Fitch Ratings, Malaysia, 1st July 2015

I think I have written many times about this. This time, no further comments. Let me just outline and explain Fitch Rating’s latest rating for Malaysia published in all major medias on 1st July 2015. On an overall basis, it’s considered a very positive news. Fitch Ratings did not downgrade Malaysia to BBB but it has even revised the outlook from negative to Stable. Long Term foreign currency issuer default rating (IDR) remained at A- and local currency IDR at A. (Yes, Ringgit is considered STRONG, still.) It is a welcome relief and suddenly, everything seemed better, both BURSA and Ringgit.

Why the current rating? Source: Fitch Ratings

– Government’s fiscal deficit continue to fall from 4.6% of GDP in 2013 to 3.8% of GDP in 2014. General government debt/GDP declining from 54.7% in 2013 to 53.9% as at end 2014.

– Goods and Services Tax (GST) and fuel subsidy reform is supportive of fiscal finances and this is expected to help the economy further even with lower oil prices.

– Malaysia’s external liquidity ratio was above the ‘A’ median of 104.6% and it is expected to improve over the forecast period.

– Current account surplus is about 4% in 2014 and this is above the median of other ‘A’ rated economies at 1.7%.

– Malaysia is still GROWING with reasonable strong real GDP growth and low inflation volatility.

– Average of five-year real GDP is at 5.8% and this is FASTER than the median of other ‘A’ rated sovereigns of just 3.1%.

To that friend who kept ignoring every single of these points, come on, this is NOT from anyone in Malaysia but is from Fitch. Or, as usual, Malaysia has paid Fitch Ratings to write such positive account?

What can lead to a negative rating in the near future?

– If government’s targets in terms of structural budgetary reform is NOT progressing well.

– Shock to the interest rates or employment which is so bad that it affects the debt service capacity. In other words, “could not pay debts.”

– Deterioration in the balance of payments or investor sentiment that impairs the sovereign’s external balance sheet.

Please, read these three reasons and memorise them. Nothing here says that due to 1MDB, Malaysia will slip into a crisis. Oh yeah, for that one particular friend working in Singapore who kept saying that Malaysia is about to become Greece, I hope he reads this too.

What about things that would help to lift the rating into positive territory?

– As long as government’s own commitment on containing public indebtness continues, this should install confidence and resilience on reducing the deficit position further.

– Sustained growth without the build-up of macro imbalances.

– Narrowing of structural weaknesses relative to peers including development indicators and governance. (Yes, this is where it includes the 1MDB’s issue which should be quickly solved, irregardless whom we hate or whom we believe)

All these are based on key assumptions that the global economic remain stable and there are no sudden escalation of regional or geopolitical disputes to a level that disrupts trade and financial flow.

No conclusion, just read as many other articles as you want and understand what is really happening. The current Ringgit does not reflect its true value based on the many fundamentals which has shown that in many aspects, Malaysia remain stronger than many other A rated economies. Would we be downgraded in the future? Of course the possibility is there. Anyone who said no way must be dreaming. As at 1st July, the sun is shining brightly and the dark clouds are nowhere to be seen, for now. Happy investing.

written on 1 July 2015

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What’s the basis my dear Fitch Ratings?

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What’s the basis my dear Fitch Ratings?

Earlier, Fitch Ratings said that it has put Malaysia on a possible downgrade outlook. One of the reason stated was 1MDB. Read here:
1MDB is “manageable risk” – Fitch Ratings

According to

someone I respect a lot, Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz, this is questionable. The reason is because of Malaysia’s current strong fundamentals. Compared to peers, we are at least as good or even better in terms of growth prospects. We have a solid financial system, our fiscal position had shown a track record of reduction in deficit and our external debt is relatively low compared with some of our peers. Thus, her question to Fitch Ratings, “what has been the basis of that outlook?” (downgrade outlook)

She explained further than on fiscal position, subsidy rationalisation has been put in place to strengthen it. In fact this had generated savings of more than RM20 billion. This is on top of the implementation of the Goods and Services Tax (GST). This GST has moderated spending somewhat but this has also been cushioned by the lower oil price. (Lower oil price meant people have more savings compared to when petrol price was much higher. This savings would most probably be spent and this is why she said this is the cushion for the moderation in spending.) Besides these two, the country’s current reliance on oil and gas revenue which currently stood at 30 percent is gradually being reduced.

Whether readers agree or disagree with Zeti, please take note of the current strong position in the financial sector. These can be easily googled and searched. In terms of fears of GST, I seriously think this is totally overblown. Malaysia cannot continue to rely on current tax structure where the minority is supporting the whole country’s population. This was the major reason why ratings downgrade were mentioned many years ago. Everyone wanted income tax to be lowered but without any tax rationalisation programmes, there is certainly no way for this to be reduced further. I really look forward to the next action from the three major ratings agencies of the world when they assess Malaysia again in the near future. I hope I am right. 🙂

written on 27 Apr 2015

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Ringgit down, Ratings stay – Moody’s.

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A- rating down soon, Not Yet, but soon.

Fitch Ratings said that Malaysia is weakened by the downtrend in international reserves which have declined by 12 percent (US$16 billion) between August and December 2014. In other words, the outflow is far greater than the inflow of funds into Malaysia. We can see this in the weakening Ringgit as well as the dropping Bursa. This would be what it call a ‘rating sensitivity’. This meant Malaysia may be downgraded the next time they release another rating on Malaysia. We are currently still rated A- by Fitch ratings. A- may seem like a bad rating but this is still considered an Investment Grade rating. Standard and Poors also rated us at A- currently.

Fitch said that eventhough Malaysia continues to enjoy an account surplus but this surplus itself is under threat. In fact, Malaysia’s revision for a higher deficit for 2015 meant that the country remains very dependent on petroleum-linked revenues. That’s an issue as oil prices remain weak and there are no signs of it bouncing back soon. Thus, with all these, it may be tough for the government to achieve a balanced budget by 2020. As usual, the rating may drop but it will only be potentially downgraded within the next 12-18 moths. Next full review is end July 2015. Do note that for 2014, our growth remain healthy and effects to the economy for the whole of 2015 is still not clear. That’s why Fitch said, 12-18 months. In other words, unless situations deteriorated even further, A- should remain till 2016. That’s a relief? Well, yes and no. Yes where ratings are concerned but not where sentiments are concerned. Sentiments remain negative.

Today (21 Jan), it was reported that the Chinese Yuan is leading drop in all Asian currencies. Dropping against which currency? US$ is the gainer. This current superpower is showing good signs of good growth, thus many are more confident and thus it’s currency is enjoying a very good spell currently. US$ is a world currency. During times of volatility, it will always enjoy a higher value as it is considered a much safer safe haven compared to any Asian currencies or even AUD$ which is even more affected by commodities and it does not need to be just oil prices. The most important thing everyone must keep an eye on is this, are there investments which I can make today which is considered safe moving forward? Buying a luxury villa in Sentosa? Nope. Keeping all money in FD? Hmm… Buy stocks in a company which has weathered the last two crisis and is still going strong? Hey, this might be one. Buying a secondary property which is 20% down today versus a year ago and rental can still cover mortgage? Yes….. this might be another one. Are there others? Of course there are. Remember those words of ‘be brave when others are fearful and be fearful when others are greedy?’ Happy seeing through all the many negatives and can somehow pick up something usable.

written on 21 Jan 2015

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Standard & Poor’s rating for Malaysia, subsidy and competitiveness

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Malaysia and Mongolia, same rating. :)

After slightly over 6 months of a reaffirmation of A- rating, Fitch Ratings has now given Malaysia a Negative Outlook. It said that out of the 10 Emerging Asian sovereigns, two is under Negative while the rest are all on stable outlook. Yes, the two include Malaysia and Mongolia. The two major reasons include erosion of current account surplus (means our export numbers are not high enough versus imports) and a large public sector deficits. Both these are compounded by the drop in oil prices. Due to all these factors it has to downgrade Malaysia as we are no longer fit for an ‘A’ range sovereign. It did however said that the government has kept to its consolidation path but the oil price can throw a spanner into its path. This is the ‘badder’ news in the sense that the near future may be rockier and more testy. If we can emerge unscathed, I think a re-rating is in place.

Fortunately, it’s not all bad news. 2014 can be considered a good year even if 2015 is likely to be tougher. According to Standard Chartered, they are predicting that Malaysia would record a robust 5.9% GDP growth for 2014. This would be the highest since the 2008 crisis. They are also maintaining their forecast for 2015 at 5.5% and said that this would be helped by the fact that Malaysia is a big exporter of non-commodities which comprise of 70% of its exports. This is likely to benefit from the effects of the fall in oil price. 5.5% is still considered very healthy when we consider the average of just 4.3% for the periods of 2001 – 2013. It expects the second half to be a better half and said that Malaysia’s fundamental remain strong with the full employment as well as new foreign investments that the country is receiving.

Okay, which one should we believe? One is a top rating agency while another is quite a big international bank. The answer is pretty easy. Are you investing or are you waiting? if you are investing, of course the report from Standard Chartered is better. In fact with this report, you may want to buy that nice little place now and wait for a better second half by the time your transaction is completed. If you are waiting, of course you hope that 2015 may not be a good year for Malaysia. Then, you may be able to get some potential ‘fire-sale’ in the property market. Personally, I would like to believe what Standard Chartered said is true. The reason is because I think the GST would just come and go. Complaints? Sure. Lots of noises? Sure. However, it will be just another phase in the country’s growth and once GST starts to show its positive effects in the years to come, I think the rating agencies would be happier with Malaysia. I only have an MBA, not an economics degree. We shall see whether Fitch Ratings or Standard Chartered or even Charles is right. Haha.

written on 12 Jan 2015

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Standard & Poor’s rating for Malaysia, subsidy and competitiveness

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Fixed Deposit rate will be higher now. Happy?

Okay, when our Bank Negara Malaysia (BNM) increased the Overnight Policy Rate (OPR), then the banks would adjust their lending rates as well. At the same time, depositors will also get higher returns too. BNM just increased our OPR by another 25 basis points which is 0.25%. Our new OPR would be 2.75%. The ceiling and floor rates of the corridor of the OPR are correspondingly increased to 3.00 percent and 2.50 percent, respectively.

The below is the actual press release by BNM on why OPR had to be increased. Please also read their assessment on the economy yeah. Stop listening to all your Facebook friends only unless one of them happened to be the BNM governor herself.

Press Release from BNM as below:
(click to view in BNM site if you prefer)

At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to increase the Overnight Policy Rate (OPR) by 25 basis points to 2.75 percent. The ceiling and floor rates of the corridor of the OPR are correspondingly increased to 3.00 percent and 2.50 percent, respectively.

The global economy continues to be weighed down by rising cost pressures, tighter global financial conditions, and strict containment measures in China. These factors more than offset the support from positive labour market conditions, and the full reopening of most economies and international borders. Inflationary pressures were more persistent than expected due to strong demand, tight labour markets, and elevated commodity prices, despite improvements in global supply chain conditions. Consequently, many central banks are expected to continue raising interest rates to manage inflationary pressures. In particular, continued aggressive adjustments in US interest rates and expectations of a higher terminal rate in the US, have contributed to a persistently strong US dollar environment. This has resulted in higher volatility in financial markets, affecting other major and emerging market currencies, including the ringgit. Going forward, the global growth outlook will continue to face headwinds from tighter financial conditions amid elevated inflation in major economies and the domestic challenges in China. The growth outlook remains subject to downside risks, including escalation of geopolitical tensions, worsening of domestic headwinds in China and potential energy rationing in Europe.

For the Malaysian economy, latest indicators show that economic activity strengthened further in the third quarter, driven primarily by robust domestic demand. Going forward, despite the challenging global environment, domestic demand will remain the key driver of growth. Household spending will continue to be underpinned by improvements in labour market conditions and income prospects. Tourist arrivals have increased following the reopening of international borders and will further lift tourism-related sectors. Investment activity and prospects will be supported by the realisation of multi-year projects. Nevertheless, external demand is expected to moderate following softening global growth. Despite bouts of heightened volatility in the global financial and foreign exchange markets, these developments are not expected to derail Malaysia’s growth. Domestic liquidity remains sufficient, with continued orderly functioning of the financial and foreign exchange markets. Financial institutions also continue to operate with strong capital and liquidity buffers. These will ensure financial intermediation remains supportive of the economy. Downside risks to the domestic economy continue to stem from a weaker-than-expected global growth, higher risk aversion in global financial markets amid more aggressive monetary policy tightening in major economies, further escalation of geopolitical conflicts, and worsening supply chain disruptions.

In line with earlier assessments, headline inflation is likely to have peaked in 3Q 2022 and is expected to moderate thereafter, albeit remaining elevated. Underlying inflation, as measured by core inflation, is projected to average closer to the upper end of the 2.0% – 3.0% forecast range in 2022, having averaged 2.7% year-to-date, given some demand-driven price pressures amid the high-cost environment. Moving into 2023, headline and core inflation are expected to remain elevated amid both demand and cost pressures, as well as any changes to domestic policy measures. The extent of upward pressures to inflation will remain partly contained by existing price controls, subsidies, and the remaining spare capacity in the economy. The balance of risk to the inflation outlook in 2023 is tilted to the upside and continues to be subject to domestic policy measures on subsidies, as well as global commodity price developments arising mainly from the ongoing military conflict in Ukraine and prolonged supply-related disruptions.

Against the backdrop of continued positive growth prospects for the Malaysian economy, the MPC decided to further adjust the degree of monetary accommodation. The adjustment would also pre-emptively manage the risk of excessive demand on price pressures consistent with the recalibration of monetary policy settings that balances the risks to domestic inflation and sustainable growth. At the current OPR level, the stance of monetary policy remains accommodative and supportive of economic growth. The MPC is not on any pre-set course, which means that monetary policy decisions will continue to depend on evolving conditions and their implications on the overall outlook to domestic inflation and growth. Any adjustments to the monetary policy settings going forward would continue to be done in a measured and gradual manner, ensuring that monetary policy remains accommodative to support sustainable economic growth in an environment of price stability.

The meeting also approved the schedule of MPC meetings for 2023. In accordance with the Central Bank of Malaysia Act 2009, the MPC will convene six times during the year. The Monetary Policy Statement will be released at 3 p.m. on the final day of each MPC meeting.

— End of press release —

Some of the things BNM said

” Underlying inflation, as measured by core inflation, is projected to average closer to the upper end of the 2.0% – 3.0% forecast range in 2022, having averaged 2.7% year-to-date, given some demand-driven price pressures amid the high-cost environment.”

” For the Malaysian economy, latest indicators show that economic activity strengthened further in the third quarter, driven primarily by robust domestic demand.”

” Against the backdrop of continued positive growth prospects for the Malaysian economy, the MPC decided to further adjust the degree of monetary accommodation.”

” At the current OPR level, the stance of monetary policy remains accommodative and supportive of economic growth.”

USD will remain strong yeah. Their rates are higher, thus returns are higher too.

There was a time when the rates in the US was lower than Malaysia’s. Today, it’s higher. In other words, it would provide better returns if one were to buy into US$ fixed investments instead of Malaysia. Just always remember that exchange rate should be used for trade and not for some speculative purpose. If it’s for trade alone… Malaysia has trade surplus while the US… is having a deficit. Think about it yeah. Until then, all the best to the US economy and hopefully their people are not adversely affected by ever higher mortgage repayments…

Cheers.

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What if someone transferred RM1 million away from your Fixed Deposit?

Regardless of how much we have, if someone transferred away RM1 million from our bank account, we are likely to go crazy. I know, these days to some people, RM1 million is really not a lot. However, when 50% of all Malaysians have less than RM10,000 in their EPF account, RM1 million is still a super big number. Read here to know why Malaysians have so little in EPF savings.
Close to 50% EPF members have less than Rm10,000 in their EPF account.

Here is one such case where someone’s RM1 million was transferred out of his Fixed Deposit. How could it happen?

Article in thevibes.com
  A lawyer in the police report claimed funds in his fixed deposit accounts were transferred to an unknown individual’s account without his knowledge or consent. The lawyer said that he visited the bank with his mother to open the fixed deposit accounts.

The RM1 million in funds was entrusted to a relationship manager from the branch who would handle all banking matters related to him and his mother. The bank had also subsequently issued two fixed deposit account certificates amounting to RM500,000 each.

On October 1, the lawyer returned to the bank to check on the balance of both accounts and discovered that the funds were transferred out from both accounts on June 11 and June 25 amounting to RM500,000 per transaction. This was during the time when much of the country was facing movement restrictions. Please do read the details here:
Article in thevibes.com

It’s best to always check your Fixed deposit accounts yeah

Even Fixed Deposit accounts can be checked from logging in to the bank account. This can be done from anywhere at all and helps to ensure if something were to happen, detection will be quick versus a few months later. Just need to remember that banks also do not want such things to happen as it affects their reputation tremendously.

Thus, they may have some safeguards in place but nothing ia totally foolproof since we are dealing with processes and systems which were built by humans. I hope this man gets back his money once its verified that he was a victim in this RM1 million case. Unfortunately this is the world we live in. Just always be careful.

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Anyone can get scammed yeah. Always be alert

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Flat 2016? Good 2018, 2019 and great 2020?

In the just concluded PropertyGuru 2016 Outlook Forum, many industry experts were invited to share their views on the Malaysian property market. For me, one comment stood out in particular. PPC International’s CEO Siva Shanker predicted that 2016 will be a flat year before recovery starts trickling in by 2017 and 2018 because of elections. By 2019, the residential market could surge again in 2019 and hit a peak in 2020. This is as long as there are no unforeseen negative news. He advised that there is little need to panic because property market have cycles and typically goes through a few bad years before rebounding. Dato Seri Vincent Tiew concurred with the flat 2016 view from Siva Shanker but he said that considering 2019 and 2020 being the years when prices rise, now is a good time to buy homes.

With regards to rental market, Shanker said that it will be dropping a lot as many property speculators try to get a little bit of income to service their mortgages. Without these rentals, many may be struggling to serve their loans. PropertyGuru’s latest Property Outlook Report also predicted that the market would shift in favour of buyers and renters in 2016 due to the current supply glut. PropertyGuru Group chief executive officer and co-founder Steve Melhuish summed up the current situation concisely, “Property markets are cyclical, so things will be looking up again. People should take a long-term view towards the property market and stay positive that in challenging conditions, one is certain to find attractive opportunities.”

The panellists consisted of Dato Sri Dr Vincent Tiew (Andaman Property Management), Dr Daniele Gambero, (REI International), Milan Doshi (Wealth Mastery Academy), Siva Shanker, CEO (PPC International), Gary Chua (Smart Financing) and K.K. Chua (Armani Media).

Views from all the experts were summarised by PropertyGuru in an article:

Downtrend expected to continue for first half of 2016 before recovering or stabilising.

Recovery is predicted to be within 2017 to 2018.

Downtrend in prices and transactions to continue, especially for high-end luxury high-rise units. Correction can be between 3 – 4 percent  My earlier article here:
Luxury condominiums oversupply in Kuala Lumpur

Prices are always influenced by land scarcity, public sentiment, construction and compliance costs, strong demand and rising cost of living. My earlier article here:
Will property prices ever come down? Realistically?

Buyers can expect plenty of incentives, rebates, freebies and goodies. My earlier article:

Without freebies, should you buy property?

Smaller units would be the order of the day as developers focus on affordability; RM300,000 to RM500,000 range. Sizes range between 450 sqft to 850 sqft. My earlier article:
Only smaller units can be affordable

MRT / BRT / LRT would be game-changers. First line will begin operation by end 2016. This is definitely confidence booster. My earlier article here:
MRT stations will change the area dynamics

Buyers MUST ensure they are credit-worthy as loans would not be easy to come by. My earlier article here:
Stay safe, buy within affordability and stop bubble building

GST will continue to affect consumer sentiment until everyone understands this is here to stay and adjusts to it. My earlier article:
GST, the cause of everything negative today

I think it’s good to know all these pessimistic views for the property market from now till at least mid of 2016. In terms of long term fundamentals, the Malaysian property market is actually still pretty positive. In terms of smaller units and where to buy however, my advice is to look at affordability first to ensure your loan is approved. Think duration and not distance and suddenly many more options open up instead of only the smaller units. Yes, wait-and-see is definitely not a better option than view-and-offer. Just make sure we do sufficient analysis. There are so many property portals in Malaysia today.
Top 8 here.
Yes, I am happy as these experts actually said many things which I have written earlier. Now, let’s hope what was said actually happen. Happy reading and learning.

written on 15 Dec 2015

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Yes, it’s definitelysafe for a long time yet, property investment

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Flat for 6-9 months more. Property Malaysia.

First of all, I disagree that the Malaysian economy is doing badly. I think it is bad for some but very good for some of those who managed to grab the right opportunities that come along. One very good example, I guess the more traditional businesses such as brick-and-mortar retail are facing lots of pressure from the online based competitors. Please proceed to disagree lah but do not forget about the car sales of non-national brands. We can also say everything we want about the transaction numbers for homes but have we even compared it to those bad years or are we comparing it to those ‘crazy’ years? I was at MidValley mall today. I arrived at 1115am and it took me 45 minutes to find a car park.

Inside the mall, there are still shops which were overwhelmed even if at the same time, some shops are surely closing down in the near future (nobody inside!) and many of the more popular restaurants were full during lunch. If these people do not have a stable job which pays them more than enough to cover their rental or mortgage, would they even have extra money to have a lunch in a restaurant? It’s funny because having a lunch in a restaurant is nowhere near ‘necessity.’ So, should the property market be rosy then? As developments were planned well ahead and could not suddenly change, this has made the property market of Malaysia tougher than usual. There’s way too many units being built at prices that the majority could not afford to buy.

Here’s an article saying just that in
freemalaysiatoday.com
 It quoted Prem Kumar, who is executive director of property consultant and real estate solution provider Jones Lang Wootton (JLW). Prem shared that the number of property transactions was currently on the decline. In fact the Malaysian property market is expected to remain flat in the next six to nine months because of an uncertain demand outlook as well as slow uptake for new launches. He said that the main reason was because many of these properties were built for people who could not afford them, specifically the B40 income level category. B40 is the base 40 in Malaysia. The B40 segment refers to the bottom 40% of households with monthly incomes of below RM3,900 per month. Here’s an earlier article:
Most wealthy Malaysians – the top 40

He shared that developers believe RM400,000 to RM500,000 is considered affordable. It is not. In fact this is a major issue because the government does not even have a strict guide on what’s really affordable.

I still think RM500,000 is the maximum that the developers could go if they intend to target a wider pool of buyers. In terms of selling very faster however, perhaps a price point nearer to RM400,000 would help tremendously. The reason I say so is because most people would think of a home when they are getting married. In this case, assuming the household income is the B40 level. RM3,900. The banks would usually lend up to 40 percent of the income for the first-home. Here, RM3,900 is RM1,560. This is less than RM100 from the
monthly repayment.

Assuming the B40 category really could not afford this unit, it meant that the M40 would be able to. M40 would be the households earning between RM3900 to RM8,319. Now do we see why many new launches today are really usually below RM500,000 and closer to RM400,000? Of course, the sizes are smaller too but the focus perhaps would be on affordability. Happy waiting if that’s what you are thinking.

written on 29 July 2017

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What if everything becomes unaffordable? Affordability will find itself

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FLAT for SGD1.2 Million (RM3.672 Million)

When the location is awesome, the demand is great and the price is crazily high. One Singapore Improvement Trust (SIT) flat in Tiong Bahru is being put up for sale at S$1.2 million. I do not know a lot about Tiong Bahru but a friend of mine who knows Singapore well told me that the location is a good one. Close to everything anyone would need. I reminded her that after buying it for S$1.2 million, some renovation is most likely as it is already nearly 50 years old! The 99-year leasehold conservation flat is a 1,080 sq ft flat and situation on a low floor. At the price that it’s listed, it is around S$1,111 per sq ft. Even more astonishing is that it has just one bed-room and one-bathroom.

The agent who is marketing the property, DTZ property agent Daniel Tan said, “The unit has been on the market for about two months and has only received four to five enquiries from potential buyers. The owner paid a fair bit to renovate the place, which is within walking distance to the MRT station and famous Tiong Bahru Market.” One advantage is that foreigners are also eligible to buy and research has shown that there are just 138 of such type of SIT blocks remaining in Singapore. The price is however much higher than many similar units for sale. One example is another SIT flat nearby which is going for around S$900,000 but that one is a little run down.

So, are you ready to buy one? A foreigner who’s wealthy enough can buy the unit too. Sometimes, these were put up to test the market. If the owner was desperate, he may not want to put a price which is high above the rest. It would really be good to know who bought that unit in the end as well as the actual transacted price. Quoting my friend who invests in just landed, many times, the quoted price and the transacted price would be totally different. Many times, when the price is way too high above everyone else, the seller can continue to feel good about that price but no buyer would feel good and thus the buying does not happen. Happy visiting Singapore.

written on 5 Nov 2015

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SGD955,000 for a 14-year old flat in Singapore

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Flat year and creative packages come together in 2016

It’s a fact. Property market Malaysia is slow in 2016.
Both transactions value and quantity for 2015 dropped.
Developers are working harder, getting more creative too. In a recent report in thesundaily, CH Williams Talhar & Wong Sdn Bhd managing director Foo Gee Jen said while some developers are delaying their launches, some are coming up with creative financing packages to move their stocks. He quoted a few,
Sunway Group
, IOI Properties Group Bhd, Kuala Lumpur Kepong Bhd. With tougher loan approval, developers with deeper pockets could definitely do more.

Recently, Sunway announced that it would offer up to 88% financing to home buyers under its “Sunway Property Certainty Campaign” for purchasers who book and sign the sale and purchase agreement from March 29 2016 to Sept 30 2016. This is specially targeted at buyers who were not abletoget their loans approved from banks. IOI Properties is currently offering a deferred payment scheme, targeted at those unable to come up with a lump sum down payment. Buyers may choose to pay in instalments over 18 to 24 months. As developers are not looking at losses, these measures meant that buyers were still able to buy while developers could still continue selling.

Some developers would offer direct discounts, rebates and even renovation packages. Foo said that 2016 would be a ‘flat’ year because of many uncertainties including the job market. In a recent report, JobStreet.com’s latest survey says that Malaysian employers expect improved hiring activity for Q1 2016 compared to Q4 2015. We will see if there are more job creations or layoffs as the year unfolds. He said that reputable developers with good products should do well but many developers would be
missing their sales target
. Actually, many of the more famous developers are still hitting their sales targets and some even
projecting higher targets for 2016.

I always believe when prices are down, values would start to emerge. I also believe that prices would not rise like the years before or else the market will crash. Malaysians need homes but only at prices which are considered affordable. Couples can increase this ‘affordability’ level when they combine their incomes but even this has its limits.

A good friend recently said that he would avoid ‘lifestyle’ products. It’s best to buy the standard products at more standard prices instead. I would think instead of looking at lifestyle versus the standard product, use price as a benchmark instead. If WE are the buyer, would we pay extra 10 percent for a better looking condo and its facilities? I think the answer may be a Yes. However, if you are asking me if I would pay 20 percent extra, then my answer is NO. Thus, do not generalise. Calculate and look one level deeper. Happy waiting for the best property. just remember to keep viewing though.

written on 13 May 2016

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Flat 2016? Good 2018,2019 and great 2020

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Why more flexibility can still be higher salary and good for employers too

Many millennials I know tell me that they would become a boss one day. Of course most of them said it’s because their current boss treats them badly or pays them too little. By becoming their own boss, they are supposed to have ‘better’ bosses (usually it’s their customers!) and they would usually earn higher pay (since they keep all the profits?) Some good real estate negotiators (RENs) tell me that they could wake up at 10am without their agency principals calling them. When I asked a few more questions, actually in the beginning, they work much harder than most jobs; bringing potential buyers to view homes even on a Sunday morning or many weekday evenings! So, RENs get to enjoy only AFTER working very hard for some time. To those who aspire to have an easier life without working hard, well, it does not really work.
In the U.S, this is true as well; millennials wanting more freedom in terms of flexible hours.  Here’s
one latest article in USA Today.

Basically, what these millennials wanted is to be the boss of their own time. On an overall basis for the whole workforce, 57 percent says that they are interested to take up a freelance job. About one quarter said that they will be a freelancer within the next 5 years. This is extremely high because it meant that more than half would be freelancers versus full-time employees! Well, if all those interested to do so, really do so.  Meanwhile, 4 out of 10 millennials say they intend to leave their full time employers to be freelancers within 5 years. The reason for this new mindset is because they do not wish to miss out on important life events, from taking time to enrich their kids’ lives to caring for elders. According to the article, freelancing can have its drawbacks. For example, a steady paycheck (salary) or even that human interaction that people value in the workforce. The reports says that employers have a stronger chance of holding onto their staffs if they’re willing to offer the flexibility many of their employees crave.
Do refer to that full article in USATODAY here.

Actually, freelancing may not mean a lower pay and it also does not mean that employers would face disruptions in their operations. Some finance people could become a freelancer to a few companies instead of one and works in each company for a specified periods every week. Truth is, smaller organisations may not have enough finance job to justify hiring a full-time finance person. So, in this case, instead of the RM4,000 which they have to pay, they may be willing to pay RM2,000 to an experience finance person who comes into the office once or twice per week and it does not even need to be for the whole day! Three SMEs may do this and the finance person actually has a pay of RM6,000 per month instead of the typical RM4,000 if they were to work full-time for an organisation. MANY years ago, my Accounting lecturer did just that and he told us that his pay was far higher than full-time lecturers in the college. He scheduled his lessons accordingly and he taught in three different colleges in the Klang Valley. For the college, this is huge savings because having a full-time lecturer sitting in the office without classes is not productive at all. Well, the trends usually start with the more advanced nations. Since this will be super common in the U.S. within the next 5 years, get ready for freelancing to become very common in Malaysia within 10 years? By the way, we should not forget that many directors in public listed companies may be directors in a few of them and not just one. WOW. Happy working, flexibly!

written on 18 April 2018

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COVID-19 normalisation: Flights are increasing again and beyond before COVID-19. Good sign?

Do you believe flights are increasing again? What are your holiday plans for the upcoming school holidays? (even if it’s a short one). When do you think you will fly again?

My daughter who’s 7 years old has probably flew 50 times. In other words, 7-8 flights ever year. Well, COVID-19 arrived and MCO started in March 2020 and we have yet to fly since then. What has happened though is that we are looking for that opportunity. Probably somewhere within Malaysia. My sister will be flying next month to Langkawi. Already I have so many friends who are flying within Malaysia and doing their best to support the Malaysian economy through cuti-cuti Malaysia.

At the moment, this is not enough. Airlines continue to struggle because international borders are closed and relying on just the local market will mean lots of financial pains ahead. However, what is certain is this. Airlines that could just survive long enough will be winners because some of their competitors could not and if they fail and the market recover, imagine what will happen to the business volume of the remaining airlines. Question is this. WHEN WILL THIS HAPPEN? Let’s look at China for some clues.

Photo by Rakicevic Nenad on
Pexels.com

Article in thesundaily.my
  China expects a significant rebound in domestic travel for the upcoming Golden Week. This holiday is one of the busiest times for travel. Trip.com said, “The demand on tourism that was suppressed for nine months will probably be released in these eight days.“

There were more domestic air bookings made between Oct. 1 and Sept. 14 than in the year-earlier period and the surge came in August where economy seats to popular routes like Beijing to southwestern city of Lijiang has sold out.

Hotel and airline bookings made during the week of Sept. 8-15 exceeded those made during the same period last year, Alibaba-backed online travel platform Fliggy said. By the way, travelling is not encouraged by all. In cities like Beijing and Shanghai, schools have asked parents and students not to go away for the holidays unless strictly necessary. “Schools want to cut risks to the minimum.”  Please do read the article in full here.
Article in thesundaily.my

Flights are increasing again, that’s for sure if we are to compare to month of March, April, May and even June. I think people start to warm up again to the prospect of flying as long as the destination they intend to go is not one of the COVID-19 hotspots. Some may want to point out that there are people who’s not taking it seriously, not wearing masks properly but truth is, Malaysians are generally quite compliant.

In fact if I am operating a restaurant, I am NOT going to risk between earning an extra RM50 from one table full of people without masks versus a fine or even a closure… This is the same for nursery operators, for supermarkets and for malls too. It’s a simple number game. Welcome the compliant ones and keep out all the rest so that we could minimise the risk of any potential infections and could continue opening.

However, all these are still not enough to save jobs in the airline and tourism industry. Without international travellers, there’s no certainty how long could airlines stay afloat. For now, let’s just hope they have rationalised enough and that the current demand for flights could cover their fixed costs and they will find fundings to cover the rest until international borders are reopened. If only we have over a billion population like China… then at least even domestic demand alone could help sustain many airlines… flights are increasing again.

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More flights from Singapore to Tawau, Sandakan

I have been to Sandakan ONLY 30 times or more.

Haha. Okay, my wife’s from Sandakan, so that explains too. Yes, I own a condo in Sandakan too. These days, when I fly to Sandakan, I no longer go to all the amazing places for tourists. I go there for seafood… seafood and seafood. Even their Ba Kut Teh has seafood Ba Kut Teh version too. Imagine drinkig the soup and eating prawns… garoupa meat… etc at the same time. Haha.

Erm… what fish is siakap again?

Seafood wise, especially about fish meat, please do not tell them about siakap fish, the people here will look at you strangely. Their usual fish meat, even for the noodle stalls is GAROUPA. Yeah, the ‘luxury’ fish here in the Klang Valley. So, if Singaporeans are reading this article, you will definitely enjoy Sandakan tremendously. Lots of nature places which is second to none aorund this whole region if not the world, lots of great seafood and lots of other foodstuff which is from the sea. Seafood in Hong Kong for example is imported from Sandakan too.

Now, here’s that news about a submission of a proposal from Sabah’s Ministry of Tourism, Culture and Environment to Singapore Airlines to increase their flights to Sandakan and Tawau. More tourists means more demand for accommodation. Now imagine what will start to happen to hotels and also property investment if there are hundreds of Singaporeans visiting every week… or every few days. Let’s read on about the proposal for flights.

Article in thesundaily.my
  Sabah’s Minister of Tourism, Culture and Environment Datuk Jafry Ariffin said that Sabah would like to have more flights from Singapore to Tawau and Sandakan. that direct flights to the Sandakan and the Tawau airports would help invigorate the tourism sector in Sabah. He said a meeting with Singapore Senior Minister of State for National Development and Foreign Affairs Sim Ann was held on the matter yesterday.

He said, “The flight routes will make it easier for foreign tourists to go to interesting tourism destinations such as Pulau Sipadan in Semporna, the Orang Utan Rehabilitation Centre in Sandakan and many more.”

“The ministry is seeking to attract the participation of Singapore airlines to expand their flight routes.” Currently, there are three weekly flights between Kota Kinabalu and Singapore. Airlines flying into Sabah include AirAsia, Scoot, Royal Brunei and Firefly. Please read the full article here:
Article in thesundaily.my

I have never been to Tawau too

I have been to Kota Kinabalu like 20 times. I have even climbed the Mount Kinabalu successfully twice! Haha. However, I have never flown into Tawau before.  I do think it should be soon since my good friend in Tawau has invited me like Xth time to go there and he will bring me around. Well, perhaps when I fly there, I would see a lot of Singaporeans in Tawau too? Hopefully by then there would be flights betewen Singapore and Tawau.

I am very sure many Tawau people would definitely love to visit Singapore and many of them could easily afford the trip too even if SGD is stronger than RM. Let’s hope this plan comes true if Singapore realised that Tawau could be another place where it could get continuous visitors too.

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Flipping properties for profit? Don’t repeat it please.

Many years ago, perhaps up to 2012, many were still buying properties. More often than not, it’s solely for the purpose of flipping. Everyone thought earning money was easy. In the beginning it was really quite easy. All it needed was some courage to sign and take the risk. This was also encouraged by the Developer Interest Bearing Scheme (DIBS) where one pays next to nothing to secure a unit. As soon it was completed, one would sell for huge profits. My colleague’s friend sold her unit as soon as she got her keys to a condo in Penang for RM40,000 profit. It was unheard of!

It did not end there, the profit from the same project reached RM70,000 for those who sold a few months later and the
property craze started in Penang
 in 2009. Queues for new projects stretched into hundreds of meters and some even paid RM1,000 for people to queue on behalf days before the actual launching. Prices spiralled up and everyone thought the party would never stop. In Penang, condos that were selling for RM229,000 became RM400,000 within 12 months of completion. I heard in KL, the number was even more higher for hotspots.

Then, Bank Negara Malaysia stopped the music. It made DIBS illegal.  Everyone said that this will ‘kill’ the market. It did, sort of, together with a host of many other cooling measures including the most effective one in my opinion; Real Properties Gains Tax (RPGT). The market’s overall transaction numbers went down. So, what happened to those who bought at the tail end before
DIBS was made illegal?
 Those who harboured the hopes of flipping? Their units have been completed and are now entering the market. If they are able to hold, they are still holding on. If they could not, the prices would go down and worst case scenario, even lower than what they paid for.

Renting it out within the first 12 months for a good price is virtually impossible and some may not want to lock down their units for 12 months at a low rent. The crazy good old days of flipping is over. Based on the current prices in the market which I seriously think is very high for that few hotspots, it will not be going up any higher. Nope, that new mall is not going to help you.
Property prices are all about affordability, demand and supply.
 When majority could not afford, demand stops until the supply of affordable ones come back. OR if the supply in the hotspots remain too highly priced, people would be forced to buy in secondary areas of today. The affordability factor kicks in. What this meant is that we should stop thinking about flipping but start thinking about investing. Work harder in your job, invest with a longer time frame. Property investment will always be a good one when we think and act objectively. Happy investing.

written on 30 June 2015

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Flipping is still possible in that 2008 mortgage crisis market. Interesting.

Do you have many friends who are telling you that they could flip properties currently? I think flipping stocks in BURSA perhaps but flipping in the property market is not likely. Unless of course we are more active in the auction market and managed to buy a grossly undervalued property. Prices of today is sometimes below the prices we bought just a few years ago. Prices of today is below the prices that we could have sold a few years ago. Two main reasons I guess,
banks are only lending to you
 based on their own valuation and not what you demand. Second reason would be the negative sentiment and people are more inclined to wait for a while more. Statistically however, this is not the same situation in the U.S. It seems that flipping is happening AGAIN. Well, up to 1 over 4 properties in some cities there.

Take a look at the article by investopedia here.
Image by ATTOM on the side. As per the article, flipping is defined by ATTOM Data Solutions as a a property that is “sold in an arms-length sale for the second time within a 12-month period.” You can follow them too:
Investopedia on Facebook
 Flipping is thus happening but the return on investment is lower. (In brief, the sellers could still sell for a higher price than they bought just less than 12 months ago even if their profits are getting lower) In some states, the flipping are at a ratio of 1 to 4. (This means every 4 properties bought, 1 was sold within 12 months for some returns in their investment. I do wonder if my friends in the U.S. are doing this.)  The conclusion as per the article is that the trends look eerily similar to 2005-2008. (From the whole article however, it is not painting a bleak outlook, merely saying that flipping continues to happen and the risks are rising) Do read the article for a lot more information here.
Are we on the brink of housing bubble 2.0?

It’s unfortunate that we do not have many of these statistics. However, if we do look at the transaction numbers versus the value of these transactions, it is safe to say that property prices are still usually trending upwards. This is despite the fact that transactions are actually falling. It may be due to the composition of these transactions which are higher priced versus the lower cost units. Besides that, as all of us know, newer launches are usually priced higher than their earlier launches. One developer friend told me that they have to launch higher or else the earlier buyers would be furious. Quite true lah. Every auctions that I go to, I could see similar faces occasionally which meant that they are trying to buy as low as possible and then sell higher. Alternatively, buy a bad condition property and make it good enough. There are still many buyers who would prefer to buy and immediately could stay instead of worrying about renovations etc. Happy following.

written on22 Sept 2017

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FMCO. These will remain open 1st June to 14th June.

Whether it’s FMCO, MCO or whatever O, one photo tells a thousand words. Here are the Essential Services which are allowed to continue to open. It tells a lot, especially the first one which is FOOD and BEVERAGES. If you queued for hours just to get into a supermarket during the weekends and you were so afraid that everyone will be asked to stay home and not allowed to come out to buy and food or beverage, then you can now relax. Food and Beverages remain available and it’s even the FIRST item in the list. I think it’s quite important? Just saying… Stay Home!

Vaccination remains the key to the economy

At the same time, encourage everyone to register in MySejahtera App to get an appointment in the near future. June and July, we are told that over 10 million doses of COVID-19 vaccines will be available 10 milllion doses also meant that it’s enough to cover every one who has registered thus far for vaccinations. Or if it’s divided into 2 doses, then 50-60% coverage of all Malaysians who have registered to be vaccinated. I do look forward to even more people sharing, ‘I have been vaccinated’ photos. If you like to know what to expect and how to be prepared, here’s my experience with WTC KL.

Happy going out only when truly necessary. I will not go to shop in any supermarket / wet market from 1st to 14th June. This is my promise to fellow Malaysians. I shall just order online, have it delivered. I will order and just pick up and leave immediately. If all of us could do the same, then this 14-day would be a turning point. Thank you.

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FMCO or MCO. Are You Ready?

Miichael said to me, “Please come and share. I will also share and I will ask questions.” He wanted to do a talk on Friday.  What was my answer?  When someone who treats you coffee when you are in Penang tells you to join his FB Live, you join lah. Haha.

Please drop by. It’s Friday evening. 830pm. Joining Miichael and I would be someone really into property investment and he has lots of rental experience stories to share too. I always learn a lot from WK Ng. Miichael has also promised to ask WK lots of good questions too. He will ask me some questions occasionally.  See you yeah.

Some topics we will cover.

What do I get from Pemerkasa Plus?
How to choose between 3 Months ZERO Payment or 6 Months 50% discount?
What to expect for the next few months?
and more… Please ask.

It will be LIVE in kopiandproperty FB page too. Click here to like the page if you have yet to do so.
fb.com/kopiandproperty (click here)
  The flyer as below.
Please do visit Miichael’s FB page (click here).
He shares many interesting news daily. Please also visit
WK Ng’s FB page (click here).
He also shares many things and is usually different from what Miichael shares too.

See you. Please do drop by and say Hi. it’s been a long time that I have not seen most of you. Stay safe with lots of social distancing. It’s not about the double ply masks yeah, it’s the confined space. If we could, stay away from crowded places. At the same time, please register for the vaccinations. Protect Yourself, Protect All. Thanks.

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Focus on more connectivity, not just Yes or No for the crooked bridge

I am all for developments (responsibly) and I am all for connectivity (necessity). Without these two, nothing much happens and we do not need to talk about helping the
B40 households for example.
  With regards to the never ending debates about the crooked bridge, perhaps it’s best to stop all the rhetorics about whether or not the crooked bridge is needed or not needed or even about who will actually be financing it for that matter. Should we not be talking about the actual benefits it will bring? The economic spillover effects from more visitors? How much increase are we talking about. What’s the cost-benefit analysis? Can we have this shared to the public?

As for the connectivity between JB and SG, it’s a foregone conclusion that we need more ways and not fewer. It took me 2 hours just to reach JB from Singapore side on a weekday after-office hours. In other words, something must happen quickly! For connectivity to be enhanced, it should reach the masses. If we are only talking about those who have cars in Singapore, the actual target is going to be very small. There are only a total of over half a million cars in Singapore currently.
Here’s the info source: land Transport Authority of Singapore.
  Or are we talking about Malaysians driving into Singapore? This will be interesting…

Latest statement about crooked bridge? Our newly minted Works Minister Baru Bian told Datuk Seri Dr Wee Ka Siong (BN-Ayer Hitam) during the Minister’s Question Time in Dewan Rakyat on Tuesday (Oct 30) this. He said that the previous government has paid some RM257 million in compensation for the cancellation of the crooked bridge 12 years ago. He shared, “The proposed project was shelved by the 5th Prime Minister (Tun Abdullah Ahmad Badawi) in April 2006 due to international legal and moral considerations. Owing to this, the government had to pay a compensation of RM257.4mil. He also stateds that the crooked bridge will only be revived if Singapore agrees to it. Here’s that
article in TheStar for reading.
  Let’s follow and see if we get some comments from the Singapore side soon.

written on 30 Oct 2018

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Focus on the NEW demand, not just the Existing. That’s the key to HSR’s attractiveness.

Someone commented that there are not much benefits to the cities / towns along the High Speed Rail KL – SG. I beg to differ. We are not talking about the same group of targeted travellers actually. Seriously. Let me explain very briefly. The benefits to the cities and towns along the lines could not be taken out of the equation and yet could not be easily estimated and accounted for. A very easy story. There are an estimated 575k cars in Singapore. ALL registered cars, not just by households. Based on the current population, I believe the number of Singaporean households or even Singaporeans with a car is much lower than 10 percent.

In other words, over 90 percent of Singaporeans are ‘carless’. They have an awesome public transportation network, that’s a must by the way. Assuming the remaining 90 percent wants to visit Malaysia but not JB this time because they have been visiting JB non-stop for years actually. Yes, I have asked many Singaporean friends, they do think Malaysia is cheap due the currency but visiting beyond just JB is not easy for those without a car.

One option. Car Rental. They could rent a car for around S$100 (RM300) per day (Toyota Vios, Segment B, not latest model) and this could take 4 people comfortably. They could come into Malaysia for 5 days. That’s RM1,500 in total. Petrol and toll? That’s another easily RM500 perhaps. This is a total of RM2,000 just for the travel part yeah. Everyone would have to pack their stuffs very well because the car boot space is limited. Compare this to the previously estimated cost of RM400 for a HSR KL – SG round trip. Tickets for 4 persons would be RM1,600. In other words, the family of 4 has RM400 to spend for GRAB services.

Actually cost wise, it’s similar but driving would have been extremely tiring for the father. I know because I drive very extensively throughout cities and towns in Malaysia. I have driven to all states in Malaysia and has even driven the trunk roads in Sabah and Sarawak too! Distance wise, SG – KL, that’s easily up to 1,000km to and fro including driving within the city / town which they travelled to. SG to Melaka is 450km to and fro. Driving to KL at a constant speed of 100km per hour would still take easily 4 hours or more. If it’s a holiday season, then expect easily 50 percent more travelling time. When we travel, time is money yeah. Arriving at 9am by starting at 7am versus nearly arriving only near to noon means a few tourist sights and food places wasted… Savvy?

Yes there’s the flight option too but that’s an earlier article here. Do refer and read yeah.

Instead of asking should we or should we not? Just look at what our Council of Eminent Persons (CEP) are doing.
This is the article in TheStar this morning. Do read for full details yeah.
 They have even gotten an alternative view on how to proceed with the HSR KL – SG based on a much lower cost. Of course, there are certain trade-offs but frankly, if the cost is down, then the ticket price would be down tremendously too. The car rental prices? Well, that’s not going to come down anytime soon due to the existing car ownership structure in Singapore.

We should also stop thinking that HSR will kill the flights because along the HSR line, there’s just KLIA which has an international airport. I seriously do not think we need airports in most cities and towns. That’s not the main point yeah. We welcome more travellers, not just Singaporeans but also travellers into Singapore who can now even drop by many other cities and towns in Malaysia easily if we are much better connected.

In fact tourism agencies in both countries can even do joint promotions: “DOUBLE YOUR JOY: ONE trip, TWO countries.” Majority have chosen our current government. Let’s let them do their best in deciding the HSR KL – SG final pick among alternatives. Happy investing!  Oh yeah, earlier article on this yesterday:

40 minutes extra, RM50billion lower. AlternativeHSR plan. Viable?

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written on 18 June 2018

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Focus on owning a home. Many may be homeless somewhere else.

Do we believe the government will be able to provide us with a home? For free? Actually, not even in advanced nations that the government could provide a home for every citizen. In fact as we know, sometimes the property prices spiral out of control and the incomes just could not catch up and in the end, some could only rent. Well, there are quite a number of affordable home programmes and our newly installed government has also promised 1 million affordable homes within 10 years.
Do read the details here.
 However, this does not take away the fact that one would still NEED to pay for them. Usually, through the incomes earned on a monthly basis coupled with a 90 percent loan from the banks.
(Comparison of loans from 15 different banks here)

This is why my advice remains the same, save for a home because it may save us in the future when we realised that inflation is wrecking havoc with our earnings. Of course I

would still prefer today and the future and not yesterday.

Reported in TheStar was an article about New Zealand which is the envy of many because of their dairy-fuelled economy.
Full report here.
 It says that despite the rise in prosperity, thousands of residents are sleeping in cars, shop entrances and alleyways. Statistically speaking, New Zealand has the highest homelessness rate among the 35 high-income OECD countries.
These are the OECD countries.
  The reason is because of sky-rocketing rents and the prices of property has soared.
(Auckland has a median property price to household income of 10 which is extremely high.)
  Fortunately for these homeless population, the country’s popular Prime Minister Jacinda Ardern has unveiled its first budget with an ambitious plan to build social infrastructure. She is looking to fix the housing crisis and this was the reason she had a successful election campaign in September.

Economy wise, New Zealand is on a winning roll underpinned by a strong dairy sector, booming tourism and migration. However, despite this success, the infrastructure in New Zealand has fallen behind. Housing issue is one prominent one. In fact, the Maoris, the indigenous people of New Zealand, account for a third of the homeless despite their number making up just 15 percent of the population. A study by Yale showed that 1 percent of New Zealanders are living without a permanent shelter in 2015. This situation would have deteriorated because the number of people eligible for government housing support doubling since 2015. Salaries have meanwhile lagged the house price growth of over 60 percent in the past 10 years. The worst homelessness is in Auckland where the house prices have risen 90 percent in the past decade! Article concluded with remarks by Kirsty Buggins, director at the Wellington Night Shelter who said the centre was almost always full. “Sometimes all we can do is give them blankets and bedding.”
Here’s that full article for reading.

Many times, the economy may move faster than many but it is extremely important for the government to have some control over the property prices. Frankly, I do not believe in fully relying on the demand and supply forces. Remember yeah, prices move because of transactions.
Here’s an earlier article explaining how.
 However, it does not move because EVERY HOME in the whole development moved up. It will move up when the buyer is okay with slightly higher price and after a few years, the homes are priced much higher than a few years before. What can really help is for the government to continue understand and build homes which are necessary. It’s a balance between location, price and size. Of course, they could also make certain locations become interesting too, for example MRT stations now cover a much wider area, including areas which has yet to be developed fully. Please do save up and get a home yeah. Happy following.

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written on 21 May 2018

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Football has restarted! More on the way.

It’s a very delicate balance between the economy and the threat from the COVID-19 threat. Too tight for too long and the economy will find it hard to restart since the businesses have all had to fully close down. Too loose and we suddenly have the COVID-19 infection cases rising again. Not all are bad news. We can also feel grateful if we look at the positive angle too:
Yes, there are certainly positive news

Moving on, we have good news from the football scene. It’s right here in ASIA. It was a 1-0 victory for South Korean’s Jeonbuk Motors (2019 league champion) over Suwon Bluewings (2019 FA Cup winner). Yes, the K League has started on Friday (8th May 2020).  This is not all. Bundesliga will be restarting on 16th May 2020. English Premier League is slated to start in June 2020 too.

Updated on 11th May.

La Liga is aiming to restart on 12th June 2020.
 (Yes, this is the league where Barcelona and Real Madrid is in.  This is also where Christiano Ronaldo and Lionel Messi are playing too.)

Article in bbc.com
  K League kicked off in an empty stadium. A few officials were around including the managers and all were wearing masks. All the masks have the brand of their sponsors printed. Handshakes were banned but players bump fists at the end. Players were not allowed to spit or talk at close proximity to each other. The atmosphere was quiet one though there were the occasional crowd noise piped in. (said to sound like if it’s real!)  Final whistle meanwhile was met by deafening silence. The match ended with Jeonbuk Motors winning with a header. Final score was 1-0 versus Suwon Bluewings. Do read the full article here:
Article in bbc.com

You may have read how many football teams are struggling financially when their leagues were stopped. Sponsorships are also stopping for even the famous football teams too and this meant that the smaller and less famous teams will suffer tremendously. Here in Malaysia, one of such football giant, Selangor has also announced that they are trying their best to secure their current sponsors. Without sponsors, salaries of players would have to be cut…

This is similar for businesses too. If they are closed, they have no chance to even earn a little to cover some of their costs. If they are open and there were 20-30% of their usual sales numbers, then at least they have these 20-30%. Just be reminded again that normalisation is a gradual process and there is no such thing as fully open and the malls are fully occupied with visitors again. If that were to happen, I will be very worried too.  Happy normalising yeah.

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How much do footballers earn? Top 20 leagues in terms of earnings here.

How much do footballers earn? Top 20 leagues in earnings here.

Why not become a footballer?

For me, the answer is a no. I remember when I was a goalkeeper in secondary school and the ball hit me right on the face and I was dazed and my specs was somewhere on the field. Anyway, that’s just me. We surely have many who may want to be a footballer. So, here is some numbers for your understanding too.

Would you like to be a footballer? As a career? Here are the expectations in terms of earnings, on average. This is nowhere near the salaries of the top stars in the world today.

As an example? Let’s look at Manchester United. By the way, their players do not earn the most yeah. There’s Manchester City, there’s Chelsea which have a higher wage bill.

David De Gea, the goalkeeper of Manchester United earns £19.5 million (RM112 million) per year .  Anthony Martial, the forward in Manchester United earns £13 million (RM75 million) per year. Okay, those are the top 2.  The 2nd goalkeeper Dean Handerson earns £5.2 million (RM30 million) per year. Another forward who’s considered a potential future star is Mason Greenwood and he earns £3.9 million (RM112 million) per year. Wow!?

This is why Premier League is top in the list

Looking at the image below from
reddit.com (click here for full image
), Premier League (Britain) players earn an average of £2.27 million (RM13 million) per year. The second placed Bundesliga (Germany), the players earn an average of £1.46 million (RM8.4 million) per year. The third is Seria A (Italy) with a yearly salary of £1.3 million (RM7.5 million) per year.

Meanwhile, the 18th, 19th and 20th on the list…

Meanwhile, the 18th, 19th and 20th in terms of average salaries, their players earn £182,789 (RM1.05 million), £178,000 (RM1.02 million) and £149,000 (RM856,000) per year respectively. Wow, still considered very high even if we consider the typical salaries a Malaysian working professional earns yeah. Perhaps time to consider footballing as a career of choice as well?

This is also why they need to be paid so high

While the average seems high but truth is, these would the ones who made it into the league in their countries. We need to also remember that most footballers would lose their top capability once they reach 30 years or maybe another 2-3 more years. In other words, they would need the salaries earned in roughly 10 years to be able to last them unless they become coaches after they stopped playing. We could see however not many eventually become coaches yeah.

Financial management remains key even if they earn so much

If the footballers spend all their money away when they play, then they would have little when they stop playing. If they invested the money into some safe investments giving stable even if low returns, then after they stop playing, the returns from these would be enough to sustain them a comfortable life. Imagine the top players saving just 10% of their income yearly for 10 years and having that money double by the time they fully stop playing? That would be super ideal right?

All the best if footballing is a career you are in progress towards. We will talk about the smaller leagues in the next article and perhaps cover the salaries of Malaysian football players too.

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For Q1, GDP may just be negative. (erm… panic buying did not help?)

Remember the panic buying just 2 weeks ago? Where so many people were buying so much groceries as if they have to feed one whole school?  It was as if the all the supermarkets were on sale except that it was not. When the Movement Control Order (MCO) was announced, the very next day, the panic buying continued? This is despite the government kept telling people that supermarkets and even morning markets and all other essential shops like pharmacies will remain open.

Okay, I think it started normalising after the first few days. Now, the MCO is extended till 14th April 2020. I still see people buying but yeah, I think everyone realised that they could buy today, buy tomorrow and buy next week too. By the way, this panic buying did not sufficiently help the GDP growth yeah. A few bank analysts are predicting a negative GDP for Q1 2020…

Article in themalaysianreserve.com
   Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said he is expecting a -1% GDP contraction in the first quarter (1Q20) and a challenging next few quarters.  He said, “At the moment, we are looking at around -1% GDP contraction and there is not much data to discern a growth. This will be the first (contraction) since 2009.”  He  added, “I think recession has become the base case. It’s a question of how deep the recession would be.”

AmBank Group chief economist Anthony Dass has a more dire projection. He said for Q1 2020, the economy may contract by -2.8%.  He said, “The adverse impact is expected to be felt across all economic activities following a ‘partial’ lockdown by the new government in view of the increasing severity of the virus’ impact.  Even prior to the outbreak of the coronavirus, the manufacturing sector has been in recession, impacted by the trade tension between the US and China.”  It’s a comprehensive article. Do read it here:
Article in themalaysianreserve.com

Malaysia’s top 5 trading partners are as follows: China, Singapore, United States, Hong Kong and Japan.
 (click here for info source)
Generally, the forecasted GDP growth for Q1 2020 for all these countries are also not rosy. United States will be having a US$2 trillion stimulus to its economy which showed how serious the U.S. government is to save the country’s economy. Singapore Deputy Prime Minister announced a second stimulus package and he said, “Today, I will introduce measures worth over S$48 billion in this ‘Resilience Budget’, to deal decisively with the situation at hand.”

When all our partners are not doing that well, it may be slow for a while. I think we will have to ride this out together and if we are able to ensure that as many businesses as possible survive this period, then the chances for a quicker recovery is higher too. This is Malaysia’s second stimulus plan. RM250 billion stimulus plan to battle COVID-19. Happy staying at home.

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Forecast for Property Price Growth in Malaysia in 2023

Here is the media release by Juwai IQI:

JUWAI IQI FORECASTS 5% RESIDENTIAL PRICE GROWTH IN MALAYSIA IN 2023

Kuala Lumpur (16 March 2023) — Just one day after the Ministry of Finance released its new Property Market report, Juwai IQI released its own report and forecast on the Malaysian residential real estate market.

Juwai IQI Co-Founder and Group CEO Kashif Ansari said, “Last year, the residential market took a determined step towards post-pandemic recovery. Buyers completed 243,190 transactions worth RM94.28 billion, up by 22.3% in volume and 22.6% in value year-on-year.

“The market continues to emphasise condominiums and terraced houses. Condominium/apartment units dominated the new launches, capturing 45.0% of the total, followed by terraced houses at 42.2%.

“While it is difficult to forecast such a dynamic market, we do have a base case. We believe the reduction in the residential overhang and the growth of new project launches and transactions in 2022 suggest sentiment and conditions are improving.

Prices May Climb by 5% in 2023

“Looking forward over the next 12 months, we take a cautious approach to predicting price changes. We believe the Malaysian House Price Index could climb in 2023 by 3% to 7%. Growth of 5% is our base case.

The Malaysian House Price Index (MHPI) grew 2.8% in 2022. Terraced House Prices climbed by 3.7%, followed by High-Rise prices at 3.4% and Semi-Detached homes at 2.9%. Detached House prices recorded a slight decline of 2.9%.

“While the House Price Index in WP Kuala Lumpur was down marginally by 0.2%, other major states saw positive growth. Selangor, Johor and Pulau Pinang were up by 3.4%, 2.2% and 3.2%, respectively.

“We expect the demand for affordable housing to remain strong, which could drive transaction activity in the sub-RM300,000 price range through Q1 2024.

Higher Transaction Numbers

“One of the positive trends we observed in 2022 is an increase in activity, with a higher volume and value of transactions in 2022 compared to the previous year. The growth in residential transactions indicated a strong demand for housing.

“The reduction in the residential overhang is a robust and positive sign. The overhang fell by 24.7% in volume and 19.2% in value to 27,746 units worth RM18.41 billion as at Q4 2022. Overhang properties can put downward pressure on real estate prices and transaction activity. As the market absorbs this unsold supply, we can better balance supply and demand. That supports price growth and further growth increase in transaction activity.

“New launches performed moderately well in 2022, with more than 54,000 units launched, and approximately 36% of these finding buyers. WP Kuala Lumpur is the best-performing market for new launches, with 47% of new are sold. In Johor, 43% of new units sold, and in Selangor, 27%.

In summary, the residential real estate market shows signs of growth, especially in the residential and commercial property segments. However, buyers remain cautious and external factors such as the ongoing pandemic, economic performance, and government policies could impact the market.

“We will continue to issue updated forecasts and reports as 2023 progresses.”

— end of media release —

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Foreign buyers and local buyers get the same protection. Great point yeah.

Actually, these days I do not try and convince anyone who thinks that there are better property markets outside Malaysia. In fact, I welcome them to proceed with whatever they believe is the best. I get no commission if they buy any property in Malaysia and it’s their money yeah. The usual debate is about price. It seems that many foreign markets offer better returns than the stagnating property market of Malaysia.

Some even say that most of the developments outside Malaysia, even within other ASEAN countries are of better quality than Malaysia. The developers there are more advanced, are more professional and more responsible. Well, I have no answers to this too as I have not studied much about other properties and do not own anything outside Malaysia. We will just leave it as it is. The below is one advantage which foreign buyers have when they buy a property in Malaysia. They enjoy the SAME protection as any local buyer.

Article in edgeprop.my here.
 A developer of a mega project in Johor had their appeal against a Singaporean house buyer dismissed in the Court of Appeal yesterday.  The buyer was awarded RM15,000 in costs. Last year Ho was awarded RM50,000 in compensation on his claim that 25 of the 26 pages within the sale and purchase agreement that he signed on Aug 23, 2013 were later changed by CGDB without his knowledge.

He alleged that the stamped copy of the document contained significant differences from the original and he said that when he received the keys for a RM1.6 million condominium unit in November 2017, it was not the unit he agreed to buy.  High Court judge Mohd Ivan Hussien on Dec 27 last year, said there should have been no amendments once the plans were approved and sales begun as there were no clauses allowing for changes. For more details please refer to
Article in edgeprop.my here.

There are many markets where foreign purchasers have some limitations. Some could not own the units directly. Some has to ensure they are within the foreign ownership limit within the same development. Some are buying into markets where the prices versus median income is already extremely high in which the support for the market must come from the foreign buyers because the locals definitely could not afford them with their income. Happy buying into any market which is deemed to be better for our needs yeah. It does not have to be within Malaysia or even within the few major cities here. Cheers.

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Stronger interest with Malaysia property market in 2020. Focus on benefits, not cost.

In the corporate world of different products and services, the formula for VALUE is as follows:  Value = Benefits – Cost.  In other words, Value is how much we are willing to pay versus the benefits we think we will get. This is why we must not be pitching any products or services based on price. It’s clearly not sustainable.  So, when we focus on the benefits instead, it may be something which our competitors may not have. Many companies survive by focusing on the niche markets too.

What about the Malaysian property market? I would like to warn that if it’s just because of price, then attracting all these foreign buyers will be a risky move. There are easily cheaper properties elsewhere. By the way, the properties in many advanced property markets such as Singapore, major Australian cities and even London is no longer cheap by any standard. However, the price seems to be well supported because it was not bought because it was cheap. Coming back to Malaysia. It seems to be a good year for us in 2020.

Article in nst.com.my
   CHINESE international property portal Juwai.com executive boardmember Kashif Ansari said that stronger interest from foreign buyers are forecasted for 2020.  Currently, mainland Chinese buyers accounted for RM8.4 billion (US$2 billion) of total Malaysia residential property sales per year, and less than one per cent of all transactions.

In Q3 2019, Chinese buyers made 16.5 percent more enquiries on Malaysian property versus the same quarter in 2018.  Within first half of 2019, Malaysia was the 5th most popular for Chinese property buying inquiries in the world. He said, “Malaysia is especially appealing to buyers motivated by lifestyle, retirement, or education. It has affordable standards of living, high quality of life, medical facilities, and accessible educational institutions. Malaysia consistently ranks among the best places to live.” Please refer to the full
Article in nst.com.my

Please do look at all those reasons why the buying a property in Malaysia is attractive. Lifestyle: We definitely have it and at a lower cost too). Retirement: This has always been a major plus point, there’s no need to keep rushing here and there). Education: Where else can any student gain a similar degree from the UK, Australia, the US by just completing their studies here?)

 Back in the year 2000, my Japanese GM in the first company I worked for told me that it’s cheaper for Japanese to travel here for medical operations / treatment versus Japan even after the patient has included the cost of treatment, flight tickets, the accommodation and even golfing rounds. This is what Malaysia has to offer even in 2000 when it comes to medical tourism. Oh yeah, if one wants to go golfing, they need to make the booking months ahead. Yes, if the foreigners are buying for all the right reasons, please come yeah. Happy understanding.

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Foreigners love condos in Thailand and Malaysia

Within this year itself, I think I visited Bangkok 4 times. Except for the jam that never seem to end, I love Bangkok. I love the friendly people, the delicious street food and the good service in hotels. I wanted to bring my family for a visit too, perhaps next year. Every time I pass by any high-rise project, I would ask my colleague about the price. They are usually pretty attractively priced (though not that big in size, usually smaller than 1,000 sq ft) and most of the time, quite close to the BTS which meant walking is possible for connectivity. Guess what, the Chinese loves Bangkok too. Perhaps even more than me because they are investing into Bangkok to complement the domestic demand which has weakened recently. In fact, I hope that they have an election as soon as possible. A good prime minister would help tremendously even if they have a good
Central Bank Governor currently.

In a report by
CBRE Research Thailand published in Bangkok Post
, it says that foreigners love condos. (Me too. Haha) According to China’s top search engine and web portal Baidu, the number one search for real estate investment in 2016 by Chinese was Malaysia, followed by Thailand. First and second respectively for South East Asia. In fact according to the site, 50 percent of the total Chinese capital invested in Thailand was for real estate investment. (Unfortunately, we do not have their research for Malaysia CBRE Malaysia…. ). It says that Malaysia’s attraction was due to the Malaysia My Second Home (MM2H) scheme. The top two places where the foreigners love to buy in Malaysia are Kuala Lumpur and Penang. (I wonder why was JB / Iskandar not mentioned despite some
scary article about Chinese investments in Iskandar
.
Anyway, even Singapore was not mentioned. Perhaps number 3?)

In terms of Thailand, the top two places would be Bangkok and Phuket.
(Hey, I wrote about this before when I visited Phuket not too long ago too).

Yeah, just like the foreign buyers, I love Phuket too. As for buying a property, if I were to choose, then it’sBangkok first lah)  The reason for both Penang and Phuket seems to be for holiday homes. The report concluded by saying that attracting the Chinese to buy is not that easy anymore because of the stricter capital outflow controls from the Chinese government. By the way, always do note that foreigners could only buy up to 49 percent of space in any condo project. I wonder what happens if there are some foreigners who exceed this 49 percent. If there are any Thailand real estate experts reading this, please do advise yeah. Of course I am biased towards Malaysia but I think the potential is definitely higher for KL because the cost of doing business remains affordable and the quality of workforce due to proficiency in many languages remain an advantage over most other nations. Plus, we have the High Speed Rail and the feverish construction of MRT Line 2 today. Cheers.

written on 28 Sept 2017

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Battersea: As usual, just blame the ‘Foreigners’

Remember an earlier article about some Londoners blaming foreigners for owning too many parcels of lands in London and thus are pushing up the prices of properties in Londoner to become homeless? Read here:
Londoners, homeless. Malaysian caused?

 That was not the last of the actions by the Londoners against these foreign developers which in this case happen to be Malaysian owned. A British daily, The Guardian said that the Battersea Power Station in London is beyond the reach of the locals as these units are for rich foreigners. It reported that the first phase of 865 flats were mostly sold to buyers from Asia.

After this first phase, the second phase of 254 homes were marketed only in London but the third phase of more than 500 apartments are again targeted at foreign investors in Tokyo, Beijing and Kuala Lumpur. This was also followed up by “celebrity-studded launch parties” in New York and Los Angeles. These allegations were denied by Battersea Power Station Development Company chief executive Rob Tincknell. He explained that of the 1,300 homes sold to date, two-thirds were bought by UK purchasers. Anyway, the locals continue to complain and said that the project serves only the rich and lamented the shortage of affordable properties in Battersea area. The Guardian also reported that of the 3,444 new homes, only 16% of 560 are considered deemed affordable.

Now let’s listen a famous and popular personality, London’s mayor Boris Johnson. He said, “600 hundred affordable homes are better than no affordable homes”. Besides these units, the developers of Battersea are also paying 200 million pounds towards the cost of extending the London Underground to serve the development.

Actually, truth is, without this Battersea redevelopment project, the whole area would still not be developed and the 560 affordable units as well as the extension of the London underground would also not happen. As for this redevelopment project, no developer would buy a piece of land for a huge amount and use it to build affordable units. Not in Battersea, not in Kuala Lumpur and not anywhere in the world. Let’s be very savvy about this. Businesses exist for profits. Fortunately, London has an objective mayor in Boris Johnson. You can read about him here:
Wiki Boris Johnson

written on 2 March 2015

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Forest City, RM175.8 billion, 20 years and eight core industries

There has been many news about Forest City earlier. The latest one is a good one. As per reported in Bernama. It has been formally unveiled by Country Garden Holdings Co Ltd, a Hong Kong-listed property developer. While not reported prominently, I think the following points are very important for the whole 1,386.05 ha which is a joint development with Johor’s Esplamade Danga 88 Sdn Bhd. It said that Country Garden is in discussions with the Malaysian government for dedicated entry points such as a light rail transit system and a ferry network linking it to Singapore as well as to the planned High Speed Rail (HSR) between Singapore and Malaysia. Read here:
Singapore Transport Ministry: Not yet true, still discussing

Forest City will be the first in South-East Asia to incorporate the largest mixed-use green development with a vertical greenery and smart city design together with the number of units to be built. It is expected to take a total of 20 years and is expected to be the catalyst for economic development in the Iskandar region and even neighbouring Singapore. Read here:
Iskandar as Singapore’s output hub, seriously

It will have eight core economic pillars of growth including

education, healthcare and tourism. There would also be Car-free zone and luxury green living co-existing with smart technologies and amenities. It is Forest City’s largest real estate project outside of China. This really says a lot about how Chinese developers see the potential of Malaysia within South East Asia. The first part which will open for global sales (Singapore, China) and Malaysia soon includes condominiums and high-rise coastal residences. Choices include two to four-bedroom condominiums and high-rise coastal residences.

To be honest, my focus for 2016 would only be for secondary properties unless some primary developments are so attractive that I could not escape. However, I am very interested to know about this project because this is a development which has no equivalents in this part of the world. The size dwarfs over everything on paper currently. I just hope that the first few phases would be affordable enough for many to own a piece of the action, hopefully Johoreans too. Read here:
Locals may not be the first to buy; beware locals

The comparison in terms of prices in RM versus the S$ HDB flats in Singapore is fair but the links must be confirmed first for this to happen. Else, that 3-4 hour journey every working day is going to be a huge stumbling block. As for buying it as just a getaway residence, not many Singaporeans may be looking currently. Super-rich ones would be looking at developed nations while the middle class has many things to think of first. Happy following and visiting.

written on 23 Jan 2016

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