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SEPTEMBER 2017
C OVER STORY
BÖN-DING GENERATIONS THROUGH REALTY BÖN ESTATES SDN BHD’S
GOH SOO SING SHARES ON ITS LATEST BÖN KIARA PROJECT
CELEBRITY CORNER
Versatile violinist Dr. Joanne Yeoh favours minimalist designs
MAIN FEATURE
BATTLE FOR SURVIVAL
Are shopping malls in the country still able to hold out, given the glut situation?
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Publisher’s Note
Rich Investor, Poor Investor
T
he challenge of investing in property is never an easy one. Just as it can prove to be ultimately rewarding and profitable, the wrong investment decision in buying property can also result in less feasible situations which could lead to decline in rentals or units not being able to be rented out – and in a worst case scenario – foreclosure of the said property. This is in the event buyers are unable to cough up enough to pay off the monthly loan repayments. In this issue, Property Insight takes you through the ups and downs and highs and lows of property investing while exploring the intriguing property market cycle. In between the pages - power-packed with insights and property investment exploits, there are success stories and also those of overcoming challenges. No one promises an easy ride in the world of property investment but given a little luck, plenty of research and analysis into the properties at hand, learning from industry specialists tempered with some degree of foresight into the future, more often than not, would yield positive results. As property is a long term game, those intending to invest for the extended period can also consider buying into BÖN Estate’s legacyinducing 100-year homes in South Bangsar built upon the concept of employing energy-efficient material fit-outs designed to achieve
2 I September 2017
passively-cool residences. The luxury boutique development promises century-lasting living with low shading and co-efficient single-glazed windows and light-emitting diode (LED) lighting for sustainability. Hence, it builds upon the concept of continual improvement from traditionally built residences. Read about the Penang-based developer’s maiden foray into South Bangsar (Turn to pg 12 - pg 17). Thriven is another developer which takes the cake as the Developer of the Month with its series of projects aimed at exceeding expectations. This comes as no surprise, given its niche and thoughtful offerings which again exemplify building upon good principles to deliver greater results. (Turn to pg 32 - pg 36) At the end of the day, the battle doesn’t belong to the brave or brainy. The savviest of developers know that at day’s end, timing, chance and an interplay of both internal and external factors, coupled with common sense combined, will determine destiny’s final outcome. Till next month, happy investing! Dato’ KK Chua Editor-in-Chief
Editor’s Note
EDITORIAL Editor-in-Chief Dato’ KK Chua kkchua@propertyinsight.com.my Editor Yvonne Yoong yvonneyoong@propertyinsight.com.my Writers Mages PV Lingam Felicia Soon
CREATIVE Tale of Two Cities Revisited “A Tale of Two Cities. It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us,” so goes Charles Dickens’ famous opening lines. In many ways, modern-day life too revisits the duality of things in much the same context. Time has a way of descending upon us in an almost stealthy fashion while disposing a sense of opposing disparity – where good and bad intermingle quite coherently. Bad news of a market downturn for instance, can be a bright spot for investors looking for lower-priced properties – hence rendering that time-old truth of finding that silver lining in the clouds saying to be true. This also brings to mind the Chinese character for crisis denoting the words danger and opportunity combined which show how the ancients saw the dual nature of things present in many contexts. Perhaps my favourite interpretation lies with Rick Warren’s notion that “Life is like a set of railroad tracks”. The famous author of the book “The Purpose Driven Life” states explicitly:“Rather than life being hills and valleys, I believe that it’s kind of like two rails on a railroad track, and at all times you have something good and something bad in your life. No matter how good things are in your life, there is always something bad that needs to be worked on. And no matter how bad things are in your life, there is always something good you can be thankful for. You can focus on your answers, or you can focus on your problems.” Thus, life is not a series of mountaintop or valley experiences but rather one in which the good and bad occur simultaneously. The obvious answer is in your hands. So, when it comes to that property decision of either lowering rentals given the downturn rendering it a renter’s market or to hold on to that piece of property given that property is a long term game, those with holding power, will be quick to revisit the adage, “Cash is king”. So, as the annals of history revisits itself in the modern context of the 21st century, it is the best of times and the worst of times combined once again. The onus is on you to choose the former. Till next month, happy reading!
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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.
4 I September 2017
Goh Soo Sing
Managing Director, BÖN Estates Sdn Bhd
THE 100 MOST INFLUENTIAL YOUNG ENTREPRENEURS (#100 MIYE) acknowledges bold, creative and innovative young Malaysian entrepreneurs below age of 45, who set the standards of Malaysia’s enterprising spirit. If you are one of these outstanding personalities who run incredible ventures, we want to honour you on 21st July 2017 at The 100 MIYE 2017 Gala Dinner with the publication of our book.
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Presented by
Contents
COVER STORY
12 | BÖN-ding Generations Through Realty
BÖN Estates Sdn Bhd Goh Soo Sing shares that his company’s objective is to make sound long term investments that would benefit families in the future
CELEBRITY CORNER
18 | Versatile Violinist Dr. Joanne Yeoh favours minimalist designs
A stroll through Dr. Joanne Yeoh’s Subang Jaya abode reveals her zest for interior design
FEATURE
21 | Battle for Survival
Are shopping malls in the country still able to hold out given the glut situation?
26 | IPC Shopping Centre: Powered by Redevelopment
Despite the downturn, this long-established mall continues to reinvent itself to stay relevant while keeping abreast of the latest trends in order to continue to thrive
28 | Right Time to Sell
Selling your property at the right time will help you to gain higher capital appreciation
30 | Strata Management Tribunal
Things about the tribunal that you need to know
DEVELOPER OF THE MONTH
32 | Thriven - Driven to Thrive
In an age where developers build incessantly without regard for the environment, Thriven literally walks the talk with its complete ecosystem which continues to add value, even way after delivery
12 This celebrity investor next door shares her experience in property investment
ENTREPRENEUR INSIGHT
52 | Overcoming Challenges of New Start-ups
JJ Delgado shares on some of the challenges faced by entrepreneurs in growing new start-up ventures
INDUSTRY INSIGHT
54 | Anchored in Architecture
RSP Architects Malaysia Managing Partner and Design Director Ar. Hud Bakar wants to continue to deliver value and set higher design standards for the nation
ROOKIE INVESTOR
56 | Planning for Your First Property Purchase
AREA FOCUS
Failure to plan is not an option when it comes to investment in such a big-ticket item as real estate as shared by this Rookie Investor
38 | Rejuvenation of Damansara Jaya
INTERNATIONAL INSIGHTS
This mature township has reinvented itself to remain relevant to the needs and demands of today’s generation
43 | Area Focus Food Trail
58 | Have You Done Your Homework Before Investing Overseas?
5 hidden eatery gems at Damansara Jaya. Check it out
When considering an investment in overseas properties, one should first weigh in on the advantages and disadvantages of such purchases
PERSONALITY OF THE MONTH
INVESTMENT TALK
44 | Moving the Indonesian Real Estate Fraternity Forward
60 | The Evolving Property Market Structure
Real Estate Indonesia (REI) Chairman Soelaeman Soemawinata shares about the property industry in his homeland Indonesia
STRATEGY
47
63 | Property Prices Have to Fall by 51% to be Considered
HOME +
66 | Basics of Borrowing
48 | A New Design Star is Born
68 | How I Lost RM1.2 Million in Property Value
| Property Nuggets Sideline on Property News
The First Malaysian Curated Design Showcase of Interior Design, Products and Objects
Affordable. So, Do We Still Wait Before Buying Property?
70 | You can’t have it all
INVESTOR NEXT DOOR
FINANCE
50 | Seeking the Right Property Match
64 | Real Estate Investment, Really?
6 I September 2017
NEWS & EVENTS
CATERING TO BUMIPUTERA ENTREPRENEURS
T
he inaugural Konvensyen Usahawan Bumiputera (KUB) held recently on August 12 at the MATRADE Exhibition and Convention Centre in Kuala Lumpur attracted more than 3,000 participants from all across the country. The full-day convention saw prominent Bumiputera speakers take to stage to present their talks on areas of their expertise. Among them were Datuk Wira Dr. Hj Ameer Ali Mydin, Managing Director of MYDIN Mohamed Holdings Bhd who shared on his earlier struggles and never give up attitude in upholding his father’s business legacy until he finally found success decades later. Dato’ Aliff Syukri, Founder of D’Herbs Holdings who has hundreds of properties to his name and who is famous as the entrepreneur who came
up with the collagen lipstick also inspired the crowd with his inspirational success story - making him the ultimate zero to entrepreneur hero. A panel of other illustrious speakers also imparted gems of insights with the enthusiastic crowd who mostly stayed back till the end of the event. They also took the chance to meet their entrepreneur heroes and took wefies with them. The convention which was organised by Entrepreneur Insight ended on a high note, with many in the crowd still lingering after the event was over. Entrepreneur Insight Founder Dato’ KK Chua also took to stage to inspire the crowd to persevere in their journey to becoming successful entrepreneurs. The main sponsor for the event was Sunsuria with support from MATRADE and Jabatan Kemajuan Islam Malaysia (JAKIM).
September 2017 I 7
NEWS & EVENTS
SULTAN OF SELANGOR VISITS PAM CENTRE
The Malaysian Institute of Architects (PAM) hosted a royal visit by Sultan of Selangor DYMM Sultan Sharafuddin Idris Shah Alhaj Ibhi Almarhum at its PAM Centre recently. The iconic structure and provisional platinum-certified green building on Jalan Tandok, Bangsar was inaugurated by His Royal Highness Sultan Sharafuddin who was attended to by PAM President Ar. Ezumi Harzani Ismail and Past PAM President and Chairman of the Organising Committee Ar. Saifuddin Ahmad. Also present were Council Members of Architects Regional Council Asia (ARCASIA), members of the International Union of Architects Congress (UIA Congress) and Past PAM Presidents. His Royal Highness launched the hardcover coffee table book profiling PAM’s journey in attaining its own centre
entitled “In The Eye of The Storm”. The four-storey PAM Centre aims to be an example of a green building emphasising five key designs embodying timelessness, sustainability, practicality, innovation and economic viability. “The building was not only designed in line with PAM’s aspirations as a centre for architectural advancement and development but also takes into account the environment, culture and society with a timeless and minimalistic approach in overall design and detailing,” says Ar. Ezumi. The final design of the PAM Centre was the result of a design competition. “We want to inspire future generations to dream, design, build and lead the building industry by building a top-notch facility such as the PAM Centre,” he adds.
LAUNCH OF SKYAWANI III SkyWorld Development Group (SkyWorld) achieved another milestone with the launch of its latest SkyAwani III development recently. The airllinethemed event was hosted by Skyworld Founder and Group Managing Director Datuk Ng Thien Ping and officiated by Mayor of Kuala Lumpur Datuk Seri Mohd Amin Nordin Abdul Aziz. “SkyWorld is the largest contributor of the Federal Government’s affordable housing (initiative known as) Rumah Mampu Milik Wilayah Persekutuan (RUMAWIP),” says Datuk Seri Mohd Amin at the gala dinner. SkyAwani’s 2,500 purchasers who attended the event were treated to a delicious dinner with lucky draw sessions and catchy dance performances.
M101 CHAMPIONS PROPERTY TOURISM M101 Holdings Sdn Bhd (M101) recently flagged off the debut of its history-making M101 Skywheel Design Suites by Studio F. A. Porsche with Dato’ Seri Mohamed Nazri Abdul Aziz, Minister of Tourism and Culture Malaysia officiating the event. Local and international guests from Hong Kong, Taiwan, Indonesia, Singapore, China, Japan, Korea, Philippines, Brunei, Sri Lanka, India and Bangladesh toured the show unit at its showroom gallery located on Jalan Yap Kwan Seng, Kuala Lumpur. Guests at the glitzy night event were treated to a grand finale fireworks display. Complemeted by the world’s first Sky Ferris Wheel on the 52nd floor of the iconic development, the Design Suites will offer breathtaking views of Kuala Lumpur city skyline at 300 meters above ground when completed. The developer has also taken the innovative step to champion property tourism by partnering with international brands such as Studio F.A. Porsche and Planet Hollywood.
8 I September 2017
FAJARBARU LAUNCHES RM280 MILLION GDV RICA RESIDENCE @ SENTUL, KL Fajarbaru Builder Group Berhad (Fajarbaru) launched its maiden residential property project – Rica Residence at Sentul, Kuala Lumpur. The launch was graced by Datuk Seri Utama Tengku Adnan bin Tengku Mansor, Minister of the Federal Territories. Speaking after the launch, Fajarbaru Builder Group Berhad Executive Director Eric Kuan Khian Leng says that the company has to date already achieved 70% sales during its private preview roadshows. The response and support received were positive which showcased market confidence in the projects by Fajarbaru. In addition, the number of sales generated so far is also a testament to the quality of its project. “We still have more projects to be launched and we look forward to introducing more innovative projects in the near future,” he adds.
RIX 2017 EXPECTS TO ATTRACT OVER 60,000 VISITORS
AN ENGAGING EXPERIENCE AT BÖN ESTATES’ BLOC PARTY BÖN Estates Sdn Bhd’s different approach to its development resonates with true value measured not just by the quality of the property but also the lifestyle it provides. The company’s dedication to providing harmony, synergy and sustainability within the project’s environment has been exemplified by the success of its flagship project named The Estate @ South Bangsar. “People are at the heart of what we do at BÖN Estates and so, it makes sense to involve them in the process. We are taking our next project to a different level by inviting young buyers to be involved from the very onset, including them in the conceptualisation process so that they have a say in how they want to live in the future,” says BÖN Estates Managing Director Goh Soo Sing. Creating an exciting atmosphere in order to drive this effort, BÖN Estates organised its first-ever collaborative development initiative in the form of the Bloc Party held from July 21 -23 which enabled young professionals and first-time home seekers to share their aspirations in a fun-filled environment.
REKA Interior Exhibition (RiX) - the first Malaysian curated design showcase of interior design, products and objects themed “Design Infinity – No Boundaries” will be held concurrently with the Home Decor and Design Exhibition (HOMEDEC) Part One from October 19-22 at the Kuala Lumpur Convention Centre. Malaysian Institute of Interior Designers (MIID) Vice President Ooi Boon Seong and MIID Council Member Lai Siew Hong are the appointed joint curators of RiX. Their role is to allow visitors to fully experience the concepts on display with the aim of inspiring them to adopt these innovative ideas for design solutions. The institute’s collaboration with HOMEDEC will enable exhibitors to showcase their design-driven products while providing a comprehensive overview of excellence and innovation in design. RiX is anticipated to be a major attraction for the hugely popular HOMEDEC exhibition which expects to attract more than 60,000 visitors. The event is jointly organised by C.I.S Network Sdn Bhd – a leading, award-winning Malaysian trade and lifestyle exhibition organiser – and MIID REKA Sdn Bhd (MRSB), a subsidiary of MIID.
September 2017 I 9
NEWS & EVENTS
ARCHIDEX 2017 GENERATES OVER RM1 BILLION IN TRANSACTIONS The 18th International Architecture, Interior Design & Building Exhibition (ARCHIDEX) took place at the Kuala Lumpur Convention Centre recently. More than 36,000 people visited the exhibition halls to discover the latest innovative solution. This year’s instalment saw an increase in transactions to over RM1 billion. Jointly organised by the Malaysian Institute of Architects (PAM) and C.I.S Network Sdn Bhd, ARCHIDEX is a key component of the annual Kuala Lumpur Architecture Festival (KLAF) — an annual celebration of architecture and design which ran from July 4 to Sept 30. “Through constant improvement, strategic growth and a strong vision, ARCHIDEX consistently delivers its promise to support and grow this industry beyond borders. And today, what was once a local exhibition has been transformed into one of Malaysia’s largest and most successful trade exhibitions, and a recognised exhibition in the ASEAN region,” said Sr Ratna Hj Mahyuddin, Deputy Director General (Specialised Sector) of the Public Works Department, Ministry of Works during the official opening ceremony of the event.
SETIA ECOHILL SINGLE-STOREY BUNGALOWS AT KINGSVILLE UNVEILED
OVERVIEW OF PROPERTY MANAGEMENT TIME BOMB SEMINAR The Property Management Time Bomb Seminar 2017 titled “Strata Management – Have We Solved Our Problems Yet?” was held recently at Eastin Hotel, Petaling Jaya. FIABCI Malaysia and PPK Malaysia (Malaysia Shopping Malls Association) have been coorganising the above series of seminars since 2007 and the 2017 edition with be the 9th in this popular series. The seminar highlighted on the issues of strata management in Malaysia, especially looking at the problems since implementation of the Strata Management Act (SMA) 2013 and the Strata Management (Maintenance and Management) Regulations 2015 in June 2015. Other topics include the hot issues from a developer’s viewpoint, the concept of limited common property and the legal provisions for the creation of a subsidiary management corporation. In addition, participants were also apprised on updates in the Tribunal through actual real life case studies, perspectives and feedbacks.
10 I September 2017
S P Setia recently unveiled its debut collection comprising single-storey bungalows at Setia Ecohill’s Kingsville. The English-inspired architecture with a touch of modern colonial-style homes features an open design concept. “The demand for single-storey bungalows is high although supply is rather limited. As the market leader in the property segment, we saw the need to build homes which the market needs,” says Setia Ecohill General Manger SM Koh. The project comprises a total of 184 units in three phases. Phase One comprises 59 singlestorey units and 16 units of one-and-a-half storey bungalows with prices starting from RM1.28 million. The township’s first commercial project in EcoHill Walk is expected to be completed by 3Q17.
CENTRAL I-CITY SECURES MRCA MEMBERSHIP Central Pattana Public Company Limited (CPN)’s maiden international regional shopping centre, Central i-City recently became a member of the Malaysia Retail Chain Association (MRCA). “We are thankful to receive this membership effective July 2017. This will provide us with the opportunity to capitalise on the collective experiences and resources of Malaysia’s premier and dynamic group of retail experts,” says CPN Ventures Sdn Bhd chief operating officer Anthony Dylan. He adds that by obtaining this membership, CPN hopes to champion the shopping centre’s “landlord-retailer synergy” through interactive and appreciation initiatives such as retailer familiarisation trips to Thailand, tenant announcements and briefings as well as media exposure, among others. “This will help facilitate a better understanding between retailers and stay cognizant of their needs and expectations,” he adds.
Cover Story
BÖN-DING
GENERATIONS THROUGH REALTY BÖN Estates Sdn Bhd Goh Soo Sing shares that his company’s objective is to make sound long term investments that would benefit families in the future By: Mages P V Lingam
B
ÖN Estates Sdn Bhd Managing Director Goh Soo Sing, a young and passionate developer, had much to say during Property Insight’s recent visit to the swanky sales gallery located off Jalan Maarof and situated on Jalan Penaga in Bukit Bandaraya, Bangsar in Kuala Lumpur. Goh, 34, who hails from the Pearl of the Orient, majored in Accounting and Finance at the London School of Economics and was attached to the banking sector in London. Thereafter, he realised that this professional career route was not his cup of tea and came back to Penang to concentrate on his family’s construction business. The family’s maiden residential development venture in Gelugor, Penang comprised three-storey terraced houses going by the name Minden Garden Residence and White Lily.
12 I September 2017
The Estate, Bangsar LakeView
White Lily comprises 73 terraced residences while Minden Garden Residence consists of 94 units of terraced and semi-detached residences – concepts which proved a hit back then. Initially, Goh faced some difficulties during his early years as a new developer in gaining the confidence and attention of the bankers and related stakeholders. Nevertheless, he managed to move forward with the sheer power of perseverance coupled with a focused mindset. Goh felt that the family’s existing construction company PPM Realty Sdn Bhd – established since year 2009 -needed a change in perspective and vision. PPM Realty Sdn Bhd was rebranded to what is now an exclusive boutique development company named BÖN Estates. Originally based in Penang, the company is now based in the Klang Valley in a move to concentrate on developing its upmarket land banks that are mainly located in South Bangsar and Mont’ Kiara in Kuala Lumpur. “We found this ideal parcel of land in South Bangsar. We wanted our name to present a dynamic appeal to the younger generation,” adds Goh.
THE COMPANY AND THE CRAFT
“BÖN Estates, with the ‘BÖN’ brand crafted from an in-depth philosophy hailing from the Tibetan culture, inculcates the union of five natural elements representing holistic living amidst nature-like surroundings,” says Goh. September 2017 I 13
Cover Story
The developer stands apart from other developers with its different highend project and hands-on approach as evident in its flagship project launched called The Estate. Being the new kid on the block didn’t stop BÖN Estates from winning Property Insight’s Prestigious Developer Awards 2017 (PIPDA) under the category of “Best Luxury High Rise Development”. The freehold niche development comprises a low-density, luxurious project sited on a 3.68-acre parcel along 112/h Street at the Bangsar locale. Uniquely, The Estate is designed for generations of families to stay together under one roof. Each floor houses four units per floor. The two 46-storey towers contain a total of 328 units. The dualkey concept is one of the many features offered by the developer to its buyers. Furthermore, he adds that the units are competitively priced from RM800 psf, which is reasonable as compared to nearby high-rise developments commanding between RM900 - RM1,200 psf. The development, which has a gross development value (GDV) estimated at RM650 million, is expected to fetch rental yields of between 6% and 10% which is considered attractive to investors. Goh shares that 90% or the majority of The Estate purchasers comprise professionals, business owners, savvy investors and elite families buying for their own stay. Retirees in their 50s, he adds, also prefer downsizing to live in a comfortable unit instead of a large bungalow. The majority of high-end segment buyers are locals from the Klang Valley who anticipate significant capital appreciation over time at this eco-modern living sanctuary. This prestigious project is expected to be completed by the fourth quarter of 2020.
LARGE UNITS FOR THE FAMILY Typically, standard units with built-up sizes ranging from 2,346 - 3,110 sq ft come with options of 4+1 bedrooms while dual-key units, which make up 40% of the project, come with 5+1 bedrooms layouts. The development’s eight penthouses with built-up sizes averaging 4,187 - 7,057 sq ft are priced at RM5.8 million. 14 I September 2017
Facilities here include a 3,000 sq ft gymnasium, yoga room, meditation room as well as child-friendly facilities such as an open play area with a sunken lawn, custom play area and an indoor playroom. Amazingly, the development has five pools which comprise two sky pools at each tower, a lap pool, family pool and kid’s pool. Sky decks at both towers come with a barbecue area,
dining area, lounge area, party rooms and a dipping pool as added features for the exclusive twin towers. Renowned landscape architectural firm Seksan Design Sdn Bhd will undertake the landscape design for the development while incorporating the ‘BÖN’ elements to liven up the surroundings for the buyers. Already, he shares that more than 65% of the units
Top Left: Resort-style Lobby Top Right: Lobby Area Middle: Living Room
have been sold. “We conducted a thorough study on the feasibility of the demand and supply considerations for the project. Even the planning of desirable materials used for the units were carefully selected from top-notch suppliers to give the best value-added features for buyers that is worthy of every penny,” shares Goh. He adds the company aims to build
long-term sustainable homes that are aligned with its mission and objectives. Quality of workmanship with essential products like sanitary fittings, full brass taps, Polypropylene-random piping right down to granite tiles and engineered wooden flooring or marble finishing seals its reputation for excellene. In addition, the project was rated with a Building Sector Energy Efficient Project (BSEEP) by United Nation Development Programme (UNDP) and Jabatan Kerja Raya (JKR). The contractors and supervisors involved in the construction comply with Qlassic standards which have the Construction Industry Development Board (CIDB) certification. “The Estate was launched despite the slow market. We saw a gap in the market in a prime location like SOUTH BANGSAR,” says Goh. The developer also believes in being firmly rooted in order to build sustainable homes and be known as an enabler to provide a better quality lifestyle for the community at large. “BÖN Estates’s mission is to be known as crafters of good living and community builders,” asserts Goh.
MOVING INTO MONT’ KIARA
After witnessing the sweet success of The Estate project, the developer is now
confident and determined to create a new platform of opportunities that would enable the younger generation, especially the Millennial-generation, to get involved in entrepreneurial and lifestyle activities. This can be seen translated in its fouracre BÖN Kiara mixed development project located in Mont’ Kiara offering a sneak preview of its project with a different streak. Ultimately, BÖN Estates is keen to entice buyers with commercial elements that complement lifestyle components including incorporating spaces for cafes, gardening or natureinspired eco-systems. At a recent event, The Bloc Party, a prototype layout based on a fact-finding survey to invited guests served to gather feedback on ideas and expressions by potential investors on building something within a physical space. The survey serves as an incentive for young home seekers to participate and express their ideas to win a trip for two to Bangkok or to win a home at BÖN Estates’ exciting new project in Mont’ Kiara. “The price bracket for BÖN Kiara would be between RM400,000 to RM800,000. The market survey was very effective which saw about 1,200 people participating. We’re targeting firsttime home buyers who have financial September 2017 I 15
Cover Story
The Estate, Bangsar building view
lifestyles to encourage a holistic symmetry such as “Grow Your Greens” programme at BÖN Kiara. Subsequently, it would promote best practices in waste management as well as enlighten a community on ways to put waste to good use by turning it into fuel for energy-savings or towards achieving sustainability. In the long run, Goh shares that its existing land banks located on Penang island spanning about 200 acres could be utilised for the hospitality sector in the future. There is no rush to develop this as he feels that the land would appreciate well when held for the long term. Another land bank is located in Bangkok, Thailand. BÖN Estates prefers to be selective in their projects by choosing the right place for its upcoming distinguished landmark developments.
BEATING THE ODDS
support,” adds Goh. Due to the strategic location in a matured neighbourhood, buyers can expect excellent rental yield and immediate capital appreciation of approximately 20% for its high-rise development located on freehold land in time to come. The 40-storey tower with units ranging from 650 sq ft to 1,200 sq ft he says will be the next happening project in the high-segment enclave of 16 I September 2017
Mont’ Kiara. “We have engaged in a joint corporate social responsibility (CSR) initiative with EPIC Communities, a community-driven non-governmental organisation (NGO) which shapes unified communities by creating a cooperative, resilient and sustainable living environment,” shares Goh. This partnership will shape many activities that promote green concept
Despite being young and strong-willed, Goh says he faced many hurdles in his real estate journey. In the beginning, it was tough to get people including contractors, bankers, lawyers and even buyers to believe in his vision for the company. Undeterred, he strived diligently to gain the confidence and trust of the stakeholders. “If I continue to fight for what I believe in and am consistent in my efforts, then people will eventually realise my serious commitment to property development over time,” asserts Goh. He recalls the moment the breakthrough occurred when Malayan Banking Bhd (Maybank) agreed to finance the project’s RM300 million bridging-term loan and opened doors for the company’s flagship project - The Estate - and the rest, as they say, is history! Goh has a team of young and innovative people under the sales and marketing team who directly handle the clients. Having direct communication with potential buyers is seen as a forward
moving strategy in BÖN Estates. “Risks can be minimised at work stations by hiring the right person with the right attention to details for the execution of projects. If there are any mishaps, the site manager needs to play his role. I believe in job delegation and taking responsibility,” adds Goh.
POSITIVE FUNDAMENTALS
Goh believes that the right mindset and continuous learning from more experienced seniors and bosses from previous companies that he worked at has shaped him to be more constructive in delivering on the company’s promises.
On the work front, Goh looks up to his project director Liew Kok Earn who has vast experience. Having been trained from Taiwan to set parameters on timelines for projects, he also regularly keeps up with open discussions on work related matters with Liew. His parents too have played an integral part and set positive influences in his growing years. The recent book Goh read is by author Elon Musk which has taught him not to give up easily and if there are problems, to persevere and eventually find solutions.Goh is always encouraged to do the right thing at the right time. In conclusion, Goh looks forward to realising his ideas in the real world.
“
The Estate was launched despite the slow market. We saw a gap in the market in a prime location like SOUTH BANGSAR” - Goh Soo Sing
September 2017 I 17
Celebrity Corner
Versatile Violinist Favours Minimalist Designs A stroll through Dr. Joanne Yeoh’s Subang Jaya abode reveals her zest for interior design
By: Mages PV Lingam
18 I September 2017
the tender age of four in being able to pick up musical notes quicker than her peers. Her father plays the guitar and violin while her mother plays the piano. Her parents’ musical abilities have enabled Yeoh to continue developing and nurturing her natural talents.
AN EARLY START
I
nternationally acclaimed violinist extraordinaire Dr. Joanne Yeoh Pei Sze recently opened her doors to Property Insight at her home in Subang Jaya. Yeoh, who lectures for six hours per week also plays at exclusive functions and teaches violin as well as piano lessons and is an external examiner attached to Trinity College London in UK. She is also an Associate Professor who also heads the music department at Universiti Putra Malaysia (UPM) in Serdang. Yeoh never fails to mesmerise the audience by playing her soothing classical instruments and is highly sought after by music enthusiasts here and overseas. It was Yeoh’s mother who first spotted her elder daughter’s musical ability at
“At 16, I knew I would be involved in music and decided to pursue this as a career. I started paying more attention by practising often and being involved in events to elevate my confidence level,” shares Yeoh. She still plays the violin with a small group of friends on a weekly basis - concentrating only on classical music. In 1998, Yeoh completed her FirstClass Bachelor’s Degree from Middlesex University, in the UK and was awarded a Luther and Ernest Gaunt scholarship to complete her Masters in Music from the University of Leeds, UK. She returned home to Malaysia and began teaching at UPM from year 2000. Yeoh later pursued long-distance studies with Heriot-Watt University in Scotland for her doctorate, undertaking PhD in Applied Psychology (2009) a case study on the psychology of
music affecting consumer behaviour. Yeoh reveals that she likes watching cartoons and enjoys fried spicy food like curries. Having said that, she never fails to exercise to maintain a healthy lifestyle. She also joins her church members to exercise and run along with autistic children from the community and is also an avid badminton player. “I have produced two albums called Pulse of the Metropolis (2005) and After a Dream (2014). The music produced by Yeoh says is based on original compositions and she prefers not to be tied up to any labels.
A PLACE CALLED HOME
The house in which Yeoh resides now in Subang Jaya was purchased by her late father 40 years ago. The then oil palm plantation company Sime Darby Group developed this enclave in Subang Jaya and transformed it into a thriving township. “My father bought this house for only RM53,000 but it has appreciated close to RM1 million,” shares Yeoh. The freehold double-storey 22ft by 80ft residence is spacious enough, and is now partially September 2017 I 19
Celebrity Corner
owned by Yeoh and her younger sister Pei Ann with their mother. Yeoh views the house as a good investment for the family. “I didn’t engage any interior designers but refurbished the house with a stepby-step extension of the kitchen and front yard, making sure the squeaks and creaks don’t turn into bangs and booms,” says Yeoh with a laugh. Yeoh, being a minimalist at heart, prefers metal or full length transparent glass doors or windows. Her abode has a distinctive showcase of various tiny souvenirs in the living room, kitchen and studio rooms located at the first floor. These tiny collectibles are treasured memories from her travels to over 20 countries.
SIMPLE DESIGNS
The decorative items and numerous fridge magnets were gathered from all the places she has toured all year around in her official capacity as an examiner engaged by the Trinity College in London covering countries like Bahrain, India, Japan and more. A rather interesting memento is the three-stacked wooden zebra chair from South Africa laid beside the staircase. She also has photos taken with influential statesmen stacked neatly in a corner while pictures of violins decorate her dining table cover. In the living room, a comfortable earthtoned sofa placed in a cosy corner makes for an inviting space. The pastel-coloured kitchen is tucked away at the rear end totally separated from the dining and two studio rooms at the front portion of the house. In all, the house has six bedrooms and three bathrooms. Yeoh entertains her close friends at home by playing music together at her home studio. “Practising can be mentally tiring. I guess that is why the bedroom is my next happy place,” chuckles Yeoh adding that she relaxes by playing the violin to put her in a “zen” or tranquil mood. She recalls that the neighbourhood has changed tremendously since her childhood days despite her immediate row of neighbours still being the original owners from the past 40 years. Yeoh says her house is strategically located 20 I September 2017
“
I didn’t engage any interior designers but refurbished the house with a step-by-step extension of the kitchen and front yard, making sure the squeaks and creaks don’t turn into bangs and booms” - Joanne Yeoh Pei Sze
just a stone’s throw away from various shopping malls, markets, schools and her church. Elements of her personality she says can be reflected in the simplicity of her residence that steers clear of cluttered and ornamental baroque interiors. She loves the hues of penguins depicting a blue and white palette as her choice for interior shades. In 2013, Yeoh bought a residence called Mulberry Grove priced at RM803,000 in Denai Alam, Shah Alam. Denai Alam is part of the 5,000-acre city of Elmina by noted developer Sime Darby Property. The buy was proposed by her mother who felt that Subang Jaya is becoming dense and noisier. The freehold double-storey link house with a built-up area of 26ft by 19ft is a gem according to Yeoh who prefers to buy from reputable developers. Her family is satisfied with the purchase as the property is located far from the hustle and bustle of city life. Now, they treat the new residential address as their weekend getaway place. Yeoh has plans to purchase her next house abroad in London as she feels that the property market here is lukewarm due to difficulty of getting bank loans as well as other refinancing drawbacks. Nevertheless, she says that if the location, down payment and timing is right, then demand can be higher too. “If all stars are aligned, I’d say go for it!” says Yeoh.
Main Feature
SHOPPING MALLS:
THE BATTLE FOR SURVIVAL Are shopping malls in the country still able to hold out, given the glut situation? By: Yvonne Yoong
U
ncertainties in the global fiscal, economic and geopolitical policies plus the effects of the shrinking ringgit and weakened consumer sentiments continue to flood the local market with some degree of concern. Adding to the catch-22 situation is what is touted to be a large flow of incoming retail space that is anticipated to lead to an unbalanced glut situation. Meanwhile, shopping malls mushrooming throughout the nation are not showing signs of a slowdown either. “Currently in Kuala Lumpur and Selangor, only 57.5 million sq ft is occupied over the total 67.1 million sq ft of retail space. There are about 4 million sq ft vacant in KL and 5.6 million sq ft vacant in Selangor,” says Sr. Sulaiman Saheh, Director of Research, Rahim & Co International Sdn Bhd. He observes that with more and more retail malls being launched and coming into completion to the tune of an estimated 8 to 9 million sq ft, there is a concern of oversupply, especially in relation to current passive consumers and deteriorating consumer sentiment. Yet, these anticipated growing numbers of retail space do not seem to be halting any time soon. Richard Chan, Past President of the Malaysian Association for Shopping and High-Rise Complex Management says that despite so much negativity going around, with speculations being rife that many malls are going to close down, the opening of more malls need not be viewed entirely negatively. “The numbers don’t matter as it is about how you plan your mall.
“You need to know your market as well as plan, position and manage it well,” he opines saying this is even more pertinent now, given the challenging times. Chan shares that even during uncertain times, when managed well and backed by the right products, certain malls are able to hold their own including fetching rental rates above other malls. He cites the example of Bangsar Shopping Centre in KL which is recording robust sales, given the suburban and upmarket neighbourhood mall’s profile targeting expatriates. He says the presence of strategically planned malls can do much to increase the capital appreciation of properties in the neighbourhood although this situation is very difficult to predict now given the downturn. Previous examples point to an increase by some 15% to 20% after some given years. According to Chan, as more and more malls open nationwide, in order for them to survive and thrive, they need to differentiate themselves by catering to the unique needs of different locales. Even huge megamalls such as Mid Valley Megamall in KL has undergone renovation and refurbishment with it expanding and opening another new mall in Mid Valley Megamall, Southkey in Johor to remain relevant and versatile while seeking new market share. “In terms of expansion, we estimate that Mid Valley Megamall in KL with 1.7 million sq ft of net lettable area (NLA) expanded by way of The Gardens with an additional 800,000 sq ft of NLA combined, adding up to 2.5 million sq ft in NLA,” says Chan.
“
Despite so much negativity going around, with speculations being rife that many malls are going to close down, the opening of more malls need not be viewed entirely negatively” – Richard Chan
“
Currently in Kuala Lumpur and Selangor, only 57.5 million sq ft is occupied over the total 67.1 million sq ft of retail space. There are about 4 million sq ft vacant in KL and 5.6 million sq ft vacant in Selangor” - Sr. Sulaiman Saheh
September 2017 I 21
Main Feature
1. An artist’s impression of Mid Vallery Megamall, Southkey in Johor
2. An artist’s impression of Pavilion Bukit Jalil 3. (From left) Malton Berhad Executive Director Puan Sri Cindy Lim; Minister of Federal Territories Datuk Seri Utama Tengku Adnan Tengku Mansor; Mayor of Kuala Lumpur Datuk Seri Mohd Amin Nordin; Malton Berhad Executve Director Hong Lay Chuan and Paviion KL CEO of Retail Dato’ Joyce Yap 4. The Starling mall was a recent addition to the Damansara Jaya neighbourhood 5. Sunway Putra Mall Kuala Lumpur was bought over and completely transformed 6. An artist’s impression of KL Gateway Mall fronting the Federal Highway
1 The unconventional wisdom of this approach has been adopted by big players in the market including Mid Valley Megamall in KL whose DNA is being replicated in the upcoming Mid Valley Megamall, Southkey in Johor. Just late last year, IGB Corporation Berhad and Southkey City Sdn Bhd announced that its joint venture company Southkey Megamall Sdn Bhd would be developing Mid Valley Megamall, Southkey. Located near Johor’s city centre, the shopping mall will comprise six levels of retail, two levels of basement car park and eight levels of elevated car parks. IGB Corp Bhd Group Managing Director Datuk Seri Robert Tan Chung Meng in a previous sharing states that the mall with a NLA spanning 1.5 milion sq ft will emulate its KL counterpart. It will for one, bank on the office and hotel crowds for the off-peak shopping season. It is anticipated to open by end of 2018. The mall, approximately 85% the size of Mid Valley Megamall in Kuala Lumpur occupying 14.5 ha, will be the largest in Johor. It is part of the larger RM6 million integrated mixed-use development by Mid Valley Megamall, Southkey in Johor comprising three hotels, four office towers and one serviced apartment. Once completed, Mid Valley Megamall, Southkey will have 400 retailers including anchor tenants besides 6,000 car park bays. 22 I September 2017
Within a 3km radius, the population catchment is said to be about 750,000. However, by factoring in Singapore within an increased radius of below 10km, just 1% the Lion City’s catchment population alone out of roughly five million would make up 50,000 shoppers daily. This would be sufficient to attract almost 80% of the footfall of its Kuala Lumpur mall. Despite an increasingly competitive retail landscape, both malls – Mid Valley Megamall in KL and The Gardens Shopping Mall in Johor have consistent occupancy rates at 100% - even during challenging times. In fact, the tenant sales in 2015 improved at an average of 8% year-on-year as compared with 1% for other malls. Another megamall expanding is portfolio is Pavilion KL with its upcoming malls in Bukit Jalil and Damansara Heights sporting the “Pavilion” brand name that will be tailored to suit the catchment, consumer behaviour and preferences of the respective areas. “Pavilion’s 1.26 million sq ft of NLA in 2007 was further boosted by the further expansion represented by Pavilion Elite in 2016 by some 250,000 sq ft. “Meanwhile, Sunway Pyramid’s 1.6 million sq ft of NLA in 2015 has seen tremendous expansion to 1.7 million sq ft currently and 2 million sq ft NLA upon completion of Phase 4,” says Chan. He adds that Suria KLCC also has expanded its 1 million sq ft of NLA to
1.2 million sq ft while 1 Utama Shopping Centre with 680,000 sq ft in 1995 has increased to 2 million NLA. Pavilion Damansara Heights which is scheduled to open in the first quarter of 2020 will resemble the successful Pavilion KL which opened in 2008 with its “neutral, timeless, stone and glass” approach for retailers to showcase their products. Meanwhile, Pavilion Bukit Jalil which is scheduled to open in the third quarter of 2019 will be positioned as a regional shopping hub complete with a Spanish staircase, similar to Pavilion KL. Malton Berhad’s The Park 2 Pavilion Bukit Jalil launch recently saw Paviion KL CEO of Retail Dato’ Joyce Yap expound on the holistic experience in edutainment and retailtainment for its Bukit Jalil mall. “This move will ultimately set Bukit Jalil apart as one of the country’s major retail and tourist destinations. With its NLA of approximately 1.8 million sq ft, Pavilion Bukit Jalil is poised to be a regional mall in terms of brands mix, flagship stores and concept. “Our experienced retail management team from the award-winning Pavilion KL will replicate the shopping mall’s success here. Designed by the KL Pavilion Design Studio, the regional mall façade which stretches up to 560 metres will maximise visibility of retailers’ brands,” she says. According to Yap, the mall has already received huge interests with over 900 registrations from prospective tenants.
2 “We’re confident that the development has the key elements to elevate the Bukit Jalil neighbourhood into an epicentre of style and living,” she shares at the recent launch of The Park 2 in Bukit Jalil. The Park 2 is the last freehold residential component that offers residents exclusive access to Pavilion Bukit Jalil via a dedicated covered link bridge besides connecting them to the 80-acre Bukit Jalil recreational park. Malaysian Minister of Federal Territories Datuk Seri Utama Tengku Adnan Tengku Mansor who was the guest of honour at the launch opines, “Once completed by 2020, the regional Pavilion Bukit Jalil shopping mall and offices will provide thousands of new employment opportunities whereby Bukit Jalil’s population and employment are projected to increase by approximately 24.2% and 51.6% to 464,300 and 273,121 respectively from 2000. “Residents of Bukit Jalil City will be the ones who will benefit the most. Those living nearby will benefit from an increase in the value of their property. For a project of this scale and vision, Bukit Jalil City will serve as a catalyst for Bukit Jalil’s rejuvenation, raising the city’s stature with further economic growth, job creation and improved infrastructure. “This creates demand for quality infrastructure and amenities that mirrors a world-class city. Hence, projects such as Bukit Jalil City by Malton Berhad and
the Pavilion Group is another positive step forward for Kuala Lumpur. I believe we are on the right track towards advancing Kuala Lumpur as a World Class City and the region’s premier hub for business, leisure and living,” he says adding that this supports the Government’s vision to position Kuala Lumpur as amongst the Top 20 most liveable cities by 2020.
OPENING OF NICHE NEIGHBOURHOOD MALLS
The Starling mall with a gross development value of RM600 million was also added to Damansara Uptown’s neighbourhood in Petaling Jaya, Selangor catering to a residential population of over 100,000 here including that of the surrounding townships. Despite the downturn, The Starling mall, having already achieved over 85% occupancy and targeting 100% occupancy by year’s end, shows its resilience in catering to the neighbourhood. Chan opines that although the market is shrouded with claims of an impending glut situation, neighbourhood malls such as The Starling mall is relevant and can thrive because it meets the needs of the surrounding neighbourhood. According to See Hoy Chan CEO Joe Tan, the surrounding captive daily catchment population is estimated at about 20,000 and a conservative 8,000 visitors daily which augurs well for the recently opened mall.
3 On the other side of the trajectory, KL Gateway Mall, located fronting the Federal Highway also made its debut, redefining the retail concept and livening up Kerinchi in March this year. To date, its is the only shopping centre with a direct light rail transit (LRT) link outside KL’s central business district (CDB). Positioned as a modern and urbanite mall, KL Gateway Mall serves a captive catchment population of approximately 400,000 within 5km of its premises while also serving over 350,000 shoppers monthly who commute using the LRT. The covered air-conditioned 100-meter link bridge linking the LRT station and the mall is anticipated to attract 40 per cent of the mall’s targeted footfall of over September 2017 I 23
Main Feature
4
5 10 million a year. The centerpiece of KL Gateway Mall is its iconic Central Piazza. A large diamond-inspired canopy made of Ethylene tetrafluoroethylene (ETFE). This fluorine-based plastic is the same material used at the Water Cube swimming arena for the Beijing Olympics covers the Central Piazza. This results in natural daylight being ushered into a one-of-a-kind indoor space that represents a perfect interactive space for the community. The Central Piazza also boasts a 10,000 square feet multi-level outdoor garden called The Park. As a whole, it is an ideal place to bring the community together via events and 24 I September 2017
activities taking place here. The mall boasts over 300,000 sq ft of retail space. In addition, an automated car park representing Malaysia’s very first and the largest in Southeast Asia at 1,238 bays will provide value to shoppers. Currently into its final stages of completion, the advanced car park system will soon be opened, complemented by 900 traditional parking bays.
ADAPTING TO STAY RELEVANT
Citing another example in Atria Shopping Gallery, Damansara Jaya in Selangor that was reopened in 2015, Chan says this neighbourhood mall which is surrounded by a residential enclave underwent
several rounds of transformation before arriving at its present stage. To a certain degree he maintains that there is wisdom in designing neighbourhood malls which depend on the surrounding smaller primary catchment area. Chan adds that they should be designed according to the size of the surrounding population count while taking into account average household incomes and spending patterns. More than a few malls have undergone facelifts due to lifestyle changes and keeping up with the trends. Examples include the stratified Summit USJ in Subang Jaya having undertaken its maiden refurbishment exercise costing RM70.48 million. The contractor began work on the refurbishment in June 2014 and the mall was subsequently relaunched in Dec 2016. When the mall first opened in 1999, it had 1.23 million sq ft of built-up area. Today, its gross built-up area spans 1.26 million sq ft with the transformation encompassing the building’s interior. Its external façade is covered in glass and in total, nine new escalators were installed. Meanwhile, Sunway Putra Mall Kuala Lumpur was bought over and completely transformed in line with a major refurbishment exercise by Sunway Malls. Out of the entire exercise cost of about RM1 billion spent to buy over and completely transform the mall, approximately RM500 million was spent on refurbishment while the other half invested in buying what was then known as The Mall Kuala Lumpur. Transforming Sunway Putra Mall from a grand dame to an urban chic mall saw it being closed for two years for this refurbishment exercise. The transformation reflects Sunway’s branding which surfaces in its other malls namely Sunway Carnival, Sunway Giza and Sunway Velocity. Chan says more than a few malls have taken the cue by undertaking renovation, refurbishment and expansion exercises which have resulted in facelifts and expanded larger gross floor area (GFA) and NLA. Other rebranding exercises he says can be seen in the examples of KL Plaza to Fahrenheit 88 and Plaza UE3 to Viva Home in Cheras, KL.
TRENDS MOVING FORWARD
As much as physical malls are mushrooming all across the nation, they will also be hit by the growth of E-commerce which would influence the need to visit a retail mall. “Generally speaking, if anybody is going to build malls today, they have to think about a one-stop area for people to congregate based on activities and not solely on retail. A few shopping centres in Singapore like Capital Mall or Fraser’s Centrepoint – the two biggest players in Singapore, are not called shopping centres or retail malls anymore,” says Colin Tan, CEO of ColinTan Training International Pte Ltd, a sales and marketing consultancy firm for developers. “The trend is moving towards lifestyle malls where people or lifestyle hubs congregate. They are no longer known as shopping centres or retail malls because offline retail is dying in the face of online competition from E-commerce,” he says. In fact, according to him, the more developed the country, the greater shopping malls are at risk. “Countries like Singapore, UK and US have already built up a high level of confidence in doing online transactions. However, in developing countries where people are not as confident of online transactions, malls there can still survive but it is only a matter of time before they gravitate towards online shopping.” Likening people in developing countries to having a crystal ball to see what is happening in developed countries, he says based on this, consumer behaviour will change. “I dare say Malaysians have a slightly lower level of confidence in online transactions than Singapore. That is the advantage for malls now. “However eventually, Malaysians will get more confident with online transactions. And when they do, they may not go to the malls to buy as frequently and this will affect shopping malls.” Therefore, he says Malaysia’s malls operator should start to adapt to this evolving trend now. Moving forward, Tan says that malls have to be geared for what people cannot get online such as spa services, the arts,
fitness and wellness, food and beverage (F&B), entertainment centres, education or the complete movie experience. The trend in Singapore now he says is to buy online so that one is able to save on petrol while avoiding the hassle of getting in queue to get into car parks or having to pay for items at pay counters. “The new anchor tenant of the future will not be departmental stores or grocers – but will be the activity-driven tenants” says Tan. He opines that shopping mall designs are crucial so gone are the days where developers can build a conventional shopping centre and expect people to walk in. Citing Pavilion at Bukit Bintang in KL as an attractive example, he says its design facilitates pedestrian walkways to flow seamlessly into the “very open entrances” that lead to the “courtyard-like” centre of the mall which makes for a welcoming environment. Such designs could comprise on NLA but would eventually command higher rents to usher in greaterrsuccess for the mall. “Malls can thrive, but they have to change their game plan,” he concludes.
“
Generally speaking, if anybody is going to build malls today, they have to think about a one-stop area for people to congregate based on activities and not solely on retail. A few shopping centres in Singapore like Capital Mall or Fraser’s Centrepoint – the two biggest players in Singapore, are not called shopping centres or retail malls anymore – Colin Tan
6 September 2017 I 25
Main Feature
IPC SHOPPING CENTRE: POWERED BY REDEVELOPMENT Despite the downturn, this long-established shopping centre continues to reinvent itself to stay relevant while keeping abreast of the latest trends in order to continue to thrive By: Mages PV Lingam
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1
2 26 I September 2017
PC Shopping Centre (IPC) recently undertook a major redevelopment project after 14 years of its existence in Mutiara Damansara, Selangor. IPC Corporation Sdn Bhd Assistant General Manager Karyn Lim shares on the shopping centre’s stage by stage redevelopment initiative with Property Insight recently which was meticulously planned and undertaken to ensure it not only stays relevant but continues to thrive and keep up with the trends. The first stage of the redevelopment took off in March this year which has since then seen the reopening of its lower ground floor on July. This coincides with the centre’s vision of rebranding the future of its neighbourhood shopping centre and increasing the centre’s shopping options with value added offerings for shoppers by way of also introducing a variety of new tenants. Scandinavian concept Ikea, having a built-up net lettable area of 78,000 sqm which first opened its door in August 2003, is the sister company sharing the same roof with IPC which started its operations six months later in December. Ikea’s unique identity has managed to attract a broader catchment which has indirectly also led to more footfall for the shopping centre coming from other neighbourhoods besides been a strong contributor to business opportunities. The same concept applies to Ikea in Cheras, Kuala Lumpur which has My Town Shopping Centre as its jointventure development project with Ikano Malaysia and Boustead Holdings. Initially operating with a majority of the tenants adopting a big box concept within a net lettable area spanning 40,000 sqm,
3 IPC Shopping Centre has helped these concept stores with “big box concepts” such as Harvey Norman, Popular, Pet Safari and Ace Hardware to launch their flagship stores here. Over a decade down the road, IPC noticed changes in consumer’s shopping behaviours and opted to address their evolving and ever-expanding needs and wants with this redevelopment exercise. “Now IPC, with a net lettable area of 38,000 sqm has initiated the rebranding of its stores to create a new look by repositioning and re-anchoring its past and loyal tenants in this redevelopment exercise,” shares Lim. Testimony to its success, the shopping centre’s tenant occupancy rate currently stands at 99.8%. Lim says the shopping centre was not affected by the redevelopment exercise whose total renovation cost amounting to approximately RM200 million was borne fully by IPC. The redevelopment exercise of building a shopping centre space that inspires was carried out over three main phases. The exterior and interior work she reveals was undertaken by a design architecture firm from Australia. The first phase of the redevelopment exercise took five months for tenants to be vacated which also saw the reconfiguring of the entire floor layout plan. “We have seen about 64% of past tenants returning. Phase two will be completing in November while phase
three is scheduled to be finished by December this year,” shares Lim. The retail look from the exterior with vertical greenery running down the façade shopping centre was designed in tandem with its forward looking plans. Incidentally, the shopping centre will be Green Building Index (GBI) rated targeted at a gold certification given its emphasis on sustainability. This shopping centre which has matured over a decade with its surrounding neighbourhood has become a social place for family and friends to mingle besides being the preferred destination for shopping. IPC will be seeing new tenants like Foodland, AEON Wellness, IC Waikiki, Young Chef Academy, Hana Japanese Restaurant and Penang Road Famous Teochew Cendol and Ben’s Independent Grocer in October complete with new concept and design complementing its tenant mix. A comeback by popular tenants will be reflected in eateries and outlets such as Uncle Lim, De Irrfan’s Café, Noodle Shack, i-Alter and Thule. Lim says that 49% of its total tenants for all three phases would be returning. A significant improvement or changes in food and
“
We have seen about 64% of the past tenants returning. Phase two will be completing in November and phase three in December this year” - Karyn Lim
beverages with a 14% increase in sales is also being targeted by IPC. More changes that shoppers can look forward to are upgrades to the Recycling and Buy-Back Centre (RBBC). IPC, established since 2009, is currently the first shopping centre having such a facility to assist both shoppers and offices to embark on this drive towards sustainability. Lim believes that now is the ripe time to forge ahead with its expansion plan encompassing a regional teamwork to create a different journey for its clientele. IPC also has in plan to open similar shopping malls with one located in Tebrau, Johor Bahru and another scheduled to open in 2019 at the Aspen Vision City (AVC), Penang spanning a 99 ha land. September 2017 I 27
Feature
RIGHT TIME TO SELL
Selling your property at the right time will help you to gain higher capital appreciation By: Felicia Soon
I
dentifying the right time to sell one’s property is quite a difficult task. A series of factors need to be taken into account when deciding on whether to sell a property or to hold on to it. Potential home sellers can certainly be in pole positon ahead of the rest by arming themselves with the right knowledge on how to time their sale better to reap more profits. “The best time to sell a property is when there is strong
bargaining power. It also means that demand is more than supply. If you read my book co-written with Tony Yap, we have found that the best time to sell your property is during the first and second cycles when the demand line is above the supply line. This will enable you to get the best price and generate the most profit,” shares the Co-author of Buy Bricks Sell Bricks Caleb Chin.
THE LOOPING SUPPLY-DEMAND CYCLES
28 I September 2017
Demand Trigger Cycle
Supply Booming Cycle
Supply Corrective Cycle
Price Corrective Cycle
“
The best time to sell a property is when there is strong bargaining power. It also means that demand is more than supply” - Caleb Chin
“
In a sellers’ market whereby negotiation is stronger on the sellers’ side, investors will get the best deal from selling their properties” - Dr. Peter Yee
CYCLES
BUYING STRATEGIES
JUSTIFICATION
DEMAND TRIGGER
Buy sub-sale (ready) property with good potential capital gain.
Supply Booming Cycle is the coming wave, so that’s the best time to sell. It is a good idea to get a unit that is ready for sale. If you can’t buy a unit with good rental yield, that’s okay because the holding period won’t be too long.
SUPPLY BOOMING (BEST TIME TO SELL)
Buy “only” sub-sale property with good rental yield.
Notice that I have used the word “only” because this is the period when property prices reach their peak and everyone is eagerly buying. If you buy now, it must be property that is easy to hold until the next wave of capital appreciation comes around. In contrast, buying a newly-launched project to flip at this time is not a good idea because it may not be able to fetch a good price in the com-ing two cycles. Furthermore, compe-tition during this cycle will be fierce. My advice is still the same for this cycle. It is better to have a property to sell than to buy.
PRICE CORRECTIVE
Buy sub-sale property with good rental yield.
This is the start of the buyers’ mar-ket. During this cycle, supply is great-er than demand. The buyer has the upper hand in the negotiation pro-cess. There are more sellers than buyers so buyers have more options. This is a good chance to get a good second-hand property with good rental yield.
SUPPLY CORRECTIVE (BEST TIME TO BUY)
Buy newly-launched property with good potential capital gain.
The average property price will hit the lowest point during this cycle. You will be able to get sub-sale properties or a newly launched prop-erty at a good price.
Chin also urges home sellers to understand the importance of location as most people prefer to buy properties in good locations. “We must remember that the main core of property investment lies with the location. Homebuyers and property investors tend to look for a good location first before deciding on the purchase of the property.”
SELLING YOUR PROPERTIES AT A LATER DATE
On the other hand, if you hold on to any property long enough, you will see noticeably good ROI (Return of Investment) when you sell it in future, suggests Chin. “It can be harder to sell now because the market is more competitive - with many property agents getting more skillful in selling properties. Furthermore, there are even more advertisements featuring lower priced properties in the same area,” he says.
CONSIDER BUYING AND FLIPPING YOUR PROPERTIES
Contrary to current widespread opinions, Dr. Peter Yee, Property Investor and Author of bestselling property book You Can become Rich in Property opines that now is also a good time to buy and flip properties. He says this is because it is a sellers’ market whereby negotiation is stronger on the sellers’ side. This will enable investors to get the best deal from selling their properties. Yee adds that there are also balance stocks from many developers which can be sold off to investors seeking to buy and flip properties at this moment. This is especially true for some of the buyers who bought properties at less strategic locations and are looking for a better deal for their next property purchase. In conclusion, ascertaining the right time to sell a property is necessary. This way, you will have maximum buyer demand and will be more likely to achieve a premium price. September 2017 I 29
Feature
STRATA MANAGEMENT TRIBUNAL Things About The Tribunal That You Need To Know By: Felicia Soon
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proprietor can make a claim with the Strata Management Tribunal (SMT) under Section 107 of the Strata Management Act 2013 (SMA). The SMT can hear claims up to a limit of RM250, 000. The subject matter jurisdiction of the SMT is provided for under Section 105(1) of the SMA 2013, Fourth Schedule Part 1. According to Dato’ Pretam Singh Darshan Singh from Pretam Singh, Nor & Co., the scope of SMT’s jurisdiction is restricted to management disputes of a strata development. The SMT does not have jurisdiction over disputes relating to the title, estate or interest in the unit or land. It is also worth noting that with the establishment of the Strata Management Tribunal (SM Tribunal), any parcel owner or tenant who fails to pay service charges can be produced before the SM Tribunal with the implementation of the Strata Management Act 2013; the Strata Management (Maintenance & Management) Regulations 2015 enforced on June 2, 2015; and the Strata Management (SM Tribunal) Regulations 2015, effected July 1, 2015. It is interesting to note that limitation is not applicable to the SM Tribunal and the maximum that can be claimed is RM250,000 per claim. Any non-
30 I September 2017
compliance of an award (decision) of the SM Tribunal is now a criminal offence. “Any person who fails to comply with an award made by the Tribunal commits an offence and shall, on conviction, be liable to a fine not exceeding RM250, 000 or imprisonment for a term not exceeding three years, or both. In the case of a continuing offence, to a further fine not exceeding RM5, 000 for every day or part thereof, during which the offence continues after conviction. (Section 123).”
JURISDICTION OF THE TRIBUNAL
The Tribunal shall have the jurisdiction to hear and determine any claims where
the total amount in respect of which an award of the Tribunal is sought, does not exceed RM250, 000 or such other amount as may be prescribed to substitute the total amount. Claims can be filed in relation to the following:1. A dispute or complaint concerning an exercise or the performance of, or the failure to exercise or perform, a function, duty or power conferred or imposed by the Strata Management Act 2013 or the bylaws; 2. A dispute on costs or repairs in respect of a defect in a parcel, building or land intended for
“
The scope of SMT’s jurisdiction is restricted to management disputes of a strata development. The SMT does not have jurisdiction over disputes relating to the title, estate or interest in the unit or land” - Dato’ Pretam Singh Darshan Singh
3.
4. 5.
6.
7.
8.
9.
subdivision into parcels, or subdivided building or land, and its common property or limited common property; A claim for the recovery of Charges, or contribution to the sinking fund, or any amount which is declared by the provisions of this Act as a debt; A claim for an order to convene a general meeting; A claim for an order to invalidate proceedings of meeting where any provision of the Act has been contravened; A claim for an order to nullify a resolution where voting rights has been denied or where due notice has not been given; A claim for an order to nullify a resolution passed at a general meeting; A claim for an order to revoke amendment of by-laws having regard to the interests of all the parcel owners or proprietors; A claim for an order to vary the rate of interest fixed by the joint management body, management corporation or subsidiary management corporation for late payment of Charges, or contribution to the sinking fund;
10.
11. 12.
13.
14.
A claim for an order to vary the amount of insurance to be provided; A claim for an order to pursue an insurance claim; A claim for compelling a developer, joint management body, management corporation or subsidiary management corporation to supply information or documents; A claim for an order to give consent to effect alterations to any common property or limited common property; or A claim for an order to affirm, vary or revoke the Commissioner of Building decision.
The Order that the SM Tribunal can make include the following:1. Pay a sum of money to another party; 2. Order the price or other consideration paid by a party to be refunded to that party; 3. Order the payment of compensation or damages for any loss or damage suffered by a party; 4. Order the rectification, setting aside or variation of a contract or additional by-laws, wholly or in part; 5. Order costs to or against any party to be paid;
6. Order interest to be paid on any sum or monetary award at a rate not exceeding eight per cent per annum; 7. Dismiss a claim which it considers to be frivolous or vexatious; 8. Any other order as it deems just and expedient; or 9. Make such ancillary or consequential orders or relief as may be necessary to give effect to any order made by the Tribunal.
EXCLUSION OF JURISDICTION IN COURT
Where a claim is filed with the SM Tribunal and the claim is within the Tribunal’s jurisdiction, the issues in dispute in that claim, whether as shown in the initial claim or as emerging in the course of the hearing, shall not be the subject of proceedings between the same parties in any court unless:(a) The proceedings before the court were commenced before the claim was filed with the Tribunal; or (b) The claim before the Tribunal is withdrawn, abandoned or struck out. This means that a claimant has to decide in advance as to which forum he has to file a case because having filed a case with the SM Tribunal, he will not be able to proceed with the same in the court or vice versa. September 2017 I 31
Developer of The Month
THRIVEN DRIVEN TO THRIVE In an age where developers build incessantly without regard for the environment, Thriven literally walks the talk with its complete ecosystem which continues to add value, even way after delivery By: Yvonne Yoong
I
t is not every day that one meets a developer who literally walks the talk and practices what is being preached. Besides exercising restraint when developing projects, this developer also takes the initiative to organise monthly walking trips to a forest reserve in Kuala Lumpur in order to educate its employees on the importance of preserving nature while undertaking development projects in the future. Additionally, the developer has organised a six-month “Thrive to Fit” wellness campaign and sponsored a forest trail at the Kota Damansara Community Forest named Serenity Trail for hiking and cycling enthusiasts and local residents. These are some of the silent initiatives by this niche boutique outfit which is starting to get the attention of even the bigger players in the property market with its thoughtful offerings. This was precisely what the Property Insight team encountered during an early Friday interview with Thriven Global Berhad Group Managing Director Ghazie Yeoh Abdullah at the developer’s headquarters in Taman Tun Dr. Ismail, KL. 32 I September 2017
1
“We group together to share and resolve issues and problems as a family and group. And, we ensure one thing that people who work in our group are healthy in all aspects which translate to a sharper, faster and healthier workforce. We give incentives and provide them with training and infrastructure, a gymnasium and flexible working hours,” says Ghazie.
THE NEED FOR BALANCE
“
2
We are here to make a difference by providing international standards in design and construction right up to the time when we deliver the properties to residents.” – Ghazie Yeoh Abdullah
A cut above run-of-the-mill developers, Thriven does not subscribe to cookiecutter solutions. Attention to detail is pivotal in all its developments, backed by a comprehensive ecosystem of complementary services. Little wonder then that all of Thriven’s projects have recorded an average 70% take-up rate to date. Even its office exudes avant-garde understated elegance and ambience cocooned in serenity. Its break-out area also comes complete with a pool table and gymnasium for employees.
Gracing its walls is the group’s unusual ring-shaped organisation chart. “If you ask anyone in the company about the organisational chart, they will draw you a ring circle. And, that’s how we work,” shares Ghazie. “A ring circle means everybody keeps everybody informed regarding all of the projects’ progress, feedback and setbacks. Everyone knows that they need to support one another in this Thriven ecosystem. We don’t work in a hierarchical structure which then takes a long time to resolve issues,” he says.
The company’s monthly walking routine at the Taman Tun Dr. Ismail forest reserve initiated two years ago for its employees is still ongoing today. “As a developer, we want to ensure that no one will ever develop this forest. We understand that certain things are meant to be developed while others are not meant to be touched,” says Ghazie. The need for balance is more important now than ever he opines, as some developers’ mentality lies in wanting to cut down everything in the name of development which he feels very strongly against. “The 75 people in our organisation are one day going to be leaders one way or another in this industry. So, they need to know about balance when developing projects to provide for the nation, population and community,” he adds. This sense of social responsibility is second nature to Thriven which thrives on giving back value to its property buyers via its comprehensive business ecosystems.
PAST INCLINATIONS AND PRESENT ENDEAVOURS
“Thriven was previously known as Mulpha Land and May 2015 was when the company changed its shareholders and took on a new direction. Mulpha, as a company, has extreme exposure in the international markets and are very entrenched in Australia. September 2017 I 33
Developer of The Month
3 “We adopted its good practices and developed supporting core businesses which include property management and investment, facility management as well as hospitality and lifestyle retail based on a proven track record of Mulpha’s assets in Australia.” Ghazie, who has 15 years of experience in property development in the city centre says that Thriven is the combination of the words “thrive” and “driven”. Besides him, the backbone of the company includes Executive Chairman Datuk Fakhri Yassin Mahiaddin and Executive Director Dato’ Low Keng Siong who, all having done business together in the Middle East previously, decided to join forces to establish Thriven. The sense of camaraderie between them is evident as Ghazie, referencing the book “The Airbnb story – How three guys disrupted an industry, made billions of dollars… and plenty of enemies” in his WhatsApp chat to his partners was met with a witty reply – “Can we three guys disrupt the industry, make billions of dollars and plenty of friends”. That remark alone speaks volumes about the essence of the cornerstone of their success story. 34 I September 2017
Testimony to its exponential growth is its projects currently being launched and executed amounting to a gross development value (GDV) of RM100 million in 2014 to its current GDV of RM1.4 billion in active projects, and a further RM700 million GDV in developments that will kick off in the next two years. Thriven’s total GDV today is RM2.1 billion. Growing tremendously in sales value, it recorded RM250 million in 2016 while this year, it is targeting RM450 million in sales value.
THRIVING INTERNATIONAL STANDARDS
Thriven in Malaysia has the hallmark of building “very efficient and effective properties” given its track record. “Two of our main brands are Lumi and eNESTa. Both items are on different levels of the playing field. Lumi focuses on the high-end segment priced from RM700,000 to a circa RM1.5 million. On the other hand, eNESTa comprises properties that range from RM150,000 all the way up to RM700,000. “All our products are cost-competitive. What we are doing is to provide branded levels of products, and a high level of
service at affordable pricing – be it for our affordable eNESTa series or for the high-end Lumi collection ” says Ghazie. “As a developer, we don’t just focus on building and leaving after the handover. Instead, we believe in going through the whole cycle from building to maintaining. Our core businesses form a complete ecosystem - from property development and investment holding of developed projects, facility management to hospitality services and lifestyle retail operation. “As a start, we will retain the retail component called Marketplace in Lumi Tropicana. We will filter and select tenants with businesses which we want to be there. We provide the interior designs so tenants’ Capital Expenditure’ is zero and they only come up with the Operating Expenses. We don’t take rental but engage in profit-sharing with the tenants. “In that way, we control the tenancy mix so that whatever we promise during the development stage, we will deliver.” “We are here to make a difference by providing international standards in design and construction - right up to the time when we deliver the properties
to residents. They will find Thriven is still there, being part and parcel of their daily lives- helping them ensure that the buildings are clean, well-maintained at a high standard while providing valueadded housekeeping and concierge services. For all of our properties, we are not just selling the hardware but also the software by providing solutions,” he explains. “Let’s take Lumi Tropicana for example, which is an all-in-one development. We have serviced apartments, SoHo (Small office Home office) units and retail elements besides many forms of facilities. This is to ensure that our residents are able to live a holistic lifestyle whereby their daily needs, children’s activities and even business requirements are well taken care of. Each tower has a specific branding to it be it Play, Action, Wellness as well as Business and Lifestyle,” explains Ghazie. “We are going to release the final Business and Lifestyle Tower at the beginning of 2018. We provide spaces for people to have meetings, conferences or dinner events and functions at the Sky Terrace. If residents wish to throw a dinner event for 20 people, they just have to contact the concierge which will then arrange everything - from the dinner to
wine selection and catering services and the activities on our ground floor retail area will support the activities upstairs. “At the end of the day, it is an ecosystem that not only provides services but also ensures that the businesses operate well in terms of giving our food and beverage (F&B) and retail components supplementary business. So, that’s the kind of business model that we are looking at when we plan. In the aspect of wellness, if someone is looking to lead a healthy lifestyle after working out at the gymnasium, there should be retail places to find healthy food. “The Wellness Tower provides all of these activities to ensure that people are able to lead a healthy lifestyle so the operations of the F&B segment relates to wellness as well. After all, we’re not just building properties but providing solutions.”
FORGING AHEAD WITH TIMELY OFFERINGS
“What we are doing is not new in Australia but is a fresh approach in Malaysia. Here, many local developers build and leave (after the development is completed) whereas our brand DNA sees us staying to ensure that facilities management and the upkeep of the buildings are there
for the long term,” he relates. Despite the downturn, the first half of 2017 has been fruitful for Thriven, marked by the launch of three projects in the Klang Valley. These include its RUMAWIP Residensi Enesta Kepong affordable housing project, mid-range eNESTa Kepong serviced apartments and the luxurious Wellness Tower @ Lumi Tropicana development. Acknowledging that issues on affordable housing will continue to top the national agenda, Ghazie says Thriven prioritises affordable housing in the central region. This is where its Kepong projects including RUMAWIP Residensi Enesta Kepong and eNESTa Kepong serviced apartments are spearheading this effort. “The groundbreaking ceremony and balloting event for RUMAWIP Residensi Enesta Kepong was held on May 16. The first queue number was given to a qualified balloter who arrived at 4am. By 10am, the queue numbers for nonBumiputera units were fully distributed,” says Ghazie. According to him, Residensi Enesta Kepong is among the lowest density RUMAWIP projects, with only 254 units housed in a single block of 35 residential storeys. Each level contains eight units
4 September 2017 I 35
Developer of The Month
designed mostly in a semi-detached layout. All units also come fitted with water heaters. Only Bumiputera quota units remain as all non-Bumiputera units were successfully balloted, with a further 60 qualified balloters placed on the waiting list. In an attempt to elevate design standards, its eNESTa Kepong serviced apartment units located on Jalan Kepong was designed by multiple award-winning Italian-based MD Architecture Studio. In addition, the units are partially fitted with air-conditioners, kitchen cabinets and water heaters. The development is located opposite the mass rapid transit (MRT) Line 2 Jinjang Station (just 100 metres away) which is currently under construction. According to Ghazie, the unit selection day for eNESTa Kepong that was held on June 17 at the Thriven Sales Gallery together with the unveiling of its Type 2 show unit saw enthusiastic prospects arriving as early as 7am. “Aside from Kepong locals, we also had a fair number of prospects from areas such as Petaling Jaya, Damansara, Cheras and Ampang who were attracted by the reasonable pricing and easy MRT access. All non-Bumiputera units were booked by 2pm,” he enthuses. “We are also previewing the eNESTa Lifestyle Commercial Hub now. As part of the eNESTa Kepong development, 15 retail lots with built-up areas from 1,851 sq ft will enjoy great visibility complemented by wide shop frontages and main road access boasting a large catchment pool coming from the immediate surroundings. The MRT Line 2 Jinjang Station will also benefit from the thousands of commuting MRT passengers daily,” says Ghazie. In addition, Lumi Tropicana, which received its Green Building Index (GBI) Gold certification earlier this year, saw the launch of the second phase of its Wellness Tower following the sell-out of its non-Bumiputera units for the first two towers named Play Tower and Action Tower respectively. “We are also planning for the launch of Lumi Section 13 by next year comprising 310 units of serviced residences located on Jalan Semangat in Petaling Jaya, Selangor. 36 I September 2017
KEEPING UP WITH NEIGHBOURING JONESES
Thriven’s existing land bank is about 166.5 acres, with ongoing projects contributing about RM1.33 billion in GDV while a conservatively estimated GDV for undeveloped land stands at over RM700 million. “This total GDV of over RM2 billion will keep us busy for the next five years while we replenish our land banks via joint ventures and/or outright purchases,” shares Ghazie. He affirms that the Klang Valley will be the main region for its expansion besides the Northern states, given the ever-improving connectivity following the completion of the Sungai Buloh – Kajang MRT line. This will further be boosted by the currently under-construction Sungai Buloh – Serdang – Putrajaya MRT Line 2 and LRT Line 3 which will witness population mobility increase. “More and more people will accept living further from urban centres such as KLCC and Petaling Jaya. We’re also currently looking at opportunities around the Klang Valley and will make announcements in due course,” says Ghazie. Thriven’s strategy he says, has always focused on offering valueadded solutions to its purchasers, be it for the middle-priced or luxury segments. In essence, the firm operates on facilitating a comfortable lifestyle whereby a homebuyer or investor will be able to move in or rent out the unit almost straightaway after the handing over of the unit. “At Lumi Tropicana, we offer housekeeping services to our residents and rental management services whereby investors assign us to handle their investment properties - from sourcing for tenants, housekeeping and maintenance - to banking in the monthly rentals into their accounts. Phase 1 of Lumi Tropicana which was launched at a net price of about RM850 psf in 2016 fetched RM930 psf this year while its latest Wellness Tower was sold at RM985 psf. “For any launch in this trying times to see a 16% appreciation over one-and-ahalf years is already very encouraging,” analyses Ghazie adding that public
transportation and ease of accessibility are the trends moving forward. “Both our Lumi Tropicana and eNESTa Kepong projects are going to benefit from being practically at the doorsteps of proposed public transport networks.” Not satisfied to rest on its laurels, Thriven aims to continually improve. “We are looking at our neighbours and seeing how they are progressing tremendously and ensuring that we are keeping up with them. “Singapore has come up with a very strong brand – the Fraser’s Group with its serviced residences – Capri and Modena. And now, they are (available) worldwide. That’s what we are aiming at with our brand Lumi - to become a full-fledged hospitality brand. “There are many developments in Malaysia that are tagged as serviced residences but Lumi is the one which provides full-fledged services in the aspect of rental management, housekeeping and facility management. We started with Lumi Tropicana and the next in the pipeline is Lumi Section 13. And, when it concerns going the extra mile in providing value added services,the extra dedication and commitment towards delivering excellence alone speak volumes about Thriven walking its developer talk.
Area Focus
REJUVENATION OF DAMANSARA JAYA
This mature township has reinvented itself to remain relevant to the needs and demands of today’s generation By: Felicia Soon
D
amansara Jaya is a mature township in Petaling Jaya, Selangor. This self-contained neighbourhood comes with a good mix of landed residential properties comprising terraced, semi-detached and detached houses complemented by two- and fourstorey shophouses and shop offices. Developed by Paramount Garden, then part of the See Hoy Chan Sdn Berhad Group in the mid-seventies, Damansara Jaya originally encompassed just Section SS22 of Petaling Jaya. Section SS22A which mainly comprised bungalows and semi-detached homes was later established in Damansara Jaya in the late seventies. Among the notable landmarks in Damansara Jaya are the Atria Shopping Gallery, SMK Damansara Jaya and KDU University College. Interestingly, there are no high-rise residential developments in this township save for the exception of Atria Small office Flexible office (SoFo) suites. Surrounded by other urban areas such as Taman SEA, Taman Megah, Kayu Ara, Damansara Utama and SS2, properties in Damansara Jaya are generally deemed as belonging to the predominantly upper middle-class Chinese owners with their bungalows and semi-detached homes particularly being sought-after. Generally, landed properties in Damansara Jaya command good values and come with a freehold tenure within 38 I September 2017
a mature township characterised by good accessibility and connectivity while being well-supported by a wide range of amenities. Newer developments in the area include Stellar Sky Villas Condominium and Cora Plus Townhouse. Other developments at the peripheral of the township include DJ Villa Townhouse, Palm Reserve leasehold gated villas/ bungalows and The Grove Waterscape freehold gated villas/bungalows. Laurelcap Sdn Bhd Property Consultant and Registered Valuer Kit Au-Yong opines that while Damansara Jaya is a mature area, there are still some pockets of development land available with the nearest being Kayu Ara in Petaling Jaya, Selangor. Although it is not an organised area due to fragmented ownership issues, it was later redeveloped into a residential and commercial area that still co-exists with existing kampung houses, warehouses and workshops. The other nearby development coming up would be Taman Megah with the Ming Tien hawker centre scheduled to undergo redevelopment in October 2017.
EASY ACCESSIBILITY ALL AROUND
Damansara Jaya is easily accessible via major expressways such as Lebuhraya Damansara Puchong (LDP), Penchala Link Highway, New Klang Valley Expressway (NKVE) and the SPRINT Highway. Public transportation is also easily available with the feeder bus service linking it to the Taman Tun Dr. Ismail (TTDI) Mass Rapid Transit (MRT) station and part of the Sungai Buloh Kajang Line (MRT Line 1) to Damansara Jaya.
MRT STATIONS AND FEEDER BUSES
According to Knight Frank Malaysia Managing Director Sarkunan Subramaniam, in the near future, there will be wider accessibility to other areas upon the completion of the Light Rail Transit Line 3 (LRT 3) which will be operational by August 2020. This planned route with an overall distance of 37km will link Bandar Utama to Klang with 26 stations positioned September 2017 I 39
Area Focus
along the route. Once completed, the LRT3 will connect with the MRT Line 1, the Keretapi Tanah Melayu (KTM) Commuter Port Klang Line, the LRT Kelana Jaya Line as well as the future Bus Rapid Transit System (BRT) System Federal Line. This will be complement by a feeder bus network that will effectively expands the catchment area to 3km from each station. This upcoming new line will provide greater connectivity to the untapped catchment areas in the northwest and southwest of Klang Valley. This will in turn create more employment and job opportunities for the locals and foreigners staying nearby as the new infrastructure will bring forth new residential developments and services that are more commercial to these populated areas. To further enhanced connectivity, the proposed Damansara-Shah Alam Elevated Expressway (DASH) is expected 40 I September 2017
to support rapid developments along the alignment covering U10 Shah Alam, Subang Jaya, Kota Damansara and Damansara. Stretching as far as 20.1km, the DASH expressway will commence at the Puncak Perdana U10 Shah Alam intersection and serve as a link for Puncak Perdana, Alam Suria, Denai Alam, Kampung Melayu Subang, Sungai Buloh, Kota Damansara, Damansara Perdana and Mutiara Damansara.
ATRIA REVAMPED
Long-term residents of Damansara Jaya would probably be able to recall fondly one of Petaling Jaya’s oldest malls - the Atria Shopping Centre located on Jalan SS 22/23. It was a popular shopping mall back in the 80s and 90s. Back then, Printemps of France and Kimisawa of Japan were the two stores frequented by the crowd until Parkson Grand took over the
outlets later. The Popular bookstore, fast food giant KFC and Chinese food chain Esquire Kitchen characterised some of the charms of the mall. Other stores were also bustling with shoppers throughout the week. A crowd favourite was also evident in Nelson’s corn in cup franchise that rented its own dedicated space in the mall for students and families to get their buttery corn fix. There was even a games arcade for children and teenagers to try to win tickets in exchange for toys and action figures displayed on a glass shelf. However, the crowd dwindled in the mid-2000s due to the emergence of bigger, newer and grander shopping malls in Petaling Jaya. Slowly but surely, the mall began to fade into the background. In 2007, OSK Property Holdings Bhd acquired the mall with a potential gross development value of up to RM1 billion with plans to redevelop the mall and revive the its former glory. Previously, the four-storey shopping complex featured a gross floor area of approximately 294,683 sq ft with a net lettable area of around 208, 400 sq ft complemented by two three-storey covered car parks. The redevelopment exercise later on saw a shopping podium and 392 SoFo suites housed in two 16-storey towers atop the retail component teeming with 470, 000 sq ft of retail space available for lease. In addition, about 1,700 parking bays are available at the two-level underground car parks complemented by five levels of multi-storey parking.
NEW ATRIA – UPGRADING AN UPSCALE NEIGHBOURHOOD
After undergoing a major facelift exercise, Atria Shopping Gallery reopened its doors on May 28, 2015. Positioned as the “Premier Family Mall” located within Petaling Jaya’s Golden Triangle, the mall offers a wholesome experience with plenty of eateries and activities to cater for families who patronise the mall during the week with their children. A spokesperson from Atria Shopping Gallery shared that due to the demands of the market for more variations of food, 30% of its retail area is currently occupied by food and beverage (F&B) outlets. This has resulted in Atria possibly having the
- Sarkunan Subramaniam
- Kit Au-Yong widest food variety within a shopping mall in Petaling Jaya. IT currently boasts anchor tenants including the supermarket chain Village Grocer, Mango & Mango Kids, Mango Man, Violeta by Mango, Terranova, Next, The Book Garden by Sinaran, SportsDirect.com, Ace Hardware, Hamleys, Chi Fitness, Jungle Gym and Dynasty Dragon Seafood Restaurant.
Upon opening, the shopping gallery saw close to 70% of its outlets already conducting their business. In Petaling Jaya’s saturated retail landscape, Atria Shopping Gallery will be competing with other neighbourhood malls such as Tropicana City Mall as well as GLO Damansara and The Starling Mall in Damansara Uptown. Situated within the mature residential
neighbourhood of Damansara Jaya, Atria Shopping Gallery reflects bespoke modern architecture that also complements the “Rainforest” theme. Despite its distinctively young and fashionable feel on the outside, the interiors display nature-inspired materials to impart a modernistic interpretation of an ideal rainforest. The idea behind the design concept
SELECTED NEW DEVELOPMENTS (2016 AND 2017) Project Name (Type)
Developer
Tenure
No.of Units
Built-up (sq ft)
Price Range (RM)
Stellar Sky Villa (Condominium)
OCR Development Sdn Bhd
Freehold
88
1,961 - 2,442
N/A
Cora Plus (Townhouse)
Adenland (Damansara Jaya) Sdn Bhd
Leasehold
46
1,066 - 1,729
876,500 - 1,392,420
% Change Base Year: 2011
Source: Knight Frank Research
INTERMEDIATE TERRACE (2-STOREY) - TRANSACTED PRICE (2011 VS 2016) Year
Land Area (sq ft)
Estimated Buil-up Area (sq ft)
Transacted Price (RM per unit)
Average Price (RM per sq ft over BUA)
2011
1,540 to 2,560
1,507 to 1,781
500,000 to 1,100,000
489
BASE
2016
1,540 to 2,502
1,537 to 2,378
950,000 to 1,725,000
771
57.8%
Source: JPPH/Knight Frank Research
SHOP OFFICES (4-STOREY) - TRANSACTED PRICE (2011 VS 2016) Year
Land Area (sq ft)
Estimated Buil-up Area (sq ft)
Transacted Price (RM per unit)
Average Price (RM per sq ft over BUA)
% Change Base Year: 2011
2011
1,650
5,391
2,600,000 to 3,000,000
519
BASE
2016
1,650
5,386 to 5,391
3,600,000
669
28.6%
Source: JPPH/Knight Frank Research September 2017 I 41
Area Focus
is to create a welcoming environment that is all at once relaxed, inspired and enriched. Representing the flagship mall of OSK Property Holdings Bhd, Atria Shopping Gallery has already received its first accolade - emerging as winner in the Best Retail Interior at the Asia Pacific Property Awards 2015. Today, the mall enjoys an occupancy rate of approximately 93% with 600,000 to 700,000 visitors per month. Tech Realtors Properties Sdn Bhd Senior Real Estate Negotiator Debbie Lam opines that with the new Atria Shopping Gallery, Damansara Jaya is not just confine to the older generation but to the newer generation as well. The brand new Atria Shopping Gallery has totally revolutionised the retail ecosystem in this part of town says GS Realty Real Estate Negotiator Clement Chan. It will inherently raise the profile of the once laidback and sleepy township of Damansara Jaya in the eyes of the public he adds opining that one can also expect to see more boutique developments targeting the affluent segment of the society to pop up within the surrounding area.
AREA ANALYSIS
Sarkunan adds that while Damansara Jaya is an affluent neighbourhood with its landed properties faring strongly in the market, there are limited yet no new supply of housing units (landed and stratified) in the township due to scarcity of development land. He further explains that existing residential properties in the township may be attractive to potential buyers in the secondary market to renovate or refurbish landed units. Overall, he maintains that it is a wellplanned township as the development is located nearby various modern amenities and conveniences with good accessibility to many schools and colleges, post office, banks and businesses offering daily conveniences. Tropicana City Mall, 1Utama Shopping Centre, The Curve, Ikano Power Centre, Tesco, Giant and Centrepoint Bandar Utama are located within a short drive from Damansara Jaya. Major healthcare providers in the vicinity include the KPJ Damansara Specialist Hospital, the University Malaya Medical Centre and Tropicana Medical Centre.
“
OCR Land Holdings Sdn Bhd has successfully built low-density and highend landed developments as well as townhouses in Damansara Jaya and the neighbouring localities such as Taman SEA and Bandar Utama. Palm Reserve II launched in 2012 comprises luxury three-storey semidetached and bungalow developments within a 24-hour guarded and gated community in Damansara Jaya. The project was fully completed in June 2015 and all 17 units of the semi-detached and bungalow houses priced from RM1,650,000 to RM2,250,000 with builtup areas ranging between 3,398 and 5,277 sq ft have been sold off since then. Its strategic locality on Jalan SS22/43, Damansara Jaya places the development in close proximity to various eateries and restaurants, a 99 Speedmart convenience store and other retail outlets offering a wide range of products and services. Neighbouring commercial business hubs of Damansara Uptown, SS2, SS23 and SS24 are also places for leisure, necessities and business activities. HOTEL
The new Atria SoFo Serviced Suites is the latest development at Damansara Jaya. All the units were sold out during the launch and these modern offices are set to cater to the new urban crowd”
De Uptown Hotel
- Debbie Lam
, Second Sunday, Yume Cruisine,
“
In the upcoming LRT 3 scheme (Bandar Utama - Klang LRT Line), two stations will be planned around the Damansara Jaya neighbourhood, namely Damansara Utama and Tropicana. The improved accessibility will surely make this community more attractive for integrated projects in the near future” - Clement Chan
42 I September 2017
NEWER PIECEMEAL DEVELOPMENTS AT THE PERIPHERAL NEIGHBOURING KAYU ARA
HOSPITAL
KPJ Damansara Specialist Hospital EATERIES
Cofaith Café, Chuup Café, Carnaval Churrascaria, the BONS Café, Li Bon Bon’s Cafe, The Magic Wok, Michele’s Kitchen, Vary Pasta, Pasta Zanmai MALL
Atria Shopping Gallery SCHOOL
SMK Damansara Jaya UNIVERSITY
KDU University College OFFICE LOTS
Atria SoFo Suites RELIGIOUS INSTITUTION
The New Covenant Church
Area Focus Food Trail
COFAITH CAFÉ
CARNAVAL CHURRASCARIA
Owner Rayny Lee delighted up by serving the Cappuccino Mushroom Soup in a Cup, which was heavenly with tiny chunks of mushrooms submerged at the bottom of the cup. We settled for the Carbornara Linguine with chilli flakes which apparently is also a crowd favourite with a tinge of spicy taste to it. The white cream sauce mixed with fresh ingredients served warm was addictive. Chilli Madness Sauce Grilled Chicken was another treat served along with wedges and summer salad dressed in homemade Mayonnaise. Team Rating: 8/10
The Brazilian - halal eatery was filled with the sweet-smell of caramelised grilled pineapples. Finely barbequed lamb shoulder, lamb briskets, chicken wings, dory fish, prawns and even garlic bread were served on skewers and brought to our table numerable times. These meats can also be relished with spread of buffet items like salad, rice and fresh greens. Team Rating: 8.9/10
5 hidden
eatery gems at Damansara Jaya Check it out! CHUUP CAFÉ
LI
The café with rustic-interiors specialises in Hainanese cuisine. Chicken Chuupies comprise bite-size, crunchy deep fried chicken dipped in honey mustard sauce. Palatable Grandma’s Chicken Chuup comprise shallow-fried, marinated chicken breast complemented by home-made egg spinach and potato carrot ragout. The Seafood Gulai Pasta smothered in a rich Indonesianstyle spicy and succulent curry-like sauce tossed with prawns and New Zealand green mussels was our favourite. We ended the meal with Sugee Cake, Vanilla ice-cream and Yam Cake. Yummy! Team Rating: 7.9/10
Lims and Lee who met each other while studying at Melbourne’s William Angliss Hospitality & Culinary Arts Institute founded Li, a restaurant famous for its crunchy housemade sourdough bread. Our favourite dish here was the rice bowl with succulent and smooth chicken thigh that came complete with a runny egg, Ginger Scallion sauce, Sriracha Mayo and cucumber. For drinks, homemade fizzy beverages comprising Dragon Fruit, Lemongrass and Calamansi with Kaffir Lime Leaves Syrup were served. Team Rating: 8.5/10
THE BONS CAFÉ BONS, meaning “good” is a quintessential European style café in Damansara Jaya. Other than the design and decoration which is based on a simple retro style, it is a good place to visit when you are in dire need of relaxation from the chaos of the city. The Spaghetti Lemak with Chicken Rendang is a new dish to sink your teeth into while the Rosemary Chicken was tender and bursting with flavour. We particularly liked the sweet and sour taste of the Curry Laksa topped with shredded chicken and prawns served in a spicy coconut milk soup. Team Rating: 8/10
September 2017 I 43
Personality of The Month
MOVING THE INDONESIAN REAL ESTATE FRATERNITY FORWARD Real Estate Indonesia (REI) Chairman Soelaeman Soemawinata shares about the property industry in his homeland Indonesia By: Mages PV Lingam
P
roperty Insight recently held an exclusive interview with Chairman of Real Estate Indonesia (REI) Soelaeman Soemawinata who also goes by the name Eman. REI is an authorised body representing the real estate fraternity in the populous nation of Indonesia whose aim is to increase economic growth and commitment by upholding its mission and vision in the populous nation of Indonesia. Born in Bogor in 1962 in the third largest city in Indonesia, Eman as he is fondly known, studied his Bachelor’s degree at the Bandung Institute of Technology located in the capital of West Java, Indonesia.
ABOUT EMAN
1 44 I September 2017
The consultant and director who serves several real estate development companies, property industries and prestigious organisations has built-up a colourful portfolio for the past 30 years. Eman served as a Project Manager of PT Perentjana Djaja from 1988 to 1993. Thereafter, from 1994 to 2007, he was the General Manager of PT Alfa Goldland Realty. He later became the Director of PT Alam Sutera Realty Tbk between January 30, 2007 and February 25, 2015. PT Alam Sutera Realty Tbk engages in the development and management of residential, commercial, industrial properties. Counted among the iconic projects by this developer is the 211.8 metres project called Tower representing a 50-storey skyscraper with five floors built underground located at the Golden Triangle of Jakarta in Indonesia. Eman also served as a Director of PT Adhihutama Manunggal from 2000
to 2007 and PT Alfa Goldland Realty. Currently, he is a Director of PT Bukit Asri Padang Golf, a position he has held since 1997. Eman was also on the advisory board for Kadipaten Banten Realty. Recently, Eman added another feather to his cap after he was elected as the President of FIABCI- Indonesia Chapter. REI has been given a mandate by the government of Indonesia in spearheading the Rupiah 1 million housing programme. Eman who hails from REI Banten holding a three-year term (2016-2019) as the chairman says he has committed to undertaking this huge role to support the government and the people of Indonesia via REI in his stride.
IN THE LINE OF DUTY
The main target for REI he shares is to solve the problem of funding developers in the region to meet the needs of community homes as well as government programmes in pushing to meet the 1 million homes goal. Eman who has undertaken urban planning for several developers in Indonesia has also managed almost 100 projects throughout the country. These include hospital and commercial developments, warehouses as well as retail, industrial and tourism projects like hotels, parks and more. He also manages the legal aspects in his line of duty including undertaking corporate agreements for joint ventures, procurements, tax, land certification contracts. REI has 29 vice presidents attending to these issues which Eman
“
Hopefully, we will do well next year after going through a three-year slowdown in the property market. Therefore, REI need to save the industry as those in the real estate industry have been affected by the uncertain market” - Soelaeman Soemawinata
2
overseas. A feat by REI members include having built 40 units of houses by themselves complemented by infrastructure needs in Papua New Guinea. Ean has teamed up with joint venture associations to develop a parcel of land with a built-up area spanning 1.175 hectare at Mandalika in Nusa Tenggara Barat, Indonesia. Incidentally, Mandalika has also been selected part of the project initiative by the Indonesian Tourism Development for Corporation (ITDC) to promote the area. Eman discloses that now, 70% of REI’s 3,700 members are focused on developing low-cost and subsidised homes throughout the rural districts in Indonesia. “I am a commissioner having a duty and obligation to the agency. I need to sacrifice time and energy as well as exercise patience to help other members,” he says. Eman says that most of the members of REI comprise businessmen and professionals therefore September 2017 I 45
Personality of The Month
3 it is tough to invite every single person to sacrifice their time, money or energy due to their personal business and careers demanding full attention. Having said that, Eman is adamant in raising funds from exhibitions which can bring in about Rupiah 7 billion to pay for research or planning initiatives undertaken in other places in Indonesia. Businessmen, doctors, lawyers usually have basic technical knowledge or skills but no formal education on REI he shares so for that purpose, REI has set up 35 training centres to manage and empower its members with knowledge.
ENOUNTERING CHALLENGES
“Every day is a challenge for me due to the economic slowdown globally which we can’t control. However, we continue to stay on course by establishing the normal price for real estates to strike a balance,” asserts Eman. At REI, members not only merely build homes but they also need to consider other factors such as ensuring accessibility or having amenities nearby their developments. In successfully completing their developments, Eman says companies will be able to generate labour and pay taxes to elevate the local economy in line with REI’s mission objectives. REI is also trying to attract foreign investors into the country. REI has declared that it will develop 200,000 units of affordable homes with a gross development value of Rupiah 46 I September 2017
190 million as this housing programme serves a primary housing need for the locals in Indonesia. Sharing on the importance of building a legacy for the property industry, Eman says that REI will fulfill part of the Indonesian Government’s strategy to upgrade existing standards while managing via regulations in order to meet the goals for the country. The Government is always wary on the property or economic bubble situation and strives to keep everything balanced. Eman opines that some regulations hinder the property sector. For example, this includes the loan-to-value (LTV) ratio aimed at controlling the bubble for developers is now from 80%, depending on the size of the houses. “Customers currently have to pay 30% down payment but REI proposes for the balance of the mortgage to be settled in three months instead, whereby the money would be paid progressively to the
4 developers,” says Eman.
FUTURE IS BRIGHTER
“Some developers have been enjoying these facilities and benefits for the past ten years. Hopefully, we will do well next year after going through a threeyear slowdown in the property market. Therefore, REI need to save the industry as those in the real estate industry have been affected by the uncertain market,” he sums. In conclusion, Eman advises new investors and homebuyers before even starting to invest in properties to weigh all viewpoints and work through each barrier even though it seems like an ongoing struggle to maintain equilibrium during the market slump. He wants to establish the mindset that properties are still the best investment which can bring about positive returns in terms of Return on Investments (ROIs) to the economy.
5
Property Nuggets
SIDELINE ON PROPERTY NEWS TOKIO MARINE LIFE INTRODUCES ONLINE CLAIMS SERVICE Tokio Marine Life Insurance Malaysia Bhd (Tokio Marine Life) has introduced a new digital feature service called e-Claims. The claim process includes claims details and documents uploading which can be submitted via the online portal. • The paperless service is secured, personalized and faster. Added smart features includes auto detect and notifications via email or SMS. Customers can also check policy details and update personal contact information through the customer portal. • This customer-centric portal even allows to download e-statement and forms conveniently. • As part of Tokio Marine Life’s corporate sustainability initiative, this service would help to reduce the environment impact caused by deforestation.
E&O SHAREHOLDERS SUPPORT RM766 MILLION LAND SALE TO KWAP Eastern & Oriental Berhad (E&O) shareholders have approved the disposal of a portion of development land at the Seri Tanjung Pinang Phase 2 (STP2) project, by the Group’s subsidiary Tanjung Pinang Development Sdn Bhd (TPD) to Kumpulan Wang Persaraan (Diperbadankan) (KWAP). • It covers the sale of 20% of net development land measuring 1.445 million sq ft on Phase 2A of STP2 (STP2A) for a cash consideration of RM766, 022, 310.42. • TPD has been granted the concession rights to reclaim and develop covering a total gross area of 250 acres. The first launch targeted at STP2A in 2019, marking a significant new chapter in the E&O Group’s vision of creating a master planned development. • As a special purpose vehicle (SPV), Persada Mentari Sdn Bhd (PMSB) formed for this and owned by Tanjung Pinang Development (TPD) and KWAP on a 80:20 % basis • The shareholder’s approval reinforces the management’s direction that SPA2A will be the major earnings driver for E&O over the next decade.
ASTAKA’S ONE BUKIT SENYUM CONFERRED NODE STATUS Johor’s upcoming RM5.4 billion administrative and commercial hubs, One Bukit Senyum, spanning 11.85 acres has been granted node status by Ministry of Finance and Iskandar Regional Development Authority (IRDA). • The Phase 2 of One Bukit Senyum enjoys full incometax exemption on proceeds from the sale and income derived from the leasing of all non-residential buildings. • Phase 2 will include the new headquarters of the Johor Bahru City Council, a five-star hotel, serviced apartments, premium shopping mall and will also feature branded residences and serviced residences.
SUNWAY RIET PROPOSES ACQUISITION OF MIXED-USE SUNWAY CLIO PROPERTY Sunway REIT Management announced recently that RHB Trustees Berhad, as trustee of Sunway REIT has entered into a conditional sale and purchase agreement (SPA) with Sunway Forum Hotel. • The total purchase consideration of RM340 million to be funded by debt and the proposed acquisition to yield accretive to their asset portfolio • Guaranteed net property income for four years to get certainty of income • The property value will increase by 7.0% to RM6.9 billion
AMENDMENTS TO APPRAISERS AND ESTATE AGENTS ACTS The Building Management Association of Malaysia (BMAM) showed a collective interest with building owners, developers, engineers, architects, high-rise complex managers, management corporations (MCs) and joint management bodies (JMB). • The objections were expressed towards the Valuers, Appraisers and Estate Agents Act, 1981 (VAEA Act) with extract on Restriction on Property Management Practice. BMAM also views that the Ministry of Wellbeing, Housing and Local Government (KPKT) should be the sole jurisdictional, regulatory and not the Ministry of Finance (MOF). • For the past 15 years, the valuers have tried in Parliament for amendments of Act 242, Act 663 and Act 757.
September 2017 I 47
Home +
48 I September 2017
D E S I G N I N F I N I T Y,
NO BOUNDARIES.
September 2017 I 49
Investor Next Door
SEEKING THE RIGHT PROPERTY MATCH This celebrity investor next door shares her experience in property investment By: Felicia Soon
“Home is where the heart is,” proclaims television personality and Emcee Lynn Lim Pei Ying. Also an entrepreneur with her own Le Sucre Studio restaurant located in the mature township of Taman Tun Dr. Ismail in Kuala Lumpur, Lim managed to secure her first property in Taipei, Taiwan in 2002. The opportunity to be independent and own a property has enabled Lim to learn many valuable lessons in life including accumulating tips in property investments which has shaped her into the fighter and survivor that she is today. “Being a business entrepreneur, my ex-husband and I bought a duplex unit in Taipei where we did some minor renovations and I selected all the furniture. Initially, we used all of our savings to invest in this property. The space was quite small because land in Taipei is very expensive,” shares Lim. Hence she adds, everything was done at their own pace to save time and money. “Our over 700 sq ft duplex unit made our living space very compact. However, the unit came with a lovely view.” 50 I September 2017
In reflection, she says that buying the property was a good choice as one could hear birds chirping during the day which was pleasant to the ears and it was peaceful during the night-time. After staying there for more than a year, they decided to sell off the house to finance her ex-husband’s further studies. “At that time, properties in Taiwan were booming and we managed to get some profits from the above sales,” she adds. Lim who considers herself a conservative investor prefers to buy property with the sole purpose of staying there with her two children aged five and nine. Lim previously owned a three-storey corner lot house that was situated just next to a forest reserve in Cheras Batu 9, Kuala Lumpur. She says she made a good choice by buying the residence situated within a gated and guarded community there. “When I first set my eyes upon the house, it was love at first sight even though it was a second-hand property. When I first entered the residence, it
gave me a calming and soothing feeling. In fact, the family who lived there before were very warm and welcoming. From what I understand, my previous tenants were really happy staying there. That explains why I decided to buy the house,” she elaborates. The house according to her also came with a luxurious garden and big rooms which was perfect for her growing children, give the ample space. “The size of the master bedroom alone was 1,300 sq ft inclusive of the bathroom area,” relates Lim. After one year, she decided to sell off the property as it was time-consuming to travel to her studio which is located in Taman Tun Dr. Ismail. She is currently renting a lower ground unit there, having moved to the neighbourhood three months ago. “I love the place where I am staying now even though it is not that big. To me, size does not matter because from the balcony viewpoint, there is a huge tree which provides good shade from the sunlight. There is also a lovely breeze in the evening,” says Lim adding that she might opt to invest in a unit there at the same block. “For me, my style of doing things is not based on going beyond my abilities or my capabilities. I will only invest in a property if I have confidence in it,” Lim opines. She adds that she may also explore the possibilities of investing in commercial lots if they are viable.
STRATEGY TO PROPERTY INVESTMENT
Lim says the first factor to consider is the location. This is the key reason why she moved to Taman Tun Dr. Ismail because of its easy accessibility to her restaurant. This enables her to cut down on travelling time from one place to another and helps her to have more time for work matters and taking care of her children. “That is the reason why I moved to Taman Tun Dr. Ismail and shifted their schools to the area. For me, I believe that properties located in Taman Tun Dr. Ismail which is also a commercial area can command good capital appreciation,” she elaborates. The second important factor to consider would be the facilities and
amenities available in the housing area. “No one shares the same opinion when it comes to property selection. People with children normally prefer to look for whatever amenities are available such as swimming pool, tennis court, badminton court or bicycle paths. “For me, safety is also a top priority. The residence has to be gated and guarded with many facilities and amenities. For instance, there should be an area where you can have a barbeque party,” she adds. The second reason why she chose the property is because her children love the area.
TIPS FOR NEW PROPERTY INVESTORS
Lim says one should always plan ahead with regards to finding the right property to buy by taking into account one’s needs and financial situation. “Invest in a property that you can hold on to which is located within close proximity to schools, hospitals and shopping malls. These added conveniences will help fetch good returns which will enable you to possibly shift out after five years or so, after selling off the unit with good profits,” adds Lim. Although there are many nice properties around within good locations, ultimately, the right residence or property is up to one to decide according to a person’s needs and wants. “It all boils down to your feelings and evaluation regarding the property. This doesn’t mean that should the location be good alone, this will suit your needs. “However, if the unit is one’s first investment, one needs to check out five, ten or twenty properties before settling for the suitable unit to meet one’s requirements,” she says. To her, if the feeling and lifestyle suits one, it will be one’s dream home and represent the perfect investment. “Whenever the need arises, look for properties that come with a good location and which is priced within your budget. “A good housing agent should also be able to provide necessary answers as well as assistance in identifying the right property that meets one’s needs. One can engage a valuer to provide a good evaluation of the property,” she sums.
“
For me, my style of doing things is not based on going beyond my abilities or my capabilities. I will only invest in a property if I have confidence in it” – Lynn Lim
September 2017 I 51
Entrepreneur Insight
OVERCOMING CHALLENGES OF NEW START-UPS JJ Delgado shares on some of the challenges faced by entrepreneurs in growing new start-up ventures By: Felicia Soon
F
ollowing an exclusive interview with Property Insight, JJ Delgado shares on what strategies can be employed to succeed and what some of the challenges that new startup companies may face. Recognised as one of the World’s Top 50 World Human Behaviour experts in 2017, Juan Jose Delgado who is better known as JJ Delgado, has more than 10 years’ experience in the digital marketing arena. Exuding strong influence in the digital marketing community, Delgado has helped emphasised the importance of customers at the center of many organisations in multiple international marketplaces including Amazon, Burger 52 I September 2017
King, Pepsi, Bosch, Pizza Hut and many more. Aside from his successful corporate life, Delgado is also a Professor at the ICEMD-ESIC Business School located in Madrid, Spain. He is also Author of his latest book entitled “The New Digital Consumer: Noriso Cube” in which he talks about how the personality of consumers affects the way they behave online. He has also published papers to help marketers understand their customers better. These include topics such as “How Personality affects Customer Behavior”, “The 8 segments to Overcome the Online Consumer”, and “Marketing
with Personality”. This multi-talented influencer with over 30,000 LinkedIn followers who was invited for the first time to Malaysia to be the main speaker of a 1-Day Master Class forum entitled “Design a Disruptive Marketing Plan like a Pro” recently shared on how to overcome challenges faced by new start-ups. The event was attended by many senior executives in marketing, including Maxis, Tealive, Sime Darby Healthcare, Microsoft and more. “I first realised that teaching was my passion when I was pursuing my Master of Business Administration (MBA) in London, UK. Besides teaching, I love to read and always seek to learn new things
when I come into contact with young people, especially students. I have shared many learning experiences with them. They found those insights useful as I help them to unlock their true potential. When you are helping others, you will feel that you are doing something good,” says Delgado. These days, he notes that entrepreneurship is on the rise because there is more funding available while educational courses and online content on how to start one’s own business is easily accessible. On top of that, coworking spaces are popping up all over the country therefore now is a good time to be involved in the startup scene, opines Delgado.
OVERCOMING CHALLENGES AHEAD
Despite the rising popularity of embarking on entrepreneurship ventures, the start-up culture will bring its own unique set of challenges and problems that leaders must commit to addressing asserts Delgado, advising would-be entrepreneurs who intend to strike it out on their own. According to Delgado, the main challenges that new start-ups face in the beginning lie with validating their business models. He shares
that usually, start-ups are birthed out of novel ideas but they need the right business model to build upon these ideas. This is where Delgado steps in right at the very beginning to guide these new start-ups to understand what comprise the right business model in order to assist them to scale up their business operations. He emphasises that it is important to have an all-rounded evaluation of one’s business model as much as to understand one’s customers who are going to be the ones who will monetise one’s start-up where one is adding value. This is because most of the new start-ups will assume that they are adding more value to their users when actually, they are just providing more value to their providers. He further explains that some of these new start-ups could only be finding one segment of customers when the real customers who are going to make them successful are from another segment. Hence, Delgado feels that identifying needs at the very beginning will help protect the business model until they find the right one. Thereafter what entrepreneurs can do is to try to scale up start-ups by trying to accelerate the engine of growth.
TIPS FOR NEW START-UP COMPANIES
In offering tips for new startup companies, the key says Delgado is to be customer obsessive. “If you are going to find a company that can succeed, it is because they are focused on customers. Most of the companies are also looking as well to their competitors. However, it is best to put your competitors aside,” asserts Delgado. “While it is good to know who your competitors are, the real key thing is to observe your customers on a daily basis. This is so long as you can understand what your customers’ needs are and what kind of values you can add to your customers,” he adds. According to him, entrepreneurs can also try to find new business models that could prove to be successful in the future. The second point to note is to take risks to invent and simplify processes. However, he affirms that in order to succeed in this industry, one has to take risks and be open to failure. The last recommendation is that nowadays when working in an arena that is dominated by different giant companies like Alibaba, Amazon, Facebook, Google and Apple, the next best thing to do is to choose from one of these platforms to build upon one’s business model. September 2017 I 53
Industry Insight
ANCHORED IN ARCHITECTURE
RSP Architects Malaysia Managing Partner and Design Director Ar. Hud Bakar wants to continue to deliver value and set higher design standards for the nation By: Mages PV Lingam
R
SP Group is a well-established architecture group, having offices in Singapore, China, India, Saudi Arabia, United Arab Emirates, Vietnam, Myanmar, Russian Federation, Greece and Malaysia. RSP Architects Malaysia which has been helmed for the past 20 years by Managing Partner and Design Director Ar. Hud Bakar who has raised a new standard in master planning and architecture. The firm which was established in 1982 in Malaysia won numerous awards and worldwide recognitions for its architectural designs. These include the Fiabci Prix D’excellence, FIABCI Malaysia, Asia Pacific Property Awards, International Property Awards, the BCI Top 10 Architectural Firms Awards and many more. The journey to the top says Ar. Hud Bakar, was not without its fair share of challenges. Being one of the top students from Victoria Institution Kuala Lumpur in the 1980s, he was offered three scholarships whereby he chose to study architecture. He relates that he ended up interviewing the scholarship interviewer instead and eventually managed to persuade his way to securing his placement overseas to undertake architectural studies.
EARLY DAYS
Having graduated from University of California in Berkeley, US with Master of Architecture, Ar. Hud Bakar joined RSP Architects, the firm at which he would take over many years later. 54 I September 2017
1 Now, even after being over 29 years’ in the profession, having seen and learnt the ropes of the business, he vouches that undertaking new projects never fail to thrill him. “I am focused in the field and love grasping the intricacies of the design as well as the suitability of the materials besides overseeing the business and financing, legal and economic aspects of being an architect,” asserts Ar. Hud Bakar. Having a firm grip on design concepts and how things are run enable Ar. Hud Bakar to make apt decisions and render the firm accountable for any projects that it undertakes. For him, keeping abreast with the latest information related to projects or circumstances around the globe and networking with people in the industry are essential to success. This celebrated
1. MITEC 2. Islamic Complex Putrajaya 3. Malaysian Anti-Corruption Commission (MACC) Headquaters
architect with acclaimed awards for his notable works of architecture has clocked achievements with the Malaysian Institute of Architects (PAM) Awards, FIABCI (The International Real Estate Federation) Awards and was also awarded Firm of the Year by the British Construction Industry (BCI) among others.
EXEMPLARY PORTFOLIO
Being a TOP 5 architecture firm in Malaysia, we o verviewedthe Merdeka PNB 118 (KL118), KL Sentral spanning seven buildings, KLCCarea comprising
2
something ordinary such as a designing a house to multi-storey sky-scrapers. “I like to break away from the norm especially in terms of my designs albeit taking account for calculated risks. Buildings are like sculptured art. Nowadays, designing for necessity’s sake and adding more people-centric values are pretty common or basic pre-requisites. When we break away (from traditional designs), that is when we get connected and inspired,” added Ar. Hud Bakar.
AGAINST ALL ODDS
3 12 buildings, Malaysia International Trade and Exhibition Centre (MITEC), Platinum Park, Ministry of International Trade and Industry (MITI), 8 Conlay and more. Some other prominent projects undertaken includes Malaysian AntiCorruption Commission (MACC) Headquarters , an iconic landmark in Putrajaya. Also, Islamic Complex Putrajaya , a building w hich d isplays a contemporary architecture with Islamic values. Project Naza and Lembaga Tabung Haji Tower @ Platinum Parkdesigned to employ energy conscious elements from various angles. Although he has wide international exposure having handled past projects in Vietnam, India, Dubai, Abu Dhabi and more, he has kept a low profile and is more focused in delivering his projects on time. A good reputation he says is key in the competitive design market. Highly sought-after by developers and private clienteles, the firm has been undertaking various architectural and design projects. Being hands-on for each of the firm’s projects - ranging from
Ar. Hud Bakar has to counter many challenges in the course of his daily routine work, one being centred on people management. The company has a set of standard operating procedures (SOP) in the area of human resources it adheres to when it comes to RSP Architects’ 200 employees. He has high expectations for the management to be competent and hands-on in their duties and emphasises the need for the Millennial and older generations to work together. Ar. Hud Bakar encourages young graduates to be trained in the field to get the relevant exposure and experiences. His style is to get to the bottom of any mishap or unforeseen circumstances to resolve issues at hand quickly. Ar. Hud Bakar, who is an active PAM member, who admits that he has come across few challenges in his profession so far however opines that the impending future may not be without its difficulties. Highlighting the fact that local architects are not allowed to advertise but foreign architects being free to advertise and through in their proposals and prices which make it a tough competing field. “The profession is getting tougher in terms of the work itself whereby banks, lawyers and local authorities rely on the architects to sign off on the official documents,” expounds Ar. Hud Bakar further. He reckons that this is a positive sign as the Government has entrusted them with a huge responsibility to give the final “good to go” approval for work completed. For this, The Board of Architects Malaysia (LAM) and PAM are always
“
The profession itself if getting tougher whereby banks, lawyers and local authorities rely on the architects to sign off the official documents” - Ar. Hud Bakar
working together to resolve both internal and external challenges faced by the professionals.
FUTURE PLANS
Ar. Hud Bakar recalls that his fondest memory was when the firm was smaller in size and the margin was bigger too. He says that he is able to switch his work mindset easily to whatever projects is at hand even need to manage different project typology simultaneously. He also has huge future plans drawn up for the firm for next few years to remain relevant and sustainable. Ar. Hud Bakar believes in embracing openness and being more efficient in his architecture and design directions. He says he has dreams to build a legacy for the country with a collection of unique buildings. His advice for young property buyers is to start buying once one is able to afford the down payment. Thereafter, one should be able to hold on before selling the property off, as property is a long term investment and will be appreciating in value in the future. Therefore, it would be wiser to be selective in value buys and also in ascertaining choice locations. In the next six months, he opines that the outlook for the property market seems soft especially for condominium and commercial units so it would be safer to invest in sought after areas. Ar. Hud Bakar prefers prime locations like Damansara or Bangsar due to their easy accessibility. September 2017 I 55
Rookie Investor
Planning for Your First Property Purchase Failure to plan is not an option when it comes to investment in such a big-ticket item as real estate as shared by this Rookie Investor By: Felicia Soon
“
Start to plan for your long term property investment strategy and be committed to always educating yourself in understanding the property market the best you can. Also, avoid investing in the wrong location that will slow down your wealth creation plan” - Chong Kok Siong
G
ood things don’t come easy and no one agrees to this statement more than KT Microhandling Sdn Bhd General Manager Chong Kok Siong who worked extra hours, followed a shoestring budget and strict financial plan just to buy his first property. Looking back, this savvy investor who has accumulated three properties under his name which generate lucrative returns for him has no regrets in having sacrificed his time and 56 I September 2017
effort in coming up with the necessary seed money which he needed to buy his first property. Property Insight (PI): How does it feel to be a young investor? Kok Siong (KS): I am fortunate enough to know a mentor who enlightened me about the importance of investing while one is young. This has driven me towards setting up a long term investment
strategy, allowing me to plan ahead for my retirement. I am constantly on the lookout for new knowledge and believe in scouting around for opportunities that will improve the quality of life. PI: What got you interested in property investment? KS: It is an assured investment whereby you will unlikely lose money over the long term period. Given the scarcity of
land, property prices have consistently increased over the years. Hence, those who seize the opportunity to invest in properties are bound to harvest lucrative capital gains at the end of the day. PI: What started you on your property journey? KS: It was a small dream of being a landlord that fuelled my desire to own my first property. I prefer renting out my property whereby I can use the rental fee to repay my monthly loan instalment. Hence, right after I graduated from university, I planned to buy a property for rental purposes. I remember buying my first apartment in 2004. At that time, it was priced at only approximately RM250, 000 and fetched a rental yield of 9%. So, it was a property generating positive cash flow and the developer also provided a Guarantee Rental Return (GRR) scheme which meant that it was a low risk investment that suited my risk profile back then. PI: Where did you get the seed money for your first property and your advice to first time property buyers? KS: Like most young investors, getting capital to purchase one’s first property is always the hardest part. I had to work as a part-time tuition teacher while studying and kept my spending as low as possible. Do not waste money on unnecessary things and you will be able to save enough for the initial down payment of your first property investment and can start building your investment portfolio from there on. PI: What was your first experience like investing in properties? KS: It was a mixture of worries and excitement. I was worried at first because I was a newbie in the property scene and might be prone to making the wrong analysis. Hence, I appointed a lawyer to review the Sales and Purchase Agreement (SPA) before signing it. I viewed the purchase as an achievement as it brought about the expected rental yield as planned and I managed to sell off the property three years later with 90% capital gain. Currently, I am planning to invest in two condominium units targeted at the student rental market.
PI: What was the biggest challenge you faced in property investing? KS: Securing sufficient capital for down payment is always the challenge that might slow you down from building a broader portfolio. Tenant management is another challenge. As you own more properties and particularly, if you are renting your property out by room basis, your time will be consumed in managing tenants. In a nutshell, you will be busier and it will affect your valuable family time. Fortunately, there are many outsourced tenant management companies available now in the market which you can hire to oversee your tenants moving in or out, collect their rental as well to maintain the property by paying a fix premium. There are plenty of companies offering such kinds of services out there in the market who can make your life much easier. PI: What is the message for those out there who have yet to start investing in property? KS: Invest as soon as you can afford it to pay off your monthly instalment. Start small and dream big especially when you are young as age is your advantage to leverage on in terms of paying off debts in the long run. Finding the initial capital should not be the reason in stopping you from investing because you can borrow money from your parents or relatives to complement that taken from your own savings.
PI: What are your top tips to those who want to start investing? KS: Look for a property at a strategic location that suits your long term investment plan. Start to plan for your long term property investment strategy and be committed to always educating yourself in understanding the property market the best that you can so as to avoid investing in the wrong location that will slow down your wealth creation plan. PI: What are your investment plans for the remaining part of this year? KS: I plan to acquire two sub-sale condominium units around the Sunway area as I am targeting the student rental market to elevate my cash flow within my property portfolio. September 2017 I 57
International Insights
HAVE YOU DONE YOUR HOMEWORK BEFORE INVESTING OVERSEAS? When considering an investment in overseas properties, one should first weigh in on the advantages and disadvantages of such purchases
I
magine owning a house in Queensland’s Gold Coast, Australia situated right next to the iconic shores of Surfers Paradise. And, world-class theme parks such as Warner Bros. Movie World and Sea World in Gold Coast which are located just a short drive down the street. Or, how about owning an apartment right next to the Manchester United Football Club’s home stadium in Old Trafford, England? You could practically walk over to the stadium to catch the next football match. Wouldn’t that be awesome? Given a choice, many people would love to own a property overseas. However, there are many reasons holding them back from deciding to invest in properties 58 I September 2017
overseas. Here are some of the reasons:•
•
•
Insufficient Research One of the biggest risks when it comes to investing overseas is that you may not have enough knowledge of another country’s property market to make the right judgement. Property Financing Property financing policy differs from country to country. Hidden Costs You’ll need to be wary of extra fees. “Some countries have certain regulations that are compulsory which need to be paid and this may end up costing one more money than
•
•
initially expected. Consider the Distance Managing your investment property from a distance can be a challenge. Finding the right property manager and suitable tenants on the other side of the world can be difficult. Exchange rates If you are financing your property from a foreign bank, always be wary of the currency fluctuation affecting your repayments.
One of the most crucial questions you need to ask yourself is the reason for wanting to purchase properties overseas.
REASON FOR PURCHASE
This is arguably your most important consideration when buying a property overseas as it will have a direct influence on everything - from your budget to the type of property that you invest in. If you are buying a property for the purpose of investing for example, you may want to decide what type of tenant you would want. If you select properties near educational districts, you would probably end up with tenants comprising students or occasionally, teachers. Alternatively, if your property is located in financial or commercial districts, you may possibly attract more working class tenants. If you choose to invest in the suburbs, you would likely end up with small or medium-size family tenants. If your property is located nearby public amenity catchment areas such as train stations, schools or shopping malls, it will also likely score higher points in the tenant market. Should you be planning to purchase a home because you are migrating, your selection criteria will increase because you will need to find someplace that you would be comfortable living in for a long time. Convenience is a priority when you select the location of your future home. Here are some questions and pointers you may ask and consider:• How far is the suburb from the city? • Are there any shopping malls or grocery stores nearby? • Is the suburb located nearby any schools/colleges/universities? • Are there any public transportation services nearby?
HERD MENTALITY
If you are considering buying a property in Australia, you will need to know that under the Australian Government’s Foreign Investment Review Board (FIRB) ruling [GN3] for foreigners purchasing properties in Australia, it is stated, “Foreign non-residents cannot purchase established dwellings as homes, for use as a holiday home or to rent out”. However, foreign non-residents are allowed to purchase new dwellings in Australia without being subject to any conditions. There is no limit on
the number of new dwellings foreign non-residents may buy but approval is needed before each acquisition. With the FIRB ruling above, you will also understand that when you decide to sell your property in the future, you can only sell it to Australian Permanent Residents (PR) or Australian local citizens. You are not allowed to sell your property to non-Australian residents. So let me ask you this, would you purchase your property in a location where local Australians and permanent residents prefer to stay or would you go for locations that other foreign investors choose? If you are not sure how to answer this, let me give you a scenario. A double-storey link house in BU1, Bandar Utama in Selangor has a subsell price of approximately RM1.2 million today. Hypothetically speaking, if a developer decides to launch a doublestorey link house in Bandar Utama for RM700,000, would you rush to buy it if you could afford it? My guess is you would, because I would definitely be the first in the queue. The reason is simple because as locals, we know the value of Bandar Utama. We also know that if we decide to sell the house in Bandar Utama in the future, the likelihood of it being sold is high. Malaysian Government rulings aside, even if foreigners are allowed to buy houses in Bandar Utama, they may not know of its existence because no property agent would market it to foreigners as they simply don’t need to. What is being marketed to foreign investors in Malaysia are mostly properties in the city centre around KLCC. That’s where foreign investors tend to flock to for property purchases. Coming back to the discussion of Australian property, if you are looking to buy a property Down Under that would have strong resale value in the future, search for the “Bandar Utamas” of Australia. Go to the suburbs where local Australians love to live at and locations where there are good local schools. Having said that, properties in city centres are not necessarily the bad buys. After all, there are many high-rise residential developments that fetch good rental yields too. The subject of resale value is a different topic altogether.
About The Contributor
As the Head of Project Marketing in CBD Properties, Timothy Low is responsible for the planning, creation, implementation, and management of marketing and sales campaigns of the Project Marketing division.
TIMING
Is there ever a good time to buy property overseas? When is the best time to enter the market?” There are no specific rules but there are indicators. For Australian properties, there are good research sources to consider. For instance, the National Property Clock is a monthly chart produced by Herron Todd White, one of the largest independent property valuation and advisory groups in Australia. The National Property Clock chart functions like a clock. Properties at 12 o’clock are at the peak of the market while properties at 6 o’clock are at the bottom of the market. The idea is that when the property is at the peak of the market, the price is at its all-time high. So, if you are looking for a good deal, come back at 5 o’clock. That’s when we will wait for the property prices to bounce back up theoretically speaking. Other indicators are usually general information that is easily availalble such as economic conditions or events. A good example would be the 2018 Commonwealth Games that will be held in Queensland’s Gold Coast. Since this major event was announced a few years ago, property prices in the Gold Coast has been skyrocketing ever since. Properties prices in Perth, Australia is a little on the softer side now however. This works out well for investors and homebuyers in getting pretty good deals as property developers launch more “price corrected” properties. September 2017 I 59
Investment Talk
THE EVOLVING PROPERTY MARKET STRUCTURE B
efore we discuss Property Market Structure, let us explore some of the fundamentals of the economy. What constitutes the economy to begin with? Economy is a social science aimed at balancing the relationship between limited resource supplies and unlimited demand. Theoretically speaking, we would like to strive for an ideal free market whereby
the total demand and supply are always equal and can always reach economic equilibrium. However in reality, this cannot be so as various factors – both internal and external - can cause the market structure to change. In microeconomics, market structure refers to contestability and the number of suppliers for a single type of product. Different Market Structures will mainly
MORE COMPETITION
influence the supply behaviour and product price. Generally, there are four types of Market Structures: a. b. c. d.
Perfect Competition Monopolistic Competition Oligopoly Monopoly
LESS COMPETITION
COMPETITION IN MARKET PERFECT COMPETITION
MONOPOLISTIC COMPETITION
OLIGOPOLY
MONOPOLY
MARKET ENTRY BARRIER EASY PERFECT COMPETITION
A Perfect Competition Market happens when there are too many suppliers offering identical products. As a result, there will be too many alternative products for buyers to choose from. Here, there are no barriers for suppliers to enter or exit the market. Prices are determined by the equilibrium point of supply-demand. If a supplier sells higher than the market price, buyers can easily turn to other suppliers for identical products at more reasonable 60 I September 2017
HARD market prices because there are so many options.
MONOPOLISTIC COMPETITION
The entry barrier for a Monopolistic Competition Market is slightly higher than that of a Perfect Competition Market. This is a type of imperfect competition where suppliers offer heterogeneous products or products with attributes that are significantly different from each other, making it difficult to substitute one product with another.
An example of a heterogeneous product is the computer. You cannot really substitute a regular PC with a Macintosh PC, because each works on a completely different platform. Thus, there are no perfect substitute options for buyers. In a Monopolistic Competition Market, producers have a small degree of control over the price of their own products. In the long run, a Monopolistic Competition Market and a Perfect Competition Market have almost the same characteristics. The main difference
is that Monopolistic Competition sellers produce heterogeneous products that involve mainly non-price competition based on subtle product differentiation.
OLIGOPOLY
An Oligopoly is a market structure in which the market is dominated by a small numbers of suppliers which
control a major part of the market share. The suppliers are also known as oligopolists. In this market structure, oligopolists will indirectly have various forms of collusion to reduce competition which leads to higher prices. Due to the small numbers of suppliers in this market, buyers will not find it easy to get substitute products, so oligopolists are also the price setters.
MONOPOLY
This is the extreme opposite of a Perfect Competition Market. It happens when there is only one supplier for a type of product in the market. Entry to such a market is restricted due to high costs or other political, social or economic factors. Because the demand is always there and there is no competition in the
SUMMARY OF MARKET STRUCTURE CHARACTERISTICS
MARKET STRUCTURE
COMPETITION
MARKET ENTRY / EXIT BARRIER
PRICE CONTROL POWER
PERFECT COMPETITION
High Competition
Almost no barrier
No control on price
Intermediate Competition
Less barrier
Small degree of price control
OLIGOPOLY
Less Competition
High Barrier
High degree of price control
MONOPOLY
No Competition
Almost impossible to enter
Full control on price
MONOPOLISTIC COMPETITION
market, the Monopoly supplier has full control over the selling price.
HOW THIS RELATES TO THE PROPERTY MARKET
Let me ask you a question: Who are the suppliers in a Property Market? Perhaps some of you may start naming developers such as SP Setia, EcoWorld, Mah Sing, UOA, Sunway, BKP, UEM Sunrise, and many more. In fact, there are countless suppliers. These can even be you or me. As long as you have a secondary property unit to sell, you are a supplier. That’s right. A supplier is not necessarily a developer but also someone who has a property for sale.
So basically, there are two groups of suppliers in the property market:1. Housing Developers 2. Sub-sale unit (also known as secondhand property) Sellers From 2008 to 2010, it was relatively easy as compared to now to be a housing developer and own a second property unit for investment. During those years, developers could sell pre-launch projects. This meant they could make a profit by getting cash from buyers even before their projects were approved for sale (Advertising Permit (AP)/ Developing Licence(DL)) by the Government. Also, the application of Individual Strata Titles from the State Government was allowed to be delayed
for two to three years after Vacant Possession (VP) of the project. Back then, the barrier to enter the housing development industry was low while the demand-profit margin was high. As a result, a lot of new small or medium-size developers jumped on the bandwagon to build new properties. Demand triggered supply. It was just that simple. With demand booming and property prices shooting up, it triggered investors’ desire to acquire more properties. In addition, there was relatively little restriction on mortgage loans and the loan approval rate was more than 80%. As a result, the number of sub-sale property suppliers started building up too. September 2017 I 61
Investment Talk
Based on the characteristics listed below, can you tell which Market Structure was prevalent during the years 2008-2013?:1. Moderately low barrier to entry as a supplier (either sub-sale or new project) of the property industry. 2. Property is a heterogeneous product (products with attributes significantly different from each othe, so that it is difficult to substitute one product for another.) The main factor that differentiates property is location 3. Competition between suppliers is considered high. That’s right! It was a Monopolistic Competition Market Structure! What about price control in this type of market structure? Yes, suppliers do exercise a small degree of control over the price. In a Monopolistic Competition Market Structure, the price of property depends pretty much on the market. When all factors such as market sentiment, demand-supply relationship and interest rates are all in good shape, then the price will go up. If it is the other way around, the price will go down. If this market structure continues, the socalled “Property Bubble” will appear.
WILL THE “PROPERTY BUBBLE” HAPPEN IN MALAYSIA? WILL IT BURST?
My answer is… NO! Why? Because a “Property Bubble” will only happen if the supplier or producer has totally lost control of product pricing. From 2010 till today, the Property Market scenario has changed from a Monopolistic Competition Market Structure to an Oligopoly Market Structure. Can this happen? Yes, it is possible. Market Structure can change if the number of suppliers increases or decreases. The number of suppliers in the local property market has changed, due to the following factors:1. Raise in the entry barrier of the housing development industry
62 I September 2017
Amendment of the Housing Development Act (HDA) • Effective July 1, 2015, there were a few amendments to the HDA aimed at preventing weak players from entering the industry:• The deposit for a developer’s licence was revised. From a fixed deposit of RM200,000, it is now a sum equivalent to 3% of estimated construction cost. • Greater restriction on advertisements by developers such as offer of free legal fees, projected rental income, claims of panoramic view, travelling distance time to popular destinations and so on. • Pre-launched projects are not allowed to collect booking fees from buyers. • Necessitates the passing of strata titles upon delivery of VP. Amendment of the Strata Title Act (STA) and Strata Management Act (SMA) • Ensures that strata titles are passed to purchasers upon delivery of VP. • Promotes certainty on the allocation of share units from the early stages of development as well as greater check and balances on developers at various stages of construction. Goods and Services Tax (GST) Implementation • The Malaysian Government implemented GST on April 1, 2015 with the aim to improve the taxation system which had an impact on the property industry as follows:• With GST, there would be a one-off increase in property prices across the board. • While developers may not bill home buyers for GST, they can transfer the costs implicitly via the sale price. • The overall price increase for new residential properties may be marginally lower than that of new commercial properties. • The secondary home market should see a knock-on effect in prices. • The increase in costs and prices of housing developments will indirectly lower both supply and demand of property development.
About The Contributor
Tony Yap is the author of the book “Buy Bricks”. He was previously an Applications Engineer with a wellknown Electronics Multinational Company, turned into Property Investment Consultant in 2014.
2. Raise in the entry/exit barrier in the secondary property supply a. Demolishing of the Developer Interest Bearing Scheme (DIBS) to waive progressive interest. b. Implementation of Real Property Gains Tax (RPGT) to hold down transaction frequency. c. Foreigner investor restriction increased to RM1 million (minimum purchase price). As a result of the tightening of loan approval rates, increase in property prices and a raise in the entry barrier for housing developers, there will be fewer numbers of developers and investors. When the number of suppliers is low, competition will be less and suppliers new property developers and sub-sale property owners - will have a higher degree of Pricing Control Power. In other words, property prices will be under control. Day by day, the Property Market is moving towards an Oligopoly Market Structure with fewer players in the industry and where the price control power will be in the hands of the suppliers. With this, I can confidently say there will be no “Property Market Bubble” effect happening right now.
Property Strategy
PROPERTY I PRICES HAVE TO FALL BY 51% TO BE CONSIDERED AFFORDABLE. SO, DO WE STILL WAIT BEFORE BUYING PROPERTY?
would like to share my thoughts about housing unaffordability in this country and how this impacts first time homebuyers and even investors who feel priced out of the market. What options are available to them? And, should they be resigned to this predicament? Firstly – some context. The average household income in Kuala Lumpur averages approximately RM7,600 per month. According to Khazanah’s statistics, for a house to be deemed as affordable, the housing loan should not translate to more than three times one’s average annual income. As such, an affordable house in KL should be priced around RM274,000 (RM7,600 x 12 months x 3) However, guess what? The average actual price of a KL property is about RM560,000 based on data obtained from NAPIC. Therefore, for properties to be considered affordable, prices need to crash by 51% (which is the difference between RM560,000 and RM274,000). However, there is a need for a reality check. After all, about 60% of home ownership in the Klang Valley would likely result in residential owners not wanting their property prices to fall by 51%. The sad truth is that should house prices fall by 51%, there would be other problems to worry about. Increasing unemployment, plummeting business confidence, consumer spending being at a standstill that can result in a precipitous drop in the economy. Assuming that property prices will remain stagnant or may just increase conservatively by about 5% per year, what can first time home buyers or aspiring investors do? It may seem easy to ask them to buy at the outskirt areas, leverage on the light rail transit (LRT) or other modes of public transportation. However, given a choice, most people would want to stay closer to where the action is at residential enclaves located not too far from the urban hotspots as they would want to be close to their friends and other amenities. Some suggestions for those who are priced out of the property market:• Here’s my two cents take on what I perceive is a balanced view. We are not going to see super-explosive
About The Contributor
Mark Chua is the bestselling author of the book “WHO SAYS”. He was a former senior vice president of a bank and an ongoing avid lover of properties. He is living proof that one can be successful in both their careers and property investments He can be reached via hello.markchua@gmail.com or www.facebook.com/MarkChuaMY
• •
•
•
•
growth in prices anytime soon. Granted, the super bull years from 2009 to 2014 are over. However, prices will still increase moderately around 4.5% to 5.5% per year. This may not appear too exciting, but prices will be sticking upwards. My advice to young, aspiring investors is there’s nothing wrong with wanting to invest in KL, PJ, Subang or other “happening areas”. However, perhaps it’s time to lower one’s expectations on how our first property should look like. After lowering those expectations, do whatever you need to do to get into the market. In all humility and with due respect, you have to find a way to get into the market because if you don’t, the opportunity to do so is going to run away from you. Learn to save. Rent first if you must. Consider borrowing from one’s parents and work hard to increase one’s savings. Do not indulge in a Jho Low inspired lifestyle. Times have changed and property prices are higher, but the methodology towards attaining property is still the same - save, sacrifice and devise a sound financial plan. Lastly, be a fighter. Don’t give up. September 2017 I 63
Finance
REAL ESTATE INVESTMENT,
REALLY?
“Investing in real estate requires a high entry point in terms of capital so I am not ready as of now.” “Investing in real estate has a lot of potential and I believe it will bring about a brighter prospect for the time to come, but I am not ready yet.” “At the rate I am able to save now, I can only hope I can still have a chance to invest and ride on the next real estate wave.” I actually disagree with the above options as I believe we can still participate in the growth story of real estate other than buying the physical properties ourselves which of course, commands a high capital requirement that often times become the absolute factor which may stop most people from investing. There are generally three options when it comes to real estate investment:1. Direct investment - Investing directly in the ownership of the physical properties; 64 I September 2017
2. Indirect investment - Investing in the stocks of housing development companies such as developers, or Exchange Traded Fund (ETF) that invest into these counters; 3. Investing in real estate trusts (such as Real Estate Investment Trusts (REITs)), or real estate mutual funds which are two different things. One can invest in funds that invest into property related assets, or the properties as assets. When it comes to real estate investment, there are a few characteristics to consider which investors should pay attention to:-
have the willingness to sell the property off at a discounted rate, does not mean someone else will be willing to pick up the offer at the other end of the table. Generally speaking, during bad times, even properties that are being auctioned off or to be auctioned by financial institutions will not be able to find takers. And sometimes, it may take a long time before the approval for the auction is finally given especially if it can be contested by the owners at times. This characteristic is often the result of a direct impact to those who invest in real estate via the first option of direct investment and is not so much of a factor for those who choose to invest via the second and third routes.
1. SALEABILITY
2. LIQUIDITY
Finding a buyer can be tough during bad times. Sometimes, even when you
Liquidity refers to the ability of the investor to convert assets owned by them
into cold hard cash at prevailing market values. The latter consideration of prevailing market values is an important element in the definition as surely, one can also find a buyer for a property by offering attractive discounts, but what good would this do for the investor, right? Therefore, liquidity is not only about looking at how soon assets can be converted into cash but it also concerns the value of the asset and cash. Surely, even after the sale of one property is completed, it would still require some time before the sale proceeds come in which normally would take anywhere from a three-month to six month time frame. If the transaction involves the consent of the State Government, it could require a longer time frame than the above stated. Hence, if you invest in real estate via route number one, the liquidity issue is quite prominent, whereby via option two or option three, liquidity is not much of an issue as the asset will be relatively more liquid as compare to direct investment.
3. TAXATION If you are investing in real estate in Malaysia, at least as of now, you are only subjected to the RPGT (Real Property Gains Tax). However, if your holding period exceeds the stipulated time frame, you may end up not having to pay any capital gains tax at all. Therefore, when you invest, be mindful of the time frame too otherwise, your profit will be taxed. However, rental income will be taxed all the way under the Income Tax Act 1967. Similarly, if you are investing in real estate via option two and option three, be sure that when you receive dividends, the income tax has already been levied unto the dividend at a flat 10% singletier rate. Therefore, when you report to income tax, you do not need to include the dividend received in that particular tax assessment year. Of course, if you are trading your holdings acquired via option two or option three, you will not be subjected to any form of capital gains tax or RPGT.
4. PROFITABILITY Making a profit is the most important concern for most investors. After all, we all invest with the expectation of receiving potential returns on investment (ROI). All forms of investments should provide at least one of these two forms of investment returns. Real estate investments will likely provide capital gains and appreciation as well as income rental and dividends for those who directly invest in properties while holding on to assets. This is assuming one can manage to rent the unit out at a rate above the cost of maintaining the property which include instalment, maintenance fee, quit rent and assessment as well as other necessary expenses. Then, one will end up with positive returns in the form of rental income. For those who invest via route two and three, the income return will come in the form of dividends declared by the stocks one hold or the dividends distributed by REITS or Real Estate mutual funds. The chances of one gaining more from capital gain returns with a huge upside potential is when one invests directly in the ownership of real properties. This may probably involve leveraging on loans as well as the potential offered by increase in prices. As opposed to option one showcasing an investment approach, option two and option three have more limited upside, while option three will have lesser appeal in terms of capital gain return but will fetch more on the income return side. REITS will have to distribute up to 90% of its income generated by the underlying assets which can be represented by commercial properties, office towers, hotels, malls, hospitals, etc. while real estate mutual funds will depend on the objective of the fund. Indirect investments will perhaps see a good combination of capital gain return and income return, whereby most probably the likelihood of income return will be dependent on the business cycle or lifespan of the company. This pertains to holding their stocks or where a new uprising company may be more focused
About The Contributor
Kevin K.M. Neoh is a Licensed Financial Planner by the Securities Commissions Malaysia and Bank Negara Malaysia.
on growth. Therefore, it may be more profitable to reinvest in the business rather than sharing the profit with shareholders. In conclusion, there is more than one way to get exposure and enjoy the benefits of real estate. What investors need to be sure of is to identify one’s investment objective and personal investment time frame, holding power and whether one has done the risk management work prior to investment as this will likely affect one’s ability to reduce the impact of liquidity risk. In all, to grow one’s money and wealth optimally, one must not be blinded by the attraction of potential investment return alone but also be wary of the risks associated with it. Risks and returns are just like water level dictating the level ships will sail at. We desire for the ship to rise high but this must be preceded by the water level rising first. Therefore, wise investors should be working hard to ensure that the water level does not go above the ship otherwise it will sink. Hence, ensure that you are not only single-mindedly focused on the attraction of ROI (return on investment) but will also access your personal finance holistically. At the end of the day, the advice is to plan ahead in advance, use information well and create synergy in all areas of personal finance which include having proper asset allocation while holding on to a diversified portfolio. With this, one will then be able to optimise one’s wealth with minimal risk exposure. September 2017 I 65
Strategy
BASICS OF BORROWING B
efore borrowing, you should ask yourself what the purpose of the loan is for. It would be wise for you to keep in mind that you should borrow to meet your needs - and not your wants. When you want to take a loan or use a credit card to purchase something, ask yourself the following questions first :• Is the product or service I intend to purchase a need or want? • Can I afford to pay the instalments? • If it is a substantial purchase such as a big ticket item like a house, can I put down a larger down payment? Sure, borrowing from credit providers is tempting as it allows you to obtain money on loan or get a line of credit to enable you to buy a house, a car, pay your bills or even go on holidays. Although a loan is beneficial, particularly in helping you pay for big purchases, it is crucial for you to keep in mind that the money you borrow is not free. Money on loan needs to be paid back with interest and penalty charges when it is repaid late!
CREDIT AND DEBT
Credit is a facility to borrow with an agreement to repay the creditor, as per the terms and conditions outlined in the contract. Borrow for productive purposes only and for something that you really need but do not have enough cash to pay for. These include buying a house or a car, sending your children for further education or meeting emergency needs. 66 I September 2017
You are given a credit card with a limit of RM3,000. If you have spent RM1, 000 on your credit card, that RM1,000 of utilised credit now becomes a debt. BEFORE : RM3,000 credit available AFTER
: RM2,000 credit still available
DEBT
: RM1,000
Borrow within your means. You should only borrow an amount that you can pay back comfortably. It is recommended that your total monthly repayments should not exceed 40% of your net monthly income (after statutory deductions including income tax, Employees Provident Fund
(EPF) and SOCSO. A borrower has a moral obligation to repay as there should be no excuses for not repaying your debts. Always bear in mind that your creditworthiness will be affected if you do not repay your loans according to the terms of repayment.
vs PRODUCTIVE DEBT
(Buying appreciating assets)
UNPRODUCTIVE DEBT (Consumption Debt)
Money borrowed at competitive rates to invest in quality assets
Taking a new loan to pay an existing loan without any cost savings
A housing loan that is being paid off in a planned manner
Having a high-interest personal loan to pay for holidays or other lifestyle costs
Here are some examples of productive debt versus unproductive debt:-
COMMON SOURCES OF BORROWING
There are various credit providers in Malaysia. The following are common sources of borrowing:Licensed Financial Institutions (LFI) LFIs, including commercial banks that are licenced by Bank Negara Malaysia (BNM), provide credit facilities to the public. You are strongly advised to borrow from a LFI as there are rules and regulations in place to safeguard your rights. Co-operatives Co-operatives are regulated by the Ministry of Domestic Trade, Cooperatives and Consumerism (MDTCC). Members of the co-operatives may borrow from their co-operatives based on their eligibility and other criteria set by their management Licenced Money Lenders (LML) LMLs are lenders licenced by the Ministry of Urban Wellbeing, Housing and Local Government to provide loans to the public. However, unlike LFIs, they cannot accept deposits and their interest
SECURED LOANS Backed by assets and normally easier to obtain In the event of default, the lender will be able to take possession of that asset and sell it to recover the loan Examples of secured loans are housing loan and car loan
rates are normally higher than LFIs. So, it is advisable that you always check the rates offered by these LMLs before
About The Contributor
taking a loan.
Unlicensed Money Lenders (UML) UMLs are illegal and commonly referred to as “Loan Sharks” or “Ah Longs”. You should never borrow from UMLs. UMLs offer unsecured loans at very high interest rates with vague but strict terms and conditions. These UMLs can resort to threats and violence on borrowers who cannot repay their loans.
TYPE OF LOANS
Dr Desmond Chong Kok Fei is a Trainer & Head of the Financial Education Department, Agensi Kaunseling and Pengurusan Kredit. He has over 25 years working experience in marketing and management,
Islamic Banking Islamic banking institutions are licensed by BNM and follow Syariah (Islamic principles), which prohibit Riba (collection and payment of interest), usury (the act or practice of lending money at an exorbitant interest rates), trading with financial risks and haram (unlawful) business ventures. In Malaysia, all individuals regardless of their religious beliefs have the opportunity to choose between Conventional and Islamic banking.
UNSECURED LOANS Not backed by any assets Reply on your ability to repay the loan and your credit background Generally smaller in amount, shorter in tenure and have higher interest rates In order to mitigate the high risk, sometimes require a loan guarantor Examples of unsecured loans are credit card and personal loan
Islamic banking operates according to Syariah rules on transactions, known as Fiqh al-Muamalat. The basic principles of Islamic banking include the sharing of profits and loss as well as the prohibition
of Riba. Some common concepts used in Islamic banking include profit-sharing (Mudharabah), safekeeping (Wadiah), joint-venture (Musharakah), cost-plus (Murabahah) and leasing (Ijarah). Islamic banking products in Malaysia are monitored by the Syariah Advisory Council set up by BNM in addition to each Islamic bank’s own internal Syariah review committee.
CONCLUSION
Before you decide to get a loan for the purpose of purchase property, you need to find a suitable loan which addresses your needs. As you are aware, a property loan is for the long term. Hence, it worth spending time to understand the workings of the loand and other factors regarding repayment. We will discuss the next topic on what lenders will look at before releasing the loan and types of interest computation as well as how it will have an effect on your total borrowing cost. September 2017 I 67
Strategy
HOW I LOST OVER
RM 1.2
MILLION IN PROPERTY VALUE I
am going to tell you a story of how I lost over RM1.2 million in property value and how you can avoid the same problems. A few years back, I bought into an old-style development surrounded by six acres of greenery fronting the Putrajaya lake that had great potential for improvement that was built some 10 years ago before the start of Cyberjaya. The property value for this project was increasing with time and it reached RM470psf at one point although it was an old development that needed plenty of upgrading works and upkeep of the place. However, the problem was with the management team (Joint Management Body (JMB) and Property Managers) who were just not up to the task. There was so much politics and arguments within the management that its focus of was on lawsuits against a developer and some owners. We are talking about lawyer fees amounting to hundreds upon thousands of the committees’ funds that was spent on arguing and fighting with the developer until they eventually lost the case and got nothing out of it. The management team was only focused on this issue and they diverted all of the owners’ attention to these
68 I September 2017
arguments while the basic management of the property was left unattended, with the maintenance of the building and its environment eventually falling apart. There were no forward- thinking solutions coming from the management team and they took slow action in carrying out their duties. There was no drive to change the managers and get experienced, proactive staff either. And as a result, the property value subsequently kept declining from RM470 page to as low as RM270 psf which was a huge drop of RM200 psf. So this is an example of how much of an impact a bad property management team can inflict on a development. The problem is that the owners’ committee which manages the project has no idea on how to upkeep or improve the development, resulting in lacklustre and impractical ideas which contribute nothing towards the development and does nothing for improvement. The committee needs to not only manage and maintain the project but has to be forward thinking and add value to the project at hand. This takes knowledge and experience which most owners don’t have as these attributes are very hard to find.
What usually happens is that in all likelihood the committee would usually seek a “professional” property manager to come in to manage the project for them. And usually, they end up with some very bad choices because the committee has no practical experience in the industry, resulting in them not even being able to pick out good managers. This then continues the vicious cycle of poor property management in Malaysia. A property manager needs to not only maintain a property but also be able to guide others to come up with a continuous improvement plan for the project. This is the only way the property will keep appreciating and benefiting all owners and residents. I’m sure I sound very negative above but not all projects are badly run. A good example of a well-run operations is Summer Suites in Kuala Lumpur. This project also had its fair share of problems when it was first developed. However, the proactive owners and the knowledgeable property manager got together and focused on ensuring the success of the development by doing whatever it would take to make it work. To cut a long story short, the figures
“
It is always best to buy below the price value of the property in a particular location and also to invest in the type of unit that commands demand. Thereafter, selling the property would be easy” - Sandeep Grewal
speak for themselves whereby the development which was once priced at 750psf is now valued at RM1,300 psf. This is the exact opposite of the earlier example. Furthermore, this price increase was from 2015 to 2017 - the same time all of the property prices were not going up at all. In fact, the two next door projects to this had no increase in value at the same time. Incidentally, the property price increase was solely due to the Quality Property Management Professionals by SCM Property Services, a subsidiary of UEMSunrise and the proactive forwardthinking owners’ committee managing the project. Another thing that is very important for a project’s success is to solve the needs of potential clients beforehand. One very important elements nowadays is the presence of commercial elements nearby. By this we are talking about the basic supermarkets, restaurants, banks and entertainment components like cinemas, bowling and other hang out places. As people are becoming busier with their daily lives, they also appreciate the ability to access as many conveniences as possible by just coming out of their houses. But none
of these conveniences should get in their way by causing traffic jams or excessive noise. If these components can be brought into a project, its value can rise and more people would want to own or rent units there. Another important thing to bring to the development is the issue of accessibility and transportation. As things get more expensive these days, the sacrifices people are willing to make deals with the ownership of cars. For the first time in history, the number of car ownership per household is actually slowing down and might just take a turn to becoming less per household. This is more prevalent in the city with the latest light rail transit (LRT) and mass rapid transit (MRT) lines coming up coupled with the new on demand pick-up services represented by GRAB and UBER. So, with great transportation services like trains as well as GRAB and UBER, a project will be more in demand and will attract future generations to come and stay. In a nutshell, proper management and the right people will make or break your investment. So as owners, one should get the right managers for
the project and experienced advisors who can set a future plan to make the building a success. These managers should also be able to bring in business to make the projects vibrant and exciting. For only then will there be development taking place within the project. Gone are the days when one just buys a property and it will just go up in price. These day, one needs to be actively involved in maintaining and also upgrading the project to increase its value as well as to think out of the box. The problem with the industry and the law is that there are rules that give owners the right to be part of the committee. As such, it doesn’t take into account the fact that property owners may not even know how to manage the project. So with this, the committee hires “professional” property managers. But in reality, these property managers are not up to the part that is needed in the industry now. Therefore, there needs to be more supervision into what these guys are doing and how the public views these property managers. This public review will be good because then, project owners can really see who is good and who is just of basic standard. So with this, I wish you happy investing and make sure your management committee and the managers are doing their absolute best with regards to maintenance and upgrading. Otherwise, your investment will turn out bad. September 2017 I 69
Strategy
YOU CAN’T HAVE IT ALL
Properties that achieve the highest rental yields have the least chance of capital growth yield and vice versa
T
o a certain degree, property investment can offer one the best of both worlds:- It is possible to earn an income from an asset while waiting for the underlying value of the asset to appreciate over time. However, having said that, there is usually an inverse correlation between the rental yield and the capital growth yield. That is, properties that achieve the highest rental yields have the least chance of capital growth yield and vice versa. This means some properties will perform better on rental yields while others will perform better on capital growth. Essentially, what all this means unfortunately is that you can’t have it all. From the outset and as part of your investment objec¬tives, you will need to decide what you want and/or need more: Income or capital. Deciding which of these two considerations is more impor¬tant to you will dictate the type
70 I September 2017
of properties you would buy. This means that if you are targeting capital growth properties, you will likely be buying at more expensive areas and will need to put down a larger equity stake to ensure that you meet the rental ratio set by many mortgage lenders. This is usually 125 per cent of the interest payment. That means that if the mortgage interest payment is RM1,000 per month, the lender will require your rent to be RM1,250 representing 125 per cent of the interest payment. However, if you want income from day one to ditch the day job, then you will be looking for higher rental yields against a lower capital outlay. These properties situated away from the Central Business District (CBD) will tend to be more affordable. However, they will probably yield monthly surplus income. The beauty of running a property investment business is the number of costs that can be offset against tax. The most valuable tax deduction is the mortgage interest that can be offset against the rental received. Moreover, there are opportunities to offset repairs and improvements to the property as either revenue or capital expenses. This is not to mention the agency fees that can be deducted besides other expenses incurred as a result of running the business. This makes property investment a very tax-efficient use of funds. However, there is a clear distinction between capital and revenue expenses and how these are set off so00 you should discuss these with a professional tax advisor. Capital growth yields are calculated differently from rental yields. Capital growth is the price appreciation on an investment relative to the amount that was initially invested. For example, if a property was purchased at RM100,000 and the value increases to RM150,000, the capital growth yield is 50 per cent. It is calculated as follows:-
CAPITAL GROWTH YIELD = (MARKET PRICE OF A PROPERTY - ORIGINAL PURCHASE PRICE) / ORIGINAL PURCHASE PRICE X 100
Thus, the worked example would look like this:-
About The Contributor
(RM150,000 - RM100,000) / RM100,000X 100 = 50% Capital growth yields can be notoriously difficult to predict and the value of a property can go down as well as up. Capital growth yields and rental yields are completely different animals with very different outcomes. This means that you would need to plan from the beginning if you want to make regular amounts of money or want a big payoff in the future. Of course, the trick to having it all could be to opt for a “blended approach” - that is, buying properties with high rental yields to support properties bought for capital growth potential.
GET USED TO COMING IN SECOND BEST Building a money-making property business does not happen overnight. And, there is no get-rich-quick. Yes, some people get lucky - gambles can pay off, markets can meteorically rise but on an everyday basis, success needs to be planned. Getting a business off the ground can be challenging and takes time, requiring effort and money to grow it. There will be moments when you wonder: Is it worth it? When you are in the early stages of building your business, you have to focus on the future outcome the good times that will come as a result of your efforts now. That means putting the needs of the business first. It’s rather like having children - the busi¬ness needs to be your priority if it is to grow into a stable and well-adjusted adult. What you need to keep in mind is the future payback of property investment: Look after a property well, and it will look after you well. What though, does being second best mean? It means unfortunately, sometimes going without. It means you being a lower priority than your business. It means your tenants’ needs come above your own needs. It means doing everything in your power to ensure your
Dato’ KK Chua is the Strategic Adviser and Managing Director of Armani Media. He is also a registered Real Estate Agent and an investor with more than 10 years experience in the industry. He can be contacted at kkchua@propertyinsight.com.my
business survives and thrives. It means what it says on the tin: you are second best. And, that can be tough in the beginning. It can feel like everything you do and all your resources are spent on building your property business. But, if you want to really succeed, your business comes first and you come second. This may all sound very depressing and boring, and you may even be questioning why you wanted to get into prop¬erty investment to begin with or why you have invested. But let me tell you: It’s for the long term. You are playing the long term game. Owning and running a property business may be hard work in the beginning, and it may feel like a never-ending drain on your resources, but look after it right and it will look after you right. Be patient. Run your business to the best of your ability and understand that making money takes time. Once you have perfected the art of looking after your business inter¬ests, you will learn what this actually means is looking after your own best interests. By knowing this, you will feel a lot less frustrated by what you are missing, because of what you stand to gain in the future. And, the sacrifices you make now will be worth much, much more when you come to collect your winnings in the future. September 2017 I 71
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