Property Insight February 2017

www.propertyinsight.com.my

COVER STORY

PUTRAJAYA HOLDINGS

FEBRUARY 2017

AREA FOCUS

PUSAT BANDAR PUCHONG

MAIN FEATURE

CITY OR SUBURBS? KDN PP 18181/04/2013 (033492)

FEB 2017 RM7.50(WM) RM9.00(EM)

ENTREPRENEUR INSIGHT

2017 EVENTS CALENDAR

MAY 13

MEC

MALAYSIAN ENTREPRENEUR CONVENTION

JULY 21

100 MIYE

THE 100 MOST INFLUENTIAL YOUNG ENTREPRENEURS

AUG 12

KUB

KONVENSYEN USAHAWAN BUMIPUTRA

OCT 13

AHBA

ASIA HALAL BRAND AWARDS

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

EDITOR’S NOTE

EDITORIAL

Prosperity Ahead

Dato’ KK Chua, Editor-in-Chief

U

sher in this Chinese New Year which is none other than the year of the fire rooster! Do you know what this means?

It is the year to rise up early and work harder towards achieving your goals and dreams!

With a new year there is also the possibility of new changes coming our way. And while we may still be experiencing some challenges in our property market this year, do not despair as like what our writer, Divya Prembaj tells us all in one of the features, we should learn how to make the most out of the situation even during this down time.

This month, we also have Putrajaya Holdings on our cover where they shared about the trials and tribulations of being a successful developer especially in this demanding market. As we all already know, it is important for us to know what our customers want but we should also not overlook the importance of raising awareness for a sustainable construction as this can also help our economy.

If you are looking for a place to invest, you may want to consider our Area Focus: Pusat Bandar Puchong as your go-to place for the best of the best. However for those of you who prefer a quieter lifestyle, you might want to check out our main feature where our new Sub-Editor, Gabriel Lim shares a more detailed analysis on what is actually suburb living.

We also have our Investor Spotlight where Mages interviewed Mark Chua, a young and positive property investor who reveals to us about how a simple employee managed to become financially free at the age of 33 simply by getting rich working a 9 to 5 job.

Lastly, for those of you who have to “balik kampong”, remember to stay hydrated during this humid weather because a healthy body is a healthy mind. Here’s wishing all of you a Happy Chinese New Year and may this year be a good year for all of us.

Editor-in-Chief Dato’ KK Chua kkchua@propertyinsight.com.my Sub Editor Gabriel Lim Writers Divya Prembaj Mages PV Lingam Felicia Soon CREATIVE Creative Director Sarah Tan sarah@propertyinsight.com.my Designer Megat Khuzamir Syarifah Fadhillah BUSINESS DEVELOPMENT General Manager Janet Loh +6012 205 0911 janet@propertyinsight.com.my Andy Fam +6012 601 9938 andy.fam@propertyinsight.com Hagenz Choo +6012 371 8831 choo@propertyinsight.com.my Iris Gan +6012 799 6685 iris@propertyinsight.com.my Wei Yeen, Chong +6012 927 2863 weiyeen@propertyinsight.com.my

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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.

ENQUIRIES enquiries@propertyinsight.com.my On the cover : Datuk Azlan Bin Abdul Karim, Putrajaya Holdings Sdn Bhd CEO & Director

CONTENTS 32 INVESTOR SPOTLIGHT

46 Sensible Investments for a Safer Future 10

Prudent investor stands on passive and active income for stable holdings

COVER STORY

DESTINATION: CULINARY JOURNEYS

Prime local developer aims to reshape the way we think about sustainability

Keith Loh Shares his views on pioneering his one-of-a-kind soft baked cookie venture in Malaysia, the brand new CookieNation

MAIN FEATURE

ROOKIE INVESTOR

Finding a delicate equilibrium between the benefits we crave for and the cost that we are willing to bear

‘Cash is King’ for the best property deal now

10 Putrajaya Holdings: Setting its Sights for a Greener 2017 50 On the Cookie Trail

16 City or Suburbs, Which is for You?

FEATURE

20 Insurance Protection: Flood and Fire Serious thoughts to be pondered for the unexpected

22 Moving Towards Sustainable Construction in Malaysia Government should advocate sustainable construction, such as giving incentives to developers who want to pursue sustainability in their projects

24 Maximising Your Profits in 2017 Making the best of a volatile property market

28 Rails to Rally Property Value Property prices around MRT stations are expected to rise

30 Have We Reached the Lowest Yet? What are the best steps for homebuyers to take in a ‘buyer’s market’?

DEVELOPER OF THE MONTH

32 TRX Panoply: City with the Sparkle of Excellence A city that neither sleeps nor slumbers is about to roar!

AREA FOCUS

38 Pusat Bandar Puchong: A Well-Kept Jewel A stellar investment for lifestyle and capital growth

ENTREPRENEUR INSIGHT

44 Leaders: Made or Born?

Upward mobility in an organization creates the next generation of leaders

52 A Shining Star Shooting Through the Roof INDUSTRY INSIGHT

54 Nawawi Tie Leung: Making a Difference Diligently in the Property Market

Going independent to scale newer heights

PERSONALITY OF THE MONTH

56 Iconic Feruni Fundamentals: The Best Kept Values Instilling the importance of adaptability in business and community

FINANCE

59 Avoiding Pitfalls: Real Estate Investment with the Right Advice

60 Flip or Hold: Which is Better?

STRATEGY

62 Is Now a Good Time to Buy a House?

64 Election Impact: A Trump Presidency – What’s Next?

71 Give Something Extra LEGAL

66 Can We Compromise on Purchaser’s Rights?

68 Duties of the Developer in Forming JMB/MC

NEWS & EVENTS

NEWS AND EVENTS – 100 MIYE NEW YEAR EVENT

T

he 100 Most Influential Young Entrepreneur (MIYE) New Year Party was officially launched on January 12 at New Shanghai Restaurant in Raja Chulan, with the presence of Ecoworld as the main sponsor. Over 200 entrepreneurs met up again after the awards for a night of glitz and glamour.Armani Media managing director, Dato’ KK Chua gave a summary of the market outlook for 2017, sharing his thoughts on how positivity is needed during these crucial softs market times.

www.propertyinsight.com.my FEBRUARY 2017 I 5

NEWS & EVENTS

MAH SING LENDS A HELPING HAND IN EXPANSION OF PSYCHOSOCIAL REHAB CENTRE

M

ah Sing Foundation, the charity arm of Mah Sing Group, has recently contributed RM100,000 to Malaysian Mental Health Association (MMHA) to aid efforts of expanding their current facility.

“As a premier lifestyle developer, we always look to see how we can improve the quality of life for the society,” said group managing director of Mah Sing Group Tan Sri Dato’ Sri Leong Hoy Kum. Dato’ Syed Norulzaman bin Syed Kamarulzaman, chairman of Mah Sing Foundation added, “Mental health is a growing matter in Malaysia. We are glad to have made this initiative in working together with MMHA to provide a better rehabilitation centre for patients.”

MMHA’s currently operates in 2 combined single-storey houses at Petaling Jaya. Named D’Light Home, the centre is approximately 10,000 square feet (sq ft) and can only cater to 10 female patients.

“We believe MMHA can make a greater impact on society”, said Mr. See Cheng Siang,

president of MMHA. “But our objective can only be truly meaningful if we make room to grow. Therefore, we are very appreciative of Mah Sing’s contribution in providing the opportunity for us to achieve our goal.”

The funds from the donation will be used to expand the current D’Light Home, upgrading its status from a Day Care Home into a full fledge integrated Residential cum Psychosocial Rehabilitation Centre.

HAPPYFRESH – TESCO MALAYSIA ANNOUNCES ONLINE PARTNERSHIP

H

appyFresh, the first and fastest-growing online grocery platform in Southeast Asia, and Tesco Malaysia, the country’s leading hypermarket officially announced its latest partnership, expanding their ondemand online grocery delivery services as quick as within an hour to more timestarved consumers across Klang Valley.

The partnership with HappyFresh which has been on trial across five stores over the past six months has provided customers a grocery shopping alternative through Tesco Malaysia’s wide selection and value-formoney products including fresh groceries, frozen goods and general merchandise.

“The partnership with Tesco Malaysia enables HappyFresh to be one step closer to achieving the mission of delighting more customers with its technology to make better food choices by supporting them 6 | FEBRUARY 2017 www.propertyinsight.com.my

with our flawless one-hour delivery service.

With technology revolutionizing the world, we are positive that our partnership with Tesco Malaysia will support our core vision of offering simple, fuss-free and trustable solutions to ease the lives of urban professionals, which they can utilize our platform to have their favorite and freshest goods from this hypermarket delivered to them whenever they need it, while they focus on other daily aspects in their lives,” shared Opal Wu, managing director of HappyFresh Malaysia.

Speaking at the event, chief executive officer of Tesco Malaysia, Paul Ritchie said, “As Malaysia’s leading hypermarket, we make every effort to delight all our customers, in-store as well as on our online platforms.

DIRECT CONNECTIVITY TO GAMUDA GARDENS VIA NEW ACCESS ROAD

M

inister of Works, Dato’ Sri Haji Fadillah Haji Yusof officiated the opening of a new 3.1km access road recently, on 9 January 2017. The opening of the new access road at the Kuang Sistem interchange will provide easier and faster access from Kuala Lumpur to Kundang, as well as its surrounding vicinities in northern Selangor.

With direct access from the North-South Expressway (NSE), the travel distance and time from the capital will be reduced by approximately 10 km or 15 minutes.

The new road will also provide direct connectivity to Gamuda Gardens, an iconic 810-acre mixed-use development by Gamuda Land.

Gamuda Land’s Executive Director, Dato’ Haji Abdul Sahak Safi said, “With the opening of the new access road, Gamuda Gardens, with a Gross Development Value (GDV) of over RM10 billion, and located right at the intersection of KL - Kuala

Selangor Epressway LATAR, NSE and GCE, will be easy to access from all parts of the peninsular.” Built on natural undulating terrain, Gamuda Gardens offers a unique and compelling proposition, fusing quality lifestyle with rich nature living in a satellite township.

It features five cascading lakes integrated into a 50-acre park.

OVERWHELMING RESPONSE ON 3RDNVENUE BY TITIJAYA LAND BERHAD

M

ore than a thousand purchasers queued up at Pullman Hotel Kuala Lumpur recently to register for units at the latest property development by Titijaya Land Berhad, 3rdNvenue. Aimed at promoting the next generation city lifestyle, 3rdNvenue was inspired by the bustling vibe of Fifth Avenue in New York City.

Speaking at the event, Titijaya Land Executive Director Ms Charmaine Lim said the positive response from purchasers of 3rdNvenue shows the market confidence and strong follower base in property products by Titijaya Land, adding that this is a very encouraging sign of recovery in the local property market.

She disclosed that the first phase of development has a total of 1,110 units across 42 storeys which are currently for sale.

“Adorned with a prestigious address along Embassy Row at Jalan Ampang and surrounded with reputable malls, hotels, hospitals and various amenities, we are optimistic that we shall receive good response for 3rdNvenue. The strong branding of Titijaya Land also plays a key role in attracting a large group of buyers,” she added. 3rdNvenue will comprise four blocks with a total of 2,400 units.

www.propertyinsight.com.my FEBRUARY 2017 I 7

NEWS & EVENTS

PARAMOUNT BLOSSOM JOINTLY DEVELOPING PROJECT IN SEREMBAN WITH TWO LEADING CHINESE CORPORATIONS

P

aramount Blossom Sdn Bhd, a subsidiary of Landasan Kapital (M) Sdn Bhd entered recently into a joint venture agreement with two Chinese conglomerates, Fujian Hexinyuantong Investment Co., Ltd. and China Railway Liuyuan Group Co., Ltd. to develop a 77-acred land in Mukim Rasah, Seremban.

Managing director of Paramount Blossom, Dato’ Mohd Nadzlim Mohd Noor said the joint venture will comprise of the development of 835 unit terraced houses, semi-D’s and duplexes.

“The joint venture has an estimated gross development value (GDV) of about RM650 Million and the launching is due in May 2017 while construction is slated for completion within 24 months,” said Dato’ Mohd Nadzlim.

Fujian Hexinyuantong Investment was represented by the Chairman, Mr Wang Jin, while China Railway Liuyuan Group by its President, Mr. Zhang Xianfeng.

“I am very pleased with this successful

signing ceremony, a true indication of the sound and robust real estate market in Malaysia, and it shows strong evidence of the sustainable and growing demand for our product offerings.

“Furthermore, the partnership agreement

will also mark a new chapter in the relationship between two countries which further consolidates China’s position as Malaysia’s largest trading partners,” he said.

E&O SPONSORING RM200,000 FOR PENANG CNY LANTERNS 2017

L

IFESTYLE property developer Eastern & Oriental Berhad (E&O) will be involved in the Chinese New Year celebrations in Penang for the 11th consecutive year.

This time, the company is the main sponsor with a RM200,000 contribution to the state government’s Penang CNY Lanterns 2017 event to be held at Dewan Sri Pinang.

A spectacular display of lanterns in various thematic designs will be up for public viewing from Jan 26 to Feb 26.

Admission is free.

E&O group corporate strategy director Lyn Chai said it was an honour for them to continue the long-standing commitment in supporting socio-cultural festivals in the state.

“E&O is extremely honoured to be part of this meaningful event which showcases the

8 | FEBRUARY 2017 www.propertyinsight.com.my

rich culture and heritage of George Town.

“It underscores our deep connection with the past, present and future of

Penang,” she said during a mock cheque presentation ceremony attended by Chief Minister Lim Guan Eng.

SUNWAY CONSTRUCTION RECEIVES RECOGNITION FROM ASEAN CORPORATE GOVERNANCE TRANSPARENCY INDEX

S

unway Construction Group Berhad received a prestigious award at the Malaysia – ASEAN Corporate Governance 2016 Awards.

The awards, presented by the Minority Shareholder Watchdog Group (MSWG), took place at the Sime Darby Convention Centre in Kuala Lumpur recently.

The award received by Sunway Construction was the Industry Excellence Award, under the Property and Construction Category. Sunway Construction is currently ranked 17th in the List of Top 100 companies for overall Corporate Governance and Performance.

Sunway Construction Chief Financial Officer, Ng Bee Lien, received the award on behalf of Sunway Construction from MSWG Chairman, Tan Sri Dato’ Seri Dr. Sulaiman bin Mahbob and MSWG Chief Executive Officer, Rita Benoy Bushon, saying, “We are humbled to receive the award and we will strive to uphold good governance through our operations as the largest listed

pure-play construction Group to ensure sustainable value for our shareholders.”

Positioned as part of a broader Capital Market framework, The Minority Shareholder Watchdog Group (MSWG) is a professional body licensed under the Capital Market & Services Act 2007. A self-governing and non-profit body, MSWG is funded predominantly by the Capital Market Development Fund (CMDF). It is an important channel of market discipline to encourage good governance with the objective of creating sustainable value.

LBS BINA SURPASSES 2016 SALES TARGET, REMAINS OPTIMISTIC ABOUT 2017

A

ward-winning developer, LBS Bina Group Berhad (LBS Bina), has started the year with a keen focus on providing homebuyers more options in the local residential property segment. Amidst a softening property market, LBS Bina attributes its continued resilience to its capabilities of applying the right strategy, with the right offerings, at the right time.

Following a successful year, LBS Bina delivered a total of 1,971 residential and non-residential units which enabled the Group to achieve an impressive RM1.238 billion in sales, as at 31 December 2016, surpassing its initial target of RM1.2 billion. 1,366 units of the total comprised homes priced below RM500,000 which contributed 70 per cent of the Group’s total sales. 87 per cent of its developments were delivered within the Klang Valley while the remaining 13 per cent comprised

developments located in Ipoh, Pahang and Johor.

In order to keep the momentum going, LBS Bina Group Managing Director, Tan Sri Lim Hock San, today announced the lineup of projects for 2017 with 92 per cent comprising residential developments and 8 per cent non-residential developments.

The property developer also announced a total of 12 new launches, amounting to a Gross Development Value (GDV) of RM 2.349 billion, constituting approximately 5,543 units due to be launched in 2017.

Approximately 4, 284 units of this total will consist of affordable homes priced below RM500,000. s “We are very happy to announce that we have achieved our sales target of RM1.2 billion in 2016. We understand the challenge homebuyers face when it comes to finding homes closer to urban

townships for better accessibility to work and amenities. This year, we will continue to focus our efforts on providing more residential options within the Klang Valley. Homebuyers can look forward to the launch of residential properties with prices ranging below RM500,000 to above RM500,000 over the next 12 months,” said Tan Sri Lim.

www.propertyinsight.com.my FEBRUARY 2017 I 9

COVER STORY

PUTRAJAYA HOLDINGS: SETTING ITS SIGHTS FOR A GREENER 2017

Prime local developer aims to reshape the way we think about sustainability BY: DIVYA PREMBAJ

10 I FEBRUARY 2017 www.propertyinsight.com.my

PERSONALITY OF THE MONTH

T

he stage is set for an evolving 2017, with the past remnants of 2016 still fresh within the minds of all parties in the property industry. The shrinking Ringgit, economic turmoil and international trade affairs have inherently shaped the way that 2016 has panned out, and inexorably paved the way for a sharper and better prepared 2017. Property developers are aiming to up their game, and the same goes to local developer Putrajaya Holdings Sdn Bhd that has a keen understanding on the effects of 2016’s market on the mass population, and are ready to put in its two cents in remedying it.

A CITY IN THE MAKING Incorporated and established on October 19, 1995, Putrajaya Holdings Sdn Bhd (PJH) was created in mind with the responsibility of designing and developing the Putrajaya Masterplan – a highly strategic 20-year plan to build up Putrajaya into the federal administrative centre of Malaysia that it is today. Putrajaya Holdings’ shareholders include Petroliam Nasional Berhad (Petronas), the national petroleum company through it’s wholly owned subsidiary, KLCC Holdings Sdn Bhd, Khazanah Nasional Berhad (Khazanah), the investment arm of the Government of Malaysia; and Kumpulan Wang Amanah Negara (KWAN). Currently with over 20 signature developments in Putrajaya comprising of office buildings, commercial hubs and residential projects, Putrajaya Holdings are pushing the envelope with their 2017 plans, in helping to create a more affordable and sustainable property

www.propertyinsight.com.my FEBRUARY 2017 I 11

COVER STORY market within Malaysia.

Located within the heart of the nation, the federal territory of Putrajaya is strategically placed amidst the hustle and bustle of the Klang Valley. Situated 5km East of Malaysia’s IT hub Cyberjaya, 20km North of Kuala Lumpur International Airport (KLIA) and 25km South of Kuala Lumpur, Putrajaya is poised for further development in 2017, carrying its name further into the stratosphere. As the federal administrative core of Malaysia, the territory comprises government offices, commercial, mixed, sports & recreational and civic & cultural development, covering 503.05 hectares of prime land. Its population count is roughly estimated to be 80,000 within residential areas, and 120,000 within the core government quarters and buildings.

DELIVERING A QUALITY LIFESTYLE Putrajaya Holdings holds strongly to many ideals that keep the company on its current journey, inherently paving the way for its progress within the industry.

With a professional take on all projects, the company is success-driven and profitorientated, with a highly knowledgeable and skilful workforce. Its goal to lead as a green city developer, along with its impressive 20-year track record of building Putrajaya to the status it is today, proudly affirm its motivations. With a brand that focuses on its commitment to deliver the projects as planned and to provide excellent customer service, Putrajaya Holdings is a premier developer that takes pride in its achievement and strong desire to deliver a quality lifestyle within a unique green city environment.

In asserting the location for its developments, the needs of its prospective buyers in terms of location and accessibility play a major role. Situated between Kuala Lumpur and Kuala Lumpur International Airport (KLIA), the developer aims to broaden its horizons with land banks in strategic areas within Klang Valley and Sepang where development is still in the planning stages.

MAKING ITS MARK As the master developer for Putrajaya, this specific role has set it apart from other developers. The company has contributed greatly to realise the plans of developing Putrajaya into a green, intelligent city. CEO 12 I FEBRUARY 2017 www.propertyinsight.com.my

Planned

Current

4,930 hectares

4,930 hectares

20

20

Resident Population

350,000

72,000

Working Population

500,000

35,000

Government Office

3.8 million m2

2.9 million m2

Commercial

3.4 million m2

0.3 million m2

65,000

27,500

Area Precinct

Resident Units Master Developer: Putrajaya Holdings Sdn Bhd Local Authority: Perbadanan Putrajaya Corporation

Planned

Completed

Government Buildings

Approximately 3.4 million m2

3.2 million m2

Commercial Areas

Approximately 3.4 million m2

0.3 million m2

Residential

Approximately 65,000 units

27,500 units

and director of Putrajaya Holdings Sdn Bhd, Datuk Azlan Bin Abdul Karim affirmed that beyond the role as a special vehicle to develop the city, it is also focussing on meeting the following objectives: • To create the hype and speed up the development of the commercial parcels • To immediately increase the value of certain plots of land • To bring in selective investors into Putrajaya • To inject variety and vibrancy into Putrajaya “The demand for our properties are still moving at a moderate level despite the economic slowdown,” he states with confidence. In league with the spectacular success of its portfolio, major components

were completed as appended here.

CHALLENGES AND STRIDES As with many current and active developers, the challenges faced by Putrajaya Holdings stem primordially from the current economic slowdown, with many talents working at its helm to counter the impacts of the slowdown. To appeal to a wider demographic of purchasers within the area, the need to transform people’s perception that Putrajaya is only available to the government servants is crucial.

Efforts to pull in residents are evident in the advent of the company’s current portfolio of more than 20 residential projects within surrounding precincts, such as Pine Valley, Precinct 12, Duta Villa, Precinct 14, Putrajaya.

Planned

Current

Public Residential Units Launched

Approximately 31,112 units

3,952 units

Government Quarters handed over

Approximately 32,809 units

22,452 units

PERSONALITY OF THE MONTH Another challenge faced by the prime developer is the perception that with a Malay majority population, the spending power is less than satisfactory, hence making its market less attractive. This despite the fact that a recent study by the Department of Statistics, Malaysia found that one of the highest household income groups come from Putrajaya, second only to Kuala Lumpur. Breaking this mindset and creating a more multicultural market would be one of the many endeavours the company has to work on in 2017.

Developers within the surrounding areas such as IOI Properties Group with their IOI Resort City and the highly-trafficked IOI City Mall, as well as various development projects in neighbouring Cyberjaya have also provided a healthy competition that propels Putrajaya Holdings forward, in the essence of asserting its projects and to keep pushing the envelope when it comes to their projects. While Cyberjaya’s MSC status has successfully attracted many investors, Putrajaya Holdings has to come up with better offers to remain in the radar screen of potential investors.

GOING GREEN The goal to become a green city has been shining brightly like a beacon in the development of Putrajaya. The Green Initiative has also defined the roles of the government agencies and the developer in creating a sustainable township, for instance: • EMS – monitoring of lake to ensure quality of water at B2 standard through Putrajaya Holdings’s own Environment Management System • Providing around 15,000 to 33,000 RT (Refrigeration Tonne) of chilled water to the Government and Commercial Offices in Putrajaya through the operation of five Gas District Cooling (GDC) plants by PjH • All houses, apartments, shops, schools and kindergartens within the areas involved are supplied with two bins to allow the residents to separate recyclable items or other waste, with the aim of reducing landfill waste by up to 40% • Water recycling through rock-filled dam, and biomass composting focusing on oil palm wastes aiming to achieve zero burning.

The supply and demand mismatch is evident in the poor take up for more expensive products” - Datuk Azlan Bin Abdul Karim

•

Public buses running on NGV to preserve the clean air environment Apart from that, Putrajaya Holdings also partners with the public, government agencies, businesses and the local authority on adhering to green city guidelines and regulatory requirements, as well as to participate actively in related programmes and projects, towards achieving the goal of making Putrajaya a sustainable city.

CREATING AN AFFORDABLE TOWNSHIP Poor market sentiments in relation to public responses were largely due to the price mismatch between high priced products offered by developers, and the more affordable property prices that is in demand by the market. “The supply and demand mismatch is evident in the poor take up rate of expensive products.” Datuk Azlan Bin Abdul Karim further reiterates.

The 2015 Khazanah Research Institute

report stated that Malaysia median household income lies at only RM4,548/ month, whereas the median price for all houses is RM242,000 (4.4 times compared to annualized household income). This inherently exceeds the recommended affordability ratio by three times.

Putrajaya Holdings aims to overcome the aforementioned price mismatch by providing affordable products, especially for the M40 Income bracket – for middle class Malaysians that find themselves in a dilemma – above the lower income threshold which qualifies them for government’s affordable home projects, yet below the higher income brackets that allows them to have the financial capabilities to purchase at ease.

CATERING TO PROSPECTIVE BUYERS Putrajaya Holdings strives to strike a balance between the administrative centre’s natural environment, iconic built www.propertyinsight.com.my FEBRUARY 2017 I 13

COVER STORY

14 I FEBRUARY 2017 www.propertyinsight.com.my

PERSONALITY OF THE MONTH Nexus International School Putrajaya, as well as institutions of higher learning like Heriot Watt University and University Malaysia of Computer Science and Engineering (UniMy), the city is evolving to cater to the residential take ups as seen in the fully occupied units in Precinct 8 and 9.

2017

2018

Landed

307

106

Strata

629

1,056

Sub-total

936

1,162

2019

2020

2012

Total

123

74

66

676

1,607

2,281

1,196

6,769

1,730

2,355

1,262

7,445

RESIDENTIAL

COMMERCIAL Retail

10

137

147

73

73

Office Suites N1 Shoplot

24

Service Industry

38

TOTAL

936

1,234

63

27

2,003

environment and populous community.

A large portion (about 40%) of the city is designated as green open space; a huge water body and wetlands segregates the city into different zones, while its world class infrastructure is aimed to offer quality urban living. With the recent launching of its medium to high-end apartments Flora Rossa, Precinct 11, the company is offering innovative designs and a 10:90 facility to house buyers In view of the current market sentiments, Putrajaya’s marketing strategy was crafted with the needs of local customers in mind.

The residential and commercial properties

2,382

114 22

60

1,284

7,839

have always been developed with the following strategies in mind.

• Progressive launching and development with focussed target market • Launching various housing products to encourage uptake in soft market condition • Introducing optimum development that is in line with market needs, in terms of demand, concept, scale, mix, composition, timing, target market, phasing as well as indicative value.

With the addition of over 20 schools including a private international school,

MOVING FORWARD IN 2017 In this brand new year, Putrajaya Holdings is keeping the momentum going passionately by securing itself a strategic positioning within the property landscape.

Seeking to enhance businesses with the Government by securing maintenance contracts for existing government buildings in Putrajaya, providing refurbishment and retrofitting services and securing new Built, Lease & Transfer (BLT) and Private Finance Initiatives (PFI) contracts. In line with this, the company will be developing skilled staff for asset management.

Creating a sustainable and complete township in Putrajaya has always been the crux of the company’s mission forward. Through careful planning of residential units launches and sales, boosting occupancy for commercial / office buildings, monetising performing assets and the development of its new waterfront retail component in Precinct 8 are part of the plan for Putrajaya Holdings to place itself forward. An adjacent initiative would be to bring in game-changers and new innovative minds to create vibrancy in Putrajaya. “We still have a lot of land, currently around 300 acres of commercial land which we are willing to open up to other MNC’s to develop, depending on whether the plans add value to the township in the long run,” Datuk Azlan further reiterates.

Looking outside of Putrajaya, the company will be on the lookout for strategic partners for its developments, particularly for its new land in Ampang.

2017’s growth and expansion strategy for Putrajaya Holdings also includes growing current land banks, looking out for potential partnerships for TransitOriented Developments (TODs) on land surrounding LRT / MRT stations, and further collaborations with educational institutions. With numerous plans in the pipelines, the company is poised for an expansion that will set its course for 2017, full speed ahead. www.propertyinsight.com.my FEBRUARY 2017 I 15

MAIN FEATURE

CITY OR SUBURBS, WHICH IS FOR YOU?

Finding a delicate equilibrium between the benefits we crave for and the cost that we are willing to bear BY: GABRIEL LIM GWO SHIN

L

and scarcity has propelled developers to build new properties further away from cities. Whether buying for own occupancy or investment, buyers are always facing the same dilemma – should one pay more for a shorter commute to work, or travel further for a cheaper suburban home?

The choice is a familiar one: do you prefer 16 I FEBRUARY 2017 www.propertyinsight.com.my

to live in a smaller urban home that puts you within walking distance to work, shops and schools, or pay less for a spacious suburban home with huge compound, but have to drive for almost all the daily needs?

Is paying less for homes that make us fork out more for commuting day in day out still a bargain?

Let’s make it clear about one thing,

whether something is expensive or cheap can come in two forms, relative or absolute.

RM550,000 is expensive for many, but if it’s the price tag of a 1,650 sq. ft. home in the outskirts, the average price RM333.34 can be regarded as relatively cheaper.

Well, many might have viewed that in our current economic slowdown, a “Buyer’s market” has emerged. But prices are

PERSONALITY OF THE MONTH buying a downtown property would be the best option, as it offers greater convenience when all the necessary services are nearby, thus one can save a lot of money and time on travelling. Besides, the capital appreciation of downtown properties will be greater too.”

Indeed, with everything such as public transport network, restaurants and groceries at the doorstep, the savings from driving less can be significant.

However, James stressed that, “Owing to budget constraints, it is always more practical for the first time homebuyers to consider the suburban options, which are affordable and spacious while allowing one to enjoy a lower cost of living. As long as the properties are located nearby basic amenities such as retail shops, neighbourhood malls and rapid transit (MRT, LRT or BRT) stations, they can still enjoy the convenience.”

On the other hand, Anthony clarified that it doesn’t matter where the property is located, because the most important criterion to consider would be one’s affordability and the distance of daily commute involved. In fact, for those who work at the city fringes, travelling from suburbs further away might not be too taxing anyway. For example, those travelling from Setia Alam to Kota Damansara, or from Bangi to Sungai Besi might even enjoy a relatively short and smooth commute.

not the only factor to consider. The daily commuting, distance to family members or various amenities, as well as lifestyle preference play a part in our decision too.

To put things into perspective, the difficult decision between city and suburbs boils down to how much you cherish these three vital factors – money, time and lifestyle. Is there any single reason that can tip the scale over the rest?

PROS AND CONS AT A GLANCE On the question of how the pros and cons of downtown and suburban living fare against one another, all the four industry experts who have responded to our survey, namely urban planner Khairiah Talha, former president and currently advisory council member of Malaysian Institute of Planners (MIP); James Wong, managing director of international property consultancy VPC Alliance (KL) Sdn. Bhd.; Anthony Chua, executive director of property consultancy KGV International, as well as Mac Tee, real estate negotiator from Zilin Properties obviously agreed on the main points.

On the question that which presents a wiser choice if one is buying for own occupancy, especially those looking for the first home, a more varied response was received. Khairiah, who was the president of MIP for two terms from 1999 to 2003 advised young couples seeking the first home that, “If the price is acceptable, No.

Benefits

1

Proximity to work, play, shop and learn, better healthcare services

2

Greater accessibility to public transport

3

Better rental return and higher capital appreciation

4

Better health as one walks more and is less car-dependent

5

Save more on fuel, parking, toll, vehicle wear and tear

6

Smaller carbon footprint due to less driving

7

More vibrant activities (festive and celebrations)

8

More human presence, less lonely existence

9

Serene and peaceful living, quieter and less crowded

10

Spacious living quarters for family

11

Lower cost of housing (on per sq. ft. basis), assessment and quit rent

12

More space for gardening and water features

13

Closer to nature and greenery

14

Cooler and better ventilated

15

Less traffic congestion, air and noise pollution

As such, James suggested that always watch out for future plans, whether the area would be served by MRT, LRT or expressways in years to come. Citing the widening of North-South Expressway as an example, he shared that since the completion of the fourth lane between Nilai and Seremban, many have in fact relocated to the more affordable neighbourhoods of Seremban and commute to Kuala Lumpur daily.

CATERING TO DIFFERENT PRIORITIES As city and suburbs offer different benefits in terms of lifestyle, amenities, transportation, convenience, security and ecofriendliness, whether one is more superior than the other cannot be answered with a straight forward yes or no.

When asked about this, Khairiah opined that, “People from different age groups have different priorities. Young people with small families would prefer the shorter travel time to and from work, the convenience of having everything within walking distance, and the fact that high rise buildings offer greater security. However, the baby boomers would naturally prefer the suburbs, which offers a more serene and peaceful life.” Anthony agreed on this, saying that suburban living is better suited for those with families, while downtown appeals more to the younger generation.

Yet, when all the consequences such City

Suburbs

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MAIN FEATURE

as longer time spent sitting idly in traffic congestion, and less time to be with family members are taken into consideration, Khairiah who currently serves as the managing director of KW Associate Planners Sdn Bhd would like to remind the homebuyers that the savings from a cheaper house might just not add up.

Also, Khairiah alerted the potential homebuyers that while people calculate the fuel and toll as the cost of commuting, many tend to ignore the cost of vehicle wear and tear. On top of that, being a depleting resources, price of petrol would only increase as time goes by, turning automobile driving into an expensive indulgence.

Nevertheless, in James’ opinion, with more new low density integrated townships introduced in suburban areas such as Desa ParkCity, Mutiara Damansara, Denai Alam or Setia Alam in the Klang Valley, where comprehensive public amenities and facilities available, suburban living offers better lifestyle as compared to cities living.

These integrated townships usually come with a central park featuring jogging path, lush greenery, man-made lakes, retail hubs, medical and educational institutions with good accessibility to major highways.

Many of the residents do not even have to travel to downtowns, because there are 18 I FEBRUARY 2017 www.propertyinsight.com.my

abundant of employment and business opportunities in the vicinity.

Mac Tee concurred, saying that while cities offer a more vibrant lifestyle, newer developments in suburbs nowadays often come with better facilities and tighter security, hence residents could enjoy a good life too.

LOOKING FOR HIGHER RETURNS On the issue of appreciation, there is a split in opinion. Khairiah believed that downtown properties would rise faster because more and more people nowadays cherish the urban convenience and vibrancy, while James, Anthony and Mac remarked that eventhough downtown properties would give a higher return in absolute terms, it

James Wong

is suburban property that would appreciate faster.

For example, The Westside One @ Desa ParkCity with built-up area of 1,700 which was selling at RM797,000 in 2010, is now changing hands at a whopping RM1,370,000. That RM573,000 presents an appreciation of 71.9%.

Take another suburban property, for example Setia Alam and the nearby Bandar Bukit Raja, at the border between Shah Alam and Klang. A double storey terrace house measuring 22 ft. x 75 ft. that was selling at RM500,000 a few years back, can easily fetch RM830,000 now. The profit of RM330,000 forms an appreciation of 66%.

On the other hand, take a look at downtown Bukit Bintang. In 2010, a residential unit at Pavilion Residence with 1,509 sq. ft. of built-up area was transacted at RM2.1 million, and now it’s sold for RM3 million. The RM900,000 profit translates into an appreciation of 42.86%.

James recommended that homebuyers and investors should focus on newlyplanned or ongoing townships surrounding mature, self-contained townships, so the existing public amenities would be easily accessible. It would be better if these townships are connected to the growing rapid transit network, such as Puchong, Cheras or Kwasa Damansara (on the landbank of Rubber Research Institute of Malaysia (RRIM) between Subang and Sungai Buloh).

From the perspective of maximising rental income, both Khairiah and Mac thought that downtown properties offer better rental yields, the nearer to downtown the better. Khairiah advocated for places

Anthony Chua

PERSONALITY OF THE MONTH

If the price is acceptable, buying a downtown property would be the best option, as it offers greater convenience when all the necessary services are nearby, thus one can save a lot of money and time on travelling” - Khairiah Talha

nearby public transport node, such as Bangsar, while Mac suggested apartments in Shah Alam, where an apartment priced at RM350,000 initially could be rented for RM1,500 to RM1,800 monthly.

Whereas for James and Anthony, they thought that the most important factor is proximity to employment opportunities or educational institutions, regardless of whether it’s located in the downtown or suburbs. James also revealed that, “Usually student housing gives better rental returns than other types of tenancy, hence investing in areas such as Bandar Sunway, Subang Jaya, Wangsa Maju, Setapak, Semenyih, Cyberjaya or Nilai are highly encouraged!”

AIMING FOR COMPACT CITIES Many wish to live in the suburbs because it’s nearer to the nature, but as suburban homes are further from amenities, longer car journeys are a given. This in turns emits higher carbon dioxide (CO2), which is detrimental to our health and accelerates global warming. Also, with fewer population, it will be difficult for public transport to run profitably, thus the service will only be available when it’s subsidised. As with anything that is subsidised, it might not run that frequently.

In fact, added Khairiah, “Since the launch of the National Urbanisation Policy 2 (NUP2) by the Ministry of Urban Wellbeing, Housing and Local Government in 2016, urban planners in Malaysia are encouraging to strive for ‘Compact City’ development. It is also the stated urban growth policy in the National Physical Plan.”

The idea of Compact City underscores

mixed development around public transportation nodes, based on the tried and tested concept of Transit-Oriented Development (TOD). By aiming for higher plot ratio (more storeys can be built in the same building), the same piece of land can accommodate a higher number of residents. Besides, the sprawling of housing estates into the suburbs, prime agricultural areas and environmentally sensitive areas can also be reduced.

When cities are compact, all the services and even the transit station are within walking or cycling distance, therefore the need for driving to bridge the “last mile connection” between one’s home and the nearest transit station is eliminated. Not only will this cut carbon emission, it also allows for a healthier lifestyle because people tend to walk more.

LIVE THE WAY YOU WISH Currently, Khairiah who is living in the suburbs and let her son occupy her apartment in the city also shared another facet of on suburban life with us – when the kids have grown up and flown the nest, it could become quite lonely for retired parents to live in the large suburban home, more so when friends, activities or urban facilities are further away, and public transport options are limited. “That’s why in many developed cities such as Sydney and Melbourne, the elderly are moving back to cities in huge numbers, where it is easier to meet people on the streets and travel by public transport. As a result they don’t feel so isolated, thus can lead a more joyful life,” Khairiah pointed out.

With the cocktail of walkability, proximity to family, friends, shopping, public transit,

recreational spaces and perhaps even school rankings all integrated into a home buying decision, many new homebuyers are finding it a daunting task before them.

At times, the pros and cons are bundled together. For example, while we enjoy the convenience to live within walking distance to excellent schools or a wide variety of food choices, it may also mean that we are never too far away from petty crimes or pollution.

If one drives for merely 10 minutes extra one way, it will be 20 minutes daily, or 440 minutes monthly, which turns out to be 5,280 minutes annually. That is a whopping 3.67 day, or 1% of a year lost, when you spend 10 minutes extra on roads each way. And a longer ordeal on roads means less quality time to spend with loved ones.

By examining these trade-offs to, we are actually finding a delicate equilibrium between the benefits we crave for and the cost that we are willing to bear. So make sure you study all the options before signing on the dotted lines.

All of us want to buy a more affordable home. But if that means we are committed to higher expenditures on monthly basis for many years to come, is it still worthwhile?

What if the savings from these extra cost is substantial enough to pay for your children’s tertiary education, or to start your own business?

Ultimately, it is not so much about house price or the measurement of the land. It is about getting a location where we can get to work easily, a place conducive for children to grow up, while leaving enough money in our wallet and saving more time to enjoy life with our family members. www.propertyinsight.com.my FEBRUARY 2017 I 19

FEATURE

INSURANCE PROTECTION: FLOOD AND FIRE

Serious thoughts to be pondered for the unexpected BY: MAGES PV LINGAM

T

he Malaysian Financial Planning Council (MFPC) recently did a video tournament for the univarsity students, which stated the importance of financial planning for households. Dr Nurul Shahnaz Ahmad Mahdzan, senior lecturer and researcher, University Malaya said many people have too many excuses and fail to plan. She added it is actually a process of managing and organising an individual’s financial matters over the lifecycle. Dr Nurul said “Ignorance is a voluntary misfortune,” Malaysia is not aligned with the Pacific ring of fire, therefore we are assumed to be relatively free from natural calamities such as volcanic eruption or earthquake.

However, it is not an excuse for households not to take flood and fire insurance seriously. As history has proven otherwise,

Hazruddin Hassan 20 | FEBRUARY 2017 www.propertyinsight.com.my

plenty of towns in Malaysia have been hit by flash floods, and houses caught fire due to malfunctioned circuits over the past few years.

Hazruddin Hassan, chief underwriting officer of general insurance, Zurich Insurance Malaysia Berhad (Zurich) explained that in Malaysia, there are currently no stand-alone flood protection plans for properties. Flood coverage is usually purchased as an extension to the fire policy.

“Generally, a basic fire policy provides coverage for the building only and covers property loss or damage caused by fire and / or lightning. As flood is an optional peril, customers will have to pay additional premium to include flood coverage in their fire policy. For comprehensive protection, we would encourage house owners to purchase the house owner and householder policies, which provide a wider coverage as compared to a fire policy,” said Hazruddin.

Flood coverage is included by default under house owner and householder insurance; which covers losses or damages to the building and household contents. For these policies, the total premiums payable are inclusive of flood coverage.

In Malaysia, recent news from the online flood reporting website Flood List reported that 25,000 people in the Northeastern states of Peninsular Malaysia, especially Terengganu and Kelantan, were displaced due to the rising flood levels which exceeded the danger mark during the Northeast

monsoon. The floods affected businesses as well as forced tens of thousands of people to evacuate their homes.

However, Hazruddin pointed out that flood insurance coverage is not only for house owners who own properties in flood-prone areas. “All property owners, including owners of high rise buildings such as apartments and condominiums, are susceptible to financial losses caused by flood. Flooding can also be caused by man-made occurrences such as the bursting or overflowing of domestic water tanks and pipes. Therefore, flood coverage is an essential component of your property insurance,” said Hazruddin.

Generally, property owners who include flood coverage in their policies will be protected against damages and losses due to: • the overflowing or deviation of water from normal channels or either natural or artificial water courses; • bursting or overflowing of public water mains and; • any other flow or accumulation of water originating from outside the building.

The above excludes losses and damages caused by subsidence and landslip. As the basic premiums for fire insurance are based on the regulated Fire Tariff, there is no differentiation of premiums rates based on risk areas. Assets that can be insured against flood included residential

properties, commercial buildings and all household contents. For better protection, property owners can also include fixtures and fittings.

Hazruddin said there are no limitations on the amount of insurance for properties.

Insurance is a form of indemnity i.e. a contract to make good or restore the insured to the same financial position immediately before the loss or damage by way of payment, repair, replacement, or reinstatement.

“It is essential to ensure that the property is adequately insured at all times, taking into account any prior renovations and enhancements made to the property.

Those who rent properties are encouraged to insure their household contents especially if they have contents which are highly susceptible to losses caused by flood. The sum insured should cover the cost of repair, rebuilding, replacement, and reinstatement of the property in the event of loss or damage,” added Hazruddin.

It is important to note that the supporting documents required for claims vary depending on the nature of losses.

Claimants are encouraged to notify the insurance company immediately or as soon as practically possible, of any potential claims so that assistance can be provided without delay. This is considering that reports to the relevant authorities have been lodged (police report or fire brigade).

Next is to submit the claim in writing with all detailed particulars including proof of purchase within 15 days from the date of loss.

Lim Chien Chong, head of general insurance, AIA Bhd. (AIA) commented on behalf of AIA, that their insurance policy for residential properties is known as A-Essential Home. The plan protects the customer’s property against any loss or damages caused by fire, lightning, thunderbolt and subterranean fire.

Additionally, the plan also covers theft (accompanied by actual forced and violent breaking into or out of a building); robbery and holdup; aircraft and impact damage; bursting or overflowing of domestic water tanks, apparatus or pipes; windstorm damage; earthquake, flood and riot, strike and malicious damage.

As for commercial properties, AIA’s fire insurance plans offer coverage on fire, lightning, thunderbolt and subterranean

Lim Chien Chong fire. Property investors are encouraged to buy insurance coverage as this will save them from financial hardships if damages incur in any unforeseen incidents to their assets.

Lim said, “Under the home plan, our customer will receive the approved claim up to the coverage amount if he or she suffers losses or damages due to the unexpected events which have been insured. The customer will also receive up to 10% of the coverage amount if he or she suffers loss of rental after the incident.”

According to Lim, the premium rates for fire insurance coverage are fixed in the Fire Tariff currently and they are affordable.

For instance, the premium for Residential Properties is RM133.00 per year for every RM100, 000 coverage amount. This is inclusive of 6% GST and RM10.00 stamp duty.

As for commercial properties, Lim explained the fire insurance premium varies from the type of business / trade carried out in the insured premise. For example, an office premise will need to pay a premium of RM89.50 per year for every RM100,000 coverage amount under the standard fire insurance while an operator who runs a restaurant at the premise will need to pay a higher premium rate of RM181.00 per year for every RM100,000 coverage amount. These premiums are inclusive of 6% GST and RM10.00 stamp duty too.

To ensure the property is adequately protected, the property owner can engage a Valuer to determine the rebuilding cost of the property and advise the sum covered.

Lim remarked, “In the event if a property

owner wants to have additional insurance coverage from the standard plan, they can request for additional coverage with top-up premium,” AIA also offers customers for loss or damage to their home contents due to fire or theft and this plan can be purchased separately at an affordable rate. Examples of contents are household appliances such as furniture, TV and etc. According to Lim, to cover a list of selected home contents worth RM100,000 for example, one only needs to pay a premium of RM540.00 per year (inclusive of 6% GST and RM10.00 stamp duty).

Similarly, contents can also be covered in the fire policy under commercial insurance such as stock, equipment, tools etc. The premium for the contents and building will be the same but varies from type of business / trade carried out in the insured premises.

In the event of a claim, the customer is advised to notify the Insurance Company within 30 days after the incident by submitting relevant documents such as invoices and receipts of purchase, reimbursement and repair bills, police report and other supporting documents so that the Insurance Company can assist to speed up the claims process.

Lim commented, “Sometimes unexpected events can really set you back, it is important for one to look for a plan which is comprehensive and provides sufficient coverage so that if you ever experience any damage or loss to any of the assets that you own, you will be able to replace them soonest and get back on your feet quickly.”

He added “Our priority has always been to ensure that we can better serve our customers; protect them from tough times, and prepare them for the unexpected by providing relevant solutions to meet their needs. With the right plan in place, our customers need not worry about funding to restore their lost assets, or those difficulties being a burden on themselves or their loved ones.”

When one has earned and accumulated properties, protecting it is prudent, therefore it is essential to be wise and add on protection to properties purchased to minimise unexpected liabilities. Financially, it is a saver and can ensure that your losses are replaced in the nick of time. www.propertyinsight.com.my FEBRUARY 2017 I 21

FEATURE

MOVING TOWARDS SUSTAINABLE CONSTRUCTION IN MALAYSIA The government should advocate sustainable construction, such as giving incentives to developers who want to pursue sustainability in their project BY: FELICIA SOON

T

he concept of sustainability in building and construction has evolved over many years. The initial focus was on the issue of limited resources, especially energy and how to reduce impacts on the natural environment.

Emphasis was placed on technical issues such as materials, building components, construction technologies and energy related design concepts.

Yet in Malaysia, various practices in the construction industry are still detrimental to our Mother Earth. Therefore, the government, professional bodies and private companies are beginning to take heed in the necessary areas to reduce this environmental problem without restraining the need for development.

Certainly, the creation of a sustainable future depends on the knowledge and involvement of everyone, as well as an understanding of the consequences of individual actions. Although most developers are aware of the rising issues on sustainability, many see very little direct benefits in implementing more sustainable practices. Therefore more effort is necessary from the government, non-government organisations (NGO) and construction players to stimulate further actions, and implement strategies towards a sustainable construction method as well as a more sustainable built environment.

According to Construction Research Institute of Malaysia (CREAM) executive director Professor Dr Zuhairi Abd Hamid,

construction is a major source of pollution and while Malaysia has taken the initiatives to address climate control, more actions can still be taken. CREAM is an agency under the Construction Industry Development Board (CIDB) created to carry out CIDB’s research.

As a developing country, Malaysia realised that the construction industry plays a significant role in its economic growth. Over the last 20 years, the industry has been consistently contributing between 3% – 5% of the national GDP (according to CIDB statistics). However, the industry is not without weaknesses. Challenges have been in the areas of productivity, quality, safety, technology and unproductive practices. The government is now striving

Sustainable Development Environment

Social Equity Viable

Bearable Sustainable Social

Economic Equitable

22 | FEBRUARY 2017 www.propertyinsight.com.my

-Living Conditions -Equal opportunity -Social cohesion -International solidarity -Maintenance of human -Capital

Economic Efficiency

Environment Responsibility

-Economic growth -Efficiency and competitiveness -Flexibility and stability -Production / consumption -Employment -International trade

-Consumption of resources -Materials and wastes -Risks -Rate of change -Natural and culture lanscape

to upgrade the construction industry through various means. In the Eleventh Malaysia Plan unveiled on 31 March 2016, sustainability is identified as one of the five key thrusts in developing Malaysia towards to goals set out in Vision 2020.

The impact of climate change is evident everywhere. As highlighted by Dr. Daniele Gambero, CEO of REI Group of Companies, global warming is on the increase, resulting in the reduction in flora and fauna species as well as their habitats. This in turn diminishes the chances for the ecosystems to evolve naturally. The weather in Malaysia is also on a topsy-turvy situation with the country getting increasingly hot compared to the years before. Again the reason is contributed to global warming. One may ask, what is the government doing about this? Shouldn’t the government look into the environment crisis we are facing now seriously.

Is being worthwhile to develop a country at the expense of the people’s health?

Looking at the current poor condition, many people’s activities are limited to the indoors. Although this is the case, many are also still venturing outdoors, in their vehicles. This means that for those people constantly travelling on the road, they will be creating a higher carbon emission, and also run the risk of falling sick due to air pollution.

The Construction Industry Development Board Malaysia (CIBD), a federal agency established with the main function of developing, improving and expanding the Malaysian construction industry and to initiate research in this field, where many focus groups have been formed in research and development. As shared by the chairman, Tan Sri Dr Ir. Ahmad Tajuddin Ali, one of the focus group concentrates on environment and sustainability, and is presently involved in waste minimisation, environmental management plan, water management and construction hazard identification. Other institutions in Malaysia such as National Institution of Valuation, Malaysia (INSPEN) and Malaysian Science and Technology Information Centre (MASTIC, under the Ministry of Science, Technology and Innovation) are also committed into the research of sustainability and sustainability-related issues.

These initiatives by the government

In the short term, the goal should be to position Malaysia as a regional leader for sustainability in construction” - Zuhairi

and others have shown positive signs, as sustainable projects are now being built in Malaysia, and people are becoming more conscious in their responsibilities towards the environment. One of the examples is the Tanarimba project at Janda Baik, Bentong, Pahang. Tanarimba is a sustainable housing project that blends man-made and natural elements into a community development, while promoting ecotourism opportunities in Malaysian highlands.

On the other hand, Malaysia still lacks sustainability-rated construction methods, and buildings and infrastructure are not built to be resilient to natural disasters such as the floods which occurred in the East Coast of the Peninsula, as well as in Sabah and Sarawak between December 2014 and January 2015. With 21 victims killed

Tajuddin Ali

and 200,00 people affected, this flooding was also acknowledged as one of the worst incidents to hit Malaysia in decades.

As a country working towards becoming an industralised nation by 2020, the government, NGOs and the public should take initiatives to set sustainability targets that we need to achieve. The ban on plastic bags in Selangor with effect from 1 January, 2017 is but a small step. Much more has to be done to enhance our awareness about the factors that lead to global warming, and various measures have to be taken to implement various sustainability initiatives.

Thus, it is hope that with this awareness on sustainability on the rise, the construction practitioners will also get their acts together to adopt the more eco-friendly and sustainable ways in the near future.

Dr. Daniele Gambero www.propertyinsight.com.my FEBRUARY 2017 I 23

FEATURE

MAXIMISING YOUR PROFITS IN 2017 Making the best of a volatile property market BY: DIVYA PREMBAJ

I

t is not an unknown impression that the property market in 2016 has been one that did not entirely rest well within the minds of most investors. Many factors including the shrinking Ringgit, rising living costs, as well as Donald Trump’s ascend to American powers - were major contributors to the market not being at its optimal desired ranks within our economy.

For investors, the underlying concerns

24 I FEBUARY 2017 www.propertyinsight.com.my

that spurs their motivations lie within the need and desire to maximize the return of their investments, maintaining a steady and balanced stream of income. Pitted against a different backdrop, investors may take a seat back and rest easy. However, with today’s volatile markets, challenges are evident. The market is believed to pick back up again after 2017, but what can investors do in the meantime to fight the

surge of a flat market? Making the most of any given situation is vital, in making the most of your investments.

TENANCY BLUES IN THE RENTAL COMMUNITY As landlords, you should avoid having your properties vacant for long periods of time. Renesial Leong, trainer of Asia’s Most Popular Property Investment Seminar

Series stated that “for newly handed over units, consider to offer more attractive rental packages, for example longer rental waived for longer term tenancy and providing the necessary furnishings to add value. Be flexible when negotiating the tenancy agreement.” Regardless of the investment returns, an occupied unit gives you dependable returns, and common sense would denote that it is always better than an empty unit. Realise and understand that the current market sentiments are difficult on all parties, and lowering one’s standards during such times could prove to be a very lucrative move in the future.

Maintaining a positive and good relationship with your tenants is another key step in keeping your tenancies afloat. Take the effort to build a deeper and meaningful relationship with your tenants, by taking the initiative to keep them satisfied as your tenants. Simple things like sponsoring a new coat of paint, regular maintenance checks, pest control, as well as season’s greetings would inherently create a bond that would elevate the relationship between both parties, giving tenants a reason not to move.

FIRST TIME HOMEBUYERS AND SEASONED INVESTORS With the advent of the recent MRT line launches as well as the expansion of existing LRT routes, it is inevitable that investors will look to invest in areas with better connectivity and accessibilities.

Travel times would be cut down significantly, resulting in smoother traffic flow in these townships. New homebuyers would flock to these areas, as the younger generation are more inclined to purchase in areas such like these, to suit their economic capabilities.

“The government has also played a vital role in building more affordable homes, providing tax incentives and passing policies to help first-time-homebuyers, making it easier for new homebuyers to invest,” Renesial states. Government housing plans like My First Home Scheme (SRP) and PR1MA Housing provide an avenue for new homebuyers to enter the market with a much-needed helping hand, during these financially trying times.

As for seasoned investors, it would be wise to take advantage of the current buyer’s market. Venturing into a non-

I foresee this impending property trend, and anticipate that more properties will be placed into the auction market in the near future” - Renesial Leong

conventional property investment route, such as purchasing properties through auctions, is an aspect in the property market that may very well prove to be a boom in 2017. “I foresee this impending property trend, and anticipate that more properties will be placed into the auction market in the near future,” Renesial further affirms. Seasoned investors should always be on their toes to look out for good deals and not miss any valuable opportunities.

Nancy Ng, sales manager of Rivertree Signatures Group affirms that it would be wise to take advantage of the current soft market that the property industry is delved in now. “It is the right time now to acquire.

We have to be realistic, as with the current market sentiments that we expect to improve by 2020, it would be wise to cash out now with a reasonable profit,” she says.

Developers offer many lucrative freebies and attractive packages to encourage an influx of buyers, therefore doing proper research on your future investments and knowing where your finances stand are vital in maximising profits. Take the time to tidy up your finances whilst waiting for the market to bounce back, and know specifically where you stand.

INFLUX OF FOREIGN INVESTORS With the recent signing of 14 business agreements with various Chinese companies, Malaysia is poised to welcome a flurry of foreign investors that are set to invest here, creating a shift with the way local investments will progress in 2017.

Gary Chua, CEO of SMART Financing further reiterated that, “With our shrinking Ringgit, it will be easier for foreign investors and not locals like us to invest, therefore it is vital to act fast and invest before property prices become more expensive and unaffordable.” Taking the risk in investing during a volatile time is always a tricky thing, however in this sense with an anticipated incursion of foreign investors, it would be wise to invest now before the hammer falls.

Property cycles and economic projections are subject to various factors. There is a chance that the property market may rise back up again in 2018 or even earlier, but the spill-over effects might also last beyond that, should economic parameters fail to correct themselves. Therefore, it is always beneficial for investors to be prepared and not to take the current market sentiment lightly. Purchase wisely, even within areas that are currently not booming, but have a high future projection of human traffic, and plans of infrastructure improvements within the vicinity.

Having a healthy appetite for future investments is the crux of good investment planning. During difficult times, the overall idea to invest may initially be a perspective that most would deem as not too bright, however with the right planning, research and understanding of the market sentiments and your own financial capabilities, you may find that jewels can easily be unearthed, if you look in the right nooks and crannies. www.propertyinsight.com.my FEBUARY 2017 I 25

PROPERTY EXPO

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

FEATURE

RAILS TO RALLY PROPERTY VALUES Property prices around MRT stations are expected to rise BY: FELICIA SOON

F

ast forward to 10 years from now, Malaysia would have become more interconnected with at least four new rail lines: the urban rails Mass Rapid Transit (MRT) line 2 and Light Rail Transit (LRT) line 3 in Klang Valley; as well as the intercity rails KL – Singapore High Speed Rail (HSR) project and East Coast Rail Line (ECRL).

RAILS TO BOOST INFRASTRUCTURE The greatest advantage to investors in Malaysia has been the nation’s persistent drive to develop and upgrade its infrastructure. Over the years, Malaysia has spent more than RM30 billion on rail infrastructure development and will likely spend another RM40 billion to enhance its connectivity in the foreseeable future.

The economic benefits included a more affordable way to travel and the 28 | FEBRUARY 2017 www.propertyinsight.com.my

convenience of avoiding traffic congestion, which can in turn shorten a one and a half hours journey down to 30 minutes. This makes it more accessible to get in touch to do business and make friends, besides travelling to work which in the long run will create more opportunities for businesses.

Tourists can also enjoy the benefit of getting from one destination to the next easily thus attracting more visitors to our country.

In fact, construction for the RM23 billion MRT line 1, running 51 km from Sungai Buloh to Kajang, started back in 2011.

The first phase between Sungai Buloh and Semantan just began its operations at the end of last year, while phase two from Semantan to Kajang is scheduled to be operational middle of 2017. The 52km MRT line 2 from Sungai Buloh to Serdang and Putrajaya, runs 13.5 km underground, and is expected to cost approximately

RM35 billion to RM40 Billion.

As for the proposed KL – Singapore HSR, there are also many spin-off benefits in terms of development potential around the stations in Malaysia and Singapore.

Targeted for completion in 2026 at an estimated cost of RM50 billion to RM60 billion, the project is, and will cut travelling time between Kuala Lumpur and Singapore to just 90 minutes.

On the other hand, the RM55 billion ECRL project is targeted to be launched in phases to connect Port Klang, Integrated Transport Terminal Gombak, Bentong, Mentakab, Kuantan, Kemaman, Kerteh, Kuala Terengganu, Kota Bharu, before terminating at Tumpat near the Thai border. Construction is expected to start in 2017 and complete in 2022.

If you look at cities Shanghai and Nanjing in China, the two cities are connected

together and both cities benefit from more business dealings and interaction. With such convenience and growth along the alignment, there will also be vast trickledown benefits for smaller businesses to take advantage of due to the multiplying effect.

RAIL’S IMPACT ON PROPERTY SECTOR According to Real Estate and Housing Developers’ Association Malaysia (REHDA) past President Datuk Ng Seing Liong, Phase 1 of the Sg Buloh – Kajang MRT Line announcement last year generated a “positive response” from the public.

In terms of being a lasting and strategic contribution, this project will bring to the country an increase in Gross National Income as we can expect to see the creation of more jobs due to the commencement of MRT service.

Ng was also enthusiastic over the fact of with the first MRT Line in operation, there will be an appreciation in land value; for example, properties nearby MRT stations can expect roughly a 5% to 10% increase in the value. He also advised those residing near the stations to fully utilise the public transport services.

His sentiments were shared by National House Buyers Association (HBA) secretary-general Chang Kim Loong, who also pointed out that properties located near the MRT stations may fetch higher rentals as well. Hence, he advised those intending to buy such properties to carry out their own research on the location of all MRT stations and the prices of property nearby.

As such, it’s better for buyers seeking to buy their dream home to survey more options within their price range and know the neighbourhood well. One will get a feel of the residents living there, to consider whether this is a community to settle into comfortably.

Chang also advised potential buyers and investors to purchase properties from developers with good track record and strong financial standing, to avoid the problem of having too many defects.

OVERSUPPLY OF HIGH-RISE PROPERTIES While it is without a doubt that the completion of the MRT line 2 will lift the property market, we are now seeing a

slowdown in transactions, especially for the high-rise residential units priced above the RM500, 000 range, which could be difficult to sell due to oversupply.

Far Capital chief executive officer and founder, Faizul Ridzuan said that in the last few years, there has been a lot of apartments and condominiums developments. For example, according to the statistics compiled by the National Property Information Centre (NAPIC), there are 5,785 unsold units priced between RM500,000 to RM1 million in the first quarter of 2016 in Selangor. Figures for the second quarter of 2016 were not immediately available.

Faizul said the pricey high-rise properties will continue to be severely affected by the oversupply, especially those nearby rail stations. Normally these highly priced properties attract more foreign investors and speculative buyers, but with the current challenging times, many are starting to feel the pinch and the situation will worsen with new units with similar price tags coming into the market. As we are already experiencing a market downturn, the surplus will be a double whammy for those who wish to sell.

When ask on how properties situated further away from rail stations will perform in terms of value and demand, Faizul emphasised that while the current rapid transit network including MRT line 1 offers convenient rides to areas they served, thus being around them will definitely be a bonus, ultimately the uplifting of property

Pricing of properties around rail stations still need to be affordable, else it will greatly influence the supply and demand dynamic” - Faizul Ridzuan

market depends more on the more ready supply of affordable homes, i.e. those priced RM500,000 and below.

Going back to the question on the influence of rails over the property sector, the short answer is that it will be a game changer, because properties with easier access to public transportation have shown to command a premium over similar products further away, whether in rental or selling pice.

Hence, with a reliable public transit network expanding its coverage to more parts of the Klang Valley, including Sungai Buloh, Kota Damansara, Balakong, Kajang, Kepong, Jinjang, Serdang, Cyberjaya and more, look out for homes around rail stations for better lifestyle and higher value appreciation! www.propertyinsight.com.my FEBRUARY 2017 I 29

FEATURE

HAVE WE REACHED THE LOWEST YET? What are the best steps for homebuyers to take in a ‘buyer’s market’?

BY: GABRIEL LIM GWO SHIN

M

any have predicted that the Malaysian property market would remain soft in 2017. If we look around, prices for some of the newly launched projects have even receded to the level a few years back. As homebuyers, what is in the store for us, and how can we wade through the low season and emerge as the winner?

We have sought the views of three industry experts, namely Prem Kumar, executive director of property consultancy and real estate solution provider Jones Lang Wootton (JLW); Ahyat Ishak, strategic property investor; and Cruz Teo, real estate negotiator from S. G. Realty to provide a balance view on these burning questions.

Just how long do we have to wait before the market rebounds? Gauging the confidence level within the various subsegments of the market, Prem, Ahyat and Cruz all agreed that the prices haven’t 30 | FEBRUARY 2017 www.propertyinsight.com.my

distinctively appeared to have reached the lowest point, thus the uncertainly arise from this scenario will prolong in 2017.

For Cruz, the slowdown is actually a good time to pick some below market value properties. If one is looking at primary market, he has to make sure that the projects are viable, and if the developer is reliable. For those looking at the secondary market, there is always auctions.

PRODUCT REPOSITIONING HAS BEGUN In response to the widespread complaint that developers have focused too much on luxury properties at the expense of affordable ones, Prem has observed that realism had settled into the property market, in order to ensure continued resilience.

“The primary market has already factoredin the need for affordable products, as noted from the more recent launches by

developers. This has been achieved to some extent by product repositioning and price strategies. The secondary market will take cue, and accordingly price adjustments would factor-in.”

“With this, the property market would eliminate a large proportion of speculative purchases. This will definitely augur well for owner occupiers and investors with a long term view,” said Prem, who stressed that the nation will stand to benefit by eliminating the potential real estate bubble that would be caused by unhealthy debts.

Just like Prem, Ahyat also predicted that demand would remain soft in 2017 because many loan applications would be declined. Ahyat asked, “If people can’t get their loans approved, how would they be able to purchase property? And who should be blamed if consumers are unable to get their loans approved? Well it is definitely not the banks! It is our own faults. Banks

Any decision making should take into cognizance the long term objectives of property investment, besides the capability of sustaining financial commitments” - Prem Kumar

anywhere in the world are not supposed to lend to those who do not qualify.”

“What happens if they do approve those loans? There will be a lot of toxic subprime loans, which is a more risky situation compared to the scenario where people can’t get loans. This is the reality, no matter how bitter a pill this is to swallow. Either we clean up our financial behavior or increase our income. And until that happens, there won’t be much upside to the property game in Malaysia.”

LOCATION, FEATURES & PRICING It’s a good time to buy. But key factors such as location, product features as well as pricing shall not be overlooked. Prem holds the opinion that while price has somehow reduced, it is important to assess new development projects from the perspective of long term growth.

Prem elaborated, “As an example, the price could be enticing for a particular serviced apartment development, but the impact of 2,000 units being developed under a single master title could have significant long term implication especially from the property management aspect.

Therefore although the location could be right, the product in itself may have flaws.

As such, decision making has to provide adequate consideration for all the three key factors.”

As for Ahyat, Income Generating Asset (IGA) is what he will be looking for this year. To be a good IGA, two sources of investment returns must be present, namely tenantability and good potential

for capital appreciation. To qualify as IGA, it must definitely be something that the real working class can afford – more often that not it refers to those products in the middle segment. According to this property investment master, “In good times, people upgrade from the low end to mid-range housing options. In bad times, people downgrade from high end to mid-range, therefore the middle segment is always a safer ground.”

On the other hand, Cruz emphasized on the price per square feet. “We will advise the prospects to focus on the price per square feet we are paying, and compare that against options with similar features in the surrounding area. Of course, we will advise them to consult the area specialists for the current market value, whether it is for rental or sales.”

While it is established that we are now in a buyer’s market, with sub-segments within the Klang Valley witnessing downward adjustments of between 5% and 10%, Prem stated that the specific price trends has not been clearly evident.

FOCUS ON DEFINITIVE REQUIREMENTS The one specific sub-segment which has seen greater clarity will be the mid-range condominiums / serviced apartment sector in the Klang Valley, where developers are conscious of the softening market and have incorporated specific strategies in terms of pricing and product profiling. In comparison, the secondary market will offer better opportunities from a product profile perspective. Therefore, it will be

an opportune time for those seeking to upgrade their homes.

The current soft market is the first time that the Malaysian property market is experiencing a significant downtrend since the Asian Financial Crisis in 1997.

In such a market, Prem advised potential purchasers / investors to maintain focus on definitive requirements instead of being overly focused on making quick gains.

According to Prem, “The financial capability and contingency plans are extremely important, and any decision making should take into cognizance the long term objectives of property investment, besides the capability of sustaining financial commitments even if the property is vacant.”

Judging by the insights given, it is quite apparent that the current soft prices will benefit those who are looking for good bargains to buy, unless their purpose is to flip it shortly after for a quick buck. As long as your income is sufficient to secure a loan, take your time to shop around because it will be some time before the prices pick up again.

Just like what Ahyat shared, “You can never time the market. In fact you should never time the market. There is always good opportunities in any markets, good or bad. Therefore go back to fundamentals.

Reexamine your personal financial master plan and redesign it to suit the times. Invest in yourself before you invest in anything else, always improve yourself and invest in knowledge, so you know how to investigate before you invest!”

Cruz Teo www.propertyinsight.com.my FEBRUARY 2017 I 31

DEVELOPER OF THE MONTH

TRX PANOPLY: CITY WITH THE SPARKLE OF EXCELLENCE

A city that neither sleeps nor slumber is about to roar!

BY: NATASHA GIDEON & MAGES PV LINGAM

32 | FEBRUARY 2017 www.propertyinsight.com.my

C

hief Executive Officer, Dato’ Haji Azmar Talib has led the mega project Tun Razak Exchange (TRX) since its inception by the Ministry of Finance Malaysia (MOF), the master developer of the dedicated financial district. This pride and joy of MOF covers a 70-acre development in the heart of capital city Kuala Lumpur, supports the government’s economic transformation programme (ETP) and strikes as the catalyst to spur urban regeneration in Malaysia.

Azmar said, “TRX carries a gross development value (GDV) of RM40 billion that would encompass investment of grade A office spaces and underpinned by the world-class residential, hospitality, retail, leisure and cultural offerings.” While the project was previously owned by 1Malaysia Development Board (1MDB), TRX’s ownership has since been transferred to the MOF via a diversified branding exercise, to encourage the stability and to rev up the level of confidence among the investors.

MANDATE PRIORITISED “When the idea of TRX was conceived, it wasn’t focusing on the property aspect alone. We took a wider perspective how the project could be pivotal to Kuala Lumpur and the larger national economy for decades to come,” Azmar shared when queried on the difference in terms of product and what sets it apart from other developments.

As such, TRX’s master plan was benchmarked against leading establishments such as Canary Wharf (London) and Marina Bay (Singapore) to provide a world-class framework for a livable financial district. This includes a large urban public park, retail mall, residential towers and hotel seamlessly integrated with businesses for a more vibrant and desirable 24-hour lifestyle.

Even a special task force was set up to consider the prospective investors, and to assist the business entities within TRX on their investment and operation.

MARK THE DIFFERENCE Azmar reiterates that the TRX development has been designed to be sustainable and responsible. Towards that end, meticulous energy-saving and water-recycling

technologies will be employed to support the master builder’s plan. As the TRX was planned to be the future central business district (CBD) of Kuala Lumpur and the financial oasis of the nation, the intelligent office buildings will feature large floor plates, as well as top-notch engineering and specifications.

Azmar who has over 3-decade of real estate and property experiences on his plate has a substantial capacity to offer in the management of TRX. According to him, “TRX as the future central business zone in KL is set to be the most soughtafter business address, with the added

benefits of co-locating and clustering with top entrepreneurs and talent.”

TRANS-CITY ACCESS On this matter, TRX will also have a business enabled eco-system backed by a digital backbone, incorporating stateof-the-art technology, a security master plan and smart city management. Seated at the heart of the city within a superior built environment, TRX will enjoy superior accessibility as the TRX Station will offer cross-platform interchange between the Line 1 (Sungai Buloh – Kajang) and Line 2 (Sungai Buloh – Serdang – Putrajaya) of www.propertyinsight.com.my FEBRUARY 2017 I 33

DEVELOPER OF THE MONTH

TRX as the future central business zone in KL is set to be the most sought-after business address with the added benefits of co-locating and clustering with top entrepreneurs and talent”

the Mass Rapid Transit (MRT), with high hopes of being the busiest station.

By hosting two MRT lines, it is hoped that commuting to TRX will be a breeze.

With both KL Sentral and Bandar Malaysia easily accessible via MRT, travelling to and from the airport and the KL – Singapore high speed rail (HSR) station will be a pleasant ride away. Azmar added, “As the master developer, we are responsible to deliver our promises for a world-class TRX for the tenants and Kuala Lumpur too.

We are footing an estimated cost of RM3 billion for the infrastructure to strategise the 70-acre land into a multi-accessible international financial hub.”

The new Southern Gateway to Kuala Lumpur would be able to extend and enlarge the current Kuala Lumpur CBD and the Bukit Bintang Shopping Belt.

Even now, TRX has invested beyond its borders to upgrade a stretch of Jalan Tun 34 | FEBRUARY 2017 www.propertyinsight.com.my

- Dato’ Haji Azmar Talib

Razak and enhance the streetscape of neighbouring locations, to create a more conducive and pulsating environment for the pedestrians.

BEAT THE ODDS TRX can cope with some challenges as their investors were long sighted on the development and plans. A good mix of local and international investors like Lendlease (Australian based property developer), the Mulia Group (Indonesia), Affin Bank, WCT Bhd and Pilgrims Fund Board (Lembaga Tabung Haji). One of its effort is to fill the gap, by conceptualizing and building what the city needs. “Our strong investor and tenant response is a testament to that.

We are currently in serious talks with international and local financial institutions to bring their operations to TRX, and will make the necessary announcements in due course,” added Azmar.

At the present, it is TRX’s priority to deliver the required infrastructure for the development, with work and all systems in full swing to move ahead.

Azmar pointed that there is a continuous demand in their office products. Having top-notch accessibilities and with capable partners, such as world renowned retail mall developer Lendlease on board will certainly be a bonus.

As TRX is a master-planned mixed-use project, the retail mall will not be a standalone attraction. It would serve a ready population of office workers in the district as well as the visitors. “The challenge on competition is stiff, which is why we plan to offer something different, a new-to-themarket brands, a new retail approach and new products too,” said Azmar.

The highlight of the project is the prime grade A office towers in TRX in compliance with the specifications of the highest international standards, positioned to provide the best office space in Kuala Lumpur. This type of building is still in demand, and being a phased development allows the developer to build and pace themselves in accordance to the existing demands.

www.propertyinsight.com.my FEBRUARY 2017 I 35

DEVELOPER OF THE MONTH CITY CATALYST For Azmar, TRX is a long term project planned for completion between 15 – 20 years, which in turn will contribute to the economic growth of the country in the long run. TRX will be noted as the city’s dedicated financial district and will enlarge the coast of CBD, whisking in more jobs and business activities.

“Even at this point, a couple of years away from Phase 1 launch, we are already seeing how TRX catalyses the rejuvenation of the area. Our neighbours have started their upgrading works, and we have seen the prices of the land surrounding our border hitting record levels,” continued Azmar.

TRX are also working with Kuala Lumpur City Hall (DBKL) to enhance the requirements like connecting the major shopping malls in CBD, in order to make Kuala Lumpur a more seamless and pedestrian friendly shopping paradise. It has a great potential to expand the Golden

36 | FEBRUARY 2017 www.propertyinsight.com.my

Triangle’s shopping destination from Bukit Bintang all the way to Imbi area and TRX. The vibrant pedestrian walkways will boost the area’s profile as a major international destination.

POSITIVE PROGRESS On the 70-acre master plan, TRX has planned a total of 26 buildings and over 21 million sq. ft. of gross floor area (GFA) spread across office, residential, hotel, retail, F&B and cultural offerings. The initial phase 1 is slated for completion in 2018 – 2019. At this point, it has commercialized about 60% of its area.

The Lifestyle Quarters, a joint venture development between Lendlease and TRX consists of a 2 million sq. ft. Lifestyle Retail Mall, with residential and hotel components. The project work on Lifestyle Quarter has picked up after receiving the development approval.

The Signature Tower, a 92-storey building that will anchor the TRX development

has been progressing rapidly. “We have also started on construction for an office building for an international tenant, and Affin Bank is currently designing their new head office in TRX too,” Azmar stated proudly.

In the middle of last year, TRX City has also started the tender process for the next phase of infrastructure work that includes the construction of Jalan Tun Razak – TRX Ingress and Egress (underground tunnel), MEX – TRX Ingress (elevated), SMART – TRX Ingress and Egress and related works, which will facilitate the development of TRX as a whole.

Eleanor Roosevelt once said, “The future belongs to those who believe in the beauty of their dreams.” Being a future acumen, TRX development has transgressed successfully with positive notes to take up the capital city to another new level altogether. TRX has progressively lifted the nation’s spirit to regain international recognition and status.

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PUSAT BANDAR PUCHONG:

A WELL-KEPT JEWEL A stellar investment for lifestyle and capital growth BY: FELICIA SOON

P

usat Bandar Puchong is a township under the jurisdiction of Subang Jaya Municipal Council (MPSJ) in the Southern part of Petaling District, Selangor.

It is where renowned developer SP Setia launched its first property development, in August 1994. The 700-acre planned 38 | FEBRUARY 2017 www.propertyinsight.com.my

township provides a balanced mix of residential and commercial properties, supported by community-centric facilities.

The name “Puchong” was derived from “pucung”, the local name for herons or bitterns which was sighted often by the Orang Asli living here at one time. Although

commonly found on river banks and at the edge of mining ponds, the “pucung” is rarely seen now.

Fast forward to 2017 and Pusat Bandar Puchong has become a booming town in the Klang Valley, thanks to its rapid expansion helmed by its proximity to city

centre and a decent transport network.

According to Tang Chee Meng, a wellknown valuer from Henry Butcher, Pusat Bandar Puchong is linked by highways and public transport, with a total of eight LRT stations along the Sri Petaling line (from Alam Sutera bordering Bukit Jalil to Puchong Prima). It’s location between Kuala Lumpur, Petaling Jaya, Subang Jaya, Serdang and Putrajaya has also endeared it to many who are working in the vicinity.

Hence, many have foreseen that Puchong will form the next central business district (CBD) that complements Kuala Lumpur!

It’s no surprise that any new development in this area will be a mass attraction to youngsters and upgraders who want to stay affordably within a booming area.

The LRT extension project was completed in 2016, and with it runs along LDP for a considerate distance, the stations are located within walking distance to most major commercial areas such as IOI Mall, Tesco and Setia Walk.

CONVENIENCE AT THE DOORSTEP Pusat Bandar Puchong is also connected by bus services to Kuala Lumpur, Petaling Jaya, and Putrajaya. Bus services are provided by RapidKL and Nadi Putra which have routes along the main roads, while local feeders also penetrate deeper into the neighbourhoods. On top of a Smart Selangor free bus routes linking Puchong to Bandar Sunway and Subang Jaya.

Fronting the LDP Highway, Puchong folks can easily travel to connect to other routes that goes to Kuala Lumpur, Petaling Jaya, Subang Jaya, Kinrara, Bukit Jalil, Sri Petaling, Cheras, Serdang, Putrajaya and beyond via a myriad of expressways.

Besides, there is also a proposed expressway, the Serdang-Kinrara-Putrajaya (SKIP). It was planned to help alleviate the traffic congestions along the LDP during rush hours. Stretching for 17.5 km, the new highway will enhance the accessibility and connectivity of Puchong, Kinrara and Serdang.

There are two primary schools in Pusat Bandar Puchong, aptly named Sekolah Kebangsaan Pusat Bandar Puchong (1) and Sekolah Kebangsaan Pusat Bandar Puchong (2), as well as a secondary school, Sekolah Menengah Kebangsaan Pusat Bandar Puchong (1).

Besides, there are also two tertiary institutions in the area, one of them is the

RIMA International College that specializes in LCCI courses, Business programmes from Heriot-Watt, Bioscience, Hotel Management programme from CTH, which is endorsed by celebrity chef and TV personality Gordon Ramsay.

The other academic institution in the neighbourhood is Binary University College of Management & Entrepreneurship, which specialises in various business courses such as Accounting, Banking and Finance, Real Estate, Tourism and more. Bestowed with various amenities and lifestyle convenience, Puchong is growing into a mature township with a high population density of 400, 000 people.

LANDMARK AND DEVELOPMENTS There are no skyscrapers so to speak of in Pusat Bandar Puchong, but a mall in present in the form of Setia Walk. Setia Walk is SP Setia’s first showcase project to mark the company’s entry into the commercial retail sector. The 20.8 acre project was launched in 2008, as the last phase of the 700 acre Pusat Bandar Puchong township. It is a one-stop centre for food, entertainment and retail shopping that appeals to the trend-conscious public.

This is a mixed development consisting of retail blocks, offices, an entertainment complex and serviced apartments. In fact, this commercial project is a hybrid between a shopping mall and shop offices and consists of 170 retail units and 336 office units.

The original launch price for the shop

Tang Chee Meng offices at Setia Walk were between RM2.5 million to RM8.9 million per block. It was estimated that the rental of these shop offices to be RM15 – RM16 psf, while the entertainment complex area will be RM8 psf. With such forecasted figures, savvy investors would earn annual rental yields of 10%, and the predictions have been achieved as of 2016. The units on the ground and 1st floors are suitable for retail outlets, while the upper floors will be dedicated to offices. These shop office blocks are carefully designed to either face the LDP or the internal waterways, to provide prime frontage and high visibility for businesses.

The business hotel and entertainment complex at Setia Walk are the anchors of this development. The entertainment complex boasts 300,000 sq. ft. of lettable area, now features karaoke lounges (Loudspeaker Karaoke), fitness centre

Image Courtesy : belle327.blogspot.com

www.propertyinsight.com.my FEBRUARY 2017 I 39

AREA FOCUS

Image Courtesy : www.j-e-a-n.com

Datuk Sr Siders Sittampalam (Celebrity Fitness), and a cinema (TGV).

Among some earlier tenants are Sushi Tei, The Beer Factory and Muzeum Pub and Bistro. Other tenants such as BMS Organics, Tipsy Brew O’Coffee and Starbucks have also moved in since then.

Set on higher ground, the serviced apartments at Setia Walk (Solace, Brio and Vio) are at the rear of the development and overlook the commercial area. There are 3 blocks towering at 27 storeys, consisting 759 apartment units. These units were priced from RM210,000 during the launching in 2008. The project also included 46 SOHO (small office home office) units here too.

Plenty of facilities have enhanced the attractiveness of the commercial precinct, for instance 24-hour security, a 2 level basement parking, pedestrian only walkways, elevators and escalators. Lush 40 | FEBRUARY 2017 www.propertyinsight.com.my

landscapes link the activity areas and soothing waterways to form the central spine of Setia Walk. These water features included a wading pool, fountains and cascading waterfalls. Modern sculptures are also present.

The condominium comes in the sizes of 845 sq. ft., 1,007 sq. ft., 1,096 sq. ft. and 1,396 sq. ft. The smallest unit sizes are 1 + 1 rooms, while the largest unit designs have 3 rooms. All units are provided with 1 to 3 car parking bays. The latest and last addition to Setia Walk is Trigon Luxury Serviced Apartments @ Setia Walk, which is a 28-storey residential tower that are priced from RM600 psf.

The condominium and serviced apartments suit all different types of buyers, ranging from singles to small families. It is convenient as people can walk to work, shop, or eat and drink without leaving the community. As a result, this complex looks promising for investors, would-be residents and tenants. By having the new Pusat Bandar Puchong LRT station located across the road, the prices should definitely rise for both the residential and commercial components, making this is a long-term investment that is set to grow.

There are 3 main zones in the commercial retail section of Setia Walk, namely the active zone, sanctuary zone and escape zone. The active zone is children-centric and is good for games, child development centres and children-related products such as toys. The sanctuary zone is for fine dining, spa and beauty centres. The escape zone is a more casual area, with alfresco dining, bistros and cafes. With an increasing foot traffic, business is thriving for the retailers in Setia Walk.

IRDK RESIDENCES TO COMPLETE IN 2018 IRDK Residences will inject a new vibrancy to the urban lifestyle of Pusat Bandar Puchong. Slated for completion in mid2018, this futuristic development is being developed by IRDK Land Group on a piece of leasehold land right behind the commercial zone.

It will comprise of 28 units of 4-storey

with plenty of lifestyle convenience around, IRDK Residences is still an enticing choice for those who cherish quality life.

The Puchong locality will continue to be popular and sought after by potential buyers and investors, due to its wide choice of property products that are competitively priced�

villas and 318 units of condominium spread across 2 magnificent blocks.

Future residents of the IRDK high-rise condominium will receive fully furnished units with high-quality finishing. Besides the spacious layouts, all units will feature impressive wide corridors, lofty ceiling for ventilation and balconies that offer great view of the horizon.

The linked villa at IRDK Residences offer tremendous space with built-up area of more than 5,000 sq. ft. The exquisite designs and elegant craftings will be an attraction for many. After entering the premises through an exclusive entrance,

- Judy Ong

future residents will be mesmerized by the master suites, living rooms and dining areas as well as the private pool. As such, IRDK Residences is definitely the place to be to enjoy a lavish lifesyle.

Though IRDK Residences will provide the luxurious living that most people will fall in love with. The premium launching price of both the condominium and the villa at IRDK Residences means that it will be filled with an affluent community. Despite the spacious and comfortable layouts, some potential buyers are worried that the premises might be crowded as the project site looks narrow to them. Nevertheless,

MOVING FORWARD According to Datuk Sr Siders Sittampalam, managing director of PPC International, the changes that we can expect to see from Puchong in the next 5 years are improved public transportation, good network of road and amenities that will turn Pusat Bandar Puchong into a favourite township for those trying to buy or rent a home, especially the young working population in the Greater Kuala Lumpur. The rentals are relatively affordable with ample choice of properties both stratified and landed ones. The property values are also bound to experience an appreciation in the future especially for landed properties in particular terrace houses.

The concentration of shopping malls such as the IOI Mall and Setia Walk, as well as hypermarkets such as Tesco and Giant has made Puchong a complete township that attracts the young middle-class working population.

Tang said while they do not expect to see major changes in the mature township of Pusat Bandar Puchong, it can be expected that Puchong as a whole will continue to witness further growth with the newly operational LRT stations (since 2016).

Neighbourhoods with LRT stations, such as Puchong Jaya, Pusat Bandar Puchong,

TRANSACTED PRICE OF DOUBLE-STOREY TERRACE HOUSES IN BANDAR PUCHONG (2016) Half Yearly

Land Area (sq.ft.)

Built-up Area (sq.ft.)

Transacted Price (per unit)

Transacted Price (psf)

H1 2016 H2 2016

1,173 - 1,647 1,170 - 1,647

1,104 - 1,543 1,056 - 1,543

RM610,000 - RM940,000 RM555,000 - RM720,000

RM553 - RM609 RM525 - RM467

H1 2016 H2 2016

1,076 1,076

986 - 1,094 986 - 1,094

RM450,000 - RM550,000 RM430,000 - RM560,000

RM457- RM503 RM436 - RM512

BANDAR BUKIT PUCHONG

H1 2016 H2 2016

1,496 - 1,647 1,496 - 1,647

1,581 - 1,674 1,581 - 1,674

RM645,000 - RM760,000 RM600,000 - RM760,000

RM408 - RM454 RM379 - RM454

BANDAR PUCHONG JAYA

H1 2016 H2 2016

1,496 - 1,539 1,399 - 1,539

1,430 - 1,704 1,704 - 1,778

PERUMAHAN KINRARA (BK 5)

H1 2016 H2 2016

1,399 - 1,647 1,399

1,289 - 1,667 1,474 - 1,510

Scheme PUSAT BANDAR PUCHONG TAMAN PUCHONG UTAMA

RM700,000 - RM790,000 RM650,000 - RM728,000 RM695,000 - RM825,000 RM670,000 - RM750,000

RM490 - RM464 RM381 - RM409 RM539 - RM495 RM455 - RM497

Source: PPC Intl Research

www.propertyinsight.com.my FEBRUARY 2017 I 41

AREA FOCUS TRANSACTED PRICE OF HIGH-RISE RESIDENTIAL IN BANDAR PUCHONG (2016) Development

Locality

Built-up Area (sq.ft.)

Transacted Price (per unit)

Transacted Price (psf)

APARTMENT SUTRAMAS

Bandar Puchong Jaya

829 - 850

RM290,000 - RM355,000

RM350 - RM417

SRI PINANG

Bandar Puteri Puchong

893

RM330,000 - RM370,000

RM369 - RM414

904

RM330,000 - RM452,000

RM365 - RM500

850 - 872

RM305,000 - RM340,000

RM359 - RM390

853 - 861

RM355,000 - RM385,000

RM416 - RM447

D'KIARA DESA TANJUNG

Taman Wawasan

D'PALMA Source: PPC Intl Research

CONDOMINIUM IMPIAN HEIGHTS LA VISTA AVILLA APARTMENT

1,227

RM415,000

RM338

1,356

RM510,000 - RM550,000

RM376 - RM406

1,033

RM465,000 - RM500,000

RM450 - RM484

1,282 - 1,700

RM570,000 - RM610,000

RM445 - RM476

Taman Puchong Prima

1,044

RM390,000 - RM440,000

RM374 - RM421

1,068

RM400,000 - RM428,000

RM375 - RM401

Kampong Baru Puchong

633

RM245,000 - RM255,000

RM387 - RM403

990

RM339,000 - RM390,000

RM342 - RM394

Bandar Puchong Jaya

ATMOSFERA DESA IMPIANA

HERON RESIDENCY Source: PPC Intl Research

TRANSACTED PRICE OF STRATIFIED RETAIL SPACES IN BANDAR PUCHONG (2016) Transacted Price Level

Built-up Area (sq.ft.)

(per unit)

(psf)

IOI BOULEVARD Ground Floor First Floor

603

RM900,000

RM1,493

1,292 - 1,981

RM901,000 - RM1,400,000

RM698 - RM707

SETIAWALK Ground Floor

1,451

Lower Ground

431

RM2,300,000

RM1,585

SUTRAMAS AVENUE (Retail within Apartment Block) RM455,000

RM1,056

KOI KINRARA SUITES (Retail within Apartment Block) Ground Floor

678 - 1,206

RM370,000 - 600,000

RM498 - RM546

Second Floor

689 - 1,862

RM220,000 - RM560,000

RM301 - RM319

Source: PPC Intl Research

TRANSACTED PRICE OF EN-BLOC SHOP-OFFICES IN BANDAR PUCHONG (2016) Development Name ONE PUCHONG BUSINESS PARK @ BANDAR PUCHONG JAYA PUSAT BANDAR PUCHONG

Land Area

Built-up Area (sq.ft.)

1,540

1,650 - 1,970

Source: PPC Intl Research

42 | FEBRUARY 2017 www.propertyinsight.com.my

4,461 - 6,001 6,380 - 5,753

Transacted Price (per unit) RM2,900,000 - RM2,930,000

RM2,600,000 - RM2,850,000

(psf)

RM650 - RM657

RM408 - RM495

FUTURE DEVELOPMENTS IN PUCHONG Development Name IOI RIO City

Locality Bandar Puteri Puchong

Le Pavillion

Bandar Puteri Puchong

Skyz Residence

Millennia City

Bandar Puchong Jaya Jalan Perindustrian Puchong Jalan Puchong Perdana 2

Lake Side City

Taman Puchong Prima

Festival Lakecity

Type Integrated township Service apartment, retail and office units Condominium

Size (acres) 72

Developer IOI Properties

5.6

IOI Properties

23

IOI Properties

Integrated township

88.7

Mah Sing Group

Integrated township

100

Millennium Land Sdn Bhd

Integrated township

155

Masteron Group

Source: PPC Intl Research

Taman Perindustrian Puchong, Bandar Puteri, Puchong Perdana and Puchong Prima will receive more attention than ever.

In her findings, Judy Ong, executive director from Research & Consultancy in Knight Frank Malaysia found that this enhanced connectivity will create a positive outlook for the Puchong property market as the stations are well located in accessible areas with a good mix of residential and commercial developments e.g. Puchong Financial Corporate Centre [PFCC], Four Points by Sheraton Puchong and MTree Hotel that cater to a wider target market.

As Puchong has become a vibrant commercial hub attracting a huge crowd, it will surely generate more business opportunities for Pusat Bandar Puchong, which has gained vast popularity for its wide range of eateries such as Marc & Grill, Texas Chicken and Sushi Mentai among others. With the LRT completed, many are hoping for the feeder bus services to be enhanced, as the “last mile connection” between homes and stations is what propelled many to drive, and car dependency breeds traffic congestion. If the transportation is improved, Puchong

will certainly be a more pleasant to live.

With the future developments in Puchong, such as those by IOI Properties, Mah Sing Group, Millennium Land Sdn Bhd and Masteron Group, Puchong will also continue to attract new buyers and investors. The projects will create a wider choice for buyers and investors to Pusat Bandar Puchong, as well as the surrounding areas including Bandar Puteri, Puchong Jaya, Taman Perindustrian Puchong, Puchong Perdana and Puchong Prima too.

AGENTS SPEAK JASON LII, Group leader, Affirm Plus Properties Sdn Bhd Pusat Bandar Puchong is developing but at this moment some developers may put their projects on hold first, as there is a slowdown in the property sector. Due to the economic situation, Puchong can be considered as stable with minimal increase in property values. However, there will be many new types of developments coming up in various parts Puchong. Therefore, Puchong will become the place to invest for newcomers, and we might see a hype of property activities in Puchong in the future.

LARRY YAP, real estate negotiator, Real Estate Finders Sdn Bhd Based on my observation as a real estate negotiator, i believe there will be more developments in the pusat bandar puchong area. Within the commercial zone, there are still opportunities for commercial expansion. With the growth of the local population, there will be a great demand for both commercial and residential units. This, coupled with the comprehensive lrt coverage in the puchong area will draw in developers to compete for a piece of the market share. So, i am indeed looking forward to it, in the near future, as i believe there will be more developments coming up in puchong.

ALAN LAI, Senior real estate negotiator of GS Realty “We are often asked about IOI City Mall’s surroundings when it was first launched and we helped arrange accommodations for retail and F&B staff members stationed here. In a very large extent, regional mall attracts more people to the area. Nevertheless, for the property price in Putrajaya, it has the same value as Kuala Lumpur and Selangor. Record shows that in 2012, two-storey landed house in Precinct 9, which was an intermediate house, transacted at RM 530,000, and it was before IOI City Mall was completed, so how much do you think the same house costs now?”

www.propertyinsight.com.my FEBRUARY 2017 I 43

ENTREPRENEUR INSIGHT

LEADERS:

MADE OR BORN? Upward mobility in an organisation creates the next generation of leaders BY: MAGES PV LINGAM

44 I FEBRUARY 2017 www.propertyinsight.com.my

PERSONALITY OF THE MONTH

A leader has to share his dreams with his managers. The managers should lead and teach the skills to others in the departments, but the leader will lead the company by selling them his dream” - Dato Tony Looi

A

Greek historian, Polybius once quoted,” A good general not only sees the way to victory; he also knows when victory is impossible”. Arthur Tan, founder of WeStyleAsia brainstormed that a few leaders in their own industries gather resourceful information regarding leadership, education levels, experiences, strategies and support from family and coworkers. The following leading minds share their inspirations and motivations, that led them to where they stand today.

EDUCATIONAL ORIGINS Seah Kian Hoe, founder of Heng Hiap Industries, said he believes firstly in gaining knowledge and respect from society through education. In his own terms, he refused a ‘recycled’ mentality.

An engineering professor during his varsity years opened his mindset to have an in-depth-view of nature, in relation to engineering.

FAMILIAL SUPPORT David Heng, co-founder of Global Leadership Dynamics Asia credited his mother who hailed from China as his mentor. Valuable life lessons included teaching others well and always learning to give back to others.

Dato’ Tony Looi, group chairman of Ban Him Group of Companies, owes his father on mentorship. Although his father was a school dropout, his hard work and experience in life through difficult times has shaped him to execute and implement wisdom in his business.

The success that Loi Tuan Ee, founder

of Holstein Milk Company and Farm Fresh, has reaped over the years is owed predominantly to his mother, as she has been an instrumental and pivotal entity in shaping his mindset to make sound judgements in life and business too. He also looks up to the first Prime Minister of Singapore, Lee Kuan Yew as his mentor as he has a set of strong conditions practised in life to counter challenges during his governing days.

ORGANIZATIONAL BACK-UPS Leaders today have a cohesive say and way in their organisations, in achieving their goals and being impactful in forward thinking. Tony agreed and said “A leader has to share his dreams with his managers.

The managers should lead and teach the skills to others in the departments, but the leader will lead the company by selling them his dream.”

“A leader is able to create more successful leaders. The same in business too, to create more successful businessmen,” said David. Upward mobility in an organisation will inherently create the next generation of leaders. The core values reiterated here lead to working in silence and creating the noise of success.

“As for me, grooming leaders means to give space. A different champion will be given a different space to test their resourcefulness. There are two types of people in the workplace. One are good followers who live by the rules, the other are growers. They operate in creative and resourceful modes. Once they have grown, we lead them further,”.

GEN-Y ALIGNMENTS Arthur added on that generation-Y (gen-Y) are less conventional in terms of work ethics and lifestyles. Even on business platforms, gen-Y’s working mode are digitalised. The core values which drive the team towards achieving the vision and mission of companies depends on how the factors are being communicated.

To set a healthy working culture inherently leads to alignments with the vision and mission. Loi said the agricultural industry is a non-glamorous field for gen-Y, and failed to attract them, despite that over the years, students from agricultural studies have been more receptive and adaptive.

“When it comes to vision, a new lens should be handed to the employees to look at a different angle. Core values should be consistent with the company’s direction,” shared Seah.

The baby boomers used to complain on the easy-going attitude of gen-Y’s, despite being gifted in many ways. “But when you were at their age, didn’t you have the same thoughts and issues that they faced in their climb to success? They realised that the issues faced were the ones they faced in their younger days,” said David.

Deriving from different insights, Arthur affirms that the leaders carry a heavy responsibility on their shoulders to reach to the height of success they have earned today. But teamwork and surmountable sacrifices are the points to determine the end results of any organisation, as the saying says - “diamonds are created under pressure.”

www.propertyinsight.com.my FEBRUARY 2017 I 45

INVESTOR SPOTLIGHT

46 I FEBRUARY 2017 www.propertyinsight.com.my

INVESTOR SPOTLIGHT

SENSIBLE INVESTMENTS FOR A SAFER FUTURE Prudent investor stands on passive and active income for stable holdings BY: MAGES PV LINGAM

S

itting comfy and sipping latte with a man who had a journey to share on his juxtaposed nine-to-five career and a life after his stint as one of the youngest senior vice presidents of a foreign banking firm was the highlight of the evening. Mark Chua didn’t fail to impress. “I used to be a banker for nearly 17 years. I was one of the youngest senior vice presidents in a foreign bank at the age of 33,” he said. Now, besides being a renowned Career and Property Coach, he has earned another feather in his cap as a bestselling author!

He has a unique sense of humour and perpetuated an innate admirable quality of a successful but laid back million dollarman. The habit of reading 2 to 3 books per week was ingrained in him during his childhood, as it was cultivated by his parents despite hailing from a modest background.

According to Mark, it’s more important to put in extra effort during your youth. For example, he had mentors to seek advice from during his years in the banking industry. His former boss saw his potential and competency, and assigned him to shoulder more than his routine duties.

This gave him the opportunity to shine, and he grew passionate about his newfound knowledge and skills. This then propelled

him to excel, which resulted in his rapid promotions thereafter. His progressive career enabled him to gain a good source of active income which was beneficial to his success as an investor in the long run.

Mark advised that talent is overrated.

Success is attained by dedicating yourself to be better and more skilled at your chosen craft. With regards to property investment, it is crucial to equip yourself with the knowledge & financial acumen to succeed. He cautions however, that the first few years of one’s career is important.

These formative years set the tone towards a progressive career and higher earned income. Mark observed that the harsh reality is that it’s hard to get rich and “live off” your property income alone. Rather, financial freedom is obtained by building a targeted portfolio of say RM 2 mil, and watching its value appreciate to say RM 6 mil over time. A progressive career is then critical to enable you to have sustainable holding power.

SKILFUL & AGGRESSIVE “You need to earn more to invest more, it’s simple as that. Do it skilfully and aggressively well in both,” quipped Mark, when queried on his property investment strategy. He leveraged more on the income he received, although it’s not an easy

feat. Working 12 hours a day was a norm.

According to Mark, many people normally have a “scientific process” when it comes to property investment. Typically, they will look at factors like location, occupancy levels, infrastructure, commercial development, affluence, security & pricing.

Similarly, a strategic framework should also apply to one’s career. Career aspects like managing, leading, seeking mentors, job rotations, going the extra mile, and gaining promotions need to be mastered as well.

Being pragmatic, Mark revealed that he initially focused on cash flow generating properties. When he first started, he targeted modest property that cost a smaller amount to buy. Over time, rentals will rise, and this automatically adds to your cash flow too. “Similarly, as your career progresses from a payroll of say RM3,000 to RM10,000, you can buy bigger properties, or dabble into under construction properties, because you have a larger cash flow to sustain you.

Mark bought his first property with his wife in 2002, a small condominium in Kota Damansara, initially to impress his fatherin-law in. Initially, he was very cautious and focused on properties that attracted a net positive cash flow. Over time, he built a portfolio of both condominiums & landed houses. Currently, his portfolio is www.propertyinsight.com.my FEBRUARY 2017 I 47

INVESTOR SPOTLIGHT an economically challenging year and it’s anyone’s guess when momentum will pick up again. However, do not let this period of uncertainty deter you from investing.

Build your portfolio by leveraging smartly via a progressive career & earned income.” Lastly, from career endeavours to investment pursuits, “People” is the common variable in every aspect. As such, Mark also advised that people management is a very important skill to develop.

worth more than RM10mill, consisting of properties in areas like Taman Tun Dr Ismail, Taman Desa, Jalan Kuching and Dutamas in Kuala Lumpur, as well as Damansara Jaya, Damansara Utama and SS23 – SS26 in Petaling Jaya. These are his “target areas” and he shies away from unfamiliar locations. “Be an expert in 5 – 6 affluent locations, instead of being a generalist in 40 locations.”

His journey in property investment has taught him skills like tenant management, renovation, negotiation & loan structuring.

Mark has a fiercely independent mind and likes to challenge the status quo. “I just sit down, chill and wait. I have not sold any of the properties bought over the years,” he said. Mark added that books were his guides on personal finance and property management, while he networks with other skilled investors to keep abreast of the property landscape.

Mark says that there is nothing wrong by being inspired by investment guru’s and their philosophies, but it is important to be balanced and objective. Do not just focus solely on investing & leveraging. Life is an ecosystem - adequate care and attention must also be given to your family, career, earned income, personal finance and spending habits.

As you become a more sophisticated investor, it is important to develop your own principles & philosophies. For instance, Mark doesn’t necessarily subscribe to the concept of buying properties that are 48 I FEBRUARY 2017 www.propertyinsight.com.my

Below Market Value (BMV). This method tends to conserve capital, but it may hamper the growth in your net worth. Mark is a big advocate of the “Margin of Safety” concept. For example, one could compare a condominium at Old Klang Road, KL priced at RM 400psq versus another located at Sri Kembangan priced at RM 600 psq. You will then validate whether the lower priced counterpart has a margin of safety, with potential capital upside.

Mark prefers to invest in residential properties in stable, affluent and evergreen areas such as Damansara.

He confesses somewhat jokingly that he doesn’t have the deep pockets to invest in pricey commercial properties within his affluent target areas. Over the years, he has developed automated systems to manage his property portfolio, whilst he continued to progress in his challenging career.

Mark’s enthusiasm and passion are enshrined in his bestselling book, aptly entitled “Who says you can’t be rich working a 9 – 5 job?” He highlighted that there seems to be a stigma that employees may not be utilizing their full potential.

However, there is no shame in being an employee. Take pride in your career.

Excel in your job, gain those promotions & boost your earned income. At the same time, leverage & build you portfolio more efficiently.

On the prospects for the coming 12 months, Mark opined that, “2017 will be

You need to earn more to invest more, it’s simple as that. Do both skillfully and aggressively well” - Mark Chua

PROPERTY INVESTMENT PROPERTY 1 2010 Location

Damansara Utama

Property type

Double Storey Link House

Purchase value

RM490,000

Market value

RM1,100,000

Price psf

RM304

Rental per month

RM2,300

Rental yield

5.4%

Loan margin

80%

Loan tenure

30 years

PROPERTY 2 Location

Jalan Kuching, Kuala Lumpur

Property type

Condominium

Purchase value (2011)

RM140,000

Market value (2016)

RM500,000

Price psf

RM127

Rental per month

RM1,600

Rental yield

13.7%

Loan margin

90%

Loan tenure

30 years

TITIWANGSA

KLCC EAST

(Proposed MRT Station)

(Proposed MRT Station)

TITIWANGSA

KLCC EAST

(Proposed MRT Station)

(Proposed MRT Station)

TUN RAZAK EXCHANGE

SERDANG RAYA SOUTH

(Proposed MRT Station)

(Proposed MRT Station)

(Proposed MRT Station)

(Proposed MRT Station)

TUN RAZAK EXCHANGE

SERDANG RAYA SOUTH

SERI KEMBANGAN

UPM

CYBERJAYA NORTH

(Proposed MRT Station)

(Proposed MRT Station)

(Proposed MRT Station)

SERI KEMBANGAN

UPM

CYBERJAYA NORTH

(Proposed MRT Station)

(Proposed MRT Station)

(Proposed MRT Station)

1800 888 299

www.decentrum.com.my

1800 888 299

CYBERJAYA CYBERJAYA CYBERJAYA CYBERJAYA NORTH NORTH NORTH NORTH CYBERJAYA NORTH www.decentrum.com.my (Proposed (Proposed (Proposed (Proposed MRTMRT Station) MRT Station) MRT Station) Station) (Proposed MRT Station)

TITIWANGSA TITIWANGSA TITIWANGSA TITIWANGSA KLCC KLCC KLCC EAST KLCC EAST EAST EASTEAST TUN TUN TUN RAZAK TUN RAZAK RAZAK RAZAK SERDANG SERDANG SERDANG RAYA RAYA RAYA RAYA SERI SERI SERI KEMBANGAN SERI KEMBANGAN KEMBANGAN KEMBANGAN UPM UPM UPM UPMUPM TITIWANGSA KLCC TUN RAZAKSERDANG SERDANG RAYA SERI KEMBANGAN

EXCHANGE EXCHANGE EXCHANGE SOUTH SOUTH SOUTH (Proposed (Proposed (Proposed (Proposed MRTMRT Station) MRT Station) MRT Station) Station) (Proposed (Proposed (Proposed (Proposed MRTMRT Station) MRT Station) MRT Station) Station) (Proposed (Proposed (Proposed (Proposed MRTMRT Station) MRT Station) MRT Station) Station) (Proposed (Proposed (Proposed MRTMRT Station) MRT Station) MRT Station) Station) (Proposed MRT Station) (Proposed MRTEXCHANGE Station) (Proposed MRT(Proposed Station) (Proposed MRT Station) EXCHANGE SOUTH SOUTH (Proposed (Proposed (Proposed (Proposed MRTMRT Station) MRT Station) MRT Station) Station) (Proposed (Proposed (Proposed MRTMRT Station) MRT Station) MRT Station) Station) (Proposed MRT(Proposed Station) (Proposed MRT Station)

1800 1800 1800 1800 888 888 888 888 299 299 299 299 www.decentrum.com.my www.decentrum.com.my www.decentrum.com.my www.decentrum.com.my 1800 888 299 www.decentrum.com.my

DESTINATION: CULINARY JOURNEYS

ON THE COOKIE TRAIL Keith Loh shares his views on pioneering his one-of-a-kind soft baked cookie venture in Malaysia, the brand new CookieNation BY: DIVYA PREMBAJ

T

he delectable aroma of slow baking cookies wafts through the air as you step into CookieNation, with the promise of a hearty cookie or two coming your way. The décor is laid-back, envisioning a contemporary styled concept that many café outlets nowadays boast, encapsulating the feel of an American city which is precisely the impression that founder and CEO Keith Loh would like you to have once entering his outlet.

Soft baked cookies are his passion, and 50 | FEBRUARY 2017 www.propertyinsight.com.my

with CookieNation, the entrepreneur has certainly paved the way forward for these specific type of cookies in Malaysia.

EARLY VENTURES WITH TAIWANESE DELIGHTS Starting out in the industry in his early 20’s, Keith has long since compiled an impressive portfolio of food and beverage related ventures, notably with his initial success of Taiwanese desert chain Snowflake that was conceptualized in 2008. A career enriching

stint as regional head of marketing for Burger King’s Malaysia and Singapore operations led him down a corporate path that opened his doors further, allowing for an array of life experiences and networking that eventually led to the conception of The Breakaway Group. CookieNation is the group’s first venture, just launched recently in November 2016.

The Breakaway Group comprises of friends and ex-colleagues that Keith has accumulated over the years, with

partners and minds ranging from various gastronomical backgrounds, such as Nando’s, Burger King and McDonalds. The main idea that these partners and Keith shared was, establishing businesses that were catered for the mass markets, and not to high-end or niche markets.

BUILDING HIS COOKIE EMPIRE Being a cookie connoisseur, Keith knew earlier on that he wanted to create a totally new concept, stemming from his love of cookies. “I don’t like to do the trend-based concept, as it has the tendency to die out – for example doughnuts. It is not part of our culture to eat doughnuts, unlike cookies that are more acceptable in our culture,” he affirms. CookieNation is the first café in Malaysia that catered specifically for soft baked cookies, other notable rivals with this specific type of gastronomical delight included Famous Amos, and Subway’s add-on soft baked cookies.

All recipes at CookieNation originated from trial and error, baking formulas created

by Keith himself, with additional pointers from his wife that provided a much needed feminine touch. “Women are undoubtedly the target market for CookieNation, as desserts are not necessarily a male-driven thing,” Keith says with a laugh.

14 flavors make up the cookies that give CookieNation the bang for its wellearned buck. Popular flavors include the Farmhouse Special, with a mouthwatering combination of muesli, cream cheese and cranberry that is a sure love of the female crowd. Keith’s personal favorite? The Peanutella – a peanut butter based cookie with Nutella filling. One certainly cannot go wrong with that.

As with most new entrepreneurial projects, challenges were evident. It would take a lot of effort, and within four admirable weeks, the café was set up.

Struggles ranged from constant running to places deep in Kepong to find the right tiles at certain price levels, to getting the right suppliers to minimise the cost of production and manufacturing. Most furniture and fittings within the cafe were designed by Keith himself, modified to fit and create the Bohemian environment that CookieNation aimed to project. And of course, when you have a brand-new concept, the fear that customers might not take well to it will always be there. CookieNation relies on the

dessert loving crowd, added with a current influx of requests for cookies to satisfy office board meetings and events.

STRATEGIC LOCATION IN THE HEART OF KOTA DAMANSARA Sitting comfortably right next to the cross junction of Kota Damansara’s main thoroughfares at a corner of Sunway Nexis mall, CookieNation undoubtedly occupies an advantageous spot. Keith reaffirmed that visibility was the key factor in choosing this specific location. Sitting in the opposite restaurant for three straight weeks in a row, and monitoring the traffic of people on this corner, was a vital part of the research process in discerning the right location.

According to Keith, it takes about roughly only 5percent of the traffic monitored that will inherently be viewing your outlet, making this information very critical in deciding the location of your business. If the area warrants less traffic, therefore it is best to look elsewhere.

When asked why Kota Damansara, Keith answers without hesitation. “It is an area with a young population, comprising mainly of 50 percent Malay, and 50 percent of Chinese and the rest. It would be the best way to test your markets – to see whether this endeavor would appeal to both markets, which we luckily do.”

Asserting if the response was positive, the concept of the store would take off, within an area that consisted of two very differing groups of people.

With the advent of the Kota Damansara MRT station just down the road, and the strategic positioning at the heart of Kota Damansara, Keith is confident that setting up at this area was a right choice, mainly fitting his target market.

BRAND PERCEPTION – KEEPING IT JUST THE WAY IT IS Keith stands strong with maintaining the core idea and belief that CookieNation was built on, leading this factor to determine that CookieNation would not be immediately run as a franchise within its first few years of conception. “The minute you have more franchisees than yourself, you tend to lose operational control. It’s difficult to control the direction of your branding perception.”

It’s all about sustainability for the young entrepreneur at the end of the day, therefore he plans to wait at least two years

before going down the franchising road.

A brand partnership with Coca Cola for the outlet’s coffees and beverages clearly sets the stage for the progress of his new venture.

All of CookieNation’s cookies are of natural ingredients, vegetable based without the use of preservatives. In terms of the possibilities of expanding to channel marketing, Keith is considering the use of silica gel to keep packaging airtight, as preservatives are not an option to keep them lasting longer.

In keeping with the Americana way, Keith is determined to theme future stores according to American cities. “With this outlet it’s New York, whereas we hope to see upcoming outlets embodying the culture of San Francisco, or even Chicago.” It is clear that travelling the globe has certainly given Keith a fresh take on consumer lifestyle concepts, shaping CookieNation’s brand.

COOKIENATION’S SWEET FUTURE Looking into the future, CookieNation aims to have two more stores up and running by the end of 2017, with sights set on Putrajaya and Damansara. Keith and the team at Breakaway Group are now aiming for smaller 200 sq. ft. kiosk concepts within malls connected to office buildings, as that are the best place to meet the target audiences.

When pitted with the idea of rising competitors down the line, Keith affirms that plans to maintain progress will focus mainly on product innovation as its main strength. “Not just with changing flavours, but innovating to keep upping the bar, for example with creating savoury cookies, and health focused cookies.” he states.

As for future promotional campaigns to increase brand awareness, Keith mentioned that holiday seasons would see the brunt of these campaigns up and running. Plans to tie up with a few friends in the film industry like movie distributors are in the pipeline. Talking to other entities to have CookieNation’s products in stores and cafes are also a viable option, through channel marketing. With these strong plans in suit, it is safe to say that CookieNation is standing on the brink of something new and exciting, not slowing down anytime soon with a clear mind on how the brand will progress forward.Cookies will certainly never be the same again. www.propertyinsight.com.my FEBRUARY 2017 I 51

ROOKIE INVESTOR

A SHINING STAR SHOOTING THROUGH THE ROOF ‘Cash is King’ for the best property deal now!

BY: MAGES PV LINGAM

G

rowing up in a mixed-parentage home, young and vibrant Roen Cian Nagapan was bestowed with a broader outlook on matters concerning the routine of his life, and he is humble and discerning in sharing his views on property outlook too. As a creative youngster and an active cyclist, Roen curates his lifestyle as the Adidas ambassador for Malaysia, cold pressed Life Juice producer, Astroturf football fields’ developer, and a landlord renting out shared office spaces 52 | FEBRUARY 2017 www.propertyinsight.com.my

CommonGround.work. He is also the owner of The Roof, an exclusive party and dining enclave to entertain and socialise in First Avenue, Bandar Utama.

Roen owes his eagerness on property and investments from his dad. His initial venture to purchase a property, a RM390, 000.00 apartment in Bukit Kiara he invested with his brother at the age of 21.

He learned the value of properties from the dad’s assets, which were performing

seemingly as good as gold, and saw them appreciating over the years. The unit was rented to a Korean. Admittedly, the rental was astounding, and that helped them to settle the loan speedily. The property was sold in year 2002, yielding a fair profit.

Roen belonged to a close-knit family and the parents’ views were highly respected.

He looked up to his dad and Patrick Grove (co-founder and CEO of Catcha.com)

as his mentors. He spent his childhood mostly in Taman Tun Dr Ismail (TTDI) neighbourhood, which cultivated his love for landed properties too. “I am less keen in condominiums or apartments, they all look the same,” claimed Roen. In fact, he could still recall the challenges he faced in selling his Casa Kiara 1 apartment, which he only managed to sell in the fifth year.

His subsequent property was a semidetached house, which he rented off for eight years. It saw tremendous appreciation over the years as it cost him only RM390,000 back then. Roen quipped, “I look at postcodes! That element really determines any of my purchases.

Bangsar, Damansara Heights are excellent areas for investments when you have the cash.” Roen is in the midst of completing his dream bungalow in Section 16 Petaling Jaya, on plot of land over 10,000 sq. ft.

For Roen, whether one is single or having a family comes into consideration in deciding what properties to purchase. “I would rather live in a modest home nestled in central metro, than in the suburbs and getting stuck in jam for hours,” said Roen.

If the economy runs bad, he can always opt to live in his abode situated at Jalan Negeri Sembilan, Federal Hill, where he owns a link-lot too. Currently, it was rented to an English native teaching here.

In Roen’s opinion, it defeats the purpose of owning a property closer to the public amenities if those amenities are not utilised by the owner at all. For instance, he recalled about a rich man who owned a property in TTDI. The property is strategically located nearby the MRT station, yet what is the point if the owner merely rent the unit to tenants from elsewhere, thus hardly enjoy the benefit of MRT. Roen prefers a liveable, mature neighbourhood where schools, malls, good roads and public amenities are easily accessible. For him, Section 16 has a soul and character attached to it. It has a unique charm which boasts of markets, eateries, entertainment outlets within a short distance, where even the houses come in various designs and architectural qualities.

Priorities and necessities change every time one climbs the corporate ladder or the family grows bigger. As such, Roen wishes to remind us to take into consideration the changing needs as one invests in a

property. Since the mobility of the family members matter too, Roen actually listed the Section 16 neighbourhood as his favourite community, due to its convenient centralised location.

By setting up the office in his own house, Roen gets to spend quality time with loved ones often. He can meet up with his wife or parents anytime it fits his timing, or when a need arrives for a situation that calls for his attention. He can even have meetings with business partners at his home office.

His father often helps to manage some of his properties too. So far, Roen only owns residential properties, although he says commercial lots yields higher rent returns.

“For first time home buyers, it is best to look for a developer who has been long enough in the industry. Buy a house you would want to live in,” Roen shared.

Property ownerships are a ‘cash cow’, thus it would the best deal in town for investors if leveraged wisely.

Meanwhile, Roen said “No selling and no

buying of properties for me this year. But I would consider to enter into a maintenance mode, that is to manage my tenants, to be more agile and responsive. Now, the timing is very unpredictable, it has hit rock bottom. So, I would just wait and see what happens,”. He remarked that it might take a while for a rebounce to occur, albeit the construction of building has not stopped entirely. If the competitors are around, the supply are will more often than not increase.

Roen believes that smart investors don’t only rely on properties alone, but would leverage and try new investments to make more money, with a time frame of around 3 to 5 years’ as the goal in mind. “For me, the most workable strategy is neither to buy a RM12 million mansion in Bangsar, nor to own 12 houses in Sekinchan. As long as you have a proper home, a safe sanctuary for your loved ones, an assurance that your family do not have to live in worries, that is a more palatable goal,” Roen said.

I would rather live in a modest home nestled in central metro, than in the suburbs and getting stuck in jam for hours” - Roen Cian Nagapan www.propertyinsight.com.my FEBRUARY 2017 I 53

INDUSTRY INSIGHT

NAWAWI TIE LEUNG:

MAKING A DIFFERENCE DILIGENTLY IN THE PROPERTY MARKET Going independent to scale newer heights BY: MAGES PV LINGAM

I

n the beginning the organisation commence under the international name of DTZ Nawawi Tie Leung Property Consultants (DTZ). DTZ was ranked among the top three property services largest brand globally but Dato’ Muhammad Nawawi Haji Mohd Arshad and his partners decided to go independant in July 2016 and rebranded the firm as Nawawi Tie Leung Property Consultants Sdn Bhd. Pioneer Dato’ Muhammad Nawawi Haji Mohd Arshad has served judiciously in the Government of Malaysia for the past 33 years. His prudent commitment in upholding integrity during his tenure in the public service has inspired many to follow suit, especially in the areas of property management and valuation. His highest accolade during his tenure (1966 – 1996) was his election as the Deputy World President of the International Real Estate Federation (FIABCI), to commemorate his active involvement in the Valuation and Property Services Department (JPPH), an agency in the Ministry of Finance (MOF).

A man bestowed with international and local recognitions, medals, rewards, Nawawi grew up as a ‘kampung boy’ in Chenor, Maran district, Pahang. He hailed from a modest family background where his father, a Muslim prayer leader or ‘imam’, encouraged him to fulfil his destiny in life, even if it means venturing into distance foreign shores. He qualified for a scholarship from the state government to further his tertiary education at the London University, United Kingdom. After graduation, Nawawi began as a Valuation 54 | FEBRUARY 2017 www.propertyinsight.com.my

Officer, where he rose gradually and finally was promoted to the highest rank as the Director General (DG) in 1990.

Despite that, Nawawi didn’t stop there but continued to water his passion in the property management sector, offering great service on property consultancy and tied up with the global brand DTZ in 2000 with co-founders Ungku Suseelawati Omar and Brian Koh Weng Chuan.

The fourth year onwards the company paved a route to success, with a diversified portfolio comprising valuation, research & consulting, marketing, property management, retail, residential, investment and agency.

“For now, I am determined to educate, contribute and excel, on my part as an ongoing responsibility I set to accomplish,” reaffirmed Nawawi. He said that his evolvement in the property sector over the decades, has set NTL apart from the rest in terms of service. Malaysia has a viable regulated book of rules for the industry players to adhere to. In fact, Nawawi was responsible and articulate, in which have streamlined and elevated the industry for the benefit of all stakeholders.

He had contributed tirelessly to bring the government valuation department and the overall industry standard to greater heights. His expertise as a valuer has encouraged strict SOPs compliance, a systematic process to curb and minimize crisis. “Make sure crisis doesn’t happens.

If you follow the SOP book and stages, the risk process can be curtailed,” added Nawawi.

Seated in the top management with

managing director Eddy Wong, executive directors Ungku Suseelawati Omar and Brian Koh Weng Chuan, it pays to know the vision and mission of the company by heart,” quipped Nawawi. He recalled that one of his fondest memories of the current set up, was how they overcome the period of uncertainties and moving forward.

Armed with his vast experience, knowledge, and hands-on skills during his younger years when he needed to attend strings of conferences, talks, workshops and make risky decisions, he was confident to seize the reign of beating the odds. He fondly said that as the first director general from the civil service and by keeping humble, he has indeed marked a new milestone in the property valuation sector.

The current position as the chairman of NTL requires superior management and organisation skills, but Nawawi believes

in delegation of duties to his team of expertise. The staff will build confidence comprehensively from the capabilities and the exposure he commands in his post.

“At the end of the day, I still cross check the work before approving the budget or assignment, being an advisor who know all the ground-works and reports,” added Nawawi.

“The plan for expansion is in the pipeline for the next few years. We have concluded to branch out to grow and to protrude as experts in the field. We would also like to offer opportunities to our competent team to advance in their career too,” added Nawawi. There are always reputational risks and challenges to cross over, to grasp as a successful consultant firm. Risk in management involves the fundamental policies, SOPs to be assessed, as well as the efficient implementation of operations.

In short, he believes in practicing what is being preached.

NTL’s pride in valuation, retail & development consultancy, sales & marketing and property management has built trust and confidence among their clientele, varying from government linked

Consistently delivering excellent property solutions to clients is key to growing the business” - Dato’ Muhammad Nawawi

companies, listed companies, real estate investment trust companies and financial institutions.

Being a leading forerunner of the industry, Nawawi insisted that an ideal consultant should possess quality, skills and the ability to comply with the laws that governs the profession. One should also be vigilant and inquisitive to provide a stronger leadership and decision-making, especially on happenings like Brexit in the Europe and change in the US presidency, as these changes affect the global socioeconomic conditions as well as the market sustainability.

While people around the world holds a mixed view on the market outlook for the coming years, and Malaysia has also experienced some roller coaster rides in the economic front, Nawawi insisted that we must always study the situation and plan ahead. As a professional, he said in the present days, practitioners should embrace a wider perspective on long term development, such as the high speed rails, the projects on the east coast economic region and more. It is beneficial to be enterprising no matter who you are, as more can be reaped in the future by instilling a positive outlook. www.propertyinsight.com.my FEBRUARY 2017 I 55

PERSONALITY OF THE MONTH

ICONIC FERUNI FUNDAMENTALS:

THE BEST KEPT VALUES Instilling the importance of adaptability in business & community BY: MAGES PV LINGAM

56 I FEBRUARY 2017 www.propertyinsight.com.my

PERSONALITY OF THE MONTH

Community, my work, my family are all part and parcel of my life. Values are important for me.

Happiness is how much I can give to others, and how we derive happiness from the people too” – Dato’ CC Ngei

business process and march towards a greater success.

A

man enriched with vibrancy in life, Dato’ CC Ngei is renowned for his cool character, and the undivided focus on his career. Ngei, managing director of Feruni Ceramiche, has lifted his business and thrived in life to a whole new horizon. He learnt his business the hard way from his father, who practiced the conventional art of business, and later felt that he needed a change. Ngei rolled up his sleeves to refine the business, elevated it a notch higher from the rest in the industry, and charted a brand new forward path for the otherwise monotonous tiles business.

In 2010, Ngei transformed the Feruni business model and management outlook inside out, to shine forth in areas concerning retail and marketing, staffing, work culture, corporate social responsibility (CSR) and more. The culture of pursuing “Happiness” has taken root in thriving company, as they persevere in cultivating talents, contributing to the community, transforming conventions to keep up with time, and finding the balance between personal and company’s values. Ultimately, the company has managed to integrate the

WORK STATIONS “In Feruni, we tune ourselves to identify the strength of each Ferunians, and to optimise productivity and creativity of each person according to area of expertise, by engaging them and bring out their in-depth aptitude,” said Ngei. To design house brand tiles that appeal to the end users, Feruni always focus on the latest trends and the customers’ demands. The intention is to resonate with the customers, in order to produce a wider range of products.

The company has adopted ten core values to keep their strength as a family, and to pave a way towards a structured working environment. Their values that shape the strong foundation included ‘learn one thing a day’, ‘be innovative’, ‘have fun at work’, ‘emphasise on fine details’, ‘demonstrate talent’, ‘communicate with heart’, ‘deliver WOW’, ‘eager to share’, ‘practice integrity, honesty & transparency’ and ‘we care for everyone like a family’. Newbies in the company were orientated, trained and polished to execute a faultless accuracy.

CHALLENGING DOUBTS When Ngei joined the tiles industry many years ago, he had skeptical remarks and resistance thrown at him by competitors.

Consequently, the fear started creeping in him to even doubt his own intentions and resolve, but as he pours in more faith and effort, he gradually improved in achieving greater business success. By focusing on creative marketing, he began to see the light at the end of the tunnel.

As business grows steadily, Feruni has successfully built a business network

comprising plenty of referrals. Today, Feruni proudly owns 18 showrooms, most of which range from 1,000 – 2,000sq. ft., while the larger galleries range from 5,000 – 20,000sq. ft. These outlets have created the potential learning platform for the public, besides offering a good shopping ambience for potential customers. Here, the clients will be able to design their own tiles according to their desired colours, shapes or surfaces for their dream homes.

IN-HOUSE PILLARS “In this business, I believe strongly on personal values and pillars of happiness, which holds up the vision and mission of Feruni as a purpose driven enterprise. We are determined to give back 10% of what we have harvested on to the communities, in order to make an impact on the ideas we uphold, again forming pillars of happiness,” www.propertyinsight.com.my FEBRUARY 2017 I 57

PERSONALITY OF THE MONTH

Ngei declared. Now, the company has trailblazing programmes called “Feruni Tour”, whereby close to 5,000 people from 800 different companies came together to spread the happiness culture. Among the participant are entrepreneurs who are curious on the ways to successfully transform an old fashion industry into an enterprising and creative one.

Over the years, Feruni has made a great amount of efforts in supporting the community. As a successful entrepreneur, Ngei emphasises heavily on the nurturing of capable, talented leaders. He often challenges his staffs with a lot of questions, to train their ability in making informed decisions. With the fire of curiosity burning within, he pushes his limit in acquiring more knowledge every day.

“At Feruni, we strive to empower and cultivate Ferunian talent by providing them opportunity to explore on their job scope.

For instance, my designer must be able to advise and explain the best way or method something can be done,” Ngei stressed.

Naturally, he always seek ways to improve after a particular job has been completed.

Thanks to his perseverance, it is not surprising that the company has shown tremendous progress over the years in the aspects of services, products and 58 I FEBRUARY 2017 www.propertyinsight.com.my

marketing. Ngei is determined to overcome all the challenges he comes across, and these strategies are applied to all levels.

Having set a high benchmark that aims to be world class, Feruni will always be inspired to improve the quality and meet the high demands, as outlined in their corporate philosophy.

“Community, my work, my family are all part and parcel of my life. Values are important for me. Happiness is how much I can give to others, and how we derive happiness from the people too,” said Ngei.

Towards the Future For Ngei, the property strategy for this year is to buy something useful that he can afford. “Investing on something that is needed. For example, commercial warehouses or showrooms which can add value to my business and enhance the business model,” added Ngei.

Undoubtedly, priority is important especially for businesses, as investing in properties generates income, allowing the company to enjoy a higher profit, which can be reinvested in a range of other beneficial ways. Ngei found that it’s wiser to stabilise the business before procuring extra properties, as investment affects cash flow, and the location of outlet plays

a huge role on profitability of the business.

On this, Ngei advised that one should determine the demographics of a certain location, and see whether the target group is widely present before deciding on a business location.

According to the expansion plans, Feruni will be opening five more showrooms in the Klang Valley within the next five years. As a visionary entrepreneur, Ngei would like to bring his brilliant ideas and concepts to create an impact in other countries too, first by focusing in the Southeast Asian region.

“We start by being a blessing for others.

If we began creating values for others, money will surely come by too when we are established. It is a cyclic ecosystem,” quipped Ngei.

Focussing to satisfy customers’ needs, and to sustain the business success with lots of corporate social responsibilities (CSR) activities is the way this company moves forward. Ferunians have committed to a 3-hour community work monthly, by sharing knowledge and insights with others. Having founded the right work culture, Feruni’s initiative to serve the community and to build a lasting platform that promotes happiness among the community will certainly make the country a better place!

FINANCE

AVOIDING PITFALLS: REAL ESTATE INVESTMENT WITH THE RIGHT ADVICE

A

sians generally believe that investing in real estate is a secure way of growth one’s wealth. It is common for most young adults to dream of owning their own property and another to rent for passive income.

However, there are those who may face challenges along the way.

Here are two common examples: SITUATION A You found your dream house or a good piece of investment property, but after you make 10% deposit of your property price, your friendly bank tells you that your loan application is rejected. How frustrated?

SITUATION B You have already committed yourself into a property, your bank loan is approved, only to find out later that you cannot afford to pay for your monthly loan repayment. What is the impact to your lifestyle?

THESE HAPPEN ALL THE TIMES. How could this happen? Firstly, people are generally ignorant.

Purchasing a property is an important financial decision for everyone from all walks of life, but the emotion and sentiment set in during decision making. Most people forget or ignore the basic – to check their personal finances before committing themselves.

Secondly, the lack of basic finance skills. The subject of analysing the property in terms of property value, loan eligibility and loan repayment amount could be daunting at times. It needs some basic financial skills for the potential buyer to perform the analysis before one can tell whether he is ready for the investment. At times, people just bypass this step and go ahead to make the down payment straight away. The results could be catastrophic.

Want to avoid such situations? No time or knowledge on what to do and how to do it? Real estate investment advice can help property buyers to avoid such pitfalls.

A good example will be the flagship Modular Plan (MP) of Real Estate Investment Advisory (REIA) by Cheng & Co Wealth Management (CCWM).

As highlighted in the flow chart, REIA will go through the process step by step, to assist you to find out your optimum financial position in order to achieve the following objectives: To determine the number of properties you can secure currently and in the future To rebalance your asset and liability statement in order to ensure that you are eligible for bank financing

1

2

3

4

5

To determine the property value that you can afford to invest in your next property investment To determine the bank repayment that you can afford to service in your next property investment.

To consolidate your current real properties investment portfolio and make it lean and fit, in order to move forward onto the higher investment horizon.

REIA begins with a definition of your goals and objectives. It ends with a specific action plan. Why? It is designed in such a way that you can immediately begin moving from where you are today, to where you want to be.

We believe that the REIA process offers the highest possible probability of getting you to your destination in the most comfortable manner.

If you are new to real estate investment or is considering your next property, you may want to determine your affordability by going through this process before parting with your down payment.

ABOUT THE CONTRIBUTOR Ng Chee Yong is a licensed financial planner and a Certified Financial Planner registered with Financial Planning Association Malaysia (FPAM).

He is chief executive officer for Cheng & Co Wealth Management (CCWM), a Corporate Financial Planning Practice Office with Standard Financial Adviser Sdn Bhd.

www.propertyinsight.com.my JANUARY 2017 I 59

FINANCE

FLIP OR HOLD: WHICH IS BETTER? W

hat kind of real estate investing should you do? There are hundreds of ways to invest in the real estates, but the most popular are the Fix & Flip and the Buy & Hold methods.

A Fix & Flip property can be defined as a property which is purchased by an investor, fixed up and sold as fast as possible to gain some quick profit. It’s not easy to find great fix and flip properties and it’s also quite difficult to make money on them.

60 I JANUARY 2017 www.propertyinsight.com.my

Buy & Hold involves buying a property, making possible improvements and keeping it for a long time. For paying the monthly costs of utilities, financing, taxes, maintenance etc., it can be rented to a tenant. When the monthly costs are less than the rental income, the cash flow flourishes with monthly profit.

To be precise, Fix & Flip brings you quick money, Buy & Hold means a long term cash flow.

PROS OF FIX & FLIP

01 Time & Money Flipping properties enables acquiring profit within a short period of time and it also does not tie up the capital for too long.

02 Quick Profit Buying, fixing and flipping a house can be done within 4 – 6 months to make a quick profit. The more experienced you become, the higher your returns will be.

03 High Return On Investment (ROI) Flipping brings a higher Return on Investment (ROI) if you manage to flip it soon enough. This is contrary to Buy & Hold where you’ll have to wait for a long duration before making substantial profit.

04 Market Fluctuations Real estate markets are prone to fluctuation. But they fluctuate over time, not within a short term like the stock market. The whole process of Fix & Flip can be completed within 6 months from buying to selling. Within such as short time span, your profits are less likely to be affected by market fluctuations.

CONS OF FIX & FLIP

01

Takes Time to Become an Expert You cannot just become a flipping expert by watching some online webinars or reality shows. It takes time and real world experience to be good at house flipping.

So you need to choose the right education and seek mentors’ help to make the most out of it.

02 Unexpected Challenges Even if you are a flipping expert, you are likely to face unforeseen situations such as unexpected renovation costs. Anticipating them is just a part of the business.

03 Greater Expenses Be prepared for paying transactional costs, both when you are buying and when you are selling. Finance and interest costs will accompany if you’re flipping houses without enough money of your own. Such costs can affect your profits tremendously.

04 Taxes The tax implication for flipping houses is different than that of long term investments. It is important to estimate your margins accurately and also factor the costs in your projections. Stamp duty and Real Property Gain Tax eat into your profit margin significantly.

02 Steady Income When you are the owner of multiple properties, it is possible to build a steady stream of rental income. To do the same through house flipping, you’ll need to have a steady and continuous stream of house flipping deals. This reliable and steady monthly cash flow is basically the most attractive feature of Buy & Hold investments.

03 Ownership Pride It feels great to be the owner of a couple of properties knowing that they belong to you. Besides, you are also helping people who need a good home to stay. If you can have a bunch of good tenants who take care of your property and also pay on time, then Buy & Hold investment can be pretty sweet.

04 No Rush for Immediate Sale Another big advantage of buy and hold investment is that there is no hurry to sell it off, you can wait until the market reaches a profitable stage. If you already have a steady monthly income and don’t need any emergency funds, you can hold on to them as long as you wish.

CONS OF BUY & HOLD

01 Market Fluctuations In critical times, the real estate investor will have to sell the property at the existing market price, or might even have to sell their property at a loss. However, refinancing is always a smarter way to take out some tax-free money from the equity of a property while keeping the property for a better time to come.

02 Beginners Beware Long term real estate investment can be a good competitor of the stock market.

But if you are a new and not adequately prepared to deal with all the responsibilities of owning a rental property, you should think it over.

03 Finding Good Tenants It is an incredibly stressful and time consuming job to find good quality tenants, servicing them, assigning payment responsibilities, managing upkeep, etc. It requires time, energy and a lot of patience to find good tenants.

04 Longer Appreciation Time Market appreciation (not capital appreciation) is what long term investors rely upon for profit, and this appreciation does not accumulate over a short period of time. So the value of a long term property depends largely on the market than the landlord themselves.

CHOOSING A STRATEGY In order to choose a strategy, there are some critical questions an investor needs to answer. Is the allocation of capital permanent or a transient one? Or is it a part of an investment strategy expecting high returns? It is also important to understand the risk-to-return ratio of an investment, as well as the tolerance and skill level of the investor.

Depending on different market situations, however, one can be better than the other.

For example, in the beginning of a housing / credit bubble, people were heated by flipping strategy as it delivered high profit with low risk. While at the end of a property crash, people started to hold for the next ride. If you start early when market is at the bottom, you are free to choose and enjoy from either strategies. If you start late when the market is peaking, you cannot avoid suffering from the coming crash with either strategy.

Comparing these two strategies is akin to comparing an apple to an orange. If you already have the skillsets for both, then the decision depends completely on the market situation.

PROS OF BUY & HOLD

01 Creation of Wealth It is absolutely certain that you can amass great wealth through Buy & Hold investing.

The property value increases over the long term mainly due to inflation. The longer you hold the property, the higher is its potential for appreciation.

ABOUT THE CONTRIBUTOR

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

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

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

www.propertyinsight.com.my JANUARY 2017 I 61

STRATEGY

IS NOW A GOOD TIME

TO BUY A HOUSE? A Trump Presidency – what’s next?

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alaysia is facing many challenges both within the country and internationally, including the decelerating economic growth rate, lower oil prices and falling value of the ringgit. On the backdrop of all these, the domestic housing market has entered into a sluggish phase, adversely affected by the pessimistic sentiment over the uncertain economic outlook.

The country is in the midst of a turbulent economic-social-political environment, beset with perennial problems from political tussles to weak governance. It does not help that bad news, be they facts or rumours, usually receive greater attention. As such, people’s confidence gradually erodes. This negative perception is shared practically by all those interviewed from both the supply and demand side of the housing market.

While the development of external

challenges is not within our control, the government of the day must put in concerted effort to draw up effective policies to ride through these rough patches. Most countries face the same external factors but handle them differently, as demonstrated by the better economic performance of some of our regional neighbours.

To immediately improve the public sentiment and produce a chain reaction, the Government needs to focus on key areas of concern and implement bold but positive policies to gain back the Rakyat’s confidence as well as to demonstrate its capacity creating sustainable economic growth.

Malaysia is currently in the midst of the downward trend of the most recent housing price cycle which has commenced around 2010. The growing slack in housing sales is apparently gaining traction as shown by

Figure 1 - Year on Year house price changes in % 30

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y - o - % changoo

20 15 10 5 0 -5 -10

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92

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96

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the increasing number of unsold houses at the end of the 2nd quarter of 2016, a jump of 16% over the previous quarter. In the secondary market, offers are aplenty.

Meanwhile, the brakes are being applied on construction activities as witnessed by the falling number of piling drivers and sentry cranes on the horizon. (D1) YEARS FROM 1990 - 2016 There are three cycles of house prices during the periods from 1990-1993, 1994-1997 and 2010-2016. The first two cycles involved rapid increase in house prices and subsequently followed by sharp drop, which are basic characteristics of a housing bubble.

However, the third cycle demonstrates a comparatively more gradual rising, peaking at a year-on-year increase of less than 20% between 2010 and 2013 when the trend reversed. The downtrend is also taking a rather gentler gradient. This means that this time around, the housing market will not be as turbulent. This can be attributed to the interventions taken by the government as well as the quick adaptive approach of housing suppliers.

Opinions gathered through interviews with developers, architects, project senior managers, civil engineers and marketing officers, point to a serious confidence crisis in the national economy being the primary factor that is depressing the housing industry in general, a point that seems to be supported by statistical figures. GDP growth rate has declined to about 4.5% which is 0.7% lower than the 5 years (2011 – 2015) average.

Private sector spending has slowed down

considerably. Both consumption and investments saw a slower growth in 2015 of 4.4% in Q3 compared to 5.7% in Q2 and 9.6% in Q1. Consumer spending (51% of demand) had its annual growth pulled back sharply to 4.1% in Q3 from 6.4% in Q2. These drops in economic growth, consumer spending and investments are shown in Figure 2. Many opined that concerted efforts by all parties and the right policies are vital in restoring the confidence of both our people as well as foreign investors. (D2) The housing industry in Malaysia generally caters mainly to the local market with only a small percentage going to foreigners. With supply being highly inelastic in the shortrun, the effect of dedicated government policies will take a while to kick in.

While consumers complain of the skyrocketing of housing prices, some developers feel that housing prices have over the years moved up but in a controlled manner. As land become scarcer in the city, property prices would naturally spike up. But with the improved infrastructure (existing and proposed highway, LRT, MRT networks), new growth areas further away are developed at more affordable prices.

Such new growth areas included Cyberjaya, Semenyih, Rawang, Nilai, Seremban etc., offering lots of choices.

Nevertheless, house prices are moving up largely due to higher land cost, construction cost and compliance cost but still have not moved beyond affordability. And again due to these high costs, house prices are not likely to come down. According to these developers, the best-case scenario is that prices will stabilise because they, the developers, will hold back new launches once they think that they do not make reasonable profit from it.

The days of volatile housing prices are over and speculators have long retreated to the sideline as commented by a developer.

Due to slowdown in sales, developers have become more adaptive to the market, adjusting to the needs of the buyers in terms of product type, specifications and neighbourhood facilities. If developers are not able to price their houses within the competitive range, they will lose out.

Additionally, they lamented that sales are significantly affected by the low approval rate of bank loans following more stringent regulations imposed by Bank Negara Malaysia. With the already very high

household debt (reported currently at around 90% of GDP), the more demanding loan approval criteria aims to protect the borrowers and the stability of the local financial industry, which will check the risk of housing bubble threat.

A further concern raised by one of the developers is the aggressive participation of foreign developers in the local housing market with mega projects. Nevertheless, the feeling is that it is now a buyers’ market where they are spoilt for choice. However, with the low confidence in the outlook of the economy and future prospects, people are paring down their expenses. Would people be so willing as yet to pick up another long term big mortgage bill?

Concern has also been raised of foreigners taking advantage of the weakened ringgit and entering the housing market to snap up properties and thus could contribute to unhealthy price hikes and more serious consequential slowdown effects on the housing market.

Yet developers have a different view.

Foreigners are attracted to premium areas

mainly KL, Penang, Iskandar Malaysia and Melaka, where foreigner buying has minimum influence on price movements.

Additionally, the foreigner purchase trend over the years show a relatively low uptake, within the 20% to 30% range and on properties in the high price category.

Yet looking at the above scenario, therein lies a seemingly ironical situation – that of affordability. There is much concern of the growing inaccessibility of housing, particularly to those in the 20s – 30s age group, that has gotten society worried sick lest they become a “homeless generation”.

When the market was running up steeply, the Government implemented various measures to control the housing price rally and has since taken concerted efforts to help target groups on homeownership. The bottom line is still the purchasing capacity of the consumers which is significantly linked to disposable income, a factor that in turn is dependent on economic growth.

If history is of any guide, economic activity is cyclical.

D2

30

10

25

8

20 6 15 4 10 2

5

0

0 IV 2011

IV 2012

IV 2013

2014

IV 2015

Real GDP % change y - o - y Private Consumption % change y - o - y Private Investment % change y - o - y

ABOUT THE CONTRIBUTOR The article is presented by a Research Team from UTAR currently conducting studies on the housing market under the Fundamental Research Grant Scheme (FRGS) of the Ministry of Higher Education, consisting team leader Asst Prof Dr Yip Chee Yin, Prof Dr Choong Chee Keong, Asst Prof Dr Au Yong Hui Nee, Asst Prof Dr Abdelhak Senadjki, Woo Kok Hoong, Tan Yan Teng and Asst Prof Dr Ahmad Nazri bin Wahidudin.

www.propertyinsight.com.my FEBRUARY 2017 I 63

STRATEGY

ELECTION IMPACT A Trump Presidency – what’s next?

U

ntil the policy details are defined and implemented, we expect political headlines and potentially financial markets to be volatile, but underlying real estate markets to remain relatively steady.

THE RESULTS Donald Trump defeated Hillary Clinton and will become the 45th President of the United States on January 20, 2017. He will be the first President to take office who has never held any other public office or public role, so there is no precedent as to how exactly he will govern as compared to how he campaigned. The advisors and appointments of his new administration will be critically important.

The Republicans also fared well in downticket elections, keeping control of the House of Representatives and the Senate.

Typically, alignment in the Executive and Legislative branches of government speeds the passage of legislation. However, the potential for results remains uncertain now because bipartisanship is more asymmetrical than in the past due to the complexion of the Republican party, and the Democrats still have the ability to delay or block progress (since the Republicans do not have the 60 Senate seats needed to prevent filibuster).

With polls pointing to a 70+ percent chance of Clinton winning leading up to 64 I FEBRUARY 2017 www.propertyinsight.com.my

the voting yesterday, the Trump victory proved once again that polls can be very misleading. The surprise Trump victory was the result of an electorate that sought change. There has been an underlying and growing appetite for change from middle and lower income Americans who have been hurt by the last recession and left behind by the recent recovery. As a result, Trump won several Rust Belt states and smaller towns and rural areas in middleAmerica that had been expected to be Democratic. The “Obama coalition” did not end up translating the way Democrats had hoped.

MARKETS REACTION The markets, despite having priced in a Clinton Presidency, have reacted in a fairly muted fashion, with most major indexes flat or up after initial sell offs and the market reaction has been significantly more positive than the day after the 2008 and 2012 elections. Compared with the post-Brexit reactions of 4-10 percent equity markets declines around the world, U.S. markets have been surprisingly resilient. Treasury yields moved upward as expectations for a rate hike increased.

U.S. 10-year yields are currently at their highest point in eight months (around 2.0 percent). The yield curve is steepening.

It is worth noting that President-elect

Trump was conciliatory in his acceptance speech toward Clinton, and also that his message was more statesman like, gracious and measured than the volatile and often insulting campaign rhetoric. In his acceptance speech Trump said: “We will seek common ground, not hostility.”

Ultimately the markets will wait to see what type of President Trump is, but the initial tone has helped to limit expected damage in the financial markets.

POLICY AND ECONOMIC IMPLICATIONS Given the relatively surprising election outcome, there are some uncertainties regarding broad policy initiatives and the manner in which the Trump administration will govern. The Republican sweep opens up a range of opportunities, but the reality is that Trump is not a typical Republican, and angst and disagreement remain within the Republican Party. The net result could be some economic benefit from fiscal stimulus and less regulation, but risks around foreign policy and trade.

• Spending Infrastructure spending is one area with fairly broad bipartisan support. To get through the legislature, this would likely have to be offset by repatriation and taxation of overseas profits. Spending on national defense and the repeal of sequestration related to defense and

public safety is likely, but continued cuts to non-defense programs may offset this spending. Thus far, aerospace/defense is one of the highest performing sectors of this post-election day, with the sector’s index gaining over 4 percent.

• Taxes Trump campaigned on the promise of tax cuts that include simplifying personal tax rates to fewer levels, lowering corporate tax rates to 15 percent and a tax holiday for the repatriation of overseas profits. The question again will be what exactly can Trump implement, and how will he propose to pay for it. The expectation of higher GDP growth may not be enough to convince more fiscally moderate legislators.

• Regulation The regulatory environment could be loosened across the board to financial-focused agencies and nonfinancial-focused agencies such as the Environmental Protection Agency (EPA).

While this may temper the legal services sector, it will likely benefit diversified manufacturers.

• Trade And Global Implications Trade is one place where the President has some unilateral power that creates some uncertainty. Despite harsh campaign rhetoric, it is unlikely that many existing trade deals like Trans-Pacific Partnership (TPP) or North American Free Trade Agreement (NAFTA) would actually get repealed. There will certainly be further discussions and likely additional rhetoric on suspected currency or trade manipulators and the potential for tariffs. China and Mexico will be on the watch list, but much is yet unknown about how trade will actually be treated by this administration and how policies will be perceived and reacted to by our trading partners.

• Impact On The Rest Of The World Another global implication is additional uncertainty about mainstream candidates across Europe who may be more nervous than before given this result. If populism and protectionism take further hold, that would impact trade and put additional pressure on prices and inflation.

• Monetary Policy The initial expectation was that a Trump victory would create more volatility and take the expected rate hike by the Fed in December off the table. However, if the markets remain stable, the Fed will instead focus on the underlying fundamentals of

the economy (e.g. market at or near full employment, wage growth, stable pricing).

There is some question about whether Federal Reserve Chair Janet Yellen will resign or be replaced given the new regime.

Trump’s fiscal plan seems to point to a rise in the deficit, which could lead to higher inflation and interest rates expectations.

REAL ESTATE IMPLICATIONS Until the policy particulars start to take form, the ultimate impact on real estate will be uncertain. Financial markets, which tend to react more quickly, have taken this shock mostly in stride, which should create some stability in terms of real estate activity.

With financial industry regulation likely to either loosen or at minimum, no longer tighten, capital flows may improve and create a short-to-medium term net positive for investment activity and performance.

However, lower regulation could lead to more risk or volatility in the longer term.

While cap rates are low, spreads remain historically healthy and the fundamentals are sound broadly across real estate sectors. Fiscal and trade policies that could lead to higher inflation and interest rates could impact pricing if not offset by faster growth, but we do not expect much change initially. Overall on the demand side, U.S. companies are likely to adopt a wait-andsee approach to decision-making as the presidential transition efforts get underway and cabinet positions begin to solidify. The potential of lower regulation, increased defense spending and tax cuts would on their own be pro-growth positive for real estate demand, but the timing, mix, and other offsetting policies or compromises are still unknown. Until the policy details are defined and implemented, we expect political headlines and potentially financial markets to be volatile, but underlying real estate markets to remain relatively steady.

SECTOR IMPACT • Defense Upside potential for defense contractors.

Most prime contractors’ stocks are up over 4 percent.

• Legal A Clinton/Elizabeth Warren cabinet would have ushered in an unprecedented period of new regulations, whereas the Republican alignment will seek to overturn Dodd-Frank and reduce regulations.

• Finance Finance overall could receive a boost from the prospect of deregulation. Reduced compliance costs should benefit retail banks and investment banks alike. Private equity could be negatively impacted by revisions to the tax code. Hedge funds and private real estate investors may also see negative impact as Trump has made a repeal of the carried interest provision a centerpiece of his campaign.

• Manufacturing Win for American manufacturing.

Protectionism will limit the outsourcing of jobs but technological improvements will continue to displace unskilled workers.

Large infrastructure investments are likely.

• Technology Mixed impact for the technology sector. Big tech employers were banking on Hillary’s support for H1B; Trump’s anti-immigration stance is likely to increase domestic wages for American tech workers. On the flip side, the tax holiday for repatriation of overseas profits would be particularly beneficial (though one time) for technology companies.

• Health Care The potential full or partial repeal of the Affordable Care Act will create uncertainty for health care providers and insurers.

Pharmaceutical and biotech companies in contrast could fare better due to less regulation and the potential for repatriation of overseas profits.

• Federal Government Expect the Reduce the Footprint initiative within GSA to gain velocity and for federal payrolls to decline (per the campaign’s “drain the swamp” rhetoric).

ABOUT THE CONTRIBUTOR JLL is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. JLL’s research team delivers intelligence, analysis and insight through market-leading reports and services that illuminate today’s commercial real estate dynamics and identify tomorrow’s challenges and opportunities.

www.propertyinsight.com.my FEBRUARY 2017 I 65

LEGAL

CAN WE COMPROMISE ON PURCHASER’S RIGHTS?

C

an Developer and Purchaser agree to compromise on Purchaser’s rights in order to settle a case for defects or liquidated damages? I think that it is quite apt for me to state at the offset the golden rules that relate to interpretation of social legislations like Housing Development

66 I FEBRUARY 2017 www.propertyinsight.com.my

(Control and Licensing) Act 1966 (Act 118), and these are stated as follow: It is a settled principle of law that statutes must be read as a whole (see Kesultanan Pahang v Sathask Realty Sdn Bhd [1998] 2 MLJ 513). And literal interpretation of a statute is not applicable in all cases.

There are circumstances where the nature and purpose of a particular legislation must be considered when construing its various provisions, so as not to defeat the intention of Parliament (see Akberdin bin Hj Abdul Kader & Anor v Majlis Peguam Malaysia [2003] 1 MLJ 1; S.E.A. Housing

Corporation Sdn Bhd v Lee Poh Choo [1982] 2 MLJ 31).

In the instant case I am of the view that the Act is a piece of social legislation and hence its provisions should be given liberal and purposive interpretation.

In the case of Kesatuan Kebangsaan Wartawan Malaysia & Anor v Syarikat Pemandangan Sinar Sdn Bhd & Anor [2001] 3 MLJ 705, the Federal Court speaking through his Lordship Steve Shim (Chief Judge of Sabah and Sarawak) on the Industrial Relations Act 1967 said this at p 710: “Quite clearly, the IRA is a piece of social legislation whose primary aim is to promote social justice, industrial peace and harmony in the country. As such, the approach to interpretation must be liberal in order to achieve the object aimed at by Parliament. This had been described by Lord Diplock as the ‘purposive approach’, an approach followed by Lord Denning in Northman v Barnet London Borough Council [1978] 1 WLR 220, who reiterated that in all cases involving the interpretation of statutes, we should adopt a construction that would promote the general legislative purpose underlying the provision. We accept that to be the correct approach”.

A similar view was also expressed by the Federal Court in the case of Hoh Kiang Ngan v Mahkamah Perusahaan Malaysia & Anor [1995] 3 MLJ 369 where it was said at p 387: Now, it is well settled that the Act is a piece of beneficent social legislation by which Parliament intends the prevention and speedy resolution of disputes between employers and their workmen.

In accordance with well settled canons of construction, such legislation must receive a liberal and not a restricted or rigid interpretation.

CAN PURCHASERS WAIVE THEIR RIGHTS TO CLAIM LIQUIDATED DAMAGES (LAD)?

It is the duty of a Housing Developer to deliver vacant possession of the property within the time stated in the Agreement, which is 36 months from the date of the agreement. In the event the developer fails to do so, he is required by law to pay the purchaser Liquidated Damages (Agreed Damages) calculated from day to day at the rate of ten per centum (10%) per annum of the purchase price, from the expiry date of

the delivery of vacant possession.

Sometimes the developer and purchaser will sign a waiver agreement or letter, indicating his willingness to waive his rights under the sale and purchase agreement.

In the event there is a dispute, then such waiver agreement may be held to contract out of the developer’s obligation under the Regulations, thus defeat the objects underlying the statute which is legislated with a view of protecting house purchasers unless it benefits the Purchaser.

The situation is not dissimilar to that found in the case of S.E.A. Housing Corporation Sdn Bhd v Lee Poh Choo [1982] 2 MLJ 31, where the Federal Court held: It is clear that only terms and conditions designed to comply with the requirements of the Housing Developers (Control and Licensing) Rules, 1970, may be inserted in the contract of sale of land that is governed by the Housing Developers (Control and Licensing) Act, 1966 and the Rules, and that the contrary terms and conditions which purport to get round the Act and rules so as to remove the protection of home buyers may not be so inserted; (2) Clause 32 of the agreement being inconsistent with r 12 of the Rules and not designed to comply with the requirements of the rules is void;.

In MK Retnam Holdings Sdn Bhd v Bhagat Singh [1985] 2 MLJ 212, the Supreme Court also held that a second agreement entered into by a housing developer and a purchaser in which it purported to extend the completion date by a further six months after the lapse of the statutory time-limit, was in violation of the letter and spirit of the Housing Developers (Control and Licensing) Rules 1970, and therefore should not be allowed to stand.

On delivering the decision of the Supreme Court in this issue, Hashim Yeop Sani SCJ (Supreme Court Judge) (as he then was) said: “But it would seem to us that the validity of the second agreement should be tested

in the light of the Housing Developers (Control and Licensing) Rules 1970. We are of the view that the second agreement is a clear example of “contracting out” of the provisions of the 1970 Rules”.

Further, the remarks of Mohamed Azmi FCJ in Koperasi Serbaguna Ceupacs Tanggungan Bhd v City Investment Sdn Bhd [1984] 1 CLJ 250 may aptly be quoted here on the purport of Housing Development (Control and Licensing) Act 1966, when he said: “The protection afforded by law to house buyers is not merely a private right but a matter of public interest which Parliament has intended to protect from being bargained away or renounced in advance by an individual purchaser.”

In situations where such waiver may be lawful, the Courts had the opportunity to consider situations where contracting out would be lawful. For example, in Tan Chee Wah v Sri Damansara Sdn Bhd [2006] 7 CLJ 66 the High Court held that: ”Pihak-pihak adalah dibenarkan untuk keluar (contracting out) daripada Peruntukan Akta Pemajuan Perumahan (Kawalan dan Perlesenan) 1966 sekiranya ia adalah untuk manfaat pihak yang lebih lemah. Dalam hal ini Perayu sebagai Pembeli adalah pihak yang lemah.” (“The parties are allowed to contract out from the provision of Housing Development (Control and Licensing) Act 1966 if it is for the benefit of the weaker party. In this case, the Appellant as the Purchaser is the weaker party.”)

In my respectful view, any discussion with the purchaser if it is beneficial to the purchaser would be lawful. In the event that the Developer has paid the purchaser less than what is due, it remains unlawful.

The purchasers has a right to claim the in the Tribunal for Homebuyer Claims for the balance sum. So you may sign a waiver or agreement for lesser sum, but both remain unlawful no matter how cleverly worded they are.

ABOUT THE CONTRIBUTOR Dato’ Pretam Singh Darshan Singh is the President of the Tribunal for Homebuyer Claims and Chairman of the Consumer Claims Tribunal. He holds an L.L.B (Hon) from the University of London, and has served as the Superintendent of Customs, Magistrate, Federal Counsel, Deputy Public Prosecutor, Legal Director and Legal Advisor for various departments. Besides practising Real Estate Law as an Advocate and Solicitor, he has also published various legal books.

www.propertyinsight.com.my FEBRUARY 2017 I 67

LEGAL

DUTIES OF THE DEVELOPER IN FORMING JMB / MC

G

etting your house in order at all times will minimize liabilities. In the course of practising law, I’ve noticed that there’s an increase of disputes involving Joint Management Bodies (JMBs) and / or Management Corporations (MCs).

These issues vary and include challenging the validity of proxy holders, use of the maintenance account and sinking funds, the efficiency of managing agents, statutory duties and so on.

JMB is formed before issuance of the strata titles for the respective parcels, while MC is formed after the land office issues the strata titles. Developers play an important role in the establishing of JMBs / MCs, as it is the duty of the developer to open, maintain, transfer the building maintenance account and convene the first general meeting. Let’s find out the statutory duties of the developer, what happens if the developer fails to perform

MEASURES TO TAKE

them and what action can the JMBs / MCs by the developer until one month after can take if that happens, as well as others the first annual general meeting of the issues to take note. This topic is important MC; because it determines whether it will have • Establishment of a MC — Upon the a good head start. opening of a book of the strata register.

It is interesting that the Strata Management A JMB is first formed after the first Act (SMA) appears to provide clarity over: meeting is called by the developer whereas • Developers Management Period — the MC is first formed upon the opening of which means the period commencing a book of the strata register. from the date of delivery of vacant The developer has a period of 12 possession of a parcel to a purchaser months from the date of delivery of vacant by a developer until 1 month after the possession of the parcels (a piece of real establishment of the JMC; (Section estate usually resulting from the division of 7(2)); land) to call a first meeting to establish a • Establishment of a JMB — convening JMB. Whereas for a MC, the developer has the first Annual General Meeting (not a duty to convene the first Annual General later than 12 months after delivery of Meeting (AGM) of the management vacant possession); corporation within 1 month after the • Preliminary Management Period expiration on when there are proprietors — means the period commencing who are registered as the proprietor of a from the date of delivery of vacant parcel a sum of whose share units is at possession of a parcel to a purchaser least 25% of the aggregate share units.

JMB

Vacant possession delivered

MC MC is formed when the Strata Register is opened.

Developer to call first meeting

12 months from vacant possession – S17 After exceeding 25% of aggregated share units – S57(1)

Notice of meeting

No less than 14 days from the meeting date – S18(3)

First meeting

JMB is formed – S17(2)

14 days from the meeting

Inform the Commissioner of Building and 30 days from the first meeting – S30 register the name Developer to transfer all balances in the Maintenance Account & Sinking Fund Accounts 68 I FEBRUARY 2017 www.propertyinsight.com.my

No later than 1 month from the date JMB is formed – S15(1)

No later than 1 month after the meeting

At the first meeting, it is imperative that the residents make sure the developer includes the issues below in the meeting’s agenda: • To determine the number of members of the JMC; • To consider the annual budget prepared by the developer; • To determine the maintenance charges and contribution to the sinking fund; • To determine the rate of interest payable for late payment of maintenance charges and sinking fund;

During the handover to the JMB, the Developer is also statutory bound to: • Hand over the administration office set up by the developer; • The audited accounts of the maintenance account and sinking fund; • All the assets of the development area; • All records relating to and necessary for the maintenance and management of the buildings; • All invoices, receipts and payment vouchers in respect of the maintenance account and sinking

• •

To consider the audited accounts; To confirm the taking over by the JMB of insurances effected by the developer; • To make additional by-laws; and • To consider any other matter connected with the maintenance and management of other common property.

The quorum (minimum number of members) that make the meeting valid at the first meeting must be one quarter of the purchasers who have paid maintenance charges. If within half an hour, a quorum is not present, the registered members

•

• •

•

fund account.

Section 15(3) of the SMA also made it a duty for the developer to deliver to the JMB: All approved plans for buildings or lands intended for subdivision; Any document in the developer’s possession that indicates, as far as practicable, the actual location of any pipe, wire, cable, chute, duct or other facility for the passage or provision of systems or services; All contracts entered into by the developer in respect of the

are entitled to vote who are present shall constitute a quorum.

Maintenance Account (MA) In the course of anticipating the first meeting, the purchasers must also know that it is the duty of the developer to open and maintain a Maintenance Account.

The account should be opened for each development area and be transferred to the JMB after JMB is formed.

Transferring of the funds from the MA is usually a tedious process and it is important that the JMB at this juncture note the following:

• •

•

maintenance or management A copy of the schedule of parcels filed with COB; The names and address of such contractors, subcontractors and persons who supplied labour or materials to the development; All warranties, manuals, schematic drawings, operation instructions, service guides, manufacturer’s documentation and other similar information in respect of the construction, installation, operation, maintenance, repair and servicing of

www.propertyinsight.com.my FEBRUARY 2017 I 69

LEGAL • •

any common property The register of all parcel owners of the buildings; The original copy of all insurance policies

Any developer who fails to convene a first

Annual General Meeting or to deliver the documents above commits an offence and shall, on conviction, be liable to a fine not RM250,000.00 or to imprisonment for a term not exceeding 3 years or to both.

If the developer fails to discharge its responsibility, a proprietor can lodge a

complaint at the Strata Tribunal. There are various issues that could arise during the handover period. If in doubt, always consult a lawyer and get a lawyer to sit in each JMC meeting – just like how you would appoint an external auditor to audit your accounts.

All monies collected by the developer in the maintenance account shall only be used for actual or expected general or regular expenditure of the following matters:

ABOUT THE CONTRIBUTOR Lai Chee Hoe is a lawyer and the founding partner of Chee Hoe & Associates.

Specialises in civil and corporate litigation, he has over 10 years of experience under his belt. Currently, he also serves as the chairperson for various Joint Management Bodies.

70 I FEBRUARY 2017 www.propertyinsight.com.my

STRATEGY

GIVE SOMETHING EXTRA Every business needs to attract the right kind of customers and get them to sign up

E

verybody loves a free gift. Free gifts are well known in the marketing world for attracting customers. Don’t worry at this moment. I am not suggesting that you should offer your property for free! But you can learn from the world of marketing and offer your property in such a way that customers feel they are getting something extra with you. And that something extra could be just the difference between why they take your property over the competition.

The property market is a fast-moving arena and properties that are hanging around need to be looked at carefully to ascertain the issues.

On nearly all occasions, the blame will either lie with the agent (not advertising it on the best magazine or websites, not answering calls, poor photos or description, etc.) or with the property itself. To ensure you have the best agent, it is critical you test them and check your property details against the competition. When it comes to property, the issues are usually down to two things: condition and price.

Properties in poor condition can often be harder to let and / or sell unless the condition is reflected in the price, i.e. it is lower than the competi¬tion. Highly priced properties can also prove problematic if the expensive gadgets and fancy finishes that go with them are not valued by the target audience – added extras must be relevant and appealing if a higher price-point is to be achieved.

The value and type of free gift you offer will vary according to your target customer. In the rental sector, the offer of a free rent period is very popular. You could, though, be more creative and it doesn’t just have to be rent related. How about throwing in a new flat-screen TV? Or maybe even RM200 worth of shopping vouchers? What about a luxury spa day or a year’s free gym membership? In the sales market,

you could use various top-of-the-range appliances as a focal point in the kitchen and include them in the price, or maybe dress the property and include the furniture; alternatively, you could even gift a cash sum on sale completion. While it may seem frivolous to be offering such gifts to attract customers, when calculated against a potential void or a quicker sale, it’s unlikely you’ll be out of pocket.

Offering something extra may seem like a marketing gimmick, and maybe to some extent it is; however, every business needs to attract the right kind of customers and get them to sign up.

The sooner customers sign up and take your property, the sooner you receive your money. Giving something extra gives you standout appeal and a reason for prospective clients to consider your property for longer. Getting into a customer’s ‘consideration set’ is key if you want to make a sale – if you’re not considered, your property not going to be viewed, let alone get an offer. Take the time to think creatively and mull over what your cus-tomers value – see what extra you can offer and give them that little bit more to make them your customer, not some¬body else’s.

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

www.propertyinsight.com.my FEBRUARY 2017 I 71

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