GUOCOLAND: MORE THAN JUST A TOWNSHIP EXPERT
EXPLORING CYBERJAYA, THE SILICON VALLEY OF MALAYSIA
ALL FOR ‘RUMAH SELANGORKU’ SCHEME
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hat is your ideal home? Does it have a strategic location, amenities, easy accessibility and so on? The same goes when you search for a good community to live in, which is the township you choose to settle down in. Amongst the major developers in this country, GuocoLand (Malaysia) Berhad shares their progress on being a premier developer advanced in creating great townships, plus its latest projects in Rawang and Sepang (page12). But with a new home comes finances — with Bank Negara’s recently tightened regulations, it has not been an easy road for many in getting loan approvals. Nonetheless, the Selangor state government has taken things into perspective for young families, thus the ‘Rumah Selangorku’ initiative was born (page 20). On top of that, we look to the Middle East for potential investment opportunities in the glittering capital of Abu Dhabi (page 61) along with its new terms and conditions for foreign investors. Last but not least, we are very excited for our upcoming Property Investment Summit & Expo (PRISM) event which will be taking place next month. It’s already our third year in a row, marking a very significant milestone for the Property Insight team. What’s more, we’ve just launched our very own coffee table book, Property Insight Guide to Investing 2015/2016, and we couldn’t have done it without your support. A very huge thanks and enjoy the issue!
PUBLISHER & EDITOR KK Chua email@example.com BUSINESS DEVELOPMENT Janet Loh 012-205 0911 firstname.lastname@example.org Client support email@example.com ART DIRECTOR Sarah Tan firstname.lastname@example.org FOR ENQUIRIES: email@example.com
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Although every reasonable care has been taken to ensure the accuracy of the information contained in this publication, neither the publisher, editors, writers nor employees or agents can be held liable for any errors, inaccuracies and/or omissions. The contents of this publication do not constitute investment advice. It is intended only to inform and illustrate. No reader should act on any information contained in this publication without first seeking appropriate professional advice that takes into account their personal circumstances. We shall not be responsible for any loss or damage, whether directly or indirectly, incidentally or consequently arising from or in connection with the contents of this publication and shall not accept any liability in relation thereto. The views by our contributors expressed here are their personal opinions and do not necessarily reflect Property Insight’s views. The publisher does not endorse any company, organisation, person, investment strategy or technique mentioned in this publication unless expressedly stated otherwise. The publisher does not endorse any advertisements or special advertising features in this publication, nor does the publisher endorse any advertiser(s) or their products/services unless expressedly stated to the contrary. All rights reserved. No part of this publication may be reproduced in any form or by any means, including photocopying and imaging without the prior written permission of the publisher.
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12 42 AREA FOCUS
Endless possibilities in Cyberjaya
Read on to discover future plans for the country’s growing technological hub
PERSONALITY OF THE MONTH
52 Investment success 20
Property Insight catches up with property magnate and motivational speaker Pip Stehlik for valuable investment tips
INVESTOR NEXT DOOR COVER STORY
Do it right
GuocoLand expands the empire to booming townships in Rawang and Kajang
Dream of owning properties worth more than RM10 million in just 3.5 years? Singaporean investor Gregory Low shares his journey with us
Seeing beyond Kuala Lumpur
A home for everyone
We explore the benefits of the Selangor Government’s initiative, Rumah Selangorku
The oasis in the desert
Coming in second just after Dubai, properties in the United Arab Emirates’ capital has started to show a promising future
Penang’s little gems
Combine history and culture with property investments
Managing your real estate
Benz & Carlton’s Chief Executive Officer Alaric A. Nathan shares some tips on keeping your investments in order, literally!
DEVELOPER OF THE MONTH
WiraDani Development Sdn Bhd tests the waters
Managing Director Leong Yeng Kit discusses the Company’s latest commercial offering in the heart of Ampang and Cheras — Q3@EastKL
An international success story
Having just started small in an office block located in PJ, awardwinning real estate agency Juste Land has come a long way
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NEWS & EVENT
GREAT THINGS COME IN GREAT PACKAGES What an awesome night the launch of the Property Insight Guide to Investing 2015/2016 coffee table book that was last month at Tanzini, GTower. What’s more with the presence of Kuala Lumpur’s very own Mayor, Datuk Mohd Amin Nordin Abdul Aziz, the occasion couldn’t have been more grand.
he 128-page book featured simplified analyses of 45 projects in the country, of which were indexed with residential, commercial and mixed investment portfolios that placed more emphasis on investment value rather than the physical products. On top of that, there was also a dedicated section that provided tips on securing property financing, a challenge that’s undoubtedly faced by many. “What sets us apart from other property guides is our analyses as other books merely have editorial writeups,” said Armani Media Sdn Bhd’s Managing Director, Chua Kee Kian.
6 I OCTOBER 2015 www.propertyinsight.com.my
He further added that many of the projects featured in the book were some of the latest that have been completed or nearing completion. “The participation from major key developers, namely Paramount, Titijaya, UM Land, Hatten Group and many more have made this Guide the most anticipated and value-added one for investors and home buyers in general,” mentioned Chua. On the other hand, City Hall announced that it was set to roll out discounts on development charges to spur economic activity. He also added that it was a new incentive for developers to continue developing the
city despite the slow economy. “The falling Ringgit is a good time to buy properties, so City Hall is also keen to give fast approvals for development orders,” said Datuk Mohd Amin Nordin. The Property Insight: Guide to Investing 2015/2016 coffee table book will be available at major bookstores this month at RM49.90. For more enquiries, please call +603 6156 3366.
www.propertyinsight.com.my OCTOBER 2015 I 7
NEWS & EVENT
PAVING THE WAY TO THE FUTURE
mart Cities 2015, “Transforming and Reimagining Your City” two-day talk was held from 8 -10th September 2015 at the Pullman Kuala Lumpur City Centre Hotel and Residences. Prominent speakers such as Ir. Dr. Leong Siew Mun (DBKL) and Datin Faudziah Ibrahim (KLCC Property Holdings) were also there to share their insights on smart city infrastructure. Post-conference site visits to MRT Corporation Train Depot, Sungai Buloh and Integrated Transport Information System (ITIS), concluded the event on the last day.
A NIGHT TO REMEMBER
he country’s finest developments and developers were recognised and rewarded at the South East Asia Property Awards (Malaysia) 2015 on 26th August 2015. Featuring a total of 20 awards, the black-tie awards ceremony and gala dinner was held at the JW Marriott Kuala Lumpur and attended by more than 300 influential industry leaders, VIPs and top real estate professionals. With the attendance of developers from North,
LAND & GENERAL BERHAD REMAINS BULLISH DESPITE MARKET SENTIMENTS
roperty Insight was at the Land & General Berhad (L&G) Annual General Meeting press conference last month at Sri Damansara Club. “The group’s pre-tax profit jumped 10 percent to RM192.3 million from RM174.8 million a year ago,” said Land & General Berhad Managing Director Mr. Low Gay Teck. He added that this strong performance came on the back of a consistent revenue of RM465.8 million, in comparison to RM491.9 million previously. Revenue and profits were principally derived from the property division, led by the successful completion of Elements@Ampang coupled with the sales and development of Damansara Foresta Phase 1. 8 I OCTOBER 2015 www.propertyinsight.com.my
The Group’s robust growth was reflected in the continual rise of its total and net assets. The former has grown by nearly two folds over a fiveyear period (from 2011 to 2015), while net assets grew by one and a half times over the same period, marking a growth of 35 percent.
South, Central and East Malaysia, a special award – not determined by the independent panel of judges but the editors of Property Report – namely “Malaysia’s Real Estate Personality of the Year “ was presented to Dato’ Colin Tan June Teng, Group Managing Director of the Hatten Group, one of the largest privately owned real estate development, property investment and retail management corporations in the country.
On the other hand, L&G is looking to replenish its landbank in the Klang Valley and other suitable locations as land prices become more reasonable. The Group is in the midst of acquiring a piece of land in Seksyen U10 Shah Alam near Bukit Jelutong, and is currently awaiting approvals from the relevant authorities. L&G‘s unbilled sales of RM369 million and new developments in the pipeline to-date is in excess of RM2.0 billion, which will keep the Group busy in the coming years. “We are confident that the property division will continue to expand with Astoria in Ampang in Kuala Lumpur, Damansara Foresta Phase 2 in Bandar Sri Damansara as well as Sena Parc in Senawang”, shared Low. Low also stated that the current economic situation has been very challenging for the last six months and foresees that it will be challenging for the coming 12 months.
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MORE THAN JUST A TOWNSHIP EXPERT
GuocoLand (Malaysia) Berhad shares its strife in creating comfortable and enjoyable lifestyles for its customers BY:DANIEL SIM
12 I OCTOBER 2015 www.propertyinsight.com.my
MAKING TOWNSHIPS A PERSONAL MATTER GuocoLand envisions itself to be the catalyst of growth that would ignite the interest and future development of Greater KL, particularly in areas such as Sepang and Rawang. In fact, the Company wants to be the one to set the trend and benchmark to spur other aspirational developers’ sights outside of the already-congested Kuala Lumpur and Petaling Jaya areas. “What sets us apart from the rest
in the industry is our strength and aspiration in building townships. GuocoLand currently has 10,000 acres of land banks across the country, and we are constantly on the lookout for more with good and long term strategic value.” shared GuocoLand (Malaysia) Berhad ‘s Managing Director Tan Lee Koon. But therein lies a question: what does the perfect township entail? Is it just about including public spaces like playgrounds, parks and water features into the plan? Or is it about thinking through how families would spend their leisure time? Although local market sentiments are not so favourable at the moment, GuocoLand (Malaysia) Berhad – the property arm of the Hong Leong Group – is looking at ways to add value for their customers, rather than just the usual four walls of a home. As a company that takes quality to heart, GuocoLand is always taking steps to make their idea of an ‘ ideal township ‘ a reality — one that provides a comfortable and enjoyable lifestyle in a fine location with quality environment, life and experience. These have to be constantly maintained, taken care of or upgraded when necessary. In other words, it must be self-sustainable, scalable, timeless in design and have features that are in tune with the people’s needs. To translate all of the above, promoting high interaction amongst its residents through activities as well as various usages of the land is right at the top of this developer’s to-do list. In fact, they aspire to support the local economy that eventually promotes high real estate values through their developments.
These could also mean little things we take for granted like transportation access and linkages as these ensure greater, safer, better and greener connections for a comfortable and aesthetic view that’s pleasing to the eye. At the same time, GuocoLand sees thorough township planning as creating environmentally friendly spaces that integrate well with technologies such as high-speed internet or Wi-Fi connection in public areas, whilst other technological innovations like parking technology, solar energy, rain harvesting, CCTV etc. promote convenience and stateof-the-art living experience. CRAFTING VALUE-ADDED OFFERINGS TO CUSTOMERS As the Company’s motto states “Creating Thoughtful Spaces “, GuocoLand’s comfortable and selfsustainable townships has certainly lived up to these words — addresses such as Emerald Rawang is a clear example and testament to the Company’s aim of providing more than just the basic needs of residents, and Pantai Sepang Putra is now emulating the same successful model and strategy. Today’s customers are well travelled and exposed to a larger variety of information. They tend to seek value-added propositions with reasonable yield and long-term capital appreciation. “Customers today are not just interested in buying the house alone; they also take into consideration the environment, surrounding areas as well as the potential lifestyle that they are going to experience,” said Tan. He added that home owners yearn for www.propertyinsight.com.my OCTOBER 2015 I 13
Spacious living room at Alanna, Pantai Sepang Putra
the convenience of being able to buy their groceries, do their banking, take their pets out for a walk or entertain their friends and family without having to go out of their neighbourhood. On top of that, Tan is envisioning this trend to last for a while more in future, hence GuocoLand’s decision to develop selfcontained townships that constantly evolve to meet people’s needs. Since these townships are preplanned, the amenities provided along with easy connectivity to major cities and abundant space for daily conveniences bring great value to properties in the development, be it residential or commercial. What’s more, customers also look for enhancements like facilities, convenience and technological innovation that are balanced out with a preserved environment. “Customers today are wanting more for less in their purchases. For example, they seek innovation in design, architecture and technology. Also, a smooth and impressive arrival experience that blends the overall development into its environment is a highly sought after factor. Safety and 14 I OCTOBER 2015 www.propertyinsight.com.my
convenience are equally paramount in their list of needs as most of them would have families,” explained Tan. STRENGTHENING TOWNSHIPS WITH AVAILABLE AMENITIES Understanding that expectations amongst savvy customers are constantly evolving, GuocoLand continuously equips itself with the latest market/industry intelligence and insights. “There’s a need to differentiate ourselves from other developers, particularly during times like this,” mentioned Tan. Various indicators started to show over the years that there would be a land shortage and potential over-congestion problems with the growing, pent-up demands of living in the popular Kuala Lumpur / Petaling Jaya area. On top of that, rising property prices in the KL / PJ area were pushing customers to look beyond, mainly to the northern and southern regions that had been in the process of advancing into new suburbs. All these came at the right time and opportunity when GuocoLand began to develop their extensive land banks outside the above areas.
Besides that, GuocoLand had already envisioned that the connectivity and access to these new areas at that time would one day blossom into various highways and transportation systems that we see today. The company has correctly predicted that it was only a matter of time that these areas would eventually mature into well-planned townships that are complete with various infrastructures and amenities. Take Emerald Rawang for example — it has attracted more developers, retailers and educational institutions to settle in Rawang and it has been a positive value-adding trend that would increase the value of GuocoLand’s property. With the possibility of settling down in mind, close proximity to schools, essential services, neighbourhood amenities along with commercial properties are some of the things that give these areas a plus point. “The fact that our property has a strong presence has added to the appeal of these areas, to the extent that people are considering them as credible areas as they have been well-planned with a good design and
www.propertyinsight.com.my OCTOBER 2015 I 15
The Rise in Emerald Rawang
Alanna in Pantai Sepang Putra
adaptability to the consumers’ ever-changing needs,” shared Tan. It has become obvious that the reasons for Rawang’s success has been due to improved infrastructure, highway connectivity as well as amenities. With good accessibility to KL, PJ and Shah Alam, you’d be able to travel to Emerald Rawang via the North South Highway, the New Klang Valley Expressway 16 I OCTOBER 2015 www.propertyinsight.com.my
and the Guthrie Corridor Expressway respectively — believe it or not, it only takes about 20 minutes from the Jalan Duta toll plaza to reach the Rawang toll plaza! Moreover, a new AEON shopping centre is less than five minutes away from Emerald Rawang, with a newly opened McDonald’s drive-through outlet and a Chinese primary school situated adjacent to it. According to Knight Frank Estate Agents, Tenby International School
and a private hospital are also in the works to boost the area’s appeal and population even more. Pantai Sepang Putra (PSP), on the other hand, has close proximity to both KLIA1 and KLIA2 along established roads and highways that connect Sepang to Kuala Lumpur. In fact, the proposed extension of the existing B20 road that will link KLIA to PSP will cut the travelling time from the existing 40 minutes to at least half. Additionally, GuocoLand is also developing other notable areas in Kuala Lumpur, such as the upcoming Murfree project at Alam Damai in Cheras that sports a dual key concept for multi-generational living, multitiered security system, perimeter fencing, multiple CCTVs and guard houses with round-the-clock security monitoring.
Murfree at KL Peak (Alam Damai) is close to 100 acres of verdant green natural forest
A CITY WITHIN A CITY AT THE HEIGHT OF AFFLUENCE & EXCLUSIVITY Townships aside, GuocoLand’s ambition to create thoughtful living spaces in the heart of Klang Valley is achieved through its Damansara City (DC) integrated development in the Damansara Heights that is anticipated to become the next business district when DC is fully in operation in coming months. This one and only luxury integrated development in Damansara Heights stands out from the rest because of its premium address that is ideal for a variety of purchasers, tenants, travelers and investors alike. To begin with, it can be accessed through multiple existing highways and through GuocoLand’s very own integrated traffic management system, involving an investment of RM48 million in new
tunnels and pedestrian crossings. Once completed in 2016, the project will also benefit from a MRT station that is almost right at its doorstep, linking it to central gateways like KL Sentral, KLIA and KLIA2 as well as the upcoming KL-Singapore High Speed Rail Link. As its name suggests, Damansara City is a city within a city that is integrated in every sense. It is also dubbed as the Jewel of Damansara Heights that integrates two Grade-A office towers; two towers of luxury branded serviced residences known as DC Residency; an F&B-centric lifestyle mall; and a 5 star international hotel. The potential to flourish is infinite as the level of integration at Damansara City is very tight and seamless. It is worth looking into from a quality and investment valuation point of view.
In fact, Hong Leong Group is the first of several prominent brands that is in the process of moving their corporate headquarters to Damansara City. This is apart from other prominent local and international brands that are already securing in-principle agreements to take up spaces at DC’s retail and corporate entities. “We are the only luxury integrated development here in Damansara Heights that will definitely help reenergise the Damansara Heights neighbourhood value, leading to more capital appreciation,” shared Tan. STEADY CONFIDENCE FOR THE JOURNEY AHEAD Besides the four walls that make a home, customers are also on the look-out for value-added features. Generally, they seek a total package www.propertyinsight.com.my OCTOBER 2015 I 17
COVER STORY that would stretch their Ringgit and make it work for them. At the same time, developers like GuocoLand are facing constant challenges like rising construction costs, less-than-ideal market sentiments, and also a situation where potential customers are finding it difficult to get a home loan due to the Government’s tightened cooling measures. Nonetheless, the Company knows the strength of its niche. “Depending on the location, the phases and types of property for each development would range from RM450,000 to over RM4 million. Given such a wide range of options available in our current portfolio of developments, suffice to say there is a property type that would suit everyone’s taste, especially for long term appreciation and quality valueadded developments,” highlighted Tan. STANDING OUT IN THE CROWD WITH CUTTING-EDGE EXCELLENCE “GuocoLand is a great believer in product innovation and the use of new building and construction technologies. In an increasingly competitive market environment where customers are spoilt for choice, developing homes that meet their expectations during
good or challenging times are no longer good enough. We need to offer compelling products that exceed their expectations,” Tan explained. That explains why the company has been generously investing in incorporating some of the latest and technologically inspired features into their products, for example smart home facilities and state-of-the-art security systems for their upcoming Murfree homes and Damansara City residences which have drawn positive feedback from some discerning buyers. “There are many factors that contribute to a good product, and savvy buyers these days often seek technologically driven and innovative features that make their lives comfortable and convenient while in the meantime preserving the environment. We want to make this an important aspect in all our product research and planning, and subsequently use it as one of the key enablers to position our products as among the top in this very competitive market,” Tan explained. THE FINISHING TOUCHES TO RAWANG AND SEPANG Going forward, the Company will also be engaging prominent and well-
established consultants in the industry to look into the re-planning of Pantai Sepang Putra and Emerald Rawang. “GuocoLand is committed to meeting the highest standards in quality and processes to include sustainable features in its developments and delivering the product in a timely manner,” pointed Tan. In fact, new and cost-effective building and construction technologies have become necessary to negate the rising costs and inconsistent supply of conventional building materials. Besides that, some of GuocoLand’s focus will be building homes and townships that will center itself around the theme of green environments that are safe, secure and equipped with technology-driven features, just like the upcoming Murfree development. “Another building philosophy that has always influenced our product development is that we tend to blend the properties and townships we build into natural surroundings, be it a forest setting, water features or hilly terrains,” mentioned Tan. “We want to create a place for people to lead an all-rounded lifestyle as well as engage within these public spaces via activities that will keep in with the motto, ‘Creating Thoughtful Spaces’.”
A breezy evening in Emerald Rawang
18 I OCTOBER 2015 www.propertyinsight.com.my
Bandar Saujana Putra (BSP) Bayuan Mas
RUMAH SELANGORKU Ownership within reach BY: FARA AISYAH FIRDAUS PETIAL
ffordable housing is probably the most concerning things to homebuyers these days and with such drawbacks, the Selangor Housing and Real Property Board (LPHS) has rolled out a scheme called ‘Rumah Selangorku’ that will make dreams come true for a lot of people. The Exco of Housing for Selangor, Y.B. Dato’ Iskandar Bin Abdul Samad, told Property Insight, “This initiative has proven to be a dire need for the state as the demand for affordable housing (RM250,000 and below) is steadily increasing.” According to the Executive Director of the Selangor Housing and Real Property Board, Puan Norzaton Aini Binti Mohd Kassim, the policy is definitely more than practical. “The Selangor State Government has introduced ‘Rumah Selangorku’ as part of the provision of low-cost, lowmedium and medium-cost housing.
20 I OCTOBER 2015 www.propertyinsight.com.my
Seeing that these have been imposed in each and every development since 2000, the state government has proactively reviewed the existing policy to make it relevant based on the country’s current economic situation,” she explained. “The situation become even more apparent when the ‘Pekeliling Dasar Rumah Selangorku Bil 1 Tahun 2013’ came into effect in January 2014, and thereafter all the development of affordable homes have been included under the ‘Rumah Selangorku’ scheme.” “The main objective of the policy is to achieve the aim of ‘A family, a perfect home’, plus we want to ensure that every individual or family is able to own a good, safe and conducive home. Besides that, ‘Rumah Selangorku’ offers more value in terms of its size, design and community,” Puan Norzaton added (see Figure 1).
Figure 1 PROJECT AREA TYPE (PER S.F.)
SELLING PRICE (RM)
INCOME ELIGIBILITY REQUIREMENTS
18’ x 60’ 200,000.00 Type D
RM3,001.00 to RM8,000.00
20’ x 60’ 250,000.00
Source: Selangor Housing and Real Property Board
WHAT IT’S ALL ABOUT “The importance of the allocation for ‘Rumah Selangorku’ in every housing development is to meet the need and demand of the lower-and middle-income earners in owning a house,” said Puan Norzaton. She also stated that the demand for affordable housing has been caused by the following factors: i. The pricing gap between lowcost houses and houses offered
nowadays; ii. Lack of choice particularly in the medium-cost category; iii. Lower-medium and medium-income group’s (young couples) incapability of owning a property; iv. Existing confined designs and insufficient facilities, especially in low-cost housing developments On the other hand, Y.B. Dato’ Iskandar elaborated that ‘Rumah Selangorku’ was an entirely different scheme in comparison to previous ones offered by the state government. “It is statuary housing that is compulsory to be built by developers, depending on the project’s district (mukim) and subdistrict (daerah). If, for example, the developer has developed more than 10 acres of a project in a PBT (Pihak Berkuasa Tempatan) area, they would have to dedicate a certain percentage of the development to build ‘Rumah Selangorku’ units.” he explained. “At the moment, we have launched about 11,000 units of ‘Rumah
Selangorku’ and the take-up rate is approximately 50 percent due to the fact that affordable housing has become a problem faced by all Malaysians! Our target is to build 20,000 units of ‘Rumah Selangorku’.” said Y.B. Dato’ Iskandar. Nonetheless these numbers did not come by easy as there was much to be dealt with by the Selangor government during their first years of establishing ‘Rumah Selangorku’ with the majority of developers. In recent times, however, the main problem has taken a shift to banks refusing to approve loans to eligible purchasers. “Previously, we failed to convince developers because the density of the planned development was limited to 70 houses per acre, but these days the density has risen to 120 houses per acre. We also have packages like special premium and exclusive development charges with the highest discounts possible.” For the initiative to expand further,
Y.B. DATO’ ISKANDAR
Y.B. Dato’ Iskandar himself leads and supervises the progress of ‘Rumah Selangorku’ with two main committees. “The first committee vets through developers’ applications of developing ‘Rumah Selangorku’ projects, while the second one observes their implementation.” “On top of that, we also control the pricing and built-up sizes for these units,” Y.B. Dato’ Iskandar added.
PROJECTS LIST TYPE
A (700 psf) B (750 –
C (800 –
C (900 –
D (1,000 psf)
D (20’ x 60’)
ESTIMATED DATE DISTRICT OF COMPLETION
SUBDISTRICT Tanjung Kuala Langat Dua Belas
Bandar Rimbayu Sdn Bhd
Taman Putra Prima
Jade Homes Sdn Bhd
September 2017 Sepang
Plenitude Permai Sdn Bhd
Masreca Nineteen, Cyberjaya Cyber 10, Cyberjaya
Sterling Prima Sdn Bhd
Tanjung Dua Belas
Bandar Rimbayu Sdn Bhd
Jade Homes Sdn Bhd
Pangsapuri Azaria, Bandar Parklands
Bandar Parklands, Klang
Gabungan Efektif Sdn Bhd
Pangsapuri Asteria, Bandar Parklands
Bandar Parklands, Klang
Gabungan Efektif Sdn Bhd
Bandar Saujana Putra
Tanjung Dua Belas
September 2018 Kuala Langat
Tanjung Dua Belas
Seribu Baiduri Sdn Bhd
Pangsapuri Alam Budiman
Seksyen U10, Shah Alam December 2015 Petaling
Sin Heap Lee Development Sdn Bhd
M Residence 2
Elite Park Development Sdn Bhd
Ukay Indah, Sg. Sering
Ukay Indah, Sg. Sering
Lembaga Perumahan & Hartanah Selangor
Pangsapuri Jenderam Indah
Wandeerfull Property And Development Sdn Bhd
Bandar Bukit Raja Fasa 17A
Bandar Bukit Raja
Sime Darby USJ Development Sdn Bhd
Jade Homes Sdn Bhd
Jade Homes Sdn Bhd
Bandar Bukit Raja Fasa 17A
Bandar Bukit Raja
Sime Darby USJ Development Sdn Bhd
Bandar Tasik Kesuma
November 2018 Hulu Langat
Agenda Istimewa Sdn Bhd
Source: Selangor Housing and Real Property Board
www.propertyinsight.com.my OCTOBER 2015 I 21
HOW TO APPLY? Apart from applying for the ‘Rumah Selangorku’ scheme online (lphs. selangor.gov.my), potential homeowners should note that the Selangor Housing and Real Property Board has not only improved the application of registration system (SPPRS) and application of registration system for shops/affordable housing industry (SPPKI), but also added the registration requirements below:
All applicants without a home who registered before 2008 need to reregister as a new application if they are still interested in applying for the ‘Rumah Selangorku’ scheme.
Applicants are allowed to choose only one type of property during the time of application — Type A, B , C or D.
The minimum salary of applications for ‘Rumah Selangorku’ Type B, C and D are set at RM3001.00 per month.
The validity period for each application registered in SPPRS and SPPK is two years. At the end of that period, pending application data will be removed from the system bids and the applicant must make a new offer if they are still interested in applying for ‘Rumah Selangorku’ or the affordable home/shop industry.
APPLICATION REQUIREMENTS FOR ‘RUMAH SELANGORKU’ TYPE A 1. Malaysian citizens aged 18 years and over. 2. Residing in Selangor. 3. Household income does not exceed RM3,000.00 per month. 4. One family one applicant only. 5. Applicant or wife/husband does not own a property, either from government or private projects. 6. Ownership transfer is only allowed after 5 years.
4. Single applicants who have dependents is eligible to apply. 5. Buying the property for stay, not to rent out. 6. Ownership transfer is only allowed after 5 years. APPLICATION REQUIREMENTS FOR SHOP/ LOW-COST INDUSTRY IN SELANGOR
Source: Selangor Housing and Real Property Board
(From left) Puan Norzaton Aini Binti Mohd Kassim, Y.B. Dato’ Iskandar Bin Abdul Samad, Y.A.B Tuan Mohamad Azmin Bin Ali, Dato’ Menteri Besar Selangor; Jen. Tan Sri Yaacob Bin Mat Zain (R), Chairman of Mah Sing Group Berhad; and Tan Sri Dato’ Sri Leong Hoy Kum, Group Managing Director & Group Chief Executive officiating the groundbreaking ceremony for Rumah Selangorku at M Residence 2@ Rawang on 15th May 2015.
1. Malaysian citizens aged 18 years and over.
3. One family one applicant only. 4. Has not yet own a property on commercial title.
APPLICANTS MUST SUBMIT THE FOLLOWING DOCUMENTS WHEN SUBMITTING THE APPLICATION FORM 1. A copy of the identity card of the applicant and spouse; 2. Copies of identity cards or birth certificates of children/dependents; 3. Copy of the Marriage Certificate/ Marriage Register/Letter Divorce/ Death Certificate of spouse; 4. Single Confirmation letter from
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8. A copy of water bill or electricity bill.
3. Applicant or wife/husband does not own any type of property in Selangor.
5. Ownership transfer is only allowed after 5 years (from the date of CF approval) with the permission from the State Authorities.
All application statuses can be checked via the LPHS website: http://lphs.selangor.gov.my.
7. EPF statement (if any); and
2. Household income is between RM3,001.00 to RM8,000.00 per month.
Effective January 2015, all applications for ‘Rumah Selangorku’ Type B, C and D, as well as applications for the shop/affordable industry shall be done online. Any application via forms will not be accepted.
6. Statutory declaration from the Commissioner of Oaths, if the spouse is unemployed;
1. Malaysian citizens aged 18 years and over.
2. Household income does not exceed RM10,000.00 per month.
5. The latest pay slips or income verification from the Commissioner of Oaths if self-employed;
APPLICATION REQUIREMENTS FOR ‘RUMAH SELANGORKU’ TYPE B
Applicants who have turned down the offer will be INACTIVE for a period of two years. New applications can only be made after a period of two years. INELIGIBLE application data will be maintained in the system. If there is an application update for the INELIGIBLE, applicants must submit the relevant supporting documents and will be assessed by the Selection Committee.
employer or Commissioner of Oath for self-employed applicants who are not married;
A HELPING HAND Y.B. Dato’ Iskandar then mentioned the Dana-Sel initiative. “We are now using the scheme for projects in Sungai Sering, Ulu Kelang and Rimbajaya in Shah Alam for individuals who have failed to get a loan from banks. The way it goes is that we, the state, will buy the property and consumers will lease it from us. So any time after two years, these individuals can opt to buy the property from us at the same price.” said Iskandar. In addition to that, Y.B. Dato’ Iskandar explained, “However, if the people do not want to buy it from us, they can continue their stay at the property and pay rent until the property’s total price has been reached and then be rightful owners of this home.”
Another alternative that’s been offered by the state government is by being a guarantor for the property purchaser. “Currently we have allocated RM20 million for this scheme and it has been implemented in places like Selayang Mutiara, where the state government is the guarantor for property purchasers who cannot afford a loan. Some may see the scheme as a risk, nonetheless we are not that worried because if the purchaser cannot pay for the property, we can always sell it back to the market,” Y.B. Dato’ Iskandar expressed. PLACES TO CALL “HOME” M Residence 2@Rawang As one of the developers involved in ‘Rumah Selangorku’ developments, Mah Sing Group’s Chief Executive Officer Ng Chai Yong is confident that affordable housing is something that the Group is more than willing to contribute to, “As a responsible corporate citizen and a premier lifestyle property developer with a presence of more than 20 years’ in Malaysia, we are committed towards supporting the nation’s initiative in building more acquirable homes for the people. It goes without saying
that housing remains as one of the key needs for any given person, and to make housing accessible to all is in line with the Group’s principles.” he said. Holding a diversified range of products in property hotspots of Greater Kuala Lumpur, Klang Valley, Johor Bahru, Penang and Sabah, the Group sees the ‘Rumah Selangorku’ initiative fitting well in its portfolio as it will play an integral part in aiding people to find and acquire an affordable home whilst enjoying the quality lifestyle that Mah Sing offers with each of its projects. Located in the booming township of Rawang, the group’s inaugural project development under the ‘Rumah Selangorku’ housing scheme, M Residence 2@Rawang’, consists of two blocks featuring 488 units with built-ups from 850 sq. ft. onwards. It is currently priced at RM170,000 and offers three bedrooms with two parking bays. “The location was chosen due to its strategic location and appealing amenities, including its great connectivity via road and rail access. M Residence 2@Rawang also stands to benefit from the extension from
Jalan Tasik Puteri onto the LATAR Expressway by the end of 2015.” Ng said. On top of that, the Group’s development will be enhanced with the KTM Rawang station, the terminal station of the KTM Komuter’s RawangSeremban route. Rawang is also served by existing public buses that ply the Kuala Lumpur-Rawang route from the likes of RapidKL, Metrobus and SJ Buses. BSP Bayuan Mas Apart from Mah Sing Group, LBS Bina Group Berhad is developing Bandar Saujana Putra (BSP) Bayuan Mas, an affordable housing project under the ‘Rumah Selangorku’ scheme. Its Executive Director, Datuk Wira Joey Lim, said, “‘Rumah Selangorku’ is a brilliant idea as it really helps lower- and middle-income earners in owning a house at reasonable prices. Since affordable housing is in line the Group’s as well as the state government’s commitment to build more affordable homes in Selangor, we are honoured and proud to support the its efforts in realising every citizen’s goal of owning a home at a good price.”
Selayang Mutiara (Bukit Botak) www.propertyinsight.com.my OCTOBER 2015 I 23
MAIN FEATURE centres and hypermarkets. It also has great direct access to major cities in Klang Valley as well as Kuala Lumpur International Airport (KLIA). As it is also near Puchong, there are various parts of the Klang Valley that are easily accessed via a number of major highways like South Klang Valley Expressway (SKVE), Lebuhraya Damansara-Puchong (LDP), the Maju Expressway (MEX) and the North-South Expressway Central Link (ELITE).
Kg Sri Temenggung, Gombak
Damai Residensi, Seksyen 3 Bangi
Lim continued, “‘Rumah Selangorku’ simply translates to the notion of having a roof over each person’s head — that is one of the basic necessities in life. Over the years, LBS has established a solid foundation in crafting highquality built environment, and it is the Company’s privilege to have the capacity to improve the community’s overall well-being.” “We have come this far with a proven track record for building excellent homes. We are driven to create sustainable living, working and recreational environments to provide 24 I OCTOBER 2015 www.propertyinsight.com.my
a better future for everyone, a future that is worth beholding. ‘Believe, Become, Behold’ is the motto that we always strive for, so this project truly demonstrates our commitment in realising the community’s dream of a better livelihood,” said Lim. BSP Bayuan Mas is located in Bandar Saujana Putra, a selfcontained township by LBS that will offer residents accessibility to education, commercial and leisure establishments as well as necessary infrastructure and amenities like hospitals, recreational parks, shopping
Rumah Selangorku Idaman PKNS According to PKNS Public Relations Manager Ishak Hashim, “PKNS highly supports the Selangor government in realising their vision to build 20,000 houses of ‘Rumah Selangorku’ within three years,” said PKNS Public Relations Manager Ishak Hashim. “Upon studying and observing existing low-cost housing conditions in 2009, PKNS decided to embark on a project to provide affordable housing based on a concept that is beneficial for residents. Our emphasis has been on giving sustainable living conditions with holistic surroundings, so this housing initiative fits into our plans of helping middle-income Selangor citizens own a home at reasonable prices.” added Hashim. “‘Rumah Selangorku’ means a lot to us, and this is the most important year because it is the first in a five-year phase of building 7,500 affordable houses. In 2015 alone, PKNS has launched a total of 5,883 units in various locations in Selangor.” he said. Although PKNS is one of the biggest land bank owners in Selangor, the developer has very limited land left to develop in the Klang Valley, and according to Ishak, most of it is exhausted. “There’s about 10,000 acres of land available for development, but they are all located outside Klang Valley, hence PKNS has shifted its focus to creating townships like Antara Gapi, Kota Puteri, Bernam Jaya and Selangor Science Park 2 (SSP2).” explained Hashim.
WALKING THE HERITAGE TRAIL
Like the Sotheby’s, anything old has the potential to be valuable BY: DANIEL SIM / IMAGES COURTESY OF RAYMOND LOO & HOTEL PENAGA
ver wondered if heritage buildings could co-exist with modern developments? Look to George Town, the state capital of Penang for an answer. It is a capital city with the most number of pre-war buildings in the whole of Southeast Asia, many of which are still intact. Hence to many Malaysians, especially the Penangites, George Town is also known as Penang Heritage City. Along with Melaka Historical City in 2008, UNESCO recognised and 26 | OCTOBER 2015 www.propertyinsight.com.my
awarded Penang with a World Heritage Site status for its historic enclave that’s worthy of recognition and preservation. As a whole, this recognition consequently helped to raise awareness of the state’s rich culture in order to regain its lustre as the ‘Pearl of Orient’. “The World Heritage List includes 962 properties in 157 places, of which 745 are cultural, 188 natural and 29 mixed properties. So owning a heritage building is not ‘just another property’; it is owning a piece of history,” said
Prima Harta management team leader Raymond Loo. Other heritage sites like the Great Wall of China or the Gunung Mulu National Park can only be visited, but you can own an actual heritage shop lot in George Town, which is a very rare and precious opportunity. Therefore, it is no wonder that many property investors are looking to invest in heritage buildings in the area. In fact, the demand has been steadily increased over the past few years, ever
since the declaration of George Town as one of the World Heritage Sites by UNESCO. The market is so in demand that it has surged to its highest levels in history from 2011 to 2013. HERITAGE PROPERTY HOTSPOTS Investors particularly like to hunt for heritage houses along roads that are located within the Heritage Core Zone, so if you’ve ever explored some of the island’s popular tourist spots, names like Chulia Street, Love Lane and Armenian Street might ring a bell. On top of that, the demands are improving in the Heritage Buffer Zone, where you’d find streets such as Prangin Lane, Kimberly Street, Lorong Carnarvon as well as heritage houses at Ceylon lane, Noordin Street and others. Corporate companies have also taken advantage of the heritage scene in Penang, especially Beach Street that remains as one of the longest streets on the island and is well known as Penang’s banking district. This is where a lot of heritage buildings are now the headquarters of premier banks in the state, and a good example would the Royal Bank of Scotland’s (RBS) premises. When it was built in 1905, the building housed the Netherlands Trading Society and was later taken over by ABN-AMRO
(a merger between Algemene Bank Nederland, Amsterdamsche Bank and the Rotterdamsche Bank) that was also used as an arts and culture centre. The RBS made it their home after a restoration project was completed in a record time of only 16 weeks. The market rate currently sits around RM1,000 per s.f. to RM1,500 per s.f., while more popular areas like Chulia Street, Love Lane and Armenian Street are approximately RM2,000 per s.f., though Loo mentioned that there had been transactions that closed for more than RM3,000 per s.f. from his own records. Due to the rent control act and high restoration costs, owners found little reason to invest in old and broken pre-war houses which they believed were unable to produce a reasonable ascending rental yield. With the full abolishment of the act in 2000, it was then that heritage lovers started to pay attention to George Town’s pre-war buildings. Looking at the prospering tourism Penang enjoys today, it has not gone by with any regrets — with cafes and boutique hotels sprouting like mushrooms all over the state, investing in heritage buildings has brought fruitful returns to investors. Many envy having the unique living experience in heritage houses as each
Owning a heritage building is not ‘just another property’; it is owning a piece of history.”
building has its own character. Providing an atmosphere of elegance and unforgettable hospitality experiences, we’ve seen nothing but growth in George Town’s tourism sector and opportunities have risen out of the demand. Yet like any other investment, there are pros and cons to consider. THINGS TO WATCH OUT FOR According to Loo, the entry cost is very high when it comes to investing in heritage property and investors may find difficulty in obtaining a bank loan due to huge gaps between valuation reports and actual transaction prices. Many investors were forced to pay up to 40 percent of initial deposit for the heritage property acquisition, not to mention the exorbitant maintenance cost of a heritage building! Needless to say, investors have to set aside huge budgets for restoration costs to restore the former glory of the buildings, and that cost will indeed increase for longterm maintenance. What’s more, investors may not get the yield expected from the investment, as rental in Penang has not achieved the level as significant as the Klang Valley. www.propertyinsight.com.my OCTOBER 2015 I 27
As presented by international asset consultants Henry Butcher (Penang), Director Dr. Jason Teoh gives us some insight into the state’s exemplary commercial heritage buildings... PENAGA HOTEL Re-developed from a group of prewar two-storey shop houses, this 45-room hotel covers a land area of 17,139 sq.ft., where a standard room size starts from 431 sq.ft. onwards.
WHAT ARE HERITAGE INVESTORS INTERESTED IN? Economic factors such as low interest rates and the depreciation of the Ringgit have cut costs for many, especially foreign investors, and have encouraged them to expand their investment portfolio to Malaysia in the real estate field. With rows and rows of heritage house to choose from, original and unrestored heritage buildings have been most welcomed by investors, especially if original features like the façade, staircase, air well and doors have remained unspoiled or untouched… The sale is now on! On top of that, security factors such as Malaysia’s political stability and low living costs have benefitted the Malaysia My Second Home MM2H programme, where trends have shown that many foreigners preferred heritage buildings to high-rise condominiums in Penang. According to the Heritage Director of the Penang Island Municipal Council (MPPP), Puan Noorhanis Binti Noordin, investors are giving more attention to heritage buildings as they
see and acknowledge the importance and significance of heritage values after Penang had received UNESCO’s grand recognition in 2008. MPPP, being a local authority, reviews development proposals and provides enforcement as provisioned by law. “Our objectives are spelled out very clearly in our Regulations and Special Area Plan for George Town World Heritage Site. Heritage building owners are strictly advised to conserve and preserve the authenticity of their buildings in its form and substance because well-conserved buildings will definitely increase in value,” shared Puan Noorhanis. The governing body also provides various incentives such as heritage building maintenance grants for owners who conserve heritage buildings. Besides this responsibility, MPPP along with other government agencies, NGO’s and local communities work very closely to conduct and organise cultural festivals and celebrations, conservation projects, educational programmes, courses, exhibitions and various activities in the World Heritage Site.
If you love buildings with a historical touch and love preserving sentimental values, there is always the option to invest in heritage buildings, so focus on UNESCO awarded sites in Malaysia such as George Town, Penang, as well as Melaka Historical City. 28 | OCTOBER 2015 www.propertyinsight.com.my
THE SEVEN TERRACES A newly-opened private hotel of only 18 suites, owners and awardwinning hoteliers, Karl Steinberg and Christopher Ong (Winners of the 2007 UNESCO Award of Distinction for heritage conservation and regular Conde Naste Hot List nominees) are set to spice things up at Lorong Stewart with their romantic, beautiful and timeless retreat. THE LOGAN HERITAGE Costing some RM6.8 million, this building has been restored to its former glory. It was built in the 1880s and spans across a land area of 32,150 sq.ft. Named after James Richardson Logan, a lawyer by profession, the building is currently owned by Oversea-Chinese Banking Corporation (OCBC) Bank. 1881 CHONG TIAN With a history of more than 131 years, this thriving hotel stands as the first and only Chinese heritage hotel in the country. Having been established since the late 1800s, the hotel presents luxurious unique suites decorated with Chinese antiques. MUNTRI MEWS Previously a dilapidated heritage building used as a stable, it has now become a boutique accommodation for flash packers.
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GETTING INVOLVED WITH ESTATE MANAGEMENT Can the management office cut your water supply if you don’t pay maintenance fee? Property Insight meets up with Benz & Carlton’s Chief Executive Officer Alaric A. Nathan to unveil the truth BY: DANIEL SIM
any of you who invested in high-rise properties, such as condominium and serviced apartments, would realise that paying the maintenance fees such as the sinking fund and the water bill are part and parcel of owning a unit in such properties. For the past few months, there were reports about resident’s dissatisfactions over the price hike of their maintenance fee due to GST imposition, when in actual fact GST is not included in the maintenance fee. “As investors and home buyers, we need to first understand the concept of strata and the type of property we intend to buy before making the actual purchase,” said Benz & Carlton chief executive officer Alaric A. Nathan. GST is not impose in maintenance fee, but the JMB has to absorb the GST cost from third party such as payment for cleaning services with an external contractor,” said Alaric. “The cost will then be included into the monthly maintenance fee and that’s why we see a huge increase in maintenance fee for certain strata developments. “For my firm, we budget contingency funds for all the developments we manage before GST imposition. Therefore, although it looks more expensive for home owner to pay
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initially, the residents don’t have to worry with their fees later on as we have the funds to mitigate the impact of GST and we do not increase the maintenance fee anymore,” said Alaric. According to Alaric, another major issue besides the GST is the confusion between what is a conventional condominium and serviced apartment. Most of the so called ‘serviced apartments’ are just regular condominiums, but due to the fact that the master title of the land is issued under “Commercial” status or the condominium units are built
Suria Stonor Condominium at KLCC
above commercial units, these service apartments are classified as commercial properties and as such, residents will have to pay fees based on the commercial rate for utilities, such as water tariff, paying more than the usual condominiums with full residential titles. Benz & Carlton is a professional building and estate management firm, and though the company has been around in existence for five years. It was selected to manage the exclusive five-star residential estate call Vila Seni in Iskandar, Johor Bahru. This
New World Gardens at Plentong, Johor Bahru
Suria Stonor Condominium at KLCC
development is actually a joint venture between a local developer and the New World Group, one of the largest developers from Hong Kong. “The level of service is very different because we have the buggy service which will transport the home owners to and fro from the comfort of their own home to the club house. There will also be a concierge service which will take care of the ticketing, accommodation and transport of the home owners’ friends to and fro from the international airport nearby,” highlighted Alaric. One would normally expect to see certain facilities in a particular strata development, for example, a gated and guarded neighbourhood with installed CCTV cameras on each security outpost, or a leisure facility such as a clubhouse. The process of setting up the management of a property occurs when the developer engages the services provided by Benz & Carlton at the initial period prior and post Vacant Possession (VP) whereby they’re able to setup the management office, assist in the VP process as well as conduct the Annual General Meeting for the formation of the Joint Management Body (JMB) or Management Corporation (MC). The firm also assumes management from pre-existing JMB to operate the estate. According to the new Strata
Management Act 2013 which came into force on 1st June 2015, the JMB needs to be formed within one year after the property’s VP. Thereafter, in order to continue running the estates or buildings smoothly, there is a set of strategic agendas that need to be followed. If one looks at Country Heights in Kajang as comparison. You would come to the realisation that Country Heights is an individual strata. This will be where an investor will buy a plot of land and erect any type of housing architecture that they want such as a pyramid. When you move to a landed strata property, the developer will come out with a uniform design, pattern, and facade. The concept of strata is basically more on bringing the community together for a common cause, which in this case owners are more involved in the management of the estate. According to Alaric, the perk of having a JMB is that residents have a stronger say at what being done at the community level; and that’s the main difference from other non-strata properties. For instance, if there is a significant security issues faced by your neighbourhood and it is not a strata community, it would be tougher getting
all residents to commit to an action plan to combat the said issue as everyone is an individual owner and there is no mandatory requirement for them to get involved. Whereas in strata properties, every owner plays a part in the management of the estate thus allowing better control over the maintenance and management of the property. “Strata literally means title in the air, so if you live in a condo – that’s where the concept of strata first started – it means that as an owner, you may renovate your own unit as you please as long as it doesn’t affect the façade since it is shared by the rest of the owners in the entire building,” said Alaric. The same concept applies to landed strata, whereby the exterior is regulated by the JMB. One who frequents locations such as Sierra Mas, Desa Parkcity or Setia Eco Park will notice that these properties look alike because at the end of the day, the two main reasons as to why the buyers purchased these strata properties are for uniformity and security. CHALLENGES OF ESTATE MANAGEMENT “Personally, I’ve never heard of any estate and building management firm who claim to receive 100% maintenance fee on time,” said Alaric. www.propertyinsight.com.my OCTOBER 2015 I 31
FEATURE “Many of the properties we manage are located in KLCC, Desa ParkCity, Sri Hartamas, Tropicana, as well as the upscale neighbourhood of Bangsar,” shared Alaric. One of the properties managed by Benz & Carlton called Casaman in Desa ParkCity won two awards in 2014 for “The Best Residential Lowrise” category from the FIABCI’s Malaysia Property Award and also a Gold Award from the Malaysian Institute of Architects (PAM) Award for “Best Multiple Residential Low-rise” category.
Casaman at Desa Park City
The payment of maintenance fee is a major issue affecting all estate owners. To counteract the situation, a clear guideline on how to handle defaulters has been provided under section 34 & 78 of the new Strata Management Act 2013. In other words, the Act gives you the flexibility to respond with these defaulters via several methods stipulated in the said Act. One of the common malpractice implemented by irresponsible JMB towards residents who do not pay their maintenance fee is to cut the water supply to their unit even though water is a necessity. According to the law, this is actually illegal. According to the Act, the tenant of such common property may also pay the maintenance fee on behalf of the actual owner of the said property, whilst the payment is deductible from the monthly rental fee imposedon the renter. “Many JMB take action when their residents default, and that, in truth, is not the wise thing to do because there is always a reason why people default in the first place,” shared Alaric. The first thing that estate management companies must do is engage the defaulters, to find out the issues and work on the repayment scheme; it is 32 | OCTOBER 2015 www.propertyinsight.com.my
always better to get something rather than nothing. “There are some default cases I’ve encountered that are not even relevant — leaking water heaters, tiles popping up or interior defects, all of which are issues not related to the common area maintenance which the maintenance charges and sinking fund is contributed for,” shared Alaric. In retrospect, Alaric think it is only appropriate that the Act’s legal action highlighted in section 34 and 78 should only be used for those who refuse to pay without valid reasons. For such cases, the management will first issue a letter notifying the defaulters of late payment ,and subsequently the defaulters will receive a letter of demand from a lawyer if the defaulters still refuse to pay the maintenance fee. CREDIBILITY MATTERS Personalisation is a very important element for estate management business as a good firm will need to be able to suite to the requirements of each unique development. Currently, Benz & Carlton manages about 35 projects consisting of highend and award winning properties in premium neighbourhoods in Kuala Lumpur and the greater Kuala Lumpur.
GET ACTIVE “My advice to residents living in strata properties — get involved and join the community. Don’t just sit back; play an active role to voice out your opinion and share your talent for the betterment of the property,” commented Alaric. “We have situations where residents with specialised expertise can contribute valuable information with their JMBs, which would not require the management to engage third party service providers, thus allowing the JMB or MC additional cost savings by tapping the internal pool of expertise contributed by residents.
The Westside One at Desa Park City
“WITH THE DROP IN OIL PRICES AND THE RINGGIT DEPRECIATING, WHAT WOULD BE YOUR PROPERTY INVESTMENT STRATEGY?”
DANIELE GAMBERO CEO of REI Group of companies
FAIZUL RIDZUAN CEO of FAR Capital
NIXON PAUL Managing Director of Carey Real Estate
RENESIAL LEONG CEO of Right Lifestyle
In uncertain times such as
Banks have tightened lending
now, the safest investment lies in properties. What, where and when depends on the investor’s capability of catching good opportunities. Firstly, a smart investor should analyse demand and current offers. By studying the Klang Valley during the past months, there has been a notable increase in supply of “affordable homes”, mostly priced below RM450 per sq.ft. in the southern and western corridors. Semenyih, Bangi, Cyberjaya, Shah Alam and several other locations have been experiencing a significant rise in both landed and condominium projects. Unfortunately, what the majority of developers have offered, in terms of prices, are reasonably affordable on a per sq.ft. basis, which in turn will transform into unaffordable ones once it’s multiplied by the builtups. - what do they mean? My advice is, look for scarcity within the sea of affordable offers! Small landed properties such as singleor double-storey houses below 2,000 sq.ft. or condominiums within the 900-1,000 sq.ft. range offered at maximum
requirements since 2011, yet
With the current challenging economic climate, ironically there are opportunities to seriously consider. Nonetheless, it would be best to invest in properties that are already tenanted — I would advise staying away from newly completed projects as there is still an abundant supply of vacant properties. 1. There will be some who put their commercial properties up for sale on a Sale and Lease Back arrangement. This is worth considering, provided the vendor/tenant is of good reputation and a proper due diligence would need to be done. 2. In challenging times like this, financing needs to be carefully considered. It would be best to keep your margins of finance to a maximum of 70 percent of the purchased price. 3. For residential properties, condominiums in prime locations and landed properties in gated and guarded developments will present great opportunities. However, source for units
With the Ringgit depreciating, crude oil prices falling and the GST being implemented since April, the property market sentiments have weakened and remained soft. Therefore, it is important to ensure that a ‘cushion fund’ is in place — this fund should include at least six months’ worth of monthly expenses, including mortgage payments. Also, throw in some perks to attract and maintain new tenants should you have vacant properties. Personally, I will be doing some ‘cherry picking’ as good bargains are starting to emerge. Despite current financial hiccups, property investment is a mid to long term game. Invest enough time to learn the game of identifying the right investment in many different areas as well as the types of property available as it will be vital for gaining a stable rental return or attractive capital appreciation in the coming years.
property prices continue to rise in spite of strict regulations plus
economy is mostly commoditydriven, and with hammered commodity prices taking place this year – its record being the lowest in the last 10 years – it is only that the depreciation of the Ringgit should occur. Thus when commodity prices recover, so would our Ringgit and crude oil, of course! On the other hand, however, we are still not building enough mass market housing projects in the country, so rest assured that property prices will not be coming down anytime soon. Just by looking at the urban migration data at hand, we are still short by approximately 300,000 in supply!
RM350,000 to 400,000 are the products will experience the best price appreciation once economic turmoil is over.
34 I OCTOBER 2015 www.propertyinsight.com.my
that are competitively priced and tenanted.
Tanming (Mutiara 2&3)FA(ol).pdf
DEVELOPER OF THE MONTH
36 I OCTOBER 2015 www.propertyinsight.com.my
Regardless of the current cautious market sentiment, WiraDani Development Sdn Bhd is one developer who continues to grow strong against the odds. The Managing Director of the Company, Leong Yeng Kit, reveals to Property Insight their story for growth in a challenging economic climate.
t is not unknown that property development has always been a lucrative business and despite the current cautious real estate situation in the country, WiraDani Development Sdn Bhd has taken it in their stride to develop projects with a different cause in mind — providing projects that are achieveable within means. WiraDani Development Sdn Bhd was formed with three partners and they started with Q3@eastKL before expanding their wings to different regions. “Besides myself, my partners are Chairman Dato’ Sri Sunny Ung and Datuk Wira Dani Bin Tun Daim.” said Leong. Q3@EASTKL With the exclusivity of 26 three- and four-storey shop offices in the heart of Ampang Jaya / Cheras, Q 3@EastKL is definitely the next commercial investment for property investors. “We bought this land a few years ago, and the land has definitely appreciated since then. Back in the day, this piece of commercial land was an actual quarry and we originally planned to have a single podium block development with two towers. After having conducted a detail market feasibility and listened to the needs of the market, we decided to divide the development into half, offering one service apartment tower with
256 units with 20 units of LifestyleRetail Outlets, and offering what many people in the market had sought for, which was 26 units of three and four storey shop-offices.” In the original plan, as Leong said, the land had been designed to be developed into serviced apartments with a plot ratio of 1:4.0. However, after considering all aspects, they decided to reduce the plot ratio to 1:2.4, hence lowering the plot ratio of the development to offer a more attractively uncrowded space, something which was quite unheard of, what with the current expensive land prices in the area. When asked about the reason for choosing to build a commercial development, Leong clarified that the scarcity of expensive commercial land within a matured area dictated that most developers would opt to maximise the plot ratio and develop highrises, however, the offering of landed shopoffices by the Company on such expensive land gave heightened value to these exclusively limited Q 3@EastKL shop-offices. Company always had it’s heart set on a commercial development since its very first day of owning the land. “The land was already a commercial title and that was why our initial plan comprised of serviced apartments. Even though we changed to develop part of the land into these 26 shop-offices instead, no www.propertyinsight.com.my OCTOBER 2015 I 37
DEVELOPER OF THE MONTH
land title conversion for category of land use was necessary.” Offering commercial spaces for a diverse range of businesses, Q3@EastKL would be the home to the likes of accounting & law firms, banks, food and beverage outlets, boutique hotels, educational centres, beauty parlours, boutique retail shops and many more. Many businesses that are growing would eventually find it difficult to acquire adjoining space at their current locations, therefore the shop-offices of Q 3@EastKL gave such businesses the rare opportunity to acquire two or three adjoining lots to expand their businesses in a single location, as there are very few landed 38 I OCTOBER 2015 www.propertyinsight.com.my
shop-offices developments being offered in matured parts of Klang Valley. Its design is conceptualised around the city’s trending modern lifestyle whilst being enhanced by a green courtyard landscape that’s 20 feet in width as well as private individual rooftop gardens above each and every unit. With such unique spaces at hand, tenants and investors in the Q 3@EastKL community would find a great balance between work and leisure, and a one of a kind unique office concept with the ability to build additional lightweight garden-offices on the very roof of one’s own office block. In addition to that, each block unit had its very own lift, not shared with other block units. In fact, Q 3@EastKL’s location in itself is a high population catchment area whilst the immediate surrounding population is approximately 65,000 people. The area is is also highly accessible via the Kuala Lumpur Middle Ring Road 2 (MRR2), DutaUlu Klang Expressway (DUKE), Shah Alam Expressway (KESAS) as well as the Sungai Besi Highway. Apart from taking the bold step of absorbing Goods and Services Tax (GST) on behalf of its buyers, and giving atractive discounts this project, interestingly, follows the new rules from the Manual Garis Panduan dan Piawaian Perancangan Negeri Selangor that demands the development to have a fire escape at the back of each unit. “Currently, shop-offices only have a single entry at the front with nothing at the back. But we’ve done it differently at Q 3@EastKL, whereby there is a second fire escape via the back — this would soon be the norm for upcoming new developments.” The Q 3@EastKL shop-offices are attractively priced below market valuation, making it a very attractive proposition for real estate investors, and prices start from RM2.8 million onwards for the three-storey shop office with roof garden block. Q3@ EastKL shop-office block sizes range
These days, the rate of aversion is poor, so that is why for residential developments, we try to focus on projects that cost less than RM500,000. It’s a question of affordability.”
between 6,466 sq.ft. to 12,473 sq.ft. AS A DEVELOPER Despite being a young development company, WiraDani Development Sdn Bhd is pioneering new and unique ways that trendy shop-offices should be about. “You’d find that besides the unique roof garden concept, our Q3@EastKL shop-offices façade look very different from conventional ones in the market and there is no product out there that looks quite like it. “Plus, if you look closely at most shop lots in the market, the whole row tends to look uniformly the same. Whereas with Q3@EastKL, each block has a different façade design, yet with some degree of grace and conformity to it. Our façade is also texturised with detailed patterned brickwork which complements the overall design. We have an architect extraordinaire
in Ar.Cheah Kah Lip from Akitek Akiprima”, Leong added. On top of that, WiraDani Development Sdn Bhd has also stood out from the crowd, in a sense that it does not own or deal with any land banks. “Anything we have, we will develop and sell the products straight away.” explained Leong. “After inspecting suitable lands and studying proposals with development orders (DO) in place, we will buy into it instantly. That’s the approach we are currently practising for some projects, to reduce the lead time prior to project sales launches.” DEVELOP A SELLING PROJECT Other than commercial developments like Q3@eastKL, the group is also developing affordable housing projects outside of Klang Valley. Needless to say, with the current market sentiment, Bank Negara
Malaysia has become more conservative on loan approvals. “Of course, consumers would naturally want or even need to buy residential house, especially ones to reside in. They are able to place the down payment for booking, but the challenge arises when these purchasers apply for loans from the banks — they fail more often than in the past, as most purchasers were either over-geared or they fell below the treshold to afford the instalments on expensive unaffordable properties”. “So that is why we spotted a huge growing need for affordable residential developments, and we place great emphasis to focus on projects that fall in the affordable bracket of RM200,000 to RM500,000. It’s the question of affordability.” Leong emphasized. “The Company’s choice to go down this road and develop affordable housing is because it sells, www.propertyinsight.com.my OCTOBER 2015 I 39
DEVELOPER OF THE MONTH
and buyers are able to secure loans. It is a win-win.” In line with that view, Leong’s philosophy as a developer would always be to meet the market need, as the market would always have a need which begs to be fulfilled, even in a challenging market environment and the key is to find out what that need is and to deliver it. “We will continue to do our best to provide these reasonable and affordable housing projects in the outskirts of the city, for example, in our current projects in Gambang, Pekan, Sandakan, Kelantan, Perak, Seremban and Johor. We also have some of them in the Klang Valley.” “In this current economic crisis, most developers either stop the project completely, or a lot of them sell the entire project to other developers — we ourselves have been receiving many offers from other developers who want to sell their projects outright.” PLANS FOR THE FUTURE The way that Leong sees it, the country’s real estate industry would be developing a trend for lifestyle and affordability in future developments. “The trend that is booming is 40 I OCTOBER 2015 www.propertyinsight.com.my
lifestyle. Just look at recent residential projects — it’s skewed towards lifestyle concepts in a mixed developments such as Bangsar South for example. We are trying to create something along those lines as well, and it’s clear that Q3@eastKL is aligned towards that concept.”
As the Managing Director of the Company, Leong said that his vision and goals for the group is certainly growth, both in challenging times a well as in times of rapid economic growth, and to deploy strategies best suited to deliver growth, in both these types of divergent economic situations.
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THE SILICON VALLEY OF MALAYSIA From an intelligent city to a liveable one BY: FARA AISYAH FIRDAUS PETIAL
township with a science park that forms a key part of the Multimedia Super Corridor in Malaysia, Cyberjaya is located in the district of Sepang, Selangor, and is situated about 30km south of Kuala Lumpur. Constantly aspiring to be known as the Silicon Valley of Malaysia, this township’s, official opening ceremony created the way for high hopes on 17th May 1997. During the groundbreaking ceremony, then-Prime Minister, Tun Dato’ Sri Dr. Mahathir bin Mohamad said, “The establishment of the Multimedia Super Corridor (MSC Malaysia) and Cyberjaya in particular, will enable Malaysians to leap into the Information Age. We hope to create the ideal environment that will attract world-class companies to use it as a regional multi-cultural information age hub.” According to Cyberview Sdn Bhd, “the idea for a high-tech city akin to the Silicon Valley stemmed from a study on the setting up of MSC Malaysia by management consultancy McKinsey & Co in 1995. In fact, Cyberjaya was to be the core of MSC Malaysia, a designated zone where technology entrepreneurs 42 | OCTOBER 2015 www.propertyinsight.com.my
and global multinationals would enjoy attractive tax breaks as well as access to world-class human capital and infrastructure at a developing nation’s costs. The ambitious project would then spearhead Malaysia’s transformation into a new knowledge economy, one that would be better able to compete on the world stage.” The city currently has a population of approximately 90,000 people with a well-rounded eco-system for its citizens to “Work, Live, Study and Play”. By 2016, Cyberjaya will be transformed into a city with a sizeable residential population who will call Cyberjaya their home as more than 25 developers are investing over RM20 billion into various development projects, gradually changing the city’s image to not only an intelligent city, but also a liveable one. The company also stated that “with the lead of Cyberview Sdn Bhd as the Cybercity Manager, this supportive and supple ecosystem will attract investors. This includes providing a collaborative environment along with incentives, such as competitive rental rates, flexible repayment schemes, building allowances and customised solutions
for investors based on their business requirements, budget and growth plans.” In 1996, Nippon Telephone and Telegraph (NTT) agreed to develop a research and development (R&D) facility in Cyberjaya, which proved to be the project’s catalyst. Soon, other corporate giants like Dell, Hewlett Packard, DHL and Shell began to follow suit. With global icons establishing their presence in Cyberjaya, the entire ecosystem has begun to form itself naturally. THE INTELLIGENT CITY The Government soon identified the development of a zone within Cyberjaya as the Cyberjaya Flagship Zone (CFZ), which was designated for activities related to MSC Malaysia. Established on 28th March 1997, Setia Haruman Sdn Bhd was entrusted with the responsibilities of the Master Developer of Cyberjaya to develop the city’s physical infrastructure as well as its facilities. Currently, Cyberjaya is a planned city with 48 percent of its land being dedicated to greenery, public facilities and amenities — that is twice that of a typical township in Malaysia!
On the other hand, 21 percent have been allocated for residential, 17 percent industrial, nine percent commercial and five percent institutional. Setia Haruman itself recently launched Ceria Residences in July 2014, which is located on 19.5 acres of freehold land comprising a total of 500 residential units, of which 150 units are elegant double-storey landed homes and 350 units are exquisite condominiums. According to the Executive Director of Setia Haruman, Lao Chok Keang, Ceria Residences is ideal for young growing families. “This project was specifically inspired by the needs and demands of these families, especially those in the working community of Cyberjaya who desired modern, quality homes at affordable prices. To meet these expectations, Ceria Residences incorporated contemporary features that promoted a healthy lifestyle amidst good natural settings.” “Its architectural forms and spaces complement the surrounding environment, whereby a 3.5-acre land has been set aside to be a recreational park (called Rimbun Ceria) equipped with fitness stations, rest areas, a playground, water jets and running spaces. The residents would also get to enjoy the clubhouse and its facilities (called Anjung Ceria) that endorse healthy leisure activities, such as the outdoor fitness centre with an aqua gym, swimming pool, spa and wading pool, two indoor badminton courts and a gymnasium.” Lao added. For the residents’ peace of mind, Ceria Residences also provides an integrated security system with CCTVs, vehicle card access and perimeter intrusion systems for its fully gated and guarded community. As for the individual units at Ceria Condominiums, they have been designed over distinctive “semidetached and bungalow” floor layouts that are imbued with excellent ventilation and natural light. These condominiums also offer a unique dual-key concept for larger units, allowing a single owner to have two homes at once! They also come
with a studio suite attached with its own living space and kitchen that’s been meticulously designed for families to stay with their parents, children or close siblings. Lao said, “Each of the dual-key units can also be rented out as it stands independently with a separate key and entrance. At Ceria Condominiums, every unit comes with two free covered car parks, whereas the larger Type C dualkey unit comes with three free covered car parks. Furthermore, all bedrooms and living rooms are equipped with air conditioners (4 Nos. split-unit air conditioners for Type A and 6 Nos. splitunit air conditioners for Types B & C units).” Another salient feature of Ceria Residences is its ready telecommunication infrastructure that offers 100 mbps internet broadband at a very competitive price of RM179 per month. Thus far, Setia Haruman has claimed that the overall gross development value (GDV) for Ceria Residences is about RM340 million. “Some of Cyberjaya’s residential properties have almost doubled in the past five years, where generally the price appreciation has ranged between 10 to 20 percent
LAO CHOK KEANG
per annum for residential properties,” commented Lau. A PIECE OF HEAVEN ON EARTH Having been the pioneer in coining the renowned “LiveLearnWorkPlay” concept as the ECO philosophy in all S P Setia Berhad’s developments, the Group braved the challenge of stepping into Cyberjaya with the development of Setia Eco Glades. With a unique concept and design of thematically different islands, this residential project clearly displayed its inspiration from cultural diversity that’s been perfected by nature and technology.
Setia Eco Glades Sales Gallery www.propertyinsight.com.my OCTOBER 2015 I 43
AREA FOCUS RECENT TRANSACTED PRICES OF HIGH-RISE RESIDENTIAL PROPERTIES
RECENT TRANSACTED PRICES OF COMMERCIAL PROPERTIES TYPE
2 Shop office 3.5
GROUP LAND AREA 1,916 sf
Cyber Valley Commercial 1,400 sf Centre Cyberjaya Glomac
YEAR 2011 2012 2013 2014 2010 2011 2012 2013 2014 2012 2013 2014 2010 2011 2013 2014 2010 2011 2012 2013
AVERAGE PSF 918,333 1,250,000 862,500 1,237,000 727,550 1,258,333 1,415,000 1,021,000 1,135,000 1,475,000 1,436,667 1,166,000 320,000 370,000 550,000 600,000 2,012,000 2,024,000 2,287,500 2,410,000
COUNT 3 3 14 2 10 6 2 2 2 2 3 3 5 2 2 1 3 2 4 3
1,001 2,000 sf Cyberia Condominium 800 - 1,000 sf Condominium
Source: Oregeon Property Consultancy
DID YOU KNOW?
As the original development site was home to an abundance of flora and fauna, S P Setia Berhad enlisted the help of Forest Research Institute Malaysia (FRIM), Malaysia Nature Society (MNS) and Zoo Negara to safeguard the local wildlife for relocation in the completed Setia Eco Glades.
Cyberia Crescent Condominium
1,013 1,050 sf
1,292 1,959 sf
463 - 906 sf
547 - 801 sf
558 - 676 sf
YEAR 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2013 2014 2015 2010 2011 2012 2013 2014 2015 2014 2015
AVERAGE PSF 228 237 258 281 336 352 241 257 275 299 349 349 333 281 300 299 323 305 323 317 321 360 302 633 666 674 339 369 397 446 447 471 630 607
COUNT 22 26 37 57 77 17 25 17 19 20 42 4 2 3 6 10 25 2 6 7 5 7 2 14 42 5 16 20 49 56 36 5 30 7
Source: Oregeon Property Consultancy
The Setia Eco Glades project sits on 268 acres of freehold land and involves a GDV of RM3 billion. Since commencing construction in 2012, the enclave has set itself apart as a luxurious gated and guarded development consisting of high-rise condos, low-rise residences, super links, semi-detached units, bungalows and commercial lots. The masterplan of Setia Eco Glades has is divided into five products, namely Liu Li Gardens, Lepironia Gardens, Sanctuary of Western Heritage, Sanctuary of Eastern Heritage and Isle of Kamares. The latter being one of the most privileged glades among the islands, Isle of Kamares is located at the southern part of Setia Eco Glades and stands tall with the warm and timeless charm of Mediterranean architecture, exuding elegance, tranquillity and serenity. Moreover, waterways that reminiscent the European canals enhance the island’s view with a visually and 44 | OCTOBER 2015 www.propertyinsight.com.my
environmentally cooling effect. Isle of Kamares consists of 20 blocks of low-rise apartments, resembling a resort villa structure. Plus it comprises of two different designs that have a built up between 1,414 sq. ft. to 1,521 sq. ft.. Inspired by houses in the Mediterranean, the building façade carries elements that are unique to the region, including clay roof tiles, symmetrical façades, stucco walls and ornamental detailing. What’s more, features like courtyards, open arches and big windows allow a fresh flow of breeze through common corridors, whilst the exterior is painted with colours like off-white and cream, reflecting heat away to keep these residences cool for its occupants. On top of that, the development‘s delicately constructed paved walkways, stone walls and terracotta coloured structures, create a striking contrast to the delicate flowering shrubs, leaving a solid boulder to add weight to its greenery. With “green” as its main theme, hence
Isle of Kamares’s Garden of Royal Fragrance’s existence — a garden filled with flora such as lush plants, aromatic herbs, graceful climbers and many colourful blooms, the development’s design couldn’t be any more scenic. Not forgetting water features like ponds and a water fountain, Setia Eco Glades lives up to its name in every way. As an additional proposition, Setia Eco Glades’s master plan design also has been based on the Green Building Index (GBI) certification criteria, resulting in a project full of homes and community facilities that are GBI certified. With the gated and guarded enclave of Setia Eco Glades having green features like eco-friendly paint, rainwater harvesting and LED lighting for a smaller carbon footprint, this residential landscape is bound to be nothing but sustainable. Since its inception, the S P Setia brand has always been clear about creating eco lifestyles with a distinct emphasis on the environment for the communities, a conducive environment where they
RECENT TRANSACTED PRICES OF LANDED RESIDENTIAL PROPERTIES TYPE
2 Semidetached house 3
Evergreen Garden 3,200 sf Residence
Evergreen Garden 3,200 sf Residence
Bandar Pinggiran Cyber
Evergreen Garden 1,920 sf Residence
Perdana Lake View
Evergreen Garden 1,920 sf Residence
AMOUNT OF TRANSACTION (LANDED)
2011 2012 2013 2014 2012 2013 2014 2015 2011 2012 2013 2013 2015 2010 2012 2013 2014 2015 2010 2013 2014 2015 2010 2011 2012 2013 2014 2013 2014 2015
1,110,000 1,135,000 1,160,000 1,280,000 1,380,000 1,300,000 1,275,000 1,460,000 200,000 120,800 140,000 750,000 980,000 620,000 710,000 1,098,000 750,000 910,000 688,800 1,098,000 1,100,000 1,100,000 841,800 1,036,800 1,488,000 1,290,000 1,300,000 1,000,000 1,080,000 1,000,000
1,270,000 1,680,000 1,490,000 1,350,000 1,488,000 1,700,000 1,500,000 1,500,000 280,000 320,000 380,000 1,260,000 980,000 789,800 710,000 1,250,000 1,200,000 910,000 929,800 1,250,000 1,430,000 1,100,000 928,800 1,300,000 1,600,000 1,450,000 1,690,000 1,100,000 1,080,000 1,000,000
3 22 15 3 4 15 10 2 11 62 13 9 1 11 1 2 9 1 4 3 5 1 3 2 2 4 9 6 1 1
Source: Oregeon Property Consultancy
can live, learn, work and play in a safe haven. COMMERCIAL FACILITIES Currently, over 800 MSC Status companies have already relocated their operations to Cyberjaya, making this township a rapidly growing area for the working class on an international level. Some of them include companies like T-systems, Dell, Hewlett Packard, DHL, Satyam, Wipro, HSBC, Motorola, OCBC, BMW, IBM, Shell IT, Vivanova Systems, the Response Centre of the Anti Money Laundering Network as well as many others. There are also a few neighbourhood malls within the area such as Shaftsbury Square, D’Pulze Shopping Centre, Gem In Mall, Centrus @ CBD Perdana 3, The Street Mall, Prima Avenue and Neo Cyber. On top of that, Pan’gaea and Tamarind Square are two upcoming malls that are due to open in the near future.
80 67 60 37
AMOUNT OF TRANSACTION (HIGH RISE)
400 287 200
AMOUNT OF TRANSACTION PRICE (RM psf) 500
300 277 200 1
Source: Oregeon Property Consultancy
EDUCATIONAL INSTITUTIONS There are approximately 23,000 students in Cyberjaya and 40 percent of its university students are foreigners. Multimedia University (MMU) was one of the higher education institutions that acted as an early component of Cyberjaya since July 1999. The brainchild of the country’s fourth prime minister, Tun Dr. Mahathir Mohamad, this campus was to be the center of learning and research for the Multimedia Super Corridor (MSC), a 750 km² area designated as the country’s high-tech research and industrial area. Other higher education institutions in Cyberjaya include Limkokwing University of Creative Technology and Universiti Islam Malaysia (UIM), whilst colleges like Cyberjaya University College of Medical Sciences, Cyber Putra College and Kirkby International College are also in the area. As for primary and secondary schools, there are several choices: Sekolah Kebangsaan Cyberjaya, Sekolah
Menengah Kebangsaan Cyberjaya, Sekolah Seri Puteri and elc International School. PUBLIC AMENITIES As an emerging township, Cyberjaya now has a police station complex and a fire station. Apart from that, other completed public amenities include a small recreational park just next to MMU, the Cyberjaya Community Club, bus shelters, pedestrian walkways and signalised pedestrian crossings at road junctions and more than 700 free parking bays. The Cyberjaya Lake Gardens is the 400-acre ‘green lung’ for Cyberjaya. At present, about 86 acres of the land have been developed with facilities like a visitors’ information centre, boardwalk, look-out tower, children’s playground, 15 acres of main lake and 29 acres of natural and wetland. Other outdoor recreational facilities include a mini park that’s adjacent to MMU, a 3.5km promenade area next to www.propertyinsight.com.my OCTOBER 2015 I 45
Ceria Residences’ aerial view
Setia Eco Glades actual site
MOST RECENTLY LAUNCHED DEVELOPMENTS RESIDENTIAL DEVELOPMENTS
Opus @ Lake Vicinity Cyberjaya
LAND SIZE (ACRES)
Setia Haruman 2017 Sdn Bhd
Condo / Landed
From 2,679 sf
350 / 150
From RM531,800 / From RM903,800
Crystalville Sdn Bhd
From 3,000 - 3,200 sf
From RM1,900,000 - RM2,500,000
Isle Of Kamares @ Setia Eco Glades
S P Setia Berhad
268 (whole development) / 13.69 (Isle of Kamares)
From 1,414 - 1,521 sf
From RM917,411.00 RM1,095,309.00
Sejati Residences (Phase 3C : 3-storey superlink)
Paramount Property (Cjaya) Sdn Bhd
From RM1,587,400 - RM1,945,500
Areca Contempo Homes
Makmur Asiamaju Sdn Bhd
Off Persiaran Bestari, 63000 75 Cyberjaya
From 2,470 - 3,162 sf
From RM1,575,000 - RM2,098,500
Source: Knight Frank Malaysia Sdn Bhd
FUTURE DEVELOPMENTS MIXED LAUNCH DEVELOPMENTS
LAND AREA COMPONENTS (ACRES)
Angkasa Icon City
The development would be sold by Nexgram Land and Nextnation Datacity to MyAngkasa Bina
The Star 21/7/15: Obtained D.O.
Cyberjaya, Selangor, Malaysia
Office & commercial lot Shop offices / virtual offices Serviced suites
Cyberjaya City Centre
Cyberview Sdn Bhd
Over 15 years Cyberjaya, to develop Selangor
RESIDENTIAL LAUNCH DEVELOPER DEVELOPMENTS
Diandra @ Lakefront Residence
Source: Knight Frank Malaysia Sdn Bhd
46 | OCTOBER 2015 www.propertyinsight.com.my
Cyberjaya, Selangor, Malaysia
BUILD UP (SF)
(EST. LAUNCH PRICE)
Mixed development township N/A
LAND AREA COMPONENTS (ACRES)
(EST. LAUNCH PRICE)
From 950 sf - 1292 sf
www.propertyinsight.com.my OCTOBER 2015 I 47
AREA FOCUS the Putrajaya Lake and a sports arena with more than 360 free parking bays, one basketball court, one tennis court, two futsal courts, a football field and a small food court. As for indoor recreational facilities, the Cyberjaya Community Club that’s developed by Cyberview has been the point of congregation for many. With two futsal courts, two badminton courts, a gymnasium, two squash courts, swimming pool, a go-kart circuit and a golf driving range, it is a hive of activity. ACCESSIBILITY The KL-Putrajaya Highway will cut short the travel time by car from Kuala Lumpur to Cyberjaya to 20 minutes, as well as allow motorists from Kuala Lumpur and other places along its alignment to get to Kuala Lumpur International Airport (KLIA) in 30 minutes. Also, thanks to the KLIA Ekspress, residents in the area will be able to enjoy easy access to the airport with the express rail link (ERL) transit service to Cyberjaya and Putrajaya. Due to the closeness of these cities, they’d share
the same station in Putrajaya. There are also feeder buses that run from the Putrajaya Sentral station to the rest of Putrajaya and Cyberjaya, including the city’s single bus terminal, Cyberjaya Transport Terminal. On top of that, there’s also the NorthSouth Expressway Central Link (also known as ELITE Highway) and the North Klang Valley Expressway (NKVE) that will reduce the travel time from Cyberjaya to the nation’s main port, Port Klang, to less than an hour. To further improve its internal transportation, Cyberview has also launched a free park-and-ride system that will serve as a viable alternative for those wishing to commute without having to drive themselves. CONCLUSION According to Setia Haruman Sdn Bhd, Cyberjaya is currently receiving full support from the Government on its transformation into a global technological hub, so it’s no wonder that the general notion of excitement is in the air to see what is in store for this township over the
next five to 10 years. In terms of infrastructure, the latest project would be the upcoming MRT 2 line that will commence construction next year. With two MRT stations in place in Cyberjaya, the rail connection to Kuala Lumpur and other major conurbations will be thoroughly enhanced. There is also a High Speed Rail (HSR) project in the pipeline to pass through Putrajaya/Cyberjaya connecting to Singapore in a mere one-and-ahalf hours. Also, the MEX 2 highway connecting Cyberjaya to KLIA will increase Cyberjaya’s connectivity and convenience, adding credence to it as a gateway to global businesses as well as a premier residential address. As for amenities and facilities, a public hospital is expected to start building in Cyberjaya in the next year, whilst a 400-room Holiday Inn hotel is already under construction and expected to be ready in 2017. Other than that, plans for more educational institutions and a hypermarket is set to roll out within the next five years.
AGENTS SPEAK “Cyberjaya is strategically located in between Kuala Lumpur, several international airports and sea ports.The accessibility to Cyberjaya is very convenient as there is already a total of six highways from several locations, including the city centre. In fact, all travellers and residents who pass by Cyberjaya would reach Kuala Lumpur’s city centre in 20 minutes! Cyberjaya City Centre adds further value to the township as it caters to numerous commercial activities,
Senior Real Estate Negotiator GS Realty Sdn Bhd
48 | OCTOBER 2015 www.propertyinsight.com.my
making this development a magnet that attracts meaningful and sustainable life in Cyberjaya. It will also connect the future High Speed Railway (HSR) and MRT extension to Singapore as well as this country’s buzzing capital, therefore creating more job opportunities and less traveling time to several locations via public transportation... Definitely an upcoming township to look forward to in the Klang Valley!”
“Cyberjaya is an emerging area in the Klang Valley area that’s known as the Silicone Valley of Malaysia. Unlike other cities such as Subang Jaya or Petaling Jaya, Cyberjaya didn’t have low-cost flats or walkup apartments from its initial township planning. In fact, they are filled to the brim with local Malaysians and expatriates working for multi-national companies such as DELL, AMD, Ericsson, Satyam, DHL, Hewlett Packard, Motorola etc, and these factors have boosted the demand for better F&B quality in Cyberjaya. With the recent opening of IOI City Mall, the number of households moving into Cyberjaya have also increased. Education-wise, Cyberjaya is already home to Multimedia University (MMU), Limkokwing University of Creative
Head of Sales Department Property Channel
Technology, Cyberjaya University College of Medical Sciences (CUCMS), University Islam Malaysia (UIM) as well as the up-andcoming Xiamen University that is bound to boost Cyberjaya property selling prices and rentals from time and time! Most of my clients who live in PJ, USJ or Cheras and working in KL are tired of traffic jams; they are more than willing to move to Cyberjaya because it is not as jammed and it is only 20 minutes to KLCC via the MEX highway. I strongly believe Cyberjaya will become a more matured city in another 10 years — with plenty of vacant land to develop and much of the leasehold land in Selangor Science Park 2 yet to be utilised, no doubt there will be more homebuyers from other areas flowing in.”
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PERSONALITY OF THE MONTH
AKING ONEY IN THE BUY Seasoned investor Pip Stehlik shares his secret to good real estate investments BY: JAMES LIM
52 | OCTOBER 2015 www.propertyinsight.com.my
hen it comes to property investment, Pip Stehlik knows the game like the back of his own hand. A student of Robert Kiyosaki and a charismatic speaker in his own right, Stehlik has been coaching property investors for years, ever since he realised how useful property investment was financially, in comparison to stocks or precious metals. Currently, Stehlik is the owner of more than 40 properties all over the world and a speaker for Tigrent Learning, an educational service that teaches potential investors tips and tricks of the trade. Before becoming a successful property guru today, Pip was like the rest of us as he started out as a novice investor with nothing but a handful of cash in his bank account and a dream to make it big. Having been inspired by famous author Zig Ziglar at a motivational seminar, Stehlik was more than on fire to start his property investment career as it was during this training session that he understood the value of property over other forms of investment. At that time, Stehlik and his family ran a small grocery store business in Nebraska City, but the constant fear of giant supermarket chain Walmart coming to town and cutting into their profits drove Stehlik to seek out alternative means of generating income. He did not have a love
for property, but chose property investment as an ‘escape plan’ — not only did it make sense, it would also be the most viable source of return even if the market turned sour. CASHFLOW IS KEY Stehlik’s strategy is a very simple one: buy property for cashflow. According to his reasoning, as long as your property is generating monthly income in the form of rental payments, you can rest easy knowing that your mortgage is being taken care of. Even if the value of the property goes down, Stehlik assures that the constant cash flow is more than enough to make a profit. “It doesn’t matter if you’re buying property in the UK, U.S. or Malaysia — as long as you get cash flow out of the property from the beginning, then it starts to make sense. And that’s the key.” he said. Of course, Stehlik does not discount the prospect of selling a property if its value appreciates, but by focusing on cash flow, he is able to control his investments while keeping options open to making money through other means. “Its value may go down, but if we invest in property with the notion that it can make cash flow from day one onwards, we’re still going to get that rent cheque every month,” He added, “The nice part about property is that we get that monthly cash flow and if we invest right, often times we see the value going
up through capital appreciation or renovations on the property… There are many different ways to make money.” Stehlik recalls one of his favourite properties that offered the best of both worlds. “I’d bought a property in Florida sometime in 2003 or 2004, and it had cash flow from the very beginning. I think I made a minimum of USD 200 per month and never had a vacancy. After owning the property for two years, it doubled in value and I sold this single family house. Did I expect property values to go up by 100 percent in two years? Not at all!” Although it was arguably his best buy ever, Stehlik always reminds his listeners to exercise caution if a property’s capital appreciation seems too good to be true. Buying a property for cash flow instead of capital appreciation has one other benefit, and according to Stehlik, you won’t even have to lose sleep every night hoping the value of your property will not drop too much during a bad economy. Even if a recession hits and the value of the property goes down, your investment will still be secure due to the consistent generation of rental payments. As a matter of fact, there will likely be more potential tenants as those who lose jobs or are forced to take pay cuts will no longer be able to afford their own homes, hence forcing them to rent instead. www.propertyinsight.com.my OCTOBER 2015 I 53
PERSONALITY OF THE MONTH “When people lose their jobs,” Stehlik explained, “they can no longer buy a house and have to become renters, so the rental market actually goes up when property values come down — it’s an inverse relationship. I’m happy when property values go up although that might mean some vacancies, but I’m also getting capital appreciation. On the other hand, when the market goes down, there will be more tenants due to the laws of supply and demand.” DIGGING FOR A DEAL Of course, finding a property that provides good cash flow is no walk in the park, but Stehlik has his ways of sniffing them out. “We look for motivated sellers — if somebody puts their property listing with a real estate agent, they generally want to sell but not obliged to, either. So what we do instead is use sourcing agents that are out there in the field to find people who are motivated,” he said. By that, Stehlik is referring to landlords who want to get rid of a property that they believe has no value, and to him, nothing is completely useless. By purchasing properties at discounted rates thanks to the original owners seeing little need of it, Stehlik has been able to improve the properties’ value via many alternatives i.e. refurbishing, adding rooms or putting a tenant buyer / lease option on it. By taking on creative options, those properties become increasingly attractive to renters and that’s where Stehlik collects his cash flow. On top of that, websites like Craigslist in the United States, Gumtree in the UK and Kajiji in Canada are like gold mines for investors to find lucrative deals. It’s common knowledge to evey investor that location is also key to determining the value of a property, even if you’re just investing for cash flow. In his case, Stehlik is careful to only select properties in locations with a stable economy and plenty of good jobs to go around. On the other end of the spectrum, he tends to stay away 54 | OCTOBER 2015 www.propertyinsight.com.my
from what he calls ‘one-horse towns’, which essentially are communities that revolve around a single industry. The reason for doing so is simple — if the industry collapses, the entire town fails and all the properties in the area not only drop sharply in value, but a lack of tenants will keep it vacant continuously, thereby affecting cash flow. In fact, Stehlik is only too aware of the consequences of investing in such locations. He recalls how the bankruptcy of Detroit, a city that depended heavily on the automotive industry, caused a massive population decline that led to lots of vacant properties with poor resale value. “Wasn’t Detroit a great market 40 or 50 years ago?” he quipped. “It was an awesome market! But who would have thought that the car industry there would fall? General Motors had 140,000 employees at one time in Detroit, and now they’re down to only 20 or 30,0000 employees.” Other examples include Huntsville in Alabama where the economy expanded around NASA, the town’s biggest employer, and Las Vegas, a tourist-dependent city. When it comes to investing in properties overseas, there are other
factors to take into account, such as the tenant-landlord laws. Every country has their own variation and for investors like Stehlik who want good tenants to produce good cash flow, it’d be better to invest in a country that has pro-landlord laws rather than protenant ones. He explained, “In the Netherlands, for example, it’s almost impossible to evict a tenant, even if they don’t pay rent. I’ve heard that the same thing happens in France, too, whereas most of Southeast Asia is very pro-landlord e.g. Hong Kong, Singapore, Malaysia etc.” Stehlik also recommends studying the market in detail as well as choosing areas that are experiencing population growth. Japan, he suggests, should be avoided as its population is declining. On the other hand, China, UK and the US are all potential hot spots as these countries have stable (if not booming!) economies with steadily increasing populations. OTHER PEOPLE’S MONEY As soon as he’s gets his eye on an appealing property, the next step for Stehlik would be raising the money to pay for it. Nonetheless, our smart investor has a few tricks for taking care
of that as well. “We use other people’s money; we use bank financing whenever we can and there are tonnes of mortgage brokers. There’s also seller-financing where the owner participates in the financing of the property — these people (the sellers) are motivated!” asserts Stehlik. While the practice may be relatively uncommon here in Malaysia, sellerfinancing is the norm in many countries. Through this unique transaction, the buyer uses his loan to pay back the remainder of the seller’s mortgage and then uses a second mortgage to pay the seller the remainder of the property’s cost. This way, both buyer and seller are protected by law and if the buyer defaults on the repayment for any reason, the seller can take the property back. Apart from the strength of the British Pound, the ability to leverage as many properties as he likes is one of the reasons why Stehlik is fond of investing in the UK. “Over there, it’s up to you. If you go to the US, Canada, Singapore, Malaysia, Australia or Japan, your ability to get a loan is based on your income. But in the UK, they don’t care if you’re only making GBP 20,000 a year; if the property you want has good cash flow, they’ll loan you the money for it. If it doesn’t, they won’t loan you the money… Simple.” he elaborates. On top of that, Stehlik uses the Internet to seek out other likeminded investors. By building a network of investors, he is able to pool their resources together and get more capital for investments. With successful investments leading to positive feedback from his fellow investors, Stehlik’s network grows easily through word of mouth. TENANT BUYERS & TROUBLEMAKERS As mentioned earlier, Stehlik usually tries to add value to a property through refurbishment or a lease option. The latter is an attractive means of courting tenants as it offers them the opportunity to own the property in future, possibly within one or two
years and depending on how much they can afford to pay. “We get people – we call them ‘tenant buyers’ – who aren’t quite ready to buy the property today. So, they get into the house they want to own and we rent it to them with the option of selling it to them two or three years later when they qualify financially to buy it.” explains Stehlik. With the words “qualifying financially”, he is referring to how much money the future owner has allocated for the purchase. A property rented with a lease option is always rented at a higher price – approximately 10 to 40 percent higher – as a guarantee to the future owner that the property will not be rented or sold to anyone else. This way is also exercised to collect funding for the down payment. “Every deal is a little bit different,” Stehlik adds. “What I find with most people is that their monthly income is not the reason they don’t get a property; it’s the ability to save for the deposit.” he said. “So we have two different situations here: you could have enough money for a deposit but not a good income; or your income could be very good but you don’t have anything saved for
No investment is perfect, but if I have the knowledge and education, I can buy 10 properties. Even if one of them doesn’t perform as well as I wanted it to, at least I have nine others providing cash flow.” a deposit. If you only need to save a little bit more for the deposit, we might put just an extra 5 or 10 percent on the rental charge; if you don’t have enough, it will be an extra 20 or 30 percent towards the deposit. That being said, it will take you a year or more to get qualified, depending on how much savings you have — every situation is different, so we’d advise tenant buyers to work with mortgage lenders to work out how long it will take them to get qualified.” Even if tenants aren’t interested in a lease option, Stehlik stresses the importance of maintaining a good relationship. Tenants, after all, are part and parcel of the cash flow supply chain because having vacancies or tenants who don’t pay on time disrupts that. “There will always be challenges with tenants — some tear up your property, some don’t pay. You must factor these into your calculations from the very beginning. I will always have a certain percentage of tenants who don’t pay on time, so we try to curb that by offering small incentives like a discount or Starbucks gift certificates.” “No investment is perfect, but if I have the knowledge and education, I can buy 10 properties. Even if one of them doesn’t perform as well as I wanted it to, at least I have nine others providing cash flow.” www.propertyinsight.com.my OCTOBER 2015 I 55
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t the time of the Ringgit’s depreciation, a typical response from many Malaysians would be to leave the country in search of ‘greener pastures’, despite knowing for a fact that they will be going into unchartered territories as ‘newbies’, but Gregory Low has done it differently. 58 | OCTOBER 2015 www.propertyinsight.com.my
Low, a Singaporean, works in Iskandar Malaysia, Johor, as a business development manager dealing with corporate accommodation. Thanks to his parents, Low grew in an environment that prepared him for his journey into property investment as since his younger days, he’s bore
memories of his parents taking him along to various property launches and showrooms. It was a turning point for Low when he visited some relatives based in Malaysia in 2009, when his pursuit for property investment was triggered by his uncle who had brought him to a show unit
called the SEED@Sutera Utama. Despite being impressed by the SEED’s huge two- and three- bedroom condominium designs as well as the quality of the show unit, Low still had his doubts that Johor Bahru was a popular destination for property investment as compared to Kuala Lumpur. Nonetheless, he was attracted by the well-thought master plan of the whole project as the residential township was complete with landed terraces, townhouses, a condominium and a signature facility — an infinity pool. “It is rare that you’d spot a Singaporean developer building such thorough townships in Singapore because of the land’s cost and scalability. This alone made me realise that Malaysian developers had the upper hand of creating more ideas to design a city out of nothing. Plus, there’s enough market data to predict future demand of the area,” said Low. Low claimed that what amazed him even more was that the properties were located just ‘a bridge away’ from Singapore whilst costing 70% cheaper on average, and this drove him to investigate more on the prospect of investing in properties in Malaysia. RESEARCH MATTERS “Research is key for me,” said Low who uses a minimum of six months to not only attend show units in Iskandar Malaysia, but also talk to the right people such as mortgage consultants and negotiators to understand the developments and the future in Iskandar Malaysia. In fact, he would drive all the way from Singapore to see more projects in Iskandar Malaysia! The difference between the two neighbouring countries was that Singapore town-planning and infrastructure were mainly managed by the Government, therefore a lot of resources were in detail and shared with the residents in their respective areas. According to Low, that made it very easy to guess the market movement in Singapore, whereas purchases in Malaysia depended a lot on the market sentiment as well as on-the-ground
research to make predictions on projects. “I’d found a few properties that I liked and what attracted me most was the Golf View Corner Cluster in Horizon Hills,” said Low who visited the location after working hours with a friend, who happened to be a legal counsel familiar with the required documentations. “After negotiating with the Dutch owner for four hours, the property was sold to me at RM950,000 — everything was done fast and I even had the Letter of Option ready to close the deal... Talk about bringing your own lawyer to close the deal on the spot!” shared Low. To date, Low owns 14 commercial and residential properties along with one industrial property, whereby 12 of these properties are situated in hotspots like Iskandar, Kuala Lumpur and Singapore. Based on the current valuation, the total net asset value of his portfolio – which consisted of 60% from sub-sale and 40% from new launches – is worth RM18 million. “The most expensive property that I bought was a commercial lot at TEEGA @ PUTERI HARBOUR for office purposes. It is currently under construction and the development was priced at RM1.38 million in Puteri Harbour,” shared Low. One of the many reasons why he’d bought the property was due to the booming corporate market in Nusajaya, west of Johor, leading to an increase in demand for office space. “From research, I’d also found out that an office block in Bukit Indah (a nearby development) with 900 sq. ft. — this had the potential to attract a lot of businesses, but the issue was the lack of Grade A units with bigger spaces, ranging from 1,800 sq. ft. to 2,000 sq. ft.,” said Low On the other hand, Low also realised that adding renovations to the mix would help increase the perceived value of his properties, hence the subsequent increase in rental yield. “I like to furnish my units so that tenants can move in immediately without the hassle of getting the interior empty spaces decorated,” shared Low.
For example, I may invest in a stack of property development units to rent out at the same time, or buy a few shop lots to rent together. This strategy will actually allow me to have better bargaining power with the tenants and investors.”
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INVESTOR NEXT DOOR INVEST WITH THE END IN MIND Like any smart investor, Low relies heavily on the project’s unique selling points before deciding on the actual deed. As a safety net, he would ask questions like, “Who would be my potential customers if I wanted to rent or sell?” to help cover his exit strategy for each project that he invests in. With detailed market research and negotiations playing a big part in getting great deals, Low’s future plan includes looking into bulk-buying deals. “For example, I may invest in a stack of property development units to rent out at the same time, or buy a few shop lots to rent together. This strategy will actually allow me to have better bargaining power with the tenants and investors,” explained Low. Nonetheless, the biggest challenge of his property investment journey is refinancing the properties in order to purchase more properties in future.
So, one of the many ways Low has used to overcome this challenge is by transferring all his properties into his own investment holding company to leverage and obtain more loans for future purchase. FROM A FOREIGNER’S VIEW “In my opinion, Malaysia’s property market is bound to enter a new phase. The five major influences on the country’s market mainly stems from politics, property control measures, government master plans, buyers’ income and rental yield — without all of these factors, the market cannot progress into the next growth stage, even though Malaysia has the best property prices in the Asian region,” shared Low. “It won’t be accurate for some to claim that Malaysia is experiencing an oversupply of properties at the moment — most properties in Malaysia may be built to rent, but the number
of Malaysian home buyers who are purchasing property for their own use are actually booming, so properties are still high in demand. Having gone through an eventful property investment journey, Low advises foreigners – like Singaporeans – who want to invest in Malaysia to do their homework as everything in the market needs to be justified by facts. “Don’t base your research solely from the Internet — there are lots of hidden gems waiting to be discovered at the actual site!” Low encouraged.
PROPERTY INVESTMENT HORIZON HILLS, NUSAJAYA Property type
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INDAH WALK OFFICE Property type
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60 | OCTOBER 2015 www.propertyinsight.com.my
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THE CITY OF ABU DHABI Your next international investment hotspot BY: FARA AISYAH FIRDAUS PETIAL / ALL IMAGES BY: LIN HO
he capital of Abu Dhabi is the largest of the United Arab Emirates’s (UAE) seven member emirates as well as the capital and second most populous city in the UAE, with the most populous being Dubai. However, According to UAE’s leading property portal Bayut.com, however, Dubai’s real estate market continued with stable pricings till July 2015, except for the high-end market. Abu Dhabi, on the other hand, had both rental returns and prices in positive growth rates on the back of heightened demand and controlled supply. Without a doubt, the city’s rapid development and urbanisation – coupled with the relatively high average income of its population – have transformed this buzzing capital into a large and advanced metropolis. Today, the city is the country’s centre of political and industrial activities as well as home to a major cultural and commercial centre. In fact, Abu Dhabi accounts for about two-thirds of the estimated USD400 billion booming economy! REAL ESTATE MARKET OVERVIEW In the latest report by Jones Lang LaSalle IP, Inc., it was recorded that following the 2013-2014 market recovery, Abu Dhabi’s real estate market in Q2 2015 saw steady growth across all asset classes. Nonetheless, due to the recent decline in oil prices that have affected the oil sector as well as government spending, it is no surprise that the pace of demand growth and market sentiment should wind down. While short term supply remains under control, the extent to 62 | OCTOBER 2015 www.propertyinsight.com.my
have also played a huge part in raising investor morale vis-à-vis the emirate.
which stable market conditions will continue would very much depend on the Government’s futurespending plans. Prices for the residential sales market have remained stable over Q2 2015, but there has been continued downward pressure on transaction volumes due to the decline in sentiment in spite of developers successfully launching new products. The rental rate for Abu Dhabi residential properties have remained stable in this quarter due to limited demand growth, but vacancies remain low in high quality, well-located schemes. The office demand in Abu Dhabi remains subdued due to contraction in some sectors, especially a slowdown in the oil sector and government infrastructure investment. In spite of this, Grade A office rents have remained stable due to minimal vacancies in quality stock. Further office completions throughout the year are expected to increase the marketwide vacancy rate, but with Grade A rents being upheld. By July 2015, around 2,397 residential units have entered the market while another 4,200 are expected to be completed by the end of this year. Some of these new units may
include The Wave and Hydra Avenue on Reem Island, Amwaj 2 in Al Raha Beach, The Views in Saraya and C59 in Rawdhat. Even after the mentioned deliveries, the residential stock would only stand at 244,000 units, which is considered limited in the face of the ever-increasing work force in the UAE’s capital city. Although 2015’s supply represents a 2.9 percent rise in total housing stock of Abu Dhabi, it is still the lowest increase the emirate has experienced in the past five years, making it an aspect that is likely to drive the prices and rents upwards in popular localities like Al Reem Island, Al Reef, Al Raha Beach, Al Ghadeer and Saadiyat Island. What’s more, the Government has been making successful endeavours in bringing Chinese investors on board by arranging road shows and similar awareness- and investmentboosting activities. Apart from that, the announcement of a real estate regulatory body similar to Dubai’s Real Estate Regulatory Authority (RERA) and new regulations regarding Escrow Accounts, Strata Law/Owners Associations, Land and Property Registration as well as the licencing of real estate companies
ABU DHABI GLOBAL MARKET According to the largest non-affiliated law firm in the Middle East, Al Tamimi & Co., the Abu Dhabi Global Market (ADGM) has published a range of regulations that apply to all those operating and owning property on Al Maryah Island, including Real Property Regulations and Strata Title Regulations. With effect from their publication on 14 June 2015, the Property Regulations and the Strata Regulations govern property matters within the ADGM, occupying the whole of Al Maryah Island and has been designated as the financial centre of Abu Dhabi. Al Tamimi & Co. also stated that the Property Regulations are significantly different to the property laws that apply elsewhere in Abu Dhabi and implementing comprehensive real property regulations in the ADGM will likely bolster investor confidence and encourage activity in the real estate sector in the area. As it is a financial-free zone and an investment area for property ownership by foreigners, investment opportunities within the ADGM provides foreign investors with a wider selection of legal structures for property investment. The Property Regulations introduce many concepts that are new to the UAE but may be familiar to those who are used to dealing with property matters in common law jurisdictions. The ADGM plans to establish its own courts that will hear on any matters arising from the Property Regulations and the Strata Regulations. The following property interests are recognised by the ADGM: Freehold title UAE or Gulf Cooperation Council (GCC) nationals or entities wholly-owned by UAE or GCC nationals can own freehold title to land and floors or units within buildings located in the ADGM. Foreign, non-GCC nationals and entities with www.propertyinsight.com.my OCTOBER 2015 I 63
INTERNATIONAL MARKET clear from the Property Regulations what the maximum term will be for an occupational interest before it will be regarded as a real estate right. Strata title The ADGM introduces the concept of strata title for multi-occupied developments, which provides for developers to establish owners associations to run common parts of developments. We will provide further detail on the Strata Regulations next month. Mortgages The Property Regulations contain provisions dealing specifically with the creation, registration and enforcement of mortgages of property within the ADGM. Statutory charges Statutory charges that impose restrictions on the use of, or dealings with, property in the ADGM are permitted under the Property Regulations. The Property Regulations do not define what is meant by a statutory charge, however it is likely to mean a form of security relating to an obligation to a government authority.
any degree of non-UAE or non-GCC ownership may not own freehold title to land in the ADGM (as is the case in the remainder of Abu Dhabi), but may own floors or units within buildings. The ADGM recognises the concepts of life interests and future or reversionary interests. Joint ownership is allowed by way of either joint tenancies or tenancies in common. Joint tenancy means that each co-owner has equal rights to the whole property and that on the death of one co-owner his share automatically passes to the other co64 | OCTOBER 2015 www.propertyinsight.com.my
owners. Tenancy in common means the co-owners can own different shares in the property and can pass on their shares in the property as they wish in their Wills. Leasehold title Leasehold interests and sub-lease interests of up to 99 years are allowed and leases may include a right to renew. Occupational interests created by licences are treated as personal contractual arrangements that do not create real estate rights. It is not
GENERAL PRINCIPLES The ADGM will apply the following general principles regarding property: • Any covenants affecting property that are considered by the ADGM Court to violate the public policy of the ADGM, the Emirate of Abu Dhabi or the UAE will be void and will have no force or effect. • In the case of any life estate, joint tenancy or tenancy in common, any tenant in occupation of a property is prohibited from destroying the property. Reasonable wear and tear is permitted. • There will be no merger by operation of law of any estate in property, meaning that the beneficial interest in a property will not be deemed to have merged with the legal interest or be extinguished in equity. A beneficial interest in a property is a common law principle, also known as an equitable interest, which
states that the beneficial owner, rather than the legal owner, of a property will have the right to income from the property or a share in the proceeds of sale of the property. On registration of a lease where the interest of landlord and tenant vest in the same person, no merger will occur unless parties expressly state in the lease that this should occur. • No interest in property, including a beneficial or equitable interest, can be created or disposed of except in writing and signed by the person creating or transferring the interest. • The concept of acquiring property rights by adverse possession is expressly disallowed. Any length of adverse possession will not result in acquisition of any right or title, beneficial or legal. Property Registration • The ADGM will appoint a Registrar and any person dealing with the Registrar may assume that the Registrar has all necessary authorities to act. • The Registrar will maintain the Real Property Register and may maintain it in any form including by way of electronic files. The Registrar will record all documents relating to the creation or transfer of property rights in the ADGM. • Musataha and usufruct interests are not specifically recognised by the Property Regulations as being distinct from leasehold rights. The Property Regulations do, however, acknowledge that there were existing rights granted under musataha and usufruct agreements at the time the Property Regulations were published on 14 June 2015 and these interests must be registered in the Real Property Register by 13 June 2016. • All documents lodged for registration in the Real Property Register must be in the English language and if the original documents are in another language they must first be translated. If there are any inconsistencies
between the original document and the document translated into English, then the version translated into English will prevail. The Property Regulations do not state whether translations will need to be carried out and stamped by official Abu Dhabi government or ADGMapproved translators. • Registered documents will have priority in accordance with the date on which they are registered, not according to when they were signed or dated. Earlier registered documents will take priority over later registered documents. It is, however, possible to agree to subordinate the priority of a document where all the parties agree in writing. • Information contained in the Real Property Register is conclusive evidence of the registration of any document, the date on which the document was registered and the contents of the document. • A document does not transfer a property right unless it is registered in the Real Property Register. The benefits of registration apply whether or not valuable consideration was paid. • Registration is conclusive proof that a person is the owner of a property interest in a property and that the
person’s title to that property is indefeasible. The Registrar will create folios for each registerable area of real estate in the ADGM. These folios may relate to whole plots or may be created for subdivided, approved strata title interests within plots. Transfers of part only of registered folios are not allowed. LEASES • Property in the ADGM may be leased for terms of up to 99 years. The term may be renewed on one or more occasion as the parties agree provided that the aggregate term of the lease (inclusive of any renewal terms) may not exceed 198 years. • Leases must be registered in the Real Property Register within 28 days of signing and must contain sufficient information for the Registrar to identify the property leased, the term and any rights of renewal. The registration fees are not yet known. It is possible to register a memorandum of lease in lieu of the full lease provided the memorandum contains all the information required by the Registrar. This may be useful where the parties wish to keep certain provisions in a lease confidential. www.propertyinsight.com.my OCTOBER 2015 I 65
INTERNATIONAL MARKET • Any variations to leases must be registered in the Real Property Register. • When a lease expires or is terminated, either the landlord or the tenant may apply to the Registrar to note that the lease has expired or has been terminated. It is not clear what will happen if neither party makes this application. • A surrender of a lease will be completed when the Real Property Register has been updated. MORTGAGES • Property or an interest in property, for example a lease, may be mortgaged by way of a registered mortgage. It is only possible to register the whole, and not part only, of a registered property title or a property interest. • Mortgages can be varied by the registration of a variation document, however this variation will have no effect on subsequent registered mortgagees unless those mortgagees agree. • Registered mortgages can be discharged by registering a discharge of mortgage. • A registered mortgagee has powers of sale, rights of repossession and rights to foreclose on default by a mortgagor but must first serve 30 days’ notice on the mortgagor to give the mortgagor the opportunity to remedy the default. WHY PROPERTY IN ABU DHABI IS A GREAT INVESTMENT? The markets in the Middle East are pretty jumpy at the moment, with political instability across the region, the sliding oil price and Dubai’s real estate market going in reverse. In these turbulent seas, only a few islands of calm remain and Abu Dhabi is one of them. According to the Managing Director of Crompton Partners Estate Agents, Ben Crompton, there are many reasons to put your money into real estate in Abu Dhabi. 66 | OCTOBER 2015 www.propertyinsight.com.my
1. The process Buying property in Abu Dhabi is a fairly simple and quick process. Thousands of transactions have been completed, plus banks and developers are experienced and secure. The unit mix is varied and expanding all the time. Most developments are less than five years old and popular with tenants as they stand out from the traditional older Abu Dhabi stock. 2. Returns Investments in some property in Abu Dhabi can earn returns of more than seven percent on your money net (look at net returns; not gross) — there are few bank accounts or funds in the
world that will give you that kind of return. There is also the potential to leverage your investment for increased returns from capital appreciation.
3. No rent cap Rent increases in Abu Dhabi are not capped and there is no rent calculator. Landlords may charge their tenants whatever the market will bear, so they can take full advantage of any rent increases. 4. Legal protections The law in Abu Dhabi is very landlordfriendly. In brief, there is no difficulty in evicting tenants once their lease term has finished. Just give them two
months’ notice, and you do not need a reason not to renew the lease. 5. Stability Property has gone through its boom and bust cycles like every other investment, but it remains a stable asset. Its prices and rents have recovered well since the global slowdown and Abu Dhabi’s significant income from oil and large capital reserves mean that continual growth prospects are good. Also, the UAE Government had learnt its lesson from the crashing housing market in 2008 and has been active (by use of loan to value rules and tinkering with registration fees) in reducing the chance of future bubbles. 6. Future prospects Property prices and returns in Abu Dhabi are linked to population and supply. At the moment, the Government has a large infrastructure expansion plan in place i.e. Etihad Rail, the
Midfield Terminal, Etihad Airways, the Louvre and Guggenheim etc summed up in the 2030 Plan, which will bring people to the UAE by creating jobs. Set against that is the tiny property supply in the pipeline — only another 18,000 units are due to come online in 2015 and 2016, and that’s just an increase of just 2.8 percent per year! Financial and professional services firm JLL and global leader in commercial real estate services Colliers International Group Inc. believe there is a current housing shortfall of more than 50,000 units. 7. Rent payment Rent in Abu Dhabi is paid upfront for the year, usually in one or two cheques (the second is post-dated), so this affords significant security of income and some safeguard against tenants absconding. 8.Low sophistication of current landlords As far as the rental market goes, Abu Dhabi is an immature market with
many first-time landlords. As a result, it suffers from low sophistication among property owners. Nimbler, more intelligent landlords can gain higherthan-average rents by understanding the market and what tenants are looking for. Furnishing certain units, for example, is just one of the ways you can command higher rents as very few of them are in Abu Dhabi. “Every real estate professional will tell you that now is the perfect time to buy as your investment is about to appreciate in value hugely and make you a millionaire overnight. No one can predict if your property value is going to go up or down, so trust your gut and don’t consult the stars. Buy an investment where your rent is going to pay your mortgage with a little left over for you. You’ll be paying off the debt, accumulating equity in the asset and pocketing some change from the rental return. Be a smart investor and make sure the numbers make sense.” said Crompton. www.propertyinsight.com.my OCTOBER 2015 I 67
JUSTE DO IT! Award-winning real estate agency Juste Land tells Property Insight the reasons for you to invest in Melbourne BY: DANIEL SIM
assion can only bring you so far if you don’t act on it and that is what drove husband and wife, Datuk Steven Ng and Datin Julie Chong, to start out Juste Land in 1997. Starting from a small team, the company’s big dreams led them to purchasing a four-storey corner shop lot in Cheras just within a year! Five years ago, they bought a d ouble -storey shop in SS3, Petaling Jaya, to become their branch for both their international and local projects. In fact, the team at Juste Land has grown to about 100 local negotiators, and 16 more in Australia with four of them based in Melbourne. Datuk Steven Ng served as a certified engineer in electronic and electrical engineering. Together with her father, a merchant fishery chairman in Kedah, as well as her brothers were involved in businesses in Malaysia and Melbourne, Australia, it was clear that business ran in this family’s DNA, leading Chong to her own endeavour in buying and selling property in the 1980s. “I liked property because I believe the asset is where the money is. I realised the top 10 richest men in the world had something in common, and that was having properties as one of their investments,” said Chong. Seeing that she included various commercial and residential properties under her investment portfolio, we gathered that Chong had her sights set on diversity. During her early stages of property investing, her strategy was to
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buy and flip for fast profit. “I had bought a land worth RM50,000 and sold it for RM100,000 within the same year, and then two houses in USJ 6, Subang Jaya. I’d sold mine for RM179,000 in the 1990’s, but according to my sister who still keeps that property, the price has shot up to at least RM600,000!” Aside from gaining lucrative passive income from her investments, Chong wanted to do more; she wanted to help people meet their basic needs i.e. getting a place to call home in a legal and responsible manner. Her spouse, Ng, on the other hand, was a Class A contractor who was very much involved in many BRDB Developments Sdn Bhd projects such as Bangsar Shopping Centre, Penaga Condominium and even Maybank’s headquarters. Although he spends
most of his time working with Chong, Ng still practices his profession by focusing more on consultancy. THE NEXT BIG THING In spite of times being perceived as tough for the property industry in Malaysia, Juste Land has claimed that it is doing fine. As a matter of fact, the realty is now focusing on Semenyih. “Since Semenyih is a niche and growing market, many big players such as SP Setia, EcoWorld and Sime Darby are moving into the area and buying plots of land there,” she said. Spurring growth in Semenyih comes as no surprise as the area’s uniqueness is centred around an education and leisure hub with the likes of Nottingham University and a Tesco supermarket. Another
plus point is the Kajang-Seremban Highway (LEKAS), which improves accessibility to Semenyih from various parts of town. “The current Ringgit devaluation is the opportune moment for you to accumulate more property, but you need to have enough cash reserve. Otherwise, you won’t be able to spend on property at all,” opined Ng. Due to inflation, property prices are bound to increase after a certain number of years if you invest in a good location, which is a stark contrast to investing in stock markets. Price fluctuation there is more volatile whilst assets, on the contrary, are a good hedge against inflation. “Malaysia is still a good place to harvest the future. If you have the resources, you can consider investing in different countries such as the United Kingdom, Australia or the United States of America. My friend managed to get a hold on several properties in the UK and earned a decent profit based on the currency exchange alone,” advised Chong. AUSTRALIA’S VIBRANT MARKET Ever since obtaining their real estate licence in Australia six years ago, Juste Land’s business continues to thrive in the international market, particularly in Melbourne, Australia. “We are about to launch the S easons Apartments at Doncaster East, one of the most sought-out suburbs in the east for Malaysian migrant investors, which is located approximately 16 kilometres away from the central business district (CBD) of Melbourne, and we are proud to be the development’s exclusive real estate partner in Malaysia,” said Juste Land ‘s S ales D irector, Patrick Pak. He adds that currently Melbourne is a city with 4.5 million people that continues to grow at an average rate of 60,000 new migrants each year. Pak believes that Melbourne will be the next big thing in Australia as it has the population to sustain the growth of the property industry. Based on the data provided from the Foreign
Investment Review Board (FIRB), it is showing that close to 90,000 migrants moved into Melbourne a lone l ast year. “There are three types of Malaysian buyers when it comes to foreign property investment in Australia. The first category of people are those who have permanent residency as they can afford to migrate the whole family to Australia,” he continued. “The second are parents; they will buy property for their children who are working and studying in Australia, whilst the third type of buyer falls under the rich and elite category. They don’t even have to migrate, but they will leverage their dollar and cents globally and this includes buying properties in Australia,” Pak elaborated. According to the Foreign Investment Revenue Board (FIRB) last year, Malaysians ranked fourth in the world to invest in Australian properties with a total value of AUD 2 billion, which surprisingly beat the numbers from Singapore in spite of the Ringgit depreciation situation. Plus, these investors know what they are doing. “Return of investment (ROI) or rental yield is the last thing that investors look for when investing in Australia,” shared Pak. “They know that investing in Australian property is for long-term prospects, and based on currency exchange rates, it is comparatively cheaper than buying properties in London or New York.” Pak shared that there is a misconception where a lot of people think that foreign investors are the majority of investors, where in actual fact they only stand for about 30 percent and the rest belong to the locals. Indeed, the Australian property market is a trillion dollar market, hence good government policies play an important role in encouraging property investors from overseas as well as protection for the local market. That way, there would be a balance between foreigner investors as well as local homebuyers for a better economy. www.propertyinsight.com.my OCTOBER 2015 I 69
ARE YOU AN EFFECTIVE REAL ESTATE INVESTOR? Despite advertisements claiming that real estate investing is an easy way to wealth, it is a challenging business as developing a long-term real estate investing business requires skill, effort and certain important habits.
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here is a Chinese saying that goes, “Good habits are better than good luck”. For example, if you are fat by nature but now you have a new habit of working out for one hour in the gym four days a week. So it’s possible that in six months’ time, you will be able to have a muscular figure like Chris Pratt in Guardians of the Galaxy! On the contrary, if you were born with a silver spoon with a habit of reckless gambling addiction, it doesn’t take a genius to figure out if you’re on the path to losing your wealth. Believe it or not, the same goes for real estate investors and with certain habits, you can make a difference between a normal real estate investor and a successful one. Let’s see if you have what it takes to be a highly effective real estate investor — here are seven habits you should possess:
KNOW THE MARKET This is very similar to any housewife’s routine of going to the market every week. As with any business, it is imperative to stay up to date with laws, regulations, terminology and trends that form the basis of a profitable business. Investors who fall behind risk not only of losing momentum in their businesses, but also legal ramifications if laws are ignored or broken. Effective real estate investors like to stay educated and updated of any regulatory changes or economic trends, and with such habit they would be able to acquire in-depth knowledge of their selected market(s). Keeping abreast of current trends – to name a few, changes in prices and rules – enable real estate investors to acknowledge current conditions in order to plan for the future. This will also allow investors to predict when trends may change, creating potential opportunities for a prepared investor.
KNOW THE PLAN A business plan allows investors to visualise the bigger picture, helping them maintain focus on the goals rather than minor setbacks. Real estate investing can be complicated and demanding, and a habit of constantly sticking to the plan keeps things on track. For example, if your plan is to acquire enough properties to generate cash flow for your retirement, an overheated market will never entice you to jump into the hot soup of risky flipping deals.
3 KNOW THE PLACE This is mostly endurance on your part as it is important for investors to develop a certain depth of knowledge for guaranteed success. Taking the time to develop this level of understanding is integral to the long-term success of an investor, and once a particular market is mastered, the investor can then move on to additional areas using the same in-depth approach. 4
KNOW THE RISKS — AND HOW TO REDUCE THEM Stock or futures market investors are inundated with warnings regarding the inherent risks that are involved in investing. Real estate investors, however, are more likely to
see advertisements claiming just the opposite — it is that easy to make money in the industry! Prudent real estate investors have a habit of risk assessment — hence adjusting their business strategies to reduce those risks, not only in terms of real estate deals but also the legal implications involved.
KNOW WHERE TO FIND HELP Learning the real estate investing business is challenging to those who like to do things on their own. Effective real estate investors often attribute part of their success to others — it could be a mentor, lawyer or supportive friend. Rather than risk time and money in tackling a single problem, effective real estate investors know it is worth the additional costs (in terms of money and ego) to embrace other people’s expertise. A network can provide important support and create opportunities to new or experienced real estate investors. So get out there and interact with mentors, business partners, clients and professionals such as accountants, lawyers, real estate agents, contractors etc. As real estate investing heavily relies on experiential-based learning, savvy real estate investors habitually seek help from experienced members in the industry.
KNOW THE PEOPLE Referrals generate a sizeable portion of customer base to a real estate investor’s business, so it is critical that investors treat others with respect. This includes business partners, associates, clients, renters and anyone whom the investor has a business relationship with. Effective real estate investors pay attention to detail, listen and respond to complaints and concerns, as well as represent their business in a positive and professional manner.
7 KNOW YOURSELF It’s sad to say that nobody is obligated to uphold a particular degree of ethics in today’s world. It would be easy to take advantage of this situation, but most successful real estate investors maintain high ethical standards. This business involves people, so an investor’s reputation is likely to be far reaching — an effective real estate investor would realise it is better to be fair, rather than see what they can get away with. All businesses revolve around people; investors can only benefit in the long run by operating with integrity and showing respect to associates and clients. If honesty and ethics are part of you, success in real estate investment will come easily, even if you are not a risk taker. CONTRIBUTED BY KC Lau and Dr Ong Kian Leong are both co-founders of the first ever online property investment course for Malaysians, called Property Method (www.PropertyMethod.com).
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REAL ESTATE FUNDS Are they same?
ther than the traditional approach to investing in real estate – buying the brick-and-mortar of physical properties – we can also add real estate exposure to our portfolio via derivatives such as Real Estate Investment Trusts (REITs), real estate mutual funds or even REITs mutual funds. It goes without saying that the advantage of using these alternatives is that it will allow investors to skip through the capital intensive of real estate investment, in which they would have to fork out a minimum 10 percent capital outlay (cold hard cash) that does probably hasn’t included legal fees and stamp duty etc. For small or young investors who have just started out, you need not lament the fact that you lack this required initial capital — don’t let it become a stumbling block for you to add real estate to your portfolio; there’s always REITs or real estate funds to look into. REAL ESTATE INVESTMENT TRUSTS (REITS) A Real Estate Investment Trust (or REIT) is a listed fund (or vehicle) that invests in a portfolio of income-generating properties. Generally, REITs are required to distribute up to 90% of the income received to unit holders, otherwise it may not qualify for some tax treatment (which is the advantage in the first place!). A REIT can be distinguished by the type of asset it holds in its portfolio — there are some that specialise in shopping complexes, commercial buildings and office towers. Some even hold a mixed portfolio covering the hospitality industry (hotels), hospitals andcommercial buildings altogether. Nonetheless, one thing investors must realise is that the REIT does not generate income or profit by trading these properties, instead the income is derived from the tenancy and rentals collected from the leasing contract. Due to its high distribution of the generated income, REITs
are considered as safe and stable assets for investors. As such, a REIT investor stands to gain from two possible sources: one is the almost-guaranteed income distribution in the form of dividends whilst the other is from capital appreciation, in the event that the price of a particular REIT is currently trading on the stock exchange. Although gain in the unit price depends on the supply-and-demand factor like any common stock listed in any stock market, the REIT’s income distribution is more popular as it is more of a ‘sure feature’. In countries with low interest rates like Singapore and Japan, REITs often act as a replacement to fixed deposits. REITS MUTUAL FUNDS On a separate note, a REITs mutual fund invests into REITs that are listed on the stock exchange; in short, this type of mutual fund invests into the equity market, but focusing only on the REITs stock in a particular exchange market. Its benefits are similar to investing into REITs directly and is more suitable for investors looking for consistent income. REAL ESTATE MUTUAL FUNDS These, on the other hand, are funds that are pooled by investors with similar objectives. They are commonly equity (shares) of real estate companies i.e. developers, construction companies, property investment companies that derive revenue from rental income and/or capital appreciation from real estate, property development companies that invest into property management businesses, or companies that conduct businesses related to this industry. In other words, it is an equity mutual fund that mainly invests into the real estate sector. As a mutual fund has readily available liquidity to investors who want to redeem the unit and exit the fund, this fund will not hold or invest into real properties directly by owning properties or land etc. Therefore, such funds www.propertyinsight.com.my OCTOBER 2015 I 73
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REAL ESTATE MUTUAL FUNDS
PRIVATE EQUITY REAL ESTATE FUNDS
No (and close-ended)
Growth / income
High subscription fee
REITs that hold real properties
Equities of property-related counters and REITs
Subjected to price movement on listed exchange
Subjected to changes in Net Asset Value (NAV) of the fund
Subjected to changes in Net Asset Value (NAV) of the fund
Extremely low and it is based on the value of the properties
High (sell on open markets)
High (fund manager will repurchase from investor)
High (fund manager will repurchase from investor)
Low (ability to exit may be restricted by agreement and subject to other conditions)
subjected to more volatility as its Net Asset Value (NAV) are will very much depend on the values of the assets (equities) it holds. As opposed to REITs – whereby the main income of the fund is from rental collection according to the leasing or tenancy contract – real estate mutual funds may opt for growth opportunities at the expense of the income’s consistency, therefore reinvests its profit for more instead of distribution amongst the investors. PRIVATE EQUITY REAL ESTATE FUNDS These funds are not listed on the exchange, but basically available to high net worth or institutional investors. These type of funds invest directly into the properties and have low liquidity as it may involve a long term strategic decision. It may invest into new townships and, depending on the strategy or category of the private equity fund, some may even develop other projects. Hence, private equity real estate funds anticipate to only realise gains when the market matures a few years later. It is usually suitable for investors looking for growth or those who seek for diversification from the exposure of traditional asset classes and hold it as an alternative investment. WHAT ARE THE COSTS? Compared to a REIT, a REITs fund may mean additional fees it typically charges investors somewhere between 5.0-5.5% as an entry fee if you invest into the fund via a bank or unit trust consultant; via an independent financial advisor (IFA), however, the fee is generally lower and can be 0%. Nonetheless, a REITs fund offer investors a good opportunity and a variety of portfolio as the it generally will invest into multiple REITs, as opposed to a particular office or shopping mall REIT that lacks this type of diversification and scalability. Of course, if we were to invest into REIT, stockbroking fees are chargeable. A real estate mutual fund – much like a REITs fund – will incur sales charges
from 5.0-7.0% via a unit trust consultant or bank. If you are one that sees abundant growth opportunities in the real estate sector, then a real estate mutual fund is one of the good options to considering adding to your portfolio as it will provide growth opportunities in the long run. The distributed income to unit holders by a REIT or REITs fund is subjected to a one-time withholding tax of 10.0% for individuals, whereas capital gain from REITs, REITs funds or real estate mutual funds are not taxable in Malaysia. An alternative to hedge against inflation and the weakening currency. At this current juncture where the Ringgit is weak, it is perhaps best for an investor to consider a REITs fund that invests in the Asia Pacific region, or a global or Asian real estate fund. This is appropriate given that the interest rate environment remains low in the Asia region (Japan, Australia, Singapore, Hong Kong etc), therefore REITs should have a stable outlook. Also, as these REITs are listed on overseas markets, it means the NAV of the REITs fund will stand to gain, should the Ringgit depreciate against these Asian currencies. Hence this type of REITs fund will be able to serve the needs of investors for consistent income in the form of dividends distributed by the REITs fund, as well as additional gain from currency depreciation should the Ringgit continue its weak trend against these Asian currencies.
CONTRIBUTED BY Kevin K.M. Neoh is a licensed financial planner who is licensed by the Securities Commissions Malaysia and Bank Negara Malaysia.
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THE IMPORTANCE OF MEASURING & MONITORING Investing where you rely on your skills, expertise and experience will always – over a medium to long term – outperform speculators who rely on luck.
ne skill sophisticated investors implement time and time again to drive profits higher is with careful measuring and management of their money and investments. Indeed, it is well known among the wealthy that increasing profits from savings (i.e. reducing expenses) is much quicker and easier than higher profits derived from increasing rents. Some simple math prove the point: assuming you pay eight percent in property management fees, then for every dollar of extra net income you must first earn $1.087 cents in additional rent 1 . The additional 8.7 cents is needed 1 to pay the eight percent management fee so you end up with a dollar in your pocket2. In other words, you would have to find +8.7 percent additional rental income for every dollar of additional net revenue you want to earn.
Yet using savings to increase profits require no additional effort; a dollar saved is a dollar made (as there is no management fee component)! The extra effort required to earn income ‘above and beyond’ is akin to climbing a ladder to get an apple at the top of the tree while there is low hanging fruit available for the picking. So why don’t more investors seek to save rather than expend effort to earn? While many investors pick up a thing or two about buying property here and there, they’ve never been taught how to properly measure and efficiently manage their money and investments. MEASURING Measuring performance does not require a degree in accounting; all that’s required is a goal for your desired income and expectations of the money going out. MONITORING The simple act of having a basic budget as a tool of accountability would place you in the top 10 percent of all investors. If you want to be in the top five percent, then all you need to do is compare your actual performance against your budget each month, then decide whether you have achieved your goal. Or if you need to, take action and recalibrate your incomings and / or outgoings. The alternative is to buy, hold and hope that your investment performs like you hope it will and only ever get round to checking when it’s time to tally up for your annual taxes. Could you imagine a successful multinational company operating in this ‘make it up as we go along’ way? Why should you expect superior outcomes and long term performance?
($1.087 or ((1 ÷ (1 – .08)) 1.087 – (1.087× 8%) = 1
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Sample Performance Review Here’s a simple template for a buyandhold property: MONTH BUDGET
INCOMING - Max. rent - Vacancy Gross rent OUTGOINGS - Management - Ownership - Taxes - Other Total outgoings NET OPERATING INCOME - Finance NET CASH FLOW + Principal loan pmts - Depreciation +/- Chg market value PROFIT
Max. rent: this is the theoretical maximum rent that could have been collected in the period. Vacancy: this is the amount of income that will be lost due to vacancy. Gross rent: the amount of rent less vacancy. Management: The cost of property management associated with leasing and rental collection. Ownership: any cost incurred to own the property, including utilities, repairs (but not capital expenditure as this should be added to the property’s value), insurance, body corporate costs etc. Taxes: any government charges levied on home owners. Other: any other costs that do not fit in elsewhere. Total outgoings: the sum of all outgoings. Net operating income: the sum of gross rent less total outgoings. Finance: principal and interest loan repayments (principal loan repayments will be added back later to determine profit). Cash flow: the sum of net operating income less finance costs. Principal loan payments: the portion of principal repaid in the loan repayment must be added back as this will not be tax deductible. Depreciation: the amount of depreciation expense. Your accountant may need to provide you this figure as there are specialised rules that vary within asset classes and country to country about what and how much can be claimed. Change in market value: this is the amount of budgeted appreciation (or loss) in capital value expected from movements in market value. Profit: Net cash flow + principal loan payments – depreciation – loss in market value + gain in market value.
FURTHER ANALYSIS Setting benchmarks for cash flow and profitability as well as going to the effort of comparing actual to budget each month is an excellent first step, but a few more calculations really get the job done. Capitalisation rate (Cap rate) ((Net operating income ÷ purchase price) × 100) The cap rate represents the asset’s return from operating (rental) activities. You can compare the return with other assets to gauge performance and to see whether your risk is being adequately compensated. Return on equity ((Profit ÷ current market value) × 100) By using profit and current market value, you price in the impact of movements in market value. This is a particularly important calculation for investors holding property for growth. Cash-on-cash return (cost) ((Net cash flow ÷ (purchase price – debt) × 100)) The cash-on-cash return represents the ‘cash back’ return for every ‘cash down’ dollar invested in the property. This calculation considers the impact of leverage on performance. Cash-on-cash return (FMV) ((Net cash flow ÷ (fair market value – debt) × 100)) The denominator is usually purchase price, but using fair market value (less debt) would be more appropriate for assets that were refinanced. INTERPRETATION Every investor should consider performance in the light of answering this question. Is this investment returning: • The most money • For the least risk • In the quickest time • And the lowest aggravation If your property’s performance allows you to answer in the affirmative, then great! If not, what is unsatisfactory and what can you do about it? Are your investing results indicative of your skills in measuring and monitoring your assets? When will your financial future be important enough for you to make the effort needed for sustainable longterm success? If you want to be more successful with your investing, then measure and manage more, and leave less things to chance.
CONTRIBUTED BY Steve McKnight is a best selling author and has bought over 500 income-producing dwellings. He will be the keynote speaker at the upcoming Property Investment Summit & Expo (PRISM) in November 2015.
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YOUR NETWORK IS YOUR NET WORTH
s cliché as it may sound, who you know or mix with really affects the quality of life you are living. From an investor’s point of view, we will always be bombarded with tenant issues and the motivation to source for new property. At some point, we are bound to hit a roadblock and wouldn’t know what to do, this is when having a support system in place when things go wrong is absolutely critical. Property investment can be a very lonely business, so reach out to other investors, organisations and resources that can help you. Legislation and regulations are always changing and you will need to be updated constantly. There is a huge variety of resources available and it is advisable to make use of everything that is out there. If you have not rented out a property before and intend to do so now, it would be a good practice to attend a crash course on how to be a landlord. In our upcoming PRISM Summit & Expo, which will be held on 14-15th November in Sunway Pyramid Convention Centre, we will revisit these issues and challenges. By attending similar conventions, you will be acquainted with like-minded investors — who knows, they might even be part of your joint venture one day! Apart from this topic, there are also free seminars at selected property fairs that can help you in certain aspects of investment. Within your networking circles, there are contacts you need to have, such as a property agent, lawyer, repairmen etc... It is a must! Get them out for drinks at least once a month, especially property agents, so that you can learn more about the market, inventory in certain projects as well as transactions. 78 I OCTOBER 2015 www.propertyinsight.com.my
Even though you intend to manage properties on your own, property agents are an absolute gold mine of information and can provide excellent advice on a range of tenancies, letting as well as property matters. Of course, it is compulsory to deal with a registered negotiator or agent — you may easily verify this just by the tag they are wearing. Property investment has become increasingly popular via the number of online property forums like Lowyat.NET. These can be highly informative, plus it affords you the opportunity to ask questions and contribute freely. As with most things, be prudent to double-check information and be clear of the source of the claimed facts. Many of these sites have a friendly, communal environment and offer great insight, practical advice, tips and even friendship to both novice and experienced investors. Having a support network not only makes your life easier; it will also help you learn and enjoy the process of property investment much more through each other’s experiences. Remember: contact is built one at a time. Happy investing!
CONTRIBUTED BY KK Chua is the publisher of Property Insight magazine. He is also a registered real estate agent and an investor with more than 10 years of experience in the industry. He can be contacted at firstname.lastname@example.org.
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