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PUBLISHER’S MESSAGE Have you ever asked yourself the 5 W’s and 1 H’s of investing? In regards to the 5 W’s and 1 H’s, the words that I had meant were what, where, when, which, why, and how. What are you investing in? Where are you investing? When should you invest? Which development should you invest in? How should you invest? Why are you investing? Curiosity can become a very powerful force. It drives us to seek answers by questioning the things we see, hear, and feel. More often than not, when we find the answers, they lead us to more questions, paving the way for us to have a better understanding of the things that we question. Real estate journalism has the potential to empower society to achieve a better quality of life, by highlighting both the problems and solutions, that affect society and stakeholders like home buyers, entrepreneurs, developers, real estate agencies, authorities, and investors alike. This goes beyond looking for a place to stay, to invest, or to do business within. At Property Insight, we are delighted to walk that journey together with you. By questioning the issues that matter in our lives, we continue to look for the answers that matter to us. Together, we will have the Property Insight that will make our lives better. Thank you for being there together with us. Lastly, to all our Muslim readers, Selamat Hari Raya. Maaf zahir dan batin.

PUBLISHER KK Chua kkchua@propertyinsight.com.my CHIEF EDITOR Mak Kum Shi editor@propertyinsight.com.my SALES & MARKETING Janet Loh 012-205 0911 janet@propertyinsight.com.my Andy Fam 012-601 9938 andy.fam@propertyinsight.com.my Chong Wei Yeen 012-927 2863 weiyeen@propertyinsight.com.my Hagenz Choo 016-221 9077 choo@propertyinsight.com.my FOR ENQUIRIES: enquiries@propertyinsight.com.my

PUBLISHER Armani Media Sdn Bhd (1032085-H) No. 32-3, Jalan Pekaka 8/4 Sec 8, Kota Damansara 47810 Petaling Jaya, Selangor Tel : +603 6156 3366 Fax : +603 6156 3399

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PRINTER

PROPERTY SHOWCASE 2015

Date

03 - 05 JULY 2015

Time

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Venue

(Fri-Sun)

MVEC, MID VALLEY MEGAMALL

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 COVER PHOTO Quayside Seafront Resort Condominiums,Penang by E&O Development

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Although every reasonable care has been taken to ensure the accuracy of the information contained in this publication, neither the publisher, editors, writers nor employees or agents can be held liable for any errors, inaccuracies and/or omissions. The contents of this publication do not constitute investment advice. It is intended only to inform and illustrate. No reader should act on any information contained in this publication without first seeking appropriate professional advice that takes into account their personal circumstances. We shall not be responsible for any loss or damage, whether directly or indirectly, incidentally or consequently arising from or in connection with the contents of this publication and shall not accept any liability in relation thereto. The views by our contributors expressed here are their personal opinions and do not necessarily reflect Property Insight’s views. The publisher does not endorse any company, organisation, person, investment strategy or technique mentioned in this publication unless expressedly stated otherwise. The publisher does not endorse any advertisements or special advertising features in this publication, nor does the publisher endorse any advertiser(s) or their products/services unless expressedly stated to the contrary. All rights reserved. No part of this publication may be reproduced in any form or by any means, including photocopying and imaging without the prior written permission of the publisher.


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CONTENT

COVER STORY 16

Pearl of The Orient

Penang’s property market is glowing brightly and evolving rapidly

16

DEVELOPER OF THE MONTH 40 Building The E&O Brand

From luxury hospitality to developing prestigious

PERSONALTY OF THE MONTH 44 Started From The Bottom Up

Dato’ Sri Dr. Vincent Tiew is revealing the sustainability secret of Andaman Property Management Sdn Bhd in the Industry

44

Quayside Seafront Resort Condominiums, Penang by E&O Development

FEATURED PROPERTY 26 Achievable Aspirational Living - The Tamarind

You may have dreamed of being a part of a world-class waterfront community. It is now possible with The Tamarind Executive Apartments at Seri Tanjung Pinang, Penang

26

INVESTOR NEXT DOOR 52 My Cup of Tea

Rachel Lim shared with Property Insight on her journey in property investment

INTERNATIONAL MARKET 56 The Lion City

The Singapore property market in 2015 is going great guns

HOME PLUS 60 How Secure is Your Home

Find out how the Sharp Cloud SmartHome Systems keeps your home safe and secured

MAIN FEATURE 30 Connect with LRT 3 Connectivity, the catalyst of a developed country

AREA FOCUS 34 Serdang The area has grown in leaps and bounds with the developments of property and infrastructure

STRATEGY 66 The Rising Demand for Shariah Compliant Properties 70 Feng Shui - More Than Mystic Mumbo-Jumbo 72 Securing Children’s Future with Insurance Trust 74 Are You Too Biased To Be A Successful Property

Investors?

78 Knowing When To Listen and When To Act


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NEWS AND EVENTS

PROPERTY & HOME SHOWCASE AT IPC, MUTIARA DAMANSARA

P

roperty Insight’s Property & Home Showcase, which was recently presented at IPC Shopping Centre at Mutiara Damansara from 18th to 24th May 2015, was well-received by home living and developer exhibitors, as well as shoppers within the neighbourhood.

Among the developers that had presented a wide range of property developments for investors’ consideration included Jalin Realty, Foresthill Damansara Land, Paragon Mastery, KLK Land, M K Land, Titijaya, De Centrum, Smart Niche, Sunway,

THE JEWEL OF DAMANSARA HEIGHTS RAISES DAMANSARA

Damansara City topping-out ceremony marks completion of development

D

amansara City created a key milestone in the up market Damansara Heights enclave as it held its topping out ceremony at a private event recently. The flagship development of GuocoLand (Malaysia) Berhad (GuocoLand), with a gross development value of RM2.5 billion will be welcoming residents by the end of the year and corporate tenants by the second quarter of 2016. “The jewel of Damansara Heights, Damansara City is an integrated development consisting of two Grade-A office towers, two high-rise towers of luxury residences, an F&B-centric lifestyle mall and a 5-star hotel. It is a designated Entry Point Project under the Economic Transformation Programme to elevate Malaysia to developed nation status by 2020 and has already started to bring new life to the established highend enclave of Damansara Heights. 10 I JULY 2015 www.propertyinsight.com.my

We are very excited at the prospect of the development coming to life and the spawning of a new community in the neighbourhood very soon,” said Tan Lee Koon, Managing Director of GuocoLand. Today’s event marked the topping out of the final tower on the project which is the future home of the 5-star hotel. Damansara City is an ultra-modern and environmental friendly development with MSC status certification development that is compliant with the Green Building Index (GBI) Certified rating; the Leadership in Energy & Environmental Design (LEED) Gold rating; and CONQUAS Quality Assessment for building construction works. Investments have been made on infrastructure like the new traffic management tunnels, an underpass, flyovers and a pedestrian bridge. Damansara City is set to blend itself

Tropicana, Mah Sing, and R&F Development. Home buyers and owners were also treated to a wide range of home living and enhancement solutions, which were presented by Sharp-Roxy, Visionary, Ideahom, IMaxx, Belka, UTS Creative & Solutions, Blue Orange, MK Curtain, and Saffano. The response to the event was positive as it was strategically located at a place with high footfall of shoppers that are keen on dining, entertainment, and home solutions. Thus, this event was quite relevant to the shopping crowd within this vicinity. Visitors at the event were treated to insightful talks on real estate. Among the topics that were covered at the event included home financing, the impact of goods and services tax, property investment, home design, and feng shui.

into the surroundings, with potential to raise the value of the entire Damansara Heights neighbourhood Residents and tenants at Damansara City will also benefit from a whole range of facilities including a walking garden along the roof-top of the retail mall. This is in addition to the health and gym facilities that include an Olympic length salt-water pool and an aqua gym for residents and visitors at the DC Residency and the hotel. Damansara Heights’ strategic location, which is a mere five kilometres from the KL city centre, its close proximity to KL Sentral and other mature and wellheeled townships like Petaling Jaya, Bangsar and Mont Kiara, has been a main selling point and one of the unique development’s greatest strengths.


www.propertyinsight.com.my JULY 2015 I 11


NEWS AND EVENTS

MAPEX 2015 – TOWARDS GREEN AND AFFORDABLE HOMES

T

he 2nd series of MAPEX 2015 will be held in Sunway Pyramid Convention Centre in Bandar Sunway from 31 July 2015 (Friday) to 2 August 2015 (Sunday). This 3-day property showcase will be officiated by Minister in the Prime Minister’s Department, Dato’ Mah Siew Keong on 31 July 2015. This event will be opened to the public from 10.00am to 9.00pm and admission is free,” said MAPEX chairman, Datuk Ng Seing Liong. He added that the rapid urbanisation rate of 2.49% annual rate change according to the department of Statistics Malaysia has led to strong demand for affordable homes, especially in the Klang Valley and its surrounding areas. This in turn brings positive contribution

to the growth of the property sector despite the current soft property market. Therefore, MAPEX is aimed towards stimulating the property market, besides providing another opportunity for developers to showcase their products. The theme for the 2015 MAPEX is ‘Towards Green and Affordable Homes’, is in line with the government’s efforts to improve the standard of living and quality of life for all Malaysians through affordable housing with conducive and safe neighbourhoods. “According to McKinsey report, the

majority of household debt, which has reached an all-time high, is in the liability category and not in the asset category. Those categorised as liability debt includes car loans, credit card and personal loans, while asset loans such as housing loan only stood at 46%. Therefore, REHDA would like to encourage the government to relook into cooling measures, especially for first-time homebuyers so that they can afford to buy a home,” said REHDA vice-president Datuk Anthony Cho Tian Han.

THE NEXT BIG EVENT ORGANISED BY

Find out how Transit Oriented Development (TOD) i.e. LRT/MRT/HSR will change Greater KL’s property market. Top International Master Planners from the UK (Benoy) & USA (Jerde Partnership) will be flying in to share insights about TOD urban real estate trends in HK, Singapore, Japan and UK.

POSITIONING MALAYSIAN REAL ESTATE:

Post GST& & Plan 2015 11 thMalaysia

12 I JULY 2015 www.propertyinsight.com.my

MARK YOUR CALENDAR... Thursday, 6th August 2015 Royale Chulan Damansara Call Aisyah/Adilena at +603-7724 1878 or email us at events@malaysiapropertyinc.com http://malaysiapropertyinc.com


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2015 EXPO & SHOWCASE CALENDAR JULY

3-5 INVESTORS’ HOT PICKS PROPERTY EXPO 2015 Mid Valley Exhibition Centre, Mid Valley City Duration : 3 Days

AUGUST

7-16 PI PROPERTY SHOWCASE 2015 Tropicana City Mall, Petaling Jaya Duration : 10 Days

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14-15 PRISM 2015 The Largest Investment Summit & Expo Sunway Pyramid Convention Centre, Sunway Duration : 2 Days

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COVER STORY

PEARL OF THE ORIENT Penang’s property market is glowing brightly and evolving rapidly By: Daniel Sim

T

here aren’t really many islands in the world with bustling fullfledged economic activities in an ever-increasing population, which at the same time, as a state, that is deeply infused with its own distinct cultural values,” said Tan, a taxi driver based in Penang who brought us around the state. Penang has indeed been remarkably changed since the time of Francis Light, who began developing Penang in year 1874. Divided geographically into two parts, the Penang state comprises of Penang Island along the Straits of Melaka and Seberang Prai on the mainland, which is also developing rapidly. Both the mainland and the island are connected by South East Asia fifth longest bridge; The Penang bridge has a total length of 13.5km. This bridge is also the second-longest bridge in Malaysia. 16 I JULY 2015 www.propertyinsight.com.my

Marina Bay Panorama Source: E&O

The total land area combined is 1,084 square kilometres. Penang Island is further divided into north-eastern and south-western district, while Seberang Prai (the Penang mainland) is divided into north, south, and central districts. The north of Seberang Prai is the largest district in the whole Penang State. The mainland itself covers 71.68% of the state. The north-eastern and south-western districts make up Penang Island, consisting of 11.5% and 16.8% of the land area in Penang respectively. The smallest district is the northeastern district (where state capital George Town is located) on the island, which has the highest population density in Penang. It is also the heart of Penang where the economy, culture, and administration converges. “George Town was a happening place in the 70’s and 80’s. After the rent control act repeal, George Town became

a ghost town. Everybody left because no one could afford to rent. All buildings fell to disrepair,” said state chairman for housing Jagdeep Singh. “When George Town was listed by UNESCO as a World Heritage Site in 2008, people started to come back to rebuild and refurbish their building,” commented Jagdeep. He commented that the Penang local councils are very strict with refurbishing heritage buildings, as any offence relating to heritage buildings may cause Penang to lose its UNESCO status. According to the Department of Statistics, the population in Penang is growing at a healthy pace on an upward trend. The highest growth recorded was in year 2010 at 2.06%. AN ISLAND TO VISIT BEFORE YOU DIE Penang is listed as one of the island to visit before you die according to an article published by Yahoo web browser


Source: NAPIC. Picture by Henry Butcher Malaysia (Penang)

in year 2011. According to the ministry of tourism, and Penang Institute, the number of tourists arriving Penang hit a record high of 6.31 million in year 2008. “Penang has unique characteristics that make it attractive for a place of residence, employment, rest and investment. 7C’s – culture, care (medical facilities), choice (housing, education, worship, language), coasts (sea line and beach), connectivity (airport, bridges, banking, port, location), cuisine (no explanation needed!),” said Penang REHDA chairman Dato’ Jerry Chan. One question remains, could Penang maintain it attractiveness as a hotspot for property investment, and gaining more sought-after high net worth investors to its state at the same time? Property Insight went to Penang to understand more about the Penang property landscape. “In year 2008, a new state government took over Penang and we introduced the CAT concept in our administration which

stands for competency, accountability and transparency that definitely make the Penang very attractive to not just investors in Malaysia but also abroad,” said Jagdeep. He said that it is now a reality for Penangites to enjoy a greener, cleaner, safer and healthier lifestyle. “Besides the buildings, the state is cleaner because the new state government has taken back control of the local councils and has provided incentives for council workers to clean the streets,” explained Jagdeep. He said that the state government place a lot of emphasis on green policies, in the sense that it is visible to ordinary man where there are plants grown everywhere, especially on the streets of Penang. “On the macro level, we want to ensure the environment is sustainable, maintain and well- preserved. Therefore, we are very stringent when it comes to any environmental impact assessment report by all developments in the state.”

SAFE AND SECURE “The property prices in Penang are relatively higher compared to national capitals such as Bangkok in Thailand

Total Volume… Property Transactions H1 2014

Total Value… Property Transactions H1 2014

MALAYSIA

MALAYSIA PENANG

0%

Residential

8%

19%

Industrial

5%

Agricultural

6%

Development Others

0%

6% Residential

19%

Commercial

49%

PENANG

0%

0%

14%

9%

He cited an example where hill-slope development in Penang will only be approved if the land area is less than 76 meter high. The state government also encourages Penangites to practice healthier lifestyles by organising free programmes such as mammogram to prevent breast cancer, and also providing dialysis centres. In terms of infrastructure, the Penang state government provides bicycle lanes from town, all the way to QueensBay, where the Penang airport is located. “You should visit Penang on Sunday where the most famous financial district, the Beach Street, is closed from morning till afternoon, as it will be converted to become a walkway, and the entire heritage zone becomes a cyclist haven during weekend,” explained Jagdeep.

Industrial

58%

8%

Commercial

2%

9%

Agricultural

9%

12%

2%

7%

64%

Development Others

74%

20%

RM82,030 Bil.

RM7.2 Bil.

193,405 units Source : NAPIC

@ Copyright reserved. No part of this presentation may be reproduced without the permission of Henry Butcher Malaysia. Neither the company nor its employees shall be held responsible to anyone that uses or relies on the information contained herein.

37

12,929 units

Source : NAPIC @ Copyright reserved. No part of this presentation may be reproduced without the permission of Henry Butcher Malaysia. Neither the company nor its employees shall be held responsible to anyone that uses or relies on the information contained herein.

36

www.propertyinsight.com.my JULY 2015 I 17


COVER STORY or Jakarta in Indonesia, even though Penang is one of the smallest states in Malaysia,” said Joanne, an expatriate from Germany who lives and works in Penang Island. As a foreign resident who has live in Penang for the past one year, she felt that the relatively low crime rate and security issues surrounding ASEAN countries as a whole, helped to attract investors to spur property market growth in Penang. Jagdeep commented that the Penang state government is also coming out with a holistic security policy, such as having CCTVs placed throughout the state. He believes that this will help the police to fight crime. He has the statistics from PDRM, where the state registered one of the highest drops in crime rates in Malaysia. LOCATION AND INCOME MATTERS “Investors in Penang do not just look at having attractive property features but also where the property is located. In short, it is all about location,” said Jagdeep. He explained that the location involved elements such as the surrounding amenities and infrastructures. At the moment, Penang, like many other cities in the world, faces the issue of heavy traffic. According to a survey by Road Transport Department, in 2012, there were 2.2 million automobile users,

where 53% constitutes motorcycle owners and 43% owns at least a car. “Penang has its vision,” said Jagdeep. He boldly gestured that Penang wants to become an international intelligence city, which will make Penangites no longer trapped in the middle-income rack, where the state will become a high-income state. But how to make it happen? “We have to invite the world to Penang. We have come up with many programmes where we are creating BPO Outsourcing hub. We have Citibank, the biggest player in the world here in Penang, where over a trillion dollar are transacted,” said Jagdeep. “The state government is also engaging with players such as B. Braun, a German factory, to train the local workforce. The macro effort of this picture is that people would want to come and receive a pie of Penang,” cited Jagdeep. Therefore, it will not only drive the increase in population, it will also create demand, especially for property in the state. THE PENANG TRAFFIC MASTER PLAN “What Penang sorely needs is an integrated transportation system. This has been promised before in 2006 by the previous government. To handicap Penang in such a manner is to cut one’s nose to spite your own face,” said Chan. “The Penang state government understand this issue and has come up with a holistic approach to resolve this

Aerial view of The Light project by IJM Land Source: IJM Land

18 I JULY 2015 www.propertyinsight.com.my

Investors in Penang do not just look at having an attractive property features but also where the property is located, in short, it is all about location.” - Jagdeep

major obstacle. We have a traffic master plan that encompasses all modes of transport which include land, sea and the air. This is a 25-year master plan that will cost some 27 billion ringgit,” said Jagdeep. He highlighted that there were many parties willing to participate with the state to get this plan forward through the request-for-proposal stage. The state government also received positive feedback from the public during the public viewing events and objection sessions, located just below his EXCO office in KOMTAR. He mentioned that the state has announced three major highways and also one tunnel, linking Penang Island to Bagan Ajam on the mainland. Once all of them come about, there will be fewer traffic issues, which is very positive for people owning properties in Penang. “Penang government is doing their very best to improve the infrastructure, like widening roads, introducing new highway, increasing the number of public transportation options, with LRT and underground tunnel in the planning, and so forth,” said Reapfield


PROPOSED PROJECTS IN BATU FERRINGHI

Properties (Penang) director Florence Lim. She added that in Penang property market track record, property prices had never dipped drastically even during the recession or downturn. The prices merely consolidated. THE DILEMMA OF SUCCESS “When there is high demand, you cannot stop prices from going up. If

I have a property worth RM200,000 which I bought 5 years ago, and someone comes to me and offers to buy it for RM1mil, Penang state government cannot stop them at point blank,” Jagdeep commented. “Even though we do not want a property price bubble to happen, we cannot be the victim of our success,” said Jagdeep. He explained that the state government has a two–pronged

approach to mitigate this situation. “In order for property prices to be controlled, we have introduced cooling measures and implemented it two years ago. It takes time to see the effect. Other jurisdiction in countries like Singapore and Hong Kong are also experiencing similar issues where despite of having cooling measures introduced years ago, they are only beginning to see the effects now,” explained Jagdeep.

AT WAR WITH PROPERTY SPECULATORS Jagdeep highlighted that the Penang state government introduced several cooling measures in December 2013. Among them, having a moratorium for low- and middle-income developments, where the state government will not allow certain type of properties to be sold within a certain period of time. He stated that this move is to prevent property speculator from buying these properties at a cheap price from the state and sell it 2 to 3 times higher than its original value. Affordable housing costing between RM200,000 to RM400,000 that are developed and sold in Penang Island will

Skim Pecah Tanah jln S.P Chelliah_affordable house

www.propertyinsight.com.my JULY 2015 I 19


COVER STORY have a moratorium of 5 years. Affordable housing on the Penang mainland are beginning to be developed, where the prices range between RM150,000 to RM250,000. The state government also does not allow any property to be transacted within 3 years of the principal purchase, but those who decided to do so will be imposed a 2% approval fee. Foreigners who buy properties in Penang will have to fork out at least double the price floor set on the national level. For example, it is RM2mil to purchase a landed property and RM1mil for stratified properties in the island. It is RM1mil for both landed and stratified on the mainland. Foreigners will also be subjected to an approval fee of 3% from the price of the property. Surprisingly even with these measures, foreigners are still investing where Jagdeep mentioned that there were some 200 transactions since March, with revenue of about ten and a half million Ringgit collected for the state. “The 3% is sufficient to discourage speculators but will not deter genuine foreign buyers. This figure is much lower than what is imposed in Singapore and Hong Kong,” commented Chan MARKET REBOUND IN PENANG According to the National Property Information Centre (NAPIC), the state’s property market saw a rebound in 2014 as indicated by the expansion in market activity, as well as its firm price and rental market. There were 25,555 transactions worth RM13.77 billion recorded in the review period, up by 5.0% in volume, which was a turnaround from -21.4% the year before. Similarly, the value of transactions increased marginally by 2.1%. The residential sub-sector continued to steer the property market, capturing 72.0% of the market activity. Commercial sub-sector ranked second with 9.4% of the market share, followed by agricultural (9.2%), development land (7.3%) and industrial

20 I JULY 2015 www.propertyinsight.com.my

sub-sector (2.0%). Market movement across the board were mixed. Three sub-sectors made a comeback, namely residential, commercial and agricultural subsectors, showing positive growth of 4.0%, 7.0% and 26.0% respectively, after experiencing contractions in 2013. Agricultural and development subsector continued to chart a downturn of 8.2% and 4.5% respectively. In terms of value, residential and agricultural subsectors saw positive growth of 6.9% and 37.8% respectively. Nevertheless, commercial, industrial and development land recorded otherwise. Several major sales were recorded in 2014 involving one purpose-built office and four hotels. In the commercial subsector, the review period recorded then sale of a seven-storey office building known as Menara Transocean in Pengkalan Weld. Meanwhile, in the leisure sub-sector, the year witnessed the transactions of Grand Continental Hotel, located in Brick Klin Road, Yes Budget Hotel in Jalan Transfer, The Boutique Residences in Jalan Masjid Kapitan Keling and Sunway Hotel with total value of RM137.40 million. Prices of residential property continued to register stable trend across the districts with notable increases recorded in selected schemes. On the island, limited supply of landed property as well as established neighbourhood attractions have spurred up prices in east-west districts. Houses adjacent to the Sultan Abdul Halim Muadzam Shah Bridge, the new second bridge for the state, saw price escalations apart from those in established neighbourhood. In Seberang Perai Utara, schemes located neighbouring Pusat Bandar Bertam experienced capital gains such as Bandar Putra Bertam due to various commercial attractions such as Sunshine Bertam Shopping Mall, Mydin Wholesale Hypermarket Bertam and the upcoming TESCO, which was under construction. In the stratified segments, residential

property on the island continued to achieve significant growth especially those located nearby Bukit Jambul commercial centre and Bayan Lepas Industrial Area. Similary, in northern region of island (sea-fronting) condominium units with good locations obtained capital gains, partly contributed by demand from foreign investment through the ‘Malaysia My Second Home’ programme as well as increasing demand from local investors. The All House Price Index for state stood at 245.8 points as at Q4 2014, up by 8.0% over Q4 2013. In the residential rental market, the trend was fairly stable with substantial increases noted in selected schemes. Terraces and semi-detached units located nearby University Sains Malaysia such as Island Park and Bayan Baru experienced rental gains. Likewise, rental in Seberang Perai were stable with increases charted in strategic areas nearby Butterworth and Sultan Abdul Halim Ferry Terminal. Rental was equally stable in the highrise segment with several movements registered in established area, nearby higher learning institutes and Penang Second Bridge as well as various


neighbourhood commercial attractions. In the shops sub-sector, prices and rentals were stable across the board. However, several increases noted in prominent schemes with good accessibility, particularly in central town prime and secondary area such as heritage buildings in Core Zone George Town World Heritage Site. The opening of Penang Second Bridge had a substantial impact on the prices of shops and boosted the property market in the vicinity, evidenced by double-digit growth recorded in several schemes. Similar stable trends were seen in the shopping complexes and purposebuilt office buildings. Retail spaces in Gurney Plaza also witnessed stable rental after experiencing significant movements last year due to rental renewal commencements until 2016. In the industrial sub-sector, several movements were recorded particularly in areas with limited availability and good accessibility. The primary market saw the launching of 3,338 units, up by 52.4% against 2013. Sales performance was encouraging, as it increased to 46.8 % (2013:31.2%). Two to three storey

terraces formed most of the newly launched types, accounting for 28.8 % (962 units). In contrast, with the improved primary market, the residential overhang increased to 477 units worth RM205.34 million, up by 30.3% in volume and more than double in value over 2013. The unsold under construction also climbed to 3,227 units, up 70.5% whilst the unsold not constructed increased to 566 units (2013: 41 units). Most of the overhang and the unsold not constructed were condominiums, whilst the unsold under construction made up of two to three storey terraces. Shop overhang depicted similar situation as the numbers and value increased to 234 units worth RM123.61 million (2013: 40 units worth RM17.11 mil). On a positive note, the unsold under construction reduced to 154 units, down by 46.0% whilst the unsold not constructed remained nil. The industrial overhang remained minimal, with 15 units worth RM3.00 million whilst the unsold under construction increased to 95 units, up by 37.7% against 69 units last year. The retail sub-sector softened as the

overall occupancy contracted to 66.1% in 2014 against from 70.3% last year. There were three new completions namely Jusco Alma (AEON Mall) in Bukit Mertajam, MYDIN Kepala Batas and Udini Square in Green Lane offered 8708 sq.ft. of retail spaces entered into the market. As at December 2014, there were 100 existing shopping complexes, 2 complexes in the incoming supply and another four in the planned supply. The overall occupancy of purpose– built office buildings increased slightly to 81.9% against 80.6% last year. The sub-sector saw an annual take-up of 20,3222 sq.ft., in-review period higher than 68,533 sq.ft. recorded in 2013. The year witnessed one new completion, namely Hunza Tower, offering 91,073 sq.ft. Other new construction activity comprised four new commencements. As at end of 2014, there were 232 existing purpose-built office buildings with another 10 buildings in the incoming supply and three buildings in the planned supply. The performance of leisure sub-sector was promising. The overall occupancy of three to five-star grew to 62.4% this

Penang Aerial

www.propertyinsight.com.my JULY 2015 I 21


COVER STORY

Penang government is doing their very best to improve the infrastructure, like widening roads, introducing new highway, increasing the number of public transportation options.”

- Lim

year against from 42.6% in 2013. “I would think the properties near the new infrastructure such as the second bridge, the coastal highway as well as Seberang Prai would be new hot spots.” “The Penang market is generally soft but places where new infrastructure is being built is seeing transactions, especially for land,” said Malaysia Property Incorporated general manager Veena Loh. “If the infrastructure and job creation around the second bridge is carefully planned and built to ensure connectivity for the residents as well as workers, the property values could increase steadily and could one day rival that of the old city.” “The advantages are the convenience and availability of good and affordable food found in close proximity to most places,” she added. She stated that the drawbacks are the build-up in traffic congestion. Penang mainland is relatively undiscovered and offers stronger capital appreciation so long as jobs can be created in the new areas that are being opened up. 22 I JULY 2015 www.propertyinsight.com.my

AFFORDABLE HOUSING IN PENANG Jagdeep mentioned that currently Penang has 12 projects in all 5 districts that is expected to generate 22,454 units of affordable housing. He proudly stated that Penang is the first state in Malaysia to have 100% affordable housing guidelines, because developers in other states have to comply with low-cost and low-medium cost quota, which under the national policy is 30%. Affordable housing prices are capped below RM200,000 - RM400,000. While on the mainland it is capped below RM150,000 to RM250,000. Developers don’t have to fret , because, even though Penang introduces 100% affordable housing guideline, the state will provide the incentives, “otherwise the developers cannot (achieve) breakeven, as the land cost is very high.” “It is very encouraging to know that many developers have stepped forward to submit their property development plans. Today, we have 10,000 units to be built by the private sector at our control price,” commented Jagdeep. Jagdeep pointed out that the state does not want to compromise on the quality of these affordable properties and does not want people to live in chicken coops, Therefore, apart from the price, the size is also control in the sense that these affordable units have a size of between 750 sq.ft. to 950 sq.ft. According to Chan, chairman of REDHA Penang, property prices are expected to continue to rise over the next 4 to 5 years, largely due to cost (labour, fuel, building materials) and compliance cost. CHANGING LOW-DENSITY AREAS TO HIGH-DENSITY AREAS Jagdeep cited an example of a project in Batu Feringghi that was highlighted in the mainstream media recently, there were already so many high-rise blocks of low-cost housing in Batu Feringghi, the residents’ complaints were actually in relation to a block of mixed development next to their housing estate. There are squatters that need to be

relocated and it is the state policy that they are relocated. The developer has agreed as per state policy, where the squatters are given low-medium cost units, but the residents contend that it is being built too close to them, so it is not an issue of overcrowding Batu Feringghi. The state wants to preserve greenery and make sustainable property development. Developers who want to develop high-density development with affordable housing components will be allowed, after the main mode of transportation is identified, but the affordable housing component will be under the state’s control. THE FUTURE OF PENANG Jagdeep mentioned that property development in the northern-eastern district is very saturated. The state cannot break any heritage buildings as the area is UNESCO certified and they can’t develop in an over-developed island. “That’s why we are telling the people that the future of Penang is on the mainland,” Jagdeep said. The Penang state government is coming up with new satellite township in Batu Kawan. This is a 15-year master plan where Penangites from the island can reach the mainland via the second bridge. The location is called Bandar Cassia. “The second bridge has just been opened. IKEA will open in Batu Kawan by 2018. A lot more industrial activity is planned over at Batu Kawan,” said Chan. “Buildings such as IKEA, university, hospital and 15,000 affordable housing will be built right here.” He said that there will be a third connection which will be the first underground tunnel in Malaysia, once there is connectivity and amenities, it will help provide jobs and therefore we will see more vertical developments in the Bukit Mertajam/ Butterworth region in times to come. A visit to these regions indicated that some of the property developments are already reaching prices comparative to the island.


REINTRODUCE DIBS SCHEME “The property industry, particularly the housing sector in Penang is now undergoing a watershed change. After many good years of a good run, in pricing and demand, the shaking out has begun.” “Now in a very short space of time, planning is tightened, charges and fees come from all directions and in everincreasing amounts, price controls

introductions, eligibility of buyers tightened,” said Chan. “The state government is consistent in its effort to provide cooling measures to reduce property prices and at the same time provide affordable housing, but many of these applicants, especially from the low-cost and the low-medium cost income earners face up to 70% loan rejection rate, ”said Jagdeep.

He explained that the state’s view is that the DIBS scheme should be reintroduced for first-time qualified home buyers with preferential loan packages. This will help Penang property prices to stabilise and at the same time ensure a step forward to ensure every Penangites will have a shelter over their heads.

DEVELOPER’S POINT OF VIEW Mah Sing has gained notable presence in Penang with Southbay City Project, followed by Ferringhi Residence. Southbay City is just a mere 10 minutes away from Queensbay mall, the largest mall in Northern Region. The group currently has RM 2.7 billion in remaining GDV and RM 400 million in unbilled sales from its remaining 82acre of land bank in Penang. Southbay City is envisaged to be an international meeting point for both businesses and residents, as its mixed development components comprise of commercial, residential, shopping malls, hotels, food and beverage enclaves and office towers strategically located next to major gateways into the island. After completion, the group believes Southbay City will transform the property landscape of Batu Maung, Penang into an international enclave. Sprawled over 33-acre of land, Southbay City has an estimated total GDV of RM2.09 billion, and has to-date seen an overall 90% take-up rate for its Residential Suites and Retail Podium in Southbay Plaza, while its Seafront Residential Suites have also seen very encouraging response to-date. “The scarcity of land bank has been an issue in the island. Although there a number of affordable homes in the market, but these projects are in nonstrategic locations, it will not have significant impact on prime location properties.”

The loft-Southbay City

“We believe that prime land banks in Penang with developments within the selling price of around RM800,000 and above will continue to attract and receive good interest,” said Mah Sing Group Bhd general manager of marketing and sales Yeoh Chee Beng. “The Group’s end financiers have also been very supportive of our projects, a good indication of their confidence in the continued boom of the Penang property market.” “We are optimistic that our new launches in Feringghi Residence 2 and Southbay City will similarly also receive

good response,” said Yeoh. He pointed out that compared to the other cities in Southeast Asia countries, the selling price of Penang property is still within reasonable level. “Although many foreigners are interested in buying Penang property, the current approval fees of 3% of the transacted selling price has become their main concern in making investment decision,” commented Yeoh. In the face of inflationary and economic concerns, Mah Sing believes that property will continue to be the preferred investment option to hedge www.propertyinsight.com.my JULY 2015 I 23


COVER STORY

We believe that prime land banks in Penang with developments within the selling price of around RM800,000 and above will continue to attract and receive good interest.” -Yeoh

against such concerns. In the long term, the property price in Penang will still be in an uptrend mode, as the demand keeps on growing. “We foresee the selling price of niche market products in the island will gradually increase. For the properties in prime location, selling price continue to escalate,” opined Yeoh The continued demand for housing will be a key factor for the Group, and with the right products at the right locations we are optimistic of healthy take-up rates from consumers which will contribute positively to the Group’s revenue and earnings. Yeoh mentioned, the Group’s mid-and long-term business plan for Penang will be to continue focusing on expanding and identifying excellent land banks to expand the Group’s presence in Penang, supported by quality product offerings which meet the demands of consumers in strategic locations with strategic pricing points. “Our products slated for launch in 2015 in Penang Island will come with partial furnishing to add value for customers.”

“These include items such as kitchen hood, kitchen hob and kitchen cabinets, together with washing machine, dryer and air conditioning units. Every detail of our products is carefully thought of to provide a hassle free situation for our purchasers,” explained Yeoh. Mah Sing believes that Batu Maung has emerged becoming the new hotspot in Penang island. Batu Maung was just a fishing village around 20 years ago. However, it has experienced rapid development due to its proximity to Bayan Lepas Free Trade Zone (FTZ). Batu Maung is rapidly developing and growing into a modern commercial hub due to land scarcity and good accessibility. It is strategically located next to Second Penang Bridge, and just 15 minutes away from Penang International Airport. Several renowned Multi-National companies with factories are located in Batu Maung, including Motorola and Nippon Express. Batu Maung is just a bridge away from IKEA and Ikano Shopping Mall, located in Batu Kawan, Seberang Prai, is expected to be completed in 2018. “The property market is very much

Aerial view of The Light project by IJM Land Source: IJM Land

24 I JULY 2015 www.propertyinsight.com.my


When the location is right, there will always be demand,” said general manager of IJM Land Berhad northern region.”

- Toh

The Light Collection II - Marina

dependent on location, when the location is right, there will always be demand,” said general manager of IJM Land Berhad northern region, Dato’ Toh Chin Leong. He stated that projects below RM1 million price ranges seem to be doing quite well. However, IJM Land Berhad is also seeing a slowdown for projects above RM1 million. “Land in Penang is getting very scarce. In view of this, it constitutes to the rise of cost for building materials, petrol and GST which result in a tremendous increase in property prices. Apart from all this, there is also increase in compliant cost,” commented Toh. “As a result, the property unit sizes have become smaller due to the impending rise of the relevant costs. On the bright side, we still see a steady flow of incoming Foreign Direct Investment which will help to spur the state’s economy and tourism industry,” explained Toh. “There are three ways to overcome these issues. Firstly, is the land reclamation. Secondly, is to move the hill line further up to make way for more land and lastly is to redevelop old developments with low-plot-ratio to high-plot-ratio,” stated Toh when asked how the state government can help developers to overcome the issue of land scarcity and skyrocketing property prices in the state.  THE LIGHT Waterfront Penang is a project by IJM, consisting of three phases. Phase 1 consist of residential

development which include, THE LIGHT point, THE LIGHT Linear, THE LIGHT Collection I, THE LIGHT Collection II, THE LIGHT Collection III, THE LIGHT Collection IV. THE LIGHT Point, THE LIGHT Linear, THE LIGHT Collection I and II have been fully completed since 2010. The remaining two projects; THE LIGHT Collection III and IV are still under construction and are expected to be completed by the last quarter of 2015 and end of 2016 respectively. One of the main highlights of THE LIGHT Waterfront Penang is Waterways which is the first marine ecosystem in a Residential Precinct, the Waterways at THE LIGHT houses 6 million litres of water and is 65595 sq.ft. in size. There are 130 species of fishes and 36 species of invertebrates. We have forged a partnership with the Malaysian Fisheries Department by utilising the Waterways as an area for research and conservation for turtles and baby turtles. Phase II is a Commercial Precinct which will be positioned as Penang’s first mega-integrated waterfront icon. The dynamic mixed-use development is expected to house retail, entertainment, recreational, residential, business, hospitality and Meetings, Incentives, Conventions and Exhibitions (“MICE”) components.  The 32.76 acres of freehold waterfront site, the Commercial Precinct will be jointly acquired and developed by IJM Land Berhad with its Singaporeanbased joint-venture partner, Perennial

Real Estate Holdings Limited. Construction work is expected to start next year and is scheduled to be completed within five to seven years’ time. Spanning about 4.1 million sq ft in total Gross Floor Area, the preliminary concept of the one-stop destination is expected to comprise a shopping mall and thematic shops (38%), residential towers (26%), an office tower (16%), two hotels (13% with over 750 rooms) and a convention centre (7%).  The remaining 70- acre will comprise of mixed development which will include residential, retail development, office towers and a marina.  Phase III of THE LIGHT will be a 7-acre Seafront Park.  “For those keen on investing in Penang, they should find any property within their budget and make that purchase now. They should not wait for property prices to come down which is unlikely to happen,” opined Toh. www.propertyinsight.com.my JULY 2015 I 25


FEATURED PROPERTY

Facade

ACHIEVABLE ASPIRATIONAL LIVING

- THE TAMARIND

You may have dreamed of being a part of a world-class waterfront community. It is now possible with The Tamarind Executive Apartments at Seri Tanjung Pinang, Penang. By: Daniel Sim

L

ooking for a home with a waterfront address with a wide range of facilities within a cosmopolitan neighbourhood? Look no further. The Tamarind Executive Apartments by Eastern & Oriental Berhad (E&O) will fulfil your desires. The name E&O is derived from the iconic Eastern & Oriental Hotel, a cherished heritage landmark in George Town, Penang which is a living testament to the Group’s inheritance of values such as grace, refinement and appreciation of beauty. Building on its rich legacy, E&O is today a premier lifestyle property developer which has established a proven track record in developing distinctive properties in Penang and Kuala Lumpur. This prestigious developer has 26 I JULY 2015 www.propertyinsight.com.my

once again made its mark in the worldclass masterplanned development of Seri Tanjung Pinang with The Tamarind, a new premium waterfront address in Penang. WHAT MAKES THE TAMARIND UNIQUE? The Tamarind is a unique opportunity for young executives and families to own a prized property that is competitively priced and bears the hallmarks of innovation and style for which E&O has become synonymous. They will also have the privilege of owning a property in Seri Tanjung Pinang which is one of Penang’s most premier and highly-sought after addresses. Residents of The Tamarind will enjoy the holistic by-the-sea lifestyle that Seri Tanjung Pinang presents. Just a

5-minute walk from The Tamarind is the Straits Quay festive retail marina which offers a little something for everyone with its array of retail outlets, bistros, bars and boutiques. From the Straits Quay promenade, one can enjoy the picturesque boating scene of Straits Quay Marina. Owners who are performing arts enthusiasts will be excited to find at their doorstep notable performances at Penang’s first dedicated Performing Arts Centre (penangpac) also located at Straits Quay. Convenience will be one of the perks that The Tamarind residences enjoy as the Tesco hypermarket is also within a 5-minute walk away. Furthermore, the development is located just 15 minutes away from the city centre of George Town and Batu Ferringhi, making it


Kitchen

Living room

Master bedroom

convenient for them to conduct their activities be it for business or leisure. On the whole, The Tamarind is wellconnected by strategic access roads to important amenities such as schools, medical centres and shopping malls. Those seeking a breath of fresh air can either take an evening stroll at the nearby Straits Green, a 4-acre public park built and maintained by E&O or cycle along the 1.6km seafront promenade overlooking the Andaman Sea. Open not only to residents of Seri Tanjung Pinang, both amenities are also enjoyed by the neighbouring communities and general public. FAMILY-FRIENDLY FACILITIES AND REFINED FINISHINGS Aimed at professionals with young families aspiring to the Seri Tanjung Pinang lifestyle created by E&O, The Tamarind features two high-rise blocks of 33 storeys comprising 1,104 units in total. The Tamarind’s typical unit size of three bedrooms and two bathrooms measures from 1,047 square feet and

Dining room

as in other signature developments by E&O, what sets The Tamarind apart is the design of its unique residents’ facilities covering 2.2 acres which includes a private 1-acre waterscape of beach and free-form swimming and wading pools for the family to enjoy. Those wanting to take it easy and catch a few rays of sun can opt between the signature swimming pool and the beach pool. Apart from the wading pool, other child-friendly facilities include the outdoor play area and kids’ crèche or day care centre which is ideal for busy working parents during the work week. Homeowners have the option of choosing between the multipurpose hall or al-fresco function area when celebrating joyous occasions with family and friends. Fitness aficionados will be spoilt for choice having to choose from the gymnasium, jogging track and Yoga Centre. Consistent with E&O’s high standards, The Tamarind boasts high quality fittings and finishings with hard-to-resist extras such as kitchen cabinets with synthetic-finished Corian counter top

as well as the kitchen hood and hob. These executive apartments also come complete with split air conditioning units and a hot water storage tank for all bathrooms. Living, dining and bedroom floors are tastefully laid out with wide timber parquet adding a warm and cosy feel. Within each unit, finishings have been chosen with a discerning eye, ensuring a touch of style in even the smallest of details. Every unit comes with a dry kitchen and the option for a separate wet kitchen that caters to Asian cooking. All bathrooms are delivered fixed with matching sinks, toilets and fittings. Adding to The Tamarind’s attractiveness is the free legal fees for SPA documentation, loan documentation and stamp duty on the loan with up to 90% financing for first time Malaysian buyers. Do you want to learn more about this exciting new development? Then visit the development’s official website at www.thetamarindpenang.com or call E&O today at +604 - 890 9999 for an appointment. Product Name: The Tamarind Development Concept: Executive Apartments Tenure: Freehold Lot Size/Land Size: 7 acres Configuration: 2 towers (Tower 1A & 1B) with 33 storeys each No. of units : Tower 1A – 552 units, Tower 1B – 552 units Site Area: Total 6.9 acres (approx. 27,923 sq m / 300,564 sq ft) Estimate Completion: 4 years/2019 Developer Name: E&O Property (Penang) Sdn Bhd – a wholly owned subsidiary of Eastern & Oriental Berhad Phone No: 04 890 9999 Website: www.thetamarindpenang.com

www.propertyinsight.com.my JULY 2015 I 27


INFOGRAPHIC

PENANG REAL ESTATE STATISTICS APPROVED PROJECTS FROM JANUARY-DECEMBER 2014

LEGEND State capital Aministrative centre Highway

New Project

Expansion/ Addition

Total

Number

74

95

169

Employment

6,160

11,736

17,896

Domestic investment (RM Million)

668,48

2,380.29

3,048.79

Foreign investment (RM Million)

1,940.89

3,172.71

5,113.59

Total Capital Investment (RM Million)

2,609.37

5,553.00

8,162.37

Batu Feringhi Tangjung Tokong

GEORGE TOWN

Butterworth

Balik Pulau Seberang Perai

Bayan Lepas

(RM’000 per unit per month) 2000

1130

1130

950

1130 950

900

500

1680

1500 1365 1175

1000

2nd Penang Bridge

2000

1500

Nibong Tebal

1150 1100

960

760

800

740

600 575

1130

1170

622

2011

2010

2012

2013

Bandar Baru Air Itam

Desa Ara

Eden Ferringghi Resort

Taman Saw Kit

2014 Island Park

AVERAGE RENTAL MOVEMENTS OF DOUBLE STOREY SEMI-DETACHED HOUSES (RM’000 per unit per month)

AVERAGE PRICE MOVEMENTS OF APARTMENTS

2000

(RM’000 per unit)

400

5000

1365 1175

1130

1130

1130 950

900

500

1680

1500

1500

1150 1100

960

760

800

622

2011

2010

2012

280

2013

Bandar Baru Air Itam

Desa Ara

Eden Ferringghi Resort

Taman Saw Kit

50

2014 Island Park

3.4

3.4

2013

2014

4.1%

2013

3.3%

2013

Existing stock Completions

377,942 391,013

2014

2014

2014

12,583 13,101 64,704 66,819 Incoming supply Starts

3700

3800

3700

2000 150 120

127

120

2010

2011

2012

Pangsapuri Ria

1300 1000

130

1000

1100

1200 0

2013

2014

2010

University Heights

2011

2012

University Heights

1200

2013

2014

Diamond Villa

SUPPLY OF SHOP UNITS IN PULAU PINANG

Turnover1

Change

3.5%

4200

4000

Belisa Court

Change 2013

4000

3300

230

SUPPLY OF RESIDENTIAL UNITS PULAU PINANG

Turnover1

3800

3500

3000

200

100

3700

4000

150

740

600 575

1130

1170

329

300 250

380

346

350

950

AVERAGE RENTAL MOVEMENTS OF APARTMENTS/ CONDOMINIUM

(RM’000 per unit)

2000

1000

Bukit Mertajam

Penang Bridge

AVERAGE PRICE MOVEMENTS OF DOUBLE STOREY SEMI-DETACHED HOUSES

3.6

2013

2014

Change

-9.9%

2013

14.9%

2013

4.2%

2013

planned supply Transaction*

3.8

2014

2014

2014

14,795 13,327 59,390 68,211 17,065 17,789

Change 29,414 30,200

2.7%

2013

5.8%

2013 778

25.8%

2014

2014 2013 2014

823 3,642 4,580

19.1%

2013

-3.0%

2013

-1.5%

2013

2014

2014

2014

1,202 1,431 4,298 4,171 1,423 1,401

*Transaction exclude ‘ Vacant Plots’ and others’. Transaction Turnover = x 100% Existing stock + incoming supply +planned supply

28 I JULY 2015 www.propertyinsight.com.my

Infographic_July.indd 28

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R3_31.pdf

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6:43 PM


MAIN FEATURE

CONNECT WITH LRT 3 Connectivity, the catalyst of a developed country By: Mak Kum Shi and Daniel Sim

Source: LRT3 website

R

ecently, the prime minister of Malaysia, Datuk Seri Najib Tun Razak, tabled the 11th Malaysia Plan (2015-2020) in parliament. This plan is dubbed as the ‘final leap’, for Malaysia as a country, to achieve a developed-nation status in 2020. One of the aspects highlighted in this plan is the budget allocation for major infrastructure and development projects for the country in the next five years. Under the plan, Malaysians will be able to see transportation networks being improved to enhanced connectivity and 30 I JULY 2015 www.propertyinsight.com.my

mobility. Infrastructure such as the toll-free Pan Borneo Highway over in East Malaysia and the 325km-long toll-free federal route that will replace the Gua Musang and Karak-Tampin highways will be upgraded. In the central region, in particular the city of Kuala Lumpur and the Greater Kuala Lumpur region, it will experience a bigger improvement in terms of public transportation, a s the government is looking to raise the utilisation of public transport by 40% from the current 17.1% by year 2020.

IT’S ALL ABOUT INFRASTRUCTURES To achieve this goal, the government, through Prasarana and MRT Corp, has kick-started a number of rail projects. The ridership will increase when the Klang Valley Mass Rapid Transit (KVMRT) becomes operational next year. The line 1 of the KVMRT will cover a distance of 51km with 31 stations built between Sungai Buloh and Kajang. This line alone will serve 1.2 million people with daily ridership expected to be 400,000 people. The first phase runs from Sungai


Buloh to Semantan, and the second phase will begin sometime in year 2017. The Line 2 of KVMRT is slated to being in June 2016 which will connect 52.2km connecting Sungai Buloh to Serdang and Putrajaya that is estimated to become operational by 2022. (Read Property Insight, June 2015 edition for detailed analysis of MRT 2). Besides the MRT rail projects, there is also the third LRT project coming up. THE THIRD LRT The Light Rail Transit (LRT) 3 will

connect Bandar Utama to Johan Setia, Klang. The construction will start in year 2016 and is expected to be completed and operation on 31 August 2020. This is a line that will have 25 stations of which only one station is underground that will run over 36km. LRT 3 is expected to serve up to two million people in the Klang Valley. It is expected to transport about 70,000 passengers daily with an end-to-end journey time of 51 minutes. According to a recent brochure circulated to the public by Prasarana,

PROPOSED STATION AND ROADS ADJACENT TO STATION NO

STATION NAME

ROAD ADJACENT TO STATION

1

One Utama

Persiaran Bandar Utama

2

Damansara Utama

Jalan 5

3

Tropicana

Jalan Tropicana Selatan 1

4

Lien Hoe

Persiaran Tropicana

5

Dataran Prima

Lebuhraya Baru Lembah Klang (NKVE)

6

Persada PLUS

Lebuhraya Baru Lembah Klang (NKVE)

7

Station 3

Persiaran Kerjaya

8

Temasya

Persiaran Kerjaya

9

Glenmarie

Persiaran Kerjaya

10

Stadium (Grand Sentral)

Persiaran Sukan

11

Persiaran Hishamuddin

Persiaran Hishamuddin

12

Section 14

Persiaran Dato’ Menteri

13

SIRIM

Lebuhraya Persekutuan

14

UiTM

Lebuhraya Persekutuan

15

I-City

Persiaran Permai

16

Bukit Raja

Persiaran Bestari

17

Kawasan 17

Persiaran Bukit Raja

18

Jalan Meru

Jalan Meru

19

Klang

Jalan Jambatan Kota

20

Taman Selatan

Persiaran Tengku Ampuan Rahimah

21

Sri Andalas

Jalan Langat

22

Tesco Bukit Tinggi

Jalan Langat

23

AEON Bukit Tinggi

Jalan Langat

24

Bandar Botanik

Jalan Langat

25

Johan Setia

Source: Prasarana LRT 3 DEIA report

Jalan Langat

the LRT 3 will be able to transport more passengers compare to other modes of transportation at the rate of 36,720 passengers an hour. “I think it is about time that there is an LRT station in Bandar Utama,” said Megan, a student currently studying mass communication in Kolej Bandar Utama (KBU) and a resident of BU6, a prime residential estate in Bandar Utama. “Here, we have the One Utama shopping, one of the most happening hangout places in Petaling Jaya, we are also near to IKEA, which is located in Mutiara Damansara, but the traffic is horrendous at times,” she adds. A check by Property Insight confirms this to be true, especially on weekends where double-parking in illegal parking zones were common sight. Another good news is when LRT 3 is fully developed and up in operation is that it also provide a total of 5,000 parking lots at 10 selected stations by year 2020. “My friends who stay in the Greater Kuala Lumpur used to complain of the long journey they have to take to reach Klang,” said media sales executive Mark Law. He said that with the LRT 3 completion, it will definitely bring Klang to greater heights. He felt that many people still thinks that Klang is just a small underdeveloped town, which is not true at all, as Klang is not just developing. There are many other developments coming up such as the completed AEON shopping malls in Bukit Tinggi. It is also a town famous for serving authentic ‘Bak Ku Teh’, and recently, the halal version of ‘Che Ku Teh’, consisting of halal chicken meat. “The 36km route alignment is expected to be finalised by the fourth quarter of this year,” said Prasarana managing director Azmi Abdul Aziz. He stated that public inspection of the proposed route alignment has already begun in several locations such as the city councils of Petaling Jaya, Shah Alam and Klang, Kelana Jaya, Masjid Jamek and Pasar Seni LRT stations. One can also visit the Land Public www.propertyinsight.com.my JULY 2015 I 31


MAIN FEATURE Transport Commission (SPAD) office located in KL Sentral from May 15 to August 14 this year. 10 of the stations are expected to have park-and–ride facilities. Prasarana has also planned to have several interchange stations, beginning with Bandar Utama MRT station, Pelabuhan Klang KTM station and a proposed SIRIM Shah Alam Bus Rapid Transit (BRT) station. It was quoted in The Star that Prasarana has identified the corridor but not the alignment as “we have to comply with the Land Acquisition Act requirement”. It also said that nine billion Ringgit will be needed for the construction alone or a total of RM250 million per kilometre of construction. Prasarana further stated that so far, seven companies have collected the Project Delivery Partner (PDP) application form, which must be submitted in the first week on June, as Prasarana aims to award the project by July. Under PDP, the successful and qualified company will receive 6% fee of the total contract value of LRT 3. Some of the companies believed to stand a good chance in bidding for the jobs for the proposed LRT 3 include Trans Resources Corp Sdn Bhd, UEM Builders Berhad, Intria Bina Sdn Bhd, Sunway Holdings Berhad, and Malaysian Resources Corp Sdn Bhd (MRCB). Some of these companies have major contract packages in the on-going RM7 billion Kelana Jaya and Ampang Lines LRT extension projects. Based on a recent visit by Property Insight to the SPAD office,Prasarana seems to minimise land acquisition as it is only proposing a twokilometre underground track with one underground station located in Shah Alam. The rail tracks would mostly be an elevated structure utilising the existing state and road reserve land. Azmi explained that should the total cost of the project should be less than or equal to the targeted cost, the PDP qualifier would be entitled to the full fee. However, if the project cost is more 32 I JULY 2015 www.propertyinsight.com.my

The 36km route alignment is expected to be finalised by the fourth quarter of this year”

- Azmi

than the targeted cost, the fee would be cut, in accordance with the agreed formula. Looking at the map printed on the Prasarana officia lwebsite, the 25 proposed LRT 3 stations are One Utama, Damansara Utama, Tropicana station near the Damansara Toll Plaza, Lien Hoe, Dataran Prima, Persada Plus, Station 3 (the station has yet to be renamed), Temasya, Glenmarie, Stadium, Persiaran Hishamuddin, Section 14, SIRIM, UITM, I-City, Bukit Raja, Kawasan 17, Jalan Meru, Klang, Taman Selatan, Sri Andalas, Tesco Bukit Tinggi, AEON Bukit Tinggi, Bandar Botanik and Johan Setia. According to Prasarana, 13 out of the 25 stations have the potential for future Transit Oriented Development (TOD). PROPERTY MARKET REPORT According to property report by the National Property Information Centre (NAPIC), prices of residential property recorded encouraging growth across the board. Residential properties in prominent and established areas continued to enjoy capital gains. The increment was proven by substantial increases of more than 16.0% in 2014 recorded for single and double-storey terraced units in upmarket areas such as Bandar Utama, where there will be the proposed One Utama station. Near the Temasya LRT 3 station, the double-storey terraced houses, in Temasya Glenmarie, Shah Alam, transacted the highest property price in the state, at between RM1.2 million and RM2.31 million. There were also increments in property prices transacted for Section 13, Shah Alam where the proposed stadium station is located nearby.

In the leisure sub-sector, the state witnesses the sole transaction of Prescott Hotel in Klang. There are at least three proposed stations in the Klang region. They are Bukit Tinggi station, Bandar Botanik station and Johan Setia station. SHOULD YOU BUY? According to S.K. Brothers Realty general manager Chan Ai Cheng, “The integration to the MRT is the added benefit for Shah Alam and Klang as they can change trains at Bandar Utama and head into KL city.” “The park-and-ride is also a very important component in enhancing the connectivity, as it services a wider area than those within walking distance to the stations.” “Generally, all infrastructure improvements are to enhance connectivity, making distances closer, making it more convenient for ‘rakyat’ to travel from their homes to the workplace, providing alternative means of transportation,” added Chan. She explained, “Locations close to the LRT 3 station stand to benefit the most from the LRT3 facilities and conveniences, and thus, enhancing the value of the property. “ She advised investors to note that when one invests in property near to LRT amenities, they should not purchase it too near the stations, as the noise produced by the LRT movement could be a disturbance to some. She advised investors to invest in properties with sufficient distance away from the LRT stations and do consider other factors, such as the surrounding amenities and target market before investing.


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AREA FOCUS

SERDANG

The area has grown in leaps and bounds with the developments of property and infrastructure By: Fara Aisyah Firdaus Petial

S

erdang is a town located in Selangor, while Serdang New Village is now known as Seri Kembangan. The town is now a considerable city in size - can be seen on the North-South Expressway Southern Route. Seri Kembangan was established in 1952 when the British moved Malaysian Chinese villagers living around Sungai Besi to a centralised location due to the Communist threat during the Malayan Emergency following the Briggs Plan. The population is estimated to be 150,000, largely made up of entrepreneurs, businessmen, professionals, government servants who works in Putrajaya & other multinational corporations’ employees located in Cyberjaya. Many developments had taken place between 2000 and 2008. Prominent developments includes AEON Equine Park, McDonald’s, Pasar Borong 34 I JULY 2015 www.propertyinsight.com.my

Selangor (wholesale market), Pappa Rich Kopitiam, Station 1 cafe, Boston Concept Restaurant, House of Healin Equine, Maybank, Giant Hypermarket and other businesses transformed this area into a business hub. A network of roads forms the 13 sections of the village, and commercialisation has come to this area in a big way. SERDANG CENTERMOST The first thing that will pop up on our mind every time Serdang is mentioned, would be the Universiti Putra Malaysia. It is located in the centre of Serdang, and has become one of the unique selling points of the area, particularly for the property developers and investors. The area is filled with UPM colleges and faculties such as the Mohamad Rashid College, Tun Dr. Ismail College, Pendeta Za’ba College, and other colleges. The faculties surrounding the area are namely the Faculty of Agricultural,

Faculty of Modern Languages and Communication, Faculty of Computer Science and Information Technology, etc. In addition to that, there is also placed the Unipertama Golf Club (UPM golf course) which is 1km away from the UPM Sports Centre. The golf courses that were built in 1981 were originally intended for agricultural and physical education. It also became a leisure attraction for staff, students and the public as well. Furthermore, staff members and students can also enjoy play golf with beautiful scenery of nature. This golf course is opened to the public, but its membership only limited to the employees. Professional Services Unit and Agricultural University Park Golf Course is the party that responsible for the management and maintenance of golf courses and provide facilities for golf players. Players Club Golf UPM (KPGU) was established to generate club activities. Nine Orchard makes golfers feel comfortable with a beautiful view because of its purity. It also filled with fruit trees surrounding. Nine Forest was surrounded by forest trees and natural scenery and a challenging field. There are also various facilities such as Driving Range and Practice Green, Resident Golf Professionals, cafeteria, club golf house and changing room. Another notable amenity in the area is the Hospital Serdang which borders the South Klang Valley Expressway (SKVE) to the east and the medical faculty of Universiti Putra Malaysia to the west. It is clearly seen from the North-South Expressway at the Kajang Interchange. From planning to construction, the hospital was built on the concept of ‘hospital of the future’. Hospital Serdang is the first hospital in Malaysia


to use aluminium coating to give it a shiny exterior. It is also the first hospital in Malaysia to use a futuristic cooling system to maintain the hospital’s temperature and reduce electricity usage. The landscape of the hospital is also known to be therapeutic to the patients and is surrounded by a park measuring 45 acres. Other unique features of Hospital Serdang is the steel structure (total 6100 tonnage), modular OT, five acres rooftop garden, as well as the application of autoclave light concrete block (ALC). The hospital also serves as a teaching hospital for medical students from the Faculty of Medicine, Universiti Putra Malaysia (UPM) and also Cyberjaya University College of Medical Sciences (CUCMS). Some students from other universities such as Royal College of Medicine Perak and UCSI University School of Nursing also do their elective posting attachments there. AMENITIES NEAR-AT-HAND Mines Wellness City (previously known as Mines Resort City) is one of the main attractions in Seri Kembangan. It is an integrated Health and Wellness resort city in Malaysia. It is both an expansion and transformation of the current MINES Resort City. The expansion of the city is part of the government’s Economic Transformation Plan (ETP) which is spearheaded by PEMANDU (Performance Management and Delivery

Unit), under the Prime Minister’s Department. It was announced on 11 January 2011 by the Prime Minister of Malaysia Datuk Seri Najib Tun Razak. The land was formerly the world’s largest open cast tin mine. It consists of Palace of the Golden Horses, Mines Wellness Hotel, Golden Horses Health Sanctuary, The Mines Shopping Mall, Mines Waterfront Business Park, Mines Resort & Golf Club, Mines Convention Centre (MIECC), The Heritage Residences and Retail. In order to complement the tourism theme, a five-star hotel, the Palace of the Golden Horses with a distinctive architectural design, and Mines Wellness Hotel (formerly known as The Mines Beach Resort and Spa), with a man-made beach and swimming lagoon, were built. A leading Health Screening Centre and Traditional Chinese Medicine Centre was also located in Mines Wellness City. Other components of development completed to date within the Mines Resort City are the Mines Shopping Fair and a theme park named Mines Wonderland. In March 2010, CapitaMalls Asia had re-branded Mines Shopping Fair to a contemporary neighbourhood shopping mall, which had undergone major upgrading works, including additional retail space, revamping of the car park system, new wash rooms, additional link bridges, and new sets of escalators inside the mall.

The Mines Resort & Golf Club is a proprietary club beneficially owned and operated by the Mines Excellence Golf Resort Berhad. The golf course construction commenced in 1993 and it was left to mature for a year with maintenance of the highest standards. It was officially opened for play in 1994 by Malaysia’s former Prime Minister, Tun Dr. Mahathir Bin Mohamed. The clubhouse’s external façade exudes unique architectural features through five distinctive pyramidal roofs with an observation tower as its summit. Equally fascinating is the clubhouse’s interior design, which is rustic, yet complements minute contemporary art together with a semblance of modern technology whilst continuously radiating an atmosphere of warmth and cosiness. The first structure that greets members and visitors alike is a towering effigy of a fiercely-proud eagle perched with its wings semi-open whilst the entrance to the clubhouse via the prominent carriage porch opens to a lobby with high-vaulted ceilings, clerestory louvers, separate pavilions linked by covered walks and a landscaped atrium. The clubhouse in its entirety presents one with an air of grandeur amid breath-taking views of lush greenery set against an iridescent 150-acre lake that perfectly mirrors the surrounding metropolitan skyline. Within a few kilometres from the Mines Wellness City, located the Selangor Turf Club. It is the symbol of

www.propertyinsight.com.my JULY 2015 I 35


AREA FOCUS PRICES OF RESIDENTIAL PROPERTIES TYPE

LOCATION

Double Storey Low- Serdang Jaya (PKNS) Cost Terrace Taman Bukit Serdang, Seksyen 6

PRICE RANGE (RM/UNIT)

AVG PRICE CHANGE (%)

SAMPLE SIZE

AVG LAND AREA (M2)

AVG FLOOR AREA (M2)

2013

2014

2

78

64

130,000 – 280,000

150,000 – 210,000

5.1

2

87

65

170,000 – 275,000

263,000 – 290,000

18.2

Single Storey Medium-Cost Terrace

Taman Sri Serdang

4

129

76

200,000 – 345,000

290,000 – 998,000

24.7

Double Storey Medium-Cost Terrace

Taman Puncak Jalil

1

109

112

310,000 – 390,000

400,000

13.1

Taman Kota Perdana

1

111

69

190,000 – 230,000

220,000

4.8

Taman Puncak Jalil

2

130

82

270,000 – 390,000

370,000 – 390,000

20.7

Taman Sri Serdang

10

130

76

240,000 – 285,000

225,000 – 350,000

125

Taman Universiti Indah

3

130

156

350,000 – 503,000

380,000 – 500,000

11.9

Taman Muhibbah, Serdang

2

100

99

330,000 – 390,000

350,000 – 480,000

11.4

Taman Putra Permai

6

143

128

310,000 – 500,000

400,000 – 488,000

Stable

Taman Bukit Serdang, Seksyen 11 & 16

2

109

97

319,000 – 430,000

370,000 – 470,000

12.5

Taman Bukit Serdang, Seksyen 5

3

153

142

520,000 – 650,000

570,000 – 598,000

Stable

Taman Pinggiran Putra–Seksyen 2

9

104

98

270,000 – 358,000

300,000 – 440,000

18.7

Taman Puncak Jalil

11

130

117

371,000 – 435,000

418,900 – 498,000

14.3

Two and A-Half Storey Terrace

Taman Bukit Serdang, Seksyen 9

3

178

220

998,000 – 998,000

850,000 – 1,100,000

Stable

Double Storey Semi-Detach

Taman Equine

2

311

283

950,000 – 1,280,000

1,050,000 – 1,300,000

3.7

Taman Kota Perdana

11

482

118

270,000 – 510,000

450,000 – 640,000

15.4

Taman Pinggiran Putra–Seksyen 2

3

446

100

350,000 – 550,000

450,000 – 750,000

26.7

Taman Bukit Serdang, Seksyen 8

2

67

95,000 – 100,000

78,000 – 120,000

Stable

Taman Pinggiran Putra–Seksyen 2

2

65

65,000 – 84,000

75,000 – 83,000

6.0

Desa Serdang

5

-

56

50,000 – 67,000

50,000 – 70,000

6.0

Taman Impian Ehsan

2

-

66

70,000 – 80,000

80,000 – 85,000

11.0

Taman Impian Indah

3

61

60,000 – 102,000

78,000 – 99,000

10.0

Bukit Serdang, Seksyen 4

2

-

70

125,000 – 195,000

175,000 – 200,000

13.2

Pangsapuri Casa Riana

10

-

76

160,000 – 260,000

230,000 – 270,000

21.1

Pangsapuri Mayang Taman Puncak Jalil

5

-

74

138,000 – 215,000

200,000 – 230,000

24.7

Taman Pinggiran Putra–Seksyen 2

10

-

79

110,000 – 165,000

128,000 – 180,000

7.6

Taman Impian Ehsan

10

-

77

60,000 -135,000

65,000 – 130,000

10.0

Taman Impian Indah

9

-

80

85,000 – 161,000

85,000 – 150,000

8.0

Kampong Baru Sri Kembangan

2

-

74

137,000 – 170,000

159,000 – 175,000

8.8

Serdang Raya Court

3

-

70

145,000

165,000 – 190,000

23.0

South City, Seri Kembangan

2

-

103

125,000 – 245,000

175,000 – 275,000

22.0

Taman Bukit Serdang, Seksyen 8

18

-

80

120,000 – 288,000

130,000 – 290,000

14.5

Taman Desaminium

15

-

97

155,000 – 280,000

160,000 – 300,000

12.5

Taman Pinggiran Putra – Seksyen 2

28

-

75

115,000 – 260,000

110,000 – 258,000

5.3

Taman Bukit Serdang, Seksyen 11 & 16

16

-

73

115,000 – 275,000

95,000 – 338,000

14.1

Taman Bukit Serdang, Seksyen 6

15

-

85

220,000 – 310,000

300,000 – 355,000

21.6

Taman Kuda Emas (Serdang Raya, Seksyen 6)

8

-

103

160,000 – 200,000

203,000 – 230,000

21.0

Taman Serdang Perdana

25

-

74

75,000 – 239,800

75,000 – 250,000

4.2

Taman Universiti Indah

6

-

122

220,000 – 310,000

275,000 – 328,000

21.8

Taman Impian Ehsan

8

-

86

100,000 – 178,000

110,000 – 160,000

6.0

Juta Mines Condo

5

-

112

208,000 – 262,000

277,000 – 320,000

13.8

Serdang Height

2

172

172

390,000

399,000 – 480,000

12.7

Taman Bukit Serdang – Seksyen 2

9

135

135

320,000 – 678,000

450,000 – 700,000

8.4

Taman Bukit Serdang – Seksyen 8

2

109

109

250,000 – 300,000

320,000

16.4

Single Storey Terrace

Double Storey Terrace

Single Storey Detach

Low Cost Flat

Medium Cost Flat

Apartment

Condominium

Town House

Source: JPPH

36 I JULY 2015 www.propertyinsight.com.my


RENTALS OF RESIDENTIAL PROPERTIES TYPE

AVERAGE FLOOR AREA (M2)

LOCATION

RENTAL RANGE PER MONTH (RM/UNIT) 2013

2014

AVERAGE RENTAL CHANGE (%)

AVERAGE GROSS YIELD (%)

Taman Universiti Indah

61

400 – 500

400 – 500

Stable

2.5

Taman Impian Ehsan

56

400 – 450

400 – 450

Stable

3.9

Single Storey Terrace

Taman Sri Serdang

76

600 – 700

700 – 750

11.5

3.3

Two and A-Half Storey Terrace

Taman Bukit Serdang

179

1,600 – 1,800

1,600 – 1,800

Stable

3.8

Double Storey Low-Cost Terrace

Source: JPPH

PRICES OF SHOP TYPE Three Storey Shop

PRICE RANGE (RM/UNIT)

AVERAGE LAND AREA (M2)

AVERAGE FLOOR AREA (M2)

2013

2014

AVERAGE PRICE CHANGE (%)

Pusat Perdagangan Seri Kembangan

143

415

1,000,000 – 1,300,000

1,150,000 – 1,460,000

5.9

Taman Bukit Serdang – Seksyen 4 & 5

143

415

1,600,000

1,720,000

7.5

Taman Sri Serdang

164

385

1,000,000

1,100,000

10.0

LOCATION

Source: JPPH

RENTALS OF PURPOSE-BUILT OFFICE LOCATION AND BUILDING Menara SSP Sapura @ Mines

RENTAL RANGE PER MONTH (RM/S.M)

FLOOR LEVEL

FLOOR AREA (S.M)

1 & Mezzanine

266 – 292

35.94

35.94

Stable

2, 3 & 3A

289 - 631

23.68 – 27.98

24.75 – 29.06

Stable

9

511 – 1,605

40.36

40.36

Stable

2013

2014

CHANGE

Source: JPPH

RENTALS OF OFFICE SPACE IN SHOP LOCATION Taman Puncak Jalil

FLOOR LEVEL

FLOOR AREA (S.M)

1

153

RENTAL RANGE PER MONTH (RM/S.M) 2013

2014

1,000

1,000

CHANGE Stable

Source: JPPH

horse racing in the city of Kuala Lumpur and the Selangor Turf Club is all that and more. The Club which began its racing activities in the 1800s has over the century evolved and grown into a centre for all forms of equine activity. In Malaysia, private membership clubs like the Selangor Turf Club run the races. Malaysian horse racing is dependent on the synergistic relationship between the Malaysian Tote Board, the Privatised Agent and the Turf Clubs. This is based on the authority of the Racing (Totalisator Board) Act 1961 and amended in 1992. South City Plaza (also known as EduMall @ South City) is also an enjoyable shopping mall in the within the Seri Kembangan area. It has renowned tenants like Giant Supermarket and Parkson Department Store. The shopping mall managed to create an Edu Hub by having major tenants such as SEGi College and International College of Health Science (ICHS) that offers various vocational and technical

courses to nearby residents without having to go further to the city centre. PROPERTY DEVELOPMENTS There are a lot of property developments in the vicinity of Seri Kembangan. Equine Park is one of the locations that is currently fast developing, which projects are mostly built by Global Oriental Berhad. The developer new launches in the area are Villa Height – Phase 1B, Galleria, as well as the Springville Residence. The Villa Height – Phase 1B is the continuation of its current project namely Villa Height – Phase 1A. The Villa Height – Phase 1A project consists of the Double Storey Link Bungalow, Double Storey Bungalow (Type A), and Double Storey Bungalow (Type B) that are completely sold out. On the other hand, new newly launched Villa Height – Phase 1B includes the Double Storey Bungalow (Type C) and Double Storey Bungalow (Type D). Developed to complement nature’s

bountiful blessings, Villa Heights boasts resort-style living, abound with lush greenery and scenic hillside flora, meditation pavilions, extensive lawns and landscaped grounds with water features and natural trails. Its exclusive premium bungalows are meticulously designed to complement its natural surroundings. Inspired by the beauty of nature, the concept blends modern aesthetics and contemporary architecture to accentuate space and elevate sheer elegance and classiness. The Villa Heights bungalows reside in the neighbourhood of Taman Equine and are strategically located via major highways such as Lebuhraya Damansara-Puchong, Lebuhraya Bukit Jalil and Lebuhraya Sungai Besi. The development is completed by nearby amenities such as AEON Equine, banks, restaurants, schools and colleges. Paragon Mastery Sdn Bhd also has developed Paragon 150 in the area of Seri Kembangan. Near the Ayer Hitam Forest Reserve, it is set on a 15.8 acres www.propertyinsight.com.my JULY 2015 I 37


AREA FOCUS SERI KEMBANGAN: SELECTED TRANSACTIONS OF HIGH-RISE RESIDENTIAL PROPERTIES PROJECT / LOCATION East Lake Residence, Seri Kembangan

TYPE

TYPICAL BUILT-UP AREA (SQ.FT.)

2014 – 2015 TRANSACTED / CURRENT ASKING (RM) Average: 382 per sq.ft.

Condominium

From 1,093

Serviced apartment

480 – 1,514

Average: 527 per sq.ft

Condominium

900 – 1,800

425,000 – 690,000 (average: 433 per sq.ft.)

Parc @ One South, Seri Kembangan

Serviced apartment

1,021 – 1,215 & 2,484

1,021 – 1,215: 430,000 – 600,000 (average: 440 per sq.ft.)

Gardenz @ One South, Seri Kembangan

Serviced apartment

1,020 -1,220

445,000 – 560,000 (average: 454 per sq.ft.)

The Heritage, Seri Kembangan The Sanderson @ Bukit Serdang

Source: JPPH / Knight Frank Research

SERI KEMBANGAN: SELECTED TRANSACTIONS OF COMMERCIAL PROPERTIES TYPE

LAND AREA (SQ.FT.)

ESTIMATED BUILT-UP AREA (SQ.FT.)

2014 – 2015 TRANSACTED / CURRENT ASKING PRICE (RM)

Jalan BS 5/26A, Bukit Serdang

3-storey Shop

1,540

4,465

1.72 million

Jalan SR 1/9, Taman Serdang Raya

4-storey Shop

1,944

6,648

2.0 million

PROJECT / LOCATION

Source: JPPH / Knight Frank Research

Palace of The Golden Horses - President suites

land made up of 150 dual-frontage 2-storey garden homes that preside over a beautifully landscaped park. The project boasts a dual frontage at its front and backyard. The marvel of the family-style front yard garden is that it is designed to address the needs of an active family with children, while the backyard can be turned into a relaxing outdoor oasis with idea such as garden paths, fountains, outdoor lighting, and more. The 3.26 acres landscaped park at your doorstep is designed with jogging track, basketball court, Tai Chi/meditation court, exercise station, children’s playground and resting pavilion. In addition to that, Paragon 150 is guarded and secure with sophisticated security features such as the guardhouse with security check point, 24-hour CCTV surveillance, 24-hour guard tour patrol system, along with mobile 38 I JULY 2015 www.propertyinsight.com.my

patrolling - Security guards patrol the streets with motorised mobility scooters for maximum and efficient round-theclock security. Paragon 150 development is situated in the key growth area of Puchong South - Southern Golden Triangle of Puchong, Seri Kembangan and Putrajaya, overlooking the Ayer Hitam Forest Reserve and Universiti Putra Malaysia’s (UPM) green lung. It is an easily accessible, vibrant and fastgrowing area with new residential and commercial developments and a wide range of amenities such as restaurants, shops, cafes and shopping complexes, all conveniently located within the neighbourhood. THE HERITAGE AS AN INVESTMENT OPPORTUNITY The Heritage (also known as The Heritage Residences) at Seri Kembangan is a luxury service

apartment building that is located next to the Mines Resort City and Bluwater Estate. Developed on a commercial leasehold title by Heritage Lakeside Developments, it was first launched in October 2003 and completed in 2006. The development consists of five 18-storey blocks on 9.5 acres of land. In total, there are 842 units. The Heritage is more suitable to be used as a holiday apartment, a company apartment, or as investment to rent it out to expats. It is highly favourable for those who do not like shopping for furniture, as it comes fully furnished. In addition, its key feature includes a Smart Home Automation System which is part of a tight 3-tier security system. It has initially attracted a lot of international investors, as it is guaranteed a rental return of 6% per annum for 3 years over on a profitshare basis. Annual returns were set to exceed 8%, and capital appreciation was thought to climb. There are three main factors to achieve those benefits, which are the developer is a reputable company, it is run by the same management of the 5-star Palace of the Golden Horses hotel, and it was deemed to be in a strategic location. Although it is not in the heart of Kuala Lumpur and takes about 20 minutes’ drive to the city centre, Cyberjaya, Putrajaya and Subang Jaya, it is a unique property to invest in due to the Venetian-inspired layout. The main pulling point of The Heritage is that it is part of the Mines Resort City area which means that it is close to shopping,


Borneo Highland Resort - golf

entertainment, and educational facilities (public, private, and international). Some of the key schools nearby include the Alice Smith School and the Australian International School. Serdang and Seri Kembangan area is accessible through several highways such as the South Klang Valley Expressway (SKVE), North–South Expressway, Besraya Expressway, and Maju Expressway. Another attraction to the area is the Serdang-Kinrara-Putrajaya Expressway (SKIP). The proposed new highway is an intra-urban expressway completing the “Missing Links” to the planned and existing highway/expressway networks within the Greater Kuala Lumpur.

Interestingly, there will also be the Sungai Buloh-Serdang-Putrajaya (SSP) line that is expected to be developed. It is the second MRT line that will serve a corridor with a population of around two million people stretching from Sungai Buloh to Putrajaya and will include Sri Damansara, Kepong, Batu, Jalan Sultan Azlan Shah, Jalan Tun Razak, KLCC, Tun Razak Exchange, Kuchai Lama, Seri Kembangan and Cyberjaya. The proposed alignment is 52.2km of which 13.5km is underground. A total of 36 stations, 11 of them underground, will be built. The first station that will be in the proximity of Serdang and Seri Kembangan are the Serdang Raya North (S26) which is adjacent to the

Plaza Serdang Raya. It is also opposite of the Serdang Sky Villas Apartment and One South. While Serdang Raya South station (S27) is neighbouring the South City Plaza. The Seri Kembangan station (S28) is located within the residential area, which next station is the UPM station (S29) built nearby the Institut Latihan Pengembangan Pertanian Serdang. The SSP line will then stretch to its next station which is the Taman Universiti station (S30). However, the 30th station is said to be a provisional one. Equine Park (S31) station is the 31st station that continues to the Taman Putra Permai (S32) station. The Taman Putra Permai station is developed close to The Atmosphere and Giant Seri Kembangan. At commencement of full service in the second quarter of 2022, the SSP Line is expected to have a ridership of 529,000 passengers per day. As a conclusion, the development of infrastructure and properties in the area has stirred a lot of investment interest and opportunities towards it. With the new property launches and future developments of infrastructure, Serdang or Seri Kembangan area would possibly be a hotspot of Malaysia property market.

RAYMOND KWONG Property Advisor Hartamas Real Estate (KD) Sdn Bhd “I am a specialist focusing in Seri Kembangan area. Seri Kembangan is a very good living and environment area. For the number of development for commercial, residential and amenities are balance especially the new township of this place which is call Equine Park. This place are always crowded. Coming up an interchange of the MEX (Maju-Express Highway) will be completed soon within this two years. It will improve the traffic to be much smoother. A few of the popular developers are also developing some housing development in this area. Furthermore, the whole Seri Kembangan area of the infrastructure, traffic and landscaping are improving but the important thing is, the price of the property are always affordable. So, it is such a prime time to make the investment here. Don’t even miss the chance.” ZEON CHENG Senior Real Estate Negotiator Vivahomes Realty Seri Kembangan is a matured town with a full infrastructure within 10km – easy access to Kuala Lumpur city centre, Bukit Jalil, Puchong and Cheras. The area is also accessible to major highways like KL – Seremban highway, BESRAYA, MEX, and KESAS. The price there is considers affordable compares to Bukit Jalil, Cheras, and Puchong area. There will also be a new shopping pavilion 2, expected to be completed in year 2018. Expecting properties surrounding rental and price will appreciate including this area. The traffic is consider good to compare to other township as there are many small roads to avoid the jam. A lot of developments are coming in in Equine Park and most of the residents in this area are working in Cyberjaya/Putrajaya. This is because the rental and price in Seri Kembangan is lower than those area. Restaurants and mamak stalls are also within reach. In addition to that, MRT is coming in and expected to be completed in year 2022. The line stretches from Serdang Raya, pass by the main road to Equine Park then Bandar 16 Sierra and continues to Cyberjaya. www.propertyinsight.com.my JULY 2015 I 39


DEVELOPER OF THE MONTH

BUILDING THE E&O BRAND

40 I JULY 2015 www.propertyinsight.com.my


The namesake of the E&O Group, the heritage Eastern & Oriental Hotel in George Town, Penang

T

he E&O brand is today synonymous with prestigious properties, offering innovative concepts and superlative quality across a diverse project portfolio. As Malaysia’s established name in premier lifestyle developments, the meticulous effort in building a distinctive

brand that endures is the philosophy that is consciously embraced at Eastern & Oriental Berhad (E&O). The namesake of the E&O Group is derived from the Eastern & Oriental Hotel, a cherished heritage landmark in George Town, Penang. Established in 1885 by the famed hotelier Sarkies Brothers, the seafronting E&O Hotel was soon acknowledged as the “premier hotel east of the Suez”. Using the E&O Hotel’s architectural blueprint, the Sarkies brothers later started The Raffles in Singapore (1887) and The Strand in Rangoon (1901).

After extensive

refurbishment and renovation to its former glory, this grand dame hotel is now owned and operated by The E&O Group, with the 100-suite heritage wing complemented by the adjacent 122-suite Victory Annexe, and a private pier that serves Penang’s first water limousine. Building on its rich legacy, E&O leveraged its expertise and experience in luxury hospitality to become the premier developer of prestigious properties. In 2004 for the launch of Dua Residency condominiums located in the vicinity of Petronas Twin Towers, it pioneered the concept of fully interior-designed show units that accurately replicated size, scale and specifications, and the introduction of spacious grounds and comprehensive facilities for its residents that truly reflected E&O’s acronym, “Expect Nothing Ordinary”. In 2006 and 2007, E&O took its hallmark of crafting exclusive residences for the discerning to landed properties in upscale Damansara Heights, with Seventy Damansara and Idamansara both achieving new design and price benchmarks at the time of launch. A decade since its launch of Dua Residency, E&O continues to make its mark in the premium property landscape within Kuala Lumpur’s prime locations. E&O’s flagship masterplanned seafront development, Seri Tanjung Pinang in Penang

St Mary’s Residences in the heart of the Central Business District was completed in 2012 and is also home to E&O Residences, where 200 units of fully furnished www.propertyinsight.com.my JULY 2015 I 41


DEVELOPER OF THE MONTH one-

and

two-bedroom

service

apartments are operated by E&O’s inimitable team.

hospitality

management

In 2013, the launch of The

Mews serviced residences nearby, saw E&O join forces with Mitsui Fudosan, in a landmark joint venture with Japan’s largest residential developer. Building the E&O brand has seen the portfolio of its projects expand in the breadth of development scope as well as in geographical reach. In 2005, E&O held its maiden launch of homes within its flagship Seri Tanjung Pinang project, the

first

masterplanned

seafront

development on Penang island. Clearly visible from E&O Hotel across the bay of Gurney Drive, the 240 acres comprising Seri Tanjung Pinang Phase One is nearing completion with 2,000 families

The 4.5-acre private waterpark at the Quayside Seafront Resort Condominiums

42 I JULY 2015 www.propertyinsight.com.my

Princes House, London


calling this thriving community of over

Medini, Iskandar Malaysia, Johor. A

2014, E&O has acquired ESCA House

20 nationalities, home. Again, E&O has

mixed development anchored on the

with plans for redevelopment in this

delivered concepts unique to the region

concept of wellness, Avira addresses the

area

in its upcoming condominium launch

growing lifestyle trend that increasingly

Notting Hill.

of 18 East at Andaman. This represents

places emphasis on holistic wellbeing

With established brand recognition,

the ultimate block that is set within

with a 12.5-acre Wellness Sanctuary at

E&O has been fortunate to forge strategic

21 acres of the gated and guarded

its heart.

alliances with esteemed partners such

of

Bayswater,

neighbouring

property, of which 7 acres are devoted

E&O’s venture overseas is focused

as Mitsui Fudosan, Khazanah Nasional,

to landscaped recreation areas, within

in Central London. This international

Temasek Holdings, Sime Darby and

which an outstanding private 4.5 acre

growth engine for E&O began in 2012,

CIMB-Mapletree.

waterpark for residents is already fully

with the acquisition of Princes House

for understated yet timeless elegance,

complete and on par with the best that

along Kingsway that is to be renovated

the E&O brand continues to seek fresh

international hotel resorts have to offer.

and

interpretations of the old to forge ahead

Following E&O’s successful presence

refurbished

apartments

and

into

residential

serviced

With a reputation

suites.

and create anew, attracting discerning

in the north on Penang island, the

Located within walking distance to

purchasers as well as savvy investors

property developer looked south to

the London School of Economics and

seeking

Iskandar Malaysia as its third growth

the Inns of Court, all residential units

appreciates and endures.

engine. In 2011, E&O embarked on

were sold upon launch without the

Avira, a 207-acre wellness-themed

need for advertising, testament to the

development, strategically located in

E&O brand. More recently in November

properties

where

value

In essence, it is said that, “Those who know, insist on E&O”.

St. Mary Residences, Kuala Lumpur

www.propertyinsight.com.my JULY 2015 I 43


PERSONALITY OF THE MONTH

STARTED FROM THE BOTTOM UP Dato’ Sri Dr. Vincent Tiew is revealing the sustainability secret of Andaman Property Management Sdn Bhd in the industry By: Fara Aisyah Firdaus Petial

44 I JULY 2015 www.propertyinsight.com.my


A

s a prominent personality in the property industry, Dato’ Sri Dr. Vincent Tiew, with a background in the retail industry, has built a few successful property developments, under Andaman Property Management Sdn Bhd. Having an education background from accounting, business, and also marketing, he started working at the age of 19 in the education industry. Tiew’s first job was with an education consultancy company, that provides services for local colleges, to bring in foreign university programmes, and then collaborate with each other. “I was in the education consultancy for over a year after then, I moved on to work in a group of colleges. During that tenure, I was in business development as well as student recruitment for the private colleges. Today, these colleges, together with many others, have gathered and come together, as a consortium of group of colleges, under the umbrella of SEGi University Group. After serving there for a couple of years, I was transferred by the owner of the college, to serve in their shopping mall industry,” said Tiew. At the age of 25 years old, Tiew was already being appointed as the general manager for a public-listed company for property development and management, as well as shopping mall management. He was managing four shopping malls during that time before he left and joined Berjaya Times Square as one of its youngest general managers, under the Berjaya Group. Thereafter, Tiew went back to manage a shopping mall named Summit USJ. EARLY DAYS WITH ANDAMAN GROUP “I eventually joined Andaman Group on its 4th year of operation. This year, Andaman is celebrating its 10th year anniversary. I myself have led Andaman Group for a solid six years. For those six years, under my management, together with my board of directors, and my whole team, that consists of less than 100 people today, we have successfully achieved total accumulated sales to the

tune of RM3 billion. The unique part is that we are not a public-listed company and 90% of our projects are without any loans from banks.” Tiew elaborated his point by saying, “We have many divisions under the Andaman Group. We have travels and tours, hospitality, mining, security services, etc., all headed by different CEOs, while I take charge of the property section. In the past three years, we are known to be quite a caring employer, simply because the company has done more than 14 company departmental trips and vacations in the last 36 months. That’s like an average of a trip every four months. These trips are overseas trips, vacations not business trips. Those major trips consistently include office boy, tea lady and receptionist. That is one thing that I can stand (and say) proudly on stage, each and every time, challenging all the 99.9% developers throughout all Malaysia, (and ask) can you do it? Can you match what I have done for my employees? Can you match what I’ve done for my colleagues?” He also claimed that his employees gain an average of 36 to 60 months bonus / incentives / profit sharing each year for the past three years. “Andaman’s employees are given very big discount and unlimited options to buy any products developed and launched by Andaman Group. So you know, staff discount is like giving money to your pocket right? It’s as good as that. We want to ensure the staff stays on. We want to ensure they take pride in the projects we develop, even if they are in the construction team. This is an ideology by Andaman.” “On the surface, for a non-property developer, you cannot feel us. You cannot feel our threat. You cannot feel our strength, power, and dynamism. If you’re in the property line, joining the Andaman Group is only via a word of mouth and referral. We don’t advertise to get our staff. So we feel more comfortable having colleagues who already know or are familiar with the character of the person that has been recommended to join us. With less than 100 staff, we generate sales turnover of

an average 500 million to 600 million a year. Most of the developer companies in Malaysia, would probably have hired 300 to 400 staff. So this is the difference about Andaman.” According to Tiew, Andaman Property Management has three groups of stakeholders. “First, not in any priority in listing, are the employees. The second one are actually the shareholders.” “For every project that Andaman does, we go for optimum returns, not maximum returns. Optimum means that if you want to achieve a sales turnover, let’s say RM600 million a year, we would rather work hard in three different projects in order to accumulate RM600 million GDV, instead of going all out, doing one township, and trying to get the RM600 million in one single project. For us, we would rather sell cheaper, go solid consistently, confidently lowrisk, and work harder in three different projects. Accumulating it together, we can still make up a RM600 million GDV each year. So our philosophy is different. Work harder, spread it out, work the extra mile. We don’t talk about maximising, we talk about optimising. Optimum returns on investment is already good for us.” “The third one are actually the buyers – our buyers that buy our property. After nine years, Andaman has finally adopted a tagline, ‘Generating Value, Creating Wealth’ in July 2014. The reason we created our tagline is because we finally are confidently and comfortably able to stand by the point and say, whoever buys the property or invests in properties built, developed, launched and sold by Andaman, (that) at the point of purchase, we want the buyers to make money,” he stated. APPLE-TO-APPLE COMPARISON Andaman is well-known for its strategic development in proven matured locations. “Let’s say we have a development in Subang Jaya, and there are ten developers doing similar project at the same time. Let’s say, with an apple-to-apple comparison, in terms of freehold title, same size, same type of furnishers, almost the same www.propertyinsight.com.my JULY 2015 I 45


PERSONALITY OF THE MONTH location, etc., almost all factors the same. On average, let’s say, they sell at RM500k to RM650k, if Andaman goes in, we will launch at RM400k. We want a clear cut profit, we want a clear cut savings, and we want a clear cut value for money for the buyers. That means when you buy, you are already buying cheaper by at least 50% compared to other developers. So that’s the different mind-set that we adopt. People ask ‘why do you need to do that? Can you still make money after doing that?’ Of course we can.” “There are really good profits to be made in property development. If in every project that you make, even if you made a return of let’s say 12%, and let’s say your project is RM500 million, your 12% is already a clean clear cut nice RM60 million. It’s better if you push yourself to make RM60 million or you try to push yourself to make RM160 million from the same project. Of course no businessman will do development and want to lose money. So does my pricing mean we will lose money? Of course not. So imagine, if, with my pricing, I still make money, what about those who sold 20% above us?” he questioned. “90% of the developers are selling at that kind of price and everyone is happy with that kind of ROI. We are happy that if our buyers can be our followers, from one project to the other. It seems that is the strength of loyalty (and we can) save on our marketing budget. We have a lot of repeated buyers, so this is one of the strengths we have. The thought of making money at the point of purchase - we want our buyers to be able to do that.” “So the comfort is this, you have bought your property at a fair price. So you have low-risk, you’re not subject to any economic or any extraordinary circumstances. What if, three years to come, the economy turns to a state of depression? The buyers for the 90% of other developments will face great difficulties . For every project that you bought with Andaman, your bought it at Low price. You are enjoying two things. First is your capital gain. With a lower selling price compared to other 46 I JULY 2015 www.propertyinsight.com.my

developments, it means you’re buying lower than other buyers. Therefore you can let go (sell) the properties easily. Number two, if your acquisition cost is so much lower per square foot, it means that even a low rental can give you a high yield.” Tiew advised people not to buy property speculatively. “That’s why people get into trouble, because they went for a speculative purchase. They bought high not because of absolute value, (but because they) bought high, based on price per square foot. That’s the key word about property development.” “So my whole ideology is this, it’s about the fundamentals. Buy from a good location good products, but with a fair price. A fair price is so easy for me to determine for Andaman. When I checked everybody’s price, it is considered the market’s price, and I sell it 20% below that price. To me, that is fair price and that becomes a good buy.” DIFFERENT APPROACH Andaman has been facing challenges and circumstances that are also faced by other developers. What is different about the company, as believed by Tiew, is the way Andaman handles those challenges. “Let me give you three examples of why, today, Andaman can reward its staff like that. Why Andaman does not become a listed company? In whatever geographical area that we go, in most locations and places we go, we are the leader. For example, four years ago, we went into Cyberjaya. We built the project called The Arc @ Cyberjaya, consisting of 1000 units of condominium. Our starting price was over RM300 psf. I launched it in 2011, completed in 2014.” “At that juncture, there were less than five developers in Cyberjaya. My land acquisition cost was a fraction of whoever that follows us 12 months after that. How could you compete with me if your land acquisition cost is already double my cost? Or even higher than that? So when we went in, the competition were like five parties

That’s why people get into trouble, because they went for a speculative purchase. They bought high not because of absolute value, (but because they) bought high, based on price per square foot.”

-Tiew

including Setia Haruman, the original master developer. When we went in, we acquired very cheap land on a prime location. With this kind of land price that we have, with the right infrastructure on the main road, we don’t have to do wonders. With the reasonable pricing that we set, it was a home-run sale.” “When we completed and handed over the keys in 2014, there were already 32 developers in Cyberjaya, each with different land acquisition cost. The level of competition was so


www.propertyinsight.com.my JULY 2015 I 47


PERSONALITY OF THE MONTH

The Arc @ Austin Hills - facade ariel view

Landscape view

intense. Assuming I bought my land at RM50 psf, those people might have bought it at RM120 psf. How would you compare to my price or my product? Due to averaging when I developed out my units, my land cost over each unit is very minimal. I have the advantage of cost and being a leader.” “Example number two – we went in to central Bangi, about 24 months ago. There were no developers in Bangi, except two or three, that were building a limited number of landed houses. So we went in. Obviously we had a super lowland price. 24 months ago, who were 48 I JULY 2015 www.propertyinsight.com.my

Lobby

looking at Bangi? But when we went in, within nine months after that, a giant developer went to Bangi as well. Many more that came in in recent months. From the last quarter of 2014 to first quarter of 2015, you can see many big developers buying hundreds of acres of land, and announcing hundreds of acres of developments in Bangi.” “Let me just share with you one thing. This is the centre of Bangi, and in a twominutes radius, the entire Bangi banking community is within our vicinity. There are many big developments that are called XYZ in Bangi, ABC in Bangi. For

Swimming pool

your information, each one of them is more than 10km away from Bangi town centre. But it’s still call Bangi. How can you compete with me if my project is so prime? I went there so early and I’m selling it so cheap, but having a very high-end development, to the people? You can’t.” “Now I already sold almost all of my apartments. My construction of the shopping mall is midway. I have nothing more to sell there. By the time I wrap up my sale, those developers are still struggling trying to finish their stage two, (or) stage three projects. However,


the economy is probably changing here and there. When the timing is about there, we break-through the market without waiting for others.” “In 2012, what Andaman did was, we went and bought strategic land banks outside of Klang Valley. For example, we bought a parcel of land, a 10-over acres of freehold land, in places that no top 50 developers in Malaysia will go, such as Slim River. We went in, we bought land which is only a fraction of the cost, freehold but commercial, only a few million ringgit. We generated RM100over millions in sales. Let me ask you, what is my ROI? This is even more profitable than building two blocks of condominiums.” “The game is this. Do you take a hundred million ringgit put into property development to make another hundred million ringgit? It’s all about how much cash you take out of your pocket. So, do I need to do a project that I have to come up with RM150 million cash, in order to make another RM150 million? To come up with RM150 million cash, I

think 90% of the developers really need to go for loan. You see the difference between developer vs developer? RM1 can make how much? My RM1 vs your RM1? So do you know why for some developers, they make RM600 million in sales turnover, they only make RM60 million profits?” “There’s no continuity. If you brag about having 28 projects on-going, and the next 24 months, you don’t have another project lined up for launch, I guarantee you, the developer will cut the staff numbers faster than you can react. It’s very simple. Look at the annual report of the public-listed developer companies, look at how much sales they do a year, and look at the bottom line, how much profit they declare. Who makes more money in percentage?”exclaimed Tiew. THE ARC @ AUSTIN HILLS “My upcoming launch, call The Arc @ Austin Hills JB (Johor Bahru). This freehold project is located in Mount Austin, which is a very stable and

matured area, and is competing against 12 different strong developers. We are going to launch it in August. This unique project is a joint-venture with Majlis Bandaraya Johor Bahru (MBJB). Who is the land owner? Majlis Bandaraya Johor Bahru. What is my land cost? Reasonably low. How can you compete with me? You can’t. Where am I located? The only condominium overlooking and adjoining the golf course, you can see the golfers playing golf. Whereas the other 12 high-rise buildings, totally don’t have golf course view. Nearby, adjacent, but not overview. What we do now is, we take all the 12 developers prices,we take the cheapest one, less 20% and we launch it.” THE ‘GUARANTEED RENTAL RETURNS KING’ “When Andaman first started, we started with RM1 million of capital. When you have very little capital, you have to complete the first project entirely. Then only you can see your profits and cash at the tail-end. Whatever cash you

Infinity pool

www.propertyinsight.com.my JULY 2015 I 49


PERSONALITY OF THE MONTH

We must first secure the master tenancy agreement with the universities or colleges in advance, way before we launched.”

collect also has to go to the contractors. So that’s why, the first four years for Andaman are very quiet years. A lot of staff left because there’s no bonus. When a small company is trying to grow, you have to wait for your money to eventually return.” However, Tiew said, “Once we’re in the 5th or 6th year, we grew quite fast. How did we ride through that period? In most media, most developers in Malaysia acknowledge Andaman as the ‘GRR King’. That means, when Andaman launched a project, we lease back the property immediately on the day we sign S&P. We lease it back from you, using the same developer company. So from that time we started our GRR project, our sales are very consistent, because we give confidence to the buyers. Whatever you buy, at the point of purchase, you will sign the rental tenancy agreement to lease it back to the developer.” “It seems that at that time, until today, Andaman has successfully constructed, launched, sold, completed, and handed over keys for more than 2000 apartments and condominiums on GRR scheme. So that means until today, Andaman is still managing more than 2000 units of properties built by Andaman, and every three months, paying by telegraphic transfer or by cheque regularly, as per the agreement into the bank account of these 2000-over buyers until today. How could Andaman do that? The philosophy Andaman has is, whatever project that was launched, we must first secure the master tenancy agreement with the universities or colleges in advance, way before we launched. We already ascertained the sub-tenants before we even launched this project.” 50 I JULY 2015 www.propertyinsight.com.my

-Tiew

“Starting from 2014, there are a few projects that are already abandoned in Klang Valley, because these developers tried to do GRR, without having a tenant in hand, and trying to cost in the future rental of three to six years into the selling price and trick the buyers like a stupid fool. What happened? The buyers actually take their own money, give it to the developers, and slowly let the developers pay them back in three to five years. Is that what you want? But that’s what happened,” he added. “You see the differentiation of strategy of what Andaman did since six years ago until today? The philosophy is, if there’s no confirmed and signed master tenancy, we will not launch a project with the package of GRR. We will launch it like a normal property development instead. Can you imagine? In the worst economic condition, you continue receiving GRR constantly, you will say thank you and you will hug Andaman. People cannot rent out but you can, because you rent out to the developer.” Why people call us the GRR King? Tiew explained, “Because there are three things. One is because of the 8% return per annum that we do. Not many people can do it. Number two, because of the quantity. We do 2000. A lot of developers tried to do GRR but after doing one to two projects, after 200 units, they stopped. For the new project, they do not dare to do GRR already. Number three is because of our flexibility and legality of this GRR. That means, we don’t use an associate company, we use the developer company itself. The location that we go, must be among the cheapest psf of selling price. Then furthermore, it’s always fully furnished. We have GRR up

to six years, ten years, and the one in Cyberjaya up to 25 years.” “GRR works and is most appreciated at the worst time of economy. So in the years of great boom or great appreciation, a lot of people don’t like GRR because of it is slow money. GRR is only 40% of our total project. Only when we have contracts, we do that. Those years, were the years that we grew. Those buyers or investors who stayed with us appreciate us, and they will appreciate us even more in the coming years.” MALAYSIAN PROPERTY MARKET “I actually have a few observations. My prediction from 2015 to 2016 is that you’ll see a lot of prime land banks being available throughout Malaysia. That means prime locations in Johor Bahru, Petaling Jaya, Subang Jaya, Cheras, or KLCC surroundings or Penang surroundings, we never thought there will be a project being launched there. Another point is, surprisingly, the price will become fairly realistic. I foresee, in terms of the property market itself, it’s about finding the right positioning for all developers. They need to do much more, in order to cover their interest and all that,” concluded Tiew.


Belka.indd 1

6/9/15 10:41 AM


INVESTOR NEXT DOOR

MY CUP OF TEA Rachel Lim shared with Property Insight on her journey in property investment By: Daniel Sim

Rachel Lim

R

achel Lim was running and putting all her focus on her F&B business until one day, when her husband invited her to join a property preview. “I was reluctant at first because at that time, the business I was running had drained most of my energy and time. However, being a loving and supportive wife, I accompanied my husband to the preview,” said Lim. “My husband and I attended a property seminar and bought our first property within 2 weeks. We were amazed with the new opportunities and new possibilities 52 I JULY 2015 www.propertyinsight.com.my

in our life as we had thought property investment was only for the rich, and not for poor people like us,” shared Lim. Lim had been through many other opportunities such as business, Forex trading, and also trading stock and shares. She later realised, property has the highest chance to bring financial freedom, to not only herself but also her family. “I found myself really passionate about property. My knowledge and experience about property investment increased at a very fast rate, special thanks to a group of

like-minded people who are passionate about property, creating wealth and success just like me,” shared Lim. Three months after she and her husband bought their first investment property, they sold off their F&B business and she ventures fulltime as a property investor till now. Lim was originally from Kuala Lumpur. Her investment portfolios for the first four years were mostly in KL, Ipoh and Australia. In 2012, she felt that the property market in KL was getting too hot. She finds it difficult to get good properties in KL that can give her the yield and capital appreciation that she was looking for. The investment journey then slowed down, as she decided that the property market in Kuala Lumpur and Selangor (Klang Valley) has reached a new height. She couldn’t see the fundamental and sustainability factors, based on the national income per capita and affordability level of the majority of people in KL. “I always tell people, I am a full-time property investor, and I always make a joke that I will be jobless if I stop investing. I realised that I had to do something different,” pointed Lim. Lim went on to study and research the UK and US property market at that time, as it was relatively a hot topic, especially after the sub-prime crisis in the US. After much research, she and her husband made a decision to acquire one apartment in Australia. “The purpose of that purchase is for us to understand the Australian market, the legal terms, financing and rental. Our plans were, if all worked out well, we will continue investing in Australian property,” said Lim.


I always tell people I am a fulltime property investor, and I always make a joke that I will be jobless if I stop investing. I realised that I had to do something different.” - Lim “At about the same time, I have been hearing about Iskandar and lots of people were asking me, what I think about Iskandar. In my heart, I was thinking, ‘Hey, why don’t I know anything about Iskandar?!’” mentioned Lim. This had triggered her curiosity and eagerness to want to know what exactly has been happening in that market. “I still remember, it was on the 24th Oct 2012, together with 4 of my friends who are also property investors. We drove all the way down to Johor Bahru for our 1st Iskandar investment tour.” Since then, her property journey unfolded another chapter. “We spent 3 days and 2 nights in a place that we are not familiar with, for those days and nights, we did our preliminary study and research the Iskandar market. We visited new places, developer sales gallery, authority departments.” “Based on our research and study, all of us realised and agreed that Iskandar is a metropolitan in the making and it was the best time to enter the market.” said Lim What this meant was that she could easily find an apartment in the town from sub-sale market as low as RM150,000 with a rental yield of between 8-10%. In terms of capital appreciation potential, she could easily find developer projects in a good location with good fundamental and boom factors that were selling below RM500 psf, some as low as RM300 psf, which was near to impossible to come by in Kuala Lumpur and Penang market. She was travelling back and forth from KL to JB for few months before finally making a decision to relocate her family and settle down in Johor Bahru. “So far, for the past two years in

Iskandar, all my investments (including landed houses) has a rental yield of between 6-10% and capital appreciation of between 30%-100%.” commented Lim happily. She is positive that Iskandar is still at the early stage of taking off to becoming a world-class metropolitan city. Of course, there will be ups and downs in the economy. However, she said that as long as one invests in a good fundamental and sustainable property, it will be reaping amazing results in 5 to 10 years to come. INVESTING IN ISKANDAR PROPERTIES “I would like to advise property investors not generalise Iskandar market. Don’t invest if you don’t understand the market,” said Lim. She pointed out that this is a basic mistake made by many people who don’t understand Iskandar. As they don’t want to miss the boat, these investors would buy based on minimal knowledge, without having any clear exit strategy. They think that as long as it is in Iskandar, everything will go up in price. She shared that another group of persons are those who are very negative about Iskandar market and especially concerned about the oversupply of property in Iskandar. These people have very limited knowledge and understanding about Iskandar and their knowledge come from the mass media like newspapers, TV and online articles. “There are many news going on about the economy, government policy, and development in Iskandar. Generally, the bad news will get the most attention,” mentioned Lim.

She also highlighted that some people do not know what to do with the information. Some others will get paralysed with too much analysis. Some will take a step back to be safe and do not want to get involved with any of it. A few will take action to go out and find out the truth. Oversupply in Iskandar has been a hot topic, especially since a few top developers from China launched megaprojects in selected areas, at the rate and scale that has not been seen before in the market. She agrees the subject of oversupply. However, it needs to be put in the correct context. “It has to be defined in terms of pocketed areas, what segment, price range, property categories, and target market of buyers and tenants.” In a nutshell, do not generalise the market and treat it like the whole Iskandar is suffering from over-supply. The key to making lots of money from Iskandar is in-depth study. Deep understanding is the key to success. “Don’t judge from what you thought you knew or listened or gathered from the news. Help yourself by understanding the fundamentals and the sustainability of Iskandar first, before you make any decision, whether it is a GO or NO GO for you,” reminded Lim. That is why, for the past three years, our company, CORE Investors, has been conducting our Iskandar Investment Tour, which we call Ultimate Investor Guide – Iskandar (UIG-Iskandar). Our mission is to be the ambassador for Iskandar, telling you Iskandar as it is, to help people understand Iskandar, the ins and outs of it, the good and the bad side of it, the potential and the risk, from the point of view of an investor. Our stand for Malaysia and Iskandar is to bring Malaysians closer to Iskandar. THE WAY TO SUCCEED “My husband and I currently have more than 50 properties. 20% of them are commercial, 30% are residential landed, while the rest of 50% are residential high-rise.” “In terms of investment strategy, it is always a better choice to invest in www.propertyinsight.com.my JULY 2015 I 53


INVESTOR NEXT DOOR

markets with good fundamentals and with boom factors. My strategy allows me to have both positive cash flow and capital appreciation,” shared Lim As an investor, this is critical. She saw before how investors placed their focus only on one of the components. So, they either progress too slow for their financial freedom and most likely will stop halfway, or they become a speculator, hoping prices will go up so they can make a handsome profit. She called this a BHP strategy – BUY, HOPE and PRAY strategy. “My strategy has never changed in any market. As I am a fundamental investor, I invest to serve the majority market, which consists of the medium-to-lower range.” “In term of target tenants and buyers, it’s based on the income and affordability of the target group,” shared Lim. Her property selection focuses mainly on medium-to-low range residential and commercial. She said that in terms of loans and financing, the only way to succeed faster in property investment is to be willing to have some of it, rather than none of it. That has helped solve the issue of Loan-to-value (LTV) ratios. In other words, it means, be willing to collaborate, work together, have a joint-venture, and share the profit out. Most of the investments that she partnered with are with her siblings, family members and friends. That has always been her strategy. “As an investor in this current market, I can appreciate the slow down because 54 I JULY 2015 www.propertyinsight.com.my

for the past few years, lots of people have gone crazy about property and do not have good investment knowledge and strategy,” highlighted Lim. “When in the bull market, lots of people want to jump on the boat because of the fear of missing the boat.” “This makes the market gets really hot and went up beyond the level that the market can afford and sustain.” That’s why, there is the joke, that even the auntie at the ‘pasar’ is also talking about property. She pointed out that in a slow time like what we are having now, these people will now jump out of the boat because of the fear of losing. Which means the market is now is in the process of eliminating the speculators and non-investors, which will bring the market back to the sustainable level. The ones who remain in the market are the ones who really understand that whether it is a high time or low time, there is always a good time to invest. She provided suggestions for anyone who wants to create wealth through property investment in any market and any place is: Key 1: Understand what property investment, and where it can bring you and your family to. Key 2: Get yourself educated with the property investment and learn the strategies that suit you. Key 3: Find the property that suits your strategy and invest. Key 4: Reap the result and repeat Key 3 until it brings you to your end goal. She agreed that compared to a few

years back, the market has moved to adapt to the new demand and supply situation. She personally felt that it is about adapting to the changes and asking the question of “What do I need to learn and change NOW to create fantastic result that I want?” Financing is also harder to obtain. Living in the fast-changing world, she would say this is part and parcel of life.

PROPERTY INVESTMENT FIRST PROPERTY LOCATION

EMPIRE SUBANG

Property Type

Soho

Built-Up

797 Sq.ft.

Purchase Value & Year

RM295,000 In Dec 2009

Market Value & Year

Sold RM385,000 In May 2010

SECOND PROPERTY LOCATION

PEEL ROAD, CHERAS

Property Type

Shop

Built -Up

2,000 Sq.ft.

Purchase Value & Year

RM760,000 In April 2010

Market Value & Year

RM1.9 Mil To-Date

Price Psf

RM38psf

Rental Per Month

RM6000

Rental Yield

4.5%

Loan Margin

80%

Loan Tenure

25 years


titijaya.indd 1

6/18/15 6:17 PM


INTERNATIONAL MARKET

THE LION CITY The Singapore property market in 2015 is going great guns By: Fara Aisyah Firdaus Petial

S

ingapore is one of the world’s major commercial hubs, the fourth-largest financial centre, and one of the top two busiest container ports in the world for at least the past ten years. Its globalised and diversified economy depends heavily on trade, especially manufacturing, which accounted for around 30 percent of Singapore’s GDP in 2013. Singapore places highly in international rankings with regard to standard of living, education, healthcare, and economic competitiveness. It has one of the highest per capita income and one of the longest overall life expectancy in the world. The country is one of nine countries in the world with top AAA rating from all credit rating agencies. Singapore is highly urbanised. Land reclamation has been used to expand the country’s land area. 56 I JULY 2015 www.propertyinsight.com.my

THE STATE OF PROPERTY MARKET According to Surbana International Consultants Pte. Ltd., Singapore group CEO Wong Heang Fine, “Singapore property market has gone up tremendously for the last few years.” Surbana’s roots can be traced back to the 1960s when it was the Building and Development Division of the Housing & Development Board (HDB). Housing & Development Board (HDB) was established as a government agency to solve Singapore’s housing crisis and to provide affordable and quality housing for the growing population. Wong recently gave his talk on Singapore Urban Property Prices Hike vs Affordable Housing Need in the FIABCI 66th World Real Estate Congress. “If you look at our housing market in Singapore, you’ll find that 81% of our population are living in private and public housing by government-

POPULATION LIVING IN PRIVATE AND PUBLIC HOUSING

6% 13% 81% HDB Dwellings

Landed Properties

Condominium & Other Apartments

Figure 1 Source: Department of Statistics, Singapore

built plans (HDB). Today, only 19% of our population stays in condominiums and landed houses. So, if you asked how we’ve done that, Surbana itself has built over 1 billion homes in Singapore. You’ll also find that 90% of our population own their flats.” “As you can see, even some of our affordable housings, governmentbuilt plans, are worth a million dollars


POPULATION GROWTH: INFLUX OF PRs AND NON RESIDENTS

PRIVATE PROPERTY & HDB PRICE INDEX (1994-2014)

5,500

220 200

Population (in 000’s)

160 140 120

137.0

80 60

Private Property Price Index

arly Increa

4,000

se of 100,00

2,500

1Q94 3Q 1Q95 3Q 1Q96 3Q 1Q97 3Q 1Q98 3Q 1Q99 3Q 1Q00 3Q 1Q01 3Q 1Q02 3Q 1Q03 3Q 1Q04 3Q 1Q05 3Q 1Q06 3Q 1Q073Q 1Q08 3Q 1Q09 3Q 1Q103Q 1Q11 3Q 1Q12 3Q 1Q13 3Q 1Q14 3Q 4Q

2000

2005

2010

2014

267.254 267.952 266.659 230.923

167.174

150,000

100,000 2001

2002

2003

2004

Pre IR Announcement: Avg GDP Growth: 4.2%

2005

2006

2007

2008

2009

2010

Post IR Announcement: Avg GDP Growth: 8.3%

Figure 4 Source:Monetary Authority of Singapore

each. It was a great time for a lot of developers. This chart [Figure 2] shows our index of our government housing and also private properties. You can see that in the last few years, there has been a boom time and only in the year of 2014 the market hesitate a bit. This is because the government has implemented some cooling measurements. For the last few years, there’s been an extraordinary period of growth of property market. If you look at the two curves, you’ll find that government housing grew slightly higher than the private property.” “So what has happened in the last few years in Singapore that has resulted in such a huge property boom?” asked Wong. “First, our population has grown tremendously. If you look at the growth rate of 2001 to the year of 2010, every year on average we grow about 100,000. There are more immigrants if you look at the chart

No. of Singles (Singapore citizens and PRs)

300,000

162.300

533.2

541

3230.7

793.1

747.9

753.4

798

308.8

339.5

334.4

356.2

386.8

418

449.2

478.2

3017.1

3043.4

3032.5

3057.1

3081

3107.9

3133.8

3164.4

3200.7

2001

2002

2003

2004

2005

2006

2007

2008

2009

PRS

2010

HDB Resale Price Index

Post IR Announcement: Avg Pop Growth: 3.5%

INCREASE IN PROPORTION OF SINGLE (AGE: 30-34)

303.652

157.136

1305

CREATING DEMAND FOR SMALL, AFFORDABLE UNITS

350,000

190.484

1253.7

Figure 3. Source: Department of Statistics, Singapore

IMPACT ON SINGAPORE’S GDP

200,000

1196.7

812.1

Singapore Citizens

ANNOUNCEMENT OF 2 IRS IN 2014:

208.764

1005.5

875.5

Pre IR Announcement: Avg Pop Growth: 0.8%

Figure 2 Source: Ministry of National Development, Singapore

250,000

0

3,000

HDB Resale Price Index

1994

Singapore GDP (SGD in million)

Average Ye

4,500

3,500

100

40

Population growth Pre IR Announcemets Post IR Announcement 0.5% 1.0% 5.5% 6.9% -0.4 10.3% 0.5% 3.5%

5,000

205.7

180

Singapore citizens PRs Non Residents Total Population

100,000 90,000 80,000 70,000

28%

89,762 2000

69,943

60,000 50,000 40,000

2010

22%

51,164

41,942

38% 38,598 28,001

30,000 20,000 10,000

0 Total Males Figure 5 Source: Department of Statistics, Singapore

[Figure 3], you will see that greatest growth is the green bar, representing non-residents. Non-residents have grown at about 800k to 1.3 billion over the ten years. So do PRs (Permanent Residents) which have grown from 300k to 500k in total. This being said, with the growth of the population, they would require roofs over their heads.” Wong elaborated his point, “You will see that we’ve drawn a line in 2004 [Figure 4]. Some of you would wonder why we’ve done so. Actually in the year of 2004, the government mentioned a huge change in the government policy by having two casino licenses in Singapore. From there, you can see the growth in the population. The growth rate has been tremendous. Before the announcement of the integrated resorts, the total population of Singapore was about 0.8%, after that it goes up to 3.5% in total.” Afterwards, what happened to GDP

Females

Wong

(gross domestic products)? Wong said, “This is the chart [Figure 4] of the Singapore’s GDP. It has doubled the value since the announcement of the integrated resort. There’s been tremendous economic growth since 2004.” “On top of that, our population has changed over the years. There has been a substantial increase in proportion of singles [Figure 5]. What does that mean? It means that there www.propertyinsight.com.my JULY 2015 I 57


INTERNATIONAL MARKET INCREASE HOUSEHOLDS WITH INCOMES OVER $15,000 Households with incomes over $15,000 have more than tripled in past 10 years

2010 Total households: 915,100

+3x +25%

Home owners Investor

$15,000 & over Below $15,000

37,519

SUMMARY OF DRIVERS THE RESIDENTIAL PROPERTY

119,174 2010 Total households: 1,145,900

*Single-person households have also increased from8.2% of total resident households in 2000 to 12.2% in2010. Note: (1) Information for resident households only; (2) Income for resident population only; excludes employer’s contribution to CPF; (3) Max affordability (at 40% DSR) for household with income of $15,000 is $1,.570

Figure 6 Source: Singapore Census 2010

Increase in transactions leads to corresponding increase in prices

Housing Demand Leading Indicator TRANSACTIONS

STI lags transactions by 1 qtr Employments lags transactions by 2 qtrs GDP and price lags transactions by 1 yr

Lagging Indicator PRICE

Figure 7 Source: Singapore Census 2010

are demand for small and affordable units. If you notice, some of our property launches in Singapore, you will find that one or two bedrooms are often fully sold on the first day of our sale. So we have a growing need for smaller apartments.” “The next one is also an interesting chart. This chart [Figure 6] shows household income in excess of 50k. Over that period, the number of households with income exceeding 50k has tripled. So it means that there are more people who can afford really good housing for both public and private sector. The market has also been boosted by really low interest rates. Over the years, the interest rate in Singapore dollars dropped to below 0.5% over that period. So it’s been a very low barrier of entry for a lot of buyers.” In addition to that, Wong believed that it is because there is a lot of money in the market. “You can see that over than five years of the period, the money supply has actually

Khalil

58 I JULY 2015 www.propertyinsight.com.my

1 qtr 2 qtrs 1 yr

doubled. So you’ll find that a lot of Singaporeans have to pay for the deposit for the private housing. So how do we as a government ensure that our public housing programme continues to be attractive? Of course, as you know, Singapore is a small place we only have 700 sq. km., where we accommodate five over millions of people.” The URA’s (Urban Redevelopment Authority) planning purposes have estimated population of 6.5 million by 2030. THE COOLING MEASURES “We have done some analysis on the market. What are the drives of property market? Besides population, economic growth, employment, government policies of course that drive housing demands, we also find that there are some catalysts. The catalysts are rising income as I have shared with you, low interest rates, strong Singapore dollars that attracts investment in Singapore. Leading indicator of everything is actually the transactions. Every time you see a transaction grows up we will see price goes up later. And also we’ve done some analysis of how our stock index leads the transactions. So this is an interesting chart [Figure 7].” What does the Singapore government do in order to make sure that they do not have the property bubble? “The first cooling measure that the government came up was in 2009, and that struck off all speculations (Interest-absorption

Housing demand affected by: Population growth Economic growth Employment rate Govermewnt policies Catalyst (multiplier effect): Rising income/wealth Interest rates Strong $$ High inflation Other good indicators 1. STI leads by 3 qtrs 2. Strength of S$ leads by 1 qtr 3. Employment rate (no lag)

scheme removed). That measure enabled the government to catch you if you sell your apartment within the certain period of that purchase. Bank Negara went on to reduce financing, what they call the loan-value ratio. So they put much tougher room to the ratio. That’s not enough to cool the market as you can see the market is still rising.” “Then they came up with what they call the New Sellers Stamp Duty (SSD). So you have to pay more stamp duties as a foreigner, and also when locals buy their second or third property. So that’s the other measure that came up. But unfortunately, the market still kept on rising.” “So in 2013, they came up with a new measure. This new measure was proven to be very effective, this is call the Total Debt Servicing Ratio. So what they do in this measure is to look at all you borrowings and all your liabilities including bank cards, car loans, in assessing whether you’ll be eligible for loans or not. So that’s been a big hit on the market. As you can see that since the introduction of the TDSR, the indexes are all coming down.” Wong concluded his point by saying that strong fundamentals will continue to keep the residential market robust. High numbers of job vacancies can provide job creation up-cycle, low unemployment rate, while the tight employment market will push up the wages. Additionally, in accordance to Wong, it will also cause cycle wealth creation. There will be wealth created


RESILIENCE OF PRIVATE RESIDENTIAL PRICES 4Q13 registered the first quarterly decline in home prices since 2009 URA private property price index (4Q98=100) 240

#2: February 10 • New sellers stamp duty (SSD): sold within 1st year • LTV lowered : 90% to 80%

220 200

#5: December 11 • 10% for foreigners • 3% for PRs 2nd & subsequent ppties • 3% for Singaporeans 3rd & subsequent ppties

#7: January 13 • Higher ABSD for 1st/2nd/3rd+ property: (citizen 0/7/10%, PRs 5/10/10%. Foreigners 15/15/15%) • LTV lowered (>30 years tenure or > age 65) 1st : still 80% (60% to 40%) 2nd : 60% to 50% (40% to 30%) 3rd : 60% to 40% (40% to 20%) Non individu : 40% to 20% • Cash downpayment for 2nd + property 10% to 25% • PR buyers have to sell their HDB

#1: September 09 • Interest-absorption scheme removed • GLS confirmed list reinstated from 1H10 #4: January 11 • LTV(2nd mortagage, insti) lowered : 70% to 50% • SDD raised : 16/12/8/4% sold within year 1/2/3/4

180 160 140

4Q12: +59% from trough

#3: August 10 • LTV(2nd mortagage) lowered : 80% to 70% • SDD applied for 3 years, from year 1 • HDB MOP raised from3 to 5 years • HDB buyers have to sell their private ppties

#6: October 12 • Loan tenures limited to 35 years • LTV lowered for >30 years tenure or >age 65, to 60% for 1st mortagage and 40% for 2nd • LTV lowered from 50% to 40% for non individu

4Q ’0 1Q 6 ’ 07 2Q ’ 07 3Q ’ 07 4Q ’ 07 1Q ’0 8 2Q ’0 8 3Q ’0 8 4Q ’0 8 1Q ’0 9 2Q ’0 9 3Q ’0 9 4Q ’0 9 1Q ’10 2Q ’10 3Q ’10 4Q ’10 1Q ’11 2Q ’11 3Q ’11 4Q ’11 1Q ’12 2Q ’12 3Q ’12 4Q ’12 1Q ’13 2Q ’13 3Q ’13 4Q ’13

120

Peak to 2Q09 trough -25%

#8: June 12 • TDSR framework • Further tweaking of LTV limits (income weighted age of borrowers)

Source: URA & CRS

by continued economic growth. Increase in income levels as well will increase the affordability to purchase private properties. From Wong’s experience and stand point, he believes that Singapore’s property market will remain affordable. This is because of the strong economic growth and political stability, along with the sound financing policies to ensure property market is stable and consistent with economic fundamentals. AN INVESTMENT DESTINATION FOR FOREIGNERS The founder of Khalil Adis Consultancy Pte Ltd, Khalil Adis described Singapore as an investment destination, “What makes Singapore attractive is it is a very cosmopolitan

city where English is widely spoken, it is seen as an international hub and a gateway to Asia. Due to its limited land size properties in Singapore tend to appreciate over time. This has made it sort of like a blue chip investment. In addition, the transparent property market, strong political stability and strong Singapore dollar have made Singapore a top choice among investors.” He said, “Singapore is undergoing a bearish stage with little sales volume and transactions as a result of the various cooling measures. The market is right now driven by genuine home buyers. Homes in the mass market and affordable home segments are selling but not the medium- to highend market. There have been fire sales reported in the high-end segment with

sellers selling at a loss. It is right now a buyers’ market to look for properties.” “For foreign investors, they will need to pay Additional Buyers’ Stamp Duty (ABSD) of 15% plus property tax. Therefore, the initial cash outlay is quite significant. Only those with deep pockets can afford to invest in Singapore. In addition, there is a Sellers’ Stamp Duty (SSD), when you sell your property in the first 5 years. This is to prevent rampant speculation. For those wanting to buy into Singapore, it is best to buy for long-term capital appreciation. The rental market is quite weak due to the many units coming on stream this year,” he wrapped up.

www.propertyinsight.com.my JULY 2015 I 59


HOW SECURE IS YOUR HOME? Find out how the Sharp Cloud SmartHome System keeps your home safe and secured By: Daniel Sim

A

ccording to a report done by the United States Department of State Bureau of Diplomatic Security (OSAC), the overall crime rate in Malaysia is designated as medium. However, the rate is believed to be higher in urban areas, notably Kuala Lumpur.” The report further stated that residential break-ins do occur and are becoming more frequent in single-family homes. These break-ins generally do not result in confrontations or injuries to the occupants. While uncommon, some burglars have entered when occupants were home, tied the residents up, and threatened them with weapons. While violent incidents during residential burglaries are rare, one U.S. citizen was killed in an apparent home burglary in 2013 in Malaysia. Hence it is very important for each Malaysian to understand and know more on how they can protect their home. Recently, Property Insight met up with Sharp marketing manager Linda Lim to learn about one of Sharp’s newest products, the Sharp Cloud SmartHome System, and how it helps property owners to protect their home from theft

Marketing manager Linda Lim introducing the Sharp Cloud SmartHome system

60 I JULY 2015 www.propertyinsight.com.my

Sharp Cloud SmartHome System is designed as a holistic home security system for the mass market

- Lim

and break-ins. “Sharp is a very established brand in Malaysia. In fact, we have been in Malaysia since 1985. This will be the brand’s 30th year in the country. Many Malaysians who are familiar with our brand would know that we are a brand famous for producing electrical appliances such as TV and fridges and more,” said Lim. She shared that there is a demand for security in Malaysia for a few reasons. Firstly, the demographics of the population are mostly working adults, with children or elderly at home. In fact, according to the offcial CIA World Factbook (year 2014), the majority of the Malaysian population for both male and female are aged between 23-35 years old. Therefore, most of them are in the working class category. Though this is a very good and healthy sign for the labour market of the country, working adults would have to do some adjustments when it comes to home security. “Most of them are working, not only to take care of themselves, but also their older parents, or in the case of married couples, their baby and children at home. However, they lack the means to monitor what is actually taking place at home when they are away at work. This is a worrying trend because crime rates in Malaysia, especially for home break-ins, are on the rise,” said Lim. She pointed out that most owners tend to take their home security matters into their own hands and not rely on the local

authorities like the police or the ‘RELA’. This is especially true for those who live in gated-and-guarded neighbourhoods. “Actually, having all these (security facilities) are not bad but they have challenges by themselves.” She cited an example where most gated-and-guarded housing estates employ foreign guards. Therefore, there is the issue of language barriers, which could result in other issues like credibility and trust for the residents. Then as a home owner with such arrangements, they would need to pay home security maintenance fees monthly or even annually, which can range from a few hundred to a few thousand Ringgit. HOW CAN SHARP CLOUD SMARTHOME SYSTEM HELPS? “Sharp Cloud SmartHome System is designed as a holistic home security system for the mass market, partially factored by the available infrastructure such as the introduction of the highspeed internet network in Malaysia,” said Lim. This is due to mobility, where you can monitor your home virtually be anywhere in the world, so long as you have internet access, a smart phone and a Sharp Cloud SmartHome Starter kit installed. “Sharp launched this product at the end of last year. Sharp is the first to have this product compared to other electrical brands. Therefore, we are a pioneer of this product in our own industry. You can protect your home with a simple click with your fingertip through an app


www.propertyinsight.com.my JULY 2015 I 61


installed in your smartphone,” said Lim. The Sharp Cloud SmartHome System app comes in 15 languages. Therefore, it is customised for expatriates as well. The Bahasa Malaysia version was launched in June, where users can choose to receive notifications in Bahasa Malaysia. The app is compatible on smartphones and iPad with iOS and Android platform. The Sharp Cloud SmartHome System helps property owners in many ways. “We call it CSS for short. Whether you are renting a house or are the owner of your own property, CSS will be able to accommodate your home security needs,” Lim said. The CSS combines both CCTV and alarm features to an app that controls everything. Most products in the market would require owners to buy the CCTV and the alarm features separately. Besides the issue of being more costly, in the event of an emergency, the owners would have to go through the hassle of tracing back the video of when and what actually 62 I JULY 2015 www.propertyinsight.com.my

happened. “The CSS provides real-time feedback that is immediate as the product includes door or window sensors. Therefore, when someone opens the door, and the home is armed with the system, the system will notify you immediately and it beeps an alarm sound on your smartphone, and a message informing you of when, where, and which home has an incident happened. You can also add-on an alarm kit in the house, which will produce a siren in the house when triggered. Lim shared that in the context of renting a home, you may have your landlord coming often to check on his/her property. They do not have to worry if you want to install CSS, as it does not require any drilling into the walls of the property. This is unlike the security systems available in the market, especially the wired ones that require you to drill into the wall, and on top of that, you need to install their keypads. Furthermore, most property owners

or even renters themselves would not like to have strangers coming into their homes to do drillings. For CSS, it is home-friendly and userfriendly, in the sense that you can just plug-and-play, and set it up on your own with simple instructions within 15 minutes. Lim shared, “So let’s say, you want to shift to a new house after renting for a number of years. All you have to do is to unplug the CSS and set up in your new house. It will use back the same settings without any added hassle.” The only requirement is a high-speed internet connection to control the CSS hub. The CSS hub can control up to 70 devices and 6 cameras. Therefore, if property owners want to extend the surrounding security coverage within their homes, they can just add on additional alarm kits or camera kits. She highlighted that another differentiation point for home owners is that they can monitor multiple properties with a single application over their smart


ALARM KIT

STARTER KIT

HD IP CAMERA KIT

PIR

PANIC BUTTON

HD IP CAMERA

REMOTE CONTROL

OPU

INDOOR SIREN

phone. Each of these locations will have their own CSS hub. The owners will then be able to monitor real time even though he/she is travelling overseas. “So what happens if you are overseas on a business trip and you do not have the luxury of time to monitor and make sure your home is safe?” we asked. She said that with CSS, you don’t have to shoulder the entire security burden of your home. What this meant was you can actually assign up to five authorisers who can see what is going on in your home and at the same time, arm and disarm your home. But what if the authorisers are busy with other things themselves? She highlighted that the system is flexible, in the sense that besides providing five authorisers, the property owners who own CSS can also add five more additional emergency contacts. Although they can’t monitor what is going on in your house, they will receive www.propertyinsight.com.my JULY 2015 I 63


an SMS notification informing them of a possible break-in and will automatically record or force-record the footages for their later preview. “For example, if you are in the U.S.A on a working trip and you have a home in Melaka, you can have your family members in Melaka as the authorisers who can arm and disarm your home with the system. At the same time, you can add the phone contact of your Melaka local police to notify them, in-case anything unfortunate happens in your home,” Lim elaborated. The benefit of this feature is not in the flexibility of adding people to become your home authoriser or emergency contact, but above all that, it helps you to save time, because as the owner, you can change the settings easily via the app on your smartphone. Currently, the CSS product comes with alarm and CCTV features, but in months to come, it will also have a special feature called Smart Home on the app. This is a feature where it will allow property owners to switch on/off their electrical appliances such as TV or air-conditioners automatically. “You don’t have to worry if you have switched off the light at your house, even when you are already out on the road, on the way to work. Therefore, it provides convenience for home owners with this wonderful feature,” Lim said. “The next product that will be introduced in the market is the Sharp Smart Plug, which will help make this feature compatible with products of different brands in your home,” Lim commented. Lim cited, “The CSS is certified and approved, according to SIRIM and PDRM standards, for the mass market.” “Besides providing real-time monitoring, it also has a recording feature or videogram, activated with a button located at the lower left-hand corner of the app. The CSS comes with a 16GB flash drive that can store up to 8,000 videos and every movement is recorded for 30 seconds that will be stored for up to 30 days,” Lim said. Hence, owners can see today what had 64 I JULY 2015 www.propertyinsight.com.my

happen a week ago. Lim also said that for the latest app update release, which is free and updated every six months, the videogram will provide additional features for property owners to push the recorded content into Dropbox with their permission. PROMOTIONAL PACKAGES There are three packages for home owners to choose from, when it comes to Sharp Cloud SmartHome System. The compulsory kit is the YL-SU 100M Starter Kit, which consists of an OverCloud Processing Unit(OPU), 2 cameras, wireless door sensors and remote control. Most of the property owners who have many large properties will want to add-on additional devices. This is where Sharp provides the Alarm Kit YZ-AL 100M, which includes one indoor siren (for home installation), two door or window sensors, one panic button, one motion sensor and one remote control. There is also the add–on high-definition camera

kit YZ-VC 100M, which will provide property owners with two high-definition IP cameras. The Sharp Cloud SmartHome System packages contrasts many alarm systems in the market, where their functions are only allocated in a fixed zone. Currently, if property owners purchase a Starter kit, which costs RM2649, with an add-on package of either the alarm or camera kit, they can buy the add-on package at a purchase-with-purchase (PWP) price of only RM699. The normal price for each add-on package is RM1059.

PREVENTION IS BETTER THAN CURE “There is no such thing as the perfect security system in the world today. Therefore, there is no security system that is 100% fool-proof,” said Lim. She advised property owners that they would still need to take the necessary precautions to avoid having unnecessary incidents from happening.


MID VALLEY_July.pdf

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INVESTORS’ HOT PICKS PROPERTY EXPO 2015 Place Booking Fee for your dream property and get rewarded with points

Date

3 - 5 JULY 2015 (Wednesday - Sunday)

Time

10am - 10pm

Venue

Official Security Partner

MID VALLEY EXHIBITION CENTRE, MIDVALLEY CITY

For enquires call: +6012-3788 683 or visit www.propertyinsight.com.my for more information


STRATEGY

THE RISING DEMAND FOR SHARIAH COMPLIANT PROPERTIES

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he Islamic Capital Market (ICM) has come a long way since its beginning in the 1960s, stemming from the response to tremendous oil wealth, and is today one of the fastest growing segments of the global financial industry with assets estimated to be more than USD2 trillion. The ICM is where market transactions are carried out in ways that do not conflict with the conscience of Muslims and the religion of Islam. ICM is a component of the overall capital market and it plays an important role in generating economic growth for the country. In Malaysia, the ICM functions as a parallel market to the conventional capital market, and play a significant complementary role to Islamic banking and Takaful in broadening and deepening the Islamic financial markets. During the 2008 global financial crisis, we witnessed Islamic Banks outperforming their conventional counterparts. Due to their ethical banking practices, they were not exposed to subprime and toxic assets. Malaysia leads the world in the development of Islamic Finance and a vibrant ICM. It has the government’s commitment to make Malaysia a global Islamic financial hub by establishing a comprehensive regulatory, legal, corporate governance & Shariah framework. Islamic Finance is seen now as more than just an alternative to conventional finance,

66 I JULY 2015 www.propertyinsight.com.my

Source: KFH Research database

and its appeal to all Malaysians is becoming apparent. Today, Malaysia’s Islamic capital market represents 58% of the total Malaysian capital market. WHY IS THERE A BIG DEMAND FOR SHARIAH-COMPLIANT PROPERTIES? The demand for Shariah-compliant properties stems from the success of Islamic finance and the establishment of Shariah Mutual and Wealth Management Funds, and Sovereign Wealth Funds in Malaysia like PNB and Lembaga Tabung Haji (The Pilgrims Fund). In addition there are many Private Fund Managers that have established Shariah Funds to cater to the growing demand for ethical investments.


The property sector still remains a very popular asset for these funds to invest in and hence, has given rise to the growing demand for Shariah compliant properties to be made available to the Islamic Funds Management and Takaful Insurance industries to invest in. WHAT ARE SHARIAH COMPLIANT PROPERTIES? Properties are a secular asset as they comprise largely of bricks and mortar. So one may ask what makes one property Shariah-compliant and the other not. The answer lies on the usage of the space within the property. The activities conducted within the property need to be permissible under the Shariah law and that activity is largely determined by the business activity of the tenant. The list of activities that are classified as non-permissible are: • financial services based on riba (interest); • gambling/gaming; • manufacture or sale of non-halal products or related products; • conventional insurance; • entertainment activities that are non-permissible according to the Shariah; • manufacture or sale of tobacco-based products or related products; • stockbroking or share trading in Shariah non-compliant securities; and • hotels and resorts. Unfortunately, most of the iconic towers in Kuala Lumpur are occupied by conventional banks or conventional insurance companies which have disqualified them as Shariah compliant properties. However, there are several types of properties that do fit very well into the Shariah-compliant space. Good examples include hospitals, industrial, and logistic warehouses that does not produce or handle non-halal products. Other examples include Oil & Gas Companies’ Headquarters, Hypermarkets, Islamic Banking Headquarters, Takaful Companies, Automotive service centres and showrooms, IT Products and Data Centres. Certain level of non-permissible activities within the Shariah compliant property may be allowable. The Securities Commission of Malaysia’s Guidelines for Islamic Real Estate Investment Trust allows a 20% benchmark of non-tolerance level within the portfolio or property (if it is a single property). This provides certain level of flexibility to the property owner when working towards ensuring the property is Shariah compliant. ISLAMIC REITS OFFER THE BEST EXPOSURE TO SHARIAHCOMPLIANT PROPERTIES Islamic Real Estate Investment Trust (Islamic REIT) is a collective investment scheme that invests and owns income producing Shariah compliant properties. Listed Islamic REITs are traded on our local Bourse and provide Unitholders with

KLCC Stapled Securities - Petronas Twin Towers (kl petronas twin towers)

consistent returns in the form of income distributions similar to owning physical properties. THE DISTINCTION BETWEEN A CONVENTIONAL AND ISLAMIC REIT IS AS FOLLOWS: Investment mandate Advised by Shariah Advisor Number and name of Islamic REIT listed on Bursa Securities

ISLAMIC REIT

CONVENTIONAL REIT

Shariah compliant real estate properties

Real estate properties

Yes

No

Three

N/A

There are currently three Islamic REITs in Malaysia: NAME OF ISLAMIC REIT

TYPE OF INVESMENTS

Axis Real Estate Investment Trust (Axis REIT)

Shariah-compliant office and industrial assets

Al-‘Aqar Healthcare Real Estate Investment Trust

Shariah-compliant hospital assets

KLCCP Stapled Securities

Shariah-compliant office and retail assets

Comparing against direct investment in Shariah-compliant property, an Islamic REIT offers the following key advantages: IT IS PROFESSIONALLY RUN AND MANAGED An Islamic REIT is run by an Islamic Fund Management Company (The REIT Manager) which is licensed by the Securities Commission under the Capital Market Services Act. Strict compliance to the Securities Commission and Bursa Securities’s regulations is mandatory. In the case of an Islamic REIT, the Manager has to engage a Shariah advisor to ensure compliance. Investing in an Islamic REIT will be your answer to owning Shariah-complaint property without the hassle of attending to tenants’ demands or managing the property. Just let the professional REIT Manager manage tenant expectations. A SMALL START-UP INVESTMENT IS ALL THAT IS REQUIRED Any physical real estate investment requires a big initial investment outlay. However with an Islamic REIT, investors can purchase a partial ownership of a big real estate www.propertyinsight.com.my JULY 2015 I 67


STRATEGY Islamic REITs sometimes trade assets like that of a normal investor Some Islamic REITs behave like the individual property investor and disposes of an asset when the time and price is right. Axis-REIT is one such example. In the last ten years, it has completed three asset disposals, the gains of which were fully distributed back to investors as special tax free dividends much to the delight of the unitholders.

portfolio and enjoy the income produced from it as well as its appreciation in value. A minimum investment of 100 units is allowed. It’s easy to buy and sell Islamic REIT units All listed Islamic REIT units are listed on Bursa Securities and traded like normal equity stocks. It is priced daily and the prices are transparent. Unlike buying a property which may take more than six months to complete and involves agency commission, the buying and selling of these units can be done almost instantly and is cheaper to transact. Frequency of Islamic REIT dividend payment Most of the Islamic REITs pay a quarterly dividend which is as good as collecting monthly rents from tenants from a directly owned property investment. There is a distinct tax advantage The tax advantage is the one of the key attractions of investing in Islamic REITs. For a REIT that distributes at least 90 percent of its total yearly income to unit holders, the REIT itself is eligible for exemption from the corporate tax rate of 25% under Section 61A of the Income Tax Act 1967 for that year of assessment. However, the withholding tax would be applicable on the REIT’s dividends that have been exempted at the REIT level, the schedule of which is appended below: UNITHOLDER CLASS

WITHHOLDING TAX RATE

Resident corporate

Nil^

Resident non corporate

10%

Non-resident individual

10%

Non-resident corporate

25%

Non-resident institutional

10%

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The Market is shifting towards more to Shariah Compliant investments Prime Minister Najib Razak announced on the 23rd April 2015 that the Employees Provident Fund (EPF), Malaysia’s RM600 billion state pension fund, will offer an Islamic investment option to its members by 2017, which would create the world’s largest Shariah-compliant fund of its kind. The EPF already invests about a third of its portfolio in stocks and bonds that complies with Islamic principles. EPF, that has consistently outperformed its guaranteed minimum dividend of 2.5 percent annually, hired consultants last year to study the feasibility of a state-backed pension fund focusing entirely on Shariah-compliant investments. The move could funnel billions of dollars into Shariahcompliant asset managers in Malaysia, which will be a boon for the country’s Islamic finance sector. The government envisions the industry accounting for 40 percent of the country’s total banking assets by 2020, compared with latest figures of around 23 percent released last year. This will create the largest Shariah fund of its kind in the world, and will further strengthen Malaysia’s position as a leading Islamic financial centre. In 2012, the government launched a private retirement scheme (PRS), which included Islamic options. As of December, they represented 29 percent of total PRS assets under management. Khazanah Nasional, Malaysia’s sovereign wealth fund, recently announced that they will add to the government efforts to develop the ICM further by issuing a 1 billion ringgit socially responsible Islamic bond. All these moves will all go to further cement the growing appeal for Shariah-Compliant properties in the markets, as these funds look for yield within the Islamic space.

ABOUT THE CONTRIBUTOR By Dato’ Stewart LaBrooy, CEO & Leong Kit May, Chief Operating Officer and Finance Director of Axis REIT Managers Berhad


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STRATEGY

FENG SHUI – MORE THAN MYSTIC MUMBO-JUMBO

Earth energy originates from the peaks of highlands and flow downhill. The secret is to recognise where the energy forms harmonious pools

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he subject of Feng Shui is usually greeted with either skepticism or enthusiasm among Malaysian investors. Before you decide which camp you belong to, do spare a few minutes and read on. Arthur C. Clarke once wrote that any sufficiently advanced technology is indistinguishable from magic. Seen from this perspective, perhaps the mystical feng shui is a form of science that has yet to be understood and is wrongly dismissed as hocus pocus, superstitions or magic! Mind you, we are talking about authentic feng shui, not the run-of-the-mill cons that pass themselves off as “feng shui”. These are the people who advise you to place totems or objects that can supposedly enhance your good luck or repel harm. They are typically based on mythical creatures or objects that the Chinese often associate with good luck or prosperity. These objects have no more power to change your luck than you have any chance of stopping the sun from rising! Feng Shui has a very long history. The term was first used in the Jin dynasty (265 - 420 AD) by Guo Pu, who is credited as the founder of Feng Shui. This ancient sage wrote a manual called Burial Canon where he outlined the do’s and don’ts of 70 I JULY 2015 www.propertyinsight.com.my

choosing a burial site. To the dead, a burial site is similar to a home to the living. It’s the dichotomy of yin and yang. In this book, Guo Pu described the flow of energy or “qi” from the mountains to the rivers; strong, fast-moving energy is too powerful and destructive; and gentle energy is conducive to life and prosperity. This can be done by conserving earth energy with water bodies and taking care not to let strong winds scatter it. Thus, we look at the wind (“feng”) and water (“shui”). However, the practice of geomancy for land selection predates this, going back for centuries under different names. Imperial courts have ministries dedicated to this task and their job involves town planning. Records showed as early as the Zhou dynasty (1046 BC - 256 BC) applied these principles to found Xi’an, one of the four great ancient capitals of China. It was home to no less than 13 dynasties! Surely the lasting success of a Feng Shui-compliant capital city cannot be a coincidence! The Zhou imperial ministers applied the best scientific knowledge they possessed to choose the site and plan its development. Such knowledge was a state secret and not widely taught to avoid having it fall


into the hands of the emperor’s enemies. The general population was also mostly illiterate. Many of the sages’ teachings were relayed in simplified forms, using terms such as “ghosts” and “killers” to indicate taboo and ‘abundant wealth”, “plentiful children” and “longevity” to encourage compliance. It was much easier than explaining how the sun, moon and planets, and their position over time affect us through their constantly shifting magnetosphere and gravitational forces. The ancient sages were not just philosophers; they were mathematicians, astronomers, geologists and sociologists, to name a few. They observed nature and events, meticulously recorded and studied them, and produced hypotheses which were refined over centuries. Every ruler wants to remain in power and for their reign to be perpetuated over generations. Perhaps in the distant past, kings or chieftains were appointed from among the strongest of a tribe. Indeed, before the Xia dynasty (2070 BC - 1600 BC) began, kings appointed successors based on their worthiness instead of bloodline. To ensure their dynasty lasts forever, emperors needed to quash opposition be it internal or foreign. They had to demonstrate that they had the “mandate of heaven” to rule over the country. The ancient Chinese believed that emperors were representatives of heaven bestowed with the authority to oversee them. Any unexpected phenomena - drought, famine, pestilence, earthquakes, the appearance of comets - were seen as signs that the emperor had lost favour and the right to rule. Even in the Bible, the seven disasters that befell Egypt were seen as God’s will to punish the pharaoh and demand the release of the Jewish people. If the emperor could anticipate these events ahead of time, he would be able to use them to his advantage; heaven is unhappy with the populace and will produce these signs as a warning to them! Thus, the imperial ministers had to be really good, not only to keep their jobs but to keep alive as well! Records of their works and knowledge were kept in the imperial libraries and many survive to this day. These are the main source of authentic Feng Shui knowledge. Unfortunately, the texts are written in archaic form, often in the form of poems - it was easier to remember - and not many people understand their true meaning today. Historical scholars usually lack the foundational Feng Shui knowledge to interpret the context; Feng Shui students lack the scholastic skills and patience to study these texts. Given these factors, is it any surprise that Feng Shui and other Chinese sciences started to decline? The Cultural Revolution did not help either. Mao Zedong believed that China’s weakness was due to its old ideas, culture, customs and habits, and sought to eliminate them. Among his targets was Feng Shui. Today, Feng Shui is still officially banned in China. Fortunately, practitioners of the science fled to Taiwan, Hong

Kong, Malaysia, Singapore and elsewhere. They keep this knowledge alive but with subsequent generations as the old masters pass away, the depth of knowledge becomes diluted. While the younger generation may know how to apply a Feng Shui formula, they may not know how the formula was derived. This is dangerous because faced with new situations, they will not be able to adapt their formula accordingly. For example, high-rise buildings are the norm in cities today; there were none in ancient China. Today’s cities are criss-crossed with elevated highways and burrowed with underground tunnels. These structures never existed when Feng Shui started. Do the ancient formulas still apply? Do they need to be modified? What would the basis for modification be? Do the practitioners have enough foundational knowledge to discern this, or is this a hit-and-miss affair? As mentioned earlier, not many people understand the original texts, written as poetry. Some words are no longer in use today – they cannot be found in any Chinese dictionary. Some words are extant but carried a different meaning in the past. Some terms were references to actual persons or animals that were famous thousands of years ago. To modern readers, they are mistakenly interpreted as, just about anything! In this series of articles, we will explore various parts of the Klang Valley and their Feng Shui, based on the local landform. We will also attempt to dispel preconceptions about this subject, and cover basic principles for choosing a suitable property. Throughout this journey, we will view and interpret Feng Shui principles from a scientific point-of-view as much as possible, to separate myth and fallacy from sound principles.

ABOUT THE CONTRIBUTOR Stephen Chin is an entrepreneur and public speaker in the field of leadership and personal development. Stephen is currently the Vice-President of Public Affairs at the Malaysian Institute of Geomancy Sciences.

www.propertyinsight.com.my JULY 2015 I 71


STRATEGY

SECURING CHILDRENS’ FUTURE WITH INSURANCE TRUST

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he tragedy that caused three fatalities in the DUKE highway accident earlier in May was really a poison in the pill to the country. Those who initiated this tragedy just to satisfy their urge for the thrill in racing are really irresponsible and anyone of us will have the absolute right to condemn such imbecility. The victims survived with a pair of daughter, aged just seven year old and three year old respectively. What is to become to these little girls moving forward? All this while, I am of the opinion that all parents with young children should look beyond the next one-two years of time horizon and be far-sighted. All parents want to be able to accompany their children and watch them grow up, but unfortunately, not all will get this opportunity, as sometimes, an illness, or an accident may take away such deserving privileges from the innocent souls or vice-versa. Some investor would conveniently choose to borrow from the bank without having a debt cancellation plan for the liabilities that count against them. No matter how many properties you have registered to your name, it does not matter at the end of the day, should one day, it be subjected to foreclosure. For investors who have young children, it should even go beyond this level of planning, for your properties portfolio will mean nothing for your family, if they cannot survive the basic needs such as food, clothing, and education needs etc. Before we discuss about setting up a private trust to hold your investment properties that you would like your next-of-kin to keep for long-term rental income, perhaps I should share with readers how an Insurance Trust can be important, especially if you have young toddler at home. Insurance trust is not about just buying life insurance. It 72 I JULY 2015 www.propertyinsight.com.my

involves an additional level of planning and considerations all together. Most of the time, people would do nominations for their insurance policies, normally, their spouse. But even if the spouse does not pass away together, some of the unexpected can still happen, such as: 1. Proceeds of claim was loss due to scam or mismanagement. 2. Spouse may marry again. 3. Spouse may pass away when children are still minors. 4. Children, if qualified to receive the claim proceeds at young age (example 23 years old), may misuse or spent it all on luxurious lifestyles, which will exhaust the money before long. Surely the initial intention would be to ensure his surviving family member will not have to worry about living expenses or achieving family goal if the father passes away, but the truth is, just making nomination after having your insurance is not the end of the story as it still leave us with a loose knot. By setting up an Insurance Trust, we would have more control and reduce the risks of such unwanted outcomes from becoming reality. Insurance Trust is a combination of life insurance with private trust, whereby, the Settlor (The father) would assign his life insurance policy to a private trust, and appoint a trustee to carry out his instruction, as outlined in the trust deed (a document that forms the core of the trust stating settlor’s instruction and intention). Trustee will then follow the trust deed and execute the instruction such as paying regular monthly income to beneficiary (for example, the wife and the son), paying allowance to guardian, paying for education fees for the child, and some of the instructions can even include a clause, stating that should wife were to remarry, she will then cease to be a beneficiary to the trust, etc. The settlor can even state that when the trust is revoked, the balance of assets


INSURANCE TRUST Insurance Company Death Claim Proceed

Children

Education, maintenance, medical etc

Creditor Protection

Spouse

maintenance, medical etc

Trust Deed Assigment of Policy

Debt and Estate Administration

Cost and advancement of living expenses etc.

should go to who or which charitable organisation. Additionally, an insurance trust would also ensure the proceeds of claims to be creditor-proof, unless it is proven that there was an intentional or fraud case. Further, when someone passes away, all the assets will be frozen, but with the proceeds from insurance trust, the settlor could direct the trustee to disburse fees and payments applicable for probate application or application for letter of administration. This planning will also provide liquidity and cashflow to the family until the estate can be distributed. Despite its good use and advantages, it does not take a huge fee or cost a fortune to set up an Insurance Trust. A very simple insurance trust can be set up from fee below RM 500. However, the thing about this is not to pay too much of attention on the fee, but rather, on how to ensure the instructions and the trust will be set up, according to the wishes of the settlor and achieve the initial objective, as well as the few areas as below:

1

WHO SHOULD BE APPOINTED AS TRUSTEE? Individual trustee may pre-decease the settlor or the beneficiaries, as opposed to corporate trustee who will likely to exist perpetually and has the expertise in execution the instructions on the trust deed. Of course, at the expense of trustee fee.

2

WHO SHOULD BE APPOINTED AS PROTECTOR TO THE TRUST? Protector to the trust takes the role of mediator between trustee and beneficiaries should dispute arise, and serve to ensure the right and interest of beneficiaries are protected. Protector can often be one of family member, or a person with high establishment of moral ground etc. Settlor may consider appoint at least two protector to ensure a built-in control to prevent moral hazard, but if there are too many protector, like four protectors, then it may makes discussion a tedious process as each of them may have different opinions. Nothing can be too safe, isn’t it?

3

HOW LONG SHOULD THE DURATION OF THE TRUST? Granted, the longer the duration of the trust, the bigger the insurance sum assured will have to be, for it does not make

sense to make a RM 200,000 insurance trust to last for 20 years when the annual payment to beneficiaries will be RM 40,000 per year. The longer the duration, the more trustee fees will be incurred, and under pressure of inflation, the value of wealth in the trust may also become worthless.

4

HOW SHOULD THE TRUST ALLOCATE THE ASSET IN IT TO BENEFICIARIES? The main issue settlor should not overlook here is if the value of the trust will be enough to sustain the desired payment to beneficiaries, as well as take into account the impact of inflation towards their lifestyles. It makes no sense to fixed payment for annual lifestyle at RM40,000 whereby 10 years later this same RM40,000 can only have purchasing power of RM 20,000, unless they were to downgrade their lifestyles or have other sources of income to supplement it.

5

HOW SHOULD THE BALANCE OF ASSET BE DISTRIBUTED WHEN THE TRUST END? When the trust come to an end, the trustee also need to know how should the balance of the asset in the trust should be distributed. Does every beneficiaries share equally of what is left, or pass to a sole beneficiary, or give to charitable organisation etc? The information above serve as a general info on how Trust such as insurance trust can serve as a solution to individual situation to ensure family financial security will be assured and protected. On a general note, each person situation will be unique from another person, as such, you are advised to seek clarity and advice before concluding which solution work best for your personal situation.

ABOUT THE CONTRIBUTOR Kevin K.M. Neoh is a Licensed Financial Planner who is licensed by the Securities Commissions Malaysia and Bank Negara Malaysia.

www.propertyinsight.com.my JULY 2015 I 73


STRATEGY

ARE YOU TOO BIASED TO BE A SUCCESSFUL PROPERTY INVESTOR?

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id you know that as property investors we can sometimes be our own worst enemy? It’s not because of the decisions we make, the opportunities we consider or the investments we miss out on, but rather, it’s due to the way we think. That’s because we’re subject to cognitive biases — the way our brains sneakily convince us to make decisions that aren’t always in our best interests. Cognitive biases may convince us to spend more, save less, and feel more confident in our decisions than perhaps we should. And the scary thing is, for the most part, we’re powerless against them. Here’s a look at some of the most common ones. CONFIRMATION BIAS People tend to search for information that confirms their view of the world and ignore what doesn’t fit. In an uncertain world, we love to be right because it helps us make sense of things. We do this automatically, usually without realising; partly because it’s easier to see where new pieces fit into the picture puzzle we are working on, rather than imagining a new picture. For example if we believe that a particular type of property 74 I JULY 2015 www.propertyinsight.com.my

or a specific region will make for good investing, then we tend to only seek out news and information that supports that position. One way to counter confirmation bias is to read things you’re going to disagree with. Another is to look for reasons your strategies could be wrong, rather than right. ANCHORING BIAS We have a tendency to use anchors or reference points to make decisions and evaluations, and sometimes these lead us astray. Anchoring explains why you’ll pay $6 for an hour of parking after seeing $10 at a car park down the street. The first number you see, especially when its a price that comes up in negotiation, colours any that come after it. A high anchor influences you to spend more than you normally would. Property marketers, estate agents and car sales people use this principle all the time. They start with a high asking price and then you feel good when you extract a discount from them. This is because the initial price you set for a house or car or more abstractly, for a deal of any kind, tends to have ramifications right through the process of coming to an


agreement. Whether we like it or not, our minds keep referring back to that initial number. AWARENESS BIAS How are your investments performing – are you happy with the results you’re getting? There’s a chance that even if they’re not doing so well, you may not even recognise it. In fact it’s been shown the poorest performers in all arenas of life are the least aware of their own incompetence. Lacking the capacity to realise how badly a task is performing is known as the Dunning-Kruger effect. POSITIVITY BIAS Many people view residential real estate positively, considering it an asset class through which they can grow their wealth – and they continue to do view it in this light, even if their investments fail to prosper. In the face of lack of capital growth, prolonged vacancies or inflated expenses, they still continue to believe that their investment will turn the corner “one day.” The problem with this is that when all signs point to a dud investment, it likely is one – but positivity bias can stand in the way of an investor taking action to rectify the situation. Overconfidence is a real risk for property investors – one of the best things an investor can do is admit what they don’t know. NEGATIVITY BIAS Just as some investors can be overly positive this is the tendency to put more emphasis on negative experiences rather than positive ones. People with this bias feel that ‘bad is stronger than good’ and will perceive threats more than opportunities in a given situation. Psychologists argue it’s an evolutionary adaptation - it’s better to mistake a rock for a bear than a bear for a rock.

To keep our ancestors alive, Mother Nature evolved a brain that routinely tricked them into making three mistakes: overestimating threats, underestimating opportunities, and underestimating resources (for dealing with threats and fulfilling opportunities). This is a great way to pass on genes, but a lousy way to promote quality of life or grow your wealth through property. Fact is: there will always be property pessimists around telling why not to invest and reminding you of all the things that can go wrong and the reality of real estate is that it is a cyclical investment class. However you can minimise your risks and maximise your upside if you educate yourself and become financial fluent, follow a proven strategy and get a good team around you. THE BOTTOM LINE: We all want to think they we are rational and biases are things that afflict other people. However our brains are designed with blind spots and one of their clever tricks is to confer on us the comforting delusion that we, personally, do not have any biases. This is why so many of us are not only bad with money, but make the same mistakes over and over again. We’re blind to our blindness. I’ll share some further cognitive biases with you in the next few issues of Australian Property Investor Magazine.

ABOUT THE CONTRIBUTOR Michael Yardney is a successful property investor and developer in Australia. He will be a PRISM speaker on the 14th & 15th November, 2015.

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STRATEGY

KNOWING WHEN TO LISTEN AND WHEN TO ACT

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istening to problems first and interrogating the source, rather than jumping in to act, is a skill that every property investor needs to develop early on. When a customer has a problem, it’s very easy to rush off and start doing things. It doesn’t matter what, but if you’re doing something, then you’re obviously helping to fix the problem, right? No, you are not. This is wrong! Not every problem needs a repairman or a contractor to attend. Not every problem is the landlord’s responsibility. Neither can every problem can be answered in one way nor has an immediate solution. Indeed, not every problem is about the property: it could be health issues, job worries, schooling problems, or maybe even a disagreement with the neighbours. Problems are not always as easy to identify as you may think.

So how can you know when a problem is a problem? You have to listen carefully, ask questions and use your powers of analysis. I have often found that the problem that was originally reported was not as it should be. The only way I was able to understand what the actual problem, was by asking more questions. For example, a tenant contacted me not long ago to report the toilet bowl piping was clogged. She asked me to change the whole toilet bowl, as according to her, this problem kept on repeating. She had also wanted me to get a cleaner after the work is done. I thought carefully and asked several more questions. After plumbing inspection, the real problem, was that the sanitary pad within the piping was causing the clogging. The change of the toilet bowl was not required. Listening to problems first and investigating on them, rather than jumping in to act, is a skill that every property investor needs to develop earlier on. The customer is not always right – and you will need to troubleshoot your way through various issues and take the initiative to get to the root of the problem. Even if you are not a technical person, common-sense should be applied and issues should be probed deeper. It is only through identifying and gaining an understanding of what the real problem is can you then act appropriately. Acting without fully knowing what the issue is, can land you with a bunch of very expensive repair bills!

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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 kkchua@propertyinsight.com.my

78 I JULY 2015 www.propertyinsight.com.my


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PRISM 15.pdf

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Property Insight July 2015  

Property Insight is a monthly property investing magazine.

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