Overnight Policy Rate (OPR) has been reduced further by BNM.

This is BNM’s Press Release.  In brief, another 25 basis points and now the OPR is at 1.75%. Happiness for home owners who are still paying (including me who owns a property here in Greater Kuala Lumpur) but would be a further reduction in returns of those who rely on Fixed Deposits. Well, hopefully this can quickly help the market recover and we can then go back to normalising the OPR too. Happy understanding.

PRESS RELEASES (click here to read full article)

Monetary Policy Statement

Ref No : 07/20/03 07 Jul 2020 Embargo : Not for publication or broadcast before 1500 hours on Tuesday 07 July 2020

At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to reduce the Overnight Policy Rate (OPR) by 25 basis points to 1.75 percent. The ceiling and floor rates of the corridor of the OPR are correspondingly reduced to 2.00 percent and 1.50 percent, respectively.

The impact of COVID-19 on the global economy is severe. Global economic conditions remain weak with global growth projected to be negative for the year. Although a trough is expected in the second quarter, broad-based weakness in labour markets and precautionary behaviour by households and businesses could affect the recovery going forward. Several major economies have begun relaxing measures to contain the COVID-19 pandemic, leading to the gradual resumption of economic activity. Financial conditions have improved, although risk aversion remains elevated. Downside risks to the global outlook remain, especially if a resurgence of the pandemic necessitates the reintroduction of containment measures.

For Malaysia, economic activity contracted sharply in the second quarter of the year, due to measures introduced to contain the pandemic globally and domestically. Following the gradual and progressive re-opening of the economy since early May, economic activities have begun to recover from the trough in the second quarter. The fiscal stimulus packages, alongside monetary and financial measures, will continue to underpin the improving economic outlook. The projected improvement in the domestic economy is expected to be further supported by a gradual recovery in global growth conditions. The pace and strength of the recovery, however, remain subject to downside risks emanating from both domestic and external factors. These include the prospect of further outbreaks of the pandemic leading to re-impositions of containment measures, more persistent weakness in labour market conditions, and a weaker-than-expected recovery in global growth.

Inflationary pressures are expected to be muted in 2020. Average headline inflation is likely to be negative this year, primarily reflecting the substantially lower global oil prices. The risks of a broad-based and persistent decline in prices are assessed to be limited as economic activity resumes and demand conditions improve. Nevertheless, the outlook remains significantly affected by global oil and commodity prices. Underlying inflation is expected to be subdued and within expectations.

The reduction in the OPR provides additional policy stimulus to accelerate the pace of economic recovery. The MPC will continue to assess evolving conditions and their implications on the overall outlook for inflation and domestic growth. The Bank will continue to utilise its policy levers as appropriate to create enabling conditions for a sustainable economic recovery.

Bank Negara Malaysia
07 Jul 2020

— end of press release —

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BNM’s decision on Overnight Policy Rate (OPR)

This is about the Overnight Policy rate decision today.

To the ones who were worried that they would get ever lower Fixed Deposit rate after today, you should feel relieved. To the ones who had hoped to have a lower monthly home loan repayment, you would not get it, currently.  Bank Negara Malaysia (BNM) in its Monetary Policy Committee (MPC) meeting on 20th January 2021 has decided that the Overnight Policy Rate (OPR) will be maintained at 1.75 percent.

Full press release from BNM as below:

— start —

Monetary Policy Statement

Embargo :
Not for publication or broadcast before 1500 on Wednesday, 20 January 2021
20 Jan 2021

At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 1.75 percent.

The global economy continues to recover, led by improvements in manufacturing and export activity. However, the recent resurgences of COVID-19 cases and the subsequent containment measures have affected economic activity in several major economies. The expedited roll-out of mass vaccination programmes, together with ongoing policy support, are expected to lift global growth prospects going forward. Financial conditions also remain supportive. The overall outlook remains subject to downside risks, primarily if there is further resurgence of COVID-19 infections and delays in mass inoculation against COVID-19.

For Malaysia, the resurgence in COVID-19 cases and the introduction of targeted containment measures has affected the recovery momentum in the fourth quarter of 2020. As a result, growth for 2020 is expected to be near the lower end of the earlier forecasted range. For 2021, while near-term growth will be affected by the re-introduction of stricter containment measures, the impact will be less severe than that experienced in 2020. The growth trajectory is projected to improve from the second quarter onwards.

The improvement will be driven by the recovery in global demand, turnaround in public and private sector expenditure amid continued support from policy measures, and higher production from existing and new manufacturing and mining facilities. The roll-out of vaccines in the coming months will also lift sentiments. Downside risks to the outlook remain, stemming mainly from ongoing uncertainties surrounding the dynamics of the pandemic and potential challenges that might affect the roll-out of vaccines both globally and domestically.

In line with earlier assessments, the average headline inflation is expected to be negative in 2020 due mainly to the substantially lower global oil prices. For 2021, headline inflation is projected to average higher, primarily due to higher global oil prices. Underlying inflation is expected to remain subdued amid continued spare capacity in the economy. The outlook, however, is subject to global oil and commodity price developments.

The MPC considers the stance of monetary policy to be appropriate and accommodative. Given the uncertainties surrounding the pandemic, the stance of monetary policy going forward will be determined by new data and information, and their implications on the overall outlook for inflation and domestic growth. The Bank remains committed to utilise its policy levers as appropriate to create enabling conditions for a sustainable economic recovery.

Bank Negara Malaysia
20 Jan 2021

— end —

If you like to read this news and more from
Bank Negara Malaysia, click here to go to their website.

By the way, this is not an easy decision especially with the MCO 2.0 decision which has now cover the whole Malaysia except Sarawak. Reducing the OPR will help in a pre-emptive move if the economy grows weaker due to the MCO 2.0.  Not reducing meant that BNM still have confidence with the near term economic growth. Do read the press release above to understand their decision.

Briefly, MCO 2.0 is not seen to be causing huge changes to their earlier forecasts about the economy. BNM also consider the current monetary policy stance as appropriate and accommodative. Please note that there is a limit to potential effects from ever lower interest rates. It may reach a point where the lowering no longer has any significant impact. Till the next MPC meeting on 4th March 2020.

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Managing ‘bad’ expenses and good debts, my way.

I think anyone who is reading this knows that even for debts, there are two kinds of debts. The good one and the bad one. Bad debts, everyone would immediately think of credit cards, car repayments (the bigger the worse) and whatever stuffs which you buy because you believe it gives you pleasure and ‘face’ or status in front of all your friends. One radio deejay said recently that bad debt may also be caused when one bought more than what is needed. For example, if you would like running, then just ONE (1) running shoe is enough. Anything extra meant that you have incurred ‘bad’ extra expenses. When you buy too many of these extra, it will accumulate into your credit card bad debts. Agree?

As my wife and I are expecting our second baby and we wanted to have space for my parents, I exchanged my Persona for an Exora. A close friend asked me why wouldn’t I buy a Livina or Avanza. I smiled and said Exora fits what I was looking for. She said that I am too stingy. I do not wish to comment on the overall value of these three cars especially the SIZE or the turbo engine but I told her the following. The savings from Persona vs City and today, Exora vs Livina has easily enabled me to have the following: 15 watches, from Casio to Swatches to Alba to Ellesse and last year, a Tissot. I have 15 pairs of shoes from brands such as Camel to Obermain to Larrie to Bonia and many more. I also spend between RM500 – RM1,000 per year on books and magazines. In terms of shirts and pants, I do have British Hindia, Dockers, Calvin Klein etc. Well, I seriously believe all these make me look better. Haha.

Actually, I feel that everyone has their own love but to pay way too much for a car which has no better value except for the so called ‘brand’ and ‘status’? Sorry, I do not need those. I love watches because of its design, because I can wear a different one every now and then and I feel nostalgic when I look back at those watches I bought in UK, in Switzerland, in Hong Kong etc. I love shoes because I do not believe in one shoe for every single occasion. I also love the feeling of deciding or matching my shoes to what I would be wearing. That’s the same for my clothing as well. Books and magazines would help me to improve myself tremendously.

So, yes, these are considered extra which should be categorised as BAD debts except that all these were accumulated over the past 17 years of working. Thus, one shoe or one shirt or even one watch per year is really nowhere near the ‘bad debt’ level of trying to pay more for a ‘better’ car. Agree or disagree? It’s okay, everyone has their own thinking and should do just fine as long as we do not overspend every month. Cheers.

written on 11 Apr 2015

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Klang Valley:  Oversupply in commercial segment, updates.

Article from TheStar.com.my
  According to Jones Lang Wootton’s in-house research, a total of 13.332 million sq ft of office space, in the form of 33 office buildings, is scheduled to be completed in the Klang Valley over the next 30 months, and almost half of this, 6.586 million sq ft is scheduled for completion in the second half of 2018. (This is definitely a WOW… this is a lot. 6.5 million is equivalent to the office space of 6 Paradigm Mall, Kelana Jaya)  It’s senior vice-president and head of research David Jarnell said there is already a growing trend of developers deferring completion dates and based on the historical trends set in oversupplied markets, it is anticipated that 50% to 60% of this space, could be deferred to 2019 or beyond. (Perhaps deferring is a good thing for both the developer and the market as well. Maintenance has to start when building is completed, regardless of tenanted or not.

As for the outlook, it’s not that gloomy. In the article, an analyst was quoted as saying that occupancy rates for the purpose-built office sector have remained healthy. He said, “The occupancy rates of office buildings within the Klang Valley usually tend to be just over 80%. It goes up when a new generation enters the workforce – and dips when new supply comes in. He also said that there is rising demand for good (grade A) office buildings from multinational companies. He added, “An example is the Tun Razak Exchange (TRX), which has been successfully wooing investors.” Besides, companies are also more open to have their operations away from the city. He shared, “The trend before was to be strategically located in the heart of the city or as close to it as possible. But not anymore. Today, a lot of companies are comfortable with working far from the city.” He gave two locations which are out of city centre and is popular.They are Mid Valley and Bangsar South.
Article from TheStar.com.my

I am not a town planner but where businesses are concerned, some oversupply of office space is much more preferable to when there’s a shortage. Every time there’s a shortage, the cost of doing business goes up and usually they do not fall after that. Not such an awesome thing to have for Malaysia. Just look at the cost of doing business due to office rental in some expensive countries to get my idea. Yeah, even neighbouring countries yeah. Remember, when times are good, many new businesses start and they need space to operate. It’s not possible for developers to build new office space within a few months when there’s demand. Besides office space is also a major consideration for foreign companies when they decide which country in ASEAN to operate in. Let’s have choices for them. Happy following.

written on 24 Nov 2018

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Oversupply concerns? Nah, it’s still ok in Johor property market

Eventhough there are oversupply concerns, the property market in Johor remains positive. This is the comment from Malaysia Institute of Estate Agents (MIEA) Johor State branch chairman Vadeveloo Suppiah. In fact the cooling measures announced in Budget 2014 were effective in Johor and this is shown from the contraction of 1.6% quarter-on-quarter house price index. This is the first decline in 27 months and this, coupled with other state policies to address the oversupply has slowed down the market.

For example, the restriction of purchase for foreigners. Others include the foreign purchase consent fee, which is now 2% of purchase price instead of RM10,000 previously. Also, the additional 7.5% levy for release of bumiputra units and a minimum RM1 million floor price for foreigners except for projects with special approvals or those in Medini. This has affected the condominiums and serviced apartment market and has also helped to reduce the number of speculative buyers. In fact, many of the developers who were supposed to launch are actually scaling back and some of them are even changing their plans from services apartments and condominiums into townships and landed properties or even industrial parks instead. Many are now waiting for the market recovery.

Despite the oversupply concerns being lessened with some push back and scaling down, the property prices would still face the huge oncoming supply, especially from the China developers which are building new units in the thousands. They include Country Garden’s 9,500 units, R&F Properties’ 32,000 units over 10 to 15 years and The Greenland Group’s 2,200 units. What about the positive news for Johor? Well, total investments in Johor for 2014 is expected to exceed RM20 billion. Besides that, the total cumulative committed investments up till September 2014 is RM156 Billion with 50% already materialised. Besides that, demand is still strong from first time buyers, upgraders who live and work in Johor as well as Malaysians working in Singapore. Besides that, one can now see new attractions in the past few years or recently such as Legoland, Johor Premium Outlet and Pinewood Iskandar Malaysia Studios. Let’s not forget the huge Pengerang Integrated Petroleum Complex as well as Microsoft Corp’s data centre in Kulai Jaya too.

Majority of the questions or perceptions for Iskandar, from the beginning until today has always been more on the negative side. In fact, the Singaporeans were the most negative but today is the largest investors by country basis. I remember reading articles about a new ‘White Elephant’ in Iskandar. Until today, I still have friends who said, there’s nothing in Iskandar or even Johoreans who said, what’s in Iskandar? I continue to be positive about Iskandar but yes, I am worried with the current state of oversupply. The China developers were not something in my mind previously until many continued to snap up lands in Iskandar after Country Garden. So, yes, I agree that there is now oversupply. As for whether I would still buy there? Answer is Yes, if the right opportunity opens up.

written on 15 Nov 2014

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Oversupply in Iskandar and Ken Holding’s JBCC Launch in 2015

Most of everyone I spoke to about Iskandar has a similar opinion. ‘Iskandar? Sure or not. Bubbles building. Over-supply. The Chinese developers are building like there’s no tomorrow, how to buy now?’ Then I read about a developer whose project I visited before in Shah Alam. Ken Holdings Bhd. It said that their biggest development to date in terms of GDV, the Ken JBCC will be launched next year, 2015. First to be launched would be one block of the serviced suites. The whole Ken JBCC carries a GDV of RM1.2 Billion. The plan is to make the development a green district and thus the aim is for the top rating in the BCA Green Mark scheme. Ken JBCC comprises of residences, commercial units, a shopping mall, serviced suites, hotels and offices. The size of the land is 22 acres (960,000 sq ft)

In the article in The Star, its managing director Sam Tan said that while popular opinion says that there is an oversupply in Iskandar for residential he is not concerned. His main reason is that the ‘over-supply’ has more to do with the fact that the launches has become unaffordable for locals. Ad for Ken JBCC, they are focussing on “good value”, good location in the city centre as well as Ken’s construction and engineering experience.  The focus should always be on a product which is affordable for the locals. In this sense, demand will still be there.

I think he has hit the right spot with his assessment. Of course I must add that it is not just in Iskandar but also in some popular areas in Greater KL as well as the properties in the island of Penang. When we look at the launches from the year 2010 onwards, every developer was launching properties with ever increasing prices per sf. In Penang Island, within that few years, prices was changing monthly! Thats what I really feel. So much so that I told my wife, how can this ever be sustainable, this is crazy. Today, new launches are priced more affordably. RM500 psf which was unheard of previously are now available again and the momentum of ever increasing prices has stagnated. Few years ago, in KL, I told my wife that if my condo reaches RM300K I would sell it. It was in 2010. Suddenly my agent called and said I can get up to RM350K for you. I did not know what to do except to say, not yet. I was still renting it out at that time. Today, it will easily be 450K. Kelana Puteri’s size is 1055sf. In other words, still way below RM450psf which is no longer an available launching price for most projects.

I still believe demand is strong but only at the right prices with a location which is still acceptable. Of course, do a good marketing for it to get as many people to know about it as possible and not put up one or two-day newspaper advertisement and hope buyers would queue up for it. Not within these few months leading to GST anyway. Ken JBCC, I think I should be able to afford a flight ticket to be there for their launching next year. Happy investing.

written on 10th Sept 2014

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JB: Another 9,500 ‘luxury’ units completing in September 2017

Too many units too fast would contribute to oversupply which in turn will cause property prices to soften. Before everyone starts blaming whoever due the oversupply, just note that this happens ALL the time in ALL countries. As usual, when people are buying, the launchings automatically increase when the other developers saw the opportunity too. Very soon, number of units launched would have already exceed the usual demand but people were still buying because of the positive sentiment. What happens later when market slows and people starts to becoming sober from the earlier frenzy? Oversupply lah. Then, when would prices start dropping then? When many of buyers (especially if it’s not for own stay and many units in hand) could not hold on to their units, then the prices would suffer a sudden drop. If that should happen, sentiment turns negative and prices may just crash. For some with cash, that might be the time to wait for. Is this happening in Iskandar too? An earlier article:
Is Iskandar getting better? Or worse? Media reports

Reported in
theedgemarkets,
 there are another 9,500 ‘five-star’ development being completed by September 2017 in Iskandar. This is just 4 months away, happening on my birthday month. The units are in Country Garden Danga Bay. This will provide even more pressure to the rental market of Johor. Statistically, based on reports by the National Property Information Centre’s (Napic) Malaysian Property Market Report 2016, the Johor property market softened last year (Actually, the whole Malaysia did). Total transactions declined 16.1 percent to a total of 40,066 transactions worth RM19.45 billion. In terms of value, the drop was 10.2%. This meant that the average price is still up since total transactions dropped at a higher percentage than price. According to KGV International Property Consultants (Johor) Sdn Bhd executive director Samuel Tan in
The Edge article
.“Landed properties still hold up quite well. As for high-rise residential units, if they are priced rightly at RM400 to RM500 psf, there are still buyers.” (I think his statement can be considered positive because the right price would attract buyers. In other words, demand is still available)

Are we waiting for affordable units in the near future or are we waiting for ‘fire-sale’ condo units? For own stay, I think both are perfectly fine. Just choose one meeting what we need the most. Given a choice, of course I prefer larger condo units and with facilities versus a smaller one and without much facilities. Landed is not within my consideration because those that I love is quite out of the reach of most Johorean first-time home buyers. For own-stay and we need it quick, then the secondary market would provide lots of choices too. Latest results from propertyguru.commy Image attached. If the population growth in Iskandar is not as optimistic as expected, then I think the property price trend is definitely moving south, startingwith the less attractive ones in design, size, location. I personally would prefer more of those supporting news. We need more commercial activities, especially from
Singaporean SMEs who want to continue to thrive
 and expand.  We also need more schools for the children. It’s definitely value for money because international schools within Iskandar has real facilities and not be restricted by size too much. With a growing student population, the demand for properties would naturally grow too. As for now, we can wait for September to see what happens.

written on 29 May 2017

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Oversupply to last 5 years. That’s until 2022…. ?

It’s a popular topic these days. In fact I have been asked no less than 3 times by a few different Whatsapp group.  Only one of those three groups are related to property investment. Haha. Well, we have another prediction, just a few days ago. This time from one of the top three international rating agencies in the world;
Moody’s Investor Service.
 It shared that the problem of oversupply would be around for five years. That means the oversupply will last till 2022. One of the major project  mentioned in the article is the Tun Razak Exchange which is said to worsen the current oversupply situation when it’s completed.
The article in FreeMalaysiaToday here.

The article quoted the South China Morning Post (SCMP) saying, “The increasing oversupply and the prospects of a material property price correction will continue to build as new supply enters the market and poses a risk to Malaysian banks’ asset quality.” Moody’s gave an example. The total retail space per capita for Malaysia had increased sharply in key states and now even surpassed regional markets such as Hong Kong and Shanghai. It added, “The large incoming supply of retail space will exacerbate the oversupply and raise vacancy rates across Kuala Lumpur, Penang and Johor from the current 13% to 30%.” (This means that Moody’s are saying that the Malaysian property market have yet to reach the lowest point (market prices) or highest point (oversupply numbers) depending on how we look at it)

This is its comment about the government’s recent approval freeze for new developments from 1st November 2017. This will not correct the oversupply situation over the next five years. This is because all those currently building will still be completed and will enter the market.  All the oversupply developments will pressure Malaysian banks with high loan-to-value (LTV) ratios.
 (Now, do you know why some banks are reluctant to lend to certain developments? Many times, their exposure to the said development is already high and they do not wish to ‘put too many eggs in the same basket. Try different banks instead)
SCMP also reported that the banking system’s total loan exposure to property segments which is suffering from the most acute oversupply – commercial properties and high-end high rise residentials are currently 8 percent of total bank lending and as of now, the non-performing ones are still low; 1.1% to 1.2%.

Moody’s estimated 20 to 30 percent of mortgages booked each year had LTV ratios of 90 percent.  (This tells us that many first-time home buyers are already paying over 10 percent downpayment when they secured their loan approval. The reason I say this is because majority of housing loans were to first-time home buyers. Here’s that earlier article:

71 pct of loans to first-time home buyers. Positive.
The few places where the unsold properties were highest include Kuala Lumpur, Penang and Johor. Johor has the largest share of unsold residential units in Malaysia (27%), followed by Selangor (21%), Kuala Lumpur (14%) and Penang (8%).
 The full article here again for your reading.

Remember to exercise the same caution
every time we look at average numbers.

Not everything should be lumped together. Some malls are dying, that’s for sure but there are malls where before noon, its car parks are already close to full. This is the same for condos. Just because both are priced at similar price levels do not mean both will be able to maintain their prices! Look at brickz.my for some information on prices. Happy anticipating.

written on 3 Dec 2017

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Oversupply Melaka? Totalling RM254 million. ONLY 725 units OVER 10 years…

Melaka property investment? It is not the top 4 property investment destination in Malaysia but opportunities are definitely available. I would love to own a place there actually. Let’s hope some opportunities open up in the near future. Of course, I need to get ready the $$$ too. In fact, investment wise, it looks pretty safe to me, based on the overall unsold unit numbers. Melaka Chief Minister Datuk Seri Idris Haron said that there are a total of 1,163 units of residential and commercial properties in Melaka which have yet to be sold-to-date. This unsold units are the total over a period of 10 years. Yes, over a period of 10 years…. Where residential properties are concerned, there are a total of 725 unsold units or around 73 units of unsold properties every year. Total population of Melaka is close to 900,000. (Source: Google). The full article in
TheMalayMailonline is here.

He shared, “The number was released by the Valuation and Property Services Department for the second quarter report of last year and Melaka was among the states which recorded the lowest number of unsold properties. This shows that the development projects implemented in Melaka are in line with current demand and have no negative impact on the property development industry.” (In brief, everything looks pretty good and the number of unsold units would be considered as normal. Properties which are not attractive at all would not suddenly become attractive with each passing year. In other words, they would continue to appear under the unsold category for a very long time more to come..
This is the full article again.

Oversupply seems to be a pretty popular topic these couple of weeks. Today, I delivered a talk in the
PIP-EVE.com 2018 Talk Series
 entitled “Property Market Outlook 2018: Boom or Bust?” When I asked if oversupply will cause the property market to crash, almost everyone in the room nodded their heads! Oh dear. I seriously think we have to start knowing that we are not to believe everything in Facebook or even Whatsapp. Well, first of all, the unsold units which contributed to the overall ‘oversupply’ are NOT going to cause the property market to burst, even if oversupply means a bubble is forming. This was an earlier article:

We need more homes actually, then why oversupply?

As for signs to look out for when it comes to the real property bubble, these are those signs:

Potential property bubble and signs to look out for

Happy thinking Melaka yeah.

written on 3 Feb 2018

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“Oversupply” of developers… Bad?

When the market has an oversupply of properties, it will be bad for property prices. Theoretically, prices will fall when supply exceeds demand tremendously. I say tremendously because if the supply is just slightly more than demand, as long as there was little speculation in the first place, prices will stay stagnant while waiting for demand growth to exceed supply again in the near future.

This oversupply of properties. Does it happen because there were too many property developers? Since everyone is simply building and building, it should add up to the numbers and soon there will be an oversupply? Okay, it’s not as simple as that but there’s one managing director and CEO of a prominent developer who said that there are too many listed developers here in Malaysia. It’s not a good situation to be in according to him.

Article in nst.com.my
  UEM Sunrise managing director and chief executive officer Anwar Syahrin Abdul Ajib said, “If I put myself as an observer, and not the CEO of this company, it (consolidation) should happen. We have too many (listed property players). I think there are about 100-plus.” He also said the following:

“For example, within The Edge property awards this year, there are many (listed) real estate players there. The awards received over 50 submissions this year.”

“The good thing is that everybody is passionate (about) this industry and people are benefitting from it. We all benefit with beautiful townships, nice designs and so forth. All of these are good but sustainability is not there. The government should really look back before they can easily give Housing Developers Licence and Sale and Advertising Permit to a developer. Because if not, we will be killing each other eventually.” More here:
Article in nst.com.my

Anwar did not say what’s the ideal number of developers but I guess there’s no such thing as an ideal number. I personally believe that property development should NOT be concentrated into the hands of just a few major developers. If one day it becomes as such (just a few developers left), the choices where location, size and design may become much more limited. It will be easier for these few developers to control the market to some extent too. I do not think this is something which the buyers or the government wants.

Competition will always be key to price and quality competitiveness. However, the government must REALLY have better control in the quantity of new homes being constructed. It will be much more prudent to get the developers to really do a survey and understand the market before it starts building, even if the developer has deep pockets and could start construction even if it had sold just half of all the units… Let’s have a healthy market shall we?

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Oversupply or not depends on the price yea. Please take note before we buy.

Is there oversupply or not?

Someone posted this question recently. Someone in the real estate industry. He was referring to one particular new township (below 100 acres) and asked if there would be oversupply since we have many of these new townships in progress of construction or being announced and launched. Since I have my personal opinion, I will write an article about this today.

Demand vs Supply? That’s usually influenced by …

If we look at the economics of demand and supply and even Marketing 4Ps, 6Ps and even 7Ps, then we could see one common word. That word is called Price. The best product in the world, if priced incorrectly will not provide the right value or even the affordability for people who knows that it is good but does not have enough money to buy it. If we shift this to the property market, then before we actually buy a property, could we determine these 4 things first?

#1 – Are there similar properties at the same price or lower?

This could easily be done these days. Look at all the nearby properties and look at the prices. Look deeper into the price per sq ft. Compare all the typical features. Just note down all the necessary amenities. Then, look into OTHER townships. We need to note that just because the township we are considering is 10km away from KL city centre does not mean all other townships are further away yeah. Some townships may even be linked by public transportation too and not just expressways.

#2 – Look at the typical rental today.

If the rental for the similar properties currently are already in negative and the similar properties are priced almost the same as what we are about to buy, then think again. What would be the rental  of our unit when it joins the total supply in the market. Of course, if we are buying for our own usage, then the rental will be secondary because the monthly repayment we pay is actually going back to us, after deducting loan interest. This is usually better than to rent a unit and losing 100% of whatever ever paid every month.

#3 – Are we buying without knowing the reasons?

Someone told you that it was worth buying?  Ask them for all the reasons why. The answer cannot stop at, “it’s worth buying.” Someone told you that this is the chance of a lifetime? Ask them for the reasons why.  Chance of a lifetime is usually not a valid claim because this person did not come from the future and would not know the future. Someone told you that they were buying and told you excitedly about their purchase? Do remember that they may also have heard of all these great reasons to buy from someone else and may not have done enough due diligence too.

#4 – Could we HOLD?

When we really like the property for many valid reasons but the price per sq ft is higher than similar properties nearby or elsewhere, we could still buy. If we have viewed enough, the decision should be alright even if not everyone could agree. Many times, this is also how we identify gems in the rough too. Assuming we do proceed for this kind of property, ask ourselves ‘how long could I hold.’

Circumstances do change, thus sometimes, we may have to continue paying but not able to use it (EMCO meant you cannot renovate and move…) or we may not be able to rent it out fast enough, thus we needed to continue paying without any income for months and possibly even up to 12 months or more.  This is why the same property bought at the same time may still yield a totally different result for different buyers.

Price will always rise, this is true as well.

We need to realize that there’s something called inflation. Value of money becomes smaller year after year. That’s why we are paid higher salaries every year as well. For this reason, the price of property will go higher even if it’s actual value may have stayed almost the same. This is also the reason why property is always a hedge against inflation. it’s a proper hedge yeah. This is not like some other hedge where the price would go up or come down by double digits every other day. Happy buying.

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Oversupply need not be all bad lah.

This is something we read everyday.
The number of unsold properties seem to be very high.

In fact there are always articles quoting some experts which kept telling us about the oversupply situation in Iskandar and that new developments should be stopped. Some say stop for now. For now means for how long? 6 months? 12 months? Who can decide? Seriously, the right solution should be on how to increase the demand FASTER and not to SLOW DOWN the development. Perhaps change the composition of homes being built. Cheaper options please and not jist high end ones. Perhaps more constructively, think how to attract and expedite the approvals for more manufacturing plants. More REAL international schools with huge fields because the demand is still huge. As for Iskandar, a rail transit system would immediately boost demand. It will not be just the Malaysians lah. Think really rationally. In a recent conversation with many senior managers including my own boss, I had to step in and tell them the same thing. Focus on the demand, not the supply.

Secondly, assuming it’s now UNDERSUPPLY. If I am a high-end manufacturer and assuming approval for my plant can be done in weeks and my plant can be up and running within 24 months, where do you think my hundreds of workers will stay? At inflated priced rooms and having to share rooms since there’s just not enough supply of rooms? I still remember the time when there were suddenly a boom in number of students in Subang Jaya and there were shortage of rooms. I was staying in a ‘newly built’ small room shared by three and each of us were charged RM250. (Mind you, that was like over 20 years ago!)  Or perhaps I tell my staffs to stay further away from the working place? Seriously, they will not join me lah. Talents need homes and without ready choices of homes, don’t talk about attracting talents.

The above is just about a manufacturer. What about those
theme parks in Iskandar?

What about those
international schools in Iskandar?
 What about the
 tertiary institutions?

What about all those
health tourism based attractions in Iskandar?

What about those new malls and upcoming ones? Perhaps someone would now say, just build more hotels. Haha. I think we are forgetting the fact that the people working in all these places need a place to stay? As for the thought of just China, China, China all the time, do drive around a bit. I think we have forgotten that there are MANY Malaysian developers within Iskandar too. I can safely say that there’s no way that 90 percent of their buyers (Malaysian developers) are from China because if I am a buyer from China, I would prefer to buy from a developer I am familiar with first and not some Malaysian developers whom I am not familiar with. I used to meet developers in Iskandar nearly on a weekly basis a few years ago. They are still there today…

Just a reminder to the property experts. The development of Iskandar is not just about the number of homes being built. In fact, if it’s only about the number of properties being built, then Iskandar will fail. It’s as simple as that. How can it even compete with
Greater KL if it’s just about building ever more homes?

Focus on providing more solutions about how to increase the demand side of the equation. Focus on pressuring the authorities to be more pro-active in ensuring developments that will make Iskandar a better place to work, live and play. Unfortunately, I am not a well known property expert and I am also not a mass media. Oh yeah, I do not even own a unit in Iskandar. However, I think the right focus would ensure Iskandar succeeds. It’s to the nation’s benefit and not just some individuals. Happy following.

written on 9 July 2017

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Oversupply = Unsold, true. Unsold is NOT oversupply, TRUE!

I hope the title is clear enough for everyone who does not understand that the two words are different because they actually meant different things. I was speaking in
starproperty.my expo in Starling Mall today.
Crowd was good. 30-40 people were standing throughout my talk which is why I think property investment remains a favourite for many. However, many continue to be confused with these two terms. This is one major reason why so many people are concerned and adopting a wait-and-see attitude. They thought there’s an oversupply, so prices should be dropping. Many are even waiting for the units in popular mature neighbourhoods!

Oversupply – According to Cambridge Dictionary, this is the meaning of ‘oversupply’: a greater supply of something than is needed. How do we know if there are oversupply or not? Ask 10 of our good friends and another 10 colleagues who are below 30 years old this question. ‘Do they own a property?’  The answer is likely to be NO but if you probe further, they are looking to buy in the near future. By the way,
1 million civil servants do not yet own a property. Earlier article here.
 Last but not least, our Housing and Local Government Minister Zuraida Kamaruddin announced that there will be 100,000 units of affordable
homes to be completed within 2019. (earlier article here)
 I am very sure her goal of 100,000 units were not because there is an OVERSUPPLY of homes in Malaysia…

Unsold – On a yearly basis, over 100,000 new properties are launched in Malaysia. The unsold units are MUCH LOWER than 50 percent… For some states like Selangor and Kuala Lumpur, the % is something to be proud about and not something to be frowned upon! Take a look at the image to understand the % of unsold properties after launchings. The current unsold stock is because the units were too expensive or were in locations not favoured by many. To better explain, it’s a mismatch in demand vs supply.

Before we buy, understand what we need. After that, be realistic. Out of 10 things we love to have, it’s perfectly fine to find an affordable place with 6 out of the 10 first. Let’s understand that when 10 / 10 of all the things we love are ALREADY available, the prices ALREADY factored in all these. If these areas are NOT yet so expensive, newer areas will have no demand, period. That’s why many younger friends said property prices are too expensive but when we point out some areas which are 10-15 minutes away, they would say that it’s too far or not the one they are looking for. Well, keep searching then. Happy understanding.

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written on 3 March 2019

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Oversupply, Yes. Crashing Down? No.

It is estimated that on a yearly basis, the average population growth in Singapore is 75,000 individuals per annum from 2014 to 2020. Assuming a conservative 3 to one home, it meant that 25,000 new homes are needed every year. Now comes the tough part. Total estimated new supply for 2015 is 50,300, 71,500 in 2016 before coming down to 37,200 units in 2017. The reason for 2017 being down by so much is easy to see. The slowdown in both buying and new developments have started to slow since 2013. Thus, the total supply definitely is coming down by 2017. According to Eli Lee, an analyst at OCBC, all these numbers meant that from 2015 onwards, there is an oversupply situation. An estimated 50,300 new residential units are set to be added to the market in 2015, followed by 71,500 in 2016 and 37,200 in 2017. In fact, it is a heavy oversupply situation.

However, for those expecting prices to drop further before buying may be disappointed. Prices are expected to decline but it will never crash. In fact, perhaps only between 5 – 10 percent. One major reason? 2015 is a potential election year. There’s no way the government is going to let prices crash and thus affecting its results during an election year. Buyers are still waiting and sellers are still holding. Developers? Well, prices that they are offering are still holding. Perhaps they are offering other incentives to get more sales but the prices have been resilient thus far. According to Credit Suisse, 47% of household assets are tied up in real estate. In other words, any sudden fall is likely to be very bad to majority of everyone. Lee said that price crash in excess of 20 percent is highly unlikely due to the high elasticity of demand in the housing market. In short, should the prices go down to an attractive level, it would quickly be supported. Demand is still there, just that the current prices are not deemed attractive. Even the foreign purchasers are staying away. Major reason is because of the additional buyer’s stamp duty of 15% of the purchase price. Come on, assuming you buy with the intention to sell, you lose 15% even before you start. Not such a great incentive to buy anymore, right?

I personally feel that there are still a lot of things which can be done should the property market slowed down way too much to the government’s liking. Removal of the stamp duty for foreigners would jump start demand pretty quickly unless the whole world is in a crisis. The reason is because Singapore continue to be regarded as a safe haven, especially for many foreigners who wants to work in Asia. It’s really safe and progressive compared to many other countries. Shanghai is another huge magnet but these days, it’s harder to get a great position in Shanghai as their talent pool has increased by leaps and bounds for many years. Thus, much of the needed positions are starting to be filled by locals who have gained many years of experience from all the foreigners who were based in Shanghai for the past many years. Singapore is however a very small country and relying just on locals to propel continuous economic would not be a good idea. How do you get more MNCs to invest if you cannot provide a huge supply of talents to them. To these MNCs, I need talents and it does not need to be locals. These are the reasons why the property market in Singapore will slow down but I personally agree with the assessment of many analysts thus far, there’s little risk of Singapore property market crashing in 2015. I do not own any property in Singapore and has no plans to get one in 2015. Happy searching and buying if you intend to get one.

written on 28 Dec 2014

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Overweight on property sector – buy property stocks now?

Market slowed down. Some developers holding back. Bearish sentiment in the market and everyone is waiting and seeing if they should buy another property. Even foreigners, especially Singaporeans seem to be holding back due to uncertainty. There’s a good news though. RHB has upgraded the Malaysian property sector to overweight and its top picks are IJM Land and Sunway while it also likes Tambun Indah and Matrix Concepts for their thematic angle. In easy to understand terms, it means RHB is saying if you intend to buy stocks, you should be picking on property stocks and out of the many stocks, they recommended two which they adore and another two which they like.

The few factors for this upgrade would be undemanding sector valuations and catalysts from infrastructure project besides the potentially stronger 2014 GDP growth and a negative real interest rate environment. Negative real interest rate environment means the FD rate is lower than inflation. It means if you keep your money in bank for FD, you are losing more than if you invest it somewhere, perhaps stocks. RHB also said that they prefer larger cap stocks because these developers are typically those with much stronger balance sheets, better landbank portfolios, stronger brand names, solid management and execution track records. RHB Research also said that HSR (High Speed Rail), MRT lines 2&3 and Kwasa Damansara projects will be the future catalysts.

Personally, it may be wise to buy some of these stocks and hold due to its undemanding valuations. In other words, potentially the dividend rate may be higher than if you left your money in FD. However, if we are talking about the potential returns for a longer term, I personally would be venturing into the secondary market instead, buying in areas which give positive yields, even if the areas are not exactly what everyone is trying to buy. I reiterate, ‘positive’ yields and not any specific % such as 6% or 8% etc. Finding a 6% yield property today I believe would be extremely tough unless you happen to be lucky and the seller happened to be in a rush to sell. Happy deciding.

written on 31 March 2014

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Overwhelming demand, more special offer and instant discounts

I was in a hypermarket in Subang Permai today and there were three different booths from three different developments. Situated at different places within the hypermarket. One happened to be a landed property located in Shah Alam north. From the charts, I think the developer or the agency appointed is only selling the left-over units. Another is one of those affordable projects by a state / government agency. The third one was a service apartment and the price was only slightly above RM500,000 and it’s near to many educational institutions. Seems attractive, right?

Well, as soon as I took the one page leaflet
(Over RM500k per unit and the leaflet is ONE page, without any APDL details too)
 and started reading, the sales person rushed over and said, 10 percent discount. Oh, that’s not great. The selling point is the discount? Is it discounted because the price was too high to start with? Actually, regardless of the reason for the discount, it should not be the main selling point. A friend, not so close bought a condo in Cyberjaya because the developer gave him a big discount. He bought it and was so happy until he learnt that every other project nearby were either at the same price per sq ft as his, after discount. Honestly, unless the price per sq ft is already very attractive PLUS a discount, then it’s worth considering. The discount should not be to make the property on par with those in the vicinity.

Another discount story. If a project is selling very well, does it need to keep pestering buyers with discounts? No answers needed. We can all decide by ourselves. A good friend sent me a message sent to him by a sales person from a developer. The message said due to the overwhelming response for project XXX, now the developer will offer to the public new packages starting from RM378,800 onwards. I looked at its launching price, which is available all over the internet and the launching price was lower! Assuming this message is NOT a discount and in fact is an upgrade in prices, then does this mean that due to overwhelming demand, this developer is increasing the prices?

2016 is already shaping up to be a buyers’ year. It’s not going to last forever and the times when developers say, ‘I’m back’ will come back in future. For now, it may be better if the launching prices are really looking at the slowing demand. Smaller margins may be more important that selling for a very long time. Promote any new launch aggressively, use the allocated marketing funds based on GDV. It really do look bad if the project was soft launched over one year ago and is still selling so well that discounts are provided….. Happy selling.

written on 4 Mar 2016

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Overwhelming response! Two carparks side by side. Cool.

Just weeks ago, a friend who’s always negative about Malaysia asked me this question. “The economy of Malaysia is so bad. I wonder if all these news about projects being sold out in one day is true at all?” Let’s not even comment about what is a bad economic situation and what is great economic situation. Let’s look at just the employment numbers. IF people have a job, they need a home. IF they move to KL from a smaller town or village, they need a home. IF they start a family, they need a home. IF the country has a young population, they ultimately would need a home when they need a home. All these situations assume they continue to have a job which pays them enough salary. So, are we (Malaysia) really that bad? Remember, take actions based on what we believe in. Please do not touch property because this is a very illiquid asset and we will face huge issues to dispose it should a crisis comes tomorrow. A call to the broker to sell the shares we own is a few seconds. Selling a property would likely take weeks or months. This brings us to another
‘overwhelming demand’ article in PTLM.

Image from ptlm.com.my

Some facts from the article. The Hamstead at Desa Tun Razak, Cheras. It said that the developer is Ujana Mutiara Sdn Bhd, a member of the Aset Kayamas group of companies. The development is built on a 1.87 acre land. It is a single-block 40-storey tall leasehold development and this is inclusive of a 8-storey car park podium. It is HDA compliance and total units would be 479. The unit built-up sizes are Type A/A1: 945 sq ft; Type A2/A3: 1,127 sq ft; and Type A4: 1,272 sq ft. Majority of units are of Type A/A1, which is a 3 bedroom 2 bath, with each unit given 2 side-by-side parking bay. The nett price starts from RM358,000 and free legal fees for SPA and loan agreement. Right beside it would be another RUMAWIP (mampu milik) block with separated entrance and common areas with 463 units.  There are 16 units per floor served by 5 lifts, offering 21 lifestyle facilities and a 4-tier security. Connections wise, The Hamstead is approximately 6-minute walking distance away to Bandar Tasik Selatan’s Terminal Bersepadu Selatan (TBS) which integrates LRT, KTM and ERL train services as well as buses and taxis.
Full article with photos here.

Well as they say, bad times are good times to buy and good times are bad times to buy. For those who believe good deals will appear during good times, do understand that this is just a dream. If we own a company today, when the business is good, we are not going to reduce the price of our products. Then again, buying during good times may also mean the opportunity to flip for a good return within a shorter period of time? Haha.
 Buy within affordability
and buy when we need it. If we always do this, our purchase should be termed an investment and it should provide us good returns in the future. Regardless of bad, good or awesome times, have a home to stay which we call our own. It’s a good feeling when we walk into that placer the very first time. I could still remember how I slowly touch the wall of my first apartment of 730 sq ft and feeling so proud of myself. Happy buying and staying.

written on 8 April 2017

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Own a property? Banks rejected me. FundMyHome fulfilled me.

FundMyHome is a property funding platform where a buyer needed to pay just 20 percent of the house price while the remaining 80 percent is funded by institutions.
Earlier article about it here.
 In other words, this is NOT the typical home loan that we are so used to. Is it popular? Briefly, I have no friends yet who told me they bought a home using this scheme. However, reported in EdgeProp.my was one guy who had managed to get his dream of owning a home fulfilled.
Here’s that article.

He is thirty-five-year-old Liau Tet Haw.  The article said that Liau had made several attempts but failed to get a bank loan to buy his first home. Liau said, “I want to settle down in West Malaysia… It is not easy to get a bank loan. Without FundMyHome, I probably can only continue to rent the unit I am now staying in OUG (Overseas Union Garden, KL) and get nothing at the end of the day.” Liau also shared that eventhough FundMyHome is a newly-introduced platform, Liau said he is very positive and confident with the scheme as it collaborates with reputable developers in Malaysia. He added, “My friends and family members had asked if I really want to take the ‘risk’ because the FundMyHome scheme seems too good to be true. They said it could be a scam!”
Here’s the full article for reference.

He did not share why he failed to get his bank loan approved. Perhaps it’s good to also know the reason because sometimes when the banks did not want to lend us 90 percent loan, perhaps we could get the loan when we apply for 80 percent instead. However, owning a property is a good thing and as long as we have more options to choose from versus just the banks, this should be good for the market. We should still ensure regardless of the method, due diligence is done on all borrowers. Hopefully it’s for own stay instead.  This is because we do not want the market to be full of people buying homes for speculating. Good news for one buyer of FundMyHome.  Happy following and finding out more.

written on 18 Jan 2019

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Own a unit and left it empty? Some countries have VACANCY TAX.

Some time back, I wrote about this:
If you leave it empty, I will charge / tax you.
 Briefly; vacancy tax potential for people who have units which were left empty. Well, it has not happened yet and may not happen so soon but if it happens, this is not just for Malaysia yeah. This has happened in many countries all over the world.

So, if we bought a unit and we left it empty, would we be taxed then? Well, Malaysia have no vacancy tax and for countries with vacancy tax, their target is the developer instead of owners. In Singapore, the developers needed to be very careful because they could be charged for unsold units.
 As per information from 99.co, these are the charges:
 (It’s quite high… actually which meant developers would prefer to sell versus being taxed)

“The charges were 8 percent for unsold units for the first year of extension, 16 percent for unsold units for the second year of extension and 24 percent for unsold units held for the third year of extension.”

Actually, what this meant is that if I am the concerned developer, I will choose to provide a discount to the buyers so that I could quickly sell the units before the government taxes me. If I failed to do so, I will become even more desperate to sell with each passing year. So, this is not such a happy news for any developer with unsold units. In Malaysia, this topic about vacancy tax was mentioned again.

Article in malaymail.com
 Deputy Federal Territories Minister Datuk Seri Edmund Santhara Kumar said that government will study the proposal to impose a vacancy tax on developers to address the number of unsold luxury condominiums in the Klang Valley. He said, “From the ministry’s point of view on the proposal to impose such tax, since the number of unsold units is less than 4 per cent to date, there is no need for now but such a proposal would be studied further.”

Edmund shared that based on data provided by the National Property Information Centre (NAPIC), there were 2,260 unsold condominium units within the Klang Valley, of which 498 comprised luxury units worth RM1 million and above as of the second quarter of 2018. To read the full article, it’s here:
Article in malaymail.com

By the way, we need to understand that if the developers reduce the price of their unsold unit, this will definitely affect the market price because the transactions now show a lower selling price and the fact that there is availability of such lower priced units meant that existing owners could not sell their units at prices higher than what the developer is selling. Depending on the number of units which the developer has, this pressure on price will last for a while.

On a longer term, there is a possibility that the developers will be much more careful with their planning and development. Please note that on the other hand, they may also become too conservative and this may also cause the supply to suddenly decrease too much versus demand and well, this will also cause the property price to be pushed upwards too. So, all these require a balancing act by the government yeah. It’s not just a decision and move on… For now, it is not happening.

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Own office and work alone? Co-work and get more benefits

The startup scene in Malaysia is an exciting one. Let me just name a few which is now the envy of many Malaysians. They started just a few years ago. They include GRAB (yeah, that new challenger in the taxi scene which is changing the whole industry. I already have 3 friends who relies only on GRAB / UBER for the past 2 years). We also have FAVE (which has even bought over a few Groupons in different countries) and is now valued at over pushing into a cashless community enabler. There’s also iflix which is already having millions of customers throughout South East Asia.

Assuming we have an idea today and we want to see if our idea works, what can we do? Well, we can bounce our ideas with like-minded individuals. People with similar ideas can always join forces (that’s why some startups have a few co-founders) while people with similar aspirations to build the next amazing startup can continue to learn from many other aspirants. In the process, connections are built and that is also one key reason why cooperations can happen between two seemingly different startups. How do we get all these connections and build all these relationships? Co-Working offices can be a great start. What’s the first thing we need to consider if we want to become a startup founder?

Unless we have super-rich parents, the first is to make sure we have enough money to last as long as possible. First one is the cost to set up a working office.  In terms of office startup cost, we can think about minimising the cost of having our own office by searching for co-working spaces. There are many choices these days and with the slowdown in the commercial property market scene, we get even better deals due to competition. Many entrepreneurs are converting these office spaces into awesome startup communities. Where are some of them?
Well worldofbuzz has listed a few here.
More choices?
Tallypress.com has a few here.
Of course the numbers are growing every few months which meant that sometimes, the less competitive ones would cease to operate.

Below would be great reasons why it’s almost always better to get a space in a co-working office.

– Lots of great ideas from many other peers

– Everyone is working hard, usually. It’s best to be with them.

– I hate to work alone. (If you hate people, forget starting a startup…)

– REDUCE COSTS. From broadbands to printer and even buying own funky tables and chairs.

– Become useful to everyone and everyone will be useful to us. (friendship is forever)

– High quality office (with free gyms, fun meeting rooms and even a great location at a low price)

– Your personal network is really your future net-worth

Many more other reasons but I trust this is already better than to spend thousands of rental every month just to run an office. Sorry, I do not own a huge building which I can renovate and make it a great co-working space. However, if you have a co-working space and would love to invite me over for a cup of coffee, do write to me yeah. Email: kopiandproperty@gmail.com All the best in your startup dream. One day in the future, I hope to also own a startup which is big enough to become a public listed company. Currently, I would have to continue working hard and keep writing. Gambate to all of us yeah.

written on 5 Dec 2017

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First time buyer? Deciding on own stay or home-stay?

I do not want you to get rich FAST from property investment. Heard of the higher returns equal to higher risks line? As a licensed auctioneer looking at the auction market, I realise that there has been many cases where a few properties within the same development belonging to the same buyer which was being auctioned at the same time. Guess why? The buyer had overstretched by taking on more debts he could handle OR he had been persuaded to buy many units to get higher amount of cash back.

The person persuading told him that the risk is low because he has all the cash and can keep paying for a few years until the property prices increase again. By the way, if it’s this easy, the Malaysian property market would have crashed long time ago. This is why I always tell everyone that property investment usually starts from 2nd property onwards. The first one? Look at it for own stay, stop paying the never-ending rental even if you seem to be enjoying low rental versus the so-called property price today. Why own-stay then?

Higher Due-Diligence.
 If I buy because I believe the property will increase in price, I will buy simply by listening and the decision could be totally emotional and quick. If I buy for my own stay, it has to be something I like. Something which meets all my expectations. The layout design, the number of rooms, the kitchen, the area / neighbourhood, the overall development, the facilities and even all the amenities which I want are nearby. If one particular unit could pass such a thorough due-diligence, it will pass through any slowdown and it will continue to be loved by many and not just us.

No risk, almost.
 If we pay rental, then it’s totally no risk since we can move anytime. Buying a property does carry a little risk BUT what happens when we rent the place we stay and bought another place and market slows down and we hate that particular home we bought and yet we could not rent it out and thus have to pay both sides (own stay and investment unit) at the same time? Hopefully for a few months but what if it’s for a very long time? Think about it seriously yeah. It has happened to some of my friends.

Starting investment journey.
 There are already many who bought a place, stayed in them for a couple of years and then upgraded into a bigger once when their salaries rose in tandem with their career growth. They continue to pay for the home they stay but that first home would most probably be sold for some extra money or rented out with a higher rental than the mortgage. This is SLOW but this is usually steady unless of course that first property we bought had overstretched us to the limits, then of course, that upgrade property after a few years will not be happening.

Most of us are usually working professionals. The strategy we will have to use will be a different one compared to a full time property investor for example. It will also be very different from someone who has lots of cash for example. This is why it’s perfectly okay to be slow and steady. Buying a property is usually a super expensive decision. Making the right choice will be essential if we do not intend to fall into the bankrupt Malaysian category.

By the way, MOST bankrupt cases are not due to property for own-stay yeah… It’s usually due to personal finance stuffs like over spending, using too much money and thinking that everything I spend, I will be able to pay back via instalments…  Happy starting your first property investment via own stay and not home-stay. This may not be applicable to everyone yeah. Some hates slow and steady and prefers fast and high returns. Cheers.

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Oxley Holdings, RM10 billion GDV, shoe box concept success

Shoe box concept means very small units of residential properties. According to Datuk Othman Omar the head of Oxley Holdings (Malaysia), the Singapore listed Oxley Holdings Ltd has been very successful in Singapore with the shoe box concept and they plan to bring this into Malaysia. They expect to launch three to four projects within this year and next year. In total, it has eight projects worth about RM10 billion to be launched over the next four to five years. All its developments will be prudently planned to ensure they are integrated, the right product mix, brand and security features.

This is another example of foreign developers who found lesser opportunities at home coming into Malaysia with their expertise and trying to carve a name and make a profit. This is one reason why the local developers are also spurred to be even better in their offerings. Of course there’s still those who said, ‘never mind, people sure buy once I start building’. As long as these developers already bought their land much earlier, I think they can do it but if they are to bid for any new piece of land today versus the much more established foreign developers, think about the final result.

Oh yeah, shoe box concept, would I buy? I am shaking my head now but on second thought, if it is really attractively priced, then yes. What’s attractive? Well, below RM250,000 is considered attractive to me, even if it is RM500 psf. Yes, I have no issues to buy a 450 sf unit. Anything lesser would be tough but 450 sf for RM250,000 I would consider attractive enough. However, I seriously do not think any developers would be launching such units unless it’s at a less conducive location but if it is a less conducive location, then I have no interest. Haha. That’s the reason why I am not a supporter of SOHO or SOVO or SOFO which are priced at RM750 psf or higher.

Let’s go view their offering once it’s announced by Oxley ok?

written on 26 June 2014

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Up to RM1.2 billion investment into Pahang. Interesting ventures.

Think of Pahang and what comes into your mind? Lynas? Hmm… Club-Med Cherating? Lots of fun! Or one new projects by the sea overlooking the South China Sea? Relaxing… Kuantan industrial parks? Yes, it’s not a white elephant.  Kuala Gandah National Elephant Conservation Park? Oh, I want to go. The East Coast Rail Line (ECRL)? Continuing… Beyond these, here is another thing that Pahang will also be associated with. It’s a Global Tropical Seeds Research Park as well as a Green Resource Manufacturing Eco-Park too.

Article in edgeprop.my here.
 Four Thai  companies will be investing RM1.2 billion into Pahang. The investment includes a development of a Global Tropical Seeds Research Park worth RM400 million in Gambang, Kuantan and a Green Resource Manufacturing Eco-Park worth RM380 million in Bentong.    The Global Tropical Seeds Research Park will span an area of 1,280 acres in Kampung Sungai Pohoi, Gambang.

AE Carbon Capital (Bentong) and Pahang State Development Corporation (PKNP) will be developing an industrial eco-park anchored in 5th Generation fully Integrated Green Resource Manufacturing of multiple green-tech products for local and export markets. There were also two MOUs worth RM433 million signed too. Pahang Menteri Besar Wan Rosdy Wan Ismail said, “We are also studying on the most possible location in Kuantan to establish a Pahang Aerospace Park and this will be quite similar to the existing Automotive Park that we have in Pekan.”
Article in edgeprop.my here.

Any good investments with job opportunities and the prospects of exporting what is produced here to the world out there is always welcomed, in my opinion. If it’s something which we have advantage, like the need for a rain forest so that research could be done for example, then it’s even better. I think we have enough of all the same stuffs like a beach resort or a theme park already. Plus, when there are theme parks nearer to the city versus a theme park further away from the city, guess which one will be visited more often? To all potential investors, I welcome you too.  If you send me your press release, I will be glad to tell the world about it too.

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It seems everywhere is worth going in Pahang. Here are 8 choices.

I just told my wife yesterday that this will be the second year that we are not going up Genting Highlands to take mooncakes. Not take as in without paying lah. Take as in exchange with the Genting Rewards card points. Somehow we have enough points to exchange 4 pieces every year. No idea if the points will expire but we have not exchanged for 2 years already.

I wonder if this year may still have that chance to exchange for 4 mooncakes. After all the Mooncake festival (actually called Mid-Autumn Featival) will only be happening towards end of September. Then, I need not buy. Usually it’s assorted and we cannot choose flavours lah. We will see how because Genting Highlands is in Pahang and that’s another state.  My wife and I are fully vaccinated and have passed the 14 days some weeks back.

Article in nst.com.my
   Tourism Pahang general manager Kamaruddin Ibrahim said the chosen holiday spots which have achieved herd immunity against Covid-19 will be reopened to visitors in stages. It is pending the green light from the National Security Council (NSC).

The eight destinations which are prepared to open their doors to tourists are Pulau Tioman and Taman Negeri Rompin (both in Rompin), Genting Highlands and Janda Baik (both in Bentong), Fraser’s Hill( Raub), Taman Negara (Jerantut), Kuala Gandah National Elephant Conservation Centre (Temerloh) and Cameron Highlands.

He said, “Tioman used to receive about 200,000 visitors a year but now due to the pandemic, no one is going there anymore. Plans to reopen the island were discussed during the Pahang executive council meeting yesterday so we hope it can be made a reality soon.” Please refer to the full article here
Article in nst.com.my

Revenge travel is has happened in all countries which has reopened after Covid-19

Out of the 8 places, I have not been to Taman Negeri, Taman Negara and Kuala Gandah National Elephant Conservation Centre. However that easy place that I can drive to quickly as soon as it is allowed would definitely be Genting Highlands lah. Enjoy some fresh and cooling air. Eat a dinner there even if the restaurants are not that cheap.

I have not been there for close to 1.5 years anyway. For all of us reading this article, happy getting vaccinated and happy getting ready to travel again.

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Press Release: Palm Garden Hotel, Putrajaya, a Tribute Portfolio Hotel makes its debut in IOI Resort City

IOI Properties Group Berhad (IOIPG) announces the opening of its Palm Garden Hotel, Putrajaya, a Tribute Portfolio Hotel. The opening of the hotel marks the brand debut of Marriott Bonvoy’s Tribute Portfolio in Malaysia. Located in the heart of the IOI Resort City in Putrajaya, the 151-room hotel is set to showcase the hidden gem of Malaysia for travellers and locals who seek out independent experiences and crave enriching experiences from the community when
travelling.

Situated within the sprawling 788-acres of IOI Resort City, Palm Garden Hotel, Putrajaya, a Tribute Portfolio Hotel offers easy access to IOI City Mall, one of the largest shopping malls in Malaysia, as well as the prestigious 18-hole Palm Garden Golf Club. The hotel is connected to major highways and is within 35-minute drive away from the Kuala Lumpur International Airport, making it easily accessible from other regional and international destinations.
Designed with an understated elegance, the hotel draws inspiration from its verdant and florafilled surroundings and features 151 well-appointed guestrooms including 14 suites. Each guestroom overlooks the lush greenery of the resort city, and equipped with a plush settee, LCD television, working desk, shower, mini bar fridge, in-room safe, iron, ironing board, and coffee and tea making facilities.

The hotel features two signature restaurants and a bar. Palms Café, the all-day dining restaurant, serves international cuisine from the restaurant’s à-la-carte menu. Aroi Dee, which translates to “good taste”, is the hotel’s signature Thai restaurant where the resident Thai culinary master presents traditional favourites such as Red Tom Yam, Pandan Leaf Chicken, Steamed Fish with Chili Lime Sauce and more. Courtyard Bar is the alfresco bar in the open-air courtyard where guests can relax and socialise over cocktails and light bites after a day of exploring the city.

Set amidst scenic greenery, the hotel features two large outdoor swimming pools and a recreation centre that houses a gymnasium and sauna, while the expansive spaces that surround the hotel are dotted with built-in teambuilding obstacle courses, which serves well for corporate events.

With over 22,000 square feet of flexible indoor meeting space, Palm Garden Hotel, Putrajaya, a Tribute Portfolio Hotel is an ideal venue for business events and social gatherings. The hotel offers 11 multifunctional event spaces inclusive of a grand ballroom that is over 6,000 square feet. Rafflesia, the pillar-less grand ballroom mesmerises with a raindrop inspired chandelier and builtin stage, which can accommodate up to 500 guests in a theatre setting. For more intimate events, the garden or poolside venue can host up to 100 guests, ideal for picture-perfect weddings.

“Palm Garden Hotel, Putrajaya, a Tribute Portfolio Hotel, is one of many world-class brand hotels owned by IOI Properties Group that are committed to offering exceptional customer experiences. We are bound by the Group’s Vision of Trusted. with the focus on delivering service and quality excellence. We are Trusted. to perform our best, prioritise our customers and demand excellence in everything we do,” said IOI Properties Group Chief Executive Officer Dato’ Voon Tin Yow.

Dato’ Voon also highlighted that the Group’s relationship with Marriott International has grown from strength to strength since 2002 with the opening of Putrajaya Marriott Hotel. “Marriott International is renowned for its service and quality excellence; traits that we value very much and are in line with our vision of Trusted. Marriott International’s solid brand positioning and presence, as well as its values of pursuing excellence and embracing innovation will surely augur well for Palm Garden Hotel, Putrajaya, a Tribute Portfolio Hotel,” he added.

— end of press release —

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Real estate not just properties. Land too. It seems durian is now one key driver of land prices too?

Agriculture sector contributed close to 8% of Malaysia’s GDP in 2018.
Link to the Department of Statistics Malaysia here.
I have no idea how much of this number belongs to durian but I know palm oil will be a significant chunk since Malaysia is the second largest exporter of palm oil in the world. I have a number of friends who believe that durian is that next catalyst for land prices. Well, if only they told me like 10 years earlier? Haha.

10 years ago, a few friends and myself went to view a durian and rubber plantation in Balik Pulau, Penang. It was an 11-acre land planted with durians and rubber trees. The owner who was already old said that he does not want to take care of it anymore and prefers cash instead. He wanted to sell it for RM1.5 million if I remembered correctly. That’s just RM3.10 per sq ft for a land which is ALREADY planted and the trees were already over 25 – 50 years old. The only downside was that the land was not a flat one but a sloping one.

We wanted to buy but NONE of us wanted to take care of it full-time. Sigh… my friends and I did not proceed then. Else, I think today we could have sold that same plot of land for much higher than RM1.5 million, right? Yes, we had good durians when we visited the farm. Hor Lor, Ang Her etc… It seems that the agricultural land will have a good time in 2020.

Article in edgeprop.my here.
 Savills Malaysia managing director Paul Khong said that agricultural land value is expected to grow in 2020 because of ongoing “durian delirium.”  (Delirium means wild excitement… wow)  He said that agricultural land value barely rose by 10% since 2014 even with the palm oil prices approaching record highs. Now with durians, he said, “Smaller parcels of land have also attracted wide interest from durian planters, supporting an anticipated uptick in value.” This was among the seven property predictions by Savills for Malaysia in 2020.

Savills director of Estate Agency Kevin Goh also said that the property market will not crash, even if it’s been down for nearly 6 years now. For the past 6 years, he said, “Over the period, more than 1.32 million residential properties have been sold, the Gross Domestic Product (GDP) grew annually between 4.5%-6.0% and the population continues to grow at 1.4% per annum. The market will not crash because it has been allowed to weaken gradually, and there is still an abundance of potential buyers, with relatively inexpensive end-financing available for those who qualify.” Please refer to the full
Article in edgeprop.my here.

If Kevin’s forecast is correct, that the property market will not crash, that’s good news yeah. As for durians, let us also be grounded to the fact that lovers of durian is definitely more than supply. However, just like property, there’s that factor of affordability which meant that there’s no way that durian prices can reach the clouds or the sky. In other words, if the yields continue to make sense, we could buy.

However, if the assumption is that durian prices have no ceiling price, then that’s called speculation. And durian prices definitely have a ceiling because when every piece of land which is now planted with durians mature, then the supply will also increase. Everyone will continue to consume more and more as long as they could afford the prices. As for the thought that Chinese consumers will keep paying ever higher prices for it, just remember that all these depend on supply and it does NOT necessary be supply from Malaysia alone yeah. Happy understanding.

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Pandemic of the unvaccinated. Be aware and beware!

I am happy that Malaysia is now one of the countries in the top of the list for total vaccinations for her people. This is why majority of all cases does not require hospitalisations and subsequently ICU. Want some actual numbers? Here’s that report
from ourworldindata.org

Mask is COMPULSORY please

I am also happy that Malaysia continues to require that everyone wears mask when they are at public places regardless of whether they are vaccinated or not. In fact, the unvaccinated are not allowed the same flexibilities given to the vaccinated. I hope this continues until a time when the other advanced countries could show that they are okay without the masks. As of now, NONE of them are showing it.

Pandemic of the unvaccinated

In fact, the famous term, ‘Pandemic of the unvaccinated’ seems to be on the way back in many of these countries. Please be reminded that vaccinations do not guarantee non-infection. However, with vaccinations come protection from hospitalization and subsequently admittance into the ICU. Here are some latest news we need to be aware and beware too.

Article in theborneopost.com
  Germany’s Heath Minister Jens Spahn said that Germany is experiencing a “massive” pandemic of the unvaccinated. He was asking for curbs targeting those not inoculated to tame a resurgence in Covid cases.

He said, “We are currently experiencing mainly a pandemic of the unvaccinated and it is massive.” He alsowarned that “in some regions in Germany intensive care beds are running out again.” Do read how serious the issue is for the unvaccinated here:
Article in theborneopost.com

Article in idahostatesman.com
  As of Wednesday, there were 834,490 Idahoans who are fully vaccinated. Of those, 14,619 have experienced a breakthrough case, which accounts for 1.75% of Idaho’s fully vaccinated population. Do read the full article here:
Article in idahostatesman.com

Article in straitstimes.com

 Senior Minister of State for Health Janil Puthucheary said Covid-19 continue the affect the unvaccinated disproportionately, especially the elderly. He shared that 60 unvaccinated seniors get Covid-19 every day, six likely to end up in ICU.

He also shared that even for those who were infected and recovered, if they are unvaccinated, the risk of them getting infected are higher too.  Please refer to the article for full details:
Article in straitstimes.com

Still think vaccination is some conspiracy? (or politically connected like some people from some countries?)

Whatever one thinks is up to the individual lah. I do not think it is proper to force anyone to get vaccinated by using law. Just that this person also need to know that it’s also not proper for you to be around anyone who has been fully vaccinated because the unvaccinated are more likely to be infected (refer above) and more likely to infect everyone else. Risking oneself because one is unvaccinated is the unvaccinated’s right but risking others is not right.

I wrote before and I repeat. If you are a teacher, please do NOT teach my kids! If you are a nurse, do NOT be at the hospital which I will be going to. Your request is for the vaccinated not to force you to be vaccinated. Fine. My request as the vaccinated is for you NOT to be around the vaccinated. Let’s leave each other alone. Thank you and I hope all would be okay for all the unvaccinated too.

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Pangkor has more to offer and not just to buy duty-free cigarettes yeah.

When I was still young, I visited Pangkor Island at least once yearly. Reason? The sea was a much clearer one compared to Teluk Batik beach which I go 2-3 times a year, at least. Teluk Batik beach or even Pangkor island is in Perak by the way. Why do I go Teluk Batik? My father’s hometown is Sitiawan. The other reason to go Pangkor? Seafood was fresh and there were some tourist attractions such as a Dutch Fort, a replica of the Great Wall of China (not available anymore), hiking and many other simple stuffs. Everyone, do you know that beginning 1st January 2020, Pangkor Island is now a duty-free island?

Article in nst.com.my
  Perak state Tourism, Arts and Culture Committee chairman Tan Kar Hing said that Pulau Pangkor’s new duty-free island status will encourage more tourists to visit the island resort. He also shared that tourist arrivals to Pulau Pangkor had declined for the last 5 years but this should change soon. He said, “We view Pulau Pangkor’s new duty-free status as an interesting development. We expect it will help the island to regain its popularity.”

Tan also said that the Perak government will invite the private sector to build a shopping mall and a three-star hotel on the island. Besides that, the state government has plans to upgrade the ferry services to cater to more passengers besides the island’s iconic pink taxis. Please do refer to the
Article in nst.com.my

Actually, I have not visited it for some time already, probably a few years though I continue to visit Sitiawan periodically. There’s now a reason to visit; duty-free status. HOWEVER, if we are to promote Pangkor island only for duty-free cigarettes for example, then I think it will soon become forgotten…

It would be good if there are more details about the number of tourists to Pangkor island today and whether it will be enough to sustain visits to the mall versus ensuring there are immediately availability of shops selling duty-free goods first. As for the 3-star hotel, are there studies being done to show the potential tourist arrivals and whether they have enough things to do in Pangkor island that they have to stay overnight?

The reason is because there are already plenty of accommodation just a ferry trip away from Pangkor island. Everyone needs to be aware that property development needs to be based on need and needs to be sustainable. It is never the building which is hard, it is the maintaining and growing which is much harder. Happy visiting yeah. I will, soon.

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Header image from
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Pangong Tso is that lake where there’s border dispute between China and India.

I think the world prefers that every country respects one another and does not go and do something which jeopardises the peace between them and more countries surrounding them. Recently, there was this deadly clash between the troops of China and India in June.
(click here to read details)
and there were deaths. There were no exchange of gun fires and the fight used stones and bamboo poles it seems.

*Header image by Chetan from pexels.com:
https://www.pexels.com/@chethanhope

A few days ago, this confrontation has happened again.
Click here to read the latest news.
Let’s hope everything will cool down and both sides will do the talking instead of the fighting. Both are Asian nations and both are the top 2 most populated nations. China is currently the second largest economy while India, based on estimation will be
number 5 largest economy as early as 2023. (click here for the projection)

Do we want to know where is this dispute? Not going into some historical lessons but perhaps some photos of the place where the disputes happen? It’s a lake by the name of Pangong Tso or Pangong Lake. It is an endorheic lake in the Himalayas situated at an elevation of 4,225 m. It is 134 km long and extends from Ladakh, India to the Tibetan Autonomous Region, China. Approximately 60% of the length of the lake lies within the Tibetan Autonomous Region. (source: Wiki)

Images below are images of Pangong Tso lake. Source is indicated too. Please do visit those pages for even more awesome images yeah.

Image source:
https://www.thelandofsnows.com/pangong-tso/

Image source:
https://travel.earth/pangong-tso-lake-must-visit/

Image source:
https://scoutmytrip.com/blog/explore-ladakh-lakes/

If only this is a place which is jointly promoted by both countries, then it would be such a wow. I know, just a wish perhaps. Well, visits are actually possible but of course there’s that possibility of clashes plus currently, India is still trying to contain the Covid-19 pandemic. Based on numbers, it will take a little more time. Vaccines would definitely help tremendously and India actually have plans for it. Their very own vaccine
may be ready by year end. (click to read here)
  Happy appreciating nature.

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