst the ‘right are’, coupled with good infrastructure and reputable

52 JANUARY 2015 |

developers, properties in Bandar Sungai Long will continue to appreciate. Especially with UTAR being in the area as it will be easy for property owners to rent out to students,” Sripathy, senior manager of City Valuers and Consultants Sdn Bhd says.

Average Price of Condominium in Sungai Long (RM)

Average Price of Apartment in Sungai Long (RM)







200,000 150,000







2010 2011 2012 2013

2010 2011 2012 2013 2014

Average Price of Terrace House in Sungai Long (RM)

Average Price of Terrace House in Sungai Long (RM)

900,000 800,000

















0 2010 2011 2012 2013 2014

2010 2011 2012 2013 2014

Source: Oregeon Property Consultancy

AGENTS SPEAK Bandar Sungai Long has more landed properties than highrise properties. Students from UTAR would want to rent rooms in the area as UTAR would have their own shutter bus to bring students in the area to and from the campus. - Aden Loh Prosper Realty Bandar Sungai Long has a very good prospect in the future as it has very good developments in terms of the strategy in it plannings. - Mustafa Ambran Metro Homes

UTAR campus set to open in Bandar Sungai Long

Aden Loh

Sungai Long Hospital | JANUARY 2015



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THE HIGHEST PRICE YET Peeking through Hong Kong property market By : Fara Aisyah Firdaus Petial

ong Kong has the most expensive property among major global cities such as London, New York, and Tokyo, according to a report by global real estate services provider Savills Plc in March 2013. The city is at its peak right now, that the price of the property is currently “the highest price in the history,” said Hong Kong seasoned investor Lucy Jiang. Jiang, who was on a real estate investment study tour in Malaysia, told Property Insight that the pricing of Hong Kong property back in the 70s and 80s in Hong Kong was very low, at about RM100 psf. Since then, Hong Kong economy has grown rapidly, until the Asian financial crisis in 1997 plunged property prices about 60% and the slowdown continued until the early years of millennium. Jiang herself has never met any Malaysians who are actually investing in Hong Kong property, perhaps because of the price range. In her observation, the current pricing is in average of RM3,000-5,000 psf which is higher than the current price of property in Malaysia. According to the latest Demographia International Housing Affordability Survey, Hong Kong has the most unaffordable property in the world, with a Median Multiple of 14.9, compared to Kuala Lumpur with Median Multiple of 7.3 which is considered severely unaffordable.


56 JANUARY 2015 |

Hong Kong currency is pegged at circa HK$7.8 (RM3.44) per US dollar which renders Hong Kong’s financial approach defenseless against monetary decisions made by the US Federal Reserve. The Federal Reserve decreased the level of short-term interest rates to near zero because of the 2008-2009 worldwide financial crisis with a specific end goal to empower new spending and support the prices of stocks and houses. This US strategy has additionally prompted a surge in living and property costs in Hong Kong. In addition, China is also a factor in Hong Kong property business. “A lot of money also comes from the mainland to Hong Kong because, for Chinese people, Hong Kong is like a safer place. They know each other,” Jiang said. “There are very good advantages in Hong Kong. Our tax is very low. When we sell property, you don’t need to pay RPGT, so it’s safe for them to keep their money. So a lot of mainland rich people just pay cash,” she added. Most investors in Hong Kong are local, including the mainland people. Interestingly, Jiang claimed that the foreigners who buy property in Hong Kong are not considered as investors. “They just have a lot of money to buy other places,” she said. “Do they really buy the property to invest? Sometimes not. They buy really expensive property but just leave it there, not renting

Hong Kong city view

out because it’s not a problem for them.” Mostly, local Hong Kong property investors are focusing on local renters because the cost of living in Hong Kong is currently very high. The people in Hong Kong, especially the middle income and young families, can hardly survive the cost with their insufficient salaries, not to mention buying a property. Hence, they have to rent out property from these local investors. The Hong Kong government however, imposed some new measures in these past years in response to soaring property prices caused by an influx of cash into the city’s property market. A recent report on the Hong Kong real estate market done by Colliers International said that Special Stamp Duty (SSD) was the first measure constituted in November 2010, resulting “with cumulative price growth of 11% during 2011 and 20% in the first nine months of 2012,” the report stated. In October 2012, the government created another new measure that added “a five-percentage-point increase in the SSD rate and an extension of the restriction period from two to three years,” according to the Colliers International. Respectively, a Buyer’s Stamp Duty (BSD) was initiated to enforce an extra 15% charge on top of the existing stamp duty or residential property bought by corporate and foreigners. February 2013 marked another change in the Hong Kong market as the government announced

The current pricing is in average of RM3,000 - 5,000 psf. It is quite higher than the current price of property in Malaysia.

Lucy Jiang | JANUARY 2015


INTERNATIONAL MARKET Hong Kong Stamp Duty Charge Before Before 23 23 February February2013 2013 Stamp StampDuty DutyCharge Charge

Price Range Price Range



HK$100 + 10% of excess over HK$2.0 million

HK$30,000 + 20% of excess over HK$2.0 million



HK$45,000 + 10% of excess over HK$3.0 million

HK$90,000 + 20% of excess over HK$3.0 million

<HK$2 million HK$2.0 - 2.4 million HK$2.4 - 3 million HK$3.0 - 3.3 million

Onor or after after23 23February February 2013 2013 On New Stamp Duty Charge New Stamp Duty Charge

HK$3.3 - 4.0 million



HK$4.0 - 4.4 million

HK$90,000 + 10% of excess over HK$4.0 million

HK$180,000 + 20% of excess over HK$4.0 million

HK$4.4 - 6.0 million



HK$6.0 - 6.7 million

HK$180,000 + 10% of excess over HK$6.0 million

HK$360,000 + 20% of excess over HK$6.0 million



HK$20.0 - 21.7 million

HK$750,000 + 10% of excess over HK$20.0 million

HK$1,500,000 + 20% of excess over HK$20.0 million

Above HK$21.7 million



HK$6.7 - 20.0 million

Source: Colliers International

Most & Least Affordable Major Markets DEMOGRAPHIA HOUSING AFFORDABILITY SURVEY Hong Kong Vancouver San Francisco Sydney San Jose Melbourne Auckland San Diego Los Angeles London St. Louis Indianapolis Cleveland Cincinnati Buffalo Atlanta Rochester (NY) Grand Rapids Detroit Pittsburgh


Most Affordable Markets Least Affordable Markets

Median Multiple: Median House Price Divided by Median Household Income (Gross)





Median Multiple: 2013: 3 Source: Demographia

58 JANUARY 2015 |

10 rd





Figure 2

two demand-side management measures. The first is doubling the existing rate of ad valorem stamp duty on most property sales. The report also stated that “The stamp duty was increased from HK$100 (RM45) to 1.5% of the transaction amount for properties valued at HK$2 million or less, whereas the highest rate of stamp duty was raised from 4.25 to 8.50% for properties valued at HK$21.7 million or more.” The second measure is that stamp duty is now charged on an agreement of sale and purchase of nonresidential properties. These non-residential properties comprise of commercial premises, offices, industrial premises and parking spaces. Jiang described that the system in Hong Kong as quite expensive. When investors sign the booking form, they already have to pay the stamp duty. “First of all you sign a booking form, and then it takes you another two weeks to sign official SPA (Sales and Purchase Agreement), and then it takes you another three months, so by the end of the three months, your transaction is complete.” According to global commercial real estate services organisation Colliers International, the Hong Kong Monetary Authority has issued to local banks a few mortgage financing measures regarding offers of mortgage financing for property buyers. The first and foremost measure is the “stricter requirements for approval of mortgage loans” and will apply to mortgage loans for all types of properties. Banks currently needed to expect a mortgage rate increase of 300 instead of 200 basis points. The other measures are “lower maximum loan-tovalue (LTV) ratio for mortgage loans for commercial and industrial properties” and “new LTV restrictions on car parking spaces,” Colliers International reported.

Another one is a measure announced by the Hong Kong Mortgage Corporation that only mortgage loans on properties with an estimation of HK$4 million or less will be qualified for the maximum mortgage insurance cover of 90% LTV. Properties with the cost of HK$4.5 million or more will only be qualified for the maximum insurance cover of 80% LTV, with the cap remaining unaltered at HK$6 million. Jiang added that if a foreigner wants to get a loan to buy property in Hong Kong, the system is even stricter. The authorities will investigate and examine everything that a foreign buyer has, and they will evaluate the buyer’s income. “If your income is not local, they might not be willing to give you [the loan],” she said. Yet, if you’re local, there is actually a way for you if you really want to own a property. “Today in Hong Kong, if you want to buy a house, you have to pay 30% of the down payment, so you’ll get 70% loan from the bank. The Hong Kong government got some policies that for the first property, you can get maximum 90% loan from the bank, which means you only have to pay 10% down payment. There it becomes easier for you to own a property,” said Jiang. Hong Kong’s lack of land offers only limited real estate choices, but the city has higher property prices compared to United States and United Kingdom. Despite the new restrictive measures taken by the government, it still remains unseen whether the price will become affordable or continuously increase. Foreign buyers interested buying properties in Hong Kong are advised to study the market and legislations before deciding, as the process could prove to be quite tedious. | JANUARY 2015


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Expectations are running high with MRT Line-2 at the forefront

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UM LAND SPREADS IT’STan WINGS Harvard-educated Sri Dato’ Dr Lin See Yan talks Understanding Slope about the paradox between the economy and real estate WHO PAYS YOUR LOAN Management AFTER YOUR DEPARTURE? + SACRED TOUCH 6 House-Flipping MAYA OF KARIN’S INVESTMENT VASTHU Don’ts SASTRA SECRETS REVEALED!

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The sweet taste of property investment A young culinary entrepreneur shares the ingredients of her property investment journey By: Viknesh Ashley Clarence


n 2009, young chef Law Yenni had been working as a chef for six years but saw that there was not much means of saving any money. So she decided that she had to do something about it. “I really did not know how to save as the process of saving cash is rather slow. Banks also don’t help much as interests rates offered are usually low at a mere 2% interest rate commonly offered, while you may get 3% if you are lucky,” says Yenni. Determined, Yenni went into stocks. This ended up short-lived, however, as she did not have the luxury of time to sit in front of her computer monitor to closely watch the stock movements, which led to stock investment becoming more of a gamble to her. Renting an apartment didn’t help her savings, too. “I was already paying RM500 to RM700 for a master bedroom, equivalent to the repayment that one would have to pay


62 JANUARY 2015 |

monthly when purchasing a home,” she adds. “My father started to get concerned as to why I was paying so much monthly just to furnish the rental of my room, and this was when he suggested me to invest in a property of my own, saying that the fee I paid for the rental of my room would match the monthly repayment having purchased a property.” A couple of years down the road, Yenni spotted a banner hung by a developer nearby where she was renting at that time. Without wasting time, she visited the property showroom and made her move as the property most importantly matched her requirements as well as was within her reach in terms of budget. Yenni then purchased her first property, an apartment in Kuala Lumpur city centre, at a hefty RM104,000.

Yet, even with the purchase, all she attained was owning instead of renting an apartment, and the passionate entrepreneur in her decided to pour her savings into opening her own restaurant called Boat House in Taman Tun Dr Ismail with her business partner Adeline. “It was tough for the first few years as I did struggle quite a lot. I put much blood and sweat [into the restaurant],” she says. For Yenni, the spark into furthering her property investment adventure began from concerns for her own health. “Being in the culinary industry is challenging as working long hours on my very own legs has taken a toll on my health.” Yenni found this scary as she did not have much savings even if she chose to go for treatment. Most of the earnings she made were used to maintain her very own business, “I believe that when I work so hard, I should be rewarded with at least with a living space that is of utmost comfort and preferably the residence where I am staying should located be in an energetic and centralised locale. I have always placed where I live on top of the list as it is important that one can de-stress effectively after a long day’s work,” Yenni says. She needed to save more money, and to make her money work for her. So Yenni then purchased a two-storey terraced home which she moved into, and sold her first property off at RM150,000, making almost half of how much she initially invested. Her decision to sell was due to what she thought to be avoiding the hassle of sourcing

out tenants and managing existing tenant – a decision, in hindsight, she says she regretted. The apartment she once owned in Kuala Lumpur was sold at a minimal profit, she believes, if she had taken into account the rental it would have reaped or the price that it would sell for perhaps eight to 10 years later. She learned the lesson and has since bought over a dozen properties. Some properties needed work to enhance their looks, so she renovated them, while some required no renovations, but all of her properties are invested for rental yields. Yenni says that property investment is one of the steadiest types of investment as it is the least volatile and this is why she had chosen to begin investing in property, which she thinks other younger investors may wish to consider.

Yenni’s advice to the Gen-Y when buying their first properties is to study the area that they plan to purchase their homes in. “There are two kinds of properties: investable and noninvestable properties. If you are buying a home just to stay in, you need not care about how well the property may pose as an investment.” Yenni adds, “On the other hand if the home has been decided to be lived in for just a couple of years and rented out later, buyers must take into account the investment value that the selected property may achieve.” She advises, “When you buy a property, always ensure that you have firstly enough funds to furnish the monthly loan granted by the bank. Secondly, always remember to go for a property that is within you reach, that you may be able to furnish your loan and yet go for a holiday, perhaps.” “I learnt so much from my first experience of buying a home, for example where you can save cash from the loans that you take, via renting out your home, knowing your rights as a home buyer and making sure that repayments to the banks are made on time,” Yenni says.

The passionate chef and property investor | JANUARY 2015



Training prudent would-be investors starts at a young age Are you a bad financial role model for your children? Parents are children’s first teachers. Although a parent’s role in their children’s learning evolves as kids grow, one thing remains constant: parents are their children’s learning models. Your child will learn from your actions on a day-to-day basis. These days, emphasis is given to the academic achievement of children; after all, not everything is taught in schools. Not only do we, as parents, have to watch our manners and language in front of children, we also have to ensure that we are giving them the correct guidance in terms of spending money. To children, money is just a means of obtaining something – you give money to a person, you get the item you want. They do not understand the value of it, nor do they realise the amount of hard work that is put in to earn this money. So, it falls back to the parents to teach them proper money management from a young age. How do you know if you are guiding your child in the correct direction in finances? Here are some common mistakes you should avoid:

1) You procrastinate talking about money to your children till they are old enough It is never too early to speak about money to children. From a young age, explain good spending habits to them and encourage them to save money in their coin box. Some parents encourage this by matching the amount the child has saved before banking in the money in the child’s savings account. As they grow slightly older, explain the value of money to them. 2) Giving in to temptations while shopping Going off your grocery list is a bad example to set around children, this makes them believe that it is okay to go off their set lists. Strictly adhere to your grocery shopping list. In cases where you are going to do some comparison shopping, it will be good to bring your children along. 3) You “bribe” your children to help with household chores Do not ever pay your child for helping around the house – this will instil a sense of entitlement in them. They need to help their parents with household chores without payment – this will inculcate a sense of responsibility in them.

ABOUT THE CONTRIBUTOR Agensi Kaunseling Dan Pengurusan Kredit (AKPK), is a wholly subsidary of Bank Negara Malaysia. Its inception stemmed from the need to ensure that the public is able to manage their finances prudently. AKPK’s primary role is to educate people from all levels of income to ensure all Malaysians are equipped with sound personal financial management skills. For more information, downloaded a guide http://www.akpk.,log on to or call the toll free number 1-800-88-2575

64 JANUARY 2015 |

4) You encourage your children to save, but have strict limitations on what they can spend it on Allow your child to spend the money he has saved on items he wishes to have, do not stop him from purchasing the item he has his sights set on. This child will learn the importance of setting financial goals in his life. 5) It’s alright to compete with your classmates As parents, we have a tendency to compare our child with his classmates or children of friends. Normally, our comparison is meant to work as a motivation for our children to work harder and begins and ends at examination results. However, the child may take this approach differently and start comparing himself to his friends in terms of gadgets or toys owned. 6) Always saying “yes” to your children’s demands We have all seen the embarrassed parents of children throwing a tantrum in departmental stores. This usually occurs when the parents denies purchasing an item (more often than not, a toy or a treat), the child screams and yells. While this may be very humiliating in public, we need to learn to say ‘No’ when circumstances call for it.


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More Misses Than Hits he recent result season for developers saw more misses than hits. Out of 13 property companies under our coverage, seven disappointed, five came in inline broadly within expectations, while only one, namely MRCB which beat expectations. Most developers are lagging behind current year’s sales estimates or company targets, save for UOA Development Bhd (KLSE: UOADEV) and Crescendo Corp Bhd (CRESNDO), while quite a number of companies have revised down guidance for the year. Signs of sectorial down-cycle are more evident as property companies’ previous reporting seasons saw sales either meeting or behind of targets while there are relatively fewer earnings downward revisions. As a result, the current year sales trend could be flat to declining, year-on-year (YoY). The weaker landscape is due to tighter lending liquidity and buyers’ wariness, which lowers the odds of a pre-GST demand rally. Additionally, industry experts expect the sector to be quiet 3-6 months post GST implementation as buyers adopt a ‘wait and see’ stance. While developers are reluctant to guide on next year’s sales targets, we note a tone of caution in the air. We also see more cash calls and expect more to come, which may affirm a view of a more challenging 2015. Our sector call (previously NEUTRAL) is UNDER REVIEW, pending our upcoming sector report, with a potential downside bias to CALLs/TPs for stocks under our coverage/ On Our Radar as we may trim earnings/sales further .


68 JANUARY 2015 |


Out of the 13 property companies under our coverage, seven developers – Crest Builder Holdings Bhd (CRESBLD), IJM Land Bhd (IJMLAND), IOI Properties Group Bhd (IOIPG), SP Setia Bhd (SPSETIA), Tropicana Corporation Bhd (TROP), UEM Sunrise Bhd (UEMS) and UOADEV – came in below our expectations. Five (CRESNDO, Hua Yang Bhd (HUAYANG), Mah Sing Group Bhd (MAHSING), Matrix Concepts Holdings Bhd (MATRIX) and Sunway Bhd (SUNWAY)) were inline or broadly within, while only MRCB performed better than expected. The earnings disappointments were largely due to: (i) higher operating costs particularly A&P and development margins, (ii) slower-than-expected recognitions and timing differences regarding land disposals. MRCB’s performance was driven by better contribution from its property division.

During this result season, earnings adjustments for: (i) current financial year’s earnings forecast was lowered for five companies (CRESBLD, IJMLAND, IOIPG, UOADEV, and SPSETIA) while we upgraded our earnings estimate for MRCB, and (ii) next financial year’s earnings forecast was lowered for six companies (CRESBLD, IJMLAND, IOIPG, UOADEV, SPSETIA and TROP) while MRCB earnings were upgraded. Most Calls/TPs were maintained as we had downgraded the sector call last quarter to NEUTRAL; the exception was CRESBLD (Downgrade in TP) as we widened our property discount factor to 60% (previously 50%) given the weak sentiment ahead.


As for property sales, only UOADEV is on track to meeting our full-year sales estimates, largely because we trimmed targets last quarter. MAHSING was proportionately behind their internal target but within our target. CRENSDO was the only one that exceeded expectations. The others were still lagging behind in terms of meeting sales target. While there were no significant quarter-on-quarter and year-on-year trend for property developers, it was rather uninspiring as the quarterly sales performance showed rather flattish to declining trends. The driving reasons are the deferment of launches towards 4Q14 or 2015 and weak buyers’ sentiment particularly running up to the first OPR hike and Budget-2015 announcement. The lending environment has also become challenging, as developers are observing slow bookings to SPA conversions across all property segments.


Sales guidance lowered since a year ago. In terms of comparing sales guidance from developers or our sales assumptions at the start of the year compared to today, most developers have cut their sales targets for the current financial year, save for: (i) SUNWAY who was already estimating flat sales from the start of the year, (ii) IOIPG as they are just starting a new financial year while we are estimating flattish sales growth, (iii) MAHSING which is still confident of achieving its RM3.6b sales target while we maintain our assumptions of RM3.3b, (iv) MRCB which delivered as per our assumptions thanks to our flat YoY estimates. Over the year, UOADEV, TROP, UEMS have seen drastic cuts in sales estimates by 20%, 25% and 35%, respectively, while IJMLAND has toned it down by 9%. SPSETIA is also unlikely to meet their RM5.0b sales target as well. Mid-cap developers like HUAYANG and MATRIX also saw a reduction in current financial year sales assumptions by 12% and 18%, respectively, while we were already estimating YoY lower sales for CRESBLD. As a result, the current financial year sales achieved may likely be flatto-declining for most developers, save for MAHSING and CRESNDO, which may likely record better YoY trends. Signs of sectorial down-cycle are more evident. The last time we observed the above weak trends was back in 2008-09 where the Global Financial Crisis affected buyers’ | JANUARY 2015



sentiment, and thus, demand. Until recently, developers’ result seasons tend to be: (i) mixed in terms of earnings delivery as timing of recognition of multiple projects can fluctuate depending on launch timing and scale of the project, (ii) within expectations with regards to meeting sales targets or our estimates. This was due to the Malaysian property developers enjoying a strong run-up in sales and prices over 2013-14 on the back of strong domestic liquidity and the low interest rate environment. However, the main difference between now and the Global Financial Crisis period is that the current weaknesses are largely driven by domestic factors including: (i) tighter lending environments as banks are concerned about asset qualities due to the significant run-up in property prices over the last few years, (ii) impending GST, which may cause the market to be quiet 3-6 months after implementation, and (iii) potential interest rate hike risks in 2H 2015. Lending taps remain tight post Budget-2015. Based on feedbacks that we gather, the lending environment for properties remains tough as there are no clear signs that the banks will be turning on their lending taps anytime soon. The current Loan to Deposit (LD) ratio is already on

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WHILE THERE WERE NO SIGNIFICANT QUARTER-ON-QUARTER AND YEARON-YEAR TREND FOR PROPERTY DEVELOPERS, IT WAS RATHER UNINSPIRING AS THE QUARTERLY SALES PERFORMANCE SHOWED RATHER FLATTISH TO DECLINING TRENDS. the higher side, averaging at 81% as of 2QCY14, whereby Malaysia’s five larger bank i.e. PBBANK, MAYBANK, CIMB, AMBANK, RHBCAP has hit LD ratios of between 87.8% 100.8%. Accordingly to our banking analysis, in order for banks to grow loans growth further, they will need more deposits. On this front, the competition for more deposits has been rising whereby banks have been aggressively advertising in the media to lock in more fixed deposits (FD) through having periodic promotions by offering higher than usual FD rates at ~4-5%. That said, we still expect to see more property launches in 4Q14 (post Budget-2015) as the months running up to Budget-2015 were very quiet. However, developers are more cautious and we observed them fine-tuning their products offerings and breaking up launch sizes into more digestible sizes. Developers are also buffering a longer lead time in terms of conversion of bookings to SPA sales and are embarking on more advanced buyers’ credit screening before even bookings can be made. In essence, developers are going to have to work very much harder.


As for next financial year’s sales guidance, most developers have yet to make a commitment but seem to lean to the side of caution. Many of them cited that the next few months will serve as indicators for FY15E sales. Note that we may trim more of our sales and earnings forecasts for FY15 in our upcoming strategy report.


Thus far, IOIPG, MAHSING and CRESBLD have announced cash calls on the premise of financing CAPEX, project infrastructure and balance sheet management. Sunway will also be spinning off their construction arm, Sunway Construction, by end 1HCY15 while WCT is expected to “REIT” their investment properties in 2015. We get the sense that developers are preparing for a challenging 2015. We do not discount more cash calls or unlocking of values in the coming quarters from developers under our coverage, particularly those with steeper net gearing levels or hefty commitments in terms of CAPEX, overseas projects or sizeable project infrastructure costs. Also, landbanking opportunities may also arise in challenging times, particularly when landbanking has been challenging over the last few years, and developers need to have ready financing in place to seize such opportunities. We expect most of the developers under our coverage to embark on some form of cash calls, save for UOADEV, CRESNDO and SPSETIA whom we expect will rely on their strong internally generated funds or borrowings.


(i) OUTPERFORM: CRESNDO (OP; TP: RM2.95), CRESBLD (OP; TP: RM1.52), HUAYANG (OP; TP: RM2.60), IOIPG (OP; TP: RM3.10), MATRIX (OP; TP: RM3.48), MAHSING (OP; TP: RM3.05), SUNWAY (OP; TP: RM3.87), MRCB (OP; TP: RM2.48). (ii) MARKET PERFORM: TROP (MP; TP: RM1.28), SPSETIA (MP; TP: RM3.30), UEMS (MP; TP: RM1.93), UOADEV (MP; TP: RM2.00). (iii) ACCEPT OFFER: IJMLAND (AO; TP: RM3.55) (iv) ON OUR RADAR RECOMMENDATIONS: IWCITY (TB; FV: RM3.39), KSL (TB; FV: RM6.63), GOB (TB; FV: RM1.23), GLOMAC (TB; FV: RM1.27), GUOCO (TB; FV: RM2.95), SBCCORP (TB; FV: RM3.24), TITIJYA (TB; FV: RM2.95-RM3.32).

UNDER REVIEW Our sector call (previously NEUTRAL) is UNDER REVIEW with a potential downside bias to CALLs/TPs for stocks under our coverage and under our On Our Radar space, pending our upcoming sector strategy. While developers are still banking on a pre-GST demand rally in 4Q14 and 1Q15, we are taking a more moderate stance on the matter as lending liquidity to the property space has slowed down tremendously, which will cap demand upsides. The sector may go through a period of declining sales and cost pressures, which will hurt future earnings. We are also concerned that we will be seeing structural change in the developers’ space once GST is implemented, which will have implications on valuations. Currently, average discount to FD RNAV for developers under our coverage is 41% vs. historical peak discount levels of 55% (historical low is 25%). Those under our On Our Radar recommendations are pegged at 45%-60% discount rates.

Kenanga Investment Bank Berhad is the No.1 Retail Broker in Malaysia as named by Bursa Malaysia Berhad with extensive experience in equity broking, investment banking, listed derivatives, treasury, corporate advisory, Islamic banking, wealth management and investment management. | JANUARY 2015




How do you distribute properties fairly in your will? By: Azhar Iskandar Hew

o Pa Pa and his wife are finalising their Wills. They want to be fair to all their four children and avoid being accused of favouritism. He and his wife decided to give all they have, including four jointlyowned properties, equally to their children. Is this the best way to distribute, especially when it comes to properties? There is no right answer that would suit everyone. However, here are some tips that may be helpful. Giving properties equally to children would be the easiest way to distribute but this may cause problems. Take for example, Ho Pa Pa and his wife’s case. They would like to have the properties distributed equally but it may cause serious problems in the future and give rise to


disputes between siblings. For example, where a property is shared by four children (two sons and two daughters) in the Will, there will be fragmentation of ownership as shown below especially after they get married and have children. This means that the number of owners will multiply due to marriage and inheritance.This would cause the following problems: • •

Fragmentation of ownership which is obvious; Difficulty to obtain consent to sell the property when a good price is offered as unanimous consent is required; Similarly, difficulty in letting the property because of

A’s Husband & Daughter

Daughter A

Son B

B’s Wife & 2 Daughters

C’s Husband & 3 Sons

Daughter C

Son D

D’s Wife with 1 Daughter & 2 Sons

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Deceased survived by Spouse only Spouse & Issue Spouse, Issue & Parents Issue only

Spouse 1/1


1/3 1/4

Issue & Parents Parents only Parents & Spouse

• • •


lack of agreement as to rental terms; Disagreement among the many owners as to who can reside in the property and whether rent is to be collected; Difficulty in collecting every owner’s share of costs such as repairs and garden maintenance; Possibility of the property being abandoned due to disagreement between the many owners; Potential forfeiture of the property when the local council taxes are not paid over a period of time.

The above are typical of some of the problems that jeopardise the relationship of otherwise close siblings especially when they start their own families. When you pass a house that is left in a state of disrepair, unoccupied, unkempt and with an overgrown garden, chances are such a house is the subject of disagreement or apathy over the maintenance of the property that is coowned by siblings who fail to reach mutual agreement. It would be tragic for the parents to create an eventual situation such as fragmentation of property ownership that is likely to promote discord rather than family togetherness, because of lack of proper planning. WHAT COULD BE THE SOLUTION? If there is only one property to be shared by four children, one of the following solutions could be adopted instead of distributing it equally to the children: •

2/3 2/4 1/1



1/3 1/1 1/2

• •


Hold the property on trust until the youngest is, say, 25 years old (or such age deemed fit). Before the youngest reaches that age, the children shall be allowed to reside in the property rent free. At the end of the period, the property could be offered to be sold to any of the children who shall pay to purchase the respective portions of the inheritance of the other children at the market value as determined by reference to a professional valuer at that time, failing which the property could be sold to a third party at market value.

Sell the property at market value and hold the proceeds of the sale for the children until the youngest child attains the specified age. Have the property rented out and the rental income net of expenses used to maintain the property and any surplus set aside or distributed as allowance until the youngest is of the specified age. When the youngest have attained that age, the property can be sold to one of the children or to a third party at market value. The proceeds can then be distributed to the non-purchasing children in equal portions.

If there is more than one property, say, four properties, then each child can receive a property. While each property may not be of equal value, the child who receives a lower value property can be given other assets as part of the inheritance to equalise with the one who receives a property of higher value. As circumstances in the family may change, it is advisable that the testator reviews the Will every two to three years and considers property value fluctuations. Besides this, the distribution will be even more complicated when a non-Muslim dies without a Will because the Distribution act 1958 (amended in 1997) would apply and it also causes the difficulties mentioned above. The distribution of wealth will be as above: Issue of the deceased would include the grandchildren of the deceased i.e. the children’s children. They would be entitled to their parent’s portion if their parent predeceased the deceased. The fragmentation and problems caused by intestate distribution under the Distribution Act 1958 cannot be avoided simply because the deceased did not leave a Will stating his preference. In short, having a Will is important when deciding the most practical way of distributing wealth. Often professional estate planners who are supported by their legal advisors would be able to assist by sharing their experiences and ideas to overcome the problems of distribution of one’s property. | JANUARY 2015




hy is it that some businesses or restaurants seem to bloom in one place, but fail in another? Or how come one business succeed in a particular location but the neighboring tenant is unable to earn even a cent, even though they are in the same location and doing the same business? The ability for a business to succeed in a certain location is often attributed to the premise’s Feng Shui and in business today, it is about having that hidden edge to stay one step ahead of the competitors. While it can be possible for Feng Shui to play a part in a business success, we have to understand why the Feng Shui of the location works and why it benefits a particular type of business. For any commercial property, the fundamental principle behind every successful business is simple enough. You will need to find the direction of the Qi, harness it and then tap into it for continuous flow of positive energy. To do so, one must determine from which direction the Qi flows and which area it enters. When you have determined the general direction of the Qi, it must then be allowed to settle. This requires a Ming Tang or Bright Hall, which can be in the form of a bright park or open space in front of the property. This


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park can function as the Bright Hall and it will enable Qi to gather and to settle into the business property. As Qi gathers at the boundaries of Water, roads will act as carriers of Qi in the modern world that we live in. Take a look at the roads in the area. See how some roads slowly curves down subtly and not in a steep incline? Like the gentle river flowing from the highest peak to the bottom, the flowing Qi should drift and move slowly and not gush down the road like a raging tsunami – otherwise it becomes Sha Qi or the ‘Killing Qi’, which spells bad luck for anyone and any businesses. FIND THE QI Since a commercial property needs customers and as the Wealth energy is symbolised by Water which flows downhill, most shops or commercial buildings should be located on the lower side of the road or near the bottom of a landscape to better harness Wealth luck. Ideally, these properties should also be developed or purchased sitting in the East, Southeast or North as it would prove beneficial for both the owners and renters as well. Once the owner is aware of this auspicious opportunity, all they need to do is to open a door – that is ample and wide, to receive the Qi. Depending on the premise location and how fortunate this establishment

is, they may even find that their Qi and Wealth constantly circulating in and around them. By literally opening more than one entrance, this allows the Qi to enter the area. Even more so, if the main or largest entrance is the one located exactly at the point where the Qi enters the area. Though most properties can be considered fortunate in that sense, some are not without their own negativity. A number of the older types of properties are designed with sharp corners and are located within straight lines or narrow gaps. And as a result of these design features, the Qi energy surrounding these types of properties becomes Sha Qi – a sharp, fierce and merciless energy that moves aggressively and quickly. It can come in a variety of sources – the most obvious source of Sha Qi is sharp, pointy objects such as a T-Junction, roof-edges, a pylon, sharp mountain peaks or straight roads are some such examples. Sha Qi can also be produced when wind is ‘focused’ through narrow gaps, for example, between two buildings. Do note however that plants and furniture themselves do not produce Sha Qi and as such should not be cause for concern. Although it is near impossible to live in today’s modern society without any form of something sharp somewhere in the environment, the best defense against Sha Qi is to be practical and use some common sense. As long as these offending features are not ‘harming’ the Qi of your business, then it is wise to not panic and to continue on. Short of destroying or renovating the offending Sha Qi affecting features, the next best option is to find ways to re-align the Qi pathways and help minimise the Sha Qi. This is because Qi, like all forms of energy, cannot be destroyed or dissolved but can only transformed. In the end, Feng Shui is not just about being paranoid and constantly worrying if your business is successful or not. It is about being observant and discovering how an area works and why such a business is able to prosper. When you are finally able to do so, then you can truly understand the versatility that Feng Shui plays in the world of real estate today.

ABOUT THE CONTRIBUTOR Dato’ Joey Yap is Asia’s Leading Feng Shui and Chinese Astrology Consultant and the founder of the Mastery Academy of Chinese Metaphysics, a global organisation devoted to the teaching of Feng Shui, BaZi, Qi Men Dun Jia, Mian Xiang and other Chinese Metaphysics subjects. He is also the Chief Consultant of Joey Yap Consulting Group, an international consulting firm specialising in Feng Shui and Chinese Astrology services. | JANUARY 2015




HANGING IN, HANGING ON In an uneven property market, how will Malaysian real estate sector perform this year? t is important to remember that the property market is all about supply and demand. On the supply side, the government is continuing to boost house building across the country especially with affordable housing, and recent output figures from the construction sector reflect this. Just to recap, of the 126,000 units proposed in 2013, only about 10,000 commenced construction in 2014. To reach the earlier set goal, commencement of affordable homes construction in 2015 will need to be stepped up


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to 120,000, failing which, the actual number of affordable homes constructed may fall far below target. Affordability is a key discussion in 2014 and years to come. For me personally, properties are only affordable to some people but not to others and the gaps are widening. For first time home buyers, houses are always not affordable. I remember paying RM90,000 for my first property with 30 years loan and totally have no idea how I am going to pay my monthly instalment. As we all know, house prices tend to rise

The main driver for price market price growth in recent years has indeed been the consistent shortage of good quality housing product in highly sought-after locations. have low relative rental yields (mostly negative cash flow for three to five years) and will likely have its best period of growth behind it! Yes, it will continue to grow, but as an investor your goal should be to buy property in an area that has the capacity to become a future prime area, and to buy it before it takes off. Then, its greatest period of growth will occur while you own it. Generally, the sentiment or drive for real estate investment is still strong in Malaysia. This is evident in our annual PRISM event where we registered more than 3,000 participants. Loan growth for banks in Malaysia was at 10.6% in 2013, and for 2014 we should be recording 9.8% growth with residential mortgage taking the lead.

when stock is low. With more houses being built, particularly in the lower end of the housing market, this could also have an effect on our house prices. The main driver for price market price growth in recent years has indeed been the consistent shortage of good quality housing product in highly sought-after locations. 2015 will see a price growth especially in suburban area. Even though Malaysia property has not gone through the roof, some of the suburban area or fringe suburbs in Klang Valley has experienced 30% appreciation in less than two years. In my opinion, properties in prime area are not the best investment. They used to be – before they became prime. A property in an area that is prime will come at a premium price,

Relatively low interest rates are driving a lot of property investor activities, and the prediction for 2015 is that there won’t be a lot of fluctuation in our Base Rate. Suburbs with growing infrastructure, easier transport access and pleasant amenities with median values around RM500,000 to RM600,000 are much more likely to experience price appreciation than suburbs with medians price around the RM1.2 million cap. 2015 will be a very fragmented market. Nevertheless, with Malaysia stable economy, growing population and relatively low interest, how bad could our property market be? I always believe property investment is medium to long term investment. However, for speculators who always go after ‘The Flavor of The Month’ where fundamentals exceeded, some cautions must be exercised.

ABOUT THE CONTRIBUTOR KK Chua is the publisher of Property Insight magazine. He is also a registered real estate agent and an investor with more than 10 years of experience in the industry. He can be contacted at | JANUARY 2015




rend Beyond Colours is the first event in the Malaysian paint industry to address up-and-coming trends and take trends beyond colours. Property Insight Malaysia got a hold of Nippon Paint Malaysia group general manager Gladys Goh along with Serene Pang, member of Colour Marketing Group, Sales & Marketing Director of The Duha Group, Singapore, to talk about colours and its unique attributes to property investments.


HOW IMPORTANT ARE PROPERTY ENHANCEMENTS? Goh: Property investors are always looking at long term financial benefits with minimal upfront investment. The investment, both financially and time wise, is minimal but can have long term effects that will boost the property’s aesthetic appeal. By having modern and neutral colouring as well as current paint trends, investors can attract more renters and more buyers, and at the same time, improve the property’s value. With the broad range

of products we offer, it doesn’t have to stop at wall colours. Investors can now update outdoor concrete, wall tiles and even glass with a coating of paint that will truly uplift and recreate an area. Our coatings also help reflect heat whilst cooling houses, provide anti fungus support, cover hairline cracks, absorbs formaldehyde and keep properties fresher for longer, which in turn keeps rental tenants very happy. As the paint leader in the industry, we believe that it is more cost effective as well as easier maintenance in the long run if one uses paint. For instance, we offer paints that are ‘washable’, which allow dirt to be cleaned out from the surface easily. What’s most important is that paint can also protect the surfaces and ensure it lasts longer. Instead of using expensive materials to furnish the interior and exterior of a building, we can now offer a better alternative to developers and home owners. We can even provide safer options. Investors can even create trending looks to emulate real stone (Nippon Stone Art paint), or metal effects by using our paints

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to keep the property looking modern for only one eighth of the original material’s cost. With our beliefs that quality and total commitment to research and development are keys to our success in paint innovation, paint can now offer the similar aesthetic designs and textures that raw materials use to provide. HOW HAS THE TREND OF COLOURS EVOLVED? Pang: Trends have always evolved as a part of the Western world palette. The big difference this year is that this is the first time trends have been forecasted for the Asian region specifically, and this is something we will do from now on. Asian trends and culture are evolving greatly and influencing more countries than ever before. With that, Asia needs to be highlighted and changing trends need to be monitored so that we can grow and promote Asian sentiments and diversity. The other big difference is trends use to be forecasted for 36 months. However the market is moving much more rapidly. As such, forecasting needs

to be done more regularly. In fact, this year’s trend forecast has been done for the next 12 to 24 months. Consumers are also wanting more than just colours, really demanding paints and effects to complement colour trends. HOW DO COLOURS AFFECT THE DOLLAR VALUE OF A PROPERTY? Goh: The first thing you look at when you enter a home is the walls; they’re the largest and most obvious feature of a home. I believe the first thing you notice is the colour and the quality. With a more appealing colour palette and a better paint job quality (no mould, no peeling paint etc.), the more positive impact the property will have on potential buyers, property valuators and rental tenants. If a home looks like it is ready to move in with no effort whatsoever, the property is going to be valued higher as it is more appealing. By using modern trends, the investor and home owner can appeal to the current market and increase demand as well as want for that property. WHAT CAN HOMEOWNERS DO TO IMPROVE THEIR PROPERTIES WITH PAINT PRODUCTS? Goh: The great thing about paint is that application is quick and easy, making renovations incredibly cost effective and affordable. Home owners can easily change themes and colours in their home on an annual basis to keep up with trends and increase property value by remaining modern and

current. With Nippon Paint MomentoTM Special Effect Paints, home owners have the ability to make walls and floors look like stone, metal and wood without having to invest in raw materials. Paint can also be applied on numerous surfaces allowing home owners to modify and change the look and feel of their home without having to do major renovations. For example, tiles can now be painted and so can concrete, completely altering the look and feel of an area without having to remove and change materials.

Asian trends and culture are evolving greatly and influencing more countries than ever before. With that, Asia needs to be highlighted and changing trends need to be monitored so that we can grow and promote Asian sentiments and diversity. – Pang With Nippon Paint MomentoTM Special Effect Paints, home owners can also enhance and alter their current walls to create a brand new look without having to change their current theme. For example; say you have a green feature wall and you still really love the colour, but want something different or more modern you could use the Nippon Paint MomentoTM Gold Frost. All you need to do is paint the frost over the top of the current colour

and you will get a completely different look and feel. The semi-transparent paint allows the original colour to come through but brings a glimmering new style. WHAT ADVICE WOULD YOU GIVE TO HOMEOWNERS IN SELECTING TYPES OF PAINTS, ALONG WITH THE CHOICE AND MIX OF COLOURS? Goh: This purely depends on what the home owner’s purpose is. If the home owner is looking at selling the property, we would recommend looking at the trending colours in our Trend Beyond Colours booklet, which is available online or by visiting your local Nippon Paint Store. The booklet allows you to see not only what colours are trending at the moment, but supplies a full palette so that you can ensure each room in your home complements one another. For selling properties, more neutral colours are the way to go. If it is for personal use, the booklet is also a great point of reference to identify what colours appeal to you, as well as what colours match your current furniture and themes, and then from there, the palette samples can supply a range of suggestions. The Nippon Paint MomentoTM paints can also enhance the colours to suit your personal preferences and complement current themes in your home. It is important to remember trend does not come from one colour or one style so you really can get creative with this. If you feel out of your depth, there is always a Nippon Paint expert waiting to help you.

Another thing home owners can do is purchase an online sample kit for Nippon Paints MomentoTM paints. This kit gives them the chance to play with Nippon Paint MomentoTM paints and makes matching colours with current home themes a lot easier. The kit even comes with a plastic sheet, so that you can hold samples up to your wall for a better idea. FOR HOMEOWNERS INTERESTED IN DIY PROJECTS, WHAT TIPS CAN YOU GIVE THEM? Goh: Be confident, so many projects can be accomplished on your own. At Nippon Paint we are driven by our Re:Think, Re:Create philosophy. We want you to step outside of your comfort zone and push boundaries. That is one of our main purposes for the Trend Beyond Colours event. We aim to inspire people to think ‘Beyond’ the ordinary. Our Create It Yourself (CIY) channels really help users embrace this philosophy in a safe and guided manner. Home owners that are interested in DIY should really check out our website and YouTube channel where we have a lot of CIY ideas. We have designers and home owners taking you through, step by step projects including some that can even be done with your kids and families. Each video comes with a downloadable activities sheet that outlines exactly what you need and how to do it. Home owners can also visit us on https:// nipponpaintblobbies to connect with us and stay | JANUARY 2015



updated with new CIY projects as they are posted. Again, we would also suggest to use our Nippon Paint MomentoTM sample kit so that you can have a good practice before you try to Re:Create your own home projects.

represents the growing free-spiritedness of what used to be a straight-laced individual; Pretty Box (NP R 1321P) pushes gender boundaries and expresses that the power of pink can be for both him and her; and Carrothead (NP AC 2065A) conveys the Asian


With Nippon Paint MomentoTM Special Effect Paints, home owners have the ability to make walls and floors look like stone, metal and wood without having to invest in raw materials. Paint can also be applied on numerous surfaces allowing home owners to modify and change the look and feel of their home without having to do major renovations. – Goh

Pang: The nine colours are across three inspirational themes – ‘Just Me’, ‘Sacred Love’ and ‘Revo-Evolution’ – these themes represent the evolving socio-ecological consciousness sweeping across Asia today, promoting Asian sentiments as well as diversity. The ‘Sacred Love’ theme features Persian Blue (NP BGG 1588T), a colour inspired by the best gifts of nature; Dinosaur Gray (NP N 2042P) is a stance against pollution and destruction; whilst Esperina (NP BGG 1750A) is a touch of nature in the concrete jungle we live in today. ‘Just Me’ recognises the vivacity of the new emboldened Asian – Yellow Jasmine (NP YO 1100D)

spontaneity and positive outlook to life. The ‘Revo-Evolution’ theme features Blue

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Award (NP PB 1520D), a colour that symbolises our sense of hope and positivity; Painted Frame (NP N 1904A) is a loud statement of sophistication; yet contradicted by Olde Rose (NP N 1893P) that represents the internal search for admiration as well as respect. They are set to trend because several designers and architects in the industry have researched trends across multiple industries including; Automotive, fashion and entertainment. The industry professionals then brainstormed vigorously about the shades and colours that truly influence and affect Asia to forecast the nine colours listed above. WHAT FUTURE TRENDS CAN WE EXPECT? Goh: Evidently, trends are really expanding beyond just colours. I think in the future you will see greater influence on textures and enhancers that can really create special effect looks. Paint is also changing the way we implement trends. For example, stone buildings

have always been a trend however now you can use paint to create that look. I think in the future we will see more design trends alter from raw materials to paint supplements. That is why we have the Nippon Paint MomentoTM paint series and we continue to work on research and development in this area. With more than 129 years of history to its credit, Nippon Paint is proud to bring you cutting edge solutions that meet your every need. About Nippon Paint Nippon Paint is equated with high quality and innovative product breakthroughs, making it the number one paint brand in the Asia Pacific region. In line with its commitment to providing total coating solutions to our diverse clientele, Nippon Paint offer an extensive range of products and thousands of colours to choose from. As the industry leader, Nippon Paint is committed to delivering the highest standards of quality through continuous research and development under stringent quality control, and leading in cutting edge solutions which meet with today’s changing needs worldwide.

“ A little


is all you need”






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Property Insight January 2015  

Property Insight is a monthly property investing magazine.

Property Insight January 2015  

Property Insight is a monthly property investing magazine.