Property Insight May 2017

www.propertyinsight.com.my

COVER STORY

TA GLOBAL

M AY

AREA FOCUS

SUNGAI BESI

2017

MAIN FEATURE

FORECLOSURE & AUCTION KDN PP 18181/04/2013 (033492)

M AY 2 0 1 7 RM7.50(WM) RM9.00(EM)

From FREEHOLD

GREENERY WITHIN THE CITY

SPNB ASPIRASI SDN BHD

(490479-v) MILIK PENUH SYARIKAT PERUMAHAN NEGARA BERHAD _SPNB)

016 321 9033 / 017 779 1688

NO. Lesen Pemajuan Perumahan: 14153-1/11/2017/ (0934(L) | No Permit Iklan dan Jualan: 14153-1/11/2017/0984(P) | Tempoh Sah: 05/11/2015-04/11/2017 | Tarikh Dijangka Siap: Mei 2019 | Hak Milik Tanah: Pegangan Bebas | Gadaian Tanah: Tiada | Pelan Bangunan Diluluskan Oleh: Majlis Perbandaran Sepang | No. Rujukan Pelan Bangunan: MP Sepang 600-34/2/71(12) | Jumlah Unit dan Harga: Pangsapuri (1,168 Unit) MIN: RM395,460.00 MAKS: RM958,247.00

EDITOR’S NOTE

EDITORIAL

Believe you can and you are halfway there

Dato’ KK Chua, Editor-in-Chief

Editor-in-Chief Dato’ KK Chua kkchua@propertyinsight.com.my Sub Editor Gabriel Lim Writers Mages PV Lingam Felicia Soon

T

he month of May brings yet another exciting time for all of us here. Our PIPDA (Prestigious Developers Awards) 2017 is happening this month itself and we can’t wait to share the highlights of this esteemed award ceremony with you guys in the next issue.

This issue, we have TA Global as our cover story. Our writer, Mages interviewed CEO Tiah Joo Kim at Menara TA One to find out about the unique attractions of Damansara Avenue and Ativo Suites and we hope you guys will enjoy reading it, especially for those of you who are looking for a place to call your own in up-scale Damansara.

While we all know the importance of owning our own home, some of us may be struggling to make ends meet. Fret not, as in our main feature about foreclosure, auction and bankruptcy, we also share on what are the options that one has, when stuck in a dire situation of being unable to keep up with housing loan instalments.

Our next feature, RPGT by another writer, Felicia Soon will explain more in detail on why our federal government levies tax on the selling of properties bought within 5 years and how this initiative is done to reduce the buy and flip strategy by some investors and protect the interests of first time home buyers.

Lastly, our area focus story brought us to explore Sungai Besi where the previously largest tin mine in Malaysia will house the future KL terminal for High Speed Rail (HSR) to Singapore which will be located in the site of the Royal Malaysian Air Force (RMAF) Airbase, once the airbase is relocated to Sendayan, Negeri Sembilan.

Before I end, I hope you will enjoy reading our May issue and remember to drop by at our Property Insight Showcase happening on 3-7 May at Nu Sentral. We welcome any feedback or contribution and here’s wishing all mothers a ‘Happy Mother’s Day!’ Cheers!

CREATIVE Creative Director Sarah Tan sarah@propertyinsight.com.my Designer Megat Khuzamir BUSINESS DEVELOPMENT Sales marketing enquiries support@propertyinsight.com.my +6012 3788 683

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On the cover : 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.

Tiah Joo Kim, CEO,

TA Global Berhad

CONTENTS

28 HOME+

10

44 Keep Strangers at Bay Introducing i-Neighbour - A Secure Multi-Functional, Cloudbased Access Management

COVER STORY

ROOKIE INVESTOR

Crafting Alluring Metropolitan Liveability

Having a visionary mind is the key in whatever you do, whether it is investing in properties or running your own business

10 TA Global: Reaching for New Heights MAIN FEATURE

15 Foreclosure, Auction and Bankruptcy You Should Talk With The Lending Bankers

FEATURE

20 What you need to know about RPGT? Uncover the Realities of RPGT and its Impact on Affordable Housing

24 Economic Anomaly: The Impact on Property Investment in Malaysia Set Your Perspectives on Global Economic Market Changes

26 Niche Products Vs Mass Market Product Which Offers Better Returns on Invesments?

DEVELOPER OF THE MONTH

28 Mayland: Elevating Quality of Life Building an affordable luxury for an exclusively niche market

AREA FOCUS

34 Sungai Besi

46 Speaking From The Heart

PERSONALITY OF THE MONTH

48 The Estate - An Attractive Investment In Real Estate BON Estates Sdn Bhd leads the way with its flagship project in the Klang Valley

ENTREPRENEUR INSIGHT

52 SO.LEK : Siblings’ Insights Into Entrepreneurship Brand awarenessas a vital yardstick in business

INTERNATIONAL

54 The Fallacies of Investing Overseas INDUSTRY INSIGHT

56 Landserve- A Wise and Tactical Synergy Competency is an edge in delivering top-notch services

LEGAL

59 Letter of Appointment and Letter of Offer to Purchase STRATEGY

A historical township under transformation

62 Investing in Properties Along the MRT Lines

INVESTOR NEXT DOOR

66 10 Signs of Property Flipping Disasters

40 Do your Research

Making wise decisions is crucial when it comes to investing in properties

68 Does Property Investment Make You Broke?

70 Know When To Walk Away

DINOSAURS ROARING GOOD TIMES @ SKYWORLD

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ity developer, SkyWorld Development Group (“SkyWorld”) saw more than 1,200 visitors turned up at their FIRST “Dinosaurs Come Alive” show and tell exhibition at its flagship SkyWorld Property Gallery @ Setapak held recently.

Mr Lee Chee Seng, Chief Operating Officer of SkyWorld shared, “The whole idea of this “Dinosaurs Come Alive” event is to further engage with our purchasers and the community at large and we genuinely want to offer a meaningful event packed with engaging and educational aspects. As a community developer, we are truly humbled and honoured to record such a big turnout. We saw a lot of budding dinosaur experts engrossed in our show and tell session and they are keen to learn more about the mysterious monsters. Hence we are glad to be part of their educational experience.”

SkyWorld has been enjoying positive take-up on all its projects and this Dinosaurs show and tell exhibition was part of SkyWorld’s engagement initiatives as well as their appreciation gesture to the purchasers for their amazing support.

www.propertyinsight.com.my MAY 2017 I 5

NEWS & EVENTS

MAH SING BAGGED ‘2017 PROPERTY DEVELOPMENT COMPANY OF THE YEAR’ BY FROST & SULLIVAN

A

nother milestone achieved for Mah Sing Group Berhad as they won the 2017 Frost & Sullivan Malaysia Property Development Company of the Year. The developer was evaluated based on the Group’s financial innovation, brand equity, customer ownership experience and customer service. The Group Managing Director of Mah Sing, Tan Sri Dato’ Sri Leong Hoy Kum as a market -driven developer, they need to stay ahead and push towards bringing the company to the next level of success.”

Mah Sing was able to differentiate itself by launching innovative designed projects in strategic locations, while keeping properties affordable and attractive.Despite a challenging 2016, Mah Sing’s operating profit grew 2.6% to RM469.9 million. The Group also achieved a return on equity of 14% on average over the past 5 years as compared to the industry average of 9% to 10%.

Apart from that, ​Mah Sing’s transformation process continues with the introduction of the Group’s new tagline “Reinvent Spaces. Enhance Life​“ and the revealing of its new logo.​

SP SETIA MERGES WITH I&P GROUP FOR A LARGER SYNERGISTIC OPPORTUNITIES

S

P Setia and I&P Group, two longstanding property brands that have strong track record of delivering value to homeowners and investors merged into one entity on 14 April 2017. The indicative price for the Proposed I&P Acquisition is estimated to be within the range of RM3.5 billion to RM3.75 billion, with total landbank 10,000 acres. The pact had entered into a non-binding Memorandum of Intent (MOI) to commence negotiations on the proposed acquisition by SP Setia of

6 | MAY 2017 www.propertyinsight.com.my

the entire equity interest in I&P Group Sdn. Berhad (I&P Group), which has remaining 4,263 acres of land banks to fast track its expansion plan (“Proposed I&P Acquisition”).

The acquisition of I&P Group will allow SP Setia to tap the synergistic opportunities that I&P Group, which could offer land banks which are located within the growth areas in the central part of Klang Valley and Johor Bahru, where SP Setia has charted successes via its “Setia” brand.

E&O REVEALED ARIZA SEAFRONT TERRACES

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remier lifestyle property developer Eastern & Oriental Berhad (E&O) again revealed “The Ariza Seafront Terraces” amassing 87% take up rate. These Phase 2, freehold 2 and half storey terraced homes are the final project of landed properties within the thriving world-class residential enclave, with an estimated of gross development value of RM90 million.

Built-ups of the Ariza terrace homes range from 3,488 sqft. for the intermediate units to 3,781 sqft. for the corner units. The Ariza homes present a spacious living for families, with internal courtyards that open to the sky, high ceilings, wide windows for breezy interiors. Each Ariza unit comes with four generously sized bedrooms, with two bedrooms paired with elegant ensuite bathrooms. E&O’s established brand and reputation as a premier lifestyle property developer contributed to the Group’s recent success in securing a milestone joint-venture partnership with Kumpulan Wang Persaraan (KWAP) to jointly develop Phase 2A of Seri Tanjung Pinang Phase 2.

TRITERRA & NAZA TTDI FORMALISE PARTNERSHIP WITH FOOTBALL MATCH

I

n conjunction with officiating The MET Corporate Towers constructed by Triterra Metropolis Sdn. Bhd. (Triterra) and Naza TTDI, both developers met up recently for a friendly football match aptly named the ‘Triterra Partnership Cup’ at the Royal Selangor Club field in Bukit Kiara.

Located in KL Metropolis area, the MET Corporate Towers is a new premium grade corporate landmark building, strategically located in the middle of Mont’ Kiara.

“This partnership between Triterra and Naza TTDI to develop ‘The MET Corporate Towers is made up of passion, teamwork and dedication,” said Triterra Chief Executive Officer, Christopher Lim. “We are pleased to have Triterra as one of our strategic partners to realise the vision of our master plan development of KL Metropolis,” said SM Faliq SM Nasimuddin, Deputy Executive Chairman

KNIGHT FRANK LAUNCHES THE WEALTH REPORT 2017 (11TH EDITION)

K

night Frank, the independent global property consultancy, recently launched the 11th edition of The Wealth Report. The report tracks the growing super-rich population in 125 cities across 89 countries. The number of Ultra-HighNet-Worth Individuals (UHNWIs) – those with US$30m or more in net assets – rose by 6,340 in 2016, taking the total to 193,490.

At a regional level, North America is still be the key hub for UHNWIs in 2026, with a population of 95,860. However, Asia will be starting to challenge for this title. At present, Asia has 27,020 fewer UHNWIs than North America; by 2026, this difference will have shrunk to just 7,680.

Sarkunan Subramaniam, Managing Director of Knight Frank Malaysia commented, “While Malaysia millionaires are mostly baby boomers, China and India have a large amount of millionaires among the Gen X which are expected to grow in the next few years. While North America tops the chart with highest number of millionaires, Asia is forecast to rise by 71% over the next decade.”

and Group Managing Director of Naza TTDI, Deputy Executive Chairman and Group Managing Director of Naza TTDI.

www.propertyinsight.com.my MAY 2017 I 7

NEWS & EVENTS

JPPH: 2106 TRANSACTIONS DECLINE BY 11.5%

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he local property segment recorded an 11.5% decline in volume and 3% drop in value last year compared with 2015, as the market continued to remain soft, said the Valuation & Property Services Department (JPPH). At the launch of its Property Market Report 2016 recently, JPPH said the residential sub sector continued to drive the overall market with 63.4% contribution in volume and 45.1% in value.

“Affordable houses continued to be in demand with more than 65% of the residential transactions within RM300, 000 and below. As the market continued to soften, the number of new launches declined to nearly 53,000 units, reduced by 9.8% compared with more than 58,000 units in 2015,” said Dato’ Wira Othman bin Aziz, Deputy Finance Minister of Malaysia.

JPPH said sales performance was also lower at 31.4% compared with 42.1% in 2015. The slow market absorption also led to the increase in overhang. The numbers

grew to 14,792 units worth RM8.56 billion, up by 43.8% in volume and 70.7% in value against 2015.

In the office and retail sector, JPPH said vacancy continued to increase. Kuala Lumpur and Selangor recorded 2.74 million sq meters of vacant office space,

TROPICANA METROPARK UNVEILS SHOW UNITS FOR PAISLEY SERVICED RESIDENCES

T

ropicana Metropark, Subang Jaya unveiled two brand new show units for its third and latest residential phase, Paisley Serviced Residences. With a total gross development value (GDV) of RM 7.2 billion, the 88-acre Tropicana Metropark is inspired by the world’s most livable city, Melbourne and its Yarra River.

Viewing the 9.2-acre Central Park at the heart of the development which acts as the green lung to promote holistic living, potential home buyers could envision enjoying a stroll along paths permeating the park or admire the waterways flowing within it. Priced from RM528,000, Paisley Serviced Residences consists of 2 iconic towers with a total of 587 units.

With built-ups ranging from 601 to 1491 sqft., the units feature layouts designed to maximise views and natural lighting.

8 | MAY 2017 www.propertyinsight.com.my

an increase of 16% compared with 2015.

Vacant retail space also increased to 2.7 million sq meters, which was an increase of 11.9% against 2015.

On the outlook, JPPH said the property market is expected to remain soft over the next couple of years.

JKG LAND BERHAD LAUNCHES THE ERA @ DUTA NORTH

P

roperty Insight was invited for media night event at the JKG Land Berhad on 14th April 2017. The media was invited to reveal their flagship mixed development project The Era @ Duta North. The freehold consists of 6 residential towers, a 3-storey retail development called Fiesta Walk, 6 acres of landscaped Forest Village, a link bridge and 11 acres of wetland.

At the launch was enclosed the Forest Village with half-century old forests trees and first 2 DAWN-themed residential towers, which has 921 units. Fiesta Walk is a 277,000 sqft. interconnected retail space. The project design was inspired by European hilltop market towns offering outlets and al fresco dining. Other amenities are water maze, tree-houses and gourmet kitchens for outdoor activities.

The proposed price for the residential units starts from RM375,900, which was described as a competitive based on an average of RM600 psf for a freehold property in Kuala Lumpur.

TAHPS GROUP LAUNCHED BUKIT PUCHONG COMMUNITY APP

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EO of TAHPS Group, Eugene Khoo launched its very own Bukit Puchong Community App on 22 April 2017 to ensure a faster way of communication and community-centric engagement among the residents in the township. The

Community App serves to provide the residents with information on safety matters, up to date happenings around the township and help to deter crime. The App carries a tagline to support its objective i.e. “Stay Safe, Stay Alert, We Care�.

Being a corporate social responsibility initiative, it also featured emergency assistance, intercom call, real time notice board and visitor registrations.

The event held at Bukit Puchong Property Gallery had visitors downloading the app and getting access a range of features at a touch via their smartphones. The App would allow buyers from Epic Residence and Foreston to have access on four safety features on their mobile phones.

Eugene said this app would enhance the desire of the people to come and live in Bukit Puchong.

Royal Malaysia Police (PDRM) via the Subang Jaya Police District Headquarter also held talks on crime prevention with safety demonstration and interactive dialogue with the public too.

www.propertyinsight.com.my MAY 2017 I 9

COVER STORY

TA GLOBAL:

REACHING FOR NEW HEIGHTS Crafting Alluring Metropolitan Liveability BY: MAGES PV LINGAM

Damansara Avenue Night View 10 I MAY 2017 www.propertyinsight.com.my

PERSONALITY OF THE MONTH

T

A Global Berhad (TAG) Chief Executive Officer Tiah Joo Kim is the second generation head of the public-listed property group that was established by his parents, Datuk Tony Tiah Thee Kian and Datin Alicia Tan Kuay Fong.

The TA Group was well known as a stockbroking giant, especially in the 1990s, with its broking arm TA Enterprise Berhad. Today, real estate arm TA Global has carved out a name of its own as a formidable property player, involved in property development, investment and management. The company has spread its wings all over Malaysia, Canada, Australia, Singapore, China and Thailand.

Joo Kim, who took over the reins of the TA Global in January 2016, is driven by his passion for quality real estate and design. Being a hands-on person, he doesn’t shun routine jobs and pays attention to details to set the standard for the company and his team of competent upper-tier management. He keeps up with the latest technologies and updates himself concerning the international real

www.propertyinsight.com.my MAY 2017 I 11

COVER STORY WHAT’S IN STORE AT ATIVO SUITES? The Damansara Avenue sales gallery will be publicly launched by mid-2017, and its first offering will be Ativo Suites.

This freehold residential project, comprising 668 units of serviced residences spread over two towers, incorporates expert architectural and design concepts

by GDP Architects that will be luxurious and functional.

Ativo Suites comes with built-up sizes ranging from 499 sqft to 1,498 sqft per unit, attracting couples and young families. The suites will be equipped with comprehensive amenities, including Bosch appliances - fridge, microwave oven, hob and hood and washing machine cum dryer, kitchen cabinets with solid surface worktops and soft closing drawers, airconditioning systems for living, dining and bedrooms, built-in wardrobes, Samsung digital door lock, video and audio intercom system and an incorporated smart home system application, amongst others.

Loads of fun and entertainment are in store for families and friends with the comprehensive podium and roof top facilities provided, such as an infinity pool, sky Jacuzzi, theatre room, games room, sky dining and kitchen. Active and adventurous millennials can also take advantage of the fully equipped gymnasium, squash

Damansara Avenue Day View

estate and financial markets, community lifestyles, design trends and more.

Millennials prefer easier, faster and manageable commutes as well as integrated mixed-use developments to complement their lifestyles, Joo Kim said.

Having listened to the needs and wants of the young community, TA Global will incorporate comprehensive amenities and green concepts into the masterplan, which includes retail lots, office hubs and residential apartments, as well as a dedicated sports complex and a performing arts centre. This, Joo Kim noted, would save time and improve the quality of life.

WHERE LIFE CONNECTS AT DAMANSARA AVENUE Joo Kim is currently lining up a smorgasbord of new property projects that will establish a new benchmark of quality, style and excellence for TA Global.

“Execution of these projects is a priority for me as this will build the strength of the company,” he said.

First up is the launch of the revamped Damansara Avenue master plan. Setting the pace for an invigorating lifestyle, SUPERIOR ACCESSIBILITY the Damansara Avenue is the first and Damansara Avenue boasts easy only integrated mixed-use masterplan connectivity to major highways, namely development in Bandar Sri Damansara, Damansara-Puchong Highway (LDP), New and will epitomise an urban living concept Klang Valley Expressway (NKVE), Sprint within 48 acres of freehold land, with a Expressway’s Penchala Link, as well as gross development value (GDV) of RM7.6 with the KL-Kuala Selangor trunk road. billion. The master plan is designed by Added future accessibility includes a award-winning architects Veritas Design proposed bridge link to the upcoming Sri Group and RSP Architects, with extensive Damansara East Mass Rapid Transit (MRT) M101 Skywheel’s Studio F.A Porsche landscaping

by JRDexclusive Design. Design Suites by station.

12 I MAY 2017 www.propertyinsight.com.my

PERSONALITY OF THE MONTH court, badminton and basketball court, meditation yoga decks, reflexology path and aerobic yoga studio.

Ativo Suites makes a compelling investment choice for both rental returns and appreciation. After all, its neighbouring Azelia Residences, also by TA Global, was launched and sold out in 2011. The most popular unit was the 614sqft unit, which was sold at RM400,000. It now commands an average rent of RM1,800 per month, or a 5.4% annual rental yield, and a current market value of RM590,000 — up by 47.5%!

OTHER TA GLOBAL PROJECTS TA Global is probably best known for the Trump International Hotel & Tower Vancouver development in Canada, which was successfully opened early this year.

“I am excited to see all that was planned and envisioned has materialised,” said Joo Kim of the RM1.23-billion, 63-storey tower, which carries Donald Trump’s name, even though the President of the United States has no stake in the project.

TA Global also has a RM2.15 billion project, comprising two luxury residential towers with a five-star hotel on Jalan P. Ramlee, directly across from the Petronas Twin towers, which is expected to be launched by end-2017.

Ativo Suites Sky Dine

Other projects in the pipeline include a RM2.3 billion residential development on 3.12 acres of prime freehold land on Jalan Bukit Bintang; a RM450 million landed master plan development on 95 acres in Kluang, Johor, targeted for launch in 2018; the RM2.5 billion Damansara Avenue Ativo Annexe, targeted for launch in the fourth quarter of 2018; and a RM482 million residential high-rise development on 4.55 acres in North Kiara.

Meanwhile, TA Global’s Little Bay Cove estate in Sydney is valued at A$280 million

(RM922 million) and is gaining popularity among investors in Australia.

VALUABLE INSIGHTS The young CEO dedicates his success to his strong faith in God, followed by his parents who have been a source of motivation, and a competent team committed towards achieving the company’s objectives.

He has learnt from the initial years in the company that being in the property business is tough. But while the property industry has evolved from conventional

Ativo Suites Infinity Pool www.propertyinsight.com.my MAY 2017 I 13

COVER STORY

Ativo Suites Gymnasium brick-and-mortar to a technology-assisted one with virtual video marketing and drones capturing 360-degree aerial views, at the core of it, what both buyers and developers want is quality offerings, Joo Kim asserts.

Groomed since young to take over the family conglomerate, Joo Kim admits that he and his parents may share different outlooks on many things due to differences in life experiences and social exposure.

However, he credits his father, Datuk Tony Tiah, as being his mentor. The elder Tiah has handed down invaluable advice and lessons to Joo Kim, such as to always try his best, to exhaust all avenues, not to replicate ideas, and to maintain integrity in all things.

While he has been blessed with comforts in life and the privilege of studying and living abroad, Joo Kim has also been brought up with a sense of moral responsibility and believes in giving back to the community via value-added offerings.

He strives to lead his team by setting an admirable example, adopting a transparent culture, exemplifying good communication skills and encouraging ambitious staff to have the passion and drive to perform well in the company.

With Joo Kim at the helm, the TA Global ship is set to navigate through storms and weather the challenges ahead with total confidence.

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Execution of the projects is a priority for me as this will build the strength of the company�

- Tiah Joo Kim

MAIN FEATURE

FORECLOSURE, AUCTION & BANKRUPTCY You should talk with the lending bankers!

BY: AHMED SYAHRIL ZULKEPLY

www.propertyinsight.com.my MAY 2017 I 15

MAIN FEATURE

A

uction usually carries negative connotations in society. When it comes to matters relating to auction, it is often referred to as the loss of property owned by the underprivileged, thus an unpleasant event.

But many may not realise that auction also an opportunity to others. When a home or a car is auctioned, it is actually an open opportunity for anyone to have it.

The advantage of an auction is to be able to possess the property at below market prices, especially those involving houses for investment purposes.

For someone who experienced a foreclosure, it can be a challenging experience. But there are steps which you can take to get yourself and your family moving forward: to relocate to a new home, to revitalise your credit ratings, and even buy another home in the future.

At the end of the day, it’s all about one’s judgment and the restructuring of asset holdings. It is important because legal proceedings might begin when a debtor fails to resolve the issue with the creditors once the Notice of Bankruptcy is submitted to them.

Furthermore, the creditor will file a bankruptcy petition, and if the debtor still fails to explain the reason why the amount is outstanding, the court will issue a Receiving Order and Adjudication Order (RO & AO) against the debtor.

In the year 2016, Malaysia Department of Insolvency (MDI) handled 293,086 active bankruptcy cases nationwide, with the branch in Kuala Lumpur registering the highest number of bankruptcy cases, followed by Selangor, Johor Bahru, Ipoh, Penang and Kota Kinabalu.

Most of the indebtedness that led to bankruptcy recorded in 2015 were for the purchase of vehicles, which accounted 4,725 cases, followed by housing loans (2,504 cases) and personal loans (5,228 cases).

In the same period, 2,504 bankruptcy cases involved individuals under the aged between 25 and 34, make it almost 30 percent from the total bankruptcy case.

In terms of gender, 69.28% of the total bankrupts were men while 30.72% were women.

According to MDI, the government agency that administers bankruptcy cases and bankrupts’ affairs, it is still in the process of 16 | MAY 2017 www.propertyinsight.com.my

preparing a report on the bankruptcy cases in 2016.

All banks in Malaysia have to observe a set of strict procedures and requirements before they declare that a certain property is to be auctioned. There are several steps that need to be done by the bank’s management, beginning with sending a letter of warning to the borrower (homeowner).

Once it enters the second month, the bank will once again follow-up by sending a final warning notice. In the third and fourth month, the bank will send letters from lawyers asking you to pay all remaining arrears within 14 days.

On the last date to settle the debt as stipulated by the bank, the bank will once again send a Letter of Facility Withdrawal from the lawyers, and again requires you to pay up the outstanding balances of the entire loan within a maximum of 14 days.

Normally, if you can’t pay the loan instalment within 3 months in a row, Bank Negara Malaysia will officially categorise your loan as non-performing loans (NPLs).

If you still fail to make any payment within the stipulated time, the bank will again serve a notice on the borrower (homeowner).

In the sixth and seventh month, you can be expected to be called to the courts. The court proceedings will depend on the type of property. At this moment, lawyers will apply to get the direction of sales from the courts. They will also appoint an auctioneer to set the date for the auction.

On the other hand, the bank will appoint a real estate appraiser to determine the auction reserve price, based on the market price and the amount of outstanding loan.

This process will take about another seven to eight month before your house can be auctioned off.

To avoid your house being auctioned, try to service loan instalments regularly. Granted, it might not be easy during a market downturn like now, with the uncertain economic situation. Some homebuyers might even have been retrenched and lost their source of income due to many unforeseen reasons.

STOP BANKRUPTCY BEFORE AUCTION Therefore, Malaysian Association for Consumers and Borrowers Solutions, whose abbreviation 4PM was derived from their name in Malay, Persatuan

Penyelesaian Pengguna dan Peminjam Malaysia, urged the banks to stop listing the borrowers as bankrupts before the auction of their property.

Its president, Rosland Mohd Arif said the bank must immediately stop such action as it is unethical. “Where are they going to live, if the banks make them bankrupt in advance? If the house is auctioned first, it might still be possible for the borrower to settle the remaining debt and then build a new life. But if they are made a bankrupt before their properties are auctioned, the borrower has no other way to improve their life,” he lamented.

Rosland said they received many complaints about this unethical practice from people, especially those who are less fortunate or suffered a loss in business.

He further elaborated that the banks do not give any prior notice whether or not they would declare the borrowers insolvent.

“By law, banks should submit a notice on the upcoming auction on the borrower’s bankruptcy by hand before they can proceed with legal actions.” Sadly, 4PM received complaints that the victims were surprised when she had been bankrupted and her house was auctioned without prior notice.

“The banks cite excuses such as they have already posted the notice by mail to her home address. However, some people claimed that they had never received the letter,” he said. He also revealed that 90% of the more than 30,000 homebuyers across the country whose houses are being or will be auctioned off by the bank are Malays.

In the meantime, he also urged the banks and other financial institutions to stop embarrassing those late payment borrowers. “In case a homeowner can’t keep up with the instalment, thus is in danger of being declared a bankrupt and having his property auctioned off, the borrower should discuss with the lending bank to reschedule or restructure their loan facility, to be allowed a revised repayment schedule. In that case, banks will ascertain the future potential repayment capability or study if they have any other assets, to propose a repayment plan that the borrower can adhere to,” he said.

“Alternatively, these homebuyers who are unable to keep up with their instalment should try to sell their properties in the sub

sale market, to avoid foreclosure and the possible shortfall in repayment,” Rosland suggested.

As long as they abide by the rules, homeowner need not worry too much as the borrowers, because Bank Negara Malaysia are always monitoring the lending banks to ensure that they act ethically within their jurisdiction and do not abuse the customers.

In case homeowner needs any assistance to prevent an imminent property foreclosure, Rosland affirmed that consumer associations such as 4PM are the best places to seek help regarding this matter.

While we are assured that the Central Bank of Malaysia is seriously looking into the issue of banks declaring borrowers bankrupt prematurely, another concern is about who should bear the legal and administrative cost in case a property is auctioned.

“When such scenario takes place, the borrower usually bear most of the fees. Besides legal fees, there will also be valuation fees for the purposes of determining the reserve price and other filing fees relating to the foreclosure proceedings incurred.

“The starting price will be the reserve price as determined and fixed by the lending bank, which is stated in the Proclamation of Sale. The forced sale value (which is lower than the market value) and

the outstanding amount owed to the bank may be a component of the reserve price,” he said.

Home financing is no doubt a complicated matter for most of us, and to avoid defaults, banks have to ensure that the borrower can afford the repayment terms stipulated.

As such, sometimes they are only willing to offer a loan with a less than ideal margin of financing.

“If you have missed several instalments, ascertain alternative funding possibilities before meeting lending bank to discuss possible options. Never at any time resort to money lenders, because you do not want to suffer for the rest of your life since their interest rates are very high,” he said.

COMMUNICATE WITH THE BANK According to Sky Bridge International Chief Executive Officer, Adrian Un, auction can take place either before or after the banks declaring someone a bankrupt.

“Normally when the instalments have been outstanding for three months, the bank will wait for a couple of months, until the legal document or the court order is mailed to the borrower’s house by the sixth month.

“It is better to have frequent communications with the bank while waiting. There is not much you can do in dealing with bankruptcy or auction.

Some even refuse to move out after being declared a bankrupt,” he said.

In addition, Adrian said if the borrower communicates with the bank and has successfully convinced them to agree on the extended time and resources, the owner might avoid foreclosure altogether.

“If the borrower can pay a little or more than half of the outstanding instalment, the bank should agree to call off the foreclosure. It is not good for the banks to have too many foreclosures on their records, because ultimately they also need to submit their report to the Bank Negara Malaysia, who will not like such high statistics on foreclosure and bankruptcy.

“So that the financial institution preferred to give a warning, as they also wish to avoid being questioned by Bank Negara for the high rates or offering loans to applicants,” he said.

However, he also claimed that the financial institutions are now more vigilant than before. “Somehow the banks nowadays are more ‘efficient’ than before. Even if the borrow just miss the instalment for a single month, they will also start calling.”

“To restructure the loan, the borrower should seek the help of the Credit Counselling and Debt Management Agency (AKPK) to represent them. AKPK can propose to the bank to lower the monthly instalment amount, but ultimately it is up to the bank whether they agree to the lowered amount.”

“If the borrower can’t pay all the debt, the best is to meet the bank directly and www.propertyinsight.com.my MAY 2017 I 17

MAIN FEATURE discuss with their debt collection or debt recovery departments. Most likely, the bank will agree although the amount reduced might be little,” Adrian added.

AVOID AUCTIONED HOUSES Property investment master Dr Peter Yee also suggested that the best way to avoid foreclosure is to talk with the lending bank.

“Foreclosure can be stopped if you talk to the bank, but it is also depending on the bank, as well as the financial health of the person involved. However, to the banks, their first and foremost concern is about their bottom line. Hence if the borrowers do not pay, the bank will auction their properties off. To be safe, the borrowers have to find additional financial resources to pay off the debt,” he emphasised.

According to him, there’s never a wrong timing for property purchase, but one must first consider the risk of buying to that of renting, he advised. Asked about banks that tend to declare someone bankrupt before auctioning off their homes, Peter stressed that this unfair to the borrower as he would be left with no other way out.

Anyway, Peter also opined that since banks now would give frequent calls and reminders to borrowers who missed the instalment, they cannot claim that they miss the instalments due to negligence, and it could only be due to the lack of financial responsibility and resourcefulness.

“Having one’s home being auctioned off is of course a headache for the homeowner.

While some have managed to buy back

If they are made a bankrupt before their properties are auctioned, the borrower has no other way to improve their life” – Rosland Mohd Arif

their auctioned home from the successful bidder at an agreed price, it is generally quite a difficult feat. Usually the bidder would like to make a profit by selling it at a higher price, and there are a lot of such cases in the high court,” he said.

For that reason, Peter also advised homebuyer to consider safer options, because buying an auctioned property could mess up the life of the original owners.

“In fact, I prefer to buy vacant homes.

Once I buy it, I will get the necessary repair done, fix the problems, clean it up, furnish it, then I will rent it or sell it.”

“My advice for those who deal with this situation is to calm down and think your way out. If you can’t, ask for help with a legitimate agency such as AKPK, instead of resorting to borrow from loan sharks.”

“If you have no other way, just let it be

auctioned off and move on in life by relocating to another house, and later find another way to buy a new home. Forget the auctioned house because it was already sold to another person and you can’t buy it back with the same price. You will don’t want to borrow more just to buy it back.

Think as it a learning process situation for you to build a new life.”

“There are people who refused to move out even after their house has already been auctioned. Therefore, for those who are considering in buying an auctioned house, first please ascertain whether there is anyone living in the house. If there is, perhaps you should just buy elsewhere because you might not want your home buying process to be further complicated,” he said.

Table 1: Bankrupts by the types of debts, 2015 Types of debts

Total

Percentage

Purchase of Vehicles

4,725

25.60

Housing Loans

2,504

13.57

Personal Loans

5,228

28.32

Business Loans

1,670

9.05

619

3.35

Social Guarantor

1,196

6.48

Credit Card Debt

1,770

9.60

Income Tax Debt

249

1.35

3

0.01

493

2.67

18,457

100

Corporate Guarantor

Study Loan Other Indebtedness Total 18 | MAY 2017 www.propertyinsight.com.my

Table 2: Bankrupts by the reasons for inability to settle debts, 2015 The reasons for inability to settle debts

Total

Percentage

Weak financial management

3,318

26.24

Economic crisis

2,308

18.26

Unaware of the debt

2,983

23.59

Unemployment

1,393

11.02

Deception

1,517

12.00

Does not acknowledge debt

881

6.97

By accident

119

0.94

Lack of financial resources

124

0.98

12,643

100

Total

Percentage

Private sector

10,322

55.92

Business

2,142

11.70

Self-employed

595

3.22

Professional

177

0.96

Civil service

960

5.20

Unemployed

77

0.42

Government pensioners

40

0.22

Students

3

0.01

No information

4,141

22.44

Total

18,457

100

Total

Percentage

122

0.66

25 – 34

4,648

25.19

35 – 44

6,507

35.25

45 – 54

4,744

25.70

55 or beyond

2,299

12.46

137

0.74

18,457

100

Gender

Total

Percentage

Male

12,787

69.30

Female

5,670

30.70

Total

18,457

100

Total Table 3: Bankrupts by the occupations, 2015: Profession

Table 4: Bankrupts by the age, 2015: Age range Under 25 years old

No information Total

Table 5: Bankrupts by gender, 2015:

www.propertyinsight.com.my MAY 2017 I 19

FEATURE

WHAT YOU NEED TO KNOW ABOUT

RPGT

Uncover the realities of RPGT and its impact on affordable housing BY: FELICIA SOON

20 I MAY 2017 www.propertyinsight.com.my

PERSONALITY OF THE MONTH

B

ased on the Real Property Gain Tax Act 1976, Real Property Gains Tax (RPGT) is a form of Capital Gains Tax that is imposed on the disposal of real properties including the disposal of shares in companies that are Real Property Companies (RPC) where 75%

of their tangible assets are in properties.

RPGT applies to both residents and nonresidents and it was reintroduced in 2010 after a temporary suspension in 2008 and 2009.

According to VKA Wealth Planners head of financial planning, Lawrence

Seow, there are three parties involved under this tax, namely the Inland Revenue Board (IRB), disposer (seller) and acquirer (buyer). The table below illustrates the types of requirements necessary for the parties involved during the entire transaction:

Disposer: Asset disposed

Submission to IRB:

Other requirements:

Individual titles

CKHT 1A

1.

2.

3.

4.

RPC

CKHT 1B

1.

2.

3.

4.

Copy of S&P stamped, MOT (Form 14A National Land Code), Copy of title if any, and Receipts / invoices for expenses / incidental costs.

Copy of S&P stamped, Form of Transfer of Securities (Form 32A Companies Act 1965), Copy of return of Allotment of shares (Form 24 Companies Acts 1965), Copy of return of allotment of shares (Form 24 Companies Act 1965) on acquisition of RPC share, 5. Copy of title if any, and 6. Receipts / invoices for expenses / incidental costs.

Acquirer: Asset disposed

Submission to IRB:

Individual titles

CKHT 2A

RPC

CKHT 2A

In 2014, RPGT was increased for the fifth straight year since 2009 and the government’s reason for the hike was mainly to reduce speculative activities on housing prices in order to cool down the real estate market. By hiking up RPGT, the

Within 3 years from the date of acquisition In the 4th year In the 5th year From the 6th year and beyond

You will be only be taxed on the positive net capital gains, which is the remainder of disposal price after the deduction of the purchased price and miscellaneous

Other requirements: -

government hoped that it would be easier for the Rakyat to purchase affordable new houses.

The logic being, by subjecting the profit from property sales within the 5 years after buying it to a higher tax, it would reduce

the attractiveness of property flipping.

With less speculation, it was hoped that the rapid growth in home prices could be contained. The table below illustrates the current RPGT rates which was in force since 1 January 2014:

Citizen and Permanent Resident

Non-Citizen

Company (RPC)

30%

30%

30%

20%

20%

20%

15%

15%

15%

0%

5%

5%

charges, such as stamp duty, legal fees and advertisement charges. Additionally, a waiver on the taxable amount is granted to individuals (but not companies) who

fulfill certain criteria. The holding period is from the date on the S&P Agreement till the disposal date. The calculation is listed below;

Chargeable Gain = Disposal Price - Purchased Price Net Chargeable Gain = Chargeable gain - Exemption Waiver (RM10, 000 or 10% of Chargeable Gain, whichever is higher) Tax payable = RPGT rate (based on holding period) x Net Chargeable Gain www.propertyinsight.com.my MAY 2017 I 21

FEATURE RPGT EXEMPTIONS On the other hand, RPGT is exempted, meaning no RPGT is levied for disposal of real property or shares in real property companies held for more than 5 years.

Even for those properties disposed within the first 5 years from the date of purchase, there are some tax exemptions available as well. According to Board of Governors and Certified Member of Financial Planning Association of Malaysia (FPAM), Kong Kim Heng, one could enjoy the exemption if any of the following criteria is fulfilled: 1. Disposal of a residential property by an individual, the exemption is available once in a lifetime.

2. Transfer as gifts between parent and child, husband and wife, grandparent and grandchild (transfer between sibling is not applicable); and 3. Exemption of RM10,000 or 10% of the chargeable gain, whichever is greater, for each disposal of a property by an individual. Chargeable gain generally meas sale proceeds less purchase cost.

A 3% RETENTION SUM As of 1 January, 2015, the lawyer acting on behalf of the seller shall retain and pay 3% of the disposal price to the Inland Revenue Board (IRB), for all transactions where the seller disposes the property within five years of signing the Sale and Purchase Agreement. On the other hand,

companies and foreigners are subjected to pay the 3% regardless of when they dispose of the property.

Sale and Purchase Agreements usually contain a clause to cater for RPGT, which states clearly that both the seller and the purchaser are to submit their respective Forms, namely CKHT 1A and 2A to the IRB upon payment of the 3% retention sum within 60 days of the date of the Sale and Purchase Agreement.

This 3% is calculated based on consideration price, and must be remitted to IRB within 60 days after the acquisition of the property by the acquirer. Once IRB evaluated the RPGT amount, the excess will be returned to seller. If insufficient, acquirer would need to pay the remainder within the next 30 days.

If the individual is selling the property after five years, the seller’s lawyer will instead submit Form CKHT 3 to apply for exemption from the 3% retention sum payment.

While all Malaysians and permanent residents are entitled to a one-time exemption from the RPGT payment, such an entitlement is not required to be exercised on the first property disposal, thus you can opt to pay RPGT first, and keep the exemption for any future disposals.

CHARGEABLE GAINS AND ALLOWABLE LOSSES

If you are planning on selling your property, but it has not been five years since you signed the Sale and Purchase Agreement, then you would probably be interested to know the way IRB assess the chargeable gain for RPGT calculation. And what if the price has dropped when you want to sell?

According to the founder of LegalMakeover, Eunice Tan, if the property is disposed at a loss, no RPGT is payable.

Under Section 3 of the Real Property Gains Tax Act 1976, RPGT is chargeable if there is a chargeable gain, i.e. profit gained accruing from the disposal of the property. Therefore, no RPGT is payable at all if the disposal price is lower than the acquisition price.

However, the RPGT Act 1976 allows the seller to deduct certain expenses from the chargeable amount, such as the following: a. The cost of preserving and improving the value of the property upon acquisition; b. The cost to confirm, preserve and defend the ownership of the property, and; c. Incidental costs during the sale of the property, including legal fees, commissions to real estate agents and other expenses.

Where there is an allowable loss, tax relief is allowed to the seller for that year of assessment in an amount equal to the sum arrived at by applying the table below:

Date of Disposal

Citizen & Permanent Resident

Non-Citizen

Company (RPC)

Within 3 years from the date of acquisition

30%

30%

30%

20%

30%

20%

15%

30%

15%

0%

5%

5%

In the 4th year In the 5th year From the 6th year and beyond

Eunice added that for properties acquired due to unforeseen events, such as those inherited upon the death of the previous owner, the IRB will consider the deceased’s date of the death as the date of acquisition, as in accordance to Paragraph 15(B) Schedule 2 of the RPGT Act. The actual date the deceased bought 22 I MAY 2017 www.propertyinsight.com.my

the property is thus irrelevant. As such, there is RPGT chargeable if the disposal of the property is made within 5 years from the acquisition date (the deceased’s date of the death) at the current applicable rate.

On the other hand, Eunice also explained why under RPGT Act, certain transfers

between family members, such as those between husband and wife, between parent and child, or between grandparent and grandchild are exempted.

It is because under the interpretation of RPGT Act, the donor in those transfers shall be deemed to have received no gain and suffered no loss, and the recipient

PERSONALITY OF THE MONTH

shall be deemed to have acquired the property at an acquisition price equal to the acquisition price paid by the donor, together with any permitted expenses incurred by the donor (As stipulated in Para 12 of Schedule 2 of RPGT Act).

Apart from the aforementioned transfers, other types of transfer between the family members shall be subjected to RPGT. If the 3% retention sum paid by the seller to IRB is in excess of the RPGT payable, then a refund will be issued to the seller where upon they will receive a cheque for the refunded amount in the postbox.

PENALTY FOR MISCALCULATION The lawyer overseeing the Sale and Purchase Agreement between seller and buyer will normally charge a nominal fee to file their respective CKHT forms. However, bear in mind that there is a penalty for stating incorrect information relating to any disposal of chargeable assets, such as miscalculating the chargeable gains, or overstating the allowable loss. The penalty is a fine of not exceeding RM5,000, and a special penalty amounting to twice of the tax which has been undercharged.

In conclusion, due to the huge capital outlay involved, there are many considerations for any individuals who wish to invest in properties to make, before one can reach any major decision to invest in real estates.

The fundamental of having a home is a national social responsibility of the government, and by having RPGT in place, it acts as a strong deterrent for market speculation, especially those seeking short term gains. With the softening of the market today, the government hopes that the implementation of RPGT will provide a more stable market where homes are more affordable. Besides, it will also provide the government with another stream of revenue when people still decide to sell within the first 5 years of acquiring a property.

Buying a property has always being long term consideration in nature, and it is also a good hedge against inflation. However, property owners must be aware of the risk in this class of investment. For instance, most investments in properties are not cash investment and owners must take the risk of having loans. Besides that, they will

also be exposed to fluctuation in interest rates, delay in completion, uncompleted projects, poor market sentiments, market slowdown, or any other events that can adversely impact their cash flow, such as unemployment or retrenchment.

On top of all that, rental income received are taxable when one files for tax returns.

Renovation cost, real estate agent fees, assessment tax, insurance premium and maintenance fees are another list of expenses to be considered before a decent profit margin can be declared.

In some cases, after deducting all these costs, the investment yield might be less than what you have anticipated.

However, real estate investment still stands out as a strategic way to secure financial freedom in the retirement days. Therefore having a comprehensive financial planning will help to address the cash flow, budgeting and liabilities issues, when you are contemplating your next property purchase. Such a plan will help you to have a better understanding on your financial strengths and weaknesses, and also help to set the right priorities and strategies in place, in order for you to gain more from property investment. www.propertyinsight.com.my MAY 2017 I 23

FEATURE

ECONOMIC ANOMALY: THE IMPACT ON PROPERTY INVESTMENT IN MALAYSIA Set your perspectives on global economic market changes BY: MAGES PV LINGAM

T

he turbulence at the economic front has ignited a market slowdown, which has blazed across many industries.

In addition, the financial realities, inflation and the turmoil that engulfed the country have also landed our people in the middle income trap, with practically stagnant growth in terms of disposable income.

In such a bitter market, the investors will often avoid major decisions for instance, as yesterday’s top performers become tomorrow’s underperformers in a split second.

The government has presented the lofty Economic Transformation Programme (ETP) in September 2010. This programme supposedly would surge the nation upward via six Strategic Reform Initiatives (SRIs), with various the policies to strengthen the nation’s companies by introducing a cohesive ecosystem where the market players can keep growing and become competitive globally. The government’s role was to assist the programmes via funding, narrowing disparities, and cultivating skilled workforce to achieve the initial vision.

24 | MAY 2017 www.propertyinsight.com.my

However, due to a series of missteps, the property development sector has found itself in a dire situation since a few years ago. Property Investor, formerly vice president 1 of Malaysia Property Incorporated (MPI), David Shieh Chong opined that, “Property development is one of the leading industries with high economic multiplier effect to the Malaysian economy” With active construction and property sales, jobs and values will be created in many other fields, such as manufacturing, architecture, consultancy, banking, logistics and many others. Therefore, a healthy property development with vibrant activities

and sales contribute to the growth and is a catalyst to the economy.

TIME FOR PORTFOLIO EXPANSION In contrast, he added, a slower economy would definitely impact buyers’ decision to invest, as prospective buyers would postpone or call off their purchases, as they prefer to secure a better career with a more stable earning capability first. Besides, with banks becoming increasingly reluctant to borrow the umbrellas during the rainy days,

the overall lower approval rate coupled with the lower loan margin approved (for example, just 70% of the home price, instead of 90%) will undoubtedly hurt the all the related industries as a whole.

On the prospect of property investment, David shared that, “Whether investment in properties strengthen or weaken someone’s financial standing in the soft and uncertain market today, ultimately depends on the goals and purposes of their investment,”.

But in the long term, property investment is commonly acknowledged as a good form of savings with good opportunities towards capital appreciation, which over time when the loan is paid off will likely increase a purchaser’s net worth.

Also, if purchasers are skilful in bargain hunting for below market value deals, they more often than not can generate healthy cash flow and increase one’s net worth through asset ownership. Taken all the factors into consideration, David believes in the age-old adage of buying low and selling high. Therefore whenever market prices are low, it is a good time for prospective home buyers or investors to climb up the investment ladder, according to expert comments.

RESEARCH IS CRUCIAL David estimated that market would stabilise with more offerings that suit the market’s appetite in the next two years to come. He also revealed that the best ways for investors to gain even during the attack of anomalies, is to understand and be clear about their ‘game plan’ and ‘timeline’. Never buy just because everyone else is buying, and never say ‘No’ to buying just because property investment may not be the ‘sexiest thing to talk about on making money now’.”

“I was having a chat with a friend on some launches recently, where purchasers are queuing just to get a unit. Nothing wrong with that as I believe many have done their research or have good justification for ‘queuing’ up,” said David. He advised the buyers to conduct their own research by comparing similar offerings around the area. To get a clearer view of the market performance, David believed that people must carry out long term research on the general areas of choices before deciding on the targeted areas.

Instead of simply searching for price per square foot, one should observe and analyse

Dr Ong KL whether such units would be in demand, who would be the targeted tenants that would be keen to live there in the future, or whether there huge government-backed affordable housing schemes will be readily available within the targeted price range.

SOME QUESTIONS TO PONDER David stressed there are currently a large supply of certain types units in the market, and upcoming developments would be sufficient in the next 2 years. For those who wish to invest, David asserted he believed in sub sales for the next 2 years, where a ‘lack of uniformity in prices’ is present clearly. In such a situation, different owners have different levels of motivation for selling, unlike the more uniform pricing in the primary market. As such, patient purchasers who could push motivated sellers for good purchase will surely emerge as the winner.

The Valuation and Property Services Department (JPPH) has revealed that in the 3rd quarter of 2016, Malaysia’s national house price index rose by 5.36% y-o-y (3.81% inflation-adjusted), slightly lower than the 7.35% y-o-y (4.61% inflationadjusted) price increase during the same period in the previous year.

Investment Strategist Dr Ong Kian Leong also shared on the keys to profit during these uncertainties period. The prominent financial educator said, “While waiting for the economy to become more certain, holding power is the key to profit in long term, particularly when oil price picks up an uptrend again. Higher oil price will support economic growth, hence boost the confidence of buyers in property market eventually.”

Regarding the strategies for the current year, Dr OngKL shared that, anything

Whether investment in properties strengthen or weaken someone’s financial standing in the soft and uncertain market today, ultimately depends on the goals and purposes of their investment” – David Shieh Chong that generates positive cash flow, enjoys high rental demands and low financial / investment risk should be considered a great deal. In view of this, he would prefer to focus primarily on the sub sale market for the time being.

On the question whether the notion of buying good properties at below-market valuations still carries water today, Ong predicted that it is always be valid and applicable, since the relatively lower initial cost provides buyer more buffer / margin in the present market, which can be translated into a stronger holding power.

Cheer up and have faith, ladies and gentlemen. While we as a nation try to sort out the economic anomalies by restoring our financial health and competitiveness, do explore the opportunities in the property market. By conducting an in-depth research in terms of supply and demand, purchasing power and the risk factor, everyone will stand to gain from the market. www.propertyinsight.com.my MAY 2017 I 25

FEATURE

NICHE PROJECTS

VS

MASS MARKET PROJECTS Which offers better Return on Investment?

BY: GABRIEL LIM GWO SHIN

Faizul Ridzuan

D

evelopment projects come in various sizes, each targeting at a specific market segment. Some feature unique concepts and lower density to be considered as niche projects, while others are more mass market-oriented, comprising multiple rows or blocks to accommodate several thousands of residents. Which offers better Return on Investment (ROI)? We spoke to Prem Kumar, executive director of property consultancy Jones Lang Wootton Malaysia (JLW); Faizul Ridzuan, CEO of FAR Capital Sdn Bhd; as well as Daniel Gambero, CEO of REI Group of Companies, for their insight on this issue.

First of all, let us find out the pros and cons of investing in a niche project, as well as a mass market product, in terms of income generation via rental or sub-sale.

For Prem Kumar, niche projects generally cater for the high-end market and usually targeted at owner-occupiers. Therefore, such projects are usually unique in terms of their design and specifications, and provide for large spaces. Inevitably this leads to higher development costs and accordingly higher sale prices.

26 | MAY 2017 www.propertyinsight.com.my

Dr Daniel Gambero

While the price entry point of niche projects could be very much higher, the value preservation over the longer term makes it a better option ” – Prem Kumar

“Investors investing in niche projects must take cognizance of the fairly limited market, which will have direct impact on both rental and sub-sale. Also, niche projects have greater appeal to those who are seeking for own occupation. and very much with a long term view,” shared Prem.

On the other hand, Prem emphasised that

mass market projects tend to have higher liquidity compared to niche projects, since the entry point in terms of price is usually very much lower, thus easier to find a buyer who is willing to pay the asking price.

ABILITY TO WITHSTAND MARKET FORCES Besides, Prem also touched on the income generation aspect of mass market products. “In terms of rental, it varies significantly between and landed and stratified developments, with stratified projects usually being able to fetch higher rates. However, sub-sale of stratified developments tend to reach a plateau in terms of price levels after several years from completion. Landed developments have shown better growth over the longer term compared to stratified ones.”

Asked about the different challenges one might face while investing in a niche project vis-à-vis a mass market project, Prem explained that for niche projects, the main challenge is the reduced liquidity in terms of sub-sale, as the project is highly customised for a certain segment of home occupiers.

Whereas for mass market projects, it is the ability to withstand market forces especially in a downtrend market, in terms of securing tenants or buyers. “The significant number of units that are completed at the same time can pose substantial risks to the investor in securing tenants, or in terms of sub-sale, therefore the financial strength becomes crucial,” added Prem.

As the lifestyle and facilities offered are always highlighted in the advertisements of housing projects nowadays, Prem also illustrated to what extent they influence the investors’ decisions. “Lifestyle is the key selling point in niche projects, and investors pay significant attention to this aspect. In fact, niche developments very much focus on design and security considerations as the key drivers, whilst facilities more often than not become a subdued aspect. In contrast, facilities is a key selling point for mass market projects, since facilities tend to become one of the major criteria for evaluation when comparing two projects.”

FOCUS ON THE ENTRY PRICE Faizul Ridzuan also agreed that mass market products tend to provide better opportunities in income generation, as the rental price is more acceptable to the average working class, thus providing a positive cash flow. It is also much easier if the owner tries to liquidate his investment, because many potential buyers out there can afford the price.

However, Faizul begged to differ when posted with the question whether among niche or mass market products, one beats another in terms of value preservation, because he was the of opinion that whether one can make a profit depends on the entry price one enters the investment.

“I am neutral on this, as at the right price, everything is buyable. It has nothing to do whether the product is niche or not. If you overpaid for something, naturally it is harder to sell for a decent profit. So the question that matters is, ‘Are you buying something at the right entry price?’ ‘Is it in line with what buyers in the market are prepared to offer for a property in that location?’”

While Faizul conceded that it would be harder for high density projects to see capital appreciation, he also stressed that it depends on a lot of factors, including entry price and location. He annotated his position by giving the following example:

“If there are two condominiums locating close to one another, one consists of 300 units, while another 1,500 units, and both selling at RM600,000, everything else being equal, the project with lower number of units will appreciate faster, because there are fewer units to go around.

However in reality, such scenario is hardly possible, because the developer of the niche project will never sell it at the same price as a high density condominium in the same neighbourhood. There will always be a difference, and which project enjoys higher demand depends very much on the difference.

People will look at how much more premium is the low density condominium, and how much cheaper is the high density condominium. For example, if one is sold at RM1,000 psf while another RM500 psf, many will go for the cheaper; after all, it is still in the same neighbourhood. In contrast, if the difference is minimal, many will go for the niche project instead.

Projects in great locations usually don’t come in good prices. While developers will focus on the features and portray developments as niche projects to charge the highest possible price, the difference is always relative, like comparing Louis Vuitton and Guess bags. Hence, we must always remember to buy something that is more accessible to the average people. At the right price, even properties in less than ideal places could be profitable!”

A HEALTHY PROPORTION OF INVESTORS Daniel Gambero defined niche products as those that are more exclusive and scarce, and opined that scarcity is the reason that a product is highly sought after. Even in townships developments or bigger projects, he believed one could still find scarce units, those with better designs or features. “If you can find a product that is in demand, yet is not so common in the market, you can surely enjoy higher return on investment (ROI)!”

Daniel would also like to warn the investing public about the flooding of supposedly niche products, which have significantly increased the supply of once niche products. “Look at the luxurious condominiums around KLCC. With so many units waiting for tenants, investors have to hold on to them without rental for an extended period of time.”

As such, Daniel reiterated that his most frequent advice to buyers, was that one should avoid projects that had attracted too many investors. “Imagine a project with 300 units. If 80% of them are investors, and only 20% are owner occupiers, what would happen to the value of this project?

The prices would be suppressed as many investors would lower the price in order to find tenants or buyers, before they are blacklisted by the banks and their assets auctioned. It would lead to issues in holding onto the units, and the in the end nobody would be able to profit from the project!”

Daniel also shared some tips on how to manoeuvre in the current soft market.

“The next 6 to 12 months will be a buyer and tenant-driven market. Investors must be smart and look at the demands and affordability for the particular types of properties. Value and location of the properties, the track record of developers, as well as the market segment targeted have to be taken into account. Avoid projects that have attracted too many investors, because with very few people buying or renting from those investors, the whole place would be empty.

Instead, one should look for properties that stay within the buyers’ affordability, for example those between RM350,000 to RM650,000 depending on location. It’s very healthy to have about 15% to 25% of investors, because that would generate positive transactions, which ultimately translate into an upgoing trend. It’s better than those projects with only investors, or no investors at all. For those who are looking for tenants, try not to go for lengthy tenancy.

1+1 or a 2 + 1 (years) contract should be sufficient, as you get to relook at the value at the end of the contract.”

Taken into consideration all the factors at play, Prem was confident that niche projects would emerge as the better choice in terms of value preservation in the long run. “Niche projects provide greater value preservation, mainly due to its higher resilience to market forces especially in a soft market. This is a direct consequence from its target market being mainly owner occupiers with a long term viewpoint. While the price entry point of niche projects could be very much higher, the value preservation over the longer term makes it a better option, more so if the financial considerations are not critical from the perspective of the investor.” www.propertyinsight.com.my MAY 2017 I 27

DEVELOPER OF THE MONTH

MAYLAND:

ELEVATING QUALITY OF LIFE Building an affordable luxury for an exclusively niche market BY: MAGES PV LINGAM

28 | MAY 2017 www.propertyinsight.com.my

M

alaysia Land Properties Sdn Bhd (Mayland) was set up by Tan Sri Dato’ David Chiu and incorporated in 1995, it has a land bank exceeding 500 acres, carrying a potential gross development value (GDV) of RM5 billion if fully developed. Dato’ Kevin Woo, the managing director of Mayland, is no stranger to the property industry.

An architect by profession, he decided to join Mayland 17 years ago as an architect and property development 6 years ago. By billowing forward with his innate expertise and experiences, he aims to grow a property empire one day.

Fortuitously, 17 years ago Kevin heeded a call to joint-venture with the first servicedapartments project developer in the nation. Now, boasting flagship projects like

Windsor & Waldorf, Dorchester & Mayfair Serviced Apartments, Plaza Damas 3, Regalia Serviced Apartments, Royal Regent Sri Putramas, Parc Regency & Palazio at Plentong and Mount Austin in Johor Bahru. and more up on their sleeves, nothing is going to slow down Mayland anytime soon.

“As for Mayland, we know that Hampton Damansara has successfully sold 95% of its 1st Phase; We in Mayland are looking at more acquisitions and good leveraging.

In fact, we still have 4 more projects in the pipeline which are valued at RM600 million each. Our next launch will be Royal Garden in Jalan Kuching, with units ranging from 1,060 sqft. to 1,285 sqft. in size,” said Kevin. Mayland is also looking at their new development Sierra Green in Sungai

Hampton Damansara

Buloh, which will offer 405 residential units sizes ranging from 1,400sqft to 1,770sqft.

Mayland, a spin-off from Far East Consortium, constructed up Plaza Damas about 17 years ago, and will be launching the building across the road that is Dorsett Residences Sri Hartamas. This development was originally planned to be marketed as Hermitage, however, due to the keen interest by the Dorsett Group, an international hospitality enterprise, to take over this development, they decided to develop it under the Dorsett brand. The confidence in the location, and being the last plot of land that allow the development to build up to a height of 27th stories (the building has an amazing view of the royal palace) attributed to Dorsett’s desire to continue building without putting up any units for sale up to now. With serviced apartment units at 560 sqft., this project is aimed at individual/couples looking for a new home, parents buying for their college going kids & investors. So stay tune for our launch which will be happening quite soon.

Over the years, Mayland together with Far East Consortium had acquired 8 hotels under the brand names like Dorsett, Silka & Cosmo boutique hotels and took over boutique shopping malls like Plaza Phoenix in Cheras, which has since been renamed Cheras Sentral. Hartamas Shopping Center, Cheras Sentral and Suria Putrajaya Mall are all located at very strategic locations.

NOTED RATIONALE “We abide by our philosophy, which is to provide satisfactory products and services to all our clients; Hampton Damansara would be the pioneer project where Mayland implements CONQUAS (Construction Quality Assessment System), the standard quality assessment outlined by Building and Construction Authority, Singapore (BCA), in order to prevent defects in different stages of construction and to ensure high quality workmanship,” said Kevin. “We have also decided to upsize the Hampton Damansara residential units to 924 sqft., with the hope to make it more comfortable to future owners and occupiers; besides, we will also do everything we can to ensure timely delivery,” added Kevin.

Kevin asserted that Mayland has committed itself to progress continuously, by adhering to management strategies which encapsulates detailed long term www.propertyinsight.com.my MAY 2017 I 29

DEVELOPER OF THE MONTH planning and goals. “We have done the pairing for Dorsett Hartamas. We are always seeking opportunities to find the right partner in the right location to expand our hotel network,” said Kevin. He added that thanks to the insightful planning, development projects have been executed successfully; as such, they were expecting guaranteed rental yields for the buyers.

AXING OFF CHALLENGES While the developer faced many challenges in meeting the buyers’ expectations, Kevin reiterated that since most of Mayland’s projects were located at choice locations, rental yields were certainly assured. In view of China’s push for the ‘One Belt, One Road Initiative’, where Chinese construction firms are funding and building many of the country’s most important projects, Mayland has intention to form joint ventures with contractors from China to strengthen their competitiveness.

Fortunately, China’s continued involvement to spur the economic growth in the country, has somehow managed to cushion against the depreciation of our currency against regional countries.

Kevin was hopeful that by having all stakeholders working together, one will find the solution to home ownership. For example, one of the challenges they faced was to make things easier for the buyers via ownership schemes, so that the buyers need not fork out so much money. This he

Indoor Golf simulator

said can be accomplished if the banking institutions adopt a change in mindset and be more realistic in approving loans.

Hence, by thinking out of the box, he also proposed a new scheme to the Real Estate and Housing Developers’ Association (REHDA), in which the homebuyers will pay up the interest in the first five years, and repayment on the capital will begin after the fifth year. Anyway, he was delighted that things have since improved with the relaxation of banking policies. Still, banking institutions must play a supporting role in sales, to overcome the challenges which otherwise developers will face during the conveyancing processes.

Kevin is also aiming to take the company management to greater heights. “When it

comes to internal challenges, as a leader, I am responsible for adequate inter-personal skills development among the upper and mid-management teams; they should be motivated to achieve positive outcomes in both production and personal growth. I will monitor the details from time to time to ensure that this is achieved,” affirmed Kevin.

SOARING WITH HIGHER PLANS As for land acquisitions, Mayland has in its portfolio huge landbanks exceeding 500 acres in Kuala Lumpur, Selangor, Semenyih, Seremban, Johor Bahru and Plentong, comprising mostly commercial lands. “Besides the landbank, we are also keen to convert old buildings by

Gym 30 | MAY 2017 www.propertyinsight.com.my

When it comes to internal challenges, as a leader, I am responsible for adequate inter-personal skills development among the upper and midmanagement teams; they should be motivated to achieve positive outcome in both production and personal growth”

refurbishing them to attract new buyers and enjoy higher return on investments (ROI). For example, buildings that we have refurbished included Silka Cheras Hotel and the new Dorsett Hotel in Putrajaya,” Kevin shared about his strategies.

Boasting a built-up area of 924 sqft. per unit, the Hampton Damansara at Country

Heights Damansara has once again acquired the limelight in the market recently, as it has become the favourite of investors and attracted plenty of buyers. Scheduled to be completed in 2020, Hampton Damansara is considered a good buy due to its distinctive location, and the price of these elegant residential units are set to appreciate further upon completion.

Olympic Sized Salt Water Pool

- Dato’ Kevin Woo

The furnished units come with a 7-tier security, with podium opening to a spacious 70,000 sqft. landscaping, which cost a massive RM5.8 million to build. Occupants would be delighted to find out that their units would be equipped with branded home appliances like refrigerator, washer dryer, hoods and hobs, built-in microwave oven, air conditioners for rooms and living hall, plaster ceiling, kitchen cabinets and wardrobe in master bedroom. With an address at Country Heights Damansara, there are 700 units up for grabs at these 43-storey exquisite twin towers, all for a fraction of payment only!

Built on a piece of 3.2 acres’ freehold land, the project comes with an indoor golf simulator, aqua gym, crystal salt sauna, Olympic-size salt water pool and 42 other facilities, impeccably created to give the extra boost in terms of leisure and entertainment at Hampton Damansara.

Hampton Damansara is expected to fetch a gross development value (GDV) of over RM700 million. Hampton Damansara is accessible primarily through the Damansara – Puchong Expressway (LDP), which leads to SPRINT’s Penchala Link and Kerinchi Link, North – South Expressway (NSE) as well as Duta - Ulu Klang Expressway (DUKE). www.propertyinsight.com.my MAY 2017 I 31

DEVELOPER OF THE MONTH The palatable project is just a stone’s throw away from shopping havens such as Hartamas Shopping Center, The Curve, Ikea, Publika and more. Moreover, the peaceful abode looks over thick foliage which will act as a cooling agent all year round, and the vast facilities compound where residents can enjoy a great workout. By widening the road, placing the management office together with the guard house, and providing 14 parking lots free for the residents, the developer has made a plausible effort.

CONVEYED PROJECTS At the same time, Mayland is working diligently to fine-tune the offering at other projects. Completed projects such as Royal Regent (also known as Sri Putramas 3), which is located along Sri Putramas, Kuala Lumpur, will now enjoy better facilities including private theatre, billiard room, gymnasium, reading lounge and music room. This project features condominium units with a built-up size of 860 to 3,300 sqft. which enjoyed a sub-sale value from RM540,000 onwards.

Kevin said “Regalia Suites @ Sultan Ismail was an inspiration for himself as an architect. It embraces a central courtyard facing three stylish towers, Madison, Melrose and Milan. It’s a freehold serviced residence, capturing a premier address.

The Hemisphere Restaurant and Bar at the top has the best view of KLCC, superior from the hind sight looking over the horizon line,” The investors of Regalia are enjoying a superb rental yield, with a resale value from RM450,000 onwards, which enjoys a great return thanks to tourists’ occupation, an attractive alternative to the hotels. There are 1,130 units, with a built-up area per unit ranging from a cosy 500 sqft. to the spacious 10,000 sqft. penthouse.

This residence is situated within the KL city centre, just a few minutes away from the Putra World Trade Centre (PWTC). Both the Putra KTM Komuter station and PWTC LRT station are located within walking distance, making it a very ideal residence for the tenants and visitors alike.

As for now, Mayland has lined up some exclusive developments in the pipeline, with the launching of Dorsett Residences Sri Hartamas, Royal Garden, One Stonor and Sierra Green in the next 3 years.

Solaris Semenyih and Phase 2 of the 32 | MAY 2017 www.propertyinsight.com.my

Hampton Damansara will also be revealed with a 6.2-acre development, where 6-storey exclusive town and terrace villas with internal lift will be built. Currently, only 3.2 acres are utilised, with 700 units of apartments in the twin towers.

Mayland has responded to construct affordable homes due to moral obligation to the citizenry. The first-time homes like Rumah Selangorku project in Semenyih are priced at between RM250,000 RM400,000 per unit, and there will also be affordable homes project in Plentong, Johor. Kevin further revealed that the proposed 426 units of luxurious homes next to the Diamond City in Semenyih would be launched in the coming August. Selling at RM880,000 per unit, the project is

expected to fetch a GDV of RM400million.

Besides, Kevin has planned to conduct a competition for the best architectural design at professional institutes for the affordable homes, to explore the best options and innovative designs for the buyers.

On the prospect of property investment in Malaysia, Kevin maintains a very positive outlook this year in comparison to the regional countries, thanks to the availability of easy home ownership schemes, cooling measures to stabilize prices, as well as the government’s support to the construction and banking sectors.

Mayland’s strategies for sales and marketing are pairing with hotels on concierge services, guarantee on profitable

rental yields, joint ventures with competent international contractors from China, landscaping facilities, business suites with high speed broadband services especially for elite professionals, rooms for drivers and more. In future, Mayland will concentrate more on landed homes with gated and guarded concepts (G&G), and bungalows in a huge scale with a higher and brighter propositions, to add on to our growing portfolio of developments.

Interestingly, Mayland has surged forward to soar higher and stronger despite the thrilling climate in the property arena, paired with strategic management and workforce to handover the projects aptly and gracefully to its investors.

Potential buyers at the sales gallery

Yoga Deck www.propertyinsight.com.my MAY 2017 I 33

AREA FOCUS

SUNGAI BESI A historical township under transformation BY: FELICIA SOON

34 | MAY 2017 www.propertyinsight.com.my

L

ocated on the southern corridor of Kuala Lumpur, Sungai Besi is directly connected to the downtown via Jalan Sungai Besi, E38 SMART Highway, as well as E9 Sungai Besi Highway (Besraya, upgraded from the original Jalan Sungai Besi beginning the Jalan Istana junction) which runs all the way to Universiti Putra Malaysia (UPM) in Serdang, with a Western extension from Salak South to

the MRR2 interchange near Pandan Jaya.

In addition, Sungai Besi is also the Kuala Lumpur terminus for E2 North-South Expressway Southern Route, which links Klang Valley to the Southern states of Negri Sembilan, Malacca and Johore before connecting to the Causeway and Second Link to Singapore.

Sungai Besi is one of Kuala Lumpur’s oldest township developments, and boasts a rich history dating back to more than 80 years, being an early area for tin-mining activities. Most of the town’s original structures are still standing, with rows of shop houses built in the 1930s, still in relatively good conditions, thus earning it the reputation of ‘Tertiary Heritage Zone’.

Historian J.M. Gullick, in the book A History of Kuala Lumpur, said the enormous Sungai Besi mine was one of the largest man-made holes in the world, covering 12 acres at surface level and 2.5 acres at the working level 80 feet below.

According to Dato’ Muhammad Nawawi Mohd Arshad, the group chairman of Nawawi Tie Leung Real Estate Consultants Sdn Bhd, a greater part of Sungai Besi is occupied by the the Sungai Besi airport, which is the home of Sungai Besi air force base after the passenger service was relocated to Subang airport. Its runway extends from Jalan Istana junction on the North to the East-West Link junction on the South. However, with the Federal Land Commissioner assigning the ownership of the Sungai Besi airport land to 1Malaysia Development Berhad (1MDB) for the development of Bandar Malaysia integrated project, the air force base will be relocated to Sendayan in the Seremban district of Negri Sembilan, where land has been acquired for the new air force base.

AN ESTABLISHED TOWNSHIP Generally, the Sungai Besi Highway (Besraya) can be divided into North, Central and South sectors. For now, the Northern sector is mostly occupied by industrial factories along Jalan Chan Sow Lin, but with the the proposed Bandar Malaysia development taking off, it will subsequently enhanced the commercial value of the area.

In the middle of Sungai Besi is residential suburbs such as Desa Petaling and Salak South, while the Bandar Tasik Selatan, where the integrated transportation terminal – Terminal Bersepadu Selatan (TBS) is located. Further South, one can

find the Selangor Turf Club (STC) and Taman Tasik Damai, where there is the Lake Fields gated and guarded residence, before the road continues to Balakong, Serdang and Kajang.

Sungai Besi is the home to various matured townships such as Salak South, Kuchai Lama, Desa Petaling and more, while surrounded by established estates such as Sri Petaling, Overseas Union Garden (OUG), Bukit Jalil and Cheras.

On the rail-based transit side, besides the aforementioned Bandar Tasik Selatan (BTS), there are also LRT stations in Salak South and Sungai Besi, all served by the Sri Petaling LRT Line that has been in operations since 1998. To ease congestion and to encourage the usage of public transport, the Park N Ride Complex near the Sungai Besi LRT station was opened to the public on 8 February 2013 with 200 extra parking bays. For users’ convenience, it is equipped with lifts, CCTV cameras, toilets and covered pedestrian walkways.

Being an established township, Sungai Besi is equipped with many schools, public and private alike, including vernacular schools and medical centres like National University of Malaysia Hospital (HUKM) in Bandar Tun Razak, as well as the Columbia Asia Hospital in Cheras.

BANDAR MALAYSIA By 2022, what is now the Sungai Besi Airport will be developed into an iconic mixed-use development called Bandar Malaysia, with an estimated GDV of RM150 billion. The 196-hectar site is merely three kilometers away from its twin project Tun Razak Exchange (TRX). This iconic development will comprise of 27,000 quality and affordable homes, and there will also be commercial districts to support new start-ups as well as small and medium enterprises (SMEs).

Originally to be developed by TRX City Sdn Bhd (formerly known as 1MDB Real Estate Sdn Bhd) and Bandar Malaysia Sdn Bhd, both subsidiaries of 1MDB, 60% of the stake in the Bandar Malaysia project was sold to a consortium comprising tycoon Tan Sri Lim Kang Hoo’s Iskandar Waterfront Holdings (IWH) and their partner China Railway Engineering Corporation (CREC) for RM7.42 billion on 31 December 2015.

According to the plan, Bandar Malaysia will also feature subterranean shopping malls, a financial hub and indoor theme www.propertyinsight.com.my MAY 2017 I 35

AREA FOCUS parks aimed at promoting liveability as envisaged by the Greater Kuala Lumpur NKRA (National Key Results Area), where it will be filled with features that strive for work – life balance, such as open green space and people’s avenue, besides worldclass tertiary learning institutions.

When the MRT Line 2 (Sungai Buloh – Serdang – Putrajaya Line, SSP Line) is up and running in the second quarter of 2022, there will be two MRT stations within the Bandar Malaysia project, namely Bandar Malaysia North and Bandar Malaysia South. Bandar Malaysia South will be the interchange station connecting the MRT Line 2 to the proposed High Speed Rail (HSR) between Kuala Lumpur and Singapore.

Prime Minister, Dato’ Sri Haji Mohammad Najib bin Tun Haji Abdul Razak said that Bandar Malaysia would be a modern metropolis with high quality living and good connectivity. The Government is expecting the development to bring in a huge amount of foreign direct investments, (FDIs) starting with the US$2bil (RM8.14bil) by China Railway Group Ltd’s (CREC), which would be building its integrated office complex there.

The High Speed Railway project between Kuala Lumpur and Singapore was first mooted in the late 1990s but it did not materialise due to the prohibitive cost. On 19 February 2013, Singapore and Malaysia officially agreed to build a high-speed rail link (HSR) between Kuala Lumpur and Singapore. According to an update by the Malaysian Land Public Transport Commission (SPAD), the commencement of work will begin in 2018, with operation beginning in 2026.

Spanning 350km, the HSR line will have seven stops — two termini in Bandar Malaysia, Kuala Lumpur and Jurong East, Singapore, with five transit stations in Seremban, Ayer Keroh, Muar, Batu Pahat and Iskandar Puteri (formerly known as Nusajaya). The express service between Bandar Malaysia and Jurong East will take 90 minutes instead of four hours by car, while transit (KL – Iskandar Puteri) and shuttle (Iskandar Puteri – Singapore) service will take 120 minutes on the same route.

As the technology is new in this region, Malaysia may follow the United Kingdom’s high-speed rail (HSR) development model for its own HSR system, for example having 36 | MAY 2017 www.propertyinsight.com.my

stricter civil design requirements to ensure the service is safe and reliable. In fact UK is a good example of how efficiently the HSR can be developed with the use of local skills and foreign expertise.

Knight Frank Managing Director, Sarkunan Subramaniam acknowledged that Bandar Malaysia was important for the overall development of KL, and Sungai Besi being right next to Bandar Malaysia would be enjoying a boost in property prices thanks to the project. However, Bandar Malaysia is a long term plan, as in the development will take place in a time frame of 15 – 25 years. Take KL Sentral for instance, it has taken more than 20 years for it to be what it is today, hence the growth of Bandar Malaysia will also take time, making it a long term plan. Of course, it is a good plan in moving forward because it will provide the growth Kuala Lumpur needed.

RESIDENTIAL DEVELOPMENTS Central Residence by Yuk Tung Land is one of the latest developments to unfold in Sungai Besi. Located just opposite Taman Salak Selatan, the serviced residence boasts an efficient transportation connection to bustling Kuala Lumpur. It is also connected to major highways such as Besraya, E10 New Pantai Expressway (NPE) and E20 Maju Expressway (KL – Putrajaya Expressway, MEX). For the ease of convenience, the developer has also provided a dedicated shuttle bus service for only a nominal fare which plies the routes to the Bandar Tasik Selatan LRT station, from which residents can continue to their destinations, be it the Golden Triangle or the Kuala Lumpur International Airport

(KLIA). Shopping malls such as Pavilion, Suria KLCC and Berjaya Times Square are all easily within reach.

In addition, The Vyne, a new condominium developed by Gadang Holdings is a natureinspired development, featuring trellis greens and outdoor facilities such as an artificial rock climbing area, herbs garden and ponds, to provide the residents a back to nature feel. The Vyne is also centrally located in Sungai Besi, just next to Taman Salak South with convenient accessibility to all parts of the city.

In terms of groceries shopping and food & beverage options, located nearby to these exciting developments are the 24hour NSK hypermarket located in Kuchai Entrepreneurs Park. Within that area, there are a multitude of services and products offered ranging between selfservice launderettes and car wash shops to electronic goods shops, dim sum eateries and steamboat restaurants.

Other high rise developments completed over recent years including The Leafz and Midfields. The Leafz @ Dedaun Sungai Besi is located along the Besraya, off Taman Salak Selatan. It is a freehold highrise serviced apartment developed by the Exsim Group of Companies. To provide an expansive greenery to the residents, the developer has crafted a serene hanging garden and a linear garden where the residents can enjoy the tranquillity away from the hustle and bustle of the city. The project has also lined up various facilities such as sky infinity pool, sky gymnasium, sports lounge and more to cater to the lifestyle of residents.

On the other hand, Midfields is a condominium located at Taman Sungai

Besi. It is located close to Salak South and Bandar Tasik Selatan stations, and is easily accessible from 4 major highways – Federal Highway, East – West Link, MEX and Besraya.

UPCOMING DEVELOPMENT Located in KL South, Trinity Aquata is a low-density condominium project with a gross development value (GDV) of about RM370 million. Spanning over 3.58 acres of freehold land, Trinity Aquata is located just 1 km away from TBS, and is accessible via Besraya, Middle Ring Road 2 (MRR2) as well as the MEX. Developed by the boutique developer Trinity Group Sdn Bhd, the developer has collaborated with the Kuala Lumpur City Hall (DBKL) to invest RM3 million to improve the infrastructure surrounding Trinity Aquata @ KL South, including to widen the existing Jalan 1/141 by expanding the current two lanes to four lanes, measuring 23.4m wide.

However while Sungai Besi has seen a rapid growth in its infrastructure, Khalil

Adis, the founder of Khalil Adis Consultancy Pte Ltd and director, REI Mediaction Sdn Bhd says that the township planning of Sungai Besi could be have been better, as the current land use and urban planning are clearly designed for a car-centric society, without prioritising the needs of pedestrians or public transport users.

INFRASTRUCTURE “I live in Sungai Besi and I experience firsthand the hassles residents here go through on a daily basis. For example, while the Integrated Transport Terminal (TBS), LRT, KTM Komuter and KLIA Transit stations in Bandar Tasik Selatan are located within close proximity, it is not safe to go from there to the nearby residential blocks, because the pedestrian bridge ends halfway, which means one has to walk on the highway against the flow of traffic before they can reach their homes. Likewise, in order to get to Sungai Besi LRT station, you need to walk on the highway against the flow of traffic. This has dampened the willingness of residents to take public transport.”

Prices in Sungai Besi has gone up in view of the upcoming Bandar Malaysia” – Sarkunan Subramaniam “While I believe that Sungai Besi has a lot of potential for growth, as it is going to be the site of Bandar Malaysia which will house the High Speed Rail station to Singapore, there still needs to be a strong political will by the various stakeholders to make things happen. For example, the authorities must ensure that residents can have easy access to the LRT stations, with frequent feeder bus services to close the ‘last mile connection’ by fetching them from the stations to where they actually www.propertyinsight.com.my MAY 2017 I 37

AREA FOCUS RECENT TRANSACTED PRICES OF LANDED RESIDENTIAL PROPERTIES IN SUNGAI BESI Transacted price (RM)

Transacted price (RM psf)

Tenure

1,600 – 3,200 2,356 – 3,654

1,200,000 – 1,500,000

524 – 704

Leasehold

1,600 – 3,200 2,356 – 3,654

1,000,000 – 1,680,000

619 - 811

Leasehold

4,298

2,600,000

604

Leasehold

3,476 – 4,682

4,298

2,600,000 – 2,950,000

630 - 747

Leasehold

Double storey terraced house

990 – 1,400

1,035 – 1,459

200,000 – 585,000

202 - 418

Leasehold

Double storey terraced house

990 – 1,400

1,035 – 1,459

275,000 – 620,000

277 – 425

Leasehold

Scheme

Year

Type of property

Taman Tasik Damai

2015

Three storey terraced house

2016

Three storey terraced house

2015

Three storey semidetached house

4,919

2016

Three storey semidetached house

2015 2016

Lake Fields, Sungai Besi

Taman Sungai Besi Indah

Land Area (sf)

Built-up area (sf)

Source: Nawawi Tie Leung

RECENT TRANSACTED PRICES OF HIGH RISE RESIDENTIAL PROPERTIES IN SUNGAI BESI Scheme

Year

Type of property

Built-up area (sf)

Transacted price (RM)

Transacted price (RM psf)

Tenure

Central Residence, Sungai Besi

2017

Service Residence

565 – 1,047

380,000 – 660,000

630 - 672

Leasehold

The Vyne, Sungai Besi

2017

Condominium

855 – 1,449

650,000 – 950,000

655 - 764

Leasehold

The Leafz @ Dedaun Sungai Besi

2016

Condominium

753 – 1,129

495,000 – 765,000

657 - 677

Leasehold

1,127

510,000 – 530,000

430 - 484

1,074 – 1,636

500,000 - 880,000

465 - 538

Midfields, Sungai Besi

2015 2016

Condominium

Leasehold

Source: Nawawi Tie Leung

live. There also needs to have clearer and better signage on bus stops to and for the LRT stations,” says Khalil.

He added that authorities should also plan proper park connectors to connect various public parks, playgrounds and residential areas with the existing pedestrian infrastructure seamlessly, and the City Hall should also enforce the municipal laws vigorously, to ensure the upkeep of city, and to prevent the unethical people from dumping garbage or construction debris everywhere.

Sungai Besi is a good place to invest in and will provide a good return of investment to investors in the long term, as the properties here are still affordable with plenty of room for capital appreciation. However, the current deficiencies in poor urban planning, lack of decent access to nearby public transport and lack of greenery need 38 | MAY 2017 www.propertyinsight.com.my

to be addressed by the relevant authorities in order to enhance its appeal.

CEO of REI International Holding Sdn Bhd, Dr. Daniele Gambero agrees that Sungai Besi is a goldmine where you can make money through property investment – in condominiums, serviced apartments and residential units, because of its wellcrafted connectivity to highways and public transportations such as LRT as well as the upcoming MRT Line 2. The HSR which connects Greater Kuala Lumpur to the southern region including Singapore will certainly open up Sungai Besi to a lot of opportunities and growth potentials.

Hence he advised that one should focus on Sungai Besi to enjoy the fantastic growth, especially watch out for the projects that will unfold around the stretch between Bandar Malaysia and the Sungai Besi toll plaza.

In conclusion, Sungai Besi has a lot of potential to become the next city centre of Kuala Lumpur. With great accessibility, international connectivity and Bandar Malaysia as a catalyst for future integrated developments, Sungai Besi is set to transform from an established matured township to a hotspot close to the city where residents will have the options in choosing their preferred transportation mode, allowing them to commute to the towncity or to their work place with ease.

They can also shop easily for groceries in retail hubs nearby, catch a blockbuster movie in cineplexes such as MBO Desa Petaling located nearby, or go for a jog at Bukit Jalil Recreational Park. These are the convenience we believe most people will be looking forward to, living in an area integrated with bundle of entertainment, transport and recreation amenities

RECENT TRANSACTED PRICE OF COMMERCIAL PROPERTY IN SUNGAI BESI Scheme

Year

Type of property

Land area (sf)

Built-up area (sf)

Transacted price (RM)

Transacted price (RM psf)

Tenure

Remark

The Trillium

2015

Three Storey Commercial Shop Office

1,799 – 7,784

4,805 – 31,184

2,580,000 –12,300,000

1,433 – 1,580

Leasehold

JPPH DATA

The Trillium

2016

Three Storey Commercial Shop Office

1,800

4,805

2,600,000

1,444

Leasehold

Asking price

The Trillium

2016

Five Storey Commercial Shop Office

-

26,760

12,800,000

-

Leasehold

Asking price

Source: Nawawi Tie Leung

RECENT LAUNCHES AND FUTURE DEVELOPMENT IN SUNGAI BESI Developer Name

Project Name

Type of property

Selling price (RM)

Built up area (sf)

Tenure

Completion date

Trinity Group Sdn Bhd

Trinity Aquata @ Sungai Besi

Condominium

544,888 – 1,500,888

1,152 – 1,420

Freehold

2018

Source: Nawawi Tie Leung

JULIANA TEH, Senior Negotiator, Mapleland Properties Sungai Besi is a relatively small township but it is now booming with new properties. However, the traffic in the area is horrendous during peaks hours and most of the buyers of the new properties in this area are property investors, where there are fewer tenants residing there despite some units being 100% sold out. It is expected that the new developments in Sungai Besi will also face the same issue of bad congestion, therefore the relevant authorities need to enhance the transit system to make a more convenient commute possible.

KELVIN HO, Registered Estate Agent, GS Realty Sdn Bhd Sg Besi is known as the deepest Tin Mine in Malaysia and also one of the main accessible highway in Kuala Lumpur. It is a strategic location and surrounded by lots of residences and factories, but it will be great if there are more commercial developments in the coming future so that the property there will become more valuable.

www.propertyinsight.com.my MAY 2017 I 39

INVESTOR NEXT DOOR

DO YOUR RESEARCH Making wise decisions is crucial when it comes to investing in properties BY: FELICIA SOON

A

conveyancing lawyer by profession, Azalea Chin has served in the legal line for 30 years, before she decided to join the property industry as a real estate negotiator recently. Investing in property came naturally to her as she was already involved in conveyancing for all the sub sale dealings during her days as a solicitor.

The first property Azalea purchased was located in Taman Sri Sinar, Segambut, Kuala Lumpur. It was around the time when she was planning for her wedding, that she bought the two and a half-storey town house which cost her RM39,900 back in 1989. Thanks to the good capital appreciation, Azalea sold the house three years ago for about RM300,000.

“Currently, I still have five other properties which included a factory, a shop office and the house where I am living,” says Azalea.

Among the many challenges along the way, the toughest yet for Azalea was the lesson learnt from investing in the wrong property.

“The worst investment I made was in Bukit Beruntung. At that time when the developer first developed the township, they promised the buyers that it would be developed into a sustainable and modern township similar to other thriving new townships such as Petaling Jaya. However after we bought a factory and shop office there, the prices went down due to poor township planning by the developer. So if I want to sell these properties today, the market rate will be very low, thus this investment experience was truly a regrettable one for me,” Azalea shared.

40 I MAY 2017 www.propertyinsight.com.my

ADVICE FOR FIRST TIME HOME BUYERS As Azalea has accumulated more experience over the years, she is now quite confident even in this market slowdown, and advises those first time buyers to look for a completed building when they want to invest in real estates.

“When you buy a completed development, you will know more about the location and what facilities that are offered there. However the downside of buying such a property is that the buying price will be higher in comparison to those buying directly from the developer during the project launching. Still, an appreciation of 30 to 40% is still possible when you buy a completed project,” said Azalea.

She also shared that if one is considering to buy a property directly from a developer, he must first study the background of the developer to find out whether it is a branded or trustworthy developer, and how is their management style like. As a matter of fact, whether the building is wellmaintained and well-managed, how much is the monthly maintenance, as well as the location of the development are all very important. Prudent investors might also want to find out what are the townships adjacent to the project, and what are the amenities provided there.

On property investment, Azalea prefers the “Flip and hold” strategy. “It is better to buy and flip units under construction and sell them off once completed. To achieve a positive cash flow, I will rent out the

property. There are many homework to do before we buy, in order to ensure that it is a good ‘Income-generating asset’. We need to study the location first and see how is the accessibility like, whether there are any connecting highways or LRT stations nearby, and also whether there are any facilities in or nearby the development, for example a grocery store, restaurants, banks and so forth.”

SUB SALE PROPERTIES CAN BE COSTLY Azalea usually seeks for good deals from matured townships. She notes that due to our current economic situation, many places are facing an oversupply of properties, therefore prices are suppressed, and presenting investors with ample cash a great opportunity for investment. “This is the time when the developer want to push up their sales by giving out a lot of attractive packages, for instance no down payment is needed for owning the house. With these, one can easily get a 90% loan, and the developer will also offer some additional rebates.

“If you are planning to buy any second hand property, you have to be prepared to invest a lot in it,” says Azalea. Initially you have to fork out a down payment of maybe 10 to 20%, because you have to sign the Sales and Purchase Agreement (SPA) first before one can apply for a loan.

As the market rate for sub sale properties vary a lot from one property to another, situations where the bank’s valuation is

INVESTOR NEXT DOOR

lower than the asking price may arise. For example, the seller is asking for RM500,000 yet the valuer tells the bank that the market rate of property is only RM450,000. As the banker thinks that the property is only worth RM450,000, the loan approve will be only 90% of this amount. In such a case, the buyer will have to pay for the gap not covered by the loan himself.

In addition, the buyer of a second hand property will still need to get ready another sum for renovation. If it is an old house, the renovation including repairs to the wiring and piping systems might easily set the buyer back by around RM50,000 or even RM100, 000. Thus the buyer would need to prepare a lot of money for all these purpose, on top of paying for the legal fee of the Sales and Purchase Agreement and the Loan Agreement.

THE DANGERS OF AN AUCTION PROPERTY According to Azalea, when you buy an auctioned property, there may be some unforeseen hidden costs to pay, so you must read the proclamation of sales carefully. In any auctioned property, the bank will not cover the outstanding utility bills such as water, electricity, broadband internet or any other rates unpaid by the previous owner, for example quit rent, assessment tax and so forth.

On top of that, if you buy an auction property, the bank will not deliver the vacant possession (VP) to you, you will have to get the VP on your own. This might pose an

You must take an interest in property investment just like doing your own business�

- Azalea Chin www.propertyinsight.com.my MAY 2017 I 41

INVESTOR NEXT DOOR

issue if the property is still occupied by the existing tenant or the owner, because then you will have to acquire a lawyer to serve them notices in order to evict them.

“I have not bought any auctioned property, but I have sold many auctioned properties to my customers and some of them do face this kind of problem. The situation arises when the buyers bought the property at a cheap price, yet they failed to visit the property which they bought prior to the purchase, so they were not aware that some of these auctioned properties are still occupied by the previous owner.

SHORT TERM INVESTMENT IS A BETTER CHOICE For serious investors, it is better to invest short term in properties. Azalea says, “Under the Real Property Gain Tax (RPGT) Act, you are entitled to pay RPGT if you sell your property within 5 years. But if you buy newly launched properties from a developer and you are given a rebate, the rebate given will not be shown in the agreement, therefore they will still use the purchase price announced originally as the selling price.

Let’s say the purchase price is RM800,000, after rebate maybe about RM700,000, but in the agreement the price is still stated at RM800,000. So after the completion, maybe there will be an appreciation of about 20%. When you sell the property, you have already earned the rebate of RM100,000; even after paying 30% of price difference as RPGT, perhaps you could make a profit of RM200,000.

With such a profit, you can save the money 42 I MAY 2017 www.propertyinsight.com.my

or look for another property to invest in!”

Azalea also encourages her son to buy some properties, especially for retail outlets and agricultural land. “Whichever project we are investing in, we must study the details first; for retail outlets, we must make sure that they have a good location, with many facilities around, because we are aiming for a higher appreciation, and it will also fetch a higher rental too. I think for commercial properties, is best for it to be located near schools or colleges, because there will be where the consumers with higher spending power are,” Azalea shared.

SMART INVESTMENT DURING TOUGH TIMES For the challenging year ahead, Azalea advises all investors to consider buying new properties directly from developers, as they offer many attractive packages to customers, such as lower booking fees, zero down payment and even special rebates.

On top of that, some developers also offer free Sales and Purchase Agreement (SPA), and buyers may enjoy a loan tenure of up to 35 years.

“If you invest your money into the shares of a company, it does not guarantee you high returns but if you were to invest in properties, even with the shrinking exchange rate due to global economic slowdown, your investment in properties would have at least provided you some savings for the future, say for example RM500,000. Of course you will also have the option of putting your funds into a fixed deposit (FD) where the interest rate

is between 3% to 3.5%, but I feel it is better to invest in properties as it will not face any depreciation, unlike branded cars which will depreciate the moment it leaves the dealer’s showroom, so it is better to invest in property,” concludes Azalea with a smile.

PROPERTY INVESTMENT PROPERTY 1 Location

Taman Sri Sinar, Segambut

Property type

2 and ½ storey town house

Purchase value

RM39,900

Market value

RM300,000

Price psf

RM56

Size

660 sqft.

Rental per month current

RM1,000

Rental Yield

50%

Loan Margin

80%

Loan Tenure

15 years

PROPERTY 2 Location

Rawang

Property type

Double Storey Terrace House

Purchase value

RM99, 000

Size

2600 sqft.

Market Value

RM450, 000

Price psf

RM60

Rental per month current

RM1,500

Yield

30%

Loan Margin

80%

Loan Tenure

20 years

KEEP STRANGERS AT BAY Introducing i-Neighbour –a secure multi-functional cloud-based accessmanagement system BY: FELICIA SOON

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ime Tec Cloud, the sister company of leading global time management and biometric security access providers, FingerTec has launched a revolutionary cloud and Internet of Things (loT) product ‘i-Neighbour’ – a multi-functional residential and visitor management system.

Residential security has become a necessity for many urban dwellers and most home buyers prefer to buy a house or a high rise residence in a gated and guarded area. However 24-hour surveillance also has its own setbacks where visitors will have to wait patiently for guards to take down their personal details or worst, trying to get hold of the person you are visiting when the owner does not answer their intercom to let you in.

There are also some visitors who feel uneasy about leaving their identity card or driving license in the hands of guards who are total strangers to them.

Hence, the creation of i-Neighbour Visitor Management System (VMS) is to help visitors to skip this hassle while providing accuracy, convenience and peace of mind for residents. The system is ideal for usage in any condominium or guarded communities, and is easy to implement with just the availability of a smart phone.

According to Founder and CEO of TimeTec Cloud Group, Teh Hon Seng, the company has been at the forefront of corporate security and workforce management for years. Now, they are thrilled to have launched i-Neighbour, 44 I MAY 2017 www.propertyinsight.com.my

and are happy to harness their expertise in helping Malaysians feel more secure in their own homes.

EFFICIENT AND DIGITAL OPTION i-Neighbour is designed to streamline the check in and check out processes.

To register i-Neighbour in your smart phone, type in www.i-Neighbour.com on your phone’s browser or you can install i-Neighbour’s mobile application from iOS App Store or Android Google Play.

Once you have installed i-Neighbour, a step by step guide will assist you in getting started and guests can pre-register their visitation free of charge, after which they will be provided with a QR Code that can be scanned at the entrance of housing estate, giving them immediate access into the premise.

This will provide convenience for regular visitors like suppliers, maintenance personnel and even tuition teachers who can obtain QR codes that will grant them regular access within a stipulated timeframe. On the other hand, both users i.e. the visitor and owner will also have the option of setting a reminder prior to the date, or jotting down details on visitation in the event they forgot or would like to make a special memo.

POWER AND CONVENIENCE For many business owners and even entrepreneurs, managing constant incoming visitors can be a feat however

i-Neighbour, powered by state-of-the-art cloud technology can effectively manage this problem. TimeTec Cloud believes that residents should be fully aware of what is happening in their environment at all times, and be entitled to the power to control who goes in and out of their compound.

Residents will also have the ability to prevent unwelcome guests from entering the premises by blocking them. The i-Neighbour application provides user round-the clock access to their account from the convenience of their smartphones, and approval, blocking, pre-registration and all other processes can be easily done anywhere and at any time.

JOINING I-NEIGHBOUR Everyone can join as an i-Neighbour member, however to join as a neighbourhood, it would be best if you are a member of your resident’s committee association, because you will need more information to build the entire accounts of your neighbourhood.

For those who are just an owner / resident of a neighbourhood and want to sign up with i-Neighbour, they are encouraged to contact their respective resident’s association to sign up. Once it has been approved, they will get an invitation to login into their account. Alternatively they may sign up their neighbourhood with i-Neighbour first before transferring the administrative rights to the authorised personnel to facilitate the whole visitor

management process.

Besides giving residents complete access to records of their complete visitation history, i-Neighbour also provides a bulletin board for your resident’s association to post important updates, contacts, documents, event updates and even photos, making communicating among one another more effective, efficient and transparent. It will also keep your neighbourhood informed, besides looking out for one another.

For visitors who join as an i-Neighbour member, you can easily log into your i-Neighbour member account to check on your visitation records and personal notes made on each individual visit.

You will also save plenty of time on filing up visitor registration form, because

towards loT, and i-Neighbour will be able to integrate seamlessly.

ON SUBSCRIPTION AND PAYMENT i-Neighbour is offering a 3-month free trial available for all neighbourhoods before they decide to continue with the paid services. For those who have decided to continue using i-Neighbour VMS, all you need to do is click to subscribe when you

i-Neighbour will keep your profile data in the cloud server free of charge.

ALWAYS SECURE AND NEVER OUT OF DATE i-Neighbours online cloud information storage and servers are provided and protected by Amazon Web Services, which prevent any data loss and are secured by their advanced unique authentication systems, thus ensuring that your data and your visitors data are securely protected.

The longevity of any software is dependent on consistent updates and continuous development, and TimeTec Cloud is experienced and committed in ensuring this stability, with an strong willingness to expand their offerings within the application.

Teh added, “i-Neighbour is going to be a game changer. Adoption is user friendly, fast and cost effective. The future is moving

receive our follow-up emails.

However, if you do not want to continue anymore, you can download all the important data / transaction within 2 weeks after the 3 months trial before the data is removed. The subscription fee is only RM24 per unit per year which works out to a mere RM2 a month per household, regardless of how many people there are in a household.

TECHNICAL SUPPORT The i-Neighbour support portal is currently being set up in Malaysia, and the technical

response team will standby 24 hours a day, 7 days a week, and users may communicate with them via email, Skype and GoogleTalk. To learn more about the procedures of getting support from i-Neighbour, visit www.i-neighbour.com to check out Suport Roadmap.

At present, the i-Neighbour cloud platform is located in West California, USA and i-Neighbour is currently working with Amazon EC2 which is acting as their Cloud platform provider. Please visit www.ineighbour.com for more information on the amazing features of i-Neighbour.

Established in 2012, TimeTec Cloud Sdn Bhd’s main objective is to develop and promote its flagship cloud-based surveillance and storage s y s t e m .

Inspired by the renowned biometrics b r a n d F i n g e r Te c ( o w n e d by parent company TimeTec Computing Sdn Bhd), TimeTec Cloud Sdn Bhd has extended its development into cloud-based residential visitor management system. This new system aims to provide a secure and friendly visitor experience for gated and guarded residences.

Over the years, TimeTec has launched various in-house developed cloud applications, such as staff attendance and scheduling, e-leave management and visitor management, all converged under the TimeTec cloud platform, Its first cloud application, TimeTec TA, under the same cloud platform, which records staff attendance and scheduling, was launched in 2014 and has been well received by the global market, currently serving 3,500 companies in over 140 countries.

www.propertyinsight.com.my MAY 2017 45

ROOKIE INVESTOR

SPEAKING FROM THE HEART Having a visionary mind is the key in whatever you do whether it is investing in properties or running your own business BY: FELICIA SOON

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rthur Tan is a man who wears many hats. An emcee, speaker and presenter, Arthur is no stranger to the entertainment industry. Apart from hosting, he also does public speaking and training for corporate organisations and education institutions.

After graduating from RMIT University, Melbourne, Australia, the Bachelor of Economics & Finance double major graduate developed an interest in investments and financial planning, which led to him owning a financial consultation company at the young age of 23 years, under the guidance and mentorship of an independent financial advisory firm in Singapore.

“I ran the investment company and was involved in many types of financial instruments for many years before I sold it off. Under our portfolio we had various trust funds, but we have never touch on properties because it was 46 | MAY 2017 www.propertyinsight.com.my

not our area of expertise at that time,” recalls Arthur.

Today Arthur is the founder and CEO of WeStyleAsia. For those unfamiliar, WeStyleAsia is an online platform which helps people to search and book their trusted grooming professionals. The brand identity of the company is kinship, which represents bridging boundaries and creating connections among one another. The idea behind it, is when we are all in together for a shared cause, a kinship is formed. Hence, the word “We” exists in WeStyleAsia.

Essentially, WeStyleAsia seeks to help grooming professionals to run their business with the necessary skills and tools they need to make it more effective, and also to survive in the digital world. “We also strive to assist more people to grow their inner confidence, to excel in life through the beauty of grooming. After all, with the right grooming knowledge, one can

always feel great and confident,” says Arthur.

FASHIONING A PASSION Experiences help to shape a person and allow them to express themselves in new ways. Arthur is a firm believer that we should have passion in whatever we do in our lives. His own inspiration is to become a life changer by developing growth in a person’s life, empowering people to look great and feel confident about themselves, building inner confidence and persona and yet instilling the right core values. These beliefs have led to the birth of WeStyleAsia.

“I turned WeStyleAsia into a full-fledged entrepreneurship mainly because I like to be involved in something where I am able to control the outcome. Coming from the background of an independent financial advisor, I was exposed to a lot of risks like market risks, fraud risks, something which I had no control over as no matter how good I was, at the end of

I live by the understanding that ‘You should be fearful when others are greedy, and understanding when others are fearful,,’ as advised by investment expert Warren Buffet” – Arthur Tan

the day it still boiled down to how is the fund manager, their experience and how good they are, whether are they lazy or not. On the other hand, business is something which I can control and thanks to technology, business has become faster paced and dynamic, and I must say that I just like the adrenaline rush there,” shares Arthur.

TURNING POINT “I became interested in properties investments because it is an investment that prompts me into having savings. I take it as a forced savings because by hook or by crook you always need to allocate a certain amount of money for property investment. Of course property investment is still one of the best ways to actually make money,” says Arthur.

Arthur bought his first property, a serviced apartment in Ara Damansara in 2010, and his second property, a condominium in Sri Kembangan in 2012. “I was intrigued by the strategic location of my first property in Ara Damansara as it was just right beside the LRT station, and for my second property in Sri Kembangan, it was also not too far away from the proposed MRT station on the MRT Line 2 (Sungai Buloh – Serdang – Putrajaya Line) as well.

When asked to share the comparison between both properties, Arthur mentioned that Sri Kembangan is quite vibrant as there is a constant traffic flow within that area and if you are talking about Greater KL, he found that areas where it is not fully developed were areas suitable for higher appreciation. As for better developed areas like Mont Kiara, he shared

that it was not so much on capital appreciation, but more on the high turnover and rental yield which can be easily gained.

Before buying his properties, Arthur spent a significant amount of time on research, and attended several property talks. “I went through the whole programme by investment guru Milan Doshi, and I followed Dr. Renesial Leong, the property queen closely on her latest findings in the property market. That was how I learnt about property investments back then when I was still unfamiliar with it,” explains Arthur.

DEAL OR NO DEAL? A big part of buying properties is looking into the location. As for Arthur, he will go with his gut feeling, think about how he felt when he first walked in to the building, and whether he can actually use the place. “When I walk in to a property sales gallery, how I feel at that moment is very important to me. In other words, I must feel a personal attachment to the property before I will consider actually buying it. Once this personal attachment has been established, I will then look into the surrounding facilities and connectivity. A selling point for me is having a grocery store right below my unit, because buying groceries is an everyday thing for me,” states Arthur.

Amazingly, though Arthur focuses much of his time on developing his business, which he hopes to be expanding soon to Australia and Thailand, it is still essential for him to read up constantly on property related stories, such as those featured in Property Insight, in order to keep track on what is happening in the

property market because it is closely related to the economic development of the country.

Thus if the property prices are going up, this would also mean that the economy is steadily improving.

ADVICE FOR FIRST TIME BUYERS “My advice for first time buyers is that make sure you have done your homework, such as reading up on all your researched materials and the facts about the property. Next is to understand what your risk appetite is, and also what are your financial goals and objectives.”

Furthermore, Arthur also emphasized on the importance of never buying any property which is not within one’s means. “I always believe in this theory where you always need to allocate 20% of your income to your property or mortgage repayments. So if it comes up to more than 20%, then you have already exceeded your buffer. Essentially this means that if you are making RM10,000 a month, then you should be able to afford to pay for a monthly mortgage of RM2,000, hence you should look for properties within that price range.

As an inspiring mentor who cares about the wellbeing of his team in WeStyleAsia, Arthur felt that it was his responsibility to give back to the society by motivating more people to improve their lives through ideas and inspirations.

Passionate in everything that he does, Arthur has proven that unlike the rest, he will do everything he can to seek the best possibilities, whether it is in running businesses or investing in properties.

In short, to succeed, you must first visualise your success. www.propertyinsight.com.my MAY 2017 I 47

PERSONALITY OF THE MONTH

CRAFTING SPACES THAT SPEAK TO HEART AND MIND BÖN Estates Sdn Bhd leads the way with its flagship project in the Klang Valley BY: FELICIA SOON

48 I MAY 2017 www.propertyinsight.com.my

PERSONALITY OF THE MONTH

B

ÖN Estates Sdn Bhd may seem like a newcomer to the industry but this boutique developer has come a long way from where they were in 2009. BÖN Estates today is the result of the whole new facelift and rebranding of PPM Realty Sdn Bhd which started out as a development company in 2009. Two signature projects, back then included the gated-and- guarded White Lily, a development comprising 73 terraced houses and also Minden Gardens, consisting 94 units of terraced and semidetached houses. Both projects, located in Minden Heights, Penang, were fully sold upon their completion in 2012.

In an exclusive interview with Property Insight, BÖN Estates Managing Director, Goh Soo Sing, shared on the direction of the company as it embarks on the journey towards success and the qualities that make a good leader. In the discussion, Goh shared his views on the direction of the company as well as qualities that make a good leader.

Its accolades alone testify to its sterling reputation and this includes being nominated for Property Insight’s Prestigious Developer Awards 2017 under the category of “Best Luxury High Rise Development”.

BÖN Estates is a boutique developer with a strong focus in building astutely designed homes. According to BÖN Estates managing director Goh Soo Sing, The Estate is the developer’s flagship project and debut in the Klang Valley.

Interestingly, its sales gallery’s use of natural materials was intended to translate to the five senses — sight, hearing, taste, smell and touch. “The word, BÖN means different things in different languages. For us, it is based on the Tibetan language, which means the balance of the five elements. That is why the five senses are important to us as they reflect the BÖN Estates brand,” Goh says.

THE CALLING Goh, a finance graduate brought up in a family involved in real estate, possessed a keen interest in the business even before he entered university. Needless to say, Goh began his career path working as an investment banker. However, when

opportunity came knocking in 2009, with an available plot of land for low density developments in Penang, Goh did not waste precious time in grabbing the opportunity to develop projects in the Minden Heights area.

“No business is always a smooth ride especially in the real estate business. As we were quite new in the sector, it was not an easy feat to convince the banks to give us financing, hence we had to look for investors and also seek out banks that were willing to support us,” says Goh. Luck was on his side when Maybank decided to fund their first project in Penang.

“Maybank saw our sincerity and also our integrity in our business dealings and has been our main supporter till today. This is something which I am very grateful for,” says Goh. He also mentioned that launching his development in the Klang Valley was also not an easy task. “It is a very competitive market and good land banks are hard to come by. Thus, I am happy that I have secured a great land bank in Klang Valley for The Estate development which saw a successful launch in the sales gallery recently, where we secured 60% sales at the launch,” Goh adds.

The Estate will sit on a 3.68-acre freehold parcel along Jalan 112H, south of Bangsar.

The two 46-storey towers consist of 328 units with built-ups ranging from 2,346 sqft. to 7057 sqft. priced at RM800 psf.

There will be four units per floor, with each one being a corner unit. The north-facing units will have a view of Universiti Malaya and the Kuala Lumpur city skyline, while the south-facing units will overlook the Bukit Gasing forest.

Goh shares that the unique selling point of The Estate is the units are catered for families. Standard units come in options of 4+1 bedrooms, while the dual-key units which makes up 40% of the project come in options of 5+1 bedrooms.

He shared that the supply for small units in South Bangsar are aplenty. However, bigger units are limited and when it comes to rental yields, South Bangsar command a higher rental yield. Thus, Bon Estates saw the opportunity to address the gap in this market and decided to build larger units.

All units come with a marble floor finishing for the living area; homogenous tiles for the balcony, wet kitchen and bathrooms; www.propertyinsight.com.my MAY 2017 I 49

PERSONALITY OF THE MONTH engineered wood flooring for the bedrooms; and carefully selected bathroom fixtures which include designer sanitaryware, quality brass taps and stone composite bathtubs.

Goh added that the reason why they were supplying quality finishing was because they wanted their buyers to move into their units hassle-free. Even the walls were fitted with plastic (PPR) pipping, because these high quality pipes are designed to withstand high pressure and temperature to prevent inter-floor and intra-floor leakages, which will minimise maintenance and leakage issues. In addition, these plastic pipes are hygienic and safe with no toxic chemicals being used during the manufacturing or joining and installation of the pipes to deliver clean water to your homes. These are also some of the things that buyers cannot change and being a responsible developer, BÖN Estates wanted to provide all these top quality products at an affordable rate.

“We try to price our products competitively so that our buyers can gain appreciation in value over time,” states Goh. Besides a good design layout, The Estate also has amazing facilities. There are a total of five pools at The Estate — the two sky pools at each tower, a lap pool, family pool and kid’s pool. Other facilities include a 3,000 sq ft gymnasium, yoga room, meditation room as well as childfriendly facilities such as an open play area with a sunken lawn, customised play area and an indoor playroom. Both towers also come with sky decks with a barbecue area, dining area, lounge area, party rooms, multipurpose hall and a dipping pool.

“Seksan Design Sdn Bhd is one of the best in designing resort themed facilities hence we choose to work with Ng Sek San. Other than that, we are giving 4 four car parks which isn’t common as most developers only give one or two car parks.

We decided to give 4 four car parks per unit because we wanted to think long-term for the whole development by ensuring that everyone has a car park inside rather than having to park outside on the road which will cause a congestion. So you can say that the difference between us and other developers is that we really think long-term for our buyers,” says Goh. THE RIGHT LOCATION BÖN Estates choose to establish The Estate 50 I MAY 2017 www.propertyinsight.com.my

in South Bangsar because they prefer to be close to the mature township of Bangsar.

“It is a strategic location for us to build our name at somewhere visible and with a proven market to minimise our risks as a new developer in the Klang Valley. Today, South Bangsar is also renowned as a hotspot where there is positive migration from the surrounding mature neighbourhoods with buyers coming from Seputeh, Taman Desa, and also Bangsar.

“People do not mind moving to South Bangsar now because the place has completely transformed from what it was before. Today in South Bangsar, there is a strong pool of multinational corporations with 22 blocks of boutique office towers which provides a steady pool of tenants due to its extensive workforce. The area is also convenient in terms of transportation.

Goh considers his former bosses and former colleagues as his mentors.

“I learnt from them whether it was a good or bad thing as I find it better to learn from others. My parents taught me to be humble and prioritise helping others, as they themselves practiced prioritising our staff welfare over theirs. It is our responsibility to ensure that their employees’ job security is taken care of and these values have been stuck with me since.

“They also thought me that there is no free lunch and short cuts in this world and in order to be successful, you need to be patient and have perseverance in doing the business. At the same time, you have to be able to adapt to changes while maintaining a high level of commitment and integrity.

These are the essential factors that you need to be successful in business. However, the most important thing to note after you have become successful in business is how you will maintain the wealth that you have created. That would be the ultimate test at the end of the day,” shares Goh. BE YOUR OWN LEADER In talking about what makes a good leader, Goh believes in leading by example.

According to Goh, he always set a high benchmark for himself because in order for a company to be successful, the leader must lead the pack. A good leader must also have passion in his role in the company and extend compassion to others and continue to think of how they can add value to others.

We hope that The Estate will reflect our potential and capabilities as a long term developer” – Goh

FUTURE PLANS Goh is positive that BÖN Estates will be able to push sales to 80% by the end of this year, following the good response they have received from buyers so far. On top of that, BÖN Estates is actually in the planning stages for two other projects, with the upcoming development to be situated in Mont’ Kiara.

“We are currently planning for a 4 fouracre mixed development in Mont’ Kiara.

After studying the demand and supply there, we have come to the conclusion that we want to build smaller units there because there is already an oversupply of large units in Mont’ Kiara. For this new development, we will be targeting younger homeowners, even first-time home buyers and potential property investors who want to have a piece of investment in Mont’ Kiara.

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ENTREPRENEUR INSIGHT

SO.LEK:

SIBLINGS’ INSIGHTS INTO ENTREPRENEURSHIP Brand awareness as a vital yardstick in business BY: MAGES PV LINGAM

S

O.LEK Cosmetics Sdn Bhd, a business name primarily derived from the terms often used by the siblings, the founder Dahlia Nadirah Juhari and co-founder Luqman Hakim Juhari, including the Malay word ‘Alat solek’ (make up set) and ‘So? Relax!’. This unique brand name was launched last October, after their visits to pharmacies in New York, USA which sparked Dahlia to create her signature brand lip crème, carrying a Malaysian DNA, custom-made for the Muslim community with subtle ingredients such as olive oil. Property Insight’s senior writer Mages had a pleasant interview with the siblings and discovered their newlyfound journey into entrepreneurial lifestyle.

Property Insight (PI): Who inspired you to venture into this market? What was the influence over your entrepreneurial race?

Dahlia Nadhirah (DN): To be exact, it was our visit to New York, when I saw Kylie Jenner’s lip kit. It wasn’t costly yet maintained good quality, so I asked myself why not we create our own, made in Malaysia. While Kylie Jenner has a huge following in the mainstream media, the lip crème, which is affordable and suitable for Muslim clients, is not readily available here. I have been attached to banking sector for 8 years, while our mother is a businesswoman. Being very strict on entrepreneurial start-ups and meticulous on proposals, she has encouraged us to pursue the idea and taught us to be on our toes if we were serious with this business endeavour.

52 I MAY 2017 www.propertyinsight.com.my

Luqman Hakim (LH): As for me, it was my sister. I am still on the verge of finishing my engineering studies when my sister requested my assistance. Now, I am serious in running the business, the figures and follow-ups on orders. I even tested the lip crème on my lips for demo purposes (chuckled). Dahlia puts her heart into anything she believes. At times, we do argue as siblings, but we complement each other too.

PI: What were the start-up challenges you faced to set up this venture?

DN: Firstly, we had tough time getting the right manufacturer for our product. We were actively searching for the perfect manufacturer who can meet our needs like formula and texture, and produce it locally. After 2 months of searching, finally in April last year, we managed to find a halal-certified manufacturer who could produce for us a matte lip crème that was soft, easy to apply, non-dry, long lasting, and easy to remove too. And the best part is, the colours will go according to the skin tone of the wearer. Currently, there are 4 – 5 similar brands in the market, some were run by my own friends, but we see it as a healthy competition. Most of our clients are friends, families and repeat customers who recommend it via social media and word of mouth.

LH: We have launched our website www.solek.com in October 2016 and collaborated with Pretty Suci and Fashion Valet to capture a wider market. Moving forward we are looking to place it in physical stores like pharmacies. Now, we usually receive hundred over orders at one time, with hundred over queries, but we managed to satisfy all the customers with timely replies and deliveries. Social media provides a better market penetration in this business. Payments were done online, and the product will be delivered from our factory in Rawang, Selangor.

PI: How did you get started with the idea or concept for the business?

DN: Our mother, who is also our investor, was a zoology graduate but ventured into a thriving engineering-based business, and myself studied psychology but decided to do this because I will have control over my income and learn entrepreneurship the basic way, with the help of technology.

She was the inspiration who worked super hard and precised to guide us the best way to manoeuvre the difficulties in running a business. With her guidance, we managed to pay our investor within 3 months. We wanted to do halal mart and services on halal line but we do not have any food and beverage background, so after a discussion with our mom we arrived at this.

LH: We loved the idea of flexi-time career, because I am a student and can still do this on a part time basis. Howerver, after being in the business we realised that if we don’t work hard continuously, there is no concrete income to sustain the business.

If we miss one or two postings in social media like Facebook, we will miss the sales too as social media users are always current and prefer sites which are active.

Therefore, while initially we thought we would have more time to ourselves, as it turned out we spent 24/7 looking out for orders or payments.

PI: Please share on your products and what makes it different from other brands in the local market?

DN: What distinguishes our products from the rest is the brand name and the logo.

The logo is dedicated to our grandmother, who used the eyeliner or ‘celak’ during her younger years. And we adopted the logo for our product to carry on a traditional feel. As for the brand names, the lip crèmes named ‘Gincu”, was started with local names like anggerik, dahlia, seroja, chempaka and mawar. The lip crème is olive oil produced in the Mediterranean, and would receive the trademark patent in less than 3 months. We also produced the eyeliner with the name ‘Celak’. With additional 6 shades and a mascara called ‘Lentik’, we hope to have a wider target audience, all before Hari Raya Aidilfitri this year. Besides, as part of our corporate social responsibility (CSR) programme, we also make a stand to donate RM1 from each sale to selected charity organisations.

LH: We wanted the texture that would be easy to apply and remove, as this is vital for our Muslim customers, when they want to perform wuduk (ritual purification before prayers). Even our eyeliner is super easy to apply and removed!

PI: What have you been doing to raise the profile of the products so far?

DN: For brand awareness, we are particularly focused on social media promotions. We are popular because of the frequent promotional campaigns. We have taken part in a few exhibitions and local bazaars. We did several interviews with print media, which helped a lot with the branding and product awareness. Next, we would focus on advertisements like on billboard space.

PI: What are your investment plans for the next 12 months?

DN: We have planned to bring the products to global market by participating in international exhibitions in China, Brunei and Africa. We would like to widen our local reach through network of stockists, distributors and drop ships (sending directly via manufacturer). We have in the pipeline to increase the brand exposure through collaboration with Fashion Valet and so on, to increase the product range and receive the product certifications.

LH: Part of the strategies would be to form partnerships with big online stores, moving forward, we would want to focus on investing on adverts, as well as selling our product in physical stores.

PI: What is your personal advice for upcoming entrepreneurs?

LH: If you want to do something, don’t think too much, just do it. If there’s a mistake along the way, learn from it. Don’t use them to measure whether you have failed or succeeded. Work hard. And make sure there’s something unique about your brand and product that would make you stand out from the others.

PI: How does branding help your popularity in entrepreneurship?

DN: We wanted unique local names to represent the brand and products. We decided to name after flowers and Malay princesses like Mahsuri to place us in a better brand recall. Such a strategy blends well with our Malay-majority clients. Hence, with increasing number of clients from all cultural backgrounds now, we are excited to let them know the meaning of the names too. Undoubtedly, we don’t compromise on the quality of the products and service, as these will determine the sustainability of the brand and propel the product range to flourish. www.propertyinsight.com.my MAY 2017 I 53

INTERNATIONAL

THE FALLACIES OF INVESTING OVERSEAS

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or a company that advocates the value of diversifying your portfolio beyond your own shores, it might come across as odd for us to be writing about the fallacies that has long beset overseas property investing. But precisely, because we have been helping clients with their portfolios for such a long time now, I reckon we have seen it all and our team is probably one of the foremost experts when it comes to all the wrong reasons when investing overseas.

So here, debunking 3 of the most common ones that marketing agents have been using to motivate sales, and over time resulted in an all too common mindset among investors today.

BUYING FOR CHILDREN EDUCATION The Pitch “Why throw money into the rental when

54 I MAY 2017 www.propertyinsight.com.my

you can own a property and profit from it when it grows in value? When your kid is done with the studies you can rent the property out and make more income!”

The Truth Student accommodation or even residential properties near universities seldom grow in value. The reason is simple – professionals and families (easily 90% of any residential market) would not want to stay in an area dominated by students, because the resale market of those areas is limited to either parents or savvy investors looking for yield.

While the former are mostly foreigners who will likely buy new, the latter will squeeze the price to maximise returns.

Add to that, once the kids enter professional life, he or she will also not likely want to stay in the same area for the same reasons. While rental can be high, so is wear and tear in student-centric

properties, thus requiring higher provisions for up-keeping. So there goes the rent.

The Answer Most will do a lot better buying a property in a high growth suburb and pass on the rental collection to their kids to rent. They will be able to then rent anywhere they like near the universities while gaining life experiences in maintaining and managing a property. Upon the kids completing their education you can then choose to have them stay in the property, sell it with profits or continue renting it out!

BUYING FOR INCOME / YIELD The Pitch “Build a passive income with a property that comes with a 5% guaranteed rental for 3 years where you will get over 15% back guaranteed!”

The Truth First a reality check. Nobody gives a rental guarantee without marking up their prices to cover the risk involve. So what you are doing is really giving the developer additional 15% and then let them give you back over 3 years.

Next, some simple math. If you are taking a loan, you will be leveraging on the additional 15% and paying interest on it for the next 25-30 years. I will leave you to work out the exact numbers but I am guessing that you will be paying back at least twice if not thrice the amount. Not to mention that you will not be collecting rent during that period.

One last point, and probably the most important one. I have not met, and I suspect most of you wouldn’t have either, any successful property investors who got rich collecting rent.

The Answer Property investment is always about capital growth especially in the early stages of wealth building. Yield / rental is only to create holding power. So if you are asking for rental guarantee without investigating into why would the asset grow in value you are almost certain to lose money.

Because chances are, to support the yield that will attract you to buy, developers will often have to price it above market, leaving very little capital growth upside for you. So think about it, will you prefer to buy a $500,000 property and collect 5% p.a. rental yield on it for the next 2 years with the property growing to $550,000? Or a $550,000 property simply to have the $50,000 returned to you through a 5% p.a. rental guarantee over the next 2 years, only to have it valued at purchase price?

Not forgetting the interest you will pay on the $50,000 differential if you were to take a loan. So no. Don’t just ask for rental guarantees. Do your research and find out where is the growth is going to come from.

would prefer to push city or city-side apartments is because that’s probably the locations that you know and thus make their job a lot easier. But the truth is city and city-side properties are often not the fastest growing nor the ones to hold their values best in a downturn. In fact, they are often just the opposite.

Properties in the cities and city-side locations are often dominated by overseas buyers, thus exposing their prices to risks other than the local demand and supply conditions. This includes forex risks, interest rate risks, capital outflow risks, policies and regulatory risks such as manpower regulations or foreigner taxes.

These risks often translate to holding power issues and thus price fluctuations.

The Answer City and city-side properties in today’s market vary from location to location, but where there is significant foreigner participation, as in most established and developed cities, the more risk there will be.

Unless investors are in for a short ride to quickly flip the market, most will be better

off buying in locations where property prices are well supported by local demand and income. Such properties will tend to provide stable and consistent growth – something which is essential when investing away from home.

CONCLUSION There are many more marketing strategies that were built on fallacies, simply taking advantage of the fact that most investors are not as informed. When faced with them, the golden rule is to never put down a reservation. While they may sound good, and in some cases make sense for some of you, walk away from the deal. Sleep on it, rationalise it, talk to your financial partner or advisor to help you see from other perspectives.

Never buy simply because you think the opportunity will not come by again. Trust me, while you might think that you are missing out on a great deal, there are so much more regrets-of-a-lifetime than dealof-a-lifetime out there.

Caveat emptor.

BUYING IN CITY CENTERS The Pitch “City centre apartments are the best buys for growth and yield, and their values are most resilient during market downturns.”

ABOUT THE CONTRIBUTOR Dan Toh is the Founder and CEO of Running Stream. He started it in 2007, and grew it into a unique boutique firm equipped with a proprietary methodology and a strong and passionate consulting team to assist investors across Asia with their global property portfolios.

The Truth The reason why most marketing agencies www.propertyinsight.com.my MAY 2017 I 55

INDUSTRY INSIGHT

LANDSERVE –

A WISE AND TACTICAL SYNERGY Competency is an edge in delivering top-notch services BY: MAGES PV LINGAM

56 | MAY 2017 www.propertyinsight.com.my

C

hen King Hoaw, the managing director of Landserve Sdn Bhd, an integrated property service firm, has planted in his heart on which direction he would pursue since his school days, and made a dash to venture into valuation, property management and estate agency at the first opportune he saw. Upon graduating from the University of Technology Malaysia (UTM) in 1990, he joined an international consultancy firm for 3 years and subsequently stayed with a public-listed property developer for about 2 years.

It was during his time there, that he sat and successfully passed the Test of Professional Competence conducted by the Board of Valuers, Appraisers and Estate Agents Malaysia (BOVAEA). Chen first started his initial private practice in 1995, and went on to establish Landserve in 2002 to provide valuation, property management, estate agency and research services.

“Landserve focuses primarily on small and medium-sized companies and individuals. But fundamentally, the types of services we offered are no different from the others though. Therefore, we value and market all types of property and manage

stratified developments including gated and guarded schemes,” asserted Chen.

Motioning with its tagline ‘Your Personal Advisors in Real Estate’, Landserve strives to deliver quality professional services as it aims to build long and lasting relationship with its clientele. This was how it gradually expanded its portfolio.

BETTER EQUIPPED Incorporated since 2002 in Malaysia, the operation of Landserve now is sustained by a workforce of about 80 staffs, who were meticulously selected for their extensive hands-on experiences, knowledge and skills on the subject matters. This would be a yardstick to meet the clienteles’ expectations and needs. As of now, Landserve is running its business from 4 operating offices in across the country, namely in Petaling Jaya, Penang, Johor Bahru and Kota Kinabalu.

For those buildings where Landserve is engaged as property manager, it will deploy trained building managers or executives, administrative personnel, chargemen, technicians, etc. to attend to the day-today operations of those buildings Chen also elaborated that the objective of property management is to enhance

the value of property. The quality of management and maintenance of stratified developments would have a direct impact on the values or prices of the units. More often than not, the quality of management and maintenance is one of the reasons why some apartments are appreciating faster than others. To maintain the topnotch service, his firm would need to make sure that its employees comply with the requirements of the Strata Management Act 2013.

Landserve also conducts educational trainings and workshops to cultivate the knowledge and skills of its employees in property management, valuation and estate agency. Estate management graduates who wish to sit for the Test of Professional Competence would find the trainings and workshops useful.

ONE STEP AT A TIME “To get the right people for the right work is a challenge that we always have to overcome; we emphasize on human resource development by providing more regular trainings, to equip them with the essential know-how to take on greater tasks and responsibilities, in order to improve on performance levels,” affirmed Chen.

www.propertyinsight.com.my MAY 2017 I 57

INDUSTRY INSIGHT

To get the right people for the right work is a challenge that we always have to overcome; we emphasise on human resource development by providing more regular trainings, to equip them with the essential knowhow to take on greater tasks and responsibilities, in order to improve on performance levels” - Chen King Hoaw

58 | MAY 2017 www.propertyinsight.com.my

Landserve is run by 5 directors, who are all registered valuers and estate agents.

While the team is capable in handling all the challenges, the directors are handson in monitoring the operations to ensure timely delivery. Landserve hires new talents as and when the need arises. When its professional and technical staffs are promoted to higher positions, the vacant positions left behind will be replenished by fresh graduates in the estate management and related fields.

The job descriptions for Landserve’s staffs can be unique as it promotes multi-tasking and encourages its staffs to acquire new skills. For instance, other than the usual maintenance works, its technicians are trained and able to prepare building audit reports. Given their expanded scope of works and capabilities, they enjoy a higher remuneration.

Chen believes that much can be achieved when there are like-minded partners and everyone in the team is united to achieve a common goal. His happiest moments were when their clients appreciated what

Landserve has achieved on their behalf.

DELEGATION OF DUTIES “I agree that the position does require superior time management but I usually delegate my duties to my subordinates.

This allows me to focus on the big picture at the operational level, while my subordinates who understand the job can deliver beyond client’s expectations. The managers were also encouraged to follow suit by delegating and training their staffs, encouraging to outperform them,” opined Chen. By delegating the tasks instead of micromanaging, Chen gets to enjoy quality time with family members more often.

Chen believes in teamwork and most importantly, leaders must be truthful. For him, it is important to equip oneself with full-fledge knowledge and problem solving skills. He added that at times if a situation has taken a turn, leaders must know the next best solution to adopt. To avoid being distracted from the issues at hand, one must concentrate on the objectives, and having a right mindset certainly helps a lot.

LEGAL

LETTER OF APPOINTMENT AND LETTER OF OFFER TO PURCHASE

A

s most peoples are not experts in selling or buying properties or doesn’t have the time for it, they engage the services of agents or negotiators to sell or buy properties. Usually the agents or negotiators will do a good job of it, as it is also in their interest to perform since they make a living from it.

However sometimes the parties involved i.e. the vendor / seller and even the agent and / or negotiators get into many problems because they lack the experience or

expertise in preparing the Letter of Appointment and the Letter of Offer to Purchase, and as such implications or problems may arise therefrom. Contrary to popular belief, the said letters are never standard, and are instead customised to the requirements of the parties, especially in this day and time.

In view of the same, this article will provide some of the essential matters that the parties may need to consider in preparing such letters.

Firstly, with regards to the letter of appointment, the parties shall take into consideration the following matters: • To spell out clearly in the appointment letter the duties of the agents / negotiators, the vendors and purchasers; • Make sure the details of the property are set out properly (For example, the address of the property, the title details, whether it is a freehold or a leasehold property? Most parties do www.propertyinsight.com.my MAY 2017 I 59

LEGAL

• • •

•

•

•

•

•

not write these details besides the address of the property); Whether the property is being sold with or without fixtures or fittings?; Whether the property is being sold with an existing tenancy or otherwise?; Who is to pay for agent/negotiator fees and what is the amount? (For example, 3% of the purchase price); What is the amount of earnest deposit that is to be collected upon the execution of the Letter of Offer to Purchase from the potential purchaser?

Who is to hold the earnest deposit sum pending the execution of the Sale and Purchase Agreement? (For example, is it to be held by the agent / negotiator’s firm, the vendor or the vendor’s solicitors etc?); When can the earnest deposit be released to the relevant parties? (For example, upon the execution of the Sale and Purchase Agreement by both parties, upon the approval of the relevant state authorities’ consent, or upon the approval of the loan by the purchaser’s financier etc?); Who will be paying for the GST on the agent / negotiator’s fees and on the sale of the property?; The authorisation to contra or offset the earnest deposit as the fees of the agents / negotiators by their agency, upon the execution of the Sale and

60 I MAY 2017 www.propertyinsight.com.my

Purchase Agreement as agreed upon or otherwise; • The description of the vendor / seller (must be specific, for example, all the owners of the property must be mentioned, whether they are companies or individuals, otherwise the appointment letter can be invalid (A common mistake); • Whether the appointment is an exclusive appointment or otherwise? If it is exclusive, it means only that the particular agent / negotiator can sell that properly, and the vendor cannot appoint another within that period of time.

Essentially, all said and done, the Letter of Appointment is a contract and therefore can differ in its terms and conditions.

Now that the Letter of Appointment is concluded and the roles of the parties are clearly defined, the agent / negotiator can work diligently to find a purchaser for the property with a peace of mind.

When the agent / negotiator has successfully found a party who is interested to purchase the said property, the agent / negotiator then have to prepare the Letter of Offer to Purchase to be executed by the vendor and purchaser to formalise the sale transaction.

Once again, many mistakes are made here, because the parties again wrongly conclude that such letters are standard when it is not. I must emphasise that

there is no such thing as a standard Letter of Offer to Purchase, contrary to popular beliefs.

Most of the time, the parties will not encounter any problems, as most proceeding are straightforward. But once any complication arises, then the parties will always fall back to the terms and conditions of the Letter of Offer to Purchase.

If the same is not prepared properly, the parties may encounter much problems and difficulties.

Once again in general, the parties have to address some of the essential matters as stated below, to minimise such problems: • Without sounding repetitious, we have to list down the correct and accurate details of the purchasers and the vendors in the Letter of Offer to Purchase, as there may be circumstances whereby although the purported sole owner has agreed to the sale of the properly at the proposed selling price and terms and conditions therein, that Letter of Offer to Purchase can be invalidated if there is a dispute, for instance if it turns out the person who executed of the said letter is not the only owner of the property. In that respect, the other owner can object to the terms and conditions therein, because it is not binding on that other owner; • Sometime the purchaser who execute the Letter of Offer to Purchase is not the only purchaser to the property.

This may give some problems say if for example, the other purchaser turns out to be the purchaser’s wife, who happens to be a foreigner, and as such she would require the state authorities’ consent to be approved first in order to purchase the property, and that will cause some delay to the transaction. If the vendor is in an urgent need of funds from the sale of the property, the vendor might not have agreed to sell to such persons had he known it earlier; • The description of the property must be accurate. (For example, the correct address must be stated, whether it is a freehold or leasehold property? Does it comes with a car park? Most of the time, the parties just mentions the address of the property in the Letter of Offer to Purchase and nothing

•

•

•

•

•

else. If the tenure is not stipulated clearly, what happens if the purchaser thought that he / she is purchasing a freehold property, yet it turns out to be a leasehold property? He / she would still be bound by the letter of offer to purchase, and will be liable to go through with the sale transaction); The amount of the earnest deposit to be paid must be listed down (For example, 2% – 3% of the purchase price. It can be any amount); The amount of deposit to paid upon the execution of the Sale and Purchase Agreement (For example, 10% or otherwise of the purchase price. It does not necessary have to be 10% of the purchase price. It can be customised to any another amount for so many reasons); Whether the purchase of the property comes with fixtures and fittings? If yes the parties should list down the same and annexed it with the Letter of Offer to Purchase. The parties must try to be specific on the important items (For example, don’t just list down “3 Air Conditioners”, list down instead “1 2HP National Air Conditioner, 1 1.5HP National Air Conditioner and 1 1HP National Air Conditioner”, else when the purchaser obtains the vacant possession of the property, the purchaser might instead receive 3 1HP Haier Air Conditioners); The parties must also list down the duration of the sale transaction (For example, 3+1 month from the date of the Sale and Purchase Agreement, or the relevant State Authorities approval etc. Kindly note that although the 3+1 month time period is the norm for this kind of transaction, it is still up to the parties. It can be instead be a 6+1 month time period because maybe the vendor is unable to shift out of the property with the 3+1 time period and requested such a term. Therefore such terms can be customised to cater to the situation at hand.

Generally the parties should also state the time period to negotiate for the terms and conditions of the Sale and Purchase Agreement, as well as the time period to execute the Sale and Purchase Agreement upon the completion of the aforementioned negotiation on terms and conditions.

•

Whether the property is to be sold with an existing tenancy, or vacant possession of the property must be given at the end the transaction needs to be stated. This is important because if the purchaser is not careful, the purchaser may be subjected to the terms and conditions of the existing tenancy for a long period to come at the existing rental sum, which may not be to the purchaser’s satisfaction or favour.

• The events or circumstances upon which the agent / negotiator is entitled to a commission or compensation (For example, if the transaction is terminated by the purchaser, the vendor would be entitled to forfeit the earnest deposit sum and give half of the same to the agent / negotiator as compensation or their fees. What happens if it is terminated mutually?

Does the agent / negotiator get any fees or otherwise? This issues have to be addressed in the letter).

• If the property comes with car parks, the Letter of Offer must distinguished whether the car park is an accessory parcel to the property, in other words the purchaser will own the said car parks, or is it just allocated by the developer? If it is the latter, the purchaser does not own the car park, and if the developer decides to take back the car parks or sell them to another person, there is nothing the purchaser can do about it.

• And finally, the Letter of Offer must also state whether there are any specific conditions to the transaction (For example whether it is subject to a loan approval by their financier, whether there are some debris or furniture that needs to be removed, or repairs that need to be done etc).

No matter how hard I try, at the end of the day, the list is still not exhaustive.

It is vital to stipulate all the events and

right of all parties involved in the Letter of Appointment and / or Letter of Offer to Purchase, to minimise the possibility of any potential disputes and protect the parties’ rights and interests.

We must be extremely alert and be aware that, whatever that is agreed upon in the letters will certainly bind the parties, and usually when the solicitors step in, it is too late to assist the parties concerned, as the terms and conditions will also bind their hands.

It may be prudent in this day and time to seek the advice of solicitors even before the parties execute such documents, and not only seek them later, as it may be too late for the solicitors to assist them when the damage has been done.

No matter how much efforts have been made to attempt to provide for all the eventualities that may arise, the possibility for dispute will still be around. But that does not mean that we should not guard ourselves against these eventualities to the best of our efforts.

As the old saying goes “Prevention is better than cure”.

Happy property hunting!

ABOUT THE CONTRIBUTOR David Kok is a partner at Messrs David Kok and Partners. He has extensive experience in conveyancing matters as well as civil litigations, and serves as a Legal Advisor to MIEA. David is the author of legal books including Conveyancing, Law And Practice in Malaysia, Legal Guide To Conveyancing Practice 1st and 2nd Editions. He can be contacted at davidkok@pd.jaring.asia www.propertyinsight.com.my MAY 2017 I 61

STRATEGY

INVESTING IN PROPERTIES ALONG THE MRT LINES

Interchange - Kajang

W

hen I started on my property journey, I was looking for a strategy to guide my purchases.

At the time, the Government was embarking on a plan to build an integrated urban mass rapid transit system (urban metro system) and made it one of the key projects under the Economic Transformation Program (ETP).

The planned Mass Rapid Transit (MRT) lines are meant to improve the connectivity of Greater Klang Valley, thus spurring the nation’s productivity. The MRT 1 will cover 51 km and will stretch from Sungai Buloh to Kajang, while the MRT 2 will cover 52.2 km and will stretch from Sungai Buloh to Serdang to Putrajaya. Phase 1 of MRT 1 from Sungai Buloh to Semantan became operational in December 2016 and Phase 2 (Semantan to Kajang) will be fully operational by July 2017. MRT 2 is targeted for completion in July 2022.

62 | MAY 2017 www.propertyinsight.com.my

AN OPPORTUNITY NOT TO BE MISSED I remember reading somewhere that many Hong Kongers and Singaporeans became millionaires from buying properties located nearby MTR / MRT stations, most notably Mr Li Ka Shing. It is not often that a country decides to build a new urban metro system.

As our Government had decided to embark on this journey, I realised that I could not miss this opportunity to capitalise on the MRT play.

Another point I noted was that once a train line is built, it is likely to remain there for a very long time as it would be too costly and almost impossible to dismantle and realign elsewhere. Hence, when you secure a property nearby an MRT station, you would essentially be enjoying the benefits forever.

Also, with the steady increase in petrol prices, properties located within walking distance from train stations would always have an intrinsic value about them,

supported by robust demand from tenants who wish to enjoy the transportation benefits. The demand will only increase as fuel costs and traffic woes compound.

Based on this, I decided to adopt a strategy to focus on properties along the MRT line.

EMERGING AREAS ARE MORE AFFORDABLE I decided to concentrate on emerging areas along the MRT lines where property prices were still low but would hopefully be “unleashed” once the MRT was ready.

I was looking for “rough diamond” areas which are not traditionally on the radar of normal investors.

Besides reducing the competition, the lower property prices in these areas would make monthly instalments more affordable, thus giving a good chance for rentals to match them. People in these areas are also more inclined to using public transportation

as compared to those in upscale areas.

I targeted properties worth RM550,000 and below, as such properties would have a monthly instalment of RM2,500 (based on 90% financing margin at an interest rate of 4.5%). I figured that this was a reasonable rental rate for Malaysians to pay based on a young married professional couple earning RM3,500 each (household income of RM7,000), which was my target tenant market.

Once the MRT is ready, rental and capital appreciation would likely ensue due to increased demand as tenants and buyers become more aware of these areas for their improved connectivity.

EXISTING TRAINS WILL HEDGE YOUR BET With this in mind, I pored over the MRT alignment maps for the MRT 1 and 2. MRT 1 has 31 stations and MRT 2, 36 stations.

This gave me 67 locations to choose from.

After removing all the “high end” areas such as Mutiara Damansara, Bandar Utama, Taman Tun Dr Ismail (TTDI), Pusat Bandar Damansara, KL Sentral, Bukit Bintang etc., I still had 50 over locations to choose from.

In the beginning I thought I could easily dive into one of the 50 locations and buy a property within walking distance from a planned MRT station. However, I soon realised that this may not be the wisest strategy for two reasons: 1. I would be totally exposed to the risk of the MRT construction being delayed. In the event my property was ready before the MRT line was up, it would be challenging for me to secure tenants as the unique selling proposition of my property (i.e. MRT) would not be ready yet. Tenants may even be put off by the traffic jam caused by the ongoing construction of the nearby MRT. 2. I would also be exposed to the risk of changes to the alignment of the MRT. To give some context, at that time, the MRT alignment was still in the midst of being finalised and was prone to change. If I bought a property along the planned MRT line and the alignment was subsequently changed, I would be “left in the lurch”, so to speak. Alignment change most notably occurred when the MRT 2 line was shifted from Pandan area and redirected towards

MRT LINE 1 (SUNGAI BULOH – KAJANG) NO

STATION

EXISTING LINE

NEW LINE

1

Sungai Buloh

KTM

MRT 2

2

KL Sentral

KTM, Kelana Jaya LRT Line, Monorail

MRT 1

3

Pasar Seni

KTM, Kelana Jaya LRT Line

MRT 1

4

Melaka

Sri Petaling LRT Line

MRT 1

5

Bukit Bintang

Monorail

MRT 1

6

Taman Maluri

Ampang LRT Line

MRT 1

7

Kajang

KTM

MRT 1

Note (1): It is proposed that once MRT 2 is partially opened in 2021, trains from both MRT 1 and 2 will start from Kwasa Damansara station, a cross platform interchange.

Bandar Malaysia, to create seamless interchange with the proposed KL – Singapore High Speed Rail (HSR) station.

To address these issues, I started looking at emerging areas which had planned new MRT stations, but had an existing LRT, KTM or Monorail station to support it. This was key to my strategy as it would allow me to “hedge” my property bets.

Should the construction of the new MRT station be delayed, my tenant would still be able to enjoy the existing KTM, LRT or Monorail. In addition, should the train alignment be altered, I would not be left in too bad shape, as I would still be supported by the existing train.

CRITERIA FOR INVESTMENT Following the above thought process, I formulated four (4) criteria to guide my property purchases: 1. New MRT station proposed to be located there.

2. Emerging area (off the beaten path of traditional real estate investors) where property prices would be relatively cheaper.

3. Absolute price of the property should be RM550,000 and below to ensure mortgage payments are within RM2,500 per month.

4. There is an existing KTM, LRT or Monorail station there, which would eventually be integrated with the new MRT station.

Based on these criteria, I studied the MRT 1 and MRT 2 lines. Below are my findings.

MRT LINE 1 (SUNGAI BULOH – KAJANG) There are seven areas along this line that have interchanges (i.e. MRT 1 station overlapping with an existing KTM, LRT or Monorail station). Please see attached map.

Areas have been circled in Blue.

From these areas, KL Sentral, Pasar Seni and Bukit Bintang are considered expensive areas, hence I did not delve further into them. In my opinion, Sungai Buloh, Taman Maluri and Kajang are promising as they are emerging areas and the properties would be relatively cheaper there.

I especially liked Taman Maluri as I saw that the area was poised for regeneration with Malaysia’s second Ikea branch being located there and Sunway Group constructing its Sunway Velocity mall. Both malls have since opened to much fanfare.

MyTown mall has also opened very recently, adjacent to Ikea. In addition, Taman Maluri is very close to Tun Razak Exchange (TRX, two stops away) which is poised to become KL’s next Financial Hub. In 2013, I bought a condominium in Taman Maluri which is located 200m away from the new MRT 1 station and 400m from the existing LRT station. My current rental is sufficient to cover my monthly instalment and thus keeps me afloat pending the MRT completion.

MRT LINE 2 (SUNGAI BULOH - SERDANG PUTRAJAYA) There are nine areas along this line that have interchanges (i.e. MRT 2 station overlapping with an existing MRT 1, KTM or LRT stations). Please see attached map. www.propertyinsight.com.my MAY 2017 I 63

STRATEGY

64 | MAY 2017 www.propertyinsight.com.my

Areas have been circled in Red. From these areas, I believe that Kepong Sentral, Kampung Batu, Titiwangsa, Chan Sow Lin and Sungai Besi are favourable as they are emerging areas, and not immediately on the radar of property investors. The existing train lines there will provide support pending the completion of MRT 2 in 2022. Also, as the construction of MRT 2 still has some way to go, properties nearby these stations may have a chance of being rented out to MRT Corp engineers (or their engineering partners) who are working on Line 2. You would thus be securing a blue chip tenant during the construction period.

Among this batch, I view Titiwangsa as being the most unique as it will have three (3) train lines – MRT 2, Sri Petaling LRT Line and Monorail, which makes it comparable to Bandar Tasik Selatan and just one line short of KL Sentral. It will certainly be a transportation hub. In addition, the planned redevelopment of Pekeliling flats will provide an added rejuvenation to the area.

Some parties have mooted a plan to build a “Battersea of the East” on the Pekeliling site i.e. mixed development project with malls, offices and residential. I am inclined to think that any project there would be large scale and sophisticated, to capitalize on the great location (Jalan Tun Razak frontage) and transport hub characteristics, and would thus enhance the overall profile of the area.

There are a few condominiums within a 200m radius from the train hub that are relatively affordable at around RM550 psf such as Titiwangsa Sentral and Vistana Residences. Besides their great connectivity, these condos are also currently supported by demand from the medical personnel of the hospitals within the vicinity (Kuala Lumpur General Hospital, Sentosa Medical Centre). A new serviced apartment project will be launched in the area soon that offers smaller sized units (600 sqft. and 700 sqft.) which I believe are suitable for city living professionals who would prefer to utilise a transport hub. I am looking out for this project.

CONCLUSION The MRT play is a unique opportunity for investors to buy an irreplaceable asset that will continue to give off benefits for a long time. However, in order to protect ourselves

MRT LINE 2 (SUNGAI BULOH - SERDANG - PUTRAJAYA) NO

STATION

EXISTING LINE

NEW LINE

1

Sungai Buloh

KTM

MRT 2

2

Kepong Sentral

KTM

MRT 2

3

Kampung Batu

KTM

MRT 2

4

Titiwangsa

Sri Petaling LRT Line

MRT 2

5

Ampang Park

Kelana Jaya LRT Line

MRT 2

6

Tun Razak Exchange

MRT 1

MRT 2

7

Chan Sow Lin

Sri Petaling LRT Line

MRT 2

8

Sungei Besi

Sri Petaling LRT Line

MRT 2

9

Putrajaya

KLIA Transit

MRT 2

Note (1): It is proposed that once MRT 2 is partially opened in 2021, trains from both MRT 1 and 2 will start from Kwasa Damansara station, a cross platform interchange.

Interchange - Titiwangsa and hedge our bets, we should target areas where a new MRT station overlaps with an existing LRT, KTM or Monorail station. The existing lines will support your property investment pending the full construction of the MRT, and will ensure that you do not go home “empty handed” should the alignment somehow change.

Traditional factors such as affordability of the property should always be kept in mind to ensure that rental rates have a chance of meeting instalments, making your property self-sustaining. Focusing on “emerging areas” in KL would go towards addressing this.

ABOUT THE CONTRIBUTOR Koh Eng Seng is a Certified Financial Analyst (CFA), who works in the corporate strategy department of a Malaysian conglomerate and has a keen interest in real estate investing

www.propertyinsight.com.my MAY 2017 I 65

STRATEGY

10 I

n the statistics released by Real Estate and Housing Developers’ Association Malaysia (Rehda), we tend to see many newly launched units coming into the market, despite the already high number of unsold units available. All these numbers are telling us that there will be more supplies available in the property market.

However, Rehda’s survey also found that local buyers are leading the current property market, making up 80% of the total purchasers, and of that, 85% are buying for self-dwelling. This may boost the confidence in most investors as it signifies the demand of property is still fundamentally solid. More and more investors (or speculators) may be taking the opportunity to engage in flipping strategy since property prices are expected to become relatively more attractive to them.

If you are one of them, beware of early warning signs that a flipping deal can potentially go south before it happens, regardless of market situation. Read on for clues that you might be walking into a disaster that could cost you tens of thousands, if not millions.

10 signs that you should walk away from a flipping deal: 1. YOU ARE TRYING TO FLIP A PROPERTY ALONE 66 I MAY 2017 www.propertyinsight.com.my

Signs of Property Flipping Disasters

Property investment is a team effort, especially when you want to flip a property in the shortest time. Of course you can do it alone, but this is definitely not the best option. In fact, not having a team increases the chances of your flip being a flop, more so if you are new to the industry.

The minimum requirement here is to have at least 6 months spent in networking and forming relationships with important team members. Your team members should include at least the following experts: • Lenders/bankers • Property agents • General contractors • Certified accountants • Conveyancing attorneys

2. YOUR VALUATION IS FROM GOOGLE Trying to estimate the value of a property by merely doing an internet search is one way of setting yourself up for a disaster.

It’s not that you shouldn’t use the internet to get an idea of how much your property’s valuation will be, but your research shouldn’t just end there – you should meet and speak with local experts like property agents and other investors. A real estate agent who knows a lot about the area where you want to purchase the property would be in a better position to give you a more accurate estimation.

3. YOU ARE USING “ERASER MATH” When you get too excited about a property flip and then try to adjust the numbers to suit your situation, that’s when you get into trouble. It is just like using and eraser to erase away those numbers not in your favour and then rewrite them to get some numbers within your own expectation.

These numbers will tell you nothing except the fact that you are too optimistic over the profit picture.

If you find yourself trying to adjust the numbers so that they can look good on paper, that’s likely a sign that you are about to get into a bad deal. The reason is very simple – a good deal will intrinsically give you a “Wow” from its most conservative numbers.

4. YOU HAVE INVESTED ALL YOUR LIFE SAVINGS IN THE FLIP The higher the risk, the greater the reward, right? But are you willing to take the risk with your life savings?

If you want to invest money in real estate, you should consider using some OPM (Other People’s Money). You can always find people around you who are looking to invest by networking and forming relationships. It could be your friends and family whom you can trust most. Get investors interested by offering them good deals. No one will give you their hard-

You won’t be serious about anything that you think is insignificant. When you are not serious about it, you tend to overlook a lot of things. Capital required for some flipping deal may not be a big sum if you are able to secure a mortgage loan. But the risk you are taking is in fact higher than losing the capital sum because of the leverage effect of finance.

Is “never mind” or “just relax” your regularly used expressions?

8. YOU ARE FINANCIALLY earned money if you are the only one benefiting from it.

5. YOUR DEAL DOES NOT HAVE AN EXIT STRATEGY Anything can go wrong when investing in property. Without an exit strategy, you might find yourself trapped. Some of the exit strategies you can employ in flipping a property include: • Renting to a tenant • Wholesaling to another investor • Using it for yourself If none of the exit strategies mentioned above is feasible or you cannot plan one then you should let the deal go.

6. YOU ARE MANAGING RENOVATION WITHOUT EXPERIENCE Some people believe that renovating a house or apartment involves just putting on a new coat of paint, fixing a light or two, and then they can sell the property for a profit. They may think they know lot of things, but what they don’t know is not anybody can renovate a house without any experience.

If you try to renovate a property on your own, and you do not know what you are doing, you are basically risking not renovating the property properly. As a result, a number of problems can happen such as you may find it difficult to get a buyer later. If you don’t have a clue as to how to renovate a property, find someone who does. There are plenty of talented contractors who are good at their job, you just have to find and meet them.

7. YOU THINK THE INVESTED CAPITAL IS INSIGNIFICANT

OVERSTRETCHED If you are flipping a property using mortgage loan, be sure you are not overstretching yourself.

We introduced the 30 – 60 Rule of Property Financing as a simple guideline to check if one is financially overstretched: • Pay no more than 30% of household income for home mortgage • Keep instalment of investment property lower than 60% of income generated by the property This rule can also be applied to property flipping with slight modification. If you are buying an uncompleted property which is not generating any income, it should be considered as part of your existing home mortgage. In other words, total instalments for both your existing home and the uncompleted property should not be more than 30% of your household income.

Otherwise you can considered yourself overstretched.

9. YOU ARE OVERCONFIDENT People can be overconfident in just about everything. Because of some previous successful investments, you might think you know more than the market about a particular deal and invest heavily in it. What you might not realise is that the market has already priced in that knowledge.

If you can’t help bragging a deal in front of everyone, or you have a habit of bragging literally everything on Facebook,

you better watch out.

You might assume the rules apply to everyone but you due to something called “I-am-different effect.” You might hear about studies of people not being as great at investing as they think they are, but you don’t think that applies to you.

Avoid falling into this trap by consciously considering the opposite of what you think might be true. If you think flipping a particular house would make a huge profit, look for evidence that it won’t.

10. YOUR GUT TELLS YOU OTHERWISE Investing in real estate comes with a lot of fear, but with a few tips you can easily overcome it. However, if you have an overwhelming sense of fear about purchasing a property, then you probably shouldn’t have started it. You should acknowledge that there’s a possibility you are in over your head if your gut constantly tells you that the deal might not work out well.

One typical symptom is you do not dare to tell anyone about the deal you are going to dive into.

What warning signs have you seen but perhaps ignored?

As Rehda has discovered also, some 31% of properties in the RM500,001 to RM1mil range were still unsold after completion in the past three years, largely in more popular property markets like Selangor and Johor. For properties in the price range of RM250,000 to RM500,000, 34% of the completed units were unsold, located mainly in Perak and Pahang.

So which way would you think the price of property will go? Well, it is up to you to speculate, isn’t it?

Before jumping into any flipping deal, please look out for these signs. If you notice any of the above signs, please make sure your insurance can cover you against high-probability, high-cost man-made disaster.

ABOUT THE CONTRIBUTOR KC Lau is a financial educator who has published 6 books on co-created more than a dozen of financial courses. His blog www.KCLau.com is one of the most visited financial website.

Dr. Ong Kian Leong (Dr. Ong KL) is the creator of GoFinance™, a tool that evaluates accurately if an investment is worth investing or worth financing for maximum returns. He blogs at www.REIJB.com.

Together, they have co-founded the Property Method, the first ever online property investment course for Malaysians.

www.propertyinsight.com.my MAY 2017 I 67

STRATEGY

DOES PROPERTY INVESTMENT MAKE YOU BROKE?

T

hese days there is so much fear in the property market, instead of thinking how to make money through property investment, people are scared that they will go broke from owning a property!

This is a very real fear as properties are the biggest purchase for many people.

Most people buy properties that cost anything between RM200,000 – RM1 million per unit, and have to spend the next 30 years paying back! Think about it, you make a choice at the age of 30, and you will still be paying for it when you are at

68 I MAY 2017 www.propertyinsight.com.my

50 with 10 more years to go! I don’t know about you, but that is a very scary thought to think about for many.

Yes, so if you make a single wrong move it will literally haunt you for the next 30 years!

If it does not generate positive cash flow, then it will make you broke every month.

But if you do get some exposure and groundwork before hand, and then make the right or at least a not so bad choice on property, then your experience will turn around to be a very happy story in deed.

Instead of going broke, it might in fact pay for your new car or holiday!

So what do you do? Let me tell you a story, it is one of the properties I bought.

This unit went from an amazing buy to almost a disaster, before turning around and become very good.

We bought this project from a top tier develop in the heart of the KL city centre.

Our entry price was good, the package was good and the potential tenants were amazing. We were so excited when we got the project, that together as a group, my friends and I literally bought up hundreds of units in this one project.

Then a few years later, when the property

INVESTOR NEXT DOOR was almost about to complete, something unexpected happened. The one thing that looked like it would never come down, rushed downward in a spiral. Oil Price.

Overnight our country’s economy and biggest income just disappeared. The whole oil and gas sector came crashing down. And disappearing together were those professionals working in the oil and gas sector, our amazing potential tenants whom we were hoping for, because they were willing to pay top dollar for the location and image.

What’s more, the units were completed and handed over by the developer a few months before the expected date. Call it a bonus, we didn’t even have the time to prepare for this down turn.

So what to do? Well, we put on the Phua Chu Kang boots and became contractors to renovate the units super fast, because we tried to rent it out quickly before others do the same. That worked for a few units but not all, soon we had so many units ready but no tenants. This was becoming worrisome. I remember I had the unit lists with me every day, they were all renovated but no tenants were even viewing it.

WHAT DID WE DO DIFFERENTLY? This is where I give credit to my partner Aravind. He told me we need to explore the possibility of turning these vacant units into Airbnb. Ok, so that weekend I studied it, set up an account, uploaded pictures, checked out what others were doing, learned from them and did the same to mine. Within 1 day I had inquires coming, and in 11 days I had all the balance units booked up. I was so excited that I thought I had solved the problem, and it would be a walk in the park from here onwards.

Well, I was wrong, the problems had just started, I had to do shopping, room set up, key hand over, reply to all inquiries (even the silly ones), be on call for any questions any time of the day, inspect the units upon check-out, do PR with the guest so we get very good reviews, clean up the unit after they have left, and be the ever ready Phua Chu Kang who can fix anything any time.

I was not so excited any more. What did I just get myself into?

Luckily I’ve had many years in business, and it was just a matter of learning how to handle it all, set up systems and hire some industry experts to help out. One thing that

I think we did right was that we researched more, and found that while Airbnb was a great starting step, it was still at the amateur level.

If I wanted to find a real solution in getting returns from our properties in a soft rental market, I needed to upgrade and build a sustainable business model that is focused on generating income from the units owned, so we as owners don’t go broke holding the units. Hence, what I did was not just run the units as Airbnb, but set up a team to run the units as a proper hotel.

We even got a hotel license.

This has now proven to be a stable solution for our units, as the tourism market is growing and we as the owners don’t have to pay a real estate agent to find new tenants year after year. There is also no maintenance issues for the owner, as the company we set up takes care of all the maintenance works, so as an owner of multiple units ,I just sit back for 3 years and collect monthly income from the units.

It has also given us the freedom to focus on property investment.

In fact, it is doing so well that as I am

writing this article, this company is now running in 9 different sites across 2 countries. We managed to expand as we were invited by the owners and developers to help them in solving the cash flow issue of fellow investors.

So after thinking that this project was going to make us investors go broke paying it off, this project has turned around to become a spectacular performer in this tough times. The building had achieved 80% occupancy in just 6 months, a record for KLCC properties and any other project that had completed in those hard times. It is yielding returns that are in the 8% range or more, and the property price has actually appreciated by 41% in less than 2 years! Also, it recently won an award in TheEdgeProperty.com Malaysia’s Best Managed Property Award. This will certainly push up the value and perception of the property further.

It is really not so much whether the property is good, so so or bad. It is all about you. Look out for my next article for more real hard truths in property investment. Till then, happy learning and investing!

ABOUT THE CONTRIBUTOR Sandeep Grewal has been investing in properties since 2004 and has purchased over 73 properties so far. He is a Co-Founder of Real Estate Tycoon Club (RTC), which spearheads property investment projects in Malaysia, Thailand and Australia. Besides, he has also co-founded the Freeman Group, which provides life-changing education programmes across Malaysia, Thailand and Hong Kong.

www.propertyinsight.com.my MAY 2017 I 69

STRATEGY

KNOW WHEN TO WALK AWAY A Success is about choosing what to stop doing, as much as it is about choosing what to start doing

Y

our life in property investment will not always run smoothly and there will be times when you have to put an incredible amount of time, energy, effort and money into a property only to realise the best course of action is to walk away.

I know that sounds crazy, but it’s true - it can happen. Every situation is different, of course, but the underlying truth remains the same: you have to know when to quit.

Knowing when to quit is damn hard.

Sometimes you say to yourself, ‘but... if I try it this way’, ‘if I try it that way’, ‘if I do this’, ‘if I do that...’ Most likely you’ll bend an ear or three of several friends and family members concerning your dilemma. But there will come a point when the options are limited and the rewards to be gained from a huge amount of effort and/or money and time are just not there. You have to balance your books. You have to balance what you’re putting in against what you’re getting out.

Such problems can happen even before a property acquisition - you really want the property, for example, but cannot run the numbers to make the deal stack. Unless you want to commit financial suicide, you have to walk away. Similarly, you may get involved in a price war over a property – thecompetition heats up and the property is no longer the deal it once was. Paying more for an asset just to win the battle will do you no favours - it will simply take you many more years to recoup your investment. Maybe in the long term the extra money paid will be worth it - but only you will know the price at which a property makes sense for you.

Sometimes you will need to walk away even when you own an asset. Maybe it no

70 I MAY 2017 www.propertyinsight.com.my

longer makes financial sense to keep it it’s underwater or it’s losing you money. Or maybe your money just isn’t working as hard for you as it could be. It could be a property you invested in a long time ago that has increased in value, but where the rental yields no longer make financial sense and the equity stake isn’t being used to its fullest capability. You will have to ask yourself: do I need to walk away from this

now? Could my money be put to better use elsewhere?

All the while you will be trying to balance your books, thinking about the funds you have and trying to make the most of them against your investment goals and the effort input these require of you. The key thing to bear in mind is: success is about choosing what to stop doing, as much as it is about choosing what to start doing.

ABOUT THE CONTRIBUTOR Dato’ KK Chua is the strategic advisor & managing director of Armani Media. He is also a registered real estate agent and an investor with more than 10 years of experience in the industry. He can be contacted at kkchua@propertyinsight.com.my

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