COVER STORY
The Trinity of Value Creation
MAIN FEATURE
Are you ready for MRT 2?
AREA FOCUS
Old Klang Road Revived
VISTAS ABOVE THE ORDINARY 4 -Storey Green Cour t yard Villas
EMBRACED IN NATURE’S LEGACY
70% SOLD
2 & 3 -Storey Semi-D Villas
FREEHOLD | GATED & GUARDED | 24-HOUR PATROLLED SECURITY
semi-Ds and 4-storey courtyard villas is enveloped in pristine rainforest tranquility, complete with cascading creeks and waterfalls. Nature’s magnificence meets urban
Wangsa Walk Giant
AEON AEON Big WANGSA MAJU
TA
Minutes away from highways and KL city | Mountain fresh air | Cascading creeks |
TO KLCC
"Good fengshui for good living" endorsement from Master Kenny Hoo
TO KLCC
KLCC
KEMENSAH HEIGHTS Zoo Negara JLN TAMAN ZOOVIEW
Fairview International School
TO MONT’KIARA / HARTAMAS DUKE
Exclusive clubhouse | Perimeter fencing | Cool temperatures | Scenic city views |
SMK Taman Melawati
SR Agama Muwafaqah
AKLEH Gleneagles Medical Centre
Sayfol Great International Eastern School Mall
MRR2
inspiration - make it your daily experience.
JL N
AN
TAR College
M
with sweeping panorama of the world below, this elite enclave of 2 & 3-storey
Seri Utama School
M EL AW AT I
TO GOMBAK / GENTING
Luxury homes perfected for the ultimate in urban green living. Perched on a hilltop
Sungai Ampang Waterfalls Sri Inai School Mutiara International School ISKL Ampang Puteri Specialist Hospital Ampang Point JLN AMPANG
TO CHERAS
GPS Coordinates: 3.219305, 101.760982
EMBUN SHOW HOUSE
PT 18223 T/Supply Jalan Melati Indah 2, Kemensah Height Taman Melawati, 53100 Kuala Lumpur.
www.titijaya.com.my
Download the Titijaya free app on your smartphone or tablet for more info!
MS No.: 05 100 14023
MS ISO/IEC 17027 : 2011 QS 16122006 CB 05
Brought to you by Titijaya, winner of the prestigious Asia Pacific Commercial Property Awards 5 Star Best Mixed Use Development Malaysia 2010.
@
ARA DAMANSARA F R E E H O L D
S I G N AT U R E SERVICED A PA R T M E N T S & SOHOS
URBAN LIVING IN UNPRECEDENTED STYLE
BLOCK A F U L LY S O L D
BLOCK C&D
Vibrant with city conveniences including established amenities, excellent highway
80% SOLD
access and three clubhouses in its vicinity. The ultra-stylish H2O residence supports a new style of living that is current and exhilarating. Final chance to enjoy a lifestyle
BLOCK B
coveted by urbanites.
FINAL PHASE OPEN FOR R E G I S T R AT I O N
Book your inspiration NOW.
Unique swimming pool with marine life display | Natural ventilation & lighting maximised | Premium views: Garden, pool, airport or Saujana greens* | Resort-style facilities
Subang Airport Sime Darby Medical Centre The Saujana Hotel Japanese School of KL
Jalan Lapangan Terbang Subang
Depending on unit type and location
*
Saujana Golf & Country Club
Oasis Mall Oasis (upcoming) Business Centre H2O Sales Gallery @
Citta Mall
ARA DAMANSARA
ARA DAMANSARA
LRT Station Ara Damansara
(under construction)
LRT Station Lembah Subang
(under construction)
NKVE Glenmarie Golf & Country Club
Subang National Golf Club
LDP
Federal Highway
BANDAR SUNWAY
GPS coordinates: 3.114759, 101.576682
H2O SALES GALLERY
A-G-6, Block A, Oasis Square, Jalan PJU 1A/7A, Oasis Damansara, 47301 Petaling Jaya, Selangor. T 03.7734 5022
AMAN KEMENSAH SDN BHD (429811-K) | EPOCH PROPERTY SDN BHD (955473-D) (A MEMBER OF TITIJAYA GROUP) N-16-01, Penthouse, Level 16, First Subang, Jalan SS15/4G, 47500 Subang Jaya, Selangor. T 03.8022 9999 F 03.8022 9988 AMAN KEMENSAH SDN BHD Developer License No.: 12369-1/08-2015/0476(L). Validity: 17/08/2013-16/08/2015. Advertising & Sales Permit No.: 12369-1/08-2015/0476(P). Validity: 17/08/2013-16/08/2015. Approving Authority: Majlis Perbandaran Ampang Jaya. Approve Building Plan No.: (9) dlm MPAJ.BS.KB.740-1/2-03/13. Tenure of Land: Pegangan Bebas. Expected Completion Date: Dec 2016. Land Encumbrances: Malayan Banking Berhad. No. of Units: 51 unit. Selling Price: RM1,590,000(min) - RM3,500,000(max). Diskaun Bumiputra: 7%. EPOCH PROPERTY SDN BHD Developer Licence No: 13556-1/06-2016/0591(L). Advertising & Sales Permit No.: 13556-1/06-2016/0591(P). Validity Period: 20/06/2014 – 19/06/2016. Approving Authority: Majlis Bandaraya Petaling Jaya. Approve Building Plan No.: MBPJ/120100/T/PT10/36/2014. Tenure of Land: Freehold. Expected Completion Date: Dec 2017. Land Encumbrances: HSBC Bank Malaysia Berhad. No. of Units: 1,357 units. Selling Price: Block A, B and C: RM520,800.00 (min) - RM1,253,035.50 (max), Block D: RM335,730.00 (min) - RM934,719.75(max). Discount Bumiputra: 7%. The information contained herein is subject to change and cannot form part of an offer or contract. All renderings are artist’s impressions only. All measurements are appropriate. All plans are intended to serve as a guide only and are subject to approval by the relevant approving authorities and may be modified or amended as directed by the approving authorities and/or project consultants. All built ups indicated are approximate measurements only and are subject to final survey/confirmation by the land surveyor/appropriate authorities. While every reasonable care has been taken in preparing this material, the developer cannot be held responsible for any inaccuracy. The numbering and postal address for the said/parcel when issued by the appropriate authority may not be the identical description as stated in this advertisement. Any dispute arising therein shall not be the subject matter of any claims for damages, compensation and/or whatsoever. Disclaimer: The developer cannot be held liable for the security of the occupant and users of the property or for any injuries, death, loss or damage to property or self in connection with the provision and maintenance of the service or lack or shortcoming thereof. Hourly patrolling is subject to developer’s discretion.
www.h2o-aradamansara.com.my
PL E A S E C A L L :
6 019 - 5 8 7 6 8 8 8 6 0 17- 3 8 2 1117 6 012 - 2 9 3 10 3 3
Intersection of 4 highways: SKVE, SILK, North-South Hwy & Sg Besi Hwy Ready student population of more than 20,000 within 2-3km radius Total population of 70,000 within 10 minutes An MRT station (Uniten Station) to be built on Line 2 nearby Major hotels, 14 universities/colleges and 5 hospitals within 20 minutes Lifestyle mall at De Centrum Located in De Centrum city (100 acres of freehold development)
Your neo-urban lifestyle comes with a truly self-contained neighbourhood, where if you so choose to, you won’t need to drive out for almost anything. Daily shopping couldn’t get more convenient at the De Centrum Mall & Retail Shops. With lifestyle stores spread over more than 160,000 sq. ft. catering to your needs, you couldn’t be more spoilt for choice, with all literally beneath your feet.
PUBLISHER’S MESSAGE
T
he public display of the proposed Sungai Buloh-Serdang-Putrajaya MRT alignment is a development that has its fair share of controversy, as the alignment had recently been changed.
Unlike previous expectations that it will pass through the Cheras neighbourhood, the newly proposed alignment will pass through neighbourhoods such as Bandar Malaysia, Kuchai Lama, and Serdang. In spite of this, this major transporation infrastructure development should improve accessibility to the capital from the northern and southern parts of the Klang Valley. This is expected to have an impact on the property market of neighbourhoods impacted by this development. It will take several years before this development is completed, but as we can see from the Sungai Buloh-Kajang MRT Line, it is halfway close to completion. The years will pass us by, and before we know it, it should be completed, changing the way of life for several neighbourhoods. In current times when the state of the property market is challenging to several home buyers and investors, there is always light at the end of the tunnel. Beyond just looking at the light, preparing for it makes good sense for the future.
PUBLISHER KK Chua kkchua@propertyinsight.com.my EDITOR Mak Kum Shi editor@propertyinsight.com.my SALES & MARKETING Janet Loh 012-205 0911 janet@propertyinsight.com.my Andy Fam 012-601 9938 andy.fam@propertyinsight.com.my Chong Wei Yeen 012-927 2863 weiyeen@propertyinsight.com.my Hagenz Choo 016-221 9077 choo@propertyinsight.com.my FOR ENQUIRIES: enquiries@propertyinsight.com.my
PUBLISHER Armani Media Sdn Bhd (1032085-H) No. 32-3, Jalan Pekaka 8/4 Sec 8, Kota Damansara 47810 Petaling Jaya, Selangor Tel : +603 6156 3366 Fax : +603 6156 3399
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PROPERTY SHOWCASE 2015 Date
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Time
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Venue
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Although every reasonable care has been taken to ensure the accuracy of the information contained in this publication, neither the publisher, editors, writers nor employees or agents can be held liable for any errors, inaccuracies and/or omissions. The contents of this publication do not constitute investment advice. It is intended only to inform and illustrate. No reader should act on any information contained in this publication without first seeking appropriate professional advice that takes into account their personal circumstances. We shall not be responsible for any loss or damage, whether directly or indirectly, incidentally or consequently arising from or in connection with the contents of this publication and shall not accept any liability in relation thereto. The views by our contributors expressed here are their personal opinions and do not necessarily reflect Property Insight’s views. The publisher does not endorse any company, organisation, person, investment strategy or technique mentioned in this publication unless expressedly stated otherwise. The publisher does not endorse any advertisements or special advertising features in this publication, nor does the publisher endorse any advertiser(s) or their products/services unless expressedly stated to the contrary. All rights reserved. No part of this publication may be reproduced in any form or by any means, including photocopying and imaging without the prior written permission of the publisher.
CONTENT
COVER STORY 16
The Trinity of Value Creation
Forward-looking, vibrant, and innovative, Trinity Group has become a leading Malaysian property developer within a decade. Property Insight takes a look at their upcoming and latest development, Trinity Aquata @ KL South
FEATURED PROPERTY 50 Pulsating on One End, Pristine on the Other
OSK Property Holdings Berhad is beautifully carving the heart of Shah Alam with the development of Emira™
50
16
MAIN FEATURE 22 Are you ready for MRT 2? Jumping onto the Bandwagon
INTERNATIONAL MARKET 53 The Greater Metropolis
Knowing the drill of Melbourne property market
INVESTOR NEXT DOOR 58 If You Will It, It Is No Dream
Find out Mohd Salahuddin’s secret of owning 23 properties in two years
PERSONALITY OF THE MONTH 62 Tricks of the Trade
Dato’ Shah Razali works the DSR Group like a charm
FEATURE 28 The Case of Affordable Housing
The recent National Affordable Housing Summit 2015 discussed in detail what affordability is all about
32
Grant Transforming Penang with GTGP
Get involved with urban regeneration projects for your cities
AREA FOCUS 36 Old Klang Road Revived
The “old” has past and the “new” is here
DEVELOPER OF THE MONTH 43 Eko-nomic Investment
Ekovest Berhad is bringing the best of both worlds – construction and property development
STRATEGY 68 Why Invest in REIT’s? 72 Tips and Strategies When Investing in Kuala Lumpur and Selangor in 2015
74 76 43
Flip or Hold: Which is Better? 3 Reasons Why the Market Deserves to Slowdown
KLK ads_June.pdf
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NEWS AND EVENTS
MAH SING SUPPORTS SELANGOR’S AFFORDABLE HOUSING
M
ah Sing Group kicks off its first project under the Rumah Selangorku affordable housing scheme programme with a groundbreaking ceremony for M Residence 2@Rawang held at the 7.86 acres of land planned for the development on 15 May, 2015. Selangor Menteri Besar Azmin Ali, who graced the ceremony said, “It is heartening to see corporations such as Mah Sing putting much thought to support our initiative to provide affordable housing for the people of Selangor. It is our aim to provide the rakyat with a home that is not only ideally located and comfortable, but which is also a valuable asset for deserving
families.” “We are committed to making the Rumah Selangorku programme a successful endeavour by working together with various corporations such as Mah Sing to build quality and comfortable homes at affordable prices to meet the high demand of low and middle-income buyers working in urban areas,” he added. Rumah Selangorku consists of two blocks, featuring 488 units with built-ups from 850 sq.ft., priced at RM170,000, offering 3 bedrooms with 2 parking bays. These affordable highrise residential blocks will be equipped with amenities and facilities within a gated and guarded community.
To apply, applicants first need to register with the Selangor Housing and Property Board (Lembaga Perumahan Dan Hartanah Selangor) by logging on to the official website at lphs.selangor.gov.my and filling up the form and all required details and submit. Applications are valid for three years from the date the projects are offered. Members of the public
can also visit the project site and enquire about the development. For applications to own a unit of Rumah Selangorku, members of the public can visit the M Residence Sales Gallery or log on to Mah Sing’s official website for assistance. M Residence Sales Gallery at Rawang is open daily from 10am to 6pm. Please visit http://www.mahsing.com.my/ for more information.
VIPs cutting the ribbon during the ceremony
THE NEXT BIG EVENT ORGANISED BY
Find out how Transit Oriented Development (TOD) i.e. LRT/MRT/HSR will change Greater KL’s property market. Top International Master Planners from the UK (Benoy) & USA (Jerde Partnership) will be flying in to share insights about TOD urban real estate trends in HK, Singapore, Japan and UK.
POSITIONING MALAYSIAN REAL ESTATE:
Post GST
& th 11 Malaysia Plan 2015
&
10 I JUNE 2015 www.propertyinsight.com.my
MARK YOUR CALENDAR... Thursday, 6th August 2015 Royale Chulan Damansara Call Aisyah/Adilena at +603-7724 1878 or email us at events@malaysiapropertyinc.com http://malaysiapropertyinc.com
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5:42 PM
2015 EXPO & SHOWCASE CALENDAR JUNE
17-21 PI Property Showcase 2015 Paradigm Mall, Kelana Jaya Duration : 5 Days
JULY
3-5 Investors’ Hot Picks Property Expo 2015 Mid Valley Exhibition Centre, Mid Valley City Duration : 3 Days
AUGUST
7-16
PI Property Showcase 2015 Tropicana City Mall, Petaling Jaya Duration : 10 Days
OCTOBER
6-11 PI Property Showcase 2015 Cheras Leisure Mall, Cheras Duration : 6 Days
NOVEMBER
14-15 PRISM 2015 Sunway Pyramid Convention Centre, Sunway Duration : 2 Days
BOOK NOW! CALL US AT +6012-6019938 / +6012-627 2863 / +6016-221 9077
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INFOGRAPHIC
Number of Residential Property Transactions According to Type and District in Selangor SABAK BERNAM
HULU SELANGOR
2013
2014
Single Storey Terrace
77
93
Type/period
2013
2014
2 – 3 Storey Terrace
51
41
Single Storey Terrace
337
508
2 – 3 Storey Terrace
521
698
Single Storey Semi-Detach
89
56
2 – 3 Storey SemiDetach
18
17
Detach
268
Condominium / Apartment
98
Type/period
Single Storey Semi-Detach
8
23
2 – 3 Storey SemiDetach
2
2
Detach
23
35
Condominium / Apartment
21
8
GOMBAK 2013
Type/period
506
426
187
2 – 3 Storey Terrace
2,214
1,889
148
Single Storey Semi-Detach
16
241
2 – 3 Storey SemiDetach
271
271
Detach
527
500
2,038
1,885
Condominium / Apartment
KUALA SELANGOR 2013
2014
Single Storey Terrace
206
235
PETALING
2 – 3 Storey Terrace
526
538
Type/period
Single Storey Semi-Detach
29
12
Single Storey Terrace
974
874
2 – 3 Storey SemiDetach
55
104
2 – 3 Storey Terrace
7,143
6,699
35
45
Single Storey Semi-Detach
39
40
Detach Condominium / Apartment
183
213
2 – 3 Storey SemiDetach
939
912
Detach
896
955
8,594
7,378
Type/period
Condominium / Apartment
KLANG Type/period
2013
2014
Single Storey Terrace
1,552
1,888
2 – 3 Storey Terrace
2013
2014
3,463
3,262
Single Storey Semi-Detach
100
115
2 – 3 Storey SemiDetach
376
368
Detach
216
219
Single Storey Terrace
919
827
922
2 – 3 Storey Terrace
4,541
3,652
Single Storey Semi-Detach
35
36
2 – 3 Storey SemiDetach
739
668
Detach
522
534
2,813
2,529
Condominium / Apartment
888
HULU LANGAT Type/period
KUALA LANGAT 2013
2014
Single Storey Terrace
521
562
2 – 3 Storey Terrace
473
545
Single Storey Semi-Detach
74
74
Type/period
2014
Single Storey Terrace
SEPANG 2013
2014
Single Storey Terrace
449
310
2 – 3 Storey Terrace
1,004
893
208
138
Type/period
2 – 3 Storey SemiDetach
74
79
Single Storey Semi-Detach
Detach
65
72
221
147
Condominium / Apartment
2 – 3 Storey SemiDetach
95
49
Detach
103
113
Condominium / Apartment
365
448
Condominium / Apartment
2013
2014
Source: NAPIC 2014
www.propertyinsight.com.my JUNE 2015 I 15
COVER STORY
THE TRINITY OF
VALUE CREATION Forward-looking, vibrant, and innovative, Trinity Group has become a leading Malaysian property developer within a decade. Property Insight takes a look at their upcoming and latest freehold development; Trinity Aquata @ KL South. By: Fara Aisyah Firdaus Petial
16 I JUNE 2015 www.propertyinsight.com.my
T
he history of Trinity Group started since 2004, and it has now emerged as one of the premier developers in Malaysia. The company has built a solid reputation of bringing affordable yet luxurious living to its customers with features such as strategic locations, premium facilities and value-added infrastructure, under the direction of Trinity Group managing director Dato’ Neoh Soo Keat. Its projects are known for its good investment values with high capital appreciation potential. With its philosophy of ‘Building Communities, Enriching Lives’, Trinity Group stands out among other developers of its class for its innovative product range and integrated marketing approaches. It is constantly evolving, and aims to be on the cutting edge of modern trends and living concepts, to enhance the lives of its customers and the community it serves. Within a decade, the company has now developed six projects, with more developments in the pipeline.
The iconic Trinity Aquata @ KL South
THE VITALITY ASPECTS “Trinity Group properties are very much sought after because of their prime locations, affordability, good investment values, and premium facilities,” said Neoh. The group differentiates itself from other players in the property business by being creative and offering innovative living concepts to suit their lifestyles. Besides innovation, it strives to ensure that each development it creates brings value to customers.
Trinity Aquata Vivarium
It also recognises that luxury living should not be the privilege of a few. Hence, most of its projects would feature innovative features (RM7 million ramp in The Zest, RM3 million missing link in The Z, floating garden in The Z, and sky deck with floor-to-ceiling glass facade for Zeva) for the ultimate lifestyle experience. “At Trinity Group, we pride ourselves in understanding the market demands and changing buyer trends. We strive to fulfil those demands in all our developments.” “For the past ten years, Trinity Group focused largely on boutique
“Trinity Group properties are very much sought after because of their prime locations, affordability, good investment values, and premium facilities.
Dato’ Neoh
www.propertyinsight.com.my JUNE 2015 I 17
COVER STORY
500 metres radius from Aquata 1 km radius from Aquata
Proposed SSP Line
Terminal Bersepadu Selatan
Taman Naga Emas Station
Google Map Scale: 200 metres BESRAYA Highway
Kuala Lumpur-Seremban Highway
developments in the Klang Valley region. Trinity Group is also looking at international markets such as China and London to develop some projects there,” added Dato’ Neoh. Dato’ Neoh commented, “Our land bank strategy is to acquire as much land bank as possible within Malaysia, provided it is a strategic location with potential development capabilities. This is where my experience as a town planner comes in handy, foreseeing the potential of a location.” TRINITY AQUATA @ KL SOUTH “We have launched Trinity Aquata in May and we’re pleased to say that the response has been encouraging so far. We have been receiving a lot of interest calls and event bookings before the launch from our private viewing sessions. In fact, “Our recent Nationwide Pre-Launch has achieved a total 60% sales in KL, KK, Kuching and Penang.”
18 I JUNE 2015 www.propertyinsight.com.my
The project is launched this year and is expected to be completed in 2018 with a gross development value of RM300 million. Inspired by the fluidity of water, Trinity Aquata has many unique water features within the development, which comprises of two blocks of 26-storey condominiums with a total of 492 units. Strategically located at KL South, Trinity Aquata is easily accessed by major highways such as Besraya Highway (BESRAYA), KL-Seremban Highway, Maju Expressway (MEX) and Middle Ring Road 2 (MRR2). The large catchment area will attract residents due to its strategic location. There are amenities nearby Trinity Aquata, which include the Terminal Bersepadu Selatan (TBS), Bandar Tasik Selatan LRT station, KTM Komuter & KLIA Transit Station. The project is close to Bandar Malaysia at Sungai Besi, Kuala Lumpur-Singapore High Speed Rail and the upcoming MRT Line 2. There will
also be a new station (MRT Line 2) – Taman Naga Emas station (500m) from Trinity Aquata. Trinity Aquata is designed with an extended balcony to capture breathtaking panoramic views of the KL City skyline and the Mines Resort City. 16 unique facilities that allow water to freely flow through seven water effect zones will be built, invoking an atmosphere of peace and serenity. The residents can experience a tranquil atmosphere from hammocks at the sunken lounge or the floating lounge. Trinity Aquata’s active water zone adds a fun element with an interactive water play nook, calm trail, bubbling trail and rain pavilion. The pocket garden, lush landscaping and green foliage creates a healthy environment for wholesome activities. The sky terrace comes equipped with large glass panels offer an incandescent flow of natural light by reflecting the surrounding skies. Knowing that security is one of the important aspects that home buyers will look at, Trinity Aquata will have patrolling guards, perimeter CCTV, and card access at the guard house, lobby, and facilities. Additional feature of panic button will be installed in each master bedroom for extra safety. Besides the water-themed facilities, the project has an architectural edge over surrounding developments with its artistic and modern architecture. It is a superb development, coupled with good amenities. Trinity Group understands that today’s sophisticated and discerning buyers are also drawn
to one-of-its-kind development (strong concept), which enables people to buy into a development which integrates both artistry and practicality. ZEVA @ EQUINE SOUTH “The development of Zeva is to be completed on schedule in July. All in all, Zeva embodies a futuristic approach, where innovative thinking, green design and intelligent technology are fused together, which is unparalleled to others,” commented Dato’ Neoh. Its strategic location is linked by a network of major highways, including the Damansara-Puchong Highway (LDP), the South Klang Valley Expressway
(SKVE), the Besraya Expressway, the Maju Expressway (MEX), the NorthSouth Expressway, and Serdang-KinraraPutrajaya Expressway (SKIP), which will improve accessibility for Zeva’s residents. Interestingly, its close proximity to upcoming infrastructure such as LRT stations (Ampang line) and MRT Line 2 (Taman Sri Serdang) can further help to enhance capital appreciation and rental yield. Zeva is a unique commercial and residential development, featuring a 24hour living concept lifestyle. The urban vertical city has a vibrant, pragmatic and efficient design, specifically to appeal to
Gen-Y. The integrated development features two blocks of 15-storey serviced apartments and one 20-storey studio block, set atop an elevated 7-storey car park podium, with a boutique retail area and a 60-feet-wide Gourmet Boulevard. Built onto the 28th floor of this highrise development, the Sky Deck allows for residents and their guests to lounge, wine, and dine in a one-of-a-kind architectural wonder. Dato’ Neoh shared, “We’ve achieved 97% sales for Zeva units and are left with premium units for our service apartments, only as all our studio units have been fully sold out.”
Zeva @ Equine South overall view
Zeva Gourmet Boulevard
Zeva 28th floor of all-glass sky deck
www.propertyinsight.com.my JUNE 2015 I 19
COVER STORY looking for high-rise buildings, as this will allow them to live not too far away from their working places and are very much trendy. High-rises are more in line with a ‘Smart City/Green City’ concept that most of the Gen Y are into nowadays.” Another trend is the dual-key concept, recently launched in the market, which is helping to push more and more buyers towards high-rise buildings, as they look into this new concept as a nice way to be independent and have some privacy, even when sharing a condo.”
Trinity Aquata masterbedroom
Trinity Aquata bathroom
“We have launched Trinity Aquata in May and we’re pleased to say that the response has been encouraging so far.
Trinity Aquata open lawn view
TRENDS OF FORTHCOMING DEVELOPMENT Dato’ Neoh foresaw that the upcoming trend of property development is the rising purchasing power of Generation Y home buyers who are looking forward to owning a house first and investing later. This means that there is a medium-long term demand that has a consistently rising trend. “A stable growth of the average income, added to the ‘multiple incomes’ mindset of the Malaysian GenY, is going to build a stable and long-term foundation for a strong and consistent demand of properties priced between RM400k to RM750k. This trend will guarantee a prompt take-up of properties, in the range that are representing the backbone of a healthy property market,” he added. He opined that “Today’s Gen Y are
TRIALS AND REASONABLE CONFIDENCE Trinity Group has faced a few challenges within this decade, but the one that is particular is during the development of The Zest. Dato’ Neoh said, “The Zest was rolled out when the country was experiencing the effects of the global economic downturn and yet this RM250 million project did very well despite the sluggish local economy. The project was sold out in just six months after its launch. The success of the development was attributed to a combination of factors such as the developer’s sound understanding of the market dynamics to see a gap in the market place, and then assemble its resources to pursue the gap in the market place.” Dato’ Neoh commented, “Moving into the next decade, we will continue to push ourselves to do better and continue to provide affordable luxury.
Trinity Aquata hanging hammock
20 I JUNE 2015 www.propertyinsight.com.my
The Zest landscape view
Trinity Aquata living room & dinning area
Trinity Aquata study room
TRINITY GROUP UP-COMING DEVELOPMENTS ITEM
PROJECT
ACREAGE
NETT GDV OF PROJECT
LAUNCH PERIOD
1
Mont’ Kiara
3 acres
390,000,000
2015
2
Ampang
8.7 acres
1,000,000,000
2016
3
Bukit Serdang
5 acres
350,500,000
2016
4
Permas Jaya
9 acres
605,700,000
2017
5
Lot 847 USJ 19
3 acres
229,500,000
2017
The Zest pool image view
In keeping our promises of ‘Building Communities, Enriching Lives’, we have made numerous improvements and enhancements to our projects as well, making it a more pleasurable place to live in. We are also looking to expand to other regions such as Johor, and are always on the lookout for locations with good demand.” “We are also exploring to go listed in 2016 – this plan has long been in the pipeline, and we now have the right team and right assets to accomplish this.” Dato’ Neoh concluded, “We are looking to expand and bring our particular brand to the international market. For the time being, our focus will still be in the Klang Valley, although we do have a couple of overseas projects in the pipeline.”
Project Name: Trinity Aquata Developer: Luxury Concord Sdn Bhd Parent Developer: Trinity Group Sdn Bhd Location: Sungai Besi Land Size: 3.58 acres Land Tenure: Freehold Land Title: Residential Land Land Status: Strata Property Type: Condominium Maintenance: RM0.31 psf No. Blocks: 2 Blocks No. Levels: 26 Storeys Total No. Units: 492 units Block A – 172 units Block B – 172 units Built-up: 1,100 sq.ft., 1,200 sq.ft. and 1,400 sq.ft. (3 bedrooms and 2 bathrooms)
Source: Trinity Group
www.propertyinsight.com.my JUNE 2015 I 21
MAIN FEATURE
ARE YOU READY FOR MRT 2? Jumping into The Bandwagon By: Mak Kum Shi and Daniel Sim
P
Source: MMC Gamuda KVMRT (PDP)
opulation growth is an occurrence that will happen naturally in large cities, managing the welfare of this population is no easy feat and one of the challenging areas will be in the accessibility in terms of public transportation. To resolve this issue, the Malaysian government studied and approved the Klang Valley Mass Rapid Transit (KVMRT) project in late 2010 that will involve construction of a rail-based public transport network comprising three lines. Many have said that it is a good initiative by the government to reduce traffic congestions, but should investors just jump into the bandwagon and start to buy property around these proposed MRT stations? Is it true that the perception of buying properties where the infrastructures still relevant in the context of property investment?
SSP LINE
The project is an Entry Point Project of the Economic Transformation Programme (ETP) under the Greater KL/Klang Valley National Key Economic Area (NKEA), which is being implemented by the Prime Minister’s Department’s Performance 22 I JUNE 2015 www.propertyinsight.com.my
Management and Delivery Unit (PEMANDU). Construction of the first line consisting of 51km between Sungai Buloh – Kajang line took place on 8 July 2011. The SSP line or the Sungai Buloh-Serdang-Putrajaya Line is the second MRT line to be developed. The proposed alignment will have 36 stations spanning across 52.2km, of which, 11 stations spanning 13.5km will be built underground, 25 MRT stations along 38.7km stretch will be elevated and 15 of the MRT 2 stations will come with park-and-ride facility. The estimated total end-to-end journey time will be 84 minute. With a population of about two millions, the people staying along the Sungai Buloh to Putrajaya stretch will definitely benefit from the MRT 2 service. These areas include Sri Damansara, Kepong, Batu, Jalan Sultan Azlan Shah, Jalan Tun Razak, KLCC, Tun Razak Exchange, Kuchai Lama, Seri Kembangan and Cyberjaya. Both the elevated and underground stations will have many facilities, such as lifts and escalators to station concourse and platform levels, customer service centre, ticket vending machines, public telephones, surau and toilets. All the stations will also be designed to enable universal
access. The facilities for this include ramp access, tactile tiles, braille for lift buttons, low counters for wheel chair users, low lift buttons for wheel chair users, disabled-friendly toilets and staff at stations to provide assistance. The construction of SSP Line or MRT 2 is expected to commence in 2016 and to be fully operational by 2022. It is expected to have a ridership of 529,000 passengers per day upon its commencement of full service in the second quarter of 2022. “The public display for SSP Line has started and as per speculated, there are some changes on the proposed station alignments in KL area. One of the beneficiaries as per speculated accurately is Kraftangan, MRT 2 will have 10 other interchange stations with KTM, Monorail, LRT and in the future, High Speed Rail (HSR). Bandar Malaysia South is where the High Speed Rail and MRT 2 stations located,” said Ho Chin Soon Research CEO Ishmael Ho. According to Skybridge International CEO Adrian Un, the proposed stations for MRT 2 line are very much what the public expected. He stated that the stations proposed are in the right locations as the population are growing rapidly in all these areas. “In about 5 to 6 years when the MRT 2 project is expected to be completed, it will help the residents in Klang Valley to have better connectivity.” “One of the most remarkable proposed stations in my opinion is located in Seri Kembangan, Serdang. The shift of population is going towards the Southern Part of Kuala Lumpur, a location now branded as KL South,” shared Un. He mentioned KL South’s border begins from Old Klang Road to Cyberjaya. He enthused that many new and large housing developments are coming up in the Seri Kembangan area, such as the 70 acres of D Alpinia by Hup Seng and 16 Sierra, a 400
acres township by IOI Properties, this township is one of the many developments that Un is identifying as a good location to invest in property as 16 Sierra is as big as DesaPark City and can accommodate a huge population. There are also plenty of landed gated and guarded neighbourhood on the premium range that are being constructed by developers. “Taman Equine is another hotspot because although the general perception is that the area consists of low- and medium-income people, the reality is that the area is developing into maturity and many projects over here have been sold out,” said Un. He stated that Sunway Eastwood a gated and guarded development is fetching property price that can reach RM 1mil. The landscape has changed so much that developers are building premium property, high net worth individual are snapping up all the bungalows, Semi-D, super linked houses in Taman Equine itself that the location will serve as a very good platform as far as property investment is concerned. “There are still a lot of affordable properties ranging from RM300,000 to RM400,000, Global Oriental Group which is one of the pioneer developers of Taman Equine still have high rise projects, consisting of apartments in the affordable price range. There are also projects by Trinity Group as well,” said Un. MRT 2 will also have its proposed station in Cyberjaya, this is a good location as Cyberjaya has got incoming population due to its branding as a technology city where many high tech companies and jobs are available. The proposed MRT 2 line that will pass through Cyberjaya to Putrajaya in a way will help to spice up the property prices in these locations.
DON’T JUST BUY
“Many buyers and investors have the idea of buying where the infrastructure, or in this case, where the MRT stations, are located, this thinking process is not accurate,” shared Un. He said that one should not be so optimistic about the having the prices of their property investment near MRT 2 line to shoot
FEASIBILITY STUDY CORRIDOR AND ALIGNMENT OPTIONS FOR SSP LINE N
NOT TO SCALE
LEGEND SBK LINE CIRCLE LINE SSP LINE OPTION FOR SSP LINE INTERCHANGE STATIONS STUDY CORRIDOR FOR SSP LINE DEPOT
Source: MRT Corp
Figure ES-9
Feasibility Study Corridor and Alignment Options for SSP Line
up exponentially. He compared and questioned the prices for properties near the existing LRT line where prices did not grow as much as anticipated. “In Malaysia’s property investment context, the increase in property prices is not solely due to infrastructures per se but because of a lack of alternative investment products. Other financial factors such as the healthy GDP growth of the country, the availability of bank liquidity and for the fact that the banks
are still lending out to borrowers, encourages investors to invest in property, causing it to increase in price,” mentioned Un. He enthused that properties nearby MRT station is an additional value proposition that will give additional reason for buyers or investors to buy them there. He said, “Two other factors to determine the price of property located near MRT 2 stations are the surrounding amenities, infrastructures
EJ 534 Klang Valley MRT\Drawings\DEIA\Fig ES-9.cdr
www.propertyinsight.com.my JUNE 2015 I 23
MAIN FEATURE Northen Segment 1
Underground Segment 1
°
° 0
0.5
0 1
0.5
1
Kilometers
Kilometers
Legend Elevated Underground
Legend Elevated Underground Station
Station
Source : MMC - Gamuda JV
ES-5 Corp Source:Figure MRT
Northern Elevated Segment
Southern Elevated Segment 1
Figure ES-6
Underground Segment
Southern Elevated Segment 2
°
° 0
0.5
0
0.25
0.5
Kilometers
Legend 1
Station Serdang Depot Elevated
Kilometers
Legend Station Elevated Underground
Figure ES-7 Source: MRT Corp
Southern Elevated Segment 1
and economical factors such job opportunity. What makes a location attractive is when there are colleges, shopping malls, hospitals, commercial areas where it will drive people to visit the area.” Un said that one can still invest in developments within walking distance to the future proposed MRT stations, but they have to do due diligence in checking the price of property around the location, because it will be considered an overvalued property if buyers are buying it with a price above 24 I JUNE 2015 www.propertyinsight.com.my
Figure ES-8
Southern Elevated Segment 2
Figure 3- 4
30% of the market value, but it is still acceptable if the price appreciation is 15% of the market value. Don’t fall for sweat talks that MRT stations will definitely push up the value of your property.
THE BOON OF MRT 2
The MRT together with existing urban rail network will form the backbone of the public transport system in the Greater KL region. According to MRT Corp, one of the key benefits is the adopting the green environment, with
less cars on the road, there will be less air pollution and the train rails uses less space compared to roads. The continuous security monitoring system make the rail travel a lot safer than travelling by road. There are also many other benefits of MRT 2 line. Besides providing an easier alternative to travel stressfree to the city centre, all the stations have feeder buses to help you reach your destination, thus eliminating the issue of finding car park, which is often troublesome in areas with high
Source: MRT Corp
www.propertyinsight.com.my JUNE 2015 I 25
MAIN FEATURE MRT 2 PROPOSED STATIONS Station Name
Station Location
Type
Interchange
Northern Elevated Segment ( 14.0KM) S01
Damansara Damai
Island
S02
Sri Damansara West
Island
S03
Sri Damansara East
Side
S04
Kepong Sentral
Island
S05
Metro Prima
Island
S06
Kepong Baru
Island
S07
Jinjang
Island
S08
Sri Delima
Island
S09
Kampung Batu
Island
S010
Kentonmen
Side
S011
Jalan Ipoh
Island
S12
Sentul West
Island
S13
Titiwangsa
Island
S14
Hospital Kuala Lumpur
Island
S15
Kampung Baru North
Island
S16
Ampang Park
Stacked
S17
KLCC East
Stacked
S18
Conlay
Island
S19
Tun Razak Exchange (TRX)
Double Stacked
Interchange with SBK Line
S20
Chan Sow Lin
Island
Interchange with AG LRT Line
S21
Bandar Malaysia North
Island
S22
Bandar Malaysia South
Island
S23
Kuchai Lama
Island
S24
Taman Naga Emas
Island
S25
Sungai Besi
Side
S26
Serdang Raya North
Island
S27
Serdang Raya South
Island
S28
Seri Kembangan
Island
S29
UPM
Island
Interchange with KTM Komuter
Interchange with KTM Komuter
Underground Segment (13.5 KM)
“One of the most remarkable proposed stations in my opinion is located in Seri Kembangan, Serdang. The shift of population is going towards the Southern Part of Kuala Lumpur, a location now branded as KL South.
- Adrian Un
Interchange with KJ LRT Line
Interchange with KTM Komuter, ERL, proposed HSR
Southern Elevated Segment 1 (11.7km)
Interchange with AG LRT Line
Southern Elevated Segment 2(13.0km) S30
Taman Universiti (Provisional)
Side
S31
Equine Park
Island
S32
Taman Putra Permai
Island
S33
16 Sierra
Island
S34
Cyberjaya North
Island
S35
Cyberjaya City Centre
Island
S36
Putrajaya Sentral
Island
Source: MRT Corp
26 I JUNE 2015 www.propertyinsight.com.my
traffic. MRT Corps believes that the commencement of MRT will boost the economy, as it provides efficient connectivity for commercial activity and produce better productivity, due to better mobility. The improved access will be able to boost property prices and rental yield.
BE DILIGENT
Interchange with ERL and proposed HSR
We can conclude that based on the feedback provided by Ishmael Ho and Adrian Un that we should never jump on the bandwagon without doing our due diligence. As a responsible property investor we need to be able to look at the macro level, from the surrounding amenities and infrastructures before zooming into the property development itself.
27.pdf
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5/19/15
9:49 AM
FEATURE
THE CASE OF AFFORDABLE HOUSING
The recent National Affordable Housing Summit 2015 discussed in detail what affordability is all about
E By: Daniel Sim
ver since Malaysia achieved its independence in 1957, the country has been on a journey of growth and prosperity, and sometimes surviving and thriving under difficult economic situations such as the pegging of Ringgit to the US dollar in the 1998 financial crisis. Although the Malaysian property industry had a fair share on the effects of economy crises, it had rebounded since with government initiatives such as Malaysia My Second Home to attract expats to buy a home in Malaysia, and the nowscraped DIBS scheme provided by developers for home buyers where they will only be paying a small down payment during the signing of the SPA. The developer will bear the interest due during the project construction period until the handing over of vacant possession and the homebuyer will pay the remaining payment. This was a strategy used by speculators to flip their properties. The downside to these actions primary lie at inflating the property prices, because “now, not just the luxury houses are truly expensive, even the property prices for normal double storey houses can reach millions”, enthused a participant
28 I JUNE 2015 www.propertyinsight.com.my
at the recent National Affordable Housing Summit 2015 organised by Asian Strategy & Leadership Institute (ASLI). First-time homebuyers were excited to hear that in 2014, the government stated that a total of RM578 million will be allocated to the National Housing Department (JPN) for low -cost flats consisting of 16,473 housing units and to provide 80,000 housing units with an allocation of RM1 billion under the affordable housing scheme. In the 2015 budget, the housing loan was increased from RM80,000 to RM120,000, which assists a lot more middle- and lower-middle income earners to purchase their first home. There is even a smart partnership between the government, Bank Simpanan Nasional, Employees Provident Fund and Cagamas with the Youth Homebuyer Scheme that will offer 20,000 units on a ‘first-come, first-served basis’ with RM200 monthly incentive to ease the monthly loan repayment. One question remains, how well have all these initiatives been so far? Affordability, or the opportunity to own our first home for a typical Malaysian, is now a huge challenge. Many in the workforce are not even eligible for a bank loan to buy a house partly because of the bank tightening their loan
requirements, which is also due to the rising household debt. According to a report by McKinsey, Malaysia’s ratio of household debt to income is 146%. In brief, affordability is calculated as a percentage of the household income in which a loan repayment should not exceed 30% of collective household income - the household survey carried out by ASLI and the REI Group of Companies in the middle of 2013 identifies RM3,200 as the average median income. “The Selangor State Development Corporation or PKNS actually delivered close to 2,000 units of affordable housing, but our interested applicants were faced with high loan rejection rates,” said PKNS general manager, Tuan Haji Azlan Md. Alifiah. According to him, what is even more worrying is the trend where the younger generation do not believe they can afford a home. WHAT REALLY IS AFFORDABLE? According to Sabah Housing and Real Estate Developers Association’s vice-president, Ben Kong Chung Vui, the question of what is affordable housing is confusing not just to the public, but also to some government agencies. For instance, low-cost and affordable housing are two different things altogether and the concept of affordable housing will be different in the city, town or even outskirt. “I come from Sabah. If the range of affordability is RM250,000 to RM500,000, it will not be considered under the affordable category in Sandakan, because there, with that price range, you can get a double-storey terrace, but the price is considered affordable if you are in the city such as Kota Kinabalu, the state capital,” he shared. He further stated that affordable housing should be mainly for city dwellers because “by 2025, due to job opportunities, we are expecting more than 75% Malaysians who will be living in the city centre.” Is RM250, 000 to RM500, 000 affordable? • 75% Malaysians will be living in city centre by year 2025 • In Sandakan Sabah, the price would qualify for a double story terrace but not in Kota Kinabalu Developer’s challenge • Capital contribution very high per unit • Buyers face high loan rejection rate • Finding quality materials with lower cost Homebuyer’s dilemma • Lifestyle issues that lead to debt accumulation before even purchasing their first home GO BACK TO FUNDAMENTAL “A fundamental issue revolving affordable housing in the XYZ generation is described to be vainer and image conscious. This group of people does not want to be seen living in a low-cost or affordable housing, they rather rent and buy expensive cars and clothing. Most of them are renting, and as a first-time homebuyer, the progressive payment would add up to their rental cost. I believe there is also a majority of them who have accumulated credit card
“There are three components when you want to talk about providing affordable homes. They are the government, the private sector consisting of the developers and the contractors, and the homebuyers or the purchasers. - Dr. Kamarul Rashdan
debts, which makes it hard for them to get loan approval.” “With limited cash, the group of people who wants to buy a house will have a problem with the down payment, therefore, the main problem when it comes to affordable housing is how people can afford the payment,” said Kong. “Private developers are profit-orientated and if there is a high demand of a particular product, the developer will find ways to build faster. It’s not easy and sometimes, it would require up to three years of clearance from the relevant authorities to approve the project,” he said. He stated that even with the government’s help, it is difficult to find the right location. The joint ventures will often build their properties on an ad-hoc site where there are no surrounding amenities and therefore, they will not attract anyone to buy properties there. In many states, the capital contribution is very high. For example, in Sabah, the cost of capital contribution for electricity can go up to RM4,000 to RM5,000 for each house. He suggested that any subsidy scheme implemented by the government for developers who build affordable housing should be across the board as the development cost is about 15% to 20% higher than the rest of the country. FUNCTIONAL VS LUXURY “We are looking at first-time homebuyers who are ready to form a family,” said UM Land group chief executive officer Datuk Charlie Chia. He said there is a general connotation that first-time homebuyers are younger people or generation XYZ who just came out from the workforce. “To be frank, this group generally does not have the buying power to afford a home. In fact, the real first-time home buyers are their parents because most of the time, it will be the parents that will buy for them, hoping that they will earn enough to pay the home loan instalments.” A developer who would like to build affordable housing need to ask themselves how they can price their product www.propertyinsight.com.my JUNE 2015 I 29
FEATURE MALAYSIAN DEMOGRAPHIC - FACT FILE MALAYSIAN DEMOGRAPHIC - FACT FILE
MALAYSIAN MIGRATION FLOWS - FACT FILE
20,000
+3.6 M
18,000 16,000 14,000
Malaysian Migration Flow Rural to Urban Areas 22,000,000.00 21,000,000.00
+1.6 M
+6 M
12,000
19,000,000.00 18,000,000.00
10,000 8,000
20,000,000.00
17,000,000.00
+2.6 M
6,000
16,000,000.00 15,000,000.00 2003
4,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
MALAYSIAN FLOW Source: World Bank Statistics
2,000 0
Source: REI GROUP OF COMPANIES
affordably. According to Chia, the key is cost. One of the many ways to reduce cost is to move away to the suburban areas where the land price is cheap, which is basically about RM12-RM15 per square foot. The design and the construction materials are another factor that determines if the development of a unit can be within the range of RM250,000 – RM500,000. “When it comes to design, affordable houses should cater to the needs of the purchasers, because this is their first home and we expect them to upgrade from a small house to a Semi-D and maybe after that, they will upgrade from a Semi-D to a Villa. Therefore, developers building affordable homes should ask themselves if the purchasers really need to have 3 bathrooms, a large living hall or parking spaces,” said Datuk Chia. “With a land size of 20ft x 60ft, the build-up should be about 1,300 sq. ft. to 1,400 sq. ft. and not overbuild to 1,800 sq. ft. to 2,000 sq. ft. The ideal property should be a single storey house in order to get the property price of RM300,000 and below,” shared Chia. “Already you can find property with prices like this in places such as Semenyih, where first-time home buyers are able to get some incentives such as stamp duty exemption, easy loan application and connectivity which is also an important feature as the area should have connection to the nearest highway.” PRIVATE AND GOVERNMENT PARTNERSHIP “There are three components when you want to talk about providing affordable homes. They are the government, the private sector consisting of the developers and the contractors, and the homebuyers or the purchasers,” said the Syarikat Perumahan Negara Berhad, president Prof Dato’ Dr. (Sr) Kamarul Rashdan Bin Salleh. He boldly mentioned that it is impossible for the government to build 1 million affordable homes around the country without the help of the private sector. The government set up PR1MA, which is assigned to build 500,000 units of affordable houses in five years’ time and created many policies catering to first-time homebuyers. For example, a qualified applicant’s salary must be between the range of RM2,500 and RM7,500 or RM10,000 and below for household. However, PR1MA has its limitation. Besides the issue of having limited capital allocation to cover the 30 I JUNE 2015 www.propertyinsight.com.my
2012: 72.5% of the Malaysian population lives in urban areas 2012: 21,000,000 Malaysians live in urban areas 3.5% growth every year Source: REI GROUP OF COMPANIES
GLOBAL & MALAYSIAN ECONOMY - FACT FILE
GDP Growth Gov debt as % of GDP
USA
EU
JAPAN
AUSTRALIA
UK
2.10%
-0.90%
0.90%
0.55%
0.63%
4.70%
101.60%
90.60%
218%
21%
92%
54.80%
-6.3%
-4%
MALAYSIA
Gov deficit as % of GDP
-8.50%
-3.7%
-9.2%
-3.1%
Balance of current acc
-440 USD Bil
25.9 USD Bil
60 USD Bil
-57 USD Bil
Inflation
1.5%
1.10%
1.10%
2.20%
2.70%
2.50%
Unemployment
7.20%
12%
4.10%
5.60%
7.70%
3.10%
Business confidence
56
-1
12
12
7
115.2
consumer confidence
73
-14
45.2
108
-18
125.3
-93.5 USD Bil 18.6 USD Bil
Source: REI GROUP OF COMPANIES
development overall cost from the government, PR1MA also does not have enough land bank to build these houses. Hence, according to him, the involvement of other private developers such as Glomac and Mah Sing to provide affordable housing is very crucial. He further commented that the government is there to create policies to help the industry grow, but to effectively implement these policies, it would require the help from the people of the industry, such as developers who may also provide a better solution to the current problems surrounding the issues of affordability. “For example, if the government targets to sell houses at RM250,000 in certain areas, the one who can provide the solution is the private developer.” “How SPNB setups the private and partnership approach is pretty straightforward. Tasked with delivering up to 20,000 units of affordable housing, SPNB will usually receive many proposals from the private sector or developers from around the country for joint-venture purposes.” He said SPNB will then look into those proposals, mainly in several aspects. Firstly, it will study the land feasibility, and then the location, whether it will attract the younger generation to buy property in the area as well as whether the developer can deliver the projects within the cost, quality and timeframe agreed. “We work in a way where the developers are the builder and SPNB will be the funder,” he enthused.
R3_31.pdf
1
5/21/15
6:43 PM
FEATURE
GRANT TRANSFORMING PENANG WITH GTGP Get involved with urban regeneration projects for your cities By: Daniel Sim
“
K
hazanah came to Penang in 2007. The Federal Government felt that the state was stuttering despite having all the necessary infrastructures in place, including well-established free industrial zones (FIZs), good connectivity and an educated workforce, but it needed to do more to avoid the middleincome trap,” shared Think City executive director, Hamdan Abdul Majeed. He stated that there was a widely-held belief that if Penang didn’t find its pathway, it would go down a slippery slope, and George Town, the state capital with over 200 years of history as a global and regional trading hub will be in a state of urban decay. Therefore, Khazanah identified George Town, not just as a state capital city, but also as a major asset that needed urgent intervention. “In 2008, UNESCO awarded George Town with the UNESCO World Heritage Site (WHS) status. The timing was right for such honour, but how can we ensure the factors that made Penang interesting and unique would not be lost?” asked Hamdan. He said that because of this, Khazanah decided to set up an urban regeneration agency known as Think City in 2009. The new team working with the Board of Directors and experts created a grant programme - The George Town Grants Programme (GTGP) - which was actually inspired by several successful examples, such as the Yayasan Salam, the Edinburgh World Heritage Grants Programme, the Toyota
32 I JUNE 2015 www.propertyinsight.com.my
Foundation Grants Programme and the Aga Khan Trust for Culture’s social activities. “GTGP has a funding of RM20mil from the Federal Government to fund numerous projects designed to have a catalytic effect on the built environment, the economy as well as quality of life.” said Hamdan. “It is no longer about Malaysia versus Indonesia. It is about George Town competing with other major cities such as Hanoi in Vietnam or even Medan in Indonesia. Therefore, we can’t do the incremental, we have to be transformative and to future-proof Penang,” enthused Hamdan. He added, “The grant programme was a new thing when we first started it and most of the grants were awarded to property owners who wanted to renovate their heritage buildings.”
HOW TO APPLY FOR THE GRANT
The Think City grant can be applied simply by downloading the GTGP Application Form from the Think City official website (http://www.thinkcity.com.my/). The applicant is also required to prepare a Project Statement with details of financial projections. For application regarding repayable grants, the applicants must include a Conservation Statement prepared by a qualified and accredited professional adviser. The applicants will also have to submit the hard copy along with the supplementary documents needed to complete the applications.
FacadeNight
“ It is no longer about Malaysia versus Indonesia, It is about George Town competing with other major cities such as Hanoi in Vietnam or even Medan in Indonesia, therefore we can’t do the incremental, we have to be transformative and to future proof Penang,” - Hamdan
All applicants’ proposal for projects should emphasise and enhance the core and buffer zones of the World Heritage Site through proactive interventions that covers the boundaries of George Town at large. Think City welcomes grant proposals that cover the following areas of heritage conservation: cultural mapping projects, physical conservation projects such as affordable housing, shared spaces and capacity building. Every proposal will be fed through a triple-review process. It will first be evaluated by the Think City team, then the proposal will be reviewed and recommendation will be made by the Think City Advisory Panel, and finally passed on to the Think City Board, who will in turn review and give final approval to the most innovative and sustainable projects.
The GTGP has been specifically allocated for the purpose of driving urban regeneration and rejuvenation projects within the George Town World Heritage Site (WHS). Therefore, it will not be used to invest in infrastructure projects. The GTGP will not fund projects that include routine maintenance and minor repairs of private property, alterations and private interior work, construction work already underway and any kind of work under the discretion of the Think City Advisory Panel and Board. After a grant is awarded, a contract will be signed between Think City and the Grantee, who can be an individual or a representative of an institution. Think City programme officers will hold progress report meetings with Grantees, who will be tasked to report regularly on project progress www.propertyinsight.com.my JUNE 2015 I 33
FEATURE
Before and after Ren Ai Tang restoration
and results achieved within the submitted timeline of their proposals. Grantees are also required to submit a financial report (using forms given by Think City) for tracking and evaluation purposes.
PLACEMAKING AN INGREDIENT OF URBAN REGENERATION
Together with Project for Public Spaces (PPS), Think City identified three public spaces in George Town to introduce the concept of “Placemaking” and one of them is Little India. PPS is a not-for-profit planning, design and educational organisation. Its pioneering placemaking approach helps citizens transform their public spaces. As a result of placemaking, Little India Joint Action Committee (LIJAC) was formed. Among the selected initiatives presented by LIJAC to the local authorities were upgrading the facades of 120 shophouses along Lebuh Queen with new paint, lime plastering and period correct windows, and removing oversized neon signage to show more of the original facades, the enhancing and the greening of a total of four neighbourhood courtyards, pedestrianising Lebuh Pasar for the convenience of shoppers and a public campaign on cleanliness.
GEORGE TOWN BIDS
Think City came out with the idea of creating Asia’s first Business Improvement District or BIDS. First introduced in the UK in 2004, BIDS is a precisely defined geographical area within which businesses have voted to invest collectively in local improvements to enhance their trading environment. The George Town Business Improvement District Scheme (GT BIDS) encompasses an 85.23 acres of land that enclosed Jalan Dato’ Keramat, Jalan Penang, Jalan Magazine and Jalan Dr Lim Chwee Leong. Several projects were implemented under the GT BIDS initiatives, such as the setting up of decorative lighting, a pavement improvement project and a 34 I JUNE 2015 www.propertyinsight.com.my
wayward finding system which improve signage in the area.
PILOTING AFFORDABLE HOUSING SCHEME
Housing security for the tenants within the inner city became an issue when the Rent Control Act was repelled between 1997 and 2000. Gentrification is a real threat to lower income tenants. There were many property owners in George Town World Heritage Site who were looking to increase their value by restoring their buildings. George Town has seen property prices increase by up to 70% since 2008, which will definitely cause a hike in the rental market. As a result, many low-income tenants that have lived in the inner city for generations had to move out. Hock Teik is a Kongsi or clan house in Penang that provides shelter for those who shared the same surname. Its rich history dates back to the mid-19th century, after the Penang Riot in the 1867, the association reinvented itself to be a benevolent society by providing a house for its poor members. Today, the Hock Teik manages and rents out 10 houses along Lebuh Armenian. Hock Teik’s trustees applied for a grant from Think City to improve the facades of their houses and this provided the opportunity for Think City to come up with Malaysia’s pilot project of affordable housing in the World Heritage Site. A community development fund (CDF) was pioneered by Think City to encourage Hock Teik to freeze rents for a 10year period and the tenants would not be displaced.
EXPANDING TO OTHER CITIES
“Moving forward, we hope to bring the concept and replicate the success stories of Think City Penang projects to other cities in the country,” said Hamdan. He said there are plans in place to expand to places such as within the 1km radius of Masjid Jamek in Kuala Lumpur and also Butterworth, covering three linked roads – Jalan Bagan Luar, Jalan Jeti Lama and Jalan Telaga Air — as the core area.
Ireka ads_June_FA.pdf
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5/13/15
6:52 PM
AREA FOCUS
OLD KLANG ROAD REVIVED The “old” has past and the “new” is here By: Daniel Sim
J
alan Klang Lama, or better known as Old Klang Road, is rapidly developing despite having the word “old” in the English version of its name. Constructed by the British Federated Malay States in 1908, this road is not only one of the oldest, but it was also a historically significant road in Kuala Lumpur because it was believed to be the only link that will connect Kuala Lumpur to Port Klang, which is located at the southern end of the Selangor’s coastline a few decades ago. In the old days, Old Klang Road started from the Public Bank building of Jalan Syed Putra, which was formerly known as Lornie Drive. Influenced and spurred by the constant development and town-planning of Old Klang Road, today, this is a road that stretches from Mid-Valley Megamall, the longest mall in Asia, to Guinness Anchor Berhad Brewery with a distance of 11km. Despite the road-widening works done on Old Klang Road, it is still considered as one of the busiest roads leading to Kuala Lumpur from Jalan Puchong. It still manages to attract big property developers such as MRCB and UOA to invest in this location. “This is a fantastic area in terms of accessibility. It is a middle point for travelling to many places within Kuala Lumpur and Selangor. Many of the commercial activities such as food and beverage centres, and entertainment outlets, which provide many job opportunities, can be found here. There are also many notable landmarks in Old Klang Road such as Scott Garden, Pearl Point and Mid Valley Megamall, which are situated at the end of the Old Klang Road. However, sooner or later, the landmarks will soon be redefined as few other significant projects will be built, such as 9 Seputeh by MRCB,” said Oregeon Property Consultancy director Sr. Kok Chin Yee. 36 I JUNE 2015 www.propertyinsight.com.my
9 Seputeh central park
Looking at Google map, one would realise that the area is actually a prime location in the sense that it is cocooned within the commercial and retail hubs of Bangsar, KL Sentral and Mid Valley.
AMENITIES AND ACCESSIBILITY
“Old Klang Road has a good proportion of commercial and residential catchmen areas. Both commercial and residential developments are able to complement each other with sufficient of schools, banks and amenities to cater for the residents,” said Hartamas Real Estate (OUG) team manager Janet Chong. There are many residential estates along this stretch. Many of these housing estates started since the 1960’s. Some of them include Shanghai Garden, Taman Desa, Taman Overseas United Garden (OUG) (which is a township sited on a hilltop), Happy Garden formerly known as Taman Gembira, Taman Sri Manja and Taman Bukit Indah. They are also many exciting and interesting developments such as 9 Seputeh by MRCB, Citizen by Binastra, Commerce One by Guocoland Malaysia and the upcoming Southbank Residence by UOA. There is also an international school called the Vikas International School. It is a co-educational school, starting from kindergarten level, and it also provides a hostel. Besides the international school, there are also many government schools: SJK (C) Choong Wen, Sri Sentosa High School, SRJK (C) Yoke Nam, SMK Katolik, SMK Assunta and SJKT Saraswathy. Institutions of higher education also exist here, such as Megatech International College which specialises in producing electronic and electrical engineering graduates.
9 Seputeh lounge @ level 9
“There are also many notable landmarks in Old Klang Road such as Scott Garden, Pearl Point and Mid Valley Megamall.” - Sr. Kok Chin Yee.
There is also a post office building near Scott Garden. There are also many eateries, such as famous steamboat restaurants, and one can also visit the Old Klang Road wet market. They are at least three pedestrian bridges that will help daily commuters cross the roadand also to shade them from the blazing heat of the sun. One of the notable hotels here is the Pearl International hotel. It has approximately 528 spacious and beautiful guest rooms. Many guests visiting Kuala Lumpur would choose to stay in this hotel because it is strategically located between Kuala Lumpur, the city and Puchong, the satellite city of Klang Valley. It will only take about 5 minutes to reach Mid Valley. Depending on your choice, there are many 4-5 stars hotels around this location, such as Cititel Mid Valley Hotel and The Gardens Hotel & Residences-St Giles Luxury Hotel. “There is a road which is toll-free, linking Old Klang Road to Puchong via Jalan Puchong and to Petaling Jaya via Jalan Gasing,” said UCM Homes sales director Vanees Wong. Located strategically between Petaling Jaya, Selangor and KL City Centre, Old Klang Road is an area well-established in
9 Seputeh duplex
terms of accessibility. It is well-connected to East-West Link Expressway, Federal Highway, New Pantai Expressway, Shah Alam Expressway (KESAS), Damansara – Puchong Expressway (LDP), Jalan Puchong, which will lead you to Kinrara Business Centre, and Jalan Kuchai Lama to Kajang Dispersal Link Expressway (SILK Highway). There are also many government institutions here such as Dewan Bandaraya Kuala Lumpur (DBKL), Institute Social Malaysia (ISM) and police stations. The proposed KL Monorail line extension that cuts through the Old Klang Road stretch (KL Sentral-Mid Valley-Old Klang Road-Bandar Sunway) could create a good potential for capital appreciation and rental yield of properties within its vicinity.
DEVELOPMENTS IN OLD KLANG ROAD
From coffee shops to shopping mall, Old Klang Road is currently experiencing a surge in high-rise development, or vertical development as many would call it, due to land scarcity. Datuk Alan Tong, working together with Ngoh Development, a company owned by his father Datuk N.K Tong, formed Sunrise Sdn. Bhd and embarked on its first development, the OG Heights condominium, in 1984. Tong will transform the former Alamanda College along Old Klang Road into a serviced apartment project with retail elements. This construction is estimated to be completed by mid2016. The former Alamanda College, which comprises of two 24-storey blocks, is just a stone’s throw away from the www.propertyinsight.com.my JUNE 2015 I 37
AREA FOCUS PRICE OF COMMERCIAL PROPERTY PRICE UNIT (RM)
TYPE
LOCATION
AVG LAND AREA (M2)
AVG FLOOR AREA(M2)
2013
2014
AVG PRICE CHANGE (%)
Single Storey Shop
Taman Tan Yew Lai
119
115
NA
570, 000
ND
Double Storey Shop
Overseas Union Garden
149
248
NA
1,600,000 –1,950,000
ND
Double Storey Shop
Kuchai Entrepreneur Park
179
276
1,300, 000 –1,750,000
1,300,000 -2,000,000
8.5
Three Storey Shop
Taman Tan Yew Lai
122
358
780,000 –1,250,000
1,200,000
9.6
Three Storey Shop
Kuchai Entrepreneur Park
198
471
4,050,000
4, 100,000
stable
Source: JPPH
RENTALS OF COMMERCIAL PROPERTY PRICE UNIT (RM) 2013 2014
TYPE
LOCATION
AVG FLOOR AREA(M2)
AVG PRICE CHANGE (%)
Office Shop
3rd Mile Square, Old Klang Road
139
NA
2,000 -3,500
ND
Office Shop
Kuchai Entrepreneur Park(Dynasty)
153
1,100 -1,200
1,100 -1,500
17.4
Office Shop
Kuchai Business Centre
130
1,100 -1,500
1,100 -1,500
Stable
Office Shop
Kuchai Business Park
142
2,300 -3,300
2,300 -3,300
Stable
Office Shop
Kuchai Exchange
140
3,300 -8,500
3,300 -8,500
Stable
Office Shop
Jalan Klang Lama
170
2,800 -4,800
2,800 -4,800
Stable
Office Shop
Happy Garden
153
NA
2,000 -3,500
ND
Office Shop
Medan Klang Lama 28
139
NA
2,000 -3,500
ND
Source: JPPH
PRICES FOR RESIDENTIAL PROPERTY
2013
2014
AVG PRICE CHANGE (%)
112
438,000 -560,000
550,000 – 650,000
26.2
149
110
400,000 -628,000
540,000 -600,000
13.8
Taman Tan Yew Lai
131
91
358,000 -450,000
390,000 -500,000
8.4
Double Storey Terrace
Happy Garden
152
174
640,000 -1,100,000
642,000 -1,180,000
Stable
Double Storey Terrace
Overseas Union Garden
153
174
685,000 – 915,000
700, 000 – 938,000
5.3
Double Storey Terrace
Taman Desa
169
166
900,000- 1,500,000
1,100,000 -1,410,000
9.1
Double Storey Terrace
United Garden (Taman Lee Yan Lian)
149
145
675,000 – 780,000
715,000 -820,000
6.9
Double Storey Semi-Detached
Overseas United Garden
471
254
NA
1,980,000 -2,100,000
ND
Double Storey Semi-Detached
Taman Tan Yew Lai
297
160
NA
1,100,000-1,215,000
ND
Double Storey Semi – Detached
Taman Yarl
437
225
NA
1,530,000 -2,500,000
ND
TYPE
LOCATION
AVG LAND AREA (M2)
AVG FLOOR AREA(M2)
Single Storey Terrace
Happy Garden
143
Single Storey Terrace
Overseas United Garden
Single Storey Terrace
Source: JPPH
38 I JUNE 2015 www.propertyinsight.com.my
PRICE UNIT (RM)
www.propertyinsight.com.my JUNE 2015 I 39
AREA FOCUS HIGH RISE TRANSACTION PRICE UNIT (RM)
LOCATION
AVG FLOOR AREA(M2)
2013
2014
AVG PRICE CHANGE (%)
Condominium
Dynasty Garden
103
420,000 – 520,000
520,000 –583,000
13.7
Condominium
Kuchai Brem Park
84
270,000 -360,000
295,000 -320,000
5.6
Condominium
Pearl Point
107
320,000 -515,000
415,000 -425,000
2.7
Condominium
O.G Heights
90
300,000 -405,000
368,000 -373,000
6.3
Condominium
Meadow Park
103
320,000 -369,000
350,000 -415,000
12.7
Condominium
Sri Desa
89
352,000 – 430,000
375, 000 – 450,000
5.6
Condominium
G Residence
109
550,000 -710,000
700,000 - 750,000
12
TYPE
Source: JPPH
UPCOMING PROJECT PROJECT
LOCATION
SELLING PRICE
Avantas Residences
Jln Klang Lama
RM600k - RM1 million
Residensi Desa
Jalan Kuchai Lama, Batu 5 1/2, Off Jln Klang Lama
RM400k - RM500k
Riverville Residences
Batu 6 1/2, Tmn Sri Sentosa, Off Jln Klang Lama
RM620k onwards. RM130 psf.
Pearl Suria
Batu 5, Jln Klang Lama
RM700k (after rebate)
Jalan Mega Mendung, Off Jln Klang Lama
Southbank Residence
-
Batu 5 3/4, Jln Klang Lama
Petalz Residences
Jln PJS 1/25, KM 11 Jln Klang Lama
From RM660k onwards
Scott Garden
Jln Klang Lama
-
Source: Oregeon Property Consultancy
SHOP TRANSACTION FLOOR ABOVE
SCHEME
Kuchai Avenue
2
Kuchai Business Park
Kuchai Entrepreneurs Park
Desa Business Park
LAND AREA
2,490 SF
2,487 - 2,700 SF
1,540 SF
1,313 SF
3 Kuchai Business Park
Kuchai Entrepreneurs Park
4.5
Kuchai Entrepreneurs Park
Source: Oregeon Property Consultancy
40 I JUNE 2015 www.propertyinsight.com.my
3,955 SF
2,130 SF
1,800 SF
YEAR
MIN
MAX
COUNT
2010
1,000,000
1,300,000
4
2011
1,160,000
1,350,000
4
2013
1,360,000
1,500,000
3
2014
4,400,000
4,400,000
1
2010
1,250,000
1,250,000
1
2011
1,150,000
1,325,000
8
2012
1,240,000
1,380,000
2
2013
1,300,000
1,525,000
10
2014
1,250,000
1,365,000
6
2012
1,400,000
1,400,000
1
2013
1,300,000
1,750,000
6
2014
1,300,000
2,000,000
8
2010
980,000
1,410,000
5
2011
1,200,000
1,650,000
5
2012
1,600,000
2,722,000
2
2013
1,950,000
2,000,000
3
2014
1,750,000
2,500,000
4
2010
1,300,000
2,150,000
8
2011
1,500,000
3,000,000
3
2012
1,350,000
2,425,000
7
2013
1,830,000
2,600,000
4
2012
1,200,000
5,200,000
7
2013
3,600,000
6,000,000
4
2014
2,900,000
4,100,000
4
2012
1,700,000
3,700,000
8
2013 2014
2,650,000 2,000,000
5,750,000 3,100,000
4 8
LANDED TRANSACTION TYPE
SemiDetached
Terraced
STOREY
SCHEME
LAND AREA (SF)
2
Tmn Desa
3,150 - 5,600 Sf
2.5
Taman Sierra Seputeh
3,200 - 3,900 Sf
3
Mutiara Seputeh
3,200 - 4,200 Sf
1
Continental Park
1,540 SF
Taman Bukit Desa Jaya
750 - 1,300 SF
Tmn Bukit Desa
1,765 - 1,915 SF
Tmn Seputeh
2,250 SF
Bukit Seputeh
1,600 SF
2
3
YEAR
MIN
MAX
COUNT
2010 2012 2013 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2010 2011 2012 2013 2014 2010 2011 2012 2013
1,300,000 2,250,000 2,050,000 2,130,000 2,175,000 2,500,000 2,500,000 3,000,000 2,260,000 2,750,000 2,900,000 3,290,000 3,600,000 355,000 250,000 290,000 490,000 432,000 200,000 220,000 260,000 325,000 400,000 610,000 610,000 850,000 870,000 520,000 750,000 880,000 880,000 770,000 710,000 1,250,000 1,350,000 1,330,000
2,200,000 2,850,000 2,875,000 2,650,000 2,880,000 2,500,000 2,800,000 3,030,000 3,100,000 3,350,000 3,458,888 3,290,000 3,600,000 355,000 300,000 570,000 600,000 500,000 380,000 475,000 498,000 500,000 510,000 815,000 850,000 993,000 1,060,000 1,175,000 955,000 1,050,000 1,250,000 900,000 1,250,000 1,250,000 1,510,000 1,330,000
5 4 4 3 4 1 3 2 5 4 6 1 1 2 2 3 2 2 8 12 10 6 6 8 2 3 4 8 2 3 3 2 4 1 2 1
Source: Oregeon Property Consultancy
Scott Garden. It is a mixed residentialcommercial development comprising condominium, shoplot, hypermarket and retail units. This site will be converted into VERVE Suites KL South with 321 residential units and 45 small office, home office (SOHO) suites on the ground level. Despite being a freehold luxurious serviced apartment property development, it is one of the very first local projects to be certified with a Green Mark Certification from Singapore’s Building & Construction Authority (BCA). The towers will be refurbished at a cost of RM126 million, with each floor playing host to eight serviced suites. There are four designs for the fully furnished units, with prices starting from
RM600,000 for one-bedroom units and RM750, 000 for two-bedroom units with built-up starting from 555 sq.ft. GuocoLand Malaysia, a subsidiary of Hong Leong Bank, is developing Commerce One and Residence One with a total GDV of RM116 million. Commerce One is a commercial development, while Residence One is a single-block condominium with a total of 192 units. This development is within Bedford Business Park and opposite Pearl Point shopping mall and OUG Square. One of the reasons why GuocoLand Malaysia choose to build it along Old Klang Road is because this area is surrounded by established commercial centres and shopping malls, and it only
takes about 3km to Mid Valley City or The Gardens. GuocoLand believes Commerce One will be able to appeal to Small and Medium Enterprise (SMEs) when they want to hire new staff. According to GuocoLand Malaysia, Commerce One will have excellent security features such as vehicle access systems, close-circuit TV and roundthe-clock security. Only 1km away from the Petaling KTM Komuter station, the development has a dedicated main office lobby with four passenger lifts and one service lift per floor. According to a spokesperson from GuocoLand Malaysia, Old Klang Road will continue to thrive as one of the most www.propertyinsight.com.my JUNE 2015 I 41
AREA FOCUS established areas in Kuala Lumpur. The hustle and bustle of trade and commerce along this road and its surrounding area, as well as the expanding network of highways and public transportation systems, will eventually transform Old Klang Road into a significant business district that offers exceptional business and commercial possibilities. The commercial viability of Old Klang Road, together with its powerful potential to elevate businesses with its location and connectivity, are strong reasons for investors to consider this prime location as their next business address. Southbank Residence is another project by UOA Group. It comprises of two blocks of L- shaped towers, block A and Block B, with 37-storeys and a total of 674 freehold units. The first 10 floors will have a mix of carpark areas and offices. Home buyers can choose 7 units of different designed layout with builtup ranging from 779 sq.ft. to 978 sq.ft. Facilities such as seating area, outdoor fitness, gazebo, reflexology path, wading pool, shower area, main lap shower area, main lap pool, pool deck, Jacuzzi, children playground, meeting room, gymnasium, multi-purpose hall, cafe, kindergarten, toilets, changing rooms, trellis, BBQ pit and preparation areas are also provided in this development. Block A has a north and south orientation, with the northern front
having the tower view of Kuala Lumpur City Centre (KLCC) and the southern view faces the rest of Old Klang Road, where one can see Scott Garden, Pearl Point and many other landmarks of Old Klang Road. Block B faces the east and west orientation. On the eastern front, Block B faces Taman Desa, while the western front faces Bangsar South and Kerinchi view. Sited on 17.4-acre stretch of prime land within the vicinity of Seputeh in Old Klang Road is 9 Seputeh, a project developed by MRCB Land. Its successful track records include the iconic flagship development KL SENTRAL is the testimony of the company strength in developing the largest transportation hub in Malaysia, high-rose office towers, luxury residences, branded hotels and many more. Seputeh has a GDV of RM2.5billion consisting of four parcels with designs to cater the demands of modern lifestyle. Besides providing retail spaces and facilities, these four parcels are divided into Parcel A with of one block of 41 story serviced apartment, parcel B with one block of 38–storey and 2 blocks of 33-storey serviced apartments, while parcel C with 2 block each of 42-storey and 2 blocks each of 44-storey serviced apartments and parcel D with 1 block of 36-storey institution. Serviced residences and SOHO suites of parcel
C are the current launch also known as Vivo series. Vivo series is expected to be completed in 2018. Connectivity in 9 Seputeh will be greatly enhanced, as MRCB intends to build a dedicated link bridge to the NPE highway, as well as a dedicated covered link bridge to the proposed monorail station that is to be located along Old Klang Road. Just a short distance away is the Maju Expressway (MEX) and the East-West Link. Adjacent to 9 Seputeh is the Klang River. The “River of Life”, a project under the EPP will transform the riverscape of the Klang River. 9 Seputeh’s development has put into motion planned beautification projects to rejuvenate and transform the scenery of the river by integrating promenades and boardwalks, in a sense, preserving the green lung of the area. Cycling trails along the promenade boulevard are being planned by MRCB to complement & capitalize on the river of life project with an idea to promote green living by encouraging the residents to enjoy healthier lifestyle. With a myriad of property developments happening in Old Klang Road, we will see this location transformed and this will certainly be a hotspot for property investors to begin their investment in times to come.
AGENT SPEAKS JANET CHONG Hartamas Real Estate (OUG) team manager The demographics of Old Klang Road are from a younger generation, thanks to the supply of new commercial and residential properties. In future, Old Klang Road will be one of the top economic contribution centres of Klang Valley. There are many developments currently under construction such as 9 Seputeh, South Bank, Avantas, Verve Suites KL South, Skyville 8 D’Sand Residence and Petalz Residences. With the fast-incoming and large supply of residential properties, the traffic condition will be one of the main drawbacks, but the KL Monorail Extension from KL Sentral to Old Klang Road and then further linked to Bandar Sunway, will eventually settle the problem.
VANEES WONG UCM Homes Sales Director There is no oversupply of properties in Old Klang Road. As long as the pricing remains reasonable, many would still prefer to invest in this location, partly due to its proximity to the city such as Kuala Lumpur and the suburban areas such as Petaling Jaya. Therefore, Old Klang Road has a potential due to mature townships with all the surrounding amenities such as Taman Desa Medical Centre within 5km radius, facilities and easy accessibility. It is also an area with high density of urban population.
42 I JUNE 2015 www.propertyinsight.com.my
DEVELOPER OF THE MONTH
EKO-NOMIC INVESTMENT Ekovest Berhad is bringing the best of both worlds – construction and property development By: Fara Aisyah Firdaus Petial
E
kovest Berhad is an investment holding company with a presence in construction, civil engineering and infrastructure, property development and toll concession. Founded in 1985 as Ekovest Bina Sdn Bhd, Ekovest went public in 1993 and was subsequently transferred to the Main Board of Kuala Lumpur Stock Exchange in 2000. The founder and Executive Chairman of Ekovest Berhad, Tan Sri Dato’ Lim Kang Hoo built the company from a small construction outfit into a reputable infrastructure construction player. Under the present stewardship of Datuk Lim Keng Cheng, Ekovest is being steered to greater heights with strategic developments and acquisitions. “We started in a place called Lahad Datu. That time, we were doing infrastructure works for FELDA at Kompleks Felda Sahabat. If you follow the news, you will remember there are a lot of pirates attacking our Sabah. During that time, there were many contractors who failed in the FELDA projects. So, we came to the
rescue,” according to Datuk Lim. He said Ekovest was able to save the project because they went there well-prepared and learnt about other people’s mistakes so that Ekovest does not repeat it. “We were very well-prepared, so that’s why we managed to overcome the challenges. We made the money, and then from there, we started to venture in building construction. Our next project was the Universiti Malaysia Sabah (UMS). Actually, the entire university is mostly done by us.” CONSTRUCTION – INNOVATIVE FOR GREATER VALUE Construction has been Ekovest’s forte, having completed various projects all around Malaysia. Among notable projects which Ekovest had participated as the turnkey contractor include the Universiti Malaysia Sabah (UMS), Universiti Tun Hussein Onn in Batu Pahat, Johor, and the Duta-Ulu Kelang Expressway (DUKE). Ekovest was also involved in the fitting out of the Petronas www.propertyinsight.com.my JUNE 2015 I 43
DEVELOPER OF THE MONTH
Night facade
“Because I am involved in highways, naturally, public transportation is my competitor. However, when I develop my DUKE Phase III, I plan for a transportation system and we integrate the public and private transport system.
Twin Towers and in various infrastructure construction projects such as the Labuan Financial Park, Kuala Lumpur International Airport (KLIA), Kuala Lumpur Sentral Station and Putrajaya Federal Government offices. Construction has been Ekovest’s main revenue contributor and it is expected to continue to be the company’s mainstay. “We are not like other property developers who are not in the construction business. Construction is the bread and butter of Ekovest. My father and I are contractors. So from a very young age, I know about construction.” “As a contractor, Ekovest have the opportunity to design and build the master plan for our development projects. Therefore, we believe we can do better than others. We know how to add value to the development. We know the quality when it is completed. The philosophy is always “value for money”.” Regarding the DUKE Highway, Datuk Lim said: “A lot of people can see the master plan of what we strive to achieve. But whether or not this can be done – you got experts who know whether this soil is suitable or if this alignment solves traffic dispersion issues or not. You 44 I JUNE 2015 www.propertyinsight.com.my
must have knowledge and vision to achieve this. So this is something that not many people have.” Ekovest’s advantage is to be able to works closely with authorities to know where the infrastructures are going to be built. “We roughly know where the next major infrastructures will be located. So when we invest in landbanks, we will follow the infrastructure planning.” Further, when asked about the current tender book, Datuk Lim replied “Just imagine, if we based on turnover alone, there’s probably more than a total of RM10 billion jobs that we have either completed or currently on-going. But for us to secure the RM10 billion jobs, we probably have to tender a few hundred billion worth of jobs.” “So within that tender process, we do our homework and gather a lot of information. Even if I don’t get the tender and somebody else secures it, I will look into their implementation and the problems that they faced and how they encounter them. We keep those in mind. So if we identify potential issues in future tender, we will find mitigation measures. When we get a tender, we can foresee the problems and challenges.” RISE TO THE CHALLENGE There are always challenges for developers to overcome. During the early days of Ekovest in Lahad Datu, the challenges we faced were financing and reluctance of employees to be relocated to East Malaysia. “The project is very far away from Kuala Lumpur. The staff was reluctant to go and we have to keep convincing them and gave a lot of incentives. Not to mention, we have to assure them of their safety and the pirate issue”. However, Datuk Lim stated that the particular challenge faced by Ekovest Berhad is during the implementation
“We are not like other property developers who are not in the construction business. Construction is the bread and butter of Ekovest. My father and I are contractors. So from a very young age, I know about construction.” and construction of the DUKE Highway. “When we start constructing the DUKE Highway, there are many challenges that we faced. People refuse to move, landowners refuse to be compulsorily acquired, and at the same time, we have actually promised the financiers and authorities on the completion timeline. That’s the biggest challenge.” He added, “You have to know whats your maximum exposure. For property development, if we do not deliver to people, maybe we will have to pay ascertained damages to owners. But for highway is different. If you do not complete it, then the is a missing link in which the highway cannot be connected. There will be no vehicles using the highway. So that is why there’s a lot of pressure.” VALUE FOR MONEY Datuk Lim, assures everyone that if you buy its property, it will be value for money. “We always manage our property. Because I’m very particular, Ekovest always maintain its property and tries to serve the best for its customers.” As a matter of fact, he said: “We don’t squeeze into small plots of lands near existing and ready infrastructures. We plan the infrastructure and development concurrently. If we plan a development with thousands of units, we
Keng Cheng
make sure the capacity of the road and drainage can cater for it.” DUKE – Value Beyond Miles DUKE Highway spans 18km in the northeast region of Klang Valley, connecting Jalan Duta NKVE intersection and the Middle Ring Road 2 via Gombak and Ampang. The construction of the DUKE Extension (DUKE Phase II) which will connect the existing DUKE with Jalan Tun Razak and Sri Damansara area is underway and is expected to be completed in 2016. In June 2014, Ekovest completed the acquisition of the remaining 30% interest in the DUKE from MRCB bringing in the entire DUKE as its wholly-owned subsidiary. Ekovest’s enthusiasm to deliver innovation and break boundaries has also lead to our DUKE Phase II being the
Overall view
www.propertyinsight.com.my JUNE 2015 I 45
DEVELOPER OF THE MONTH pioneer to provide direct access to park and ride facilities under the proposed Segambut toll plaza. To support this concept and to ensure that the facility remains vibrant and provides a safe environment for users, Ekovest also encouraged providing and promoting commercial activities within the area. The concept is part of the entire masterplan to integrate transportation system within Klang Valley which includes linking of various expressways with public transportation system. “Because I am involved in highways, naturally, public transportation is my competitor. However, when I develop my DUKE Phase III, I plan for a transportation system and we integrate the public and private transport system,” explained Datuk Lim. The proposed alignment of DUKE Phase III, measuring approximately 35km, will traverse north to south of Kuala Lumpur and will serve areas such as Universiti Tunku Abdul Rahman, Wangsa Maju, Setiawangsa, Ampang, the Tun Razak Exchange & Bandar Malaysia development corridor and Kerinchi. The DUKE Phase III is expected to provide an alternative route for road users with improved and more efficient traffic dispersal system in and around Kuala Lumpur city centre to complement and relief peak hour congestion on existing arterial roads and expressways along its proposed alignment. The DUKE Phase III is also expected to improve connectivity with existing expressways and public rail transportation system such as the KTM Komuter, LRT and MRT lines, providing a holistic land transport system to support the development and modernisation of Greater Kuala Lumpur. Ekovest has received a letter from the Public Private Partnership Unit, Prime Minister ’s Department approving in principle the Proposed Privatisation of the DUKE Phase III on 14 January 2015. EKOTITIWANGSA – REJUVENATING NORTHERN KUALA LUMPUR The next development project slated to be launched in June 2015 is the EkoTitiwangsa mixed development project located along Jalan Pahang, Kuala Lumpur. EkoTitiwangsa will consist of commercial space and serviced apartments with an estimated gross development value of RM560 million. Together with its other developments, namely EkoPArk Place, EkoQuay, EkoAvenue, and its flagship EkoGateway, it will provide a holistic development plan to transform and modernise northern Kuala Lumpur city centre. Its ultimate vision is to create a new world class riverfront development along the Gombak River to deliver some of the most vibrant commercial and residential development in this area. Ekovest’s entire land bank in northern Kuala Lumpur is expected to deliver an estimated gross development value of RM3.2 billion over the next 10 years. EkoTitiwangsa is designed in line with the “River of Life” (RoL) concept. The RoL is a project marked as an Entry Point Project under the Economic Transformation 46 I JUNE 2015 www.propertyinsight.com.my
“I took the San Antonio model for me to compare, but we have done it better. They are using a tunnel to channel the floodwater. On the other hand, we identified the river stretch that has suitable gradient to allow for gravity flow and don’t need to use a pump.
Programme and entails the cleaning up of a 110km stretch of Klang River, beautification of the corridors along the Klang and Gombak rovers up to the confluence, as well as the development of areas adjoining the river corridors under a master plan to spur economic investment. Ekovest-MRCB JV Sdn Bhd will have the opportunity to participate in the beautification works and will be able to participate in the development works via the Swiss Challenge method. For river cleaning works, it has submitted various alternative design proposals to the Government which has been accepted. These alternative
Entrance
designs are expected to allow the Government to save as much as RM300 million and this is again testament of the strength and expertise in value engineering that the team possess. Datuk Lim developed the idea of RoL from his personal experience. “Before I moved, I stayed at Heritage Condominium, in Jalan Pahang next to the Gombak river. My unit was facing the river and I looked at the river, it’s so dirty. If we can deliver this, [RoL] then how nice will it be?” Ekovest again took the challenge and keep on convincing stakeholders about riverfront development and lifestyle. With expertise in construction and the team he has behind him, Datuk Lim is confident that Ekovest will be able to make this dream come true. He furthered his point by saying “It’s a double decker river system. The floodwater will flow underneath. This is similar to the San Antonio river project. This will also be the first one in Malaysia where we will build highway through development projects. And what we want is for people to come here and enjoy the beautiful lifestyle it offers.” “I took the San Antonio model for me to compare, but we have done it better. They are using a tunnel to channel the floodwater. On the other hand, we identified the river stretch that has suitable gradient to allow for gravity flow and don’t need to use a pump. This will help us in our goals to ensure sustainability and to save energy consumption. When I travel, I not only take what
Mall Entrance
www.propertyinsight.com.my JUNE 2015 I 47
DEVELOPER OF THE MONTH has been done correctly, but I see things that can be improved on so we don’t make the same mistakes” said Datuk Lim. Apart from that, we also strive to promote the green building concept. “In Malaysia, when it’s green on top [roof] – then this is really a green building. You need greenery on the roof to absorb the heat. In a building, lighting only consumes 10% of total energy while aircon consumes the other 90%. This is something that not many people understand. Glass is not green in Malaysia. The green roof is actually green here. We want to save energy, not so much to let natural light in, which in colder climates, do help in keeping the building warm.” EKOVEST – BUYING DIRECT “We are not like other developers – they have a lot of middlemen and agents. We keep it to the very minimum. When you buy our property, it’s like buying things direct
from factory. So that’s why people like our product,” he expressed. The name Ekovest itself stands for Ekonomic Investment. Therefore, its projects always keep to the promise to be affordable, serving the people, as well as returning the value of money. He opined: “I think we should thank our Prime Minister for being bold to construct the MRT and all other huge infrastructures. The trend for future development is that all these property players will follow where the alignment and stations are located. This is also the trend of purchasers. They want better and more secure environment for them to stay. Gated, with the facilities nearby and either close to highways or where public transport is available for easy connectivity.” Datuk Lim concluded by saying, “Of course, we hope we can double our size [Ekovest Berhad]” in years to come.
UPCOMING PROPERTY DEVELOPMENT EKOCHERAS
EKOTITIWANGSA
EKOQUAY
EKOPARK PLACE
EKOGATEWAY
EKOAVENUE
Location
Cheras
Jalan Pahang
Jalan Pahang
Jalan Pahang
Setapak
Jalan Pahang
Area
11.98 acres
2.91 acres
2.13 acres
1.38 acres
14.50 acres
1.10 acres
Type
Shop office, retail lots & serviced apartments
Retail shops & serviced apartments
Retail lots, serviced apartments & hotel
33 storey Grade A corporate office
Serviced apartments, shopping mall & hotel
Retail shops & Serviced apartments
GDV (RM)
1.61 billion
560 million
210 million
320 million
1.90 billion
250 million
GFA (sq.ft.)
3,211,711
898,396
371,131
478,634
3,789.720
383,328
Period
Q3 2013 - Q4 2017
2015 - 2018
2015 - 2018
2015 - 2018
2015-2013
2019-2022
Source: Ekovest Berhad
PROPERTY DEVELOPMENT TIMELINE
Year EkoCheras
2013
2014
2015
2016
2017
2018
2019
2020
2021
GDV RM1.61b
EkoTitiwangsa EkoGateway EkoQuay EkoPark Place EkoAvenue Source: Ekovest Berhad
48 I JUNE 2015 www.propertyinsight.com.my
GDV RM560m GDV RM1.90b GDV RM210m GDV RM320m GDV RM250m
2022
2023
R2_Ekotitiwangsa_Launching Ads_21cm x 28.5cm_FA.pdf
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5/13/15
10:34 AM
FEATURED PROPERTY
Artist impression
Emira™ Residence Facade
PULSATING ON ONE END, PRISTINE ON THE OTHER OSK Property Holdings Berhad is beautifully carving the heart of Shah Alam with the development of Emira™
O
By: Fara Aisyah Firdaus Petial
SK Property Holdings has stepped into the heart of Shah Alam with its Emira™ development, located in the lively Section 13 neighbourhood. It is a mixed development which comprises of residential and urban retail units, and offers the best of vibrant metropolitan colours alongside cosy green touches. With a bustling commercial front on one end, and a pristine sanctuary on the other, it is all-encompassing life personified. ALL-ROUND CONNECTIVITY Front and centre of Shah Alam’s developing heart, Emira™ is easily accessible to key areas such as KL City Centre, Petaling Jaya or Kuala Lumpur International Airport (KLIA) via major highways such as the Federal Highway, Lebuhraya DamansaraPuchong (LDP), Shah Alam Expressway (KESAS), and NorthSouth Expressway Central Link (ELITE). Further connectivity is ensured with an upcoming LRT line 3 station and Bus Rapid 50 I JUNE 2015 www.propertyinsight.com.my
Transit infrastructure proposed at the nearby Section 13, Shah Alam. The vicinity houses various amenities for daily living, providing residents with greater convenience. INSPIRING DAILY COMFORT Retreat to cosy spaces are thoughtfully designed for the modern dweller, ranging from 614 sq. ft. to 1,238 sq. ft. in different layout options. Every corner exudes sleek elegance ideal for versatile living, while retaining the charm of a practical, cosy sanctuary you. COMMERCIAL HUB BY DAY, SOCIAL HEART BY NIGHT A pulsating commercial hub at the heart of it all, it comprises of a total of 2 levels and 50 units in a vibrant commercial and retail boulevard, designed for a pedestrian-friendly experience and residents’ convenience. All ground floor shops are fronted by circular driveway, enabling greater ease for passers-by to
locate their favourite outlets. It aims to bring the convenience of great shopping, dining and entertainment outlets right to the residents’ doorsteps. SPACE TO CONNECT & CONTEMPLATE Emira™ offers an uplifting verve of modern living coupled with nature’s touches. Experience rejuvenation at the Garden Patio, where one can cool down on a hot day at the lap pool, or indulge in a relaxing jacuzzi dip. A green circular walkway provides calming solitude alongside vertical gardens, trellises and water features. Finally, immerse in the stunning city skyline at the Sky Patio. The roof-top facilities designed there are sky gym, entertainment deck, hammock haven, potpourri garden, including a reading room, etc. CENTRAL OF EVERYTHING YOU NEED Access a variety of hypermarkets within walking distance, as well as other amenities and landmarks – shopping malls, educational institutions, medical centres, resorts, parks and
Artist impression
more. The tertiary educational hubs nearby Emira™ are the Universiti Selangor (UNISEL), Management & Science University (MSU), Universiti Teknologi MARA (UiTM) Shah Alam, and the upcoming KDU University College. Emira™ is also built close to neighbouring healthcare centres such as Darul Ehsan Medical Centre, KPJ Selangor Specialist Hospital, Columbia Asia Hospital @ Bukit Rimau, and a few others. Apart from shopping havens such as the SACC Mall, Plaza Shah Alam, Ole-Ole Shopping Centre, and also the planned AEON development, Emira™ is likewise not far off from golfer’s paradise such as the Sultan Salahuddin Abd Aziz Shah Golf Club, Glenmarie Golf & Country Club and Saujana Golf & Country Club. Emira™ is going to be officially launch on the 17th to 21st June, from 10am to 10pm, at the Concourse @ Ground Floor, Atria Shopping Gallery. To be part of this elevated living experience, please call 019-295 5997 or visit www.emira.com.my
Emira™ Residence Gym Product Name: Emira™ Property Type: Mixed Development comprises of Residence & Urban Retail Tenure: Leasehold Location: Persiaran Sukan, Seksyen 13, Shah Alam Land Title: Commercial No of Tower: 1 tower (27-Storey) No of Storey: a) Residence (20-Storey) b) Urban Retail (1st & 2nd Floor) Total Number of Units: a) Residence (400 units) b) Urban Retail (50 units) Built-Up : a) Residence Type A - 1,238 sq.ft. (3+1 Bedrooms) Type B - 883 sq.ft. (2 Bedrooms) Type C - 614 sq.ft. (1 Bedroom) b) Urban Retail 1,200 sq.ft. - 2,000 sq.ft. Prices: a) Residence - from RM342,000* b) Urban Retail - from RM940,000 Estimate Completion: Q4 2018 Developer Name: Ribuan Ekuiti Sdn Bhd (A subsidiary of OSK Property Holdings Berhad) Phone No: 019-295 5997 Website: www.emira.com.my
Artist impression
Emira™ Entertainment Lounge
www.propertyinsight.com.my JUNE 2015 I 51
R2_Emira_ads.pdf
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5/18/15
12:17 PM
INTERNATIONAL MARKET
THE GREATER METROPOLIS Knowing the drill of Melbourne property market By: Fara Aisyah Firdaus Petial
M
elbourne is the capital and most populous city in the state of Victoria, and has been ranked the world’s most liveable city since 2011 (and among the top three since 2002), according to the Economist Intelligence Unit (EIU). Hence, this factor adds interest to the growing residential property market in the beautiful city. Metropole Property Strategist director Michael Yardney saids “The Melbourne residential property market has performed very strongly over the couple of years driven by strong population growth, rising wages, incomes and business profit, lower interest rates, a rising stock market and rising consumer confidence.” This, he added, has led to strong property growth over the last 12 months and particularly strong growth over the last 10 years. Yardney also stated, “In most cities in Australia, there was a property boom after the global financial crisis of 2008 – 2009. This boom peaked in late 2010 when the Reserve Bank of Australia raised interest rates. The market then bottomed out during the second quarter of 2012 and since then the
CBD Panorama
current cycle has seen dwelling prices increase to different degrees in each of our eight capital cities.” The Certified Practising Valuer of Build Capital (Property Advisory Solutions), Stuart Biggs on the other hand said, “Property prices are generating momentum for 2015 with a modest level of optimism on the back of reported growth of 7.8% in 2014. In order to discuss the strength of the property market its best to understand how property transacts and the psyche of the Melbourne market. The Melbourne property market is unusual in the sense that 80-90% of residential (existing) stock is sold via public auction, in the front yard or on the Street and typically a Saturday morning after experiencing a 4-5 week advertising campaign.” Spec Property, is one of the sustainable developers in Melbourne. Its International Manager, Robert Evans commented on the property market by saying, “The Melbourne property market is undoubtedly one of the most robust and mature residential property markets in the world. Residential property is supported by the mantle of Melbourne enjoying a number of very important www.propertyinsight.com.my JUNE 2015 I 53
INTERNATIONAL MARKET fundamental attributes, having been voted one of the world’s most liveable cities every year for the past decade, Melbourne is an obvious choice for people who want to live an enjoyable and priviledged lifestyle.” “Growth in population of over 120,000 people per annum, with most of these are moving from other parts of Australia, plus the fact that Melbourne is an international education and culture hub provides an underpinning of demand for both owner-occupier and investors alike. Projections of a population of over 6 million people in 20 years means another 1.5 million people will need to be housed,” Evans added.
PROPERTY INVESTMENT HOTSPOTS
When asked about Melbourne’s property investment, Biggs said “Location, location, location: It’s an old saying in Australia but it rings true, you need to buy in a location which is well located to shops, transport and where possible lifestyle attributes (e.g beach, park land or entertain facilities.) Australians are lifestyle buyers and you need to think like an Australian.” “Do NOT buy in the CITY,” advised Biggs. This is because, according to him, there’s a massive oversupply of condominiums within this market and capital growth is predicted to be flat over the next 5 years with higher than normal vacancy rates. Biggs also highlighted some eastern areas that are believed to have strong demand such as McKinnon, Bentleigh, Glen Waverley, and Box Hill which are being acquired Asian families which are paying above market to enter these areas. This is generally inflating the market by 10% and more for these area’s as they’re generally within school zones, Asian retail and community stores as well as good transport linkages. Yardney expressed his opinions on the Melbourne’s property investment hotspots by saying, “Some of the strongest property sub markets in Melbourne are in the inner and middle ring south-eastern suburbs where landed property is highly sought after by locals with high and rising disposable incomes. They’re looking for proximity to amenities, transport and lifestyle. Access to good private and public schools also drives property values in certain suburbs.”
FOREIGN INVESTORS MUST-KNOW
In conformity with Biggs, “International purchaser are legally allowed to purchase property within Australia without having permanent residency provided they apply to the Foreign Investment Review Board (FIRB) as seek formal approval which typically takes 10 - 15 days. New property (newly built without prior occupancy) and vacant land area approved without any visa while existing or second hand property require an approved visa. These applications are processed online via www.firb.gov.au” Biggs added that “The Australian government has proposed new foreign investment fees ($5,000-$10,000 [RM13,953-RM27,906]) as a measure to raise funds to 54 I JUNE 2015 www.propertyinsight.com.my
Source: CORELOGIC
support FIRB with the required resources to sufficiently monitor foreign investment within Australian borders.” The CEO of Real Estate Institute of Australia, Amanda Lynch said “What is important is that the revenue gained from these penalties will provide the Australian Taxation Office with more resources to ensure all investors are complying with the regulations.”
Tram
SUBURB
The Hotel Windsor
DEC-14 MEDIAN
SEP-14 MEDIAN
QUARTERLY CHANGE
Kew
$2,035,000
$1,721,250
18.20%
Carlton North
$1,160,000
$988,000
17.40%
Dromana
$547,500
$470,000
16.50%
Northcote
$1,065,000
$915,000
16.40%
$468,000
$410,500
14.00%
$1,725,000
$1,517,500
13.70%
Thomastown
$435,000
$385,000
13.00%
Williamstown
$955,000
$849,000
12.50%
Richmond
$1,071,000
$955,000
12.10%
Glen Iris
$1,570,000
$1,400,000
12.10%
Mount Martha
$750,000
$670,000
11.90%
Port Melbourne
$1,180,000
$1,057,500
11.60%
Aspendale
$770,500
$695,250
10.80%
Blackburn South
$855,500
$772,000
10.80%
$1,270,750
$1,147,000
10.80%
$842,500
$762,500
10.50%
$1,450,000
$1,315,000
10.30%
Brunswick West
$853,000
$775,000
10.10%
Boronia
$517,500
$470,500
10.00%
Bayswater
$552,000
$502,000
10.00%
Dandenong North Hawthorn East
Ivanhoe Maribyrnong Hampton
Source: The Real Estate Institute of Victoria (REIV)
www.propertyinsight.com.my JUNE 2015 I 55
INTERNATIONAL MARKET “Of concern, however, is that the Options Paper also proposes an application fee of $5,000 for properties under $1M, $10,000 for properties valued between $1-2M and $10,000 increments for each additional $1M in value. These fees will be used to finance increased compliance, which is what the industry has been calling for but it also means that properties over $1M will attract a fee of approximately 1%,” she added. In addition to that, Yardney indicated, “Foreigners can only buy new or off-the-plan residential properties in Australia. They are not able to buy established residential properties.”
“Foreigners can only buy new or off-the-plan residential properties in Australia. They are not able to buy established residential properties.
WORD TO THE WISE
“While there are many new developments currently being built to accommodate the strong requirements of foreign investors, particularly from Asia, to invest in Melbourne residential real estate, I would be very cautious at this stage of the property cycle,” said Yardney. Yardney thoughtfully clarified, “As you can see from the graph provided by the chief economist of Domain, Dr. Andrew Wilson, Melbourne has reached the mature stage of its property cycle and capital growth will now be more subdued. This means careful property selection will be critical. ” The problem is, as stated by Yardney, many of the new apartment buildings are being targeted at Asian investors, who don’t fully understand what makes a good investment in Australia. Yardney foresees, “This significant oversupply looming in the Melbourne high-rise apartment market will mean there will be minimal, if any, capital growth and rental growth for the next five or six years. In fact many investors will find that their properties will not be worth their contract price on completion of the project.” He said, “My suggestion is that rather than invest in the central business, investors should look for smaller more boutique new apartment buildings in the inner and middle
contraction
56 I JUNE 2015 www.propertyinsight.com.my
Yardney
ring Melbourne suburbs where there is not an oversupply of properties. These could include the suburbs of Bentleigh, Caulfield and Moonee Ponds.” Yardney’s point of view is also agreed by Biggs, as he opined “Buy into a boutique development, typically with no more than 100 as when this property is completed there will be less stock to complete with from a sale and rental perspective.” Biggs’ strategy for the investors is to “Hold for five years. Melbourne is not considered a flip and run investment market as I’ve come to understand from the market here in Malaysia. High stamp duty costs and selling cost reduce the benefit while the general condominium and landed properties are not generating 20% returns per year growth which negates the benefit of selling prior to settlement.”
“Seek finance approval before signing any contract to confirm you’re eligible for Australian finance. Australian banks will lend 80% Loan to Value Ratio (LVR) on all property within no decrease LVR ratio on the amount being purchased,” warned Biggs. He also pointed out to “Investigate the Foreign Capital Gains tax which applies - When the property is sold then the capital gain or loss will need to be calculated. Capital loss will carry forward. In case of capital gain the amount they will pay tax on is: • Sale Price • Less costs associated with sale • Less costs associated with purchase • Add back depreciation claimed in the preceding income tax years • Less negative gearing loss carried forward from the preceding years Any remaining gain will be subject to Australian nonresident tax. There is no capital gain 50% discount available for non-residents for investment properties purchased after 8th May 2012.” Evans also opined, “Residential apartments in good locations – not the CBD where massive 60-80 storey towers will be built for sub-standard quality housing, but mid -sized projects in city fringe locations are the best bet, along with growth suburbs such as Doncaster will be good for rental returns and capital growth. Houses in new estates – 30-50 km from the CBD offer a cheap entry to the market but offer poor returns and growth – this is where the cheapest of everything – i.e rents and affordability will always live – (Not a good choice).”
CONCLUSION
Biggs described the benefits of investing in Melbourne’s property as “It’s a multicultural population of 4.5M people with a clean and safe lifestyle for university students through to families. Access to some of the world’s best restaurants, cafes, bars, sporting entertainment, stable government and transport infrastructure which are why it’s been voted the most liveable city in the world for 4 years running.” However, Biggs said “The cost of living is high - This includes renting/buying property, food, utilities and petrol prices. For those working these costs is generally proportional to income however university students and pensioners are the hardest hit in these areas.” Likewise, Yardney disclosed “Overall Australian property values will increase in the medium to long-term, driven by our strong population growth and the wealth of the nation. Its economy is robust and with population growth in the order of 1.8% per annum, this means Melbourne’s population will increase by around 10% over the next five years.” “At the same time its population will be wealthy, because Melbourne is home to many service industry and I.T. related jobs. A growing population who can afford to buy property, but who all want to live in many of the same locations is
conducive to a buoyant property market,” he concluded. Evans concluded, “Melbourne offers very good long term investment options – there is little fluctuation in prices – they only rise generally – they don’t fall dramatically, the saying is get rich slowly. Annual growth in good suburbs is consistently 6-8% compounding. Values have tended to double on average every 10 years.”
“Investigate the Foreign Capital Gains tax which applies - When the property is sold then the capital gain or loss will need to be calculated.
Biggs
“Melbourne offers very good long term investment options – there is little fluctuation in prices – they only rise generally – they don’t fall dramatically, the saying is get rich slowly.
Evans
www.propertyinsight.com.my JUNE 2015 I 57
INVESTOR NEXT DOOR
IF YOU WILL IT, IT IS NO DREAM Find out Mohd Salahuddin’s secret of owning 23 properties in two years By: Daniel Sim
I
mpossible is not a word. This rings true for Mohd Salahuddin bin Shaari, a Kelantanese from Kota Bharu who migrated to the big city of Kuala Lumpur to find a job and make a living for his family. Coming from a family with nine siblings, Mohd Salahuddin suffered from a hole-inthe-heart, possibly a life-threatening medical condition. Despite these hardships, he persevered in his early days and graduated with a diploma in Mechatronics from Politeknik Ungku Omar in 2009. After several interview sessions, he got a job offer from a Japanese company called Asahi Kosei and became a supervisor at the Mould Maintenance department. Due to his expertise in CADD field, he was transferred to the engineering department and obtained a Solid Works Professional Certification within a year.
“I managed to buy 3 properties at one time and all of them are mediumcost property, prices ranging from RM45,000 to RM65,000, two of them were subsales and one of them was from an auction, the units were 800 sq.ft., it was very cheap then.
THE FIRST ENCOUNTERED “My father was working as a contractor but had to declare bankruptcy in 2000 due to the economic crises, and because of this, he was not able to pay the monthly bank instalments for the house and as a result, the bank had to auction it,” said Salahuddin. He tried to buy his parent’s house but was unsuccessful because his salary would not qualify him for a bank loan. “In the end my siblings and I chipped in and we pay the full instalment together, but it was a turning point for me as fear became one of my biggest challenges in getting a bank loan to even buy a property for myself.” According to Salahuddin, working long hours is a Japanese culture and he felt very tired after wo years of working in the Japanese company. “I felt like there was no life because once I am in the factory, I will not know anything that happened in the outside world. My concern at that time was only for the machines that were operating in the factory.” He further stated that the salary didn’t increase much despite the larger scope of responsibility. A typical day would involve being at the factory at 7.30am and only went home at 10pm. By then, his children would already be sleeping. He realised that despite his fear, his life has to change. He took the first step by trying to gain knowledge about passive income and he got to know about property investment by attending property seminars. DETERMINED TO SUCCEED “Despite earning a meagre salary of RM2,000, I took the risk
58 I JUNE 2015 www.propertyinsight.com.my
and embarked on a journey of investing in my first property which was a condominium in KLCC, one of the most sought after prime locations. The condominium was priced at RM1.4 million at that time. I tried to be creative in finding financing and I decided to enter a joint venture with my siblings in applying for a bank loan. Even with the combine salary amount, it was still not sufficient for the bank to approve the loan application. I later realised that it was because my salary would not be enough to cover for my monthly loan instalments,” said Salahuddin. He was a bit disappointed, but a co-worker from his factory advise him not to give up hope and suggested Mohd Salahuddin to buy properties which he can afford based on his salary. “After some calculations and research done with various banks, I realised my salary was only able to be approved for a bank loan if I buy low and medium-cost apartments. I immediately realised my previous mistake, partly because I was too ambitious in getting things done my way even though the timing was not right, especially in financing,” he shared. With a renewed determination, he started all over again in property investment. He spends about two to three months researching Balakong, the area where he was working around at that time. “Balakong is a place known for its manufacturing industry, therefore, there are many factories situated there. That means there will be a lot of factory workers looking for a place to stay. So that’s why I invest in this area,” shared Salahuddin. He also did a feasibility study to understand where the surrounding amenities were, such as public transport and shopping malls and also the occupancy rate of the development. “I managed to buy 3 properties at one time and all of them are medium-cost property, prices ranging from RM45,000 to RM65,000, two of them were subsales and one of them was from an auction. The units were 800 sq.ft., it was very cheap then,” enthused Salahuddin who bought the properties in 2012. He used all his savings to buy all the properties and then he renovated and refurbished the properties to rent out. “I can get monthly rental of between RM1,000 and RM1,300, which is more than enough to cover my monthly instalments of approximately RM180-RM230.” The monthly passive income that he received further motivated him to know more about property investment. “I continued getting new knowledge, I bought a lot of books that were property-related and I started playing a bigger game by buying more properties in 2013 and 2014.” By entering a joint venture with his siblings, Salahuddin today owns a total of 23 properties, 2 of them are commercial while the rest are high-rise. THE STRATEGY “I now have 11 properties in Balakong area, 10 properties in Cyberjaya - seven of which are penthouses and two properties in Nilai, Negeri Sembilan. My focus is on the Southern Corridor as it is an area that has been identified with many new developments,” said Mohd Salahuddin. He shares that it is important to acquire the right knowledge in property investment. He gave an example where the property he bought in Balakong normally rents at RM300 per month, but he manages to rent it out at about RM1,300. Same goes with his
Before renovation
After renovation
First property Location
Kasawari Apartment, Balakong
Property Type
Medium Cost Apartment
Furnish Level
Fully Furnished
Purchase Value & Year
RM65,000 & 2012
Market Value & Year
RM150,000 & 2015
Price PSF
RM187psf
Built-Up Area
800sq.ft.
Rental Per Month
RM1,300
Rental Yield
24%
Loan Margin
90%
Loan Tenure
40 years
Second property Location
Cyberia Smart Home, Cyberjaya
Property Type
Condominium
Purchase Value & Year
RM509,000 & 2014
Market Value & Year
RM650,000 & 2015
Price PSF
RM280psf
Built-Up Area
2266 sq.ft.
Rental Per Month
RM5,000
Rental Yield
9%
Loan Margin
90%
Loan Tenure
30 years www.propertyinsight.com.my JUNE 2015 I 59
INVESTOR NEXT DOOR property in Cyberjaya where the maximum rental can go up to RM3,000, but he manages to rent it out at RM5,000. He added that people can rent out properties in different types - not furnished, fully furnished, homestays or room rental - and the rates can be daily, weekly, monthly, yearly or even semester basis. “I used a compression strategy whereby leveraging on my bank loan, I will buy many properties below market value at the same time,” he said, adding that knowing and identifying your target market is also very important. Ask yourself questions like who will be the renters or what will attract people to rent your place. Salahuddin would not buy properties based on just the type but also on the need of the target market. He said that knowing the target market can also help you save cost. You would not need to buy a subsale property and renovate it with futuristic design when you just want to rent to factory workers as the rent yield would not suffice your monthly instalments. You would renovate it in such a way that it will be comfortable for renters to stay. Besides the target market, another thing to keep in mind when investing in high-rise residential will be how much you would need to spend every month for items such as utilities, maintenance fee and rental rates for high-rise units.
60 I JUNE 2015 www.propertyinsight.com.my
Another thing that he shared with Property Insight is how to manage your renters. For Salahuddin, he would give money to the renters who failed to pay their rent to move out, although many would feel that this is a foolish action. He said that it will actually help lessen his emotional stress. “Why worry about losing RM500 (monthly rental), when you can get more with a new and more responsible renter.” Moving forward, he would like to acquire as many properties as possible this year and is looking for someone to help him manage all his properties. WISE SAYING He advised, “I think the problem with Gen-Y not being able to own property is because of their lifestyle. They spend a lot of money on expensive cars and because of this, their debt service ratio increased, making it difficult for them to get a loan to buy a house. I suggest that young people, who just started working, should allocate a sum of money to buy low cost property first, at least for their own stay, if not for investment as property prices will get higher and higher in the future. Investors, on the other hand, should be willing to spend more on paid seminars so that they will get more knowledge to grow their investment. What good does it make when you have money but no knowledge? It will only cost you many unnecessary mistakes.
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PERSONALITY OF THE MONTH
TRICKS OF THE TRADE
Dato’ Shah Razali works the DSR Group like a charm By: Fara Aisyah Firdaus Petial
D
“Our target market are the youngsters, and those who are interested in auction properties – those who don’t have much capital to purchase the property.
ato’ Shah Razali has been coming on strong since seven years ago when he first stepped in to the financial business as banker. He is now a very familiar name in the property and business industry, and has established his own company, the DSR Group. Sharing his personal background to Property Insight, he said, “I worked seven years as a banker, and then I ran a home business: construction, majoring in piping. After that, I ventured into property development.” Coming from a strong background in finance and construction, Shah decided to share his knowledge through his consultant company.
Shah
THE DSR GROUP
“Overall, I have four types of business groups. The first one is Shah Group, which is our construction business. The DSR group is for the consultation business, which we usually do seminars. We also have a medical group, whereby we have our own clinics, dentistry, and even for maternity. As for the last one, we have what we call an investment holding,” he said. In the business industry, Shah treats Albukhary Foundation founder Tan Sri Syed Mokhtar Shah bin Syed Nor AlBukhary as his icon and hopes that he can be as successful as Syed Mokhtar. That is the one particular dream that he has for his company. He voiced out, “I definitely want to have a big company, and big conglomerate like Syed Mokhtar’s. But it’s still a long way to go. Yet, I believe that with the right foundation, I can 62 I JUNE 2015 www.propertyinsight.com.my
achieve that, maybe within these 10 years.” DSR Group provides consultant, seminars, as well as coaching for property investors. “We have our top students. We do seminars, coaching, and then we also have renovation consultation, especially for the investors who buy any type of properties. We can advise them not only on how to purchase the property but how to rent their properties with the correct design, right colours, tones, all these things.” The group created an event called ‘Gegar Hartanah’, which aims to educate people regarding financial management and property investment, and it focus mainly on the youth.
TAKEN BY SURPRISE
“Our target market are the youngsters,
and those who are interested in auction properties – those who don’t have much capital to purchase the property. They can lease first the property from the owner, and then they can do the homestay, they can also do sublets all these things. That’s how they can generate income while waiting to purchase the property. So during this period, they can also learn how to manage the property, how to manage the tenants. When they have their own properties, it’s easy to plan, because they already have the experience on property management.” Shah added, “We need to share the knowledge with our youngster because they are too afraid to purchase or invest in property. At times, they face problems with their tenants. If they wrongly renovate the house, they will get summonses and
compounds. These are the things that we advise them. We will also teach them the best way to save money and to get extra money, especially for the down payment to pay for their own property.” “I started property investment 15 years ago. That time, my father asked me to purchase a property. My salary was only RM1,000. I was a management trainee for six months, and then my father asked me to buy a property. I still hold the property, Bayu Perdana @ Klang,” Shah said. His second property buying experience happened when a home owner came to the bank, shared his problems and said that he wanted to sell the house. “And I said okay, I’m interested to buy the house – based on the location. And then after that, I went for the site visit. I tried for a loan and it got approved, and that is my second property. Until today, I have never stopped buying,” Shah added. He stated, “I had started investing in year 2001 and now have already transacted more than 100 units. Right now, I’m still holding about 89 units, including retail, commercial, residential. Is there any difficulty during the beginning? Yes, definitely, because I lacked experience. I also didn’t know the type of properties that I should buy, and where.” Shah said location is a very important issue in choosing property, because an investor must choose a location that can attract tenants. Just like other investors, he also had some experiences dealing with “tenants from hell.” “This would be the biggest and quite common issue for us when the tenants didn’t pay the rent. It happened during my first five to six years when I started investing. But it’s a good experience. That’s one of the things I always share with my students.”
WHY PROPERTY?
“Property has two important things for me. We have cash flow, and we have appreciation. These two things are very crucial things which we cannot get in other instruments of investment. Property investment is
unique. You cannot pull it, you cannot bring it together with you to show it to people wherever you go because it’s static there. When you started off, you need the money, you can leverage in it can get mortgages, can refinance it and can sell it as long as you buy the right property. If we buy the right property, we can sell it easier, we can rent it easier. Although when you decided to refinance it, you can refinance it easier compare to other investment,” expressed Shah. As a financial expert, he sees property as an asset in a bigger picture. “They must have a proper plan whereby, when they want to buy a property, they must set the actual date of when they want to buy and how much they need for the down payment, instalments and all these things,” Shah said. Expressing his concern, he said, “As we can see today, a lot of people’s concerns are more on entertainment, lifestyle, image, without the major concern in what they are supposed to have for the future. So that’s what we do here. We have clubs, coaches and mentors to guide them to create the environment. Not only to build the environment, but with the same understanding. Everyone shares their achievements with each other.” “Nowadays, young people, after graduate, they don’t have a proper planning. Even during university time, they didn’t plan anything. Then they started their career without a proper planning, without a proper financial planning. They don’t have savings, so when are they going to buy their property? They focus more on the entertainment. They obtain a credit card first, personal loan, all these things,” Shah mused. INVESTORS’ GUIDE Property investment, Shah emphasised “Is not about the quantity. It’s about the quality. You need to choose a right property. You must wait for the right moment, the right location, the right price and the right government policy. During that time, even if you want to shoot three or four units in one lump sum, it’s no problem. But then if you do it frequently – every month you
“I had started investing in year 2001 and now have already transacted more than 100 units. Right now, I’m still holding about 89 units, including retail, commercial, residential. Is there any difficulty during the beginning? Yes, definitely, because I lacked experience. I also didn’t know the type of properties that I should buy, and where.
buy one property – it’s not a good thing either.” “Because I already experienced it, I tried to keep the momentum – I purchased one in every three months. But it will drag you into another problem where you cannot maintain your personal cash flow. Because you save the money, let’s say for RM20k and RM50k, and then after that in the next three months, the money is gone – so the liquidity is less.” He opined, “So actually as an investor, we need liquidity as well. It’s not only the property. It’s not how many properties you have. You have one property, but that gives you a good appreciation and cash flow. It’s better than having ten properties but all the tenants are ‘from hell’. It will only give you headache.” MALAYSIA PROPERTY MARKET Shah expects the 2015 market to bit a www.propertyinsight.com.my JUNE 2015 I 63
PERSONALITY OF THE MONTH
little tough, especially for developers and investors. For investors, even though they purchased the property this year, and in the next two or three years after the property has been completed, it will also be hard to get the buyers or tenants, especially if they purchase a high-end property that cost more than RM400k. Shah said, “If you see, in the next three years based on our history, it’s our recession period. Not everyone can make the comeback from recession. The economy is not stable. They can’t afford to pay high rental. Down payment is too high. It’s also hard for investors to purchase during this period. That’s why if you notice in 2015, if you want to purchase the property, you must choose wisely. Look at the type of property, the location, and you must study the forecast of appreciation, as well as the cash flow. This thing is a very crucial thing in 2015.” “I’m also a small time developer – I also experienced the same thing when we get high rates for the raw materials. Hence, when we get a high rate, it affects the property price as well. We need to control our margin. Buyers will get the burden, investors 64 I JUNE 2015 www.propertyinsight.com.my
Because I already had experience it, I tried to keep the momentum – I purchased one in every three months. But it will drag you into another problem where you cannot maintain your personal cash flow. Because you save the money, let’s say for 20k and 50k, and then after that in the next three months, the money is gone – so the liquidity is less.
will be affected twice. As a developer, we do face this kind of problem. As an investor, the impact they face is different,” he explained. A STROKE OF LUCK Shah disclosed that the stepping stone to success is not easy, even for him. “It’s a hard way, it’s not easy. I have gone through a lot of experience, but I’m a little bit lucky because my mother was a businesswoman. So I just have to continue the legacy. I just continue
the company’s license and I got my experience from my mother’s company. That’s what makes my journey moves a bit faster than others. Actually, it has helped me a lot. Because I don’t need to wait to get the G7 license from the CIDB, or PKK, etc. But other people, they have to wait for seven to eight years in order to obtain that. But for me, during my earlier days, I already got everything. So it’s easy for me to get the license and what’s left for me is how to keep the company going.”
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QUESTION AND ANSWER
WHAT WILL YOU INVEST IF YOU HAVE RM 1MILLION CASH?
DATO’ STEWART LABROOY
ALAN POON
ADRIAN UN
Chief Executive Officer/Executive Director of Axis- REIT
Principal Strategist of Superior Wealth Mastery
CEO of Skybridge International
In a buoyant property market, the temptation is to leverage your RM1,000,000 and borrow up to 90% and purchase RM10,000,000 worth of properties. Profits are made when you sell on the asset as it is being built, or upon completion. However, we all know this is not a good idea in the current market climate. If I had RM1,000,000, I would invest it in a well-run REIT, leverage it up to 50% to boost returns, and enjoy the dividends, sleep well at night and wait for a market correction.
Actually, it all depends! Since property market trend changes based on various factors, one must know when to deploy the RIGHT strategies involved. Given the same market conditions, strategies used by seasoned investors could be different from beginner investors. It all depends on individual risk-reward appetite and gearing ratio (or even exit strategy)! PLAN FIRST before deploying the funds at hand. I need to stress that for beginner investors, the RIGHT thing to do is to invest in YOU. Yes, set aside funds for continuous learning AND mastering of the fundamentals of investing. This should include getting the required education in different aspect of propertyinvestment.
If it is for capital appreciation, I would invest in a double-storey landed property with gated and guarded scheme in existing mature neighbourhood. Frankly speaking, I will normally not spend all the money to buy a single type of property. I would still apply for a bank loan. If the banks are lending then why aren’t you applying for the loan? Even if you already have an existing loan, you can still qualify to borrow up to 70%. One good location I would invest in is Taman Desa. The reason is because there is no more land available in this area for new development. Furthermore, Taman Desa is a mature neighbourhood catering to medium and highincome population where amenities are abundant.
66 I JUNE 2015 www.propertyinsight.com.my
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STRATEGY
WHY INVEST IN
REIT’S?
“Ninety percent of all Millionaires become so through owning real estate” -Andrew Carnegie
A
lthough we don’t realise it, real estate is part of our lives since the day we are born. We come into this world under the shelter of a hospital and then are taken home. We go to school for the large part of our youth and then on to college/university. Then we start working and we have to operate out of an office or work in a factory. It doesn’t stop here. After we get married, we take holidays and get pampered in a hotel or a resort having travelled from airports or train stations. We also shop in malls or high street shops, see our favourite football games in stadiums and then as we come to the end of our lives, we lie to rest in a memorial park. Yes indeed, we are surrounded by property all our lives, and it’s no wonder that this is a favourite investment tool amongst us Asians. Let’s look at some of the main reasons for owning real estate; • Buy and sell for fast speculative profits • For long-term investment income and capital appreciation • To hedge our capital against inflation • To let the word know how wealthy we are • To leave an inheritance for our children • To have a permanent abode that is ours
68 I JUNE 2015 www.propertyinsight.com.my
For many years, the only way private investors could own property was to buy into Houses, Shop lots, Office suites, Condominiums or Serviced Apartments. Many investors faced problems obtaining a bank loan, disposing of the property quickly, being exposed to interest rate volatility, being taxed up to 25% on income and finding tenants who will pay a rent that justified the investment. Until 2005, this was the only real estate investment choice available in Malaysia but the landscape has since changed by having an alternative property investment tool – and that is a REIT.
WHAT IS A REIT?
A Real Estate Investment Trust (or REIT) is a listed vehicle that invests in a portfolio of income-generating properties. Rents collected from tenants are distributed on a regular basis to provide stable yields to Investors or Unitholders. This distributed income to Unitholders is subjected to a one-time withholding tax of 10% for individuals. The REIT is not taxed by the Internal Revenue Board (IRB). Listed REITs are traded on our local Bourse and provide Unitholders with consistent returns in the form of income distributions and capital gains. REIT’s in Asia Pacific evolved from the listed property trust structure introduced in Australia of the 1970’s.
TYPICAL REIT STRUCTURE Vendors
Cornerstone Investors
Investors
Institutional funds
Maximum 75% Minimum 25% and 1,000 unit holders
Unit Holders
Retail
Investment in REIT Units
Distributions
Acts on behalf of Unit holders
REIT Management Company Property Management Company
Management Services
Management Fees
REIT
Trustees Trustee Fees
Services Fees
Properties
REIT’s in Asia Pacific evolved from the listed property trust structure introduced in Australia of the 1970’s.
Malaysia is the first country in Asia after Australia to introduce listed property trusts to encourage small investors to invest in the local property sector. In 1989, the Amanah Harta Tanah PNB debuted on Bursa Malaysia as the first listed property trust in Malaysia, with the Amanah Harta Tanah PNB 2 and Arab Malaysian First Property Trust after it. However, these three listed property trusts did not manage to garner much investor interest due to restrictive rules and low growth. The earliest markets to embrace REITs as an asset class was Japan in 2000, followed quickly by Korea in 2001, Singapore in 2002, Hong Kong and Taiwan in 2003 and in 2005, the Malaysian Securities Commission announced the Malaysian REIT Guidelines which resulted in the listing of Axis -REIT and Starhill REIT that same year. The Malaysian REIT market has seen tremendous achievements over the last ten years. Today we have a total of 15 REITs with a total market capitalisation of RM38 billion and a total asset size of RM49 billion.
WHAT MAKES A REIT SO DIFFERENT FROM OTHER ASSET CLASSES?
Typically REITs invest in the many asset classes - office, retail, hotels, hospitals, and industrial, logistics, shopping malls, hospitals, colleges and business parks. Some REITs specialise in one type of asset class while others offer a mixed portfolio. The invested real estate provides steady income generated from rent under lease contracts and potential capital growth. REITs are not allowed to enter into development projects which can put the trusts income at risk.
In the simplest form, a REIT provides the property investor with an opportunity to own property of a very high standard through a securitised structure where one can own an interest in a portfolio or dispose it in an instant to realise profit.
WHAT MAKES REITS GOOD INVESTMENT CHOICES?
1
It’s professionally run and managed A REIT is run by a professional management company (The REIT Manager) which is licensed by the Securities Commission under the Capital Market Services Act. Strict compliance to the Securities Commission and Bursa Securities’s regulations is mandatory. The REIT Manager is responsible for asset maintenance, ensuring property vacancies are kept at a minimum, prompt rental collection, dividend payments, prudent capital management of the Trust and take on asset enhancements when needed. Most importantly, the REIT Manager is there to ensure that the tenants are happy and their needs are being attended to on a daily basis. This in fact is a big plus point for all property investors. It eliminates business risk for the investor. In addition many REITs recognise the importance of best practices and good corporate governance which is important to promoting investor confidence. A good example here is that of Axis-REIT winning the Asia Pacific Real Estate Association’s (APREA) Best Practices Award, three years running. So, in summary, investing in a REIT will be your answer to owning real estate without the hassle of attending to your tenants’ demands or managing the property.
www.propertyinsight.com.my JUNE 2015 I 69
STRATEGY
2
There are many investment options to choose from With fifteen REITs currently listed on Bursa Securities, investors have options to choose the type of REIT to invest in The Malaysian REITs and their assets classes are listed below: REIT Name
Type of investment
Al Aqar REIT
Hospital
Am First REIT
Office, retail and hotel
Amanahraya REIT
percent of their total yearly income to unit holders, the REIT itself is eligible for exemption from the corporate tax rate of 25% under Section 61A of the Income Tax Act 1967 for that year of assessment. However, the withholding tax would be applicable on REIT’s dividends that have been exempted at the REIT level, the schedule of which is appended below; Unitholder Class
Withholding Tax Rate
Industrial, office, hotel, educational institution and retail mall
Resident corporate
Nil^
Resident non-corporate
10%
Atrium REIT
Industrial
Non-resident individual
10%
Axis-REIT
Office and industrial
Non-resident corporate
25%
CMMT REIT
Retail
Non-resident institutional
10%
Hektar REIT
Retail
IGB REIT
Retail
KLCC REIT
Office and retail
Pavilion REIT
Retail
QCT REIT
Commercial properties
Sunway REIT
Retail, hotel and office
Tower REIT
Office
UOA REIT YTL REIT
Office Hotel
3
Small start-up investment needed REITs are unlike any physical real estate investment that REITs are unlike any physical real estate investment that requires a big initial investment outlay. With a REIT, investors can purchase a partial ownership of a big portfolio of high quality real estate and enjoy the income produced from it as well as its appreciation in value. As these are Trusts, have high quality, well-maintained and sometimes iconic properties, their value are always moving up. Through REITs, investors can lay claim to ownership of such assets like the KLCC twin towers, Pavilion, Sunway Pyramid and the Midvalley shopping malls – properties that would be out of reach of the man on the street before. The minimum subscription a unitholder can invest in a REIT is 100 units and that means for a very small outlay one can get started.
4
It’s easy to buy and sell REIT units As all REIT units are listed on Bursa Securities they trade like normal equity stocks. They are priced daily and the prices are transparent. Unlike buying a property which may take more than six months to complete and involves an agency commission; the buying and selling of REIT units can be done almost instantly and is much cheaper to transact.
5
Frequency of your REIT dividend payment Most of the REITs pay a quarterly dividend, which is as good as collecting monthly rents from tenants from a directlyowned property investment.
6
There is a distinct tax advantage The tax advantage is the one of the key attractions of investing in REITs. For a REIT that distributes at least 90
70 I JUNE 2015 www.propertyinsight.com.my
^ Resident corporate investor will enjoy tax transparency but will subject to the prevailing corporate tax rate when it is declared as income
The 10% withholding tax rate is considered low and competitive as compared to a direct property investment where the rental is taxable at the progressive individual rate to a maximum of 25%.
7
REITs sometimes trade their assets like that of a normal property investor Some REITs occasionally behave like an individual property investor and choose to dispose of an asset when the time and price is right. Axis-REIT is one such example. In the last ten years it has completed the disposal of three assets, the gains of which were fully distributed back to investors as special tax free dividends, much to the delight of the unitholders.
8
REITs – a hedge against inflation Investment in a REIT should always be viewed as similar to a direct property investment i.e. it is a long-term investment and is 100% asset-backed. If you look at the value of property as always increasing and the value of money always decreasing over time, it does not make sense to leave your money in the bank to earn the paltry 3-4% interest offered in a fixed deposit. At the end of the year your dollar will probably buy you 5-10% less goods and services depending on inflation. It’s a negative return. A REIT provides both a cash dividend return every quarter as well as a capital gain if the REIT is well-run and successful. For example for 2014, Axis-REIT provided investors with a total annual return of 30%! It will always provide the investor an excellent hedge against inflation and a safeguard of your investment.
ABOUT THE CONTRIBUTORS
Dato’ Stewart LaBrooy CEO/ Executive Director Axis REIT Managers Leong Kit May Chief Operating Officer/ Finance Director of Axis REIT Managers
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STRATEGY
TIPS AND STRATEGIES
WHEN INVESTING IN
KUALA LUMPUR AND SELANGOR IN 2015
2015 is expected to be a challenging year ahead for the Malaysian property market. Still, there are opportunities to be sought by both locals and foreign investors
I
was walking around KLCC and Bukit Bintang one night and noticed that despite the bright lights emitting from Malaysia’s iconic Petronas Twin Towers, it stands in stark contrast to the many vacant units at the nearby luxurious condominiums. I recall covering the KL property market back in 2008 when some of the units in KLCC were launched as ‘bungalows in the sky’. One particularly iconic development that I had visited has units as big as 4,000 sq. ft. While living in such apartments is definitely a dream for many, alas, it is out of reach for the majority of Malaysians. Coupled with the Lehman’s Brothers crisis during the same year, developers suddenly realised that such units were indeed hard to move as they aren’t affordable to locals while foreign buying had somewhat waned. Still, there were some high net worth Malaysians and foreigners who had purchased units there as ‘trophy properties’ and to rent them out. Sadly, that didn’t quite happen. KUALA LUMPUR In this article, I will be sharing with you tips and strategies should you wish to invest in Kuala Lumpur or Selangor in 2015 72 I JUNE 2015 www.propertyinsight.com.my
in the hope that you will minimise your mistakes. Most homes in the Klang Valley area are already averaging more than RM600, 000 and are out of reach for first-time homeowners. Therefore, this market will primarily be driven by middle income and well-to-do locals as well as foreign investors. Properties in prime areas are priced from around RM2, 000 per sq. ft. onwards. Last year, Kuala Lumpur’s prime areas witnessed a flurry of high-end condominium launches last year in Bukit Bintang and KLCC like Harrod’s and Banyan Tree averaging at RM3, 000 per sq. ft. Despite the prestige of such brand names, many locals tend to shy away from such projects due to overall quantum price. However, high net worth Malaysians may still snap up such projects as these are considered ‘trophy properties’. Even so, they are not likely to live in the area, preferring to rent it out or use it as their holiday homes. For foreigners, these projects will be very popular due to the increase in minimum purchase price and their location right smack in the city centre. On 1 March 2014, the minimum purchase price for foreigners buying properties in Kuala Lumpur was increased from RM500,
000 to RM1 million. Hence, if we use RM2, 500 per sq. ft. as a price gauge, a studio apartment of 500 sq. ft. can easily fetch RM1.25 million. According to DTZ Research, the third quarter of 2014 saw a healthy amount of new supply with the completion of another five high-end residential projects adding a total of 574 units to the market. For the first three quarters of 2014, a total of 1,892 units have been completed. The new completions in the third quarter were mostly located in the city centre, namely Brunsfield Residence@U-Thant (93 units), Madge Mansions (52 units), One@Bukit Ceylon (354 units) and an unnamed high-end residential development at UThant by Bandar Park Sdn Bhd (12 units). Only one development, Kenny Hills Residence (63 units) is located outside the city centre. Data from DTZ Research also shows that another 4,604 highend residential units are expected to enter the market by the end of 2014. Amongst the major developments expected to be completed in the fourth quarter of 2014 are The Elements (1,040 units) by Elite Forward, Sky Residence-Phase 2: Celesta & Divina (450 units) by SP Setia and Icon Residence (260 units) by Mah Sing Group. For locals who are thinking of buying a home in the Klang Valley area, it is best to get small units like a studio as they can be easily rented out and sold to both locals and foreigners as their quantum price will be within the range for both locals and foreigners. In addition, such units are limited in supply making them a rare find. According to DTZ Research, the high-end residential market in Kuala Lumpur saw marginal growth in the rental values. Average rents increased 0.7 per cent quarter-on-quarter, from RM3.59 per sq. ft. per month in the second quarter to RM3.61 per sq. ft. per month in the third quarter, Moving forward, average rents are expected to fall due to the almost 6,000 supply of new units will be coming on-stream in city centre from 2016 onwards. Also, data from National Property and Information Centre (NAPIC), showed that Kuala Lumpur has an existing stock of 434,484 units with an incoming supply of 53,394 units as of the fourth quarter of 2014. All these factors will put pressure on rental yields. For those who are thinking of renting out their properties, it is best to take a long-term investment horizon by focusing on capital appreciation. The luxury sector also saw marginal growth in capital values. According to DTZ Research, average capital values increased 0.7 per cent quarter-on-quarter, from RM758 per sq. ft. in the second quarter of 2014 to RM763 per sq. ft. in the third quarter. This is expected to increase marginally, barring any economic crisis. SELANGOR Areas near the MRT extension, spanning from Sungei Buloh to Kajang Line are expected to be popular among locals as it will ease their commute time to Klang Valley, where many jobs are
located at. In addition, there are still affordable properties that can be found here from below RM600,000 – well within the affordability price range for locals. For locals, buying a property near the upcoming MRT stations will increase the overall desirability, rental attractiveness, and capital values of your property as they will be in demand once the MRT line is completed in 2017. For foreigners, they might skip Selangor altogether. This is because there seems to be some sort of anomaly in Selangor’s property market as the minimum purchase price for foreigners has been increased to RM2 million effective 1 September 2014 in Zones 1 and 2. The two zones include the Petaling, Gombak, Hulu Langat, Sepang, Klang, Kuala Selangor and Kuala Langat districts. This is rather odd as the entry price in these areas are wellbelow RM1 million. As Selangor is located outside the Klang Valley area, the minimum purchase price here should follow Kuala Lumpur’s as not many foreigners will need a big space just to qualify for the RM2 million ruling. In view of this, foreigners may be better off buying a property in Kuala Lumpur instead where the entry price is around RM1 million.
SUPPLY
According to data from NAPIC, Selangor will have the largest incoming supply for new homes in Malaysia as at the fourth quarter of 2014 bringing it to a total of 157,450 units. Those who are thinking of renting out their units will face great competition once these units come on-stream in 2016 to 2017. Therefore, properties that are located close to the MRT lines will be very much in demand and can command higher asking price. Properties near to upcoming MRT stations with interchange stations such as Kwasa Damansara in Kota Damansara, Sungei Buloh and Kajang will be highly sought after. Kwasa Land Sdn Bhd is currently building a township in Kwasa Damansara for bumiputeras measuring 2,330 acres. The township will be served by two MRT stations and four expressways – NKVE, Guthrie, NSE and the proposed Dash Highway. In Kajang, a PR1MA housing project near the Kajang KTM and MRT stations are in the supply pipeline to be launched in the future starting from around RM158,000. Properties near to MRT stations generally command a five to 10 per cent premium in pricing compared to others. Download KL/Selangor Infographic athttp:// bitly.com/KACKL2015
ABOUT THE CONTRIBUTOR
Khalil Adis is the founder of property consultancy firm Khalil Adis Consultancy. Contact him at khalil@khaliladis.com
www.propertyinsight.com.my JUNE 2015 I 73
STRATEGY
FLIP OR HOLD: WHICH IS BETTER?
W
What kind of real estate investing should you do? If you’re a relatively new real estate investor, this is a question that would definitely come up in your mind. There are hundreds of ways to invest in the real estate business and if you keep digging up, you might find out even more. Out of all these ways, the most common and popular are the Fix & Flip and the Buy & Hold methods.
WHAT IS FIX & FLIP?
A fix and flip can be defined as a property which is purchased by an investor, fixed up and sold as fast as possible to gain some quick profit. It’s not easy to find great fix and flip properties and it’s also quite difficult to make money on them. The biggest challenge of the fix and flip method is that you need to find a property which is cheap enough and which can be sold at a decent profit. With the rapid improvement of the real estate market, it’s becoming increasingly difficult to find good deals. When you’re buying a flip, be prepared to pay not only the repairing costs, but also the carrying costs, selling costs and opportunity costs. This is something that the investors need to keep in mind.
WHAT IS BUY & HOLD?
Buy & Hold is a long term investment process. It involves buying a property, making possible improvements and keeping it for a long period time. For paying the monthly costs of utilities, financing, taxes, maintenance etc., it can be rented to a tenant. When the monthly costs are less than the rental income, the cash flow flourishes with monthly profit. In many cases, the investor might be interested to buy the property with a plan to 74 I JUNE 2015 www.propertyinsight.com.my
sell it at some point of time, but not very soon. So to be precise, Fix & Flip brings you quick money, Buy & Hold means a long term cash flow.
PROS OF FIX & FLIP INVESTING Time & Money
Flipping properties enables acquiring profit within a short period of time and it also does not tie up the investor’s capital for too long. Quick Profit
Buying, fixing and flipping a house can be done within 4-6 months and quick profit can be made in the process. The more experienced you get at flipping properties, the higher your returns will be. High ROI
Investing in property flipping brings a higher Return on Investment (ROI) if you can manage to flip the house soon enough. This is contrary to Buy & Hold investing where you’ll have to wait for a long period of time before making substantial profit. Market Fluctuations
Real estate markets are prone to fluctuation. But they fluctuate over time, not within a short term like the stock market. The whole process of Fix & Flip can be completed within six months from buying to selling. Within such as short period of time, your profits are less likely to be affected by fluctuation of market. of market.
CONS OF FIX & FLIP INVESTING Required Time to Become an Expert
You cannot just claim yourself as an expert in house flipping by
watching some online webinars or a few reality shows. It takes time and real world experience to be good at house flipping. So you need to choose the right education and seek out for mentors if you really want to make the most out of it. Unexpected Challenges
Even if you are an expert at house flipping, you are likely to face unforeseen situations such as unexpected renovation costs. Anticipating these ups and downs is just a part of the business. Greater Expenses Be prepared for paying transactional costs on both sides. When you buy, there are some costs, when you sell, there are some costs too. Finance and interest costs will accompany if you’re flipping houses without enough money of your own. The holding and transactional costs can highly affect your profits. Taxes
The tax implications for flipping houses are different than that of long-term investments. It is important to estimate your margins accurately and also factor the costs in your projections. Stamp duty and Real Property Gain Tax eat into your profit margin significantly.
PROS OF BUY & HOLD INVESTING Creation of Wealth
It is absolutely certain that you can amass great wealth through buy and hold investing. The value of a real estate property increases over the long term mainly due to the nature of inflation. The longer you hold the property, the higher is its potential for appreciation. Steady Income
When you are the owner of multiple properties, it is possible to build a steady stream of income from the rents. If you want to make the same steady income from house flipping, you’ll need to have a steady and continuous stream of house flip deals. This is basically the most attractive feature of buy and hold investing, that you’ll always have a reliable and steady monthly cash flow. Ownership Pride
It feels great to be the owner of a couple of properties knowing that they belong to you. Besides, you are also getting to help people who need a good home to stay. If you can have a good bunch of tenants who take proper care of your property and also pay on time, then buy and hold investment can be pretty sweet. No Rush for Immediate Sale
This is another big advantage of buy and hold investment. There is no hurry to sell it off immediately. The investor can wait until the market reaches a profitable stage. If you already have a steady monthly income and don’t need any emergency funding, you can hold on to the property as long as you want.
CONS OF BUY & HOLD INVESTMENT Market Fluctuations
In case of critical financial times, the real estate investor will have to sell the buy-and-hold property at the existing market price. If the market values are on the low side, investors might
have to sell their property at a loss. Beginners Beware
Long term real estate investment can be a good competitor of the stock market. But if you are a new real estate investor and not adequately prepared to deal with all the responsibilities of owning a rental property, you should think it over. Finding Good Tenants
It is an incredibly stressful and time consuming job to find good quality tenants, servicing them, assigning payment responsibilities, managing upkeep, etc. It requires time, energy and a lot of patience to find good tenants. Longer Appreciation Time
Market appreciation is what long term investors rely upon for making a profit, not capital appreciation. In case of buy-andhold properties, this appreciation does not accumulate over a short period of time. So the value of a long term property depends largely on the market than the landlord themselves.
CHOOSING A STRATEGY
Now let’s focus on the ultimate question. Which one should you choose? Fix & Flip or Buy & Hold? In order to choose a strategy, there are some critical questions an investor needs to answer. Is the allocation of capital permanent or a transient one? Or is it a part of an investment strategy expecting high returns? It is also important to understand the risk/return ratio of an investment, as well as the tolerance and skill level of the investor.
Depending on different market situations, however, one can be better than the other. For example, in the beginning of a housing/credit bubble, people were heated by flipping strategy as it delivered high profit with low risk. While at the end of a property crash, people started to hold for the next ride. If you start early when property market is at the bottom, you are free to choose and enjoy from either one or both strategies. If you start late when the market is peaking, you cannot avoid suffering from the coming crash with either strategy.
Comparing these two strategies is almost like comparing an apple to an orange, despite the fact that both of them fall under the overall heading of “property investment”. If you already have the skill set for both, then whether it is a better decision to flip or hold a property, depends completely on the market situation. It should be part of an investment strategy which takes your investment goals and opportunities presented by existing market into account. takes your investment goals and opportunities presented by existing market into account.
ABOUT THE CONTRIBUTOR
KC Lau and Dr Ong Kian Leong are both co-founders of the first ever online property investment course for Malaysians, called Property Method (www.PropertyMethod.com).
www.propertyinsight.com.my JUNE 2015 I 75
STRATEGY
3 REASONS WHY THE MARKET DESERVES TO SLOWDOWN
S
ince the start of the year, I’ve notice that the real estate market has somewhat quiet down a bit. A lot of people have asked me since, what my prediction of the market would be like. My genuine answer is “The market is plateauing at the moment, and… it is about time it did!” Now, I’m not a sceptic of the market, rather, all I am saying is that it’s about time the market consolidated and people took time to really digest what has happened in the market in the past few years. We have experienced one of the most exciting times in recent years, where we saw prices in some areas double, if not triple in value. Perhaps now is the time for us to take it all in and let the dust settle a little before the market starts to rally up again. Many people are concern when the market starts to slow down and many others are hoping the the upward rally will continue. My personal feeling is that it shouldn’t. The property market isn’t like any of the other commodity markets, like the stock market for example, at least not in Malaysia. There are many factors that can lead to the overheating of the real estate sector, and potentially leading to a meltdown. While I do believe we haven’t reached that level there, we are certainly having the potential of going that way. I would like to share my personal points of view why I say the market should definitely slowdown, and I’ve summarised it into 3 main points as follows:
1
ARE WE WORKING FOR MONEY OR IS MONEY WORKING FOR US?
We all know that the best reasons to invest into properties is mainly because of the ability for us to stretch our investment ringgit to the max. Just imagine this, with just RM100,000, most of us can qualify 76 I JUNE 2015 www.propertyinsight.com.my
to take a loan up to 10 times that amount, which is RM1,000,000! The leveraging factor is amazing for this class of investments. While we have experienced our loan-to-value ratios reduced tremendously to 70% since 2010, we can still buy 2 residential properties and take 90% loans before being capped. The alternative is also to buy commercial properties for investments, as the banks are willing to loan up to 80% of the value, giving us a 1:5 ratio for the value of our money. Now, of course we need to repay our loans, which means we need to allocate certain amount of cash for the monthly instalments. There have been many investors whom have looked for smart ways of taking on more loans, while minimising the repayment instalments as much as possible. Several ways in the past are like the DIBS schemes (which have stopped since end 2013), where the developer finances the instalment until the completion of the property. DIBS scheme was abolished in 2013 to encourage responsible lending. While it is a scheme in the past, I would like to use it as an example to share how this might be one of the property investment traps that exist in the market. Assuming Mr. Tan bought Property A, which has the following characteristics. Property Value = Rm500K Mr Tan took a loan of 90% at 6% interest for a 30 year tenure. Loan amount = RM450,000
Instalments borne by developer throughout the development period.
Instalments after property completed = RM2,698 per month. Upon getting CCC, the DIB scheme stops, and Mr Tan now has to pay the instalments in full. Now, whether you are selling the property or renting it out, you should consider adding just
a little bit or renovation to the unit to make it stand out from the rest. Let’s not forget, if you have bought it new, there are probably hundreds (if not thousands) of similar units going for sale and rent at the same time. However, putting this aside, if you were Mr. Tan, and you had an offer to purchase properties with little or no money down, and no financing required for at least 3 years, how many of such units would you buy? Perhaps you were the prudent one to purchase only one or even none. During the past 3 years, I assure you, there were quite a few that bought more than just one of these types of properties. Assuming Mr Tan was a little bit more aggressive, and went on to buy 3 properties of similar price, upon completion, he would need to bear an instalment of RM8,094 per month. Within 6 months he would have paid RM48,564 and in 1 year, RM97,128. Assuming even if Mr Tan earned RM10,000 a month, paying RM8,094 monthly would be a burden to him, yes? The simple term for this is over-leveraging. For many investors in this situation, what initially was the intention of making money work for you, turned out to be you working for money.
2
ARE WE INVESTING OR TRADING?
Now, you are probably asking, why would people like Mr. Tan invest so heavily into properties? Well, in
the past 5 years since 2010, we have seen the property prices escalate due to a surge of demand in the market. Where is this surge coming from? Is there a sudden burst of population or foreign migrants coming into our cities? Yes, and no. While the initial boom was triggered by real demand from home buyers, it was the later years of 2012-13 that we saw swarm of investors coming into the market, hoping to invest and make some money out of the real estate market. Places like Cyberjaya and Iskandar in Johor saw property prices rise to new highs, as well as development properties snapped up overnight. What was the intention of some of these investors? While I am only speculating, I believe there was a mix of intentions. Some of these investors were in for the potential returns from renting. However, my feeling is, most of them were interested in the potential capital gains. In other words, to buy and sell quickly to make a quick buck. So, why would people like Mr. Tan buy so many properties so suddenly? Probably to sell one or two off quickly, for capital gains, since he notice that the property market was on an up cycle. If Mr. Tan were to expect a 30% gains, he would expect to sell his property, which he bought at RM500K, at about RM650K within 3 years. Now here’s the thing, in 2013, our government reinstated the real property gain tax (RPGT) to 30%. If Mr. Tan were to sell his property now, he would make almost nothing from it, forcing him to reconsider holding it a little bit longer to make a fair amount of gains from the investment. Now, remember, Mr. Tan has to pay RM8,094 per month for 3 of his properties, and if he is not ready to put in more money to do up the place to rent, or ready to hold it for a longer term, he might just get caught in a fix.
I guess this is where I draw the line between investing and trading. To me, there are much deeper fundamentals in real estate investment that a person must understand, in order to get the best value out of it. If a person were to ask me how I evaluate the property to determine its value, my answer would be, I do not. There is little or no true value in the property itself, rather, how the property serves the market, the population and the needs of the target market in the location where it is situated at the right timing that brings true value. All these factors do take time to study and understand before one makes a solid judgement of whether to invest or not in the properties in the said area. I call this Value Investing. I felt that in the past years, a lot of investors have missed this point completely, and have rushed into deals without truly understand its value. When this happens in a large scale, it creates a mob effect, hence surging the market forward without any true fundamentals.
3
REAL ESTATE IS LIKE WINE
This comes to my final part. Hearing all that I have said, perhaps one might be asking now, does that mean a
person like Mr. Tan is going to lose his money? The answer is “Maybe”. While the situation may sound morbid, the good news is that the property market, especially in Malaysia is rather forgiving. If Mr Tan were to be able to hold through, the market may eventually settle and start to pick up again. I would like to defer my view a little from those who are sceptical about the market. While i do believe that we are going thru a period of adjustments in the market, and we are seeing and expecting the market to be slower in months to come, I am rather confident that the market will start to pick itself up again. There is a short term over supply in the market, and while this may be present, I do believe, in the longer term, there is still real demand. Holding the local and global economy factors constant, the need for a place to stay will continue to be there. On a longer term prospective, I do believe that property is like wine. Unlike any other types of investments, there is true economic value in real estate, and given time for it to mature, real estate will eventually serve its rightful place in fulfilling the needs of the population. So for the impatient few, perhaps it is time to reset your outlook on the properties you have bought and look on a broader horizon to see how to bring the best value out of them. A market slowdown isn’t necessarily a bad thing. Perhaps, similar to wine, this is just an ageing process to boost up the value of real estate.
ABOUT THE CONTRIBUTOR
Michael Tan is an entrepreneur, investor, speaker and coach. He is the founder of Freemen, which has the largest life changing network through property investment in Asia, being no.1 in Malaysia, Thailand and Hong Kong. He can be contacted at michaeltan@freemen.com.my
www.propertyinsight.com.my JUNE 2015 I 77
STRATEGY
YOU DON’T HAVE TO BE THE BEST OF FRIENDS
Let’s be clear of one thing, as a landlord, your tenants are your customers. They are not your friends but that doesn’t mean you can’t be friendly. Being friendly is fine but being friends is not. There is a major difference between being friendly and being friends. Long-lasting tenant-investor relations can be developed when you keep a fair distance to allow for both personal and professional relationship. In many normal situation, respect does not just happen overnight. You would have to work a fair bit on it to earn the right to be respected and this is the case for many landlords, even though a landlord is in a position of authority. Tenants will respect you when you treat them as your customers fairly and appropriately. Another way to earn their respect is to help sort out the problems they face while renting your property promptly and efficiently. Listening to your customers is vital because it is a sign of respecting your customers. Respect is lost when you don’t respect your customers. You should communicate the reasons for your disagreement politely and justly if you don’t agree with what they are saying. Though some will tell you, ‘the customer is always right’, there is another saying, ‘give them an inch and they will take a mile’. Be wary when tenants try to overstep the mark and be clear about your position. Building open and honest communications with tenants enable you to create a strong working partnership and it should stay that way. Your tenants have made a home in your property and they pay rent to you every month for the privilege of having a shelter over their heads. 78 I JUNE 2015 www.propertyinsight.com.my
You need that rent so that it can help you in property investment. This is especially true when you’re renting property. It’s a two-ways street where you need your tenants as much as they need you (and your property). That is why this situations demands mutual respect. Building good relationship is hard work. Just like a property, it will require maintenance. Don’t forget to add the human touch. It doesn’t take much effort to remember to send a New Year card, or to occasionally ask how your tenants are doing rather than just treating them only as customers. There are times when things are bumpy, but don’t forget your customers as they are also people having their own set of challenges in life. Take interest in them ask about how is their work life or how little Jason is getting on (it’s always good if you remember the names of any kids or pets, so write them down, together with other key points about your tenants, and keep them on file to nudge your memory). It doesn’t have to be a conversation in great detail or to take a lot of time, but it’s important to show you care – and for them to know you care. Your tenants are part and parcel of your property investment, so make sure you are approachable and professional in all your dealings.
ABOUT THE CONTRIBUTOR
KK Chua is the publisher of Property Insight magazine. He is also a registered real estate agent and an investor with more than 10 years of experience in the industry. He can be contacted at kkchua@propertyinsight.com.my
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