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COVER STORY

THE RISE OF ‘PENANG CONDO KING’

J U LY 2 0 1 6

AREA FOCUS

GLENMARIE

MAIN FEATURE

ONE YEAR POST-GST

KDN PP 18181/04/2013 (033492)

J ULY 2016 RM7.50(WM) RM9.00(EM)


EDITOR’S NOTE

EDITORIAL

Wishing all our Muslim readers Selamat Hari Raya, Maaf Zahir & Batin KK Chua, Editor

J

uly marks the start of the second half of the year. It’s a good time to take stock of what we’ve achieved in the first half, and to make an effort to catch up if we’re a little behind on our goals. Frankly, the team at Property Insight has never been more inspired about goal setting after our sister brand Entrepreneur Insight, hosted the inaugural Malaysian Entrepreneur Convention (MEC 2016) on 28 May 2016 at the Grand Ballroom of Nexus Connexion, Bangsar. We were absolutely thrilled when the Malaysian Book of Records certified that the event bagged the title of ‘Largest Entrepreneur Convention’, as it successfully brought together a total of 3,036 participants under one roof and featured the movers and shakers of the local F&B, retail, training, investment, property and digital marketing scene, among others. Read more about it on page 12. On our cover this month is Dato’ Alex Ooi, Executive Chairman of Ideal Property Group. Although Ooi comes from a family of developers, he has built a solid reputation for himself and his company in Penang. At a time when many developers are scaling back, the group, also known as the ‘Penang Condo King’, is forging ahead with its ambitious plan to launch five new projects. Writer Avinash delves into a creative method to invest in property, namely, via a joint venture (JV) or sharing agreement. This method leverages on other people’s money

and has become rather popular in recent years, especially among investor groups. Find out what are things that you should consider and the potential pitfalls before you sign on the dotted line. Writer Natasha researched into the serious issue of abandoned housing and revealed some shocking statistics. As of June 2015, there are a total of 10,403 house buyers who have had their dreams of owning their home turn to naught when their housing projects were abandoned by errant developers. What happens when a project is abandoned? Are the current regulations sufficient to protect home buyers? These are just some of the questions that we attempt to answer. One thing is for sure, no amount of regulation is enough to address the issue if there is no strict enforcement in place. On a lighter note, our personality of the month is rapper cum producer cum songwriter Joe Flizzow aka ‘The President’. He opens up about his struggles as an entrepreneur, as well as the challenges he faces in running numerous businesses – a record label, a talent agency, a barbershop, a restaurant and even a retail shop. Check out our Raya specials on sprucing up the home to usher in the festivities. Natasha has compiled tips and tricks from several experts on how to decorate your home and living spaces, and wow your guests at the same time.

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PropertyInsight

Editor-In-Chief KK Chua kkchua@propertyinsight.com.my Assistant Editor Kamini Raja Writers Fara Petial Natasha Gideon Avinash Sagran CREATIVE Creative Director Sarah Tan sarah@propertyinsight.com.my Designer Irman Hakim BUSINESS DEVELOPMENT General Manager Janet Loh +6012 205 0911 janet@propertyinsight.com.my Andy Fam +6012 601 9938 andy.fam@propertyinsight.com Hagenz Choo +6012 371 8831 choo@propertyinsight.com.my Iris Gan +6012 799 6685 iris@propertyinsight.com.my Wei Yeen, Chong +6012 927 2863 weiyeen@propertyinsight.com.my

ARMANI MEDIA

Armani Media Sdn Bhd (1032085-H) No. 32-3, Jalan Pekaka 8/4 Seksyen 8, Kota Damansara 47810 Petaling Jaya, Selangor Tel : +603 6156 3366 Fax : +603 6156 3399 PRINTER Percetakan Osacar Sdn Bhd Lot 37659, No. 11, jalan 4/37A Taman Bukit Maluri Industrial Area Kepong, 52100 Kuala Lumpur, Malaysia ENQUIRIES enquiries@propertyinsight.com.my

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.


CONTENTS

36 PERSONALITY OF THE MONTH

50 Survival of the Fittest

Joe Flizzow’s journey from a boy who wanted to make good music to a succesful entrepreneur

18

INVESTOR NEXT DOOR

54

Having the Best of Both Worlds

COVER STORY

Dr Evan Tan, a veterinarian, is living his passion while earning passive income

18

ROOKIE INVESTOR

The ‘Penang Condo King’

Dato’ Alex Ooi, from developing projects for other people to being a developer himself

MAIN FEATURE

24

One Year Post-GST

Making sense of the current GST challenges with its new regimes and legislation

FEATURES

58

A Tale of Perseverance

Redzuan Effendy’s journey has always been a difficult one, but the will to achieve something to call his own drove him towards success

INDUSTRY INSIGHT

61

Piercing Through Expectations

Dato’s Howard Chew, founder of Chester Properties, was able to grow his single-office entity to an international corporation in just a short time

28

Experts weigh in on the state of home buyers and developers

Second Half of 2016 - Property Status Update

HOME PLUS

31

Abandoned Homes, Abandoned Dreams?

64

Raya Special: Ideal Ideas for Aidilfitri

Legislations alone are not enough to make wayward developers pay

Tips and tricks to decorate your living space for the festive season

34 The Legalities Behind Joint Venture Property Purchase

68

Get your paperwork and lawyer ready before signing on the dotted line

DEVELOPER OF THE MONTH

36 Quality Living Space that is Livable

Dato’ Choo Beng Kai, founder of Masmeyer Holdings, believes in practical home designs that suit everyone’s need

DESTINATION - RETREAT The Straits Hotel & Suites

A contemporary chic hotel set against the historical backdrop of Melaka

FINANCE

72

Financial Planning Insights into Property Investment

LEGAL

AREA FOCUS

74

41 Glenmarie - There is More to it than You Know

STRATEGY

Follow the transformation of this neighbourhood

FEATURED PROPERTY

48

The Colony by Infinitum

Incubating creative and professional urban lifestyles in the heart of Kuala Lumpur

75

Joint Purchase on Properties - The Challenges

The Waiting Game is Best Played After We Own

Something

76 78

2016 - A Good Time to Buy Property? No Pay...No Stay


PROPERTY SHOWCASE 2016 EVENTS CALENDAR

A place where the right people meet to achieve their dream homes & investments PROPERTY SHOWCASE

PIPDA GALA DINNER 2016

PROPERTY SHOWCASE NU SENTRAL

3

PUBLIKA

SHANGRI-LA

Solaris Dutamas

Kuala Lumpur

KL Sentral, KL

4 – 6 MARCH 2016

1 APRIL 2016

13 – 19 APRIL 2016

days

1

7

night

days

PROPERTY SHOWCASE

PROPERTY SHOWCASE

INVESTORS’ HOT PICKS PROPERTY SHOWCASE

QUEENSBAY MALL

4 days

KOMTAR JBCC

MID VALLEY EXHIBITION CENTRE

Penang

Johor Bahru

Mid Valley Megamall, KL

12 - 15 MAY 2016

3 – 5 JUNE 2016

3 days

3 days

15 – 17 JULY 2016

HOME+ & PROPERTY SHOWCASE

PROPERTY SHOWCASE

PROPERTY SHOWCASE

IPC SHOPPING CENTRE

CHERAS LEISURE MALL

PARADIGM MALL

Mutiara Damansara

Cheras

Kelana Jaya

25 – 31 JULY 2016

02 – 07 August 2016

12 – 14 AUGUST 2016

7

days

6

days

3

days

PROPERTY SHOWCASE

MALAYSIA’S LARGEST INVESTMENT SUMMIT

GURNEY PLAZA

SETIA CITY CONVENTION CENTRE

4

days

Penang

Shah Alam

27 – 30 OCTOBER 2016

5 – 6 NOVEMBER 2016

2

days

We look forward to collaborating and partnering with you Enquiries: +6012-2050 911 / janet@propertyinsight.com.my


NEWS & EVENTS

THE INAUGURAL MALAYSIAN ENTREPRENEUR CONVENTION 2016 IS A THUMPING SUCCESS

T

he long awaited Entrepreneur Insight (EI) was officially launched on May 6 at an official ceremony held at The Oak Room Nexus @ Bangsar South. Being another brand of Armani Media, Entrepreneur Insight acts as a platform that engages local entrepreneurs via its website (www.entrepreneurinsight.com.my), social media and events like conventions, expos and social networking. EI carries a tagline of ‘Entrepreneurs Growing Entrepreneurs’, and focuses more on local Malaysian stories ranging from start-ups to established players in the industry. The website provides readers and businesses a good coverage on local entrepreneurs’ movement, valuable business tips, business trends, events,

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leadership and lifestyle updates. The contentrich portal also has crisp video coverages on personalities and issues that shape the exciting world of entrepreneurs today. To mark the launch of EI, the brand also held its inaugural Malaysian Entrepreneur Convention or MEC 2016 on May 28 at Nexus Connexion. Attended by over 2,000 participants, the one-day event was named the country’s ‘Largest Congregation of Entrepreneurs’ under one roof by the Malaysian Book of Records. Prominent business personalities such as Professor Dato’ Michael Tio (CEO & Managing Director of PKT Logistics), Benjamin Yong (Founder & Group Chief Eating Officer of the Big Group), Joel Neoh (Founder of KFit), Anabelle Co-Martinent (Founder of La Juiceria), Jeevan Sahadevan (Founder of LeverageLab), Freda Liu (Presenter & Producer at BFM Radio), Chris Tan (Managing Partner of Chur Associates) and a host of personalities touched on pertinent topics like digital marketing, mentorship, growing and closing sales, and surviving through tough times for the benefit of participants. To access more stories on MEC and to learn more about Entrepreneur Insight, visit www. entrepreneurinsight.com.my

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NEWS & EVENTS

MEC SOCIAL NIGHT After a whole day of absorbing knowledge, networking and learning from celebrated speakers and vibrant panel discussions, the Malaysian Entrepreneur Convention 2016 (MEC 2016) ended on a high note with the MEC Social Night. The get-together was aimed at leading entrepreneurs, special invitees, guests and MEC speakers to allow them to mingle and network with each other. Over 200 guests were

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present at the event, which took place after MEC 2016, at the exclusive wine bar Vina del Ray, Nexus South @ Bangsar. Among the personalities that were spotted at the event include philanthropist Dato’ Ruby Khong, PKT Logistics Group CEO Professor Dato Michael Tio, One Auto Group Managing Director Dato’ Billy Goh, IQI Holdings Sdn Bhd Group Managing Director Daniel Ho, Ata Plus Sdn Bhd Director Elain Lockman,

Malaysia Book of Records Operations Director Christopher Wong, A Cut Above Salons CEO Datin Winnie Loo, BFM Presenter Freda Liu, Chur Associates Founder and Managing Partner Chris Tan, celebrity stylist Davis Wong and business coach Jeevan Sahadevan. Entrepreneur Insight would like to thank the main sponsors for MEC 2016, namely Mah Sing Group, RHB Bank and Sothys Malaysia, for contributing to the success of the event.


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NEWS & EVENTS

PROPERTY INSIGHT’S PROPERTY SHOWCASE AT KOMTAR JBCC

E

ight industry experts had a great time sharing their experience and investment strategies at Property Insight’s Property Showcase which featured seminars, fun activities as well as good deals by several renowned developers and big players in the real estate business. The event, which was held from 3-5 June at Komtar JBCC, was held in collaboration with Property Guru and featured renowned experts like Raphael Wong, Malaysian Institute of Estate Agents Youth Chairman; Khalil Adis of Khalil Adis Consultancy Pte Ltd; Ryan Khoo, director of Alpha Marketing; Rachel Lim, director of Core Investors; Dr Daniele Gambero, CEO of REI International Holdings; Kaygarn Tan, founder of Freemind Works; Gary Chua, CEO of Smart Financing; and Gregory Low, director of Core Home Management. Among the developers that took part in the event include Hatten Group, UM Land, Scudai Development, Macly Equity, Casa Andaman, 123 Property, Premium Plus, CBD Development and Mah Sing Group.

QUEENSVILLE: EXCLUSIVE EVENT

P

roperty Insight is back with its exclusive events. Queensville Kuala Lumpur’s event, the most recent one – was held at Plaza Dwitasik, Jalan Permaisuri. The event was well attended, due to the inspiring investment talks by KK Chua on ‘Why must you invest in challenging times’ as well as Gary Chua’s ‘How to make the bank say YES’. The event was held in conjunction with a showcase of Queensville, a self-contained city with SOHO, serviced apartments, office tower, retail and shopping mall, strategically located at Bandar Sri Permaisuri, Cheras. Those who attended the event were entitled to sign up for an attractive investor package, and were eligible for a lucky draw that offered two grand prizes worth up to RM2,000 and Bonuslink points redemption special deals. The first 50 guests also received goodie bags.

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MAH SING’S GROUP MANAGING DIRECTOR NAMED ENTREPRENEUR OF THE YEAR 2016

T

an Sri Dato’ Sri Leong Hoy Kum, Group Managing Director of Mah Sing Group Bhd, was named Entrepreneur of the Year at the ASEAN Business Awards Malaysia 2016. Leong is an industry captain who have made significant and outstanding contributions in growing Mah Sing Group into a dynamic player at the forefront of the industry. Presenting the awards was the Prime Minister of Malaysia Datuk Seri Mohd Najib Abdul Razak, witnessed by Minister of International Trade and Industry Malaysia Datuk Seri Mustapa Mohamed.

ECO WORLD ENTERS INTO JOINT-VENTURE TO DEVELOP ECO ARDENCE

E

co World Development Group Bhd (Eco World) has entered into a joint-venture with Cascara Sdn Bhd to jointly develop 533.92 acres of prime freehold land located next to Setia Alam in Shah Alam, Selangor, as a mixed residential and commercial development. The proposed JV provides an opportunity for EcoWorld to work together with Cascara to undertake a large-scale mixed development known as Eco Ardence which will have a potential Gross Development Value of RM8.58 billion. Eco Ardence will be positioned as a relatively high-end development with uniquely differentiated products tailored to meet the specific requirements of the targeted customer segment. Dato’ Chang Khim Wah, President and CEO of EW Bhd, said, “Eco Ardence’s strategic location, large and relatively affluent population catchment will enable us to create a township with multi-generational appeal. This is one of the fastest growing corridors along the central development spine of the Klang Valley with a matured and good quality market catchment.”

GAMUDA LAND’S LUXURY RESIDENTIAL PROPERTY IN MELBOURNE’S MOST SOUGHT AFTER ADDRESS TO LAUNCH IN MELBOURNE

G

amuda Land will soon be unveiling its new luxury residences in the heart of Melbourne’s coveted Chapel St to local Melbournians. With a name that reflects its prime location, 661 Chapel St will be launched in Melbourne in the third quarter of this year. Ngan Chee Meng, Chief Operating Officer for Gamuda Land, says, “Chapel St has always been alluring for both locals and foreigners alike. The location is an embodiment of a luxurious lifestyle complete with the modern day amenities that are perfect for any family.”

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COVER STORY

18 I JULY 2016 www.propertyinsight.com.my


PERSONALITY OF THE MONTH

THE RISE OF ‘PENANG CONDO KING’ Dato’ Alex Ooi, from developing projects for other people to being a developer himself BY: FARA PETIAL

P

enang Island has been receiving a lot of interest when it comes to property market. As the saying goes, nothing can go wrong if you invest in a property on an island. But how is it really doing in this current market? Property Insight talks to the Executive Chairman of Ideal Property Group, Dato’ Alex Ooi, to find out. Ooi started the group on his own in 2002 from scratch and managed to steer the company into developing more than 10,000 units of residential and commercial units locally as well as abroad. In the early years, he even managed to successfully develop several residential and commercial developments in Cambodia. Ooi now focuses on developing projects locally, which comprises more than 50% of the housing supply on Penang Island. His developments, which concentrates mainly within the vicinity of Bayan Lepas, have made a positive change in the skyline of Penang South West District. With his vast experience, he managed to turn the group into a major market player in Penang with a successful track record that earned him the nickname the ‘Penang Condo King’.

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COVER STORY

Dato’ Alex Ooi, the property man who unveiled a new chapter of Penang’s real estate with his concept condominium development

STARTING POINT The group started as a property consultancy, offering ideas that proved to be the building blocks for many agencies, land owners and developers, to produce the right product, for the right market and profit. “I didn’t want to be a contractor and I could not be a developer then because I have no land and no developments, but I have the experience. So I tried to establish myself as a property servicing officer. Back then, it was a good time to do BPO (business process outsourcing). That means you can outsource parts of your businesses to other parties,” says Ooi. His first project was in Bukit Mertajam, where a developer had completed a project but had leftovers of around 100 unsold bungalow-lots. The developer wanted to sell it at about RM30 per square feet (psf). Ooi had convinced the developer to outsource the business to his company and he managed to sell the leftover bungalows at the determined price. Ooi’s company has been providing real estate solutions to government agencies, private developers and land owners. Ideal Property Group has a track record of increasing property sales value by 400%, 20 I JULY 2016 www.propertyinsight.com.my

one of its biggest achievements, to date. The company started its own property development ventures in 2008 through a new division known as Ideal Property Development Sdn Bhd. “My turning point came in 2008. I was doing BPO for one of my clients, Koperasi Tunas Muda. It had 100 units of shop-lots built within the premise, in Bayan Baru. I revamped the project and gained the commercial strata title for the development as well as 148 units of apartment which increased the sales value from RM50 million to RM90 million. I shared the profit with them and gained their trust,” he says. Ideal Property Group adopted the motto ‘Creating Legacy’, which has become the guiding principle for each and every development project led by the company. The developer aims to uplift Penang’s property market by promoting a quality lifestyle and better living environment. I-CONDO DEVELOPMENT Ideal Property Group is well-known for building sustainable communityoriented development such as I-Condo – condominiums with an affordable housing price tag. All developments under I-Condo are located in prime locations and deliver

quality and value at an affordable price. The affordable condominium, built by the group, uses high quality construction materials to provide value to homeowners. The surroundings have been carefully planned to include schools, markets and other facilities for homeowners to live, work and play. Infrastructures are well-planned and are improved from time to time for the benefit of residents. This includes the widening of major roads and the addition of access points to ease traffic congestion. The developer is currently launching two projects under I-Condo: One Foresta in Bayan Lepas and I-Santorini at Tanjong Pinang. THE LEADER Ideal Property Group is also a market leader when it comes to conceptual developments. Some of their projects that reflect this include: • One Residence: a garden living concept in a low density and tranquil environment • One Imperial: theme park resort concept that fosters good family ties, a healthier living environment with multi-faceted recreation facilities.


PERSONALITY OF THE MONTH

Queens Waterfront is creating a new aura in Penang with its waterfront development, international sports centre and international school

We prefer to concentrate in the south west district of Penang, mainly because there are many people working in this area compared to the UNESCO heritage site, which has its limitations” - Dato’ Alex Ooi

A view of the pool

Queens Residences (QR1), being the first phase of development of Queens Waterfront, features a creative and innovative concept

Ideal Vision Park: a development embracing a buon vivire way of life, which encourages a low carbon and environment-friendly lifestyle Project I-Santorini: Greek inspired development indulging in the romance of Santorini Island

QUEENS WATERFRONT While most developers are holding back launches due to high cost and a slow market, Ideal Property Group sees a chance in building a niche market. Knowing that owning a home is an essential component in one’s life time, the group strives to deliver more quality homes at an affordable price. Within this year, Ideal Property Group targets to launch a total of five new projects comprising a total of 3,600 residential units, namely, Forest Ville, Bukit Ayun Development and Amarene. The first out of the five projects – Summerskye Residences was launched in January this year. The major highlight this year for Ideal Property Group would be its masterpiece development – Queens Waterfront. It will be one of Penang’s iconic development, covering an area of 36.53 acres. www.propertyinsight.com.my JULY 2016 I 21


COVER STORY

“Property investors should look at the 5Ps when considering any property investment,” Ooi says

The development component comprises of seafront condominium units, a waterfront promenade, a marina bay, waterfront alfresco, an international sports centre and an international school. Queens Waterfront is strategically located near Queensbay Mall Bayan Lepas, which is currently one of the most preferred shopping destination in Penang. Residents of Queens Waterfront development will enjoy a spectacular view of the Penang Bridge and the Penang second link which offer a stunning sea view. The project is a nautical-inspired waterfront development. Therefore, nautical elements such as water and wave forms, seahorse sculptures, seaweed inspired floor patterns, stingray roof forms, seahorse inspired fins and support, coral patterns and sea habitat will be highlighted throughout its architecture and landscape. It uses the regal seahorse as its symbolic icon, symbolising hope of the future and the promise of today. It is a culmination of everything that will be prosperous and 22 I JULY 2016 www.propertyinsight.com.my

rewarding at Queens Waterfront. Ideal Property Group is having its soft launch for Phase 1 this month. Phase 1 comprises 500 units of residential units ranging from 950 sqft to 1,650 sqft in size. There are commercial units on the ground floor and first floor. There will be separate entrances for the commercial and residential components, as well as a 3-tier security system to maintain a peace of mind. DEVELOPING PENANG ISLAND Ooi states that his company is still concentrating on island development because the limited land banks on the island help maintain a good selling price. He explains that island developments are also of high-density type due to land scarcity. “When we are looking for locations, we will look at the type of land first. Hill lands are a big no for us. We would rather reclaim a land instead of getting land on a hill. Firstly, this is because it destroys the environment,

and secondly, we do not know what is inside it. There will also complaints if we harm the land on hills since there are many non-governmental organisations (NGOs) fighting to preserve it,” he says. “We prefer to concentrate in the south west district of Penang, mainly because there are many people working in this area compared to the UNESCO heritage site, which has its limitations,” he adds. CORPORATE SOCIAL RESPONSIBILITY According to Ooi, the Ideal Property Group believes it is important to practice the spirit of giving back to society. Therefore, it has been consistent in carrying out various CSR programmes throughout the years. The company took the initiative of constructing a link bridge crossing Sungai Tiram in Bayan Lepas, which incurred a cost of RM650,000. The bridge connects Jalan Tun Dr. Awang and Persiaran Rajawali to Jalan Dato Ismail Hashim and is of convenience to the Bayan Lepas community.


PERSONALITY OF THE MONTH

Ideal Property Group’s headquarters is located at The One, Bayan Lepas, Penang

building of the school.

Besides that, the major link road to the Penang International Airport – Jalan Tun Dr. Awang – has been widened from single carriage to double carriage. The upgraded infrastructure has effectively alleviated traffic congestion near the Bayan Lepas old town. The company has also adopted the project of upgrading the landscape at Bayan Lepas’ biggest roundabout. In addition, Ideal Property Group will construct a flyer over bridge along Jalan Tanjong Tokong to ease traffic congestion in the area. The company is even keen on contributing to the academic aspect. Their ‘I Love Edu’ programme was established for this purpose. Under the programme, an annual budget is allocated to help out needy schools. In 2013, Ideal Property Group had contributed a piece of land measuring 3.24 ha for the construction of a new secondary school, i.e. Heng Ee Bayan Baru Branch, in Penang South West District. The company also constructed the administrative

INVESTMENT TRICKS Ooi advises property investors who are considering to invest in Penang to look at the following ‘5Ps’: • Product – What type of products are you looking for? Is it high-rise or landed? Commercial or residential? • Pricing – What is your budget? If you have limited budget, then go for a smaller unit that costs less. • Package – Go for new launches with great packages will benefit you. • Place – New property investors should focus on the town area because the property will be more valuable in the future. • Producer – Look out for established developers and contractors. Ideal Property Group has won various awards for its developments. This year, One Imperial has won the ‘Highly Recommended Residential Renovation/ Redevelopment in Malaysia’ at the Asia Pacific Property Awards 2016. In addition to that, its I-Santorini was also awarded the ‘5-Star Best Residential High Rise Architecture in Malaysia’ at the same awards ceremony. The Asia Pacific Property Awards is part

of the International Property Awards – the world’s largest, most prestigious and widely recognised event. Ideal Property Group hopes to continue delivering quality products to its purchasers, safeguard the interest of its shareholders and contribute positively to the welfare of the society and its employees. The group currently has approximately 10,000 units from its existing and upcoming projects. With the continuous support from purchasers, shareholders, team of talents and business associates, the ‘Penang Condo King’ is certain that it will scale greater heights within the next five years. Ooi also believes that his company will be able to maintain their market leader position for niche market developments.

Video interview with Executive Chairman of Ideal Property Group, Dato’ Alex Ooi www.propertyinsight.com.my JULY 2016 I 23


MAIN FEATURE

ONE YEAR POST-GST

Making sense of the current GST challenges with new regimes and legislation BY: FARA PETIAL

F

ollowing numerous delays and postponements since its initial announcement back in 2009, the Goods & Services Tax (GST) regime was finally implemented in Malaysia on April 1, 2015. It affected all sectors, including the property industry. The Royal Malaysian Customs (Customs) and Ministry of Finance have recently published a press statement comprising several key facts and figures on GST implementation. The facts and figures are as such: • 406,000 companies have registered for GST as at March 2016; • GST collection for 2015 is estimated to exceed the target of RM27 billion (total amount is yet to be finalised due to expected refunds);

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RM800 million GST refunds are still pending or are being processed; the Customs Department is expected to raise RM39 billion from GST for 2016; and 1,190 GST-related cases have been investigated by the Customs Department as at 31 January 2016.

HOW DOES GST WORK? According to the Customs Department, businesses making taxable supplies have to be GST registered if their annual sales turnover exceeds the prescribed threshold. Only a registered person can charge and collect GST on the taxable supplies of goods and services made by him. GST is charged on the value or selling price of the products. The amount of GST incurred on

input (input tax) can be deducted from the amount of GST charged (output tax) by the registered person. If the amount of output tax is more than the input tax in the relevant taxable period, the difference shall be remitted to the Government. However, if the input tax is more than the output tax, the difference will be refunded by the Government. GST & PROPERTY INDUSTRY So how has the property industry fared since the introduction of the tax regime? Even though a year has lapsed, confusion and misinformation are still aplenty in the minds of property investors on various aspects on the application of GST. Based on ‘The GST Guide for Property Developer’ issued by the Royal Malaysian


It is the same for all the other services that are involved in buying a property. The GST is applicable to legal services, financial services and agency services” - Richard Oon

Customs, the supply of land used for agriculture, residential or general purpose such as burial, playground and religious are exempted from GST. On the other hand, the supply of land and building used for commercial, administrative and industrial purpose such as shop lots, offices, retail businesses, small office home offices (SoHo), small office virtual offices (SoVo), small office flexible offices (SoFo), factories, hotels, motels, inns, hostels and warehouses are all subject to the 6% tax. Individuals or companies who have an accumulated rental income of more than RM500,000 per year have to be GST registered and is subject to charge their tenants the 6% GST.

TY Teoh International national tax director Richard Oon says that it is a well known fact that residential property is exempted from GST, and the things that do not appear in the exemption order is all subjected to GST. “If you are a contractor, regardless of whether you are building a residential or commercial property, you are providing a service to the developer, hence your services should include the 6% GST charge. It is the same for all the other services that are involved in buying a property. The GST is applicable to legal services, financial services and agency services,” he explains. The Real Estate and Housing Developers’ Association (REHDA Malaysia) has recently completed a survey, and proved

that the majority of developers had taken the initiative to absorb the implementation cost of GST. However, there are still several concerns regarding the implication of GST on property developers. One of the concerns revolve around joint venture development. As stated by the Customs Department, under normal conditions, the parties involved in the joint development of land in Malaysia would not qualify as a joint venture under GST. “Usually, a land owner will have contracts with a developer. The developer will take the power of attorney for the land owner over all aspects of the development, including constructing the buildings, marketing the project and selling the separate lots, but the title is still held by

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MAIN FEATURE the land owner. The land owner then sells the developed lots and pays a portion of the proceeds to the developer. In this case, the land owner supplies the property while the developer provides a service to the land owner,” Customs Department explains. Onn then questions what land owners get back in return, under such circumstances. “If it is a residential development, then it’s fine. If it’s a commercial development, then the land owner needs to charge the developer GST. But what happens if the development is a mixed development? This is why it is important for the land owner to be knowledgeable with GST implementation,” he explains.

In addition, what happens to properties that come partly- or even fully-furnished? He says, “As I mentioned earlier, only the residential unit is exempted from GST. However, some developers are providing built-in furniture with their units. That furniture is chargeable with GST. Developers often take steps to add more value to their developments, but they should be mindful that those services should be charged with GST.” Oon believes that real estate agents should also be knowledgeable in the implication of GST. “For example, if you are putting up a banner to sell, let’s say a RM800,000 shoplot, they should be aware that the

price they put up should be inclusive of GST. They can’t tell the potential buyer that the price is without GST. That’s wrong.” Despite the numerous effort to educate Malaysians about the GST regime, many are still confused and uncertain about how it works. Within the property industry, there are many issues that need to be ironed out or clarified by the Customs Department in relation to the interpretation of the GST Act and its subsidiary legislation, the practical implementation of GST obligations, compliance requirements and GST treatment of transactions or supplies.

HOW HAS GST AFFECTED YOUR PROPERTY INVESTMENT? Charles Tan, Property Investor / kopiandproperty.com

When we buy objectively, GST is not a major consideration. Still remember developers telling everyone that they would increase their prices with GST? With the current slowdown, many are offering rebates which are even higher than the 6% GST charge. GST has not affected my property investment as I am buying with a long term view of hedging against inflation and potential capital appreciation.

KC Lau, Property Investor / kclau.com

After GST implementation, generally most people’s pocket is squeezed further, coupled with the ringgit depreciation. Consumers have less to spend and businesses need more cash flow to cope with GST. Certain commercial property transactions require upfront GST payment. The direct effects are that investors need to fork out more money when investing in commercial properties. Property prices also remain on the high side due to the inflation caused by GST. The indirect effects include a descrease in demand due to less spending power, thus affecting the market as a whole and resulting in a lower number of transactions. I’ve invested heavily in commercial properties prior to the implementation of GST. Post-GST, I haven’t been looking at commercial properties so far, due to all the issues that I mentioned.

Miichael Yeoh, CEO & Founder of GM Training Academy PLT

Initially, when GST was introduced there was a lot of confusion. It scared a lot of investors. They are worried their investment return will be reduced by a lot. Well, as time passed, new rules on GST were introduced. Developers also adjusted to the increase of GST. I have spoken to many developers, I found that many absorb the GST. As such the impact is minimal.

Michael Tan, Property Investor & Entrepreneur / Freemen Property Millionaire Coach

GST has impacted my investment portfolio substantially. I mostly invest in commercial properties, and in the past one year, I really felt the impact. Government now imposes GST on individuals and not just companies, where commercial properties above rm2.5M are also taxed. The capital needed to fork out the money in the first place is substantial and the journey of getting back the GST is long and unsure, making it harder to invest. Constant changes in government policies aren’t helping either and has dampened our spirits to further invest. Looking into the current trends, it will be an uphill battle for the government to gain the trust of investors and consumers alike again, if they do not change their focus on only lining their own pockets. Many of the markets are losing its fluidity as more and more people are spending less and saving more. The last thing we need is for the market to freeze over.

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GST TREATMENT FOR THE INDUSTRY •

Any transfer of the whole right of ownership in land, land under an agreement for the sale of such land, land under an agreement which expressly stipulates that the ownership of such land will pass at some time in the future, any interest under Deed of Assignment or any strata title is a supply of goods.

Any lease, tenancy, easement, license to occupy land or transfer of undivided share in land is a supply of services.

Where there is a default in payment under security relating to land, the transfer of such land shall be treated as a supply of goods.

Changes in the land title such as the replacement of title with strata title or subdivision is not regarded as a supply.

The sale and disposablity of property involving a transfer of ownership or title is regarded as a supply of goods. In the case of taxable supply, GST is charged on the whole value of the property when the land is made available to the purchaser that is the date of conveyance. However, in the case of property under construction involving progressive payment, the supply is treated as separately and successively supplied, and GST is charged whenever a part of the consideration is received or whenever the developer issues a tax invoice relating to that supply, whichever is the earlier.

Where the transaction involves a transfer of possession such as lease and rental of property, it is regarded as a supply of services. GST is imposed on each successive lease or rental payment. GST is charged whenever the consideration is received or whenever the developer issues a tax invoice relating to that lease or rental.

All supplies where charges and fees imposed by the government related to real estate such as quit rent, premium, survey fees (conducted by Survey Department), registration of titles and other payment are regarded as out of scope. The assessment rates imposed by the local authorities is also out of scope of GST.

The treatment of any land transaction with a building or structure attached, will depend on its usage. If a residential building is built on the commercial land title, it will be treated as residential and such transaction is exempted from GST. However, if the residential building has been used for commercial purposes, GST is charged on the sale of this building.

Where a development project involves both residential housing and commercial building, the residual input tax that can be claimed are GST incurred on utilities, rental, office equipment’s and stationeries etc., infrastructural and recreational works such as landscaping, community hall, car park facilities, playgrounds and incidental services.

In order to secure the purchase of the property, developers are allowed to collect deposit or booking fees. Deposit or booking fees given in respect of a supply is not regarded as payment and is not subject to GST. However, if the developer applies such deposit or booking fees as consideration or part payment, then they are subject to GST.

Land that is under charge (mortgage), lien or caveat is not a supply. When a developer charges the land title to the lender to obtain a loan, it is regarded as security for payment of debt. The same treatment is applicable in the case of a lien where such as actions are not regarded as a supply and not subject to GST.

Source : Royal Malaysia Customs Department

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FEATURE

SECOND HALF OF 2016 -PROPERTY STATUS UPDATE 28 | JULY 2016 www.propertyinsight.com.my


T

he Malaysian property market boom between 2009 and 2013 saw the prices of residential units ballooning – with some even doubling in value. Not surprisingly, efforts were taken by the government to mitigate the rising housing prices. This included placing cooling measures such as adjustments to the Real Property Gain Tax (RPGT) and the removal of the Developer Interest Bearing Scheme (DIBS). At the beginning of the year, Bank Negara Malaysia (BNM) issued stricter guidelines in issuing housing loans. Despite the cooling measures, prices remain considerably high. In many cases, properties have become unaffordable to everyday Malaysians. The position of the residential sector remains precarious. That situation, however, is largely due to the mismatch of supply and demand by developers, as the average Malaysian has to factor in the rising cost of living and the implementation of the Goods and Services Tax (GST) to make it through the month. So what does the second half of the year have installed for us? Would the sluggish economy have any further implications? Two experts Sr. Chee Kok Thim, a Chartered Valuation Surveyor from Rahim & Co International Sdn Bhd, and James Wong, a Chartered Surveyor and Director of VPC Alliance weigh in on the matter. What is causing the slowdown of the residential property market? 1. Stringent lending rules by the bank 2. Slow recovery of global economies 3. Too many launches at inflated prices in 2014 and the years prior to this 4. Removal of the developers’ interest bearing scheme (DIBS) 5. The ongoing political uncertainty 6. Loss of jobs 7. Political uncertainty

Experts weigh in on the state of homebuyers and developers for the rest of the year. BY: AVINASH SAGRAN

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FEATURE SLOW PROPERTY MARKET The unstable position of the Ringgit has played a major role in the low number of property transactions and it has caused a reduction in the number of activities for residential construction. Chee says the slowdown affects the highrise strata development more than the landed segment of the property market. As a result, developers are experiencing slow sales in their launches. “There is however still a demand for affordable housing. As such, to make home-buying possible for people on low and medium incomes as well as young people, the Malaysia People’s Housing (PRIMA) Bill 2011 was launched back in July 2011,” he says. This has prompted numerous developers to incorporate more affordable housing projects into their development plans. He adds that some developers are offering direct discounts, rebates and renovation packages. These discounts and rebates, however, are not reflected in the Sale and Price Agreement. As a result, buyers are at times getting a 100% loan from the banks. These financing packages include deferred payments, rent-and-purchase schemes, Sunway’s 12:88 payment structure and the 10:90 scheme by SP Setia Bhd.” The repercussions of the DIBS scheme is now taking effect, as many buyers had to abandon their purchases, as they are unable to service their loans. As a result, developers face with the dilemma of property overhang, which are being directed to this scheme. “It will be a buyer’s market and home buyers will have multiple choices when they go home hunting. We foresee homebuyers becoming more selective and cautious due to the increased difficulty in obtaining mortgage financing.” He however believes the slower transaction activity within the short term of one to two years will lead to a more stable market and price correction. The opportunity has presented itself for genuine and first-time homebuyers, as they will have the chance to buy houses with a price correction from the sellers of DIBS schemes – from developers who wants to clear their stocks to buyers who are unable to service their loans. 30 | JULY 2016 www.propertyinsight.com.my

DEALING WITH OVERHANG Based on findings by NAPIC, Wong explains that the overhang units are normally bumi quota units, which makes up between 30% and 50% (depending on guidelines by the individual state) of the whole development. The difficulty in meeting the bumi quota is especially pronounced in areas that are not popular with the Malay community. “The developer can only release the unsold Bumiputera units to the open market or non-Bumiputera buyers after they have obtained consent from the State Government and pay levy or other payments to the relevant authorities,” he adds. “When the developer releases these units to non-Bumiputeras, the prices will be higher compared to the initial launch price, which translates to extra profits for them. Hence, it is not a really big issue for the big developers to deal with their existing ‘overhang’, as they normally have ample cash reserves and unbilled sales,” explains Wong. On the other hand, small and medium sized developers usually need to lower prices to sell their housing stocks or look for bulk purchasers. According to Chee, developers are delaying their launches and slowing down construction activities to lower the supply of residential properties. “When the economy improves and demand exceeds supply, house prices will start to move up again,” he says. BANK NEGARA GUIDELINES The cooling measures implemented by Bank Negara come in the wake of the depreciating value of the Ringgit. To ensure that the already high number of household debts do not escalate further, strict guidelines on loans were issued to banks. For Wong, the stricter lending rules will continue to negatively affect homebuyers and property transaction activities. The revised budget saw no changes to stimulate the market by changing its rules or easing the restriction. Besides the current schemes that are available for first time home buyers, they would have to wait for a better proposition in obtaining loans. The current buyers market allows buyers to negotiate deals in their favour, however obtaining the necessary loan remains a big

When the economy improves and demand exceeds supply, house prices will start to move up again” - Chee Kok Thim obstacle. As such, property transaction will remain low. Buying a house is a big-ticket item and involves obtaining loans from banks. As Chee points out, the current household debt is at 89.1% to the gross domestic products. This figure is rising and is one of the highest in Southeast Asia. According to him, rejection rates for loans is as high as 70%. The high rejection rates indicate that there is still a demand for properties, but that demand is not being translated into transactions due to loan rejections. Buyers however should not be alarmed at the high rejection rate. “As the current rejection rate is high, it is now common to include a new clause in the Sale and Purchase Agreement whereby if the vendor fails to obtain a loan from two or three banks and could not proceed with the purchase, the purchaser’s initial deposit will be refunded in full,” says Chee. WHAT TO EXPECT According to Wong, the current economic conditions, weak property market sentiment and oversupply do not seem to indicate any potential for recovery in the second half of 2016. “We are expecting the property market to be stable and flat in 2017 and market recovery is only expected to be in 2018. This will probably coincide with the General Elections,” he says. Chee concurs, adding that the sentiments and fundamentals for the second half of this year would remain weak. The large incoming supply over the next one or two years could further dampen the weak sentiment as buyers may continue to adopt a wait-and-see attitude in anticipation of lower selling prices.


FEATURE

ABANDONED HOMES, ABANDONED DREAMS?

With the increasing number of abandoned houses and affected house buyers suffering various degrees of financial hardship, we surmise that no amount of legislations would totally eradicate such problems against wayward developers. BY: NATASHA GIDEON

M

ore often than not, being able to save up for your first down payment on your soon-to-be home is something most of us strive for. The exhilaration of signing your S&P becomes a fond memory, not just among home buyers, but also for investors. So for all that

to be taken away, because the developer abandoned the construction of your dream home midway, is a devastation few can imagine. As of June 2015, Malaysia recorded 10,403 house buyers who were affected, with a total of 15,206 abandoned housing

units from 53 housing projects. Selangor, Perak and Johor recorded the highest number of abandoned housing projects. The Ministry of Urban Wellbeing, Housing and Local Government regards abandoned housing projects as a serious problem. If a developer is blacklisted, the company www.propertyinsight.com.my JULY 2016 I 31


FEATURE and its board of directors will not be able to apply for licences and advertising permits. It will also not be able to renew its advertising and sales permits, and the company name will be added to the ministry’s website. A project is considered abandoned if: 1. There is no significant construction activity at the site for six consecutive months. 2. The developer is under the control of the Official Receiver. 3. The developer admits in writing to the Housing Controller that it is unable to complete the project. DIRE STRAIGHTS Under amendments to the Housing Development (Control and Licensing) Act 1966, all licensed housing developers who fail to complete a housing project or have caused a project to be abandoned is deemed to have committed a criminal offense. The latter is punishable, with a fine of not less than RM250,000 and not more than RM500,000 or jail up to three years, or both. There are several reasons why housing projects are abandoned, and these include poor management, lack of finances, low buyer response, legal disputes and the rising cost of materials. To address the issue, Deputy Urban Wellbeing, Housing and Local Government Minister Datuk Halimah Mohd Sadique Halimah explains that amendments were made to the Housing Development Act to ensure that stricter regulations are imposed on developers to give house buyers greater protection. “For example, developers will have to place a deposit of 3% of their project’s total cost with the housing fund, compared with RM250,000 previously. Buyers can also now terminate their agreement with the developers if there is no sign of work at the project site for six months,” she says, adding that the ministry would also step in to assist affected house buyers to negotiate loan terms. INADEQUATE LAWS Are the current regulations sufficient to protect home buyers though? Chang Kim Loong, National House Buyers Association secretary-general (HBA), comments, “Although the Housing Development 32 | JULY 2016 www.propertyinsight.com.my

(Control & Licensing) Act 1966 (HDA) has been tweaked and tuned on numerous occasions in the past, it has not been able to address the issues of abandonment adequately.” “The latest round of amendments to the Housing Development (Control & Licensing) Act were tabled in Parliament and debated in December 2011. Its implementation was delayed because of the governing HD Regulations, 2015 (HDR) and a host of other crossed referred laws that relate to strata management and maintenance. It finally came into operation on June 1, 2015,” he adds. The procedures for the control and licensing of housing developers have now been made more stringent so that non bonafide developers would be marginalised. The effectiveness of the revamped act remains to be seen and would depend on the degree of enforcement carried out. The crux of the problem lies in the system of delivery, such as the sell-then-build (STB) concept. It exposes buyers to the business risks that developers face, which should not be the case. This is the key reason why the government has to enact laws in its attempt to protect house buyers. Yet, looking at the number of abandoned projects and house buyers involved who are suffering various degrees of financial hardship, it seems that no amount of legislations would be able to totally eradicate the problems brought by wayward

developers. In the majority of cases, the projects are successfully completed and the house buyers can count their blessings. When a housing project fails, the buyers are left in the lurch. Back in April, in his speech at the 7th Affordable Housing Projects Conference, Syarikat Perumahan Negara Bhd (SPNB) former president Dato’ Dr Sr Kamarul Rashdan Salleh, states that stricter rules should be implemented. His suggestions include increasing the number of housing deposit for licensing; introducing mortgage insurance schemes; and ensuring that the delivery of vacant possession and transfer of land is concurrent with the payment schedule; to enforce the House Buyers Claims Tribunal in accordance with Act 118; and to include a provision that allows the prosecution of developers who fail to complete their projects within the stipulated time. STORIES OF REVIVAL A case study, conducted by Dato’ Dr Sr Kamarul, revealed that a single storey medium cost development in Taman Senawang Jaya, Seremban, that was abandoned in 1987 was only revived in June 2007, a staggering 20 years later. It was finally completed in May 2009, and more than RM9.5 million was spent rehabilitating the project which sits on almost eight acres of land. He was quoted as saying, “We did not


pass on any additional cost to the house buyers, and we also absorbed the deficit incurred in completing the project. The Certificate of Fitness for the project was obtained by the Seremban Municipal Council two years after SPNB took over the project.” The project had a balance of RM2.78 million to be collected, with a rehabilitation cost of RM15.31 million and was at a deficit of RM12.53 million. Another example is Plaza Rakyat, a development by Plaza Rakyat Sdn Bhd (PRSB) located in the heart of Kuala Lumpur. It has been an eyesore ever since all works halted in 1997 due to the 1997/1998 Asian Financial Crisis. In 2010, the government terminated PRSB’s contract, 12 years after the project was abandoned. As of December 2012, only the base of the complex has been completed. Ivory Properties Group Bhd (IPGB) is reviving the development of the project with a revised RM8 billion in Gross Development Value. In 2014, Kuala Lumpur City Hall (DBKL) took vacant possession of the abandoned project site after repaying PRSB’s RM150 million loan taken from a consortium of banks. Another development, which took much shorter time to revive is Bandar Alam Perdana in Shah Alam. The project, scheduled for completion in 2002, was already at 80% completion before it was abandoned that same year. LBCN Development Sdn Bhd, a subsidiary of Prime Utilities Bhd, was the developer who was tasked to complete the project. According to LBCN’s Chairman Datuk Nik Ezar Nik Bolia, the project was abandoned because the developer Vega Builders Sdn Bhd faced financial problems and had a shortage of workers. The mock keys were only recently handed over, April of this year, to the home owners who have been waiting for over 14 years for their units. LENGTHY PROCESSES From a liquidators’ perspective, Kumar Nathan of Rimbun, a boutique firm specialising in corporate recovery and project rehabilitation, explains that when a project is abandoned, an appointed liquidator becomes the de facto developer or land proprietor. This means the liquidator assumes the pivotal role in liaising with purchasers, financier, authorities, utility providers, contractors, consultants and the

“Although the Housing Development (Control & Licensing) Act, 1966 (HDA) has been tweaked and tuned on numerous past occasions, it has still not been able to address the issues of abandonment” - Chang Kim Loong

courts. The sale and purchase agreement, previously signed with the defunct developer remains in force, and the liquidator, after taking note of the legal, technical and commercial considerations, will have to make a decision on whether rehabilitation is a viable option. After the project is revived and the CCC/CFO obtained, the liquidator – in the case of strata property – will have to apply for the strata title, effect its transfer and form a management corporation when the required numbers have been transferred. The quantum of work (electrical, plumbing, roofing, water reticulation, sewerage system, etc) carried out in an abandoned project varies and in rehabilitating it, the work needs to be carried out almost simultaneously. Any delay in one activity will have a ripple effect, which explains why the process takes so long. NECESSARY ACTION The stakeholders involved in this sticky situation all have a responsibility to be more proactive. Kumar suggests that the National Housing Department (NHD) should consider establishing a panel of ‘forensic accountants’ in collaboration with the Malaysian Institute of Accountants (MIA), to audit the Housing Development Account utilisation, architect certification for progress claims and physical work at site for projects that fall under the ‘sick’ category. This will act as a deterrent for errant developers and provide the NHD with a means to salvage a project before it becomes abandoned. The NHD should also take a proactive stance in levying criminal prosecution against a developer who abandons its

projects, either through wilful negligence or fraud. It should be noted that no criminal action has been taken against errant developers as there were no provisions in Act 118 to do so prior to the current amendment. Buyer need to be wary of recent practices by developers providing ‘free legal service’ as a carrot to entice purchasers as this predicts the problems highlighted above when common lawyers are engaged. To avoid being penny wise pound foolish, purchasers should engage their own lawyers to ensure that the sale and purchase agreement is properly drafted; the charge on the property by the bridging financier is discharged; the land in which the project is being developed has been properly converted; and the relevant premium is paid. Professionals have an equally important role to play. Architects play a crucial role in certifying progress claims that will enable the developers to drawdown from the financier. They often face a dilemma as their fee is paid by developers who could exert tacit pressure for the architect, to certify work that was not carried out in return for prompt fee settlement. As such, the government should look into the feasibility of developers paying the architects fees upfront to the Malaysian Board of Architects (MBA), which will then release the payment in accordance with the architect’s certification. Lawyers, on the other hand, should desist from acting for both the developer and purchaser simultaneously due to the conflict of interest, and ensure proper checks are carried out on land matters, the developer’s license and advertising permit before taking up the assignment.

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FEATURE

THE LEGALITIES BEHIND JOINT VENTURE PROPERTY PURCHASE Get your lawyers and paperworks ready BY: AVINASH SAGRAN

A

s the going gets tough, people tend to get creative with their problem solving skills. So when property investors have trouble obtaining loans in the current economic climate, the solution is to leverage on other people’s money to build wealth, portfolio and income streams. This is often done in the form of a joint venture (JV) or sharing agreement, a method that has steadily gained traction over the years as loan approval rates reduced drastically. Through such ventures, one appears to have a stronger credit mobility. The ingredients for a successful JV

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in property investment include proper screening, designated responsibilities and check and balance analysis prior to signing a deal together. However, when the deal doesn’t work out, it often ends in a nightmare of broken relationships, bankruptcy and foreclosures on homes and businesses. JOINT VENTURE – WHAT? WHEN? WHO? The ideal JV allows two or more people to benefit from each others’ strengths and balance out their weaknesses during a property purchase. Often used as a tool to

build one’s property portfolio, this venture allows profit sharing among the partners involved. According to property investor Patrick Poh, those considering JV agreements should ensure that everyone involved has the same goal and vision in their approach to a particular property. A JV does not solve personal indifference – like credit weaknesses – therefore everyone’s approach has to be in sync. The most common place to find JV partners is through a property investment network, seminars, courses or when investors have the same property guru.


Scrutinise their rights within the agreement to ensure the individual rights are not compromised when in disagreement� - Sitaraman Mani There are two types of JVs; 1. A loose JV does not require one to form a company or register a business entity (LLP). It requires a partner to act as a trustee (registered owner) and to purchase the property under adjoining partnerships. 2. A Real Property Company (RPC) is a venture that forms a proper licensed entity, which is incorporated under the Company Act. The parties involved can form a shareholders’ agreement to hold shares on properties they jointly own. These shares can be traded instead of sold when one person decides to exit, without going through a strenuous legal battle. UNDERSTAND FINANCIAL AND BANKING RESPONSIBILITIES As JVs are essentially a group of people coming together as a means to generate funds, there are numerous things to consider so things do not get sticky between you and the banks. Banks are reluctant to approve loans for properties bought via loose joint ventures because an application that involves third parties is seen as highly dubious. Sitaraman Mani, Managing Director of CIC Banque PrivÊe, urges individuals to thoroughly scrutinise their rights within the agreement to ensure that individual rights are not compromised when in disagreement. This is pivotal to ensure your credit score does not get affected as a result of problems faced by third parties.

who purchases a bumi lot 2. A JV with foreigners 3. A JV with residents who hold PR in another country 4. Lee advises those who are party to JVs to put everything in writing and to get a good lawyer to vet the documents and agreements thoroughly. Since this is a form of profit and liability sharing, all percentages regarding the matter should be clearly spelt out in black and white. As this falls under contract law, any breach of the agreement is entitled to legal remedy. Property investor Hazel Leong echoes his thoughts and asks everyone to get his or her paperwork right from the beginning and to have an exit strategy. EXIT PROVISION According to Lee, in instances where one party breaches their obligation or agreement, the partner may seek several recourses which includes:

1. Selling the shares of the defaulter to a third party 2. Selling the property to a third party 3. Servicing the remainder of the loan if it is within your means and be the sole owner of the property The locking period set by banks has to be taken into account in the event of a default by a partner. A lock out period stops the seller from negotiating with any other party. Hence, during this period, the partners involved have to fully service their loan. A breacher or defaulter would be subjected to a civil suit based on the terms and conditions placed on the contract. As a JV is a profit agreement, the court will take into account the provision of profit lost during the period of contract has been breach. Without a proper framework and binding documents, any contractual breach will result in an arduous he-say-she-say battle in court. The beneficiaries and results of the decision will take years to settle.

LEGAL MATTERS Mike Lee, a senior legal associate, points out that, another way to form a JV is to have a trustee deed, which is legally binding unless it breaches existing public policies. The latter will result in you being held in contempt of law. For example, 1. A JV between bumi and non-bumi www.propertyinsight.com.my JULY 2016 I 35


DEVELOPER OF THE MONTH

QUALITY LIVING SPACE THAT IS LIVEABLE Design meets practicality to suit everyone’s need BY: AVINASH SAGRAN

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DEVELOPER OF THE MONTH

I

t was destiny in the making. As a child, Dato’ Choo Beng Kai’s weekend retreats included visits to his father’s construction sites and land offices. Little did he realise that those retreats would eventually ignite a deep passion that led him to join the family’s construction and development business. After having garnered nearly 30 years of experience under his belt, he decided to leave the family business to establish Masmeyer Holdings Sdn Bhd. He was determined to create an impact with his unique proposition in terms of design and 38 | JULY 2016 www.propertyinsight.com.my

practicality. Wanting to build a legacy that enriches the lifestyles of homebuyers, Choo is always searching for innovative and practical ways to fulfil their needs. He strongly believes a property is for utilisation and debunks the idea of property speculation and investment-centric design factors. He said, “A home is meant for people to stay. As such, the side effects of owning a home should not include the possibility of inflation.” Although his no frills approach may seem bullish to some, the end result is he is able to create affordable well-

designed spaces for his buyers to call home. EVERY INCH MATTERS Extravagant designs are often visually appealing, yet it may not be practical for everyday living. Choo ensures every single corner of the home is designed with practicality in mind. Hence, every inch of the walls, windows and doors are carefully measured to utilise every square foot. The precision of practical design is a unique selling point, starting from his initial flagship project at Taman Pinang Merah at


A home is to be enjoyed with loved ones to build memories and live happily without having to bear big burdens and constant worry” -Dato’ Choo Beng Kai, JP

Bukit Pinang, Alor Setar. With the rising number of car ownerships, residents living in terrace houses often find it difficult to secure parking spots for their second car. As such, Choo realigned the design of the pillars to ensure two vehicles can be parked within the compound. Such design elements add to the unique selling point for each of his projects. Choo makes it a point to imagine himself as the end user to ensure the layout is something that his customers would appreciate. He pointed out that although architects can produce great designs, they don’t always ensure that their designs are liveable. For example, even though storage spaces are useful to stow equipment and gears, storerooms are not a common feature in Malaysian homes. Realising the need for it, Choo ensures that his designs include a storage space even if the unit measures a mere 900 sqft. He said, “A home is where

the soul is, therefore the people living in it should experience only the best.”

He said, “Having joined the family business during the 1997 financial crisis and riding the wave of the 2008 economic slowdown, I have experienced and endured difficult times. These are moments everyone will face. However, we can overcome it by facing challenges positively.” Armed with lessons learnt from his past, Choo decided to move forward with his second project in Sungai Petani. With his track record of successfully completing a large scale project, he was able to convince the city council to allow him to obtain more land to start new projects.

THE START OF THE JOURNEY Choo’s flagship project costing RM30 million, consisted 300 units of houses, including low cost housing. “As a young boy, I often followed my father on trips to Kedah which enabled me to network with a range of people. So as I was in search of land, I felt that Kedah choose me. As a developer, getting a piece of land is similar to getting a chance in life to start building your dreams.” Reality, however, can be brutal. His flagship project resulted in him incurring losses due to several unforeseen reasons, such as the rising cost of steel due to construction for the Beijing Olympics and allowing pre-bookings prior to the project’s approval. He was, however, determined to see through the tough times.

CALL IT TACTICS Choo commented, “The current market sentiment has fortunately not affected my business. We did very well in 2012, but, we have not launched any new projects this year. To put it another way, we are by the shore observing the rough sea. I have parked our boat at the jetty to wait for the right time to go on my next voyage.” Joint venture manoeuvres have become increasingly popular of late as corporations realise the need to collaborate in the current economic condition. Choo seized the opportunity by developing landmark projects with strategic partners through joint ventures with Government-linked companies such as UDA Holdings Bhd, PKNK and Rakyat Hartanah Sdn Bhd. He said, “We cannot deny that the www.propertyinsight.com.my JULY 2016 I 39


DEVELOPER OF THE MONTH government is the largest land owner, yet they are not able to maximise returns as they do not have the capacity to do so. I sensed a synergic approach to obtain land to develop from them. It was a winwin situation, as I had a lesser burden on my loan, while the government is able to maximise on land returns.” MARINOX SKY VILLAS & MILROW VILLAS When asked about his design philosophy, Choo prefers simplicity coupled with practicality. Providing a spacious yet usable area is important, as a fancy design can translate into high maintenance cost for buyers, which he believes is unnecessary. “A home is to be enjoyed with loved ones to build memories and live happily without having to bear big burdens and constant worries.” The development at Tanjung Tokong, Penang, certainly offers a unique living experience. Milrow Villas consist of 17 prime lots to those who seeks an exclusive resort-style living. Marinox Sky Villas offers the best possible combination of living spaces, design and specifications. Choo pointed out, “We spent half a million Ringgit to build a link bridge for running activities at Marinox. I take creating wellrounded amenities very seriously because I always imagine myself as the end user.” The utilisation of design is evident as each resident gets to enjoy the magnificent sea view coupled with versatile lifestyle facilities that meet every need. So far, the project is 95% sold, an achievement that is credited to a successful marketing strategy employed by Choo. His no frills approach encourages his buyers to think twice before signing up as a buyer. The company does not offer schemes as it does not believe in inducing buyers to overburden themselves. According to Choo, a real estate agent compared the sales of Masmeyers projects to other projects and commented that the company has low loan rejection rates and few immature buyers mainly due to the thorough screening process of buyers. FUTURE There are two upcoming launches in the pipeline. One is a joint venture with Koperasi Polis Diraja Malaysia Bhd (KPDM) in Sentul. Choo said, “We do not foresee 40 | JULY 2016 www.propertyinsight.com.my

any pressure in selling as the location is near the city with matured infrastructure. Furthermore, we were approached by KPDM and the intended target market are members of the police so it suits our end user philosophy.” Another future launch would be in Kelantan, “I have always been interested in suburban areas like Kota Bahru or Kuala Terengganu, as there is no property speculation. My target has always been real end users, especially those in the second tier capital, because they have the right buying power.” FOUNDING PRODUCTIVITY Choo’s approach to business is similar to his approach to life. Hence, when he formed the Masmeyer Foundation, its objective was not just about giving, but also to restore productivity so each individual is self-sufficient again. The foundation is now running systematically with funds raised solely by the group for three specific reasons. Firstly,

the foundation assists those suffering from medical conditions such as cataract and diabetes by providing surgery or postoperation care so that these individuals return and contribute back to society. During his personal time, Choo loves running and exercising, so it is not a surprise that he often supports sports activities such as marathons. He believes sports activities can have a positive impact on an individual’s lifestyle. Lastly, the foundation also engages in moral uplifting projects fuelled by Confucious’ teachings, as well as equipping children with the right frame of mind to grow into holistic individuals. Abiding by the philosophy that has defined his career, Choo’s no frills approach helped homebuyers enjoy the essence of a well-designed living space with practical features to maximise the use of space. In closing, he said, “When buyers enjoy staying in their homes, it is lit with positive energy flow that creates a conducive living environment.”


AREA FOCUS

THERE IS MORE TO GLENMARIE THAN YOU KNOW Follow the transformation of this neighbourhood

R

enowned for its industrial park, Glenmarie is a familiar place to most KLites. It sits within the Shah Alam district and is located 35km west of Kuala Lumpur. Quietly tucked away between the major urban residences and commercial centres of Shah Alam, Subang Jaya and Petaling Jaya, Glenmarie has steadily built a reputation for being a good neighbourhood for homebuyers and investors alike. It is home to many international car showrooms and workshops, and is

BY: AVINASH SAGRAN

regarded as a prime area for industrial developments, a reputation that was solidified by the success of the HicomGlenmarie Industrial Park. Based on the Property Market Review 2015/2016 by Rahim & Co, the transacted value of 1½-storey terraced factories in Glenmarie Industrial Park is RM2.3 million, whilst in neighbouring Subang Jaya, a similar property would transact between RM1.1 million and RM1.8 million. The general increase in the number of multi-level distribution businesses such

as, Padini, Proton Parts Centre, Scott and English Malaysia, DHL Services Point, Yakult and Kawasaki Malaysia Glenmarie, has contributed to the increase in demand for industrial factories. Overall though, the industrial sector is generally spared from cycles of speculations and the sector remains stable compared to other types of real estate, according to Foo Gee Jen from CRBE WTW. OTHER FACETS OF THE TOWNSHIP Glenmarie offers spacious houses with www.propertyinsight.com.my JULY 2016 I 41


AREA FOCUS

average floor sizes ranging between 2,000 sqft and 5,400 sqft (according to Napic 2015). The spacious living space offered by Glenmarie Properties Sdn Bhd and I&P Group Sdn Bhd is suitable for those seeking a low density living space with ample room. University townships or metropolises often become the pulse of the area where vibrant integrations interact. To that end, Paramount Corporation Bhd has created a unique university metropolis, aptly named Paramount Utropolis. The project features 21.7 acres of freehold integrated development anchored by KDU University College campus, which includes 1,063 units of serviced apartments and 447 units of SOHO. Earlier this year, Utropolis Marketplace, a 120,000 sqft retail centre, opened for business. Sam’s Groceria also opened for operation recently to provide for the everyday needs of the students and residents around the area. The number of projects in Glenmarie has steadily increased over the span of five years, with more projects in the pipeline, namely a mixed development by Temasya 8 by I&P Group and Emporia Glenmarie by Titijaya. The integrated development is set to alter Glenmarie’s landscape by adding vibrancy to this subdued industrial area. 42 | JULY 2016 www.propertyinsight.com.my

With a varied range of offerings from studio apartments to bungalows, this opens up the opportunity for investors to enjoy potential rental returns from students who enrol in nearby colleges and universities. Seasoned investor Kam Wei Tsung weighs in on Glenmarie’s potential as a matured area surrounded by established neighbourhoods. He believes that investors should be looking at properties such as terrace houses or purpose built offices around the area. The medium to high-end price range is suitable for professionals, businessman and those with a healthy budget. Glenmarie also offers an opportunity for young adults looking to upgrade. Kam compares it to Kepong and Desa ParkCity. “Young adults would often search for a new home within the vicinity of the neighbourhood they grew up in. As such, Glenmarie is the right avenue for those from Petaling Jaya, Subang Jaya and Shah Alam,” he says, adding that homebuyers should also take advantage of the resort style living environment provided in the township. TEMASYA 8 The Temasya 8 project within Temasya Glenmarie by the I&P Group consists of commercial, industrial and residential developments. Its signature project,

Temasya 8 Serviced Apartment, features an opulent design with a stylish concept that will suit a contemporary lifestyle. The sizes of the units range between 926 sqft and 2,045 sqft. Residents get to enjoy all the convenience that an urban location has to offer alongside the amenities of a luxurious lifestyle, where an entire floor is outfitted with facilities on deck such as indoor and outdoor gymnasium, multipurpose hall, playground, surau, swimming pool, changing room, cafeteria and kindergarten. Temasya 8 will also feature exclusive business suites measuring between 936 sqft and 1,302 sqft, as well as future developments comprising commercial space. This is a much-anticipated project that offers prospective buyers a luxurious living ambience to call home. AREA ANALYSIS The Managing Director of Firdaus Associates Property Professionals Sdn Bhd, Sr Firdaus Musa points out that the area has slowly become an exclusive high-end residential area with properties ranging from high end condominiums to super link, semi-detached and detached houses interspersed with existing industrial properties. The transacted sales price of doublestorey terrace houses saw a maximum of


8% increase while semidetached houses had a maximum change of 10% increase between 2014 and 2015. However, the transaction sales price of bungalow houses saw a maximum decline of 11%, arguably as a result of having taken a hit from the depreciating ringgit and cautious buyers’ market. The industrial area is also slowly becoming a hub for high-end industrial property that includes service oriented industrial premises, commercial and warehousing. Property values remain stable with a good potential for capital growth for existing and

future properties. Semi-detached factories at Temasya Industrial Park recorded a positive increase in transaction prices across the board, thus further cementing the hotspot nature of the Glenmarie Industrial Park. Considering the slow economy last year, transactions prices have managed to maintain an upward trajectory within the Glenmarie area across all real estate because the nestled location provide an enclaved retreat for residents, while the prime industrial area continue to lure in businesses, according to industry

expert Datuk George Stewart LaBrooy. The operation of retail centres such as the Utropolis Marketplace will continue to enhance the appeal of Glenmarie for homebuyers and investors alike. AMENITIES AND ACCESSIBILITIES The unique feature of Glenmarie is that the area is sheltered from the bustling urban epicentres. The developments are intertwined with luscious greenery; spacious roads provide the appearance of low-density housing and easy living. Residents can enjoy numerous amenities

TABLE 1.0.1 TRANSACTION SALES PRICE OF TERRACE HOUSES NOS.

SCHEME

LAND AREA (SQ.FT)

BUILT UP AREA (SQ.FT)

2014

2015

% CHANGE

TENURE

STOREY

1.

Laman Glenmarie

1,765

2,077

RM900,000.00 to

RM950,000.00

3%

Freehold

2

RM920,000.00

2.

Temasya Citra

1,915

2,080

RM1,300,000.00

RM1,415,000.00

8%

Freehold

3

1,960

2,426

RM1,500,000.00 to

RM950,000.00

3%

Freehold

2

RM1,650,000.00

3.

Temasya Suria

3,360

4,005

RM2,150,000.00

RM2,150,000.00

Stable

Freehold

2

2,411

2,936

-

RM1,820,000.00

ND

Freehold

2

3,358

3,475

RM1,880.000.00

RM1,980,000.00

5%

Freehold

2

2,690

3,075

RM1,930,000.00

-

ND

Freehold

2

Source : Firdaus & Associates Property Professionals Research

www.propertyinsight.com.my JULY 2016 I 43


AREA FOCUS from shopping, education, healthcare and recreational centres at nearby neighbourhood just minutes away. Dr Daniele Gambero, CEO and co-founder of a strategic marketing consultancy firm, REI Group of Companies, points out the township’s fantastic mobility and accessibility. Glenmarie can be easily accessed through major highways like the Federal Highway, New Klang Valley Expressway (NKVE), Guthrie Corridor Highway, Lebuhraya Damasara Puchong and New Pantai Expressway (NPE). It also enjoys easy access via Jalan Lapangan Terbang Subang and Jalan Subang. For those who prefer using the public transport, Glenmarie is part of the Rapid KL U81 route to the city centre while the latest LRT expansion, which started operations on June 30, covers the area via Glenmarie and Subang stations. Kam predicts that there would be more pedestrian traffic with the connection of the Subang LRT Station to the UOA Kencana

TABLE 1.0.2 TRANSACTION SALES PRICE OF FACTORY NOS.

SCHEME

TYPE

LAND AREA (SQ.FT)

BUILT UP AREA (SQ.FT)

2014

2015

% CHANGE

TENURE

STOREY

1.

Temasya Industrial Park

Terrace

1,604

1,001

RM600,000.00 to

RM550,000.00 to

-8%

Freehold

1

RM650,000.00

RM600,000.00

Glenmarie

Terrace

RM1,600,000.00

RM550,000.00 to

-8%

Freehold

1

2.

3,305

2,760

Industrial Park

3.

Temasya Industrial Park

RM600,000.00

Semi-D

3,896

3,360

-

RM2,300,000.00

ND

Freehold

2

9,602

6,929

RM6,000,000.00

RM6,450,000.00

7.5%

Freehold

2

21,797 – 22,497

5,123

RM11,500,000.00

RM14,200,000.00

23%

Freehold

2

10,725 – 11,560

6,878 – 7,000

RM5,795,000.00 to

RM9,100,000.00

32%

Freehold

3

RM6,914,000.00 Source : Firdaus & Associates Property Professionals Research

TABLE 1.0.3 NEWLY LAUNCHED, NEWLY COMPLETED AND FUTURE DEVELOPMENT NOS.

SCHEME

BUILT UP AREA (SQ.FT)

RM (PER SQ.FT)

DEVELOPER PRICE

TENURE

1.

Temasya Kasih

937 – 1,561

618.00 - 738.00

RM646,888.00 onwards

Freehold

2,347 – 2,917

583.00 – 614.00

RM1,439,888.00 onwards

Freehold

2

Temasya 8

926 – 2,045

683.00 – 699

RM647,800.00 – RM1,396,800.00

Freehold

3

Paramount Utropolis

797 – 1,202

848.00 onwards

RM672,300.00 onwards

Freehold

Source : Firdaus & Associates Property Professionals Research

44 | JULY 2016 www.propertyinsight.com.my


TABLE 1.0.4 TERRACE AND SEMI-DETACHED HOUSES NOS.

SCHEME

TYPE OF PROPERTY

LAND AREA (SQ.FT)

BUILT UP AREA (SQ.FT)

DEVELOPER PRICE

TENURE

STOREY

1.

Temasya Sinar 2

Terrace House

3,078

3,629

RM2,000,800.00 onwards

Freehold

2

2.

Temasya Cinta

Semi Detached House

6,157 to

4,357

RM3,249,800.00 to

Freehold

2

Semi Detached House

6,157 to

Freehold

2

3.

Temasya Cinta 2

6,727

6,727

RM3,249,800.00 4,215

RM3,316,800.00 to RM3,710,800.00

Source : Firdaus & Associates Property Professionals Research

Office and retail outlets, thus driving even more traffic to Glenmarie. On the other hand, Sultan Abdul Aziz Shah Airport, which is currently the hub for Berjaya Air, Firefly and Malindo Air, is merely 5 minutes away. Lifestyle and shopping centres like Empire Subang, Subang Parade, Citta Mall, Evolve Concept Mall Ara Damansara, SS15 commercial centre area, Giant Shah Alam and Tesco Shah Alam are all within a 7km radius. For those seeking to lead an active lifestyle, there’s the Glenmarie Golf & Country Club, Subang National Golf Club and Glenmarie Sport & Recreation Centre to provide you the perfect destination on the weekends. For soccer lovers, it is just a short drive to Stadium Shah Alam to catch

their favourite team in action. Besides KDU University College, Glenmarie is also surrounded by other education institutions such as Sultan Salahuddin Abdul Aziz Shah Polytechnic, Management & Science University (MSU) and Pusat Teknologi dan Pengurusan Lanjutan (PTPL), SJK (T) Glenmarie, Japanese International School, SMK TTDI Jaya, SM Teknik Shah Alam, Batu Tiga, SK TTDI Jaya and Montfort Boys Town, providing ample options for parents to enrol their children in affordable certified institutions. Three renowned health care facilities are within 10 minutes of Glenmarie, namely, Ramsay Sime Darby Medical Centre Ara Damansara, Ramsay Sime Darby Medical Centre Subang Jaya and Sunway Medical

Centre. LOOKING FORWARD Glenmarie has great potential and this has turned the heads of big players in its direction. Dr Gambero says the township is a property goldmine and this would be the booming start of the western corridor with big developers such as I&P Group and UOA Group dressing up the area. Titijaya Land Bhd recently entered into an agreement with The Ascott Ltd to collaborate on two of its upcoming developments, one located in Glenmarie and Penang. Ascott has great brand presence in Malaysia, Asia Pacific, Europe and the Gulf Region. To have developments associated to such a global brand is a testimony to Glenmarie’s growth and investment potentials. Ronald

www.propertyinsight.com.my JULY 2016 I 45


AREA FOCUS Tay, the CEO of Ascott Residence Trust Management Ltd, says the township’s location serves as a central hub due to its comprehensive real estate features. The proposed LRT3 would include stops in Temasya and Hicom Glenmarie, providing further access to the location. The opening of the newly completed UOA Kenchana offices would further increase the commercial activity within Glenmarie. What makes Glenmarie investmentworthy is the fact that it is surrounded by everything one needs. Healthcare facilities, education institutions, sports and recreation facilities, as well as lifestyle and leisure outlets are all located in the peripheries of the township without intruding into the peaceful living environment that the area offers. Residents can easily gain access to these amenities while maintaining the exclusivity of their homes.

Scan here for aerial view video of Glenmarie

AGENTS SPEAK EMILY KHO, Vivahomes Realty Developments in Glenmarie feature modern designs and a spacious layout, things that attract homebuyers the most. Several high-rise buildings have recently been completed, which are suitable for investors as the demand for rental properties from students, working adults and families are very high in this area. Accessibility to health care services is a major plus point with the Sunway Medical Centre and SDMC located minutes away. Apart from that, there are education hubs such as KDU and MSU, with Sri Kuala Lumpur only a 15-minute drive from the township.

ERIC TAN BAN LEE, Property Central One can be optimistic in terms of investment or for own stay (for landed property and condominiums) as the impending completion of the LRT and UOA Kenchana offices and retail hub will add value to the township in terms of amenities and job opportunities. These will inevitably increase the demand for residential needs from quality expatriates and the local workforce. The completion of the KDU University College will also add an extra dimension as students will be part of the tenant demographics in Glenmarie.

46 | JULY 2016 www.propertyinsight.com.my


FEATURED PROPERTY

INCUBATING CREATIVE AND PROFESSIONAL URBAN LIFESTYLES @ THE COLONY BY INFINITUM The art of modern living with dual-key suites in the heart of Kuala Lumpur BY: FARA PETIAL

48 | JULY 2016 www.propertyinsight.com.my


A

re you someone who is always keeping abreast of industry trends? Then you might want to check this out. There is a new mixed development in town that is being built by two established developers from Singapore. The project is called The Colony by Infinitum, and it is developed by Macly Equity Sdn Bhd, a joint venture between Macly Group and Roxy-Pacific Holdings Ltd Singapore. They are presenting a design that has been famous in developed countries like Singapore and Japan – dualkey apartment units. ABOUT THE COLONY It is a new boutique development located in the middle of the city, beside Quill City Mall and on Jalan Dewan Sultan Sulaiman. If you are looking for a lifestyle suite that is built on freehold land, then you are looking at the right place. The Colony by Infinitum stands apart from the rest on the busy lifestyle street. The development enjoys great accessibility to attractions around town such as Kuala Lumpur city centre, Maju Junction Mall, Sogo Mall and also the shopping heaven along Jalan Tunku Abdul Rahman. Its close proximity to malls means easy access to shopping, F&B as well as entertainment. The Colony by Infinitum is a short walk from the Medan Tuanku monorail station that connects to other major transportation hubs such KL Sentral and Kuala Lumpur International Airport (KLIA). Being in the middle of town also gives it good connectivity via bus rides or even taxis, and every major highway. In short, The Colony by Infinitum is simply convenience at your doorstep. DUAL-KEY UNIT The Colony by Infinitum is not your average serviced apartment. It employs a dual key concept for residents to enjoy the best of both worlds. In other words, a seamless integration between work and play for its residents. Although it is built on commercial land, the property is for residential use. Its dualkey units come in a range of layouts, from simple rectangular ones divided right down the centre of two-storey maisonettes or

lofts. What is a dual-key unit? It is one unit with two different doors, spaces and functions. This is the main unique selling point that deserves attention from property investors. If you are a home buyer, you can stay in one of the units while using the other one to generate income, for example, renting it out as an office unit. However, if you are an investor, you are literally killing two birds with one stone when you own a unit of The Colony by Infinitum. As an investment opportunity, this development is built around the idea of economy of space and is furnished with an innovative design which enhances the dual key function abilities that gears towards dual income units. An investor can opt to stay in one of the units and rent out the other one for investment. Another option is to simply rent out both of the units. One unit comes with built-in kitchen cabinets with hob and hood, sink and tap, while the pairing unit, which can be rented out or used as an office, come with a cabinet, sink and tap. The bathroom will be fully equipped with a showerhead, water closet and wash basin, while additional throw ins include water heater and split air-conditioning units. There is built-in kitchen and wardrobe as well. Therefore, without the need for any renovation, you can just rent out the property to tenants. This is known as a modular concept property which is a relatively new concept in Malaysia. SHOEBOX UNITS The Colony by Infinitum, which has a Gross Development Value of RM800 million, consists of shoebox units – apartments that measure under 500 sqft. Shoebox units have been particularly well received in Singapore where land is scarce and property prices are high. There will be two residential blocks divided into two construction phases with the 33-storey Block A under Phase 1 and Phase 2 is the 43-storey Block B – named as The Luxe by Infinitum which is now opened for pre-registration. Block A has a total of 423 units with unit built-ups measuring between 705 sqft,

725 sqft, 945 sqft, 990 sqft and 1,155 sqft, while The Luxe by Infinitum houses the remaining 300 units with built-ups between 675 sqft to 1,575 sqft. Prices for Phase 1 average at RM1,300 per sqft with a maintenance fee of RM0.40 per sqft. The developer believes that its development stands out from the competition, especially with reports that small sized apartment units are going to be the upcoming trend. For more details on The Colony by Infinitum, please visit www. thecolonybyinfinitum.com.my or call +603 6201 9188 (Malaysia) / +65 9677 6777 (Singapore).

PROJECT DEVELOPMENT DETAILS Project Name: The Colony by Infinitum Type of Development: Mixed (Commercial, Retail and Residential) Developer: Macly Equity Sdn Bhd (A Joint Venture Between Roxy-Pacific Holdings Limited and Macly Group) Location: Wisma Infinitum, No. 18, Jalan Dewan Sultan Sulaiman, 50300 Kuala Lumpur Land Tenure: Freehold Title Status: Master AMENITIES Education Hub • IBC Higher Studies Sdn Bhd • ANC Business Management • International Academy Clipso • Boston Language Centre • International Business School • LUpeichan Japan Education Centre • University Technology Malaysia Medical Facilities • General Hospital Kuala Lumpur • IJN Heart Institute • Hospital Pusrawi Sdn Bhd Hospitality • Sheraton Imperial Hotel • Renaissance Hotel Kuala Lumpur • Maya Hotel • Tune Hotel Downtown Kuala Lumpur • Quality Hotel City Centre • Concorde Hotel Kuala Lumpur • Shangri-la Hotel Kuala Lumpur • Pacific Regency Hotel Shopping Malls • Quill City Mall • Maju Junction Mall • Sogo Shopping Mall • Jalan TAR (Tunku Abdul Rahman) • Suria KLCC

www.propertyinsight.com.my JULY 2016 I 49


PERSONALITY OF THE MONTH

50 I JULY 2016 www.propertyinsight.com.my


PERSONALITY OF THE MONTH

SURVIVAL OF THE FITTEST Joe Flizzow’s journey from a boy who wanted to make good music to a leader BY: FARA PETIAL

H

avoc! Havoc! Havoc! Havoc! Havoc! Does this chant sound familiar to you? If you are a fan of hip-hop music, then you would have heard of ‘The President’, better known as Joe Flizzow. Joe (born Johan Ishak) is an influential figure in the hip-hop music scene. For decades, this rapper cum producer and songwriter has helped defined the genre’s sound. In addition to his legacy in the music industry as the founder and CEO of Kartel Records, Joe has also set up talent agency called Kartel Agency, which has represented a variety of cultural icons including Altimet, SonaOne, Ila Damia, Zamaera, Aisya Hasna and Anis Nabilah. Beyond the music industry, he has also left his mark as a successful entrepreneur. In 2014, Joe established a barbershop that he named Joe’s 47500 and a restaurant called Joe’s Kitchen in Subang Jaya. More recently, he opened a sneaker consignment, fashion, and skate shop, catering to local and international brands called Goodfellas KL. WHY ENTREPRENEURSHIP? For Joe, his journey into entrepreneurship

was a matter of survival. “I never intended to become a fulltime rap artist. I wanted to start my own business when I was much younger, but didn’t do so because I didn’t have the time and motivation as well as the right guidance,” he said. “The main reason I established my own record label was because of ownership. I wanted to own the masterpieces that I have recorded. To this day, I do not own any of the masterpieces that I have previously produced with the company that I signed up with. I want to have full ownership of my work so that my children and grandchildren do not have to ask someone else’s permission if they want to use my songs in the future.” Establishing Kartel Records was no easy feat as Joe admitted that he lost money in the first four years of running the company. Instead of giving up, he decided to venture into another line of business and he admitted to doing this to keep Kartel Records alive. THE BIRTH OF JOE’S BARBERSHOP Joe said his barbershop was inspired by a famous barbershop in Los Angeles named

Frank’s Chop Shop. “Years ago when I was in LA, I went to this barbershop and my first impression was, ‘Wow, I really need this back home. I need to be able to go to this kind of barbershop back in Malaysia’,” he said while holding on to the idea and waiting for the right opportunity to act. “One day, I was walking around in SS15 and I saw a ‘To Let’ advertisement at a vacant shoplot. It so happened that the real estate agency that was managing the property was located just above. So I quickly approached them and told them that I would love buy the property although I wasn’t sure what to do with it yet.” “After discussing with my business partner David, we decided to set up a barbershop there. At that time, I even brought my personal barber to work there. He has since become a famous barber in his own right,” he pointed out. However, Joe’s barbershop was not doing well in the first two years. Joe was having a hard time managing human resource, therefore, they decided to change their business strategy. Instead of hiring barbers to work at the shop, Joe decided to rent the chairs out to different barbers. www.propertyinsight.com.my JULY 2016 I 51


PERSONALITY OF THE MONTH house wearing your suit and you want to stop by at the barbershop for a while just to shape up and look good before your interview. “Here the culture typically for men is to go home, change into shorts, go to the mamak and go for a haircut after that. Then they return home to take a shower. People ask me why I don’t offer hair washing services at my barbershop? I don’t see the need to because when Malaysians go home, they want to shower anyway,” he pointed out. The success of his business means Joe has had to face several competitors. “I’m known as the barber guy and we created the template for the barbershop from scratch. However, we have come across competitors who just copy and paste everything we have, even down to my logo.” As he questioned their intention, Joe also challenged them to set up their own brand and do something different as would all successful people.

“We changed our game plan. We enabled barbers to start their own business by renting chairs from our shops. It could be on a weekly or monthly basis. This method proved to be a success, so much so that we have been able to open five more outlets throughout Malaysia,” he added. NECESSARY EVIL Like any other entrepreneur, Joe faced financial difficulties in the first few years as well. He said, “There were times I did not have enough money to pay my staff. But I knew I had to make it work. One advice from Sun Tzu’s ‘The Art of War’ is you have to pay your troops on time. Even when you’re at war, you’re not always at the battlefield. There are times when your troops would want to buy gifts to send home, send money or even entertain 52 I JULY 2016 www.propertyinsight.com.my

themselves. If you want to keep your troops in line, you must pay your troops on time.” Joe pointed out, “When times are hard, you need to ask yourself as the business owner, is this the right time to buy that Ferrari? You want to live a luxurious lifestyle and you think it’s important, but the truth is you can survive with just any ordinary car. You need to differentiate the things that are important, and things that are merely luxury. If you can afford it, then by all means enjoy the finer things in life.” Joe chose the location of his shops based on the rent that they could afford. He wanted the barbershops to be in the middle of established communities and complement the businesses around them. He pushed away the idea of being located in malls. “In London or New York, you leave your

PROPERTY VS SNEAKERS INVESTMENT Joe bought his first property when he was 24 years old. The house is located at Kota Damansara and that was his first property investment. “However, looking at the current market condition, I think investing in sneakers will give me a better return on my investment compared to property.” “There’s a pair of sneakers that was priced at RM899 when it was first launched. Now that same pair can fetch RM13,000. Another example is brand new Kanye West’s edition from Adidas, which was initially priced at RM799, is now priced almost RM6,000. I wish my properties would appreciate like that.” Joe believes that Goodfellas KL is probably the only consignment store in the country right now. “For people who are not familiar with sneakers, its value does indeed appreciate. I’m also a sneakers guy but it’s difficult for me to explain how this sneakers phenomenon came about. The sneakers that I’m wearing initially sold for RM699, but now it can fetch about RM2,000. Just to be clear, I’m not responsible for the rising prices, it’s a worldwide thing,” he explained. “Our shop allows sneakers collector to be entrepreneurs. If you come to the shop


PERSONALITY OF THE MONTH

Photo credit : juiceonline.com

and you’re lucky enough to buy five pairs of sneakers at RM700 each for a total of RM3,500, those same sneakers can be easily worth RM5,000 over time,” he stated. Where property investment is concerned it is a different ballgame as Joe is only willing to invest in properties that are developed by established developers. “You can spot a good deal when you see one, for example, by looking at the price per square feet, the area and its surroundings. It’s important to know what is your goal when purchasing the property. If you want to rent your apartment out, what’s around it? Are there any international schools? Your surroundings will tell you the type of people that live there,” he said. He added that one might be tempted to buy a property based on the view it offers, but the view might come with a price like traffic congestion. Joe has a few words of advice for those who aspire to be entrepreneurs themselves. “Many people say ‘I don’t have money to start a business’. It only costs you RM50 to set up your own website, once its up you can start your own business. It’s all to do with your mindset. There are also many people who run their business solely on

Photo credit : poskod.my

Instagram. Does that require a lot of money to start a business? The answer is obviously no, so there’s just no excuse for not trying,” he said. “Many people have big dreams but they are simply too scared to take their first step. The reason for the fear is because they’re the one feeding themselves with negative thoughts. It takes almost nothing to start a

business. You can start with just one item. We were taught in school to follow the herd. That is the wrong advice. Don’t follow the herd and don’t go for the crumbs,” he advised. He also asked self-starters to surround themselves with successful people, study their habits, listen to what they say and apply them accordingly. www.propertyinsight.com.my JULY 2016 I 53


INVESTOR NEXT DOOR

HAVING THE BEST OF BOTH WORLDS Living your passion while earning passive income BY: AVINASH SAGRAN

54 I JULY 2016 www.propertyinsight.com.my


INVESTOR NEXT DOOR

D

r Evan Tan Zhang Jian, is a charismatic young veterinarian who is passionate about animals. His interest in property investment however might come as a surprise to those who are accustomed to seeing the astute veterinarian in his lab coat. After graduating from University Putra Malaysia in 2009, Dr Tan started working for a well established veterinary clinic. As a fresh graduate, he was thrilled to have found his dream job as it has been his passion to care for animals since he was a young boy. He was aware from the start on the importance of building an income that is solely not dependent on his day job. As the realities of paying bills and loans came into the picture, he saw the need to seek financial education. Through a good friend, Dr Tan came to know about how property investment can help generate positive income. One strategy is to purchase a property and rent it out so the tenancy would eventually help pay off the property. He then saw that the potential of achieving financial freedom while maintaining his passion and love for animals was within his grasp, so he decided to take the plunge.

become, there will always be something you can learn from someone who is more successful than you,” he advises. For those who have begun their property investment journey, Dr Tan’s advice is to stay committed, and to keep moving forward, even if it is just baby steps, in order to achieve targets you have set for yourself. A STEADY PROGRESSION According to Dr Tan, after six months of

struggling with limited income, yet enriched with knowledge of the property market, he made a decision to start buying properties. “After spending two months doing research, going for site visits, and meeting and discussion with agents, I finally settled on a sub-sale walk up apartment in USJ and bought it for RM130,000.” The challenge was having enough funds to pay for the down payment and miscellaneous fees, which came up to about RM16,000, a large sum then for a

DARE TO DREAM BIG In the beginning, Dr Tan’s exploration into property investment was like many others, namely by reading books, meeting and talking with seasoned investors and attending seminars, which he admitted was, “rather expensive given my low starting salary.” Undeterred by prices of classes and seminars regarding property investment he held on to the belief of ‘delayed gratification’ in order to obtain financial health. “To me, having a partner who understands and have similar goals is very important. My wife has always been supportive even back when I was still in university; from my days of minimal savings to now, when we are able to reap the benefits of our investment. She leaves the decision making to me and trusts that I will grow our capital,” he says. “I am always looking forward to improving and learning from people who are doing better than me. One of the most important things I learned is to stay humble and keep learning, and your net worth will follow. No matter how successful you have www.propertyinsight.com.my JULY 2016 I 55


INVESTOR NEXT DOOR fresh graduate. Despite facing what seems to be an insurmountable challenge, Dr Tan is a strong believer in the law of attraction and the saying ‘seek and you shall find’. It was then that he and his wife got a lucky break as they were commissioned for a translation job in Thailand, and the payment was almost enough to cover the amount required. So he topped up the remaining sum and proceeded to make his first purchase. As a veterinarian, his work involves making calculated decisions based on existing theories. He soon discovered that when it comes to the property market and how it operates, this is not always the case. “You need to be able to think creatively to solve your dilemmas. There is no one fixed method when it comes to purchasing properties. Earn sufficient income first so that your loans will be more easily approved. Then start networking with likeminded people, who knows, this might lead you to a joint venture that will enable you to continuously build your portfolio,” he says. To Dr Tan, beginners should start small and work their way up. His property purchases began with high-rise residential units before moving on to landed residential property. He is currently in the midst of scouting for the right commercial properties. “If you sense a good deal, then take action in one to two months. During times when there is a lot of property speculation, take between six to 12 months before making the final decision,” he adds. “There are no fixed rules as long as the purchase makes sense to you. Cashing out should never be about spending the money, instead you should use it to grow the number of properties you have or to pay for a more expensive property,” he adds. PLANNING AND EXECUTION Dr Tan focuses on several areas he is familiar with instead of looking at the entire Klang Valley. He believes that by zooming in on a specific type of property or residential area, the property agents he works with can help keep a close eye on deals or unit sales. He points out, “By inspecting the area and thoroughly doing your homework, you would be able to strike the best deal in town and sell at the best price to obtain 56 I JULY 2016 www.propertyinsight.com.my

maximum profit. Personally, I just aim for a reasonable return as I believe any profit is still good money thus I am not overly concern about getting the best deals.” “Currently, it appears to be a buyer’s market as negotiations are more possible now compared to a few years back. I’m taking my time to view and analyse the units available, with commercial shop lots as my target purchase this year,” he elaborates, adding that one should take the time to study the market and practice one’s negotiation skills. His property investment skills have even come in handy with his current employment. Thanks to his scouting skills, the management were able to expand and open several new branches. With his detailed analysis of certain residential areas, he was able to identify commercial areas with good population catchment and decide where the clinic should be setup. Dr Tan urges those who want to venture into property investment to make the decision to commit and follow through with their plans. More importantly, they should set goals and keep track of it constantly to stay ahead in the game. DOCTOR’S TIP 1. Build your value and income – there are ways to do zero money down, grow your investment capital and secure loans. You still need to focus on building your worth and generating a higher income in order to give you the ability and guts to invest in property. 2. Choose to believe and take action – all things will start off difficult, choose to believe that you can do it and take action. Begin within your comfort zone to start getting accustomed to the property market; start with properties below RM100,000 before progressing to properties ranging between RM100,000 and RM500,000, and then to properties priced RM500,000 above. This would give you necessary experience and confidence to tackle bigger opportunity. 3. Be prepared for the worse and hope for the best – the reason why I build my income first is to give myself room to manoeuvre in worse case scenarios. Now I have the confidence to purchase any property and deal with any stumbling blocks such as not

being able to secure a tenant or hard to sell properties. No investment is worth sleepless nights, so keep that in mind before taking any action.

There are no fixed rules as long as the purchase makes sense to you. Cashing out should never be about spending the money, instead you should use to grow the number of properties you have or to pay for a more expensive property” - Evan Tan Zhang Jian

PROPERTY INVESTMENT PROPERTY 1 Location

USJ

Property type

Apartment

Purchase value (2009)

RM130,000

Market value (2016) RM320,000 Price psf

RM145

Rental per month

RM1,100

Rental yield

10.1%

Loan margin

90%

Loan tenure

30 Years

PROPERTY 2 Location

Seri Kembangan

Property type

Condominium

Purchase value 2010)

RM220,000

Market value (2016)

RM450,000

Price psf

RM200

Rental per month

RM1800

Rental yield

9.8%

Loan margin

90%

Loan tenure

30 Years


REHDA INSTITUTE

2016 CEO SERIES Be inspired by the best on 18 Aug 2016 To attend, log on to

www.rehdainstitute.com/ceo2016

INSTITUTE


ROOKIE INVESTOR

A TALE OF PERSEVERANCE His path had always been difficult, with all his businesses closing down, but the will to achieve something to call his own drove him towards success BY: NATASHA GIDEON

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I

t’s always inspiring to see people who once fell but got back up again finally succeed, especially those who live by the saying, “fall 7 times, and get back up 8.” Redzuan Effendy was working as a quality engineer for three years before he decided to pursue his passion in life – property investing. His journey up until this day, is still filled with surprises, but these roadblocks are not slowing him down. From losing money to making money, this is a story for the underdogs. After quitting his job as a quality engineer, he spent a lot of money and time attending one seminar after another trying to learn from those who paved the way before him. At the same time, he was running his own business supplying laptops, but found himself at a loss. At one point, he decided to open his own car repair workshop with a partner, but was unfortunately cheated of RM40,000 by the same partner he entrusted. A large chunk of that investment consisted of savings for his wedding, which understandably created additional stress for him. Although it was an expensive lesson, he was determined not to give up. One day he picked up a Robert Kiyosaki book, and thus began his journey into what would be his passion. Two years ago, Redzuan came across Faizul Ridzuan’s book WTF 23 Properties Before 30’ and started attending his property seminars. He wasn’t sure how to get started, and requested for a one on one session with Faizul. Now Redzuan works for his mentor. Although he is soft spoken, when he speaks, you can hear the dedication and the determination to succeed. His path had been a difficult one, with all his businesses closing down, but the will to achieve something to call his own drove him towards success. “If you want to achieve something, you have to go get it, no matter how. To each his own.” His family members were not so supportive of him investing in property as a result of past business failures. “At one point, things started to look up, and they (family and spouse) finally saw what I saw, that this was the one thing that would work for me, and they were supportive once they understood that.” A couple of years back, Redzuan tried to apply for a loan to purchase a house in Johor Bahru. The loan was rejected due to

some technical problems with his PTPTN loan, a loan he never received. “I studied in Unisel for less than a semester and applied for a PTPTN loan, but I never got it when I moved institutions, so my CCRIS had the PTPTN loan stated as never paid for. That issue took six months to resolve before I could take any further action.” “My first purchase however is not the Johor Bahru house. I recently bought a house, sub-sale in Cheras. It is a great feeling being able to finally own a property.

Especially when you sign the S&P a week before your wife is due with your first child,” he beamed proudly. Redzuan intends to rent out the house in Cheras he recently bought, and to convert the Johor Bahru unit into Airbnb when he buys it. “I do a bit of Airbnb here and there in Kuala Lumpur, but these are not my own units. It’s a good business if you know how to please the demographic you are targeting, but it’s also quite competitive,” he pointed out.

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ROOKIE INVESTOR He targets expatriates, people on business trips as well as those on holidays as his Airbnb units are all located in the city centre within a 10km radius from KLCC. He started the business three months ago, and now manages five units and does everything from A to Z. “I do the cleaning, the finances, the accounts, handling the responses, the whole works,” he said. When asked about the difference between Airbnb and renting out the units the traditional way, he explained that Airbnb units need to look pretty and suit the customers’ appetite. He said, “There is a large pool of suppliers who may offer the same service, so you have to be different and know how to attract your audience.” When looking for properties, Redzuan relies on data and also gut feeling. “It’s about getting the right information, check for the increase in price from a few years back, and also look for a couple of boosters to enhance the value of your property,” he advised. In order to get to know an area well, he

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goes to the area personally and spend time checking out the vicinity. He does this for all the prospective properties he intends to invest in. “If you want it bad, you have to go all in, do whatever it takes and just go get it.” “The problem with my peers, and people of my generation is their lack of awareness, and the lack of trust in the industry. Among my friends, no one has any confidence in the industry. When I talk about investing in property, I can feel that they are hesitant,” he stated. Redzuan advises those who want to venture into property investing to just do it, and never give up. “Read up more on the market, do your research, everyone will tell you that but you must do it. If you have the money, go to well-known seminars that have proven results and a good track record, it really helps,” he pointed out. The budding investor aims to buy two houses per year from now onwards and to do Airbnb for his own units. Although he had a rocky start, i.e. being cheated of his savings for his wedding, he has since

At one point things started to look up, and they (family and spouse) finally saw what I saw, that this was the one thing that would work for me, and they were supportive once they understood that.” - Redzuan Effendy progressed to become a manager of a few Airbnb’s in Kuala Lumpur and buying his very own property. For Redzuan, when there’s a will there’s certainly a way.


INDUSTRY INSIGHT

FAST LANE TO SUCCESS From a single-office entity to an international corporation, Chester Properties is on par with the big players in just a short period LBY: NATASHA GIDEON

W

ith an impressive portfolio to back him, Dato’ Howard Chew has been expanding his business at a tremendous rate and enjoying success at a young age. Within a short amount of time from when Chester Properties Sdn

Bhd started as a single-office entity in Kota Damansara, the business grew to include branches in Solaris Dutamas, Damansara Perdana and even Johor. The company has also achieved international expansion to South Korea, China and Hong Kong.

It all started 10 years ago. Chew had only been a property agent for a year before he founded Chester Properties. One year later, the company opened its second branch in Sri Hartamas. Today, the company has 13 branches throughout the country with

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INDUSTRY INSIGHT

It’s difficult coming from a single office in Kota Damansara with no brand to expanding internationally in a short time. No one knew who we were when we started so that was quite a challenge but eventually, the expansion helped in 2009,” - Dato’ Howard Chew

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1,000 professionally trained staff under its payroll. Taking the big step to expand globally to countries like South Korea, China and Hong Kong has put Chester Properties on par with all the other big players. “We faced many challenges on our journey, starting from a single office in Kota Damansara to expanding internationally in a short time. No one knew who we were when we started. That changed when we began expanding the business in 2009,” he explains. Things started looking up three years later once the company had established its reputation. Setting up an office in Hong Kong at the time, was a strategic move as it went a long way towards encouraging the investors there to invest in Malaysia. “Back then, their impression of the Malaysian property market was a positive one,” he points out. The company targeted investors in Hong Kong and Shenzhen aggressively as the buyers’ sentiment was the country had good infrastructure as a developing nation, and its properties were competitively priced. “In our business, generally the biggest challenge is adapting to each customer, and their wants and needs. Different people behave differently and they obviously want different things, which is why we take the training of our agents very seriously as we take our customers seriously.” While building his business empire, Chew’s fondest moment throughout his experience in Chester Properties was in 2008 when they did a bulk purchase and had 10 units left to sell, with each unit costing RM600,000. “If we couldn’t sell off the 10 units, we would have to bear the cost of the unsold units, which would have amounted to a total of RM6 million. We had no idea what to do at that time as we obviously did not have that amount in hand. In the end though, we managed to sell off all the units, which is why this has so far been my most memorable experience,” he says. To get where he is today, Chew makes sure his staff knows the ins and outs of each and every project. “We provide them all the information that they would need, from A to Z, so they are equipped with information that the customer wants to know and we train them so they know how to identify the customer’s needs and how to handle them professionally,” he says. If you are looking for an agent for your personal property investment endeavours,


Chew suggests studying the background of the agency before engaging them as there are a huge number of up and coming agencies in the market nowadays. “They are responsible for providing you with the best ideas, so you need to select agents who are reputable and do so wisely for your personal benefit,” he advises. To be a great agent, one must know how to interact with the customers, according to Chew. “If you don’t know how to communicate well, the transaction will not go through. You have to exude confidence when dealing with clients. They are entrusting you with their investment decisions, you need to at least be able to converse well and grab their attention,” he says. Property agents also need to have an aggressive spirit, to be ruthless and go all out. “It’s quite simple really. Don’t be shy, talk to your clients well, be aggressive and show them that you are passionate about their interests,” he advises. LOOKING AHEAD So what is in store for Chester Properties in the next few years? “We want to be known as the agency that aggressively buys in

bulk. At the moment, that is our strength, so we want that to be our stronghold,” Chew says with conviction. “In five years, we hope to be public listed as that would mean a great deal to us,” he adds. Chester Properties is already in the million-dollar club generating annual profits of more than RM1 billion a year. “This year, we aim to hit the RM5 billion mark,” Chew says with enthusiasm. Profits aside, Chester Properties is also active in carrying out its Corporate Social Responsibility (CSR). Since April 2010, 1% of their home sales commission is donated to various charities and organisations every month. These range from animal shelters to old folks homes. Back to the Malaysian property market, Chew points out that the problem lies in the number of people in the buying age group. “We have a small population with huge land banks in this country. The prices of investment properties are high and these will soon become harder to rent out let alone sell. We need to increase the awareness of property investment as well as the inherent need to buy homes,” he says. Being an investor himself, having owned 30 properties by the age of 30, Chew believes

that in order to be successful in property investment, one has to choose the right property for oneself, and not for others. “If you hear someone say a particular property is good, don’t take their word for it. It is your money and not theirs. Do a proper survey, and then do more research on the area before deciding,” he says. If it is for own stay, a buyer should first be comfortable with the area. Other factors to consider would be modes of transportation that are available, and whether it make sense to drive to work from that location. If you are looking to invest, make the necessary calculations before taking a calculated risk. He asks, “Do you have an emergency fund if you can’t find a tenant? Set aside some cash so you will be able to pay for the instalments, and if so, how long can you sustain without a tenant?” Going forward, Chew is moving on to bigger things. Having won awards like ‘Outstanding Real Estate Agency of the Year’ – Titanium from iProperty, Chester Properties is set for more achievements under his leadership.

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OF SPACES AND PASSIONS

Exploring interior design with PDI Design & Associates BY: FARA AISYAH FIRDAUS PETIAL

IDEAL IDEAS FOR

AIDILFITRI! BYLINE: NATASHA GIDEON

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W

ith Hari Raya Aidilfitri just around the corner, we’ve compiled some tips and tricks from several talented and renowned experts on how to decorate your homes and living spaces this festive season. From maximising minimal space to adding some zest to your home this festive season, read on to see what these specialists have in store this Raya. HELLO DEER The Hello Deer family specialises in simple and minimalistic decor that act as centrepieces in your living space. The name may seem familiar as they are one of the pioneers in organising party spaces and themed birthday parties in Kuala Lumpur. They have some quirky and fun ideas to consider if you’re looking at changing the mood of a room. One of their signature pieces for this season is the ‘Happy Night Light’, which doubles up as a piece of art as well as a night light. You can also perk up your bare wall and living space with their ‘Light Stuff’ to give your room an instant visual interest. Plus, it’s lovely to look at whether it’s turned on or off. Decorate any area with a Mexican garland

to enhance the festive mood. Whether you are entertaining your guests in the dining area or the living room, colourful garlands on a bare wall can give the area more dimension. You can also opt for ‘Stick Em Up’, simple and discreet wall stickers that add colour to your wall for those who prefer a subtler decor this Aidilfitri. Hello Deer also has beautifully designed cutlery and cake stands. So why stop at only furniture? Add that rustic, traditional feel to your presentation of kuih muih with a classy 2-tier ceramic cake stand.

JOY DESIGN STUDIO Joy Design Studio is a home-grown brand that supplies joy-inducing mid-century to contemporary as well as minimal furniture pieces. Determined to deliver a better living

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experience, the studio’s pieces are what you need to make your home a liveable space. They share useful tips on how to add that festive spice to your home this Aidilfitri. 1. Use varying textures – When decorating big spaces, it is okay to mix textures but make sure to keep them within the same tonal family. Mixing too many materials or textures will look excessive. Keep it simple but stylish. 2. Choose a theme – Choose a design or theme you love, and stick to it. 3. Pick a dominant colour – When decorating a room, divide colours into percentages; 60% of a dominant colour, 30% of a secondary colour and 10% of an accent colour. For example, if your sofa is green, use the same green for the cushions and artwork. 4. Create a white base – If your walls, ceilings and floors are all white, the effect is strangely calming, and it makes your home feel bigger. Plus, a white base allows for you to change the décor each season, since you won’t have to worry about coordinating your new pieces with the colour of your walls. 5. Add a wood element – In a white and neutral space, natural materials will make the room warm and cosy. Consider cotton or wool for the couch; faux fur, ceramics and, of course, wood for the furniture and floor. 6. Mix ‘n’ match – A mix of furniture pieces can co-exist peacefully in a single room, giving the space a unique, fresh and uncommon look. The trick is to keep to a similar-but-not-exact wood finishing match.

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IKEA Malaysia’s favourite store for well-designed home furnishings and functional living solutions, IKEA has never let us down with their affordable solutions to every household problem. This Aidilfitri, they shed some light on festive furnishings. Firstly, create a classy dining setting with beautiful silverware from the limited edition DOFTRIK range, a blend of TurkishMoroccan artistic elements and modern Swedish interior design concept. This series of ornate silverware complements the Raya celebrations and is sure to make festive favourites even more appealing. Cooking a great meal for family and friends is a celebration in itself. Having the right equipment means that you can involve more people in the cooking process and make it a social activity. Keep your kitchen up to date with functional, beautiful and affordable cookware from the IKEA 365+ range. Create the right ambience for your guests by simply adding printed tea towels and coasters to your serving area. Worried about not having enough space for everyone? Make room for everyone with foldable chairs and tables which can extend outward to create more surface area. The best part? These tables and chairs can stow away with ease and take up less space once the festivities are done. The giving of duit raya has become a tradition here in Malaysia. These traditionally green packets now come in a variety of colours and designs, and can be used for more than just holding money. With a little imagination, you can also use them as decorations.

For this festive season, a lot of eating and tending to guests will be involved. The more important spaces would be the living as well as the dining area. Create a personal place setting using fabric covered placemats. All you need is a little glue and some imagination. If you are going for something more elaborate, or even if it is just a nice dinner at home, add some patterned napkins. The usual checklist for Aidilfitri is usually new clothes, delicious ‘kuih’ and new curtains. Ready-made eyelet curtains are easy to hang and even easier to change with the seasons. They will spruce up any room in your home and are readily affordable. You can even match them with

your cushions. For a lovely garden-like setting, create a beautiful decor piece using faux flowers glued to a deco foam ball. You can even make ones that look like ketupat. Don’t limit yourself to just the outdoors. Bring the outdoors in with faux flowers. They are an easy and inexpensive way to keep your home looking fresh and festive all year round. Want a subtle hint of colour without splurging on a floral sofa or overly patterned furniture? Create a simple fabric garland using leftover fabrics and some string. No sewing machine necessary. You can make several and hang them all around your home.

SPOTLIGHT Our friends at Spotlight gave us some really easy to-do tips on decorating, not only for the festive season, but for an all year-round of simple, affordable yet chic ideas for any household. Throw out that old rulebook you have been living by. A plain sofa can be the centre of attention with a few throw pillows. Instantly update your living area by covering your existing cushions with beautiful new decorator fabric. Go bold, mix rather than match your pillows. For an exclusive feel, use two pairs of cushions, in contrasting patterns, colours and textures.

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DESTINATION - RETREAT

MELAKA’S CONTEMPORARY CHIC HOTEL A different setting against the historical backdrop of Melaka BY: AVINASH SAGRAN

IMAGE COURTESY: THE STRAITS HOTEL & SUITES MELAKA

T

he historical city of Melaka is often the destination of choice for many Malaysians who are in search of a staycation. Its rustic colonial charm coupled with its variety of gastronomic delights has made it one of the must visit locations for tourists visiting the country. The cultural landscape, set against the unique culture of Baba Nyonya and Peranakan, makes every trip memorable as staycationers often discover something new each time. A weekend in Melaka would not be complete without wandering the night market at Jonker Walk, a highlight in anyone’s trip to the city. All the shopping, sightseeing, ‘snapchatting’, ‘instagraming’ and food hunting in one day however would probably take a toll on your body. In order to recuperate and repeat the cycle the next day, you need a good place to recharge. An ideal way to unwind during your stay might include taking a dip by the infinity pool whilst enjoying a panoramic view of Melaka city centre. However, trendy boutique hotels are often booked well in advance and would probably burn a hole in your pocket. CHIC CONTEMPORARY HOTEL The Straits Hotel & Suites, managed by Topotels, offers a magnificent view and a comfortable stay during your vacation to the city. Conveniently located in the heart of Melaka city, the hotel is within walking distance to Dataran Pahlawan Megamall and Mahkota Parade. As a frequent staycationer, I tend have a list of criteria when it comes to spending the night at a hotel. For me, a contemporary design against the cultural backdrop of Melaka city sets the hotel apart from the

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DESTINATION - INTERNATIONAL INVESTMENTS other hotels within the vicinity. The suites feature apartment style living and is fitted with kitchen top and cabinets. The modern finishing in the spacious bathroom with standing rain showers echoes the entire design scheme of the room. WHAT I HAVE TO SAY Upon arrival, the friendly hotel staff greeted me cheerily, which set the tone for the remainder of my stay. I did, however, find it a little bizarre that a 23-storey hotel is serviced by only three lifts, which meant longer waiting times and crowded lifts especially during peak hour. In my opinion, the one thing that stands out about the hotel was the amazingly comfortable bed. Since everything in Malacca is best explored by foot, the bed is definitely inviting and provides you with the chance to rest and relax. On the downside, the lighting could be brighter in the bathroom. In addition, some rooms do not have the best of views, so do try to request for rooms that face the town. Rudi Putra, the general manager of the hotel, says, “The Straits Hotel and Suites Concept provides a conducive setting for families or those who needs a home away from home. We have three types of rooms, namely Deluxe Suites, Straits Suites & Premier Suites, to satisfy all types of customers.” The signature infinity pool located on the 23rd floor is a good place to unwind. For me, a morning swim was a relaxing way to recuperate from the night before and a good way to start my day. I even got a little reading done while I was there. On Fridays and Saturdays, the hotel hosts a BBQ dinner at the poolside from 7pm to 10pm. If the spread does not satisfy you, fret not, you can choose to indulge at the numerous food escapades in Melaka. After all, the famous chicken rice ball restaurant is just a minute’s walk away. 4/5 RATING For an affordable and comfortable stay, The Straits Hotel & Suites is a good choice. The spacious setting provides adequate room for families to have a relaxing vacation without fighting for space. When you are done exploring Melaka, the contemporary living concept hotel would be a welcoming stay for a good night’s sleep. www.propertyinsight.com.my JULY 2016 I 69


CONTRIBUTOR

B

ased on digital intelligence by PropertyGuru, the Face Platinum Suites tops the list as being the top rented condo in Malaysia. Four of the highly rented high-rise residences are located in Kuala Lumpur. Meanwhile, five top rented condos’ are located in

Johor. Besides KL and Johor, there’s one condo in Penang, Quayside, which manages to enter the list as well.

There are several factors which determine why certain developments are the preferred choices for rental. Among them are: • Location

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• Facilities

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• Accessibility

• Rental rates


AT THE MOMENT, THE TOP RENTED CONDOS IN MALAYSIA ARE: 1. FACE PLATINUM SUITES Face Platinum Suites is an elegant high-rise residence situated in Kuala Lumpur, which is located just minutes away from KLCC. Highly preferred due to its strategic location in the city centre, this 51-storey building consists 733 units in total. 2. TWIN GALAXY RESIDENCES Developed by Golden Oriental Realty, this residence in Johor consists of two 35-storey towers with a total of 668 units. Located within a short stroll from a myriad of amenities, the Danga City Mall KTM Station is located merely walking distance away. 3. TROPEZ RESIDENCES This is a freehold luxury condominium project, which consists of two 38-storey towers and a 28-storey tower. Consisting a total of 1,149 units. this residence is located in Danga Bay, an upcoming township in Johor, which has easy accessibility Singapore. 4. PALAZIO Palazio is a high-density development in Johor, which offers a total of 6 blocks. Developed by Mayland Austin, this residence is strategically located nearby many amenities; and it takes about 30 minutes to reach Johor CIQ. 5. GREENFIELD REGENCY Located in Johor, this freehold condominium consists of 2 towers with a total of 561 units. This residence is located 30 minutes drive sway from the Johor CIQ, which links to Singapore. 6. QUAYSIDE Quayside is a serene seafront resort condominium development located in the popular tourist haven of Tanjung Tokong. This residence comes with a myriad of facilities which includes a waterpark, 7 acres of landscaped gardens and an open park. 7. ST MARY RESIDENCES St Mary Residences is a new serviced apartment development located in the popular hotspot in Kuala Lumpur adjacent to the famous Petronas Twin Towers. The development consists of three 28-storey apartments that house 457 residential units. 8. THE ELEMENTS The Elements is a high-rise luxury condominium located in the vicinity of Ampang Hilir in Kuala Lumpur. The condo comprises of 1,040 residential units and highly accessible via several highways and LRT stations. 9. REGALIA The Regalia is a freehold serviced residence located in Kuala Lumpur. This residence is situated within the KL city centre and is a few minutes from the Putra World Trade Centre (PWTC). There are commuter stations and LRT station within a short walking distance. 10. NUSA HEIGHTS This property comprises of 5 blocks which house a total of 910 units of service apartments. Nusa Heights is located just minutes away from several country clubs, Educity and Legoland.

This article is contributed by PropertyGuru.com.my, Malaysia’s leading property site

www.propertyinsight.com.my JULY 2016 I 71


FINANCE

FINANCIAL PLANNING INSIGHTS INTO PROPERTY INVESTMENT

D

uring a dinner session with friends recently, I kept hearing sighs about how they were unable to rent out their investment condominiums. At the time of purchase, those units were located in hot areas and were quickly snapped up for its rental yield. However, with the current economic situation, some of them are facing tenants who delay payment or are unable to get new tenants when the existing one leaves. This leads to the situation where the secondary market and the property auction list starts to grow. In fact, there is a growing list of Bandar Utama double-storey link houses up for sale. Once upon a time, the moment one is available, it is quickly snapped up and will

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rarely make it to the For Sale list. The next challenge property investors face is the repair bill when a tenant leaves. You need to spruce up your place to attract new tenants. Another major challenge is the tenant’s deposits that you hold on to. Nowadays, tenants will happily contra their deposit with their rental whether you like it or not. Chances are, after they have left, you will find areas that need repairs which the tenant conveniently forgot to inform you before leaving. Another nightmare is the tenant who turns into a freeloader citing bad times for not paying their rent. You must get them out after the stipulated period in the contract to avoid potential sabotage from your angry

freeloader. A model tenant is undeniably a blessing, but they are a rare breed. FINANCIAL PLANNING STRATEGIES OF PROPERTY INVESTMENT Many property experts out there would have shared with you where, when, how and which are the valued properties to invest in. To complement all these knowledge, the Financial Planning Association of Malaysia is providing insights from a personal financial planning angle. This is a reflective piece in view of the above scenario being played out with each economic turbulence over the years. Here are some ideas on how you can invest in properties and survive during tough times. First and foremost, property experts


will continually stress on the importance of location, so this is a given. On the personal finance side, the investor must keep enough cash reserves to cover the instalments in case you are unable to rent out your property. This cash reserve should come from emergency money that you put aside, which should amount to 3-6 months of your expenses. Your emergency money must either be in the form of fixed deposit or a vehicle which is liquid. Tying up your emergency money in shares or an equity fund is not a good idea as, during economic turbulence, these may drop in price or it may be hard to dispose of to raise the cash you need. When you are collecting rent, remember to set aside a portion of your rental, aka sinking fund, towards: 1. Repairs and repainting for when your tenant leaves 2. Advertisement for new tenant 3. Annual payments for quit rent, assessment and house owner insurance This is a separate sum from the emergency money, which is to pay for instalment whilst you find another tenant or find a buyer to purchase your property. Last but not least, for those who have been saving their money and think that this is an opportune time to pick up bargain properties, do a quick calculation of your income and expenses to make sure that you have enough savings to fall back on before you plonk your hard-earned money in an investment property. Having the down payment alone is not

good enough, especially if you are solely responsible for all the finances and do not have a spouse or parent to fall back on for financial help should it arise. You must factor in the following cost of acquisition in terms of fees and payments: 1. Lawyer and agent’s fees 2. Bank loan agreement 3. Insurance premium 4. Renovation and furnishing 5. Stamp duty

6. Goods & Services Tax 7. Property valuation fee to determine your eligible loan amount by the bank This is a ‘no-brainer’. If it looks like you cannot afford it, chances are you are right, as you know yourself better. Hold back, save some more before you commit and settle for one that is within your budget. Don’t stretch your purchase price now unless you want to be financially stretched later.

IN A NUTSHELL NO

TYPE OF RESERVES/SAVINGS

PURPOSE

1

Emergency savings (3-6 months of your expenses)

Pay instalment when you have no tenant or lawyer fees to get non-paying tenant out

2

Sinking fund

Pay for repairs, advertisement and property upgrade when your tenant leaves

2

Savings for down payment (2x amount of down payment)

For new investment properties, remember to include your acquisition cost

I wish you every success in your property investment.

ABOUT THE CONTRIBUTOR Linnet Lee is the CEO of Financial Planning Association of Malaysia (FPAM). She obtained her Certified Financial Planning (CFP) Certification and Islamic Financial Planning (IFP) Certification through FPAM and has been its member since 2002. She can be contacted at www.fpam.org.my

www.propertyinsight.com.my JULY 2016 I 73


LEGAL

JOINT PURCHASE ON PROPERTIES

– THE CHALLENGES J

oint ownership of properties, as a result of joint purchase between two or more individuals is very common in this day and age. The purchase of property is jointly done among spouses, family members, business associates and friends. The reasons for the joint purchase of properties varies depending on circumstances. Some agree on this to obtain a higher loan margin while some do it with the intention of wanting to invest together. However, joint ownership of properties may limit your rights or options, not only while you own the property, but also when you intend to do a transfer of ownership. Let’s examine the nature and challenges involved in joint property purchases. Most disputes in this area occur between unmarried cohabitees, but such disputes can also arise between family members, friends or business partners who purchase properties together. What is important here is the understanding of joint purchasers. Before entering into any joint purchasing, the parties involved should always have a common understanding about the property and the agreement that binds them together. They will need to look into the tenure of agreement, whether it for short-term or long-term yield, roles or contributions by the relevant joint-purchasers in areas related to the payment of quit rent, assessment, mortgage loans and more. These issues should always be ironed out or addressed prior to the joint-purchase of any property. This may avoid disputes in cases of death, breakdown of a relationship or when it comes to the sale of the said property. Section 342(1) of the National Land

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Code 1965 provides that the shares of joint-purchasers are deemed equal unless different proportions are specified in the memorial of registration. Hence, unless an agreement has been drawn up to reflect the relevant share proportions held by different jointpurchasers, all joint purchasers are deemed to own an equal share to a property. As such, in an event when share proportions are unequal, joint-purchasers should always reflect the same in an agreement to avoid unnecessary misunderstandings.

Another issue to consider is in the event of the death of any of the joint-purchasers. The share which the deceased holds shall be distributed in accordance with the laws of intestacy. In the event the surviving joint-purchaser decides to sell the property, a court order would need to be obtained by the relevant beneficiaries prior to the sale of such property. This would entail some costs and time, and not forgetting convincing the relevant beneficiaries before a decision is made.

ABOUT THE CONTRIBUTOR Jason Tay is a partner of Tay Ibrahim & Partners, Advocates & Solicitors. He is actively involved in the real estate industry. He can be reached via jasontay@tippj.com


STRATEGY

THE WAITING GAME IS BEST PLAYED AFTER WE OWN SOMETHING

I

bought my first property in 2002, a 700 sqft apartment in Relau, Penang. Three years later, I bought a 1,258 sqft condominium. When my friend, a senior manager working for a multinational company heard about it, he advised me to be careful. The next crisis is just around the corner. A financial crisis is predicted every 10 to 12 years. The last one was in 1997 and he read many predictions that it would happen in 2008. He was right, it did happen and for a while everything seemed negative. However, both my properties did well even during the crisis. I believe the reason was because I bought the properties at a very low price, compared to many other more popular projects or areas. In brief, buying objectively saved my investments, not the timing. Anyway, the crisis did not last long and when it was over, the world started growing again. There was a property boom in Malaysia, and both prices and the number of transactions started rising. However, the increase in prices became too fast for comfort. As a result, cooling measures had to be implemented. One day when I met the same friend for dinner in 2010, he told me about his prediction again. He said Penang’s property market was getting way too hot. People were queuing to buy properties like buying fish. He decided to only enter the market when the market drops significantly. In 2010, the typical prices for my 1,258 sqft condominium was around RM500,000. In other words, it was less than RM400 per sqft. I told him that I believe RM400 per sqft is a safe level and he should just buy one unit and wait it out. Anyway, I had sold my condominium two years before that at RM645,000.

Today, my 1,258 sqft condominium would have fetched between RM600,000 and RM630,000. Even at RM645,000, that would only come up to RM512 per sqft, a level I considered normal. Even though that is not cheap, it definitely was not as expensive as some of the more popular areas in Penang. My friend earns much more than me, but he has been staying in the same 700 sqft apartment all this time because he was waiting for the best time to enter and buy. In total, he has waited for over 10 years. I am very sure he has been saving money and investing it elsewhere where it is safer. Have you ever wondered when is the best time to buy? Personally, I believe the best time to buy is when we are financially ready and have viewed enough units to be objective. How about the second property? For me, it is the same answer. It is when we have enough down payment for the second unit and we have viewed enough units to be objective. The first property can be rented out fully furnished and the rental would be enough to cover your mortgage payments which would have remained more or less the same every month. Buying the second property would signal the start of our journey into property investment. After speaking to many fellow property investors, I have four general conclusions for those who intend to invest instead of speculate.

1. The best time to buy depends on us. (When we are ready financially.) 2. The second best time to buy was 20 years ago. The best time is now. (In other words, when we are ready financially.) 3. If there are people who are able to predict when the crisis would come, they would already be so rich that they have no time to predict. I do not know of any economist who has been right in every prediction. (If you know of any, please tell me. I will follow him closely.) 4. Buying (the right property) and waiting is better than to wait and buy (when the price drops tremendously.) Assuming we want to buy when the price dropped a lot, do we have a target price? If the answer is, ‘It depends’, then I wish you all the best. Fellow investors who are still reading this article, I think it is time we start viewing more units in different areas. It is also time to start reading more property news. We can always declare our intention to buy at a later date, say in the next two years. However, it would be foolish to only start reading property investment news a few days before we buy. By the way, if we bought the wrong property, it does not matter when we bought it. It is still a wrong buy and that would set us back many years. Happy investing.

ABOUT THE CONTRIBUTOR Charles Tan is the founder and principal writer of kopiandproperty.com, where he blogs about his personal views on the property market. He is also a regular contributor to several property related publications in Malaysia.

www.propertyinsight.com.my JULY 2016 I 75


STRATEGY

2016 - A GOOD TIME TO BUY PROPERTY?

W

henever the subject of property is brought up in a conversation, inevitably one of the discussion topics would be whether this is a good time to buy property. The answers we get are as varied as day and night and everything in between. WHAT ABOUT NOW? There are many naysayers who point out that it is not a good time to invest in properties. Others are saying that the market is on the way down and had not reached the bottom

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yet. Still others are saying that we should be saving our money for a rainy day. However, in order to make money, we need to be contrarian thinkers. It is at times such as these that we are able to buy properties at a huge discount and disposing them later when prices recover. We had often heard of people lamenting that they should have bought an investment property during the economic crisis of 1997/1998. Well, today’s market situation is not very different from the economic situation then. If we speak to real estate agents today, we

will hear that there are not many property purchase activities. Many real estate agents are relying on commission mainly from the rental of properties instead of the selling of properties. Data is suggesting that the percentage of housing loan application approval by the financial sector had fallen as well. Therefore, it should not come as a surprise that there is not much property buying activities in the market. Or to be specific, there are people who want to buy properties but they are not able to close the deal due to their inability


to secure financing. Due to this phenomenon, it has become a buyer’s market. This means that in a price negotiation, all the cards (aka power) reside with the buyer. Depending on the seller’s situation, the buyer is able to dictate the selling price and even the condition of the sale. In a hot property market, however, it would be a seller’s market where, in the negotiation process, the seller holds the power. As in any market, there will always be people who really need to dispose their property for a number of reasons. It could be due to the need for cash for their business purposes or it could be because the owner had bought another property to upgrade or downgrade and they desperately need to dispose off the property. It could also be because the owner is migrating to another part of the country or even to another country. Or it could be some unfortunate events such as divorce or death. Due to the current market condition, it is even more difficult for these property owners to sell their property. As such, if your negotiation skills are finely honed, you would be able to buy the property at a huge discount. If you are intending to buy new properties instead, there is no better time than now to do it. In the heyday of the early 2010s, it was so tough to buy properties, even from property developers. Some had to queue overnight in their sleeping bags outside of the offices of property developers in the hope of buying a property of their choice. Some had to go through a balloting process just to buy a property costing hundreds of thousands of ringgit. The situation today however is rather different. Today, we see many property developers offering some form of discount or even giving free electrical appliances such air conditioners, televisions, etc. Some developers are offering free kitchen cabinets. It is not often that we are faced with such a fantastic opportunity to buy new properties. The other plus point in buying new properties now is that property developers would only be handing the property to you in 36 months (strata-titled property) or 24 months (landed property). Surely, the economy would have recovered by then

and you will be in for a handsome profit if you decide to sell when you get the keys to your new property. However, if you insist on buying a ready built, new property right now, there are property developers who have some leftover units. Most of these units are available for sale now because the earlier purchasers were not able to close the sale due to the rejection of their loan application. Or it could be units that were originally reserved for Bumiputra only. Another huge opportunity in today’s market lies in property auction or foreclosure sales. Due to the current unfavourable market condition, many are having issues servicing their housing loan. As a result, their property had to be auctioned off. There is also another sector of the market where new properties are being foreclosed. Not too long ago, it was not uncommon to see people going to the property developers’ office and placing a booking for three to five new properties at one go. This was because developers were offering very attractive financing scheme where the buyer would only need to place a booking fee of 5% to 10%, and they would not need to pay a single sen until they get the keys to the property. This is known as Developer Interest Bearing Scheme, or DIBS in short, which was later banned in 2014. WHAT TO DO NOW? 1. Get your financial report card in order. One of the key reasons why many housing loan applications are rejected is really within our control. The main ‘financial report card’ refers to the CCRIS (Central Credit Reference Information System). In this report, which is collated by Bank Negara Malaysia, you can see all your financial activities in terms of car loans, other housing loans, personal loans and

even credit cards. Do refer to it and take steps to clear all the “black” marks in the report. 2. It would be good if you could start approaching friendly bankers who could give you an idea on how much money you can borrow from the bank. That way, you are able to focus your search for an investment property within a predetermined band of prices. 3. Start learning how to invest in properties. Discover your property investing profile and what kind of investment strategy is suitable for that profile. Learn how to evaluate a property. Most important of all, learn how to negotiate well so that you can buy a property at the prices and terms that you like. 4. This is the time to research the kind of investment property you are comfortable with, including locations. Once you have identified the types of properties you like and where they are located, identify real estate agents and property developers who are active in that location. 5. If you want to buy new properties directly from the property developer, you can either gather a group of buyers and approach the developer for a group discount, or join a property investor group to do the same. While there is such thing as an optimal time when we are able to acquire properties at a low price, the truth is, we should be buying properties all the time. This is because even in good times, when properties prices are flying through the roof, we can still buy properties at below market prices if we have great negotiation skills. The coming year is working out to be a great time to buy property. Start the process now and stop putting off this very important decision. Happy investing.

ABOUT THE CONTRIBUTOR Calvyn Laang regularly conducts property investing training to share his vision that investing in property is not only for the rich but is also for everyone. He believes that property investing is the best investment vehicle for an average wage earner to retire earlier if he/she chose to. For more information on his “Secrets to Successful Real Estate Investing” training, go to http://PropertyInsiders.com.my or WhatsApp 016-992 1800.

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STRATEGY

NO PAY ... NO STAY F

or the most part, tenants understand this essential rule; pay the rent on time in return for living in your property. However, at times, this rule can be forgotten, misunderstood or just plain ignored. Tenants who do not adhere to this rule can be a major source of frustration, anxiety and even cause the landlord to suffer sleepless nights. Many investors have lending on their property, with mortgages and loans to pay every month a large chunk of which comes from the tenant’s rental. Non-paying tenants are therefore a major issue for investors and need to be dealt with quickly and effectively. Chasing a tenant to pay their rent is one of the least welcomed part of a landlord’s job and can be one of the most stressful as well. Tenants will come up with a barrage of reasons and excuses as to why the rent has not been paid. However, a tenant who is not paying their rent is the equivalent of your boss not paying your salary. Now, when you look at it this way, how often would you be willing to go to work and not be paid your salary as agreed? Not often, I would think. So this is how you need to approach the subject of non-paying tenants; a tenant who is not paying their rent is like your employer not paying your salary. Now that you understand the importance of this rule and it is an essential rule, it is time to get tough and take action. Procedures need to be in place so that you know the instant a tenant falls behind in their rent. It doesn’t have to be anything fancy a simple note on the calendar every month will suffice. The key lies in checking that you have received the rent and, if not, taking appropriate steps to rectify the situation immediately. Allowing the rent to go unpaid for long periods of time not only sends a signal that you don’t really need the money, but it also 78 I JULY 2016 www.propertyinsight.com.my

makes it incredibly difficult for tenants to catch up and get back on track. His debt or debts can quickly spiral out of control. Remember, if your rent has gone unpaid, it is likely that the other bills the tenant is liable for may also have not been paid. This could potentially mean you are joining a queue of debtors, and you need to make sure that you are at the head of the queue. Remember to check the calendar and mark the date when rent is due. Set a reminder to check your bank account that day. If the rent has not been received, contact the tenant immediately to clarify the situation. Although everyone needs a roof over their head, tenants can sometimes forget just how vital it is to have somewhere to live. When the rent goes unpaid, you may need to remind them of it, making it clear that they must keep up with their payments if they wish to continue living in your property. This may sound harsh. However, unless you want to start your own housing charity, you’d be best advised to keep a close eye on the payments. When tenants do not pay the rent, you end up footing the bill. So, unless you can manage non-payers yourself, you will probably end up paying a solicitor to sort it out in court.

ABOUT THE CONTRIBUTOR KK Chua is the strategic advisor & managing director of Armani Media. 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


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Property Insight July 2016  

Property Insight is a monthly property investing magazine.

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