No matter how much we save, it may not be enough. (anymore)

When I started working, my parents told me that savings is important. I think they hoped I could save more instead of spending it all away. They saved a lot because they know they have to get ready for the family’s future; my brother, my sister and I. Both were educators. Well, their savings ensured all three of us have enough to eat, enough daily allowances and enough for all three of us to complete our studies. They spent the most for me, sigh… My sister was a sportswoman, so she got student scholarships all the way until she finished her Diploma. My brother got into an Engineering matriculation programme. Both got PTPTN after that and both have FULLY REPAID their PTPTN loans. Both are responsible Malaysians, regardless of the government of the day. Coming back to savings, it seems that Malaysians are saving less.

Article in theedgemarkets.com
  Malaysians are saving less. The growth pace of individual savings weakened in 2017 compared to previous years. Sunway University Business School professor of economics Dr Yeah Kim Leng said the rising household debt-to-gross domestic product ratio was a contributing factor to the declining savings. He said, “When household debt goes up, you can expect savings and fixed deposit balances to decline as there would be less income available for savings, and [monthly income] would instead go towards financing assets that include property investments.”

Socioeconomic Research Centre executive director Lee Heng Guie said the weaker growth rate of savings could be that some had to repay debts using their savings. Lee said the pickup in savings was seen from 2011-2012, likely due to the normalisation of the overnight policy rate. He said, “After the 2008 global financial crisis, the central bank slashed the interest rate, and this started to normalise from 2010 onwards. So the role of interest rates is an important factor here especially for pensioners when deciding where to put their money.”   UOB Malaysia senior economist Julia Goh also said the growth rate of household savings has also been a decline. “The compound annual growth rate (CAGR) of household savings declined from a growth rate of 7% in the periods of 2000 to 2005 and 2006 to 2010, to 6% in 2011 to 2016,” she said.
Article in theedgemarkets.com

It’s hard to save more, these days. Let’s talk about those who actually could save IF ONLY they did not buy that new handbag, that new handphone or that weekly trips to the cafe for a RM15 latte. Actually, what the stats continue to tell us is that the disparity in income will likely become wider
everywhere in the world. Earlier article here.
Those who could somehow save and use that savings to invest for higher returns will likely be better off many years in the future compared to those who did not save at all. Whether it’s an investment into equity for
good returns at low management fee (click here)
or buying a property and let it increase in price slowly, all these will help us even as the savings rate continue to decline. Better understand it and start earlier. Starting LATER will come sooner than we thought. Happy understanding.

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News article summarised by Dina Batrisyia. Article written and edited by Charles.

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No more cruise ships into Malaysia with immediate effect.

There’s little need to guess why cruise ships are now banned from coming to Malaysia. It’s Covid-19.  Malaysia has already banned visitors from some regions in Japan, Iran and Italy too. Usually these arrive via flights. Yes, this will definitely affect tourism industry but I think for now, this is definitely necessary. When I was in 1 Utama mall yesterday, we realised that the number of cars in the car park were far fewer than usual. Many may have chosen to just stay at home instead.

Article in thestar.com.my
 With immediate effect, ALL cruise ships into Malaysia is no longer allowed to enter into any ports in Malaysia. This is as per instruction from the Health Ministry and Transport Ministry. Penang Port Commission issued a circular to ship owners, agents, vessel owners, port authorities and terminal operators, citing the ministries which said all cruise vessels are temporarily restricted from entering any Malaysian port until further notice. Port Klang Authority (PKA), also issued a similar statement and said that this temporary measure was necessary.

Malaysia is not alone in banning cruise ships. We join countries like Taiwan, Hong Kong and Japan which has done the same. Penang port recorded 354,507 passengers in 2018. It increased to 449,885 passengers in 2019. Port Klang received 360,000 passenger in 2019 versus 300,000 the year before. Total number of Covid-19 cases is 93, with 10 new cases on 7th March 2020.
Article in thestar.com.my

Yeah, I think it’s better to be safer than to be sorry later. Statistically, based on fatality, COVID-19 is nowhere near the influenza which is expected to kill hundreds of thousands of people in the world this year alone.
(Refer here for World Health Organisation (WHO) statement)
 However, one reason this is feared more is because there are at present no vaccines for it. There were news that vaccines have reached the trial stage but until it is officially ready, people will continue to fear it tremendously. Hopefully no kopiandproperty.com readers are reading this on a cruise. May all of us be safe from COVID-19 soonest possible.

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No more single market? Well, that’s to be expected.

It has been some time that I have not written about Brexit. I think the UK’s Prime Minister Theresa May is still having a hard time because she is aiming for a ‘winning’ negotiation while disagreeing to agree to European Union’s (EU)terms. I still think it’s a wrong decision even if this is voted by the majority. Just a reminder that majority are easily swayed and need not all be experts in all fields. This week, another sign that it will be a tough time in the near future for Britain. Japanese MNCs in Britain are worried that their access to the single market will be threatened and has plans to move back into European Union. Move back because they are currently based in Britain and Britain would no longer be part of European Union, remember? Fortunately, that consideration will happen only after the UK completes its ‘divorce’ with European Union. The two quoted ones? Japan’s largest car-maker and a major finance firm; Toyota and Bank of Tokyo-Mitsubishi UFJ. Here’s that article in
dw.com: Brexit: Japanese companies set to leave London.

In terms of the actual negotiation, there are already many parties which are urging for a tough stance. Sort of like, ‘if you disagree to our terms, we disagree to your requests.’ Nothing wrong with such a statement actually. Here’s that
 article in cnbc.com: German industry leader calls for strict and very serious Brexit talks, detail from the UK
Anyway, this is not the first one. Oh yeah, there are actually more jobs created currently in the UK. There is even a department called “Department for Exiting European Union” I guess the UK is taking this very seriously. I just wonder what will happen to these staffs after the exit is completed. Fortunately, this is not likely within the next 3 years. Beyond Germany, this is what France is saying.
“Paris will overtake London in 10 years where financial sector is concerned.”
 In other words, should London remain within the EU, then Paris would always be second or third since I think Frankfurt is already a leading financial centre today.

Another measure assuming the UK really do lost the single market access would be to start bilateral trade agreements with some of their European trading partners. PLUS, thinking outside Europe. So, perhaps not all is gloom and doom. It would however look very bad if the UK loses more than it gains after the split. We shall have to wait. Would a leadership change allow for the UK to change its stance perhaps? An interesting article here for some personal interpretation.
 Article in The Independent: Boris Johnson breaks with Theresa May and says UK should still send £350m to NHS after Brexit
 Boris Johnson was the man who helped to push through the Brexit vote. Happy following.

written on 16 Sept 2017

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Boosting the market? Better educate and ‘fight back’ lah

We have often read about how the government should relax some of the cooling measures and do more to boost the property market. I think Budget 2018 was not considered an awesome one when it comes to boosting the property market. From certain incentives to 100% loans and all the way to reducing duties and even leniency in approving loans, these have never stopped. The reason is because there is now an oversupply of units.
Here’s that report.

As

a working professional who had to view 30 homes before I bought my first property around 15 years ago, here’s my take about this ‘boosting the property market.’

Nearly one month ago, I received one same news article from three different Whatsapp groups. In fact, I received the 4th one just 2 weeks ago. It was a ‘bold article’ about property bubble bursting very soon and house prices falling from RM500k to RM300k. This prediction was based on an oversupply report which I have also personally written about much earlier than that ‘bold prediction’ article. Here’s my article:
Unsold units up 40 pct. Strategy ahead?

Within the next couple of days, there were so many other articles from prominent property people, all providing their views on the matter and the message is similar. Property market is slow. There are oversupply of properties which people could not afford. Developers and the government must focus on building more affordable homes. Yet, I receive NONE from any of my Whatsapp group. So, should we focus on BOOSTING the market? Frankly, no.

Regardless of who the experts are, I think we are missing one big point about the demand for property in Malaysia. Based on homeownership
numbers, 1 million civil servants do not own a home, yet.
 Based on my own survey of my friends, more than half do not yet own their own home. Probably because most of my colleagues are still young. Based on the questions I have received in kopiandproperty email, I can safely say that most of the time, the question is about whether they should buy that first property. What does this tell us? DEMAND is available. There is no need to BOOST the property market by becoming too lenient. What we need however is to tell the right side of the story so that these people needing a home and could afford one actually buys one. They should not only listen to one side of the story (which is untrue) and then decided that it’s best to wait, eventhough they could qualify for the loan. Reminder, over
70 percent of all loan approvals were approved in 2017 thus far.

Tell everyone today and please stop spreading xxxxxx news and think that it will not affect the market. Time to ‘fight back’ with more educational news perhaps. Remember, when every news first-time home buyers  receive in their Facebook and their Whatsapp are negative, will they buy? Or dare to buy? Becoming too lenient may only encourage those who already own properties to buy more properties. Serious.
First time is always the hardest.

It is not about spreading fake POSITIVE news okay. It’s about giving people the right to view both sides of the story. Today, only the negative side is shared. Did everyone know that the export numbers for October was very healthy? Did everyone know that the ringgit has stabilised since a crazy 2016 which was NOT due to export vs import but because of some stranger in some countries outside trading our currencies? Happy following and please do disagree. It’s your right and also mine too.   🙂

written on 9 Dec 2017

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No, No, Don’t buy that.

I have never gotten the services of a fengshui master for any of my purchases thus far. Perhaps because I know very little, thus I do not think it is too important a factor. However, if you are buying for investment, there are some things which you may want to be aware of because it does affect you when you want to sell the place. As they say, it is true that not everyone would take negative things into account but if your target market may just be smaller if you do not pay heed to some of the no-no when you are buying the property.

T-Junction. Yes, if the house is facing a T-junction, it will be much harder to sell. I have no idea about the actual stats but if I am staying at a house facing a T-junction, I would feel uncomfortable every time I hear some vehicles moving towards my house. Would it turn in time? What if the driver was drunk? What if the brake failed? There’s just too many worries and thus even for own stay, I would rather pay a little premium to buy somewhere else.

Below the road level. My friend stays in a condo where some floors were below the road level. Every time I pass by her condo, I would tell my wife that I would not buy the units which are below the road level. There are some superstition that only ‘certain people’ are below road level. I am not so superstitious. I am more of thinking that what if the vehicles lost control and ‘flew’ into the unit? What if there’s a landslide and my unit is below the road level? Besides that, if I am looking up and I can’t see what’s above me but there’s sound of vehicles passing by, I would feel uncomfortable.

Beside a steep slope. I do not believe there’s any engineer who can stop the powers of nature. Even if it was promised by the top developer in the world. The reason is because, perhaps for the first few years, it may be okay but what about maintenance? What about continuous inspection? What about the other developments nearby which DID NOT follow the regulations and caused the shifting of structures due to an activity which is many hundreds of metres away?

Electric grids. Everytime I drive pass areas with lots of high tension cabels, I always feel insecure. Maybe due to the too many movies that I have watched and how one jolt of that electricity would just BBQ me alive. Yes, it is much higher than the unit. Yes, it may be 500 metres away. Yes, there are security walls to prevent anyone from going in. If I worry, it means anyone who cares for his life or health would worry. Anyone with kids would worry. There may not be any conclusive studies that staying near these places would cause any health problems but why do you want to buy when majority of all other places have no such worry?

Cemetery. If you can’t see it, I think still acceptable. However, if it is right next to your project, think twice, or thrice. Okay, if it is for own stay and you really have zero issues, fine, just buy. However, if you should be buying for investment, then be wary that your future buyers would be thinking thrice as well. Some may not even want to view the place. Of course, here’s my personal experience
buying properties nearby cemeteries.

Haunted. I wrote about this topic before. You can read it here:
Buying Haunted Properties
. If you do not know and you do not feel anything, then it is okay. However, if you feel anything at all, anything that you can’t see but can feel, please back out. There’s no guarantee that your feeling may not be real. This is why I always say, use Agents whom you are familiar with or recommended by your friend etc. I think the chances that they try to sell you a haunted place is far lower. Remember, when you need to sell a haunted place, it will be tough.

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written on 5 April 2014.

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No. No longer just ant vs grasshopper story

The Ant and the Grasshopper.

If you like to know what’s the ant and grasshopper story, this is the story of the hardworking ant and the lazy grasshopper. The ant works hard everyday, saving up food for the coming winter. Grasshopper did not because food was still aplenty. When winter arrives, the ant has enough food to last the whole winter. Depending on which version you were told, the grasshopper died of hunger or the grasshopper got a reprieve because the ant gave it just enough food to last the winter and when the new season came, the grasshopper also work hard to store food for the next winter.

Got savings or No savings.

In real life, this happens all the time and in all countries. Please stop thinking that this happens only in Malaysia. Within the same graduating class, we will see people who could save a lot of their monthly salary and after a few years, they would have built up a substantial amount in their bank. At the same time, they would have peers who did not have much savings, relied on credit cards and some may even face the potential to become a bankrupt once their financial issues spiral out of control. Earlier
 article on bankruptcy here. It’s harder to become a bankrupt.

Savings alone is no longer enough.

Sorry to tell everyone this fact. Statistically, we have been working almost the same number of years in the 60s, 70s, 80s and today. We graduate at 23, we work until 55 or 56, roughly 30 plus years. So, if we have saved for the last 30 plus years diligently, then our savings would have been enough if we only need it to last the next 10 plus years.

Life expectancy for Malaysians used to be in the 60s during the 60s and 70s. Today, though we are still working for almost similar number of years, our life expectancy is close to 80. In other words, our savings for 30 years plus will need to be enough for 25 years… Close to 1 versus 1. Do we believe the RM100 we saved when we started working will still be equivalent to RM100 when we retire? Or that the FD rate would help this RM100 to be enough? I have no idea but I think everyone has to realise that just saving diligently is no longer enough.

Beyond savings?

Understanding the actual life-cyle to prepare for retirement:
Earning, Saving, Investing and Preserving.
 In brief, it involves keep upgrading ourselves so that the salary we earn will go higher every year. It involves saving enough so that we can start investing. Just remember investing is not speculating and is not trading and is not buying. Read more to understand what investment really meant. We also need to protect and preserve what we have versus sudden unforeseen circumstances. Yes, reading kopiandproperty.com helps too.

Happy understanding that sometimes, the story then and the story today will also have to evolve. It’s no longer an ant versus a grasshopper story. Maybe the ant needs to also think of preserving the food they have so that if there are unforeseen circumstances, they still have food which was preserved and could last for more than just 1 season… Happy preparing.

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No one is buying property. Incorrect. Please also see secondary.

There are friends who told me that the property developers are all in trouble. Just look at the property market. No one is buying any property. By the way, this is not true. Do ask your friends who are in the senior management in property developers. Of course, the property buying today or even these few years are nowhere near the 2009 -2012 period. However, property transactions has been on an increasing trend since 2018.

2018 was considered a turnaround. It was the first year that property transactions rose after years of declining transactions which has started in 2013 and continued until 2017. The earlier
article with charts are here. 2019 Property Transactions and Prices in Malaysia.
 Now, as for the property transactions here in Malaysia, we need to know that primary properties (buying from developers) consist of slightly lower than 20 percent of total transactions. The rest of the transactions are all from the secondary market. Do refer to the chart below courtesy of my good friend Senior Partner of
Raine & Horne
 International Zaki + Partners Sdn Bhd. Mr Michael Geh.

In the residential
PRIMARY MARKET
, a total of 37,451 residential properties worth RM15.03 billion were recorded in 2019 compared to 31,993 units worth RM12.91 billion in 2018, showing an increase by 17.1% in volume and 16.4%. This huge double digit jump was because of the Home Ownership Campaign (HOC) in 2019.

In the residential
SECONDARY MARKET
, a total of 171,846 residential properties worth RM57.39 billion were recorded in 2019 compared to 165,392 units worth RM55.83 billion in 2018, showing an increase by 3.9% in volume and 2.8%. Secondary properties are those which we buy directly from owners. This includes those from the auction market as well. It can even be units where the owners just got their units too.

This means that if we look at the overall property transactions, the total residential property transactions in the
PRIMARY MARKET
is only about
18%
whilst
82%
are from the
SECONDARY MARKET
. So now your know. Every 10 people thinking of buying a property, around 8 of them eventually bought a secondary property while 2 would prefer to buy a new property instead. Property market Malaysia is a vibrant market whether primary or secondary. The above is total for the whole of Malaysia and not just the Klang Valley.

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There is no property bubble in Malaysia? Why is it so.

What is a property bubble? This is the definition by
investopedia.com:

“
A
housing bubble
 is a run-up in
housing
 prices fueled by demand, speculation and exuberance. … Speculators enter the market, further driving demand. At some point, demand decreases or stagnates at the same time supply increases, resulting in a sharp drop in prices — and the
bubble
 bursts.”  In brief, the first sign of a property bubble is actually a continuous and sharp increase in property prices. I have touched upon this in an earlier article here.
Spotting signs of a property bubble, 3points (updated)

Anyway, before we start to get worried that a property bubble is about to burst here in Malaysia, a prominent property market expert said,“We will not have a ‘bubble situation’ as we strongly believe that the fundamentals are still there.” He is CBRE-WTW Managing Director Foo Gee Jen.

He explained further, “Overall in the market, we have not seen any panic selling happening in Malaysia. Oversupply issues are also prevalent only in certain sub-locations such as in Cyberjaya, where there are concerns over many empty units there.” Besides that he shared that landed homes are still seeing a healthy take up rate of 65-70 percent which means that the
demand is positive for this type of properties.

Besides that, the market has been supported by the actions from the authorities. Some of these cooling measures include RESPONSIBLE lending and even Real Property Gains Tax (RPGT). Beyond that, the most recent one would be the limitations on the ban of
new condos and offices worth at least RM1 million.

Foo shared also that Malaysia’sproperty market will be flat in 2018. Foo also explained that, “for the last three years, pricing has moderated about five to eight percent, which we believe is in line with the salary increment of five to six percent during the period.” Foo’s parting statement is a very good one. “Ten years ago we had an oversupply of low-cost houses. Not because there is no demand, but because of mismatch of location. So this is the situation that we are facing. Therefore I urge PR1MA and the rest of the agencies to carry out proper feasibility studies before they launch their products,” he said, adding that some of the residences houses are situated in areas far from infrastructure.”
(THIS IS VERY TRUE. Build quality ones, not just focus on quantity…. Not just for PR1MA but also ALL STATE governments too)
The full article in PropertyHunter here.

Incomes must rise before property prices could, else affordability is capped. However, this is not usually the case else, the median affordability index would not keep showing a continuous increase. Here’s an earlier article:
Median Income vs Property Prices
.

Besides all these, I think it is worth noting that Bank Negara continues to also try and drive the market’s direction with their available stats. One recent one here:

Bank Negara’s 6 policy options. I like them all

Whether a flat market is bad or good depends on where we are looking at it from. 🙂   For buyers, this is still a good time.   For sellers, well, if you have identified another potentially good buy, then it is still okay. For the over-stretched property owners, then it’s not that awesome. Please remember that for properties which have been completed and still unsold, it may take some time to clear them. Happy following and well, I am on his side when it comes to the question of whether a property bubble is about to burst or not.

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written on 22 Jan 2018

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No rumour, No speculation, Pudu Prison for Eco World, KWSP

UDA has announced that the development of Pudu Prison will be undertaken by a consortium of UDA, Eco World and KWSP. The development would be known as Bukit Bintang City Centre. UDA will hold 40%, Eco World 40% and KWSP 20%. The choice of Eco World was due to its good track record. The development consisting of over 5 million square feet would include commercial, office and residential development. The development will start early next year. This is a good announcement indeed as with Eco World, the project would definitely be of a certain standard and stature. No further details were available on the potential pricing for the residential project though.

I think many potential investors would be waiting for more details of this huge development in such a prime piece of land in the city centre. A check on some of the latest listings for Bukit Bintang in Iproperty revealed that the price per sf is at a minimum of RM1,100 today. Please refer to the image for further details. I do not think the launching price for the residential component would be lesser than this current benchmark. Furthermore, Eco World has many loyal followers and thus there should be queues few days before the project opens? Hmm..  market is supposed to be slow for 2014 but when a good deal comes along, we can see the power of demand.

GDV is RM7 billion and the retail mall would have 1 million sq ft rental space, similar to Suria KLCC. This redevelopment of the Pudu Prison is also part of the Economic Transformation programme to turn Klang Valley into Greater Kuala Lumpur economic district. The role of Eco World is very clear and I think for EPF, it would be supporting the project financially. This is especially due to the huge development cost involved.

Written on 24 June 2014

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No SST on building materials does not mean lower home prices.

A friend rushed to complete his home purchase before GST started. He did not manage to do it in time. Here’s that earlier article:
Oh dear, I missed the GST deadline to buy property

Well, the story of GST has ended. In fact, this happened when GST ended and SST yet to start.
People are simply buying! Not everyone needs new cars right?

The rush to buy a car was real because within a Whatsapp group I was in, one was happy she bought a new car before SST and one was unhappy because he bought a car just before the GE14. Anyway, the point remains the same. Was the car really necessary in the first place with or without the GST.  If the answer is yes, then it’s a purchase based on needs. If the answer is no, then one has just overspent money which could have been invested. 😛

Here’s that article about how even if building materials are to be exempted from Sales and Services Tax (SST), prices of home may NOT becoming down. This is a remark from our Housing and Local Government (KPKT) Deputy Minister Raja Kamarul Bahrin Shah. His actual sentence, Cement [bricks] and steel will be exempted from SST and I was asked how many percent would the house prices come down yesterday.  But this is impossible for me to answer because although we are lowering the prices for these materials, the cost [of building homes] can be increased by the rising cost of other components, such as land prices, development charges and compliance cost.” Raja Kamarul also shared this, We also need to look at having a central database in distributing the affordable and general houses because there are still first time home buyers missing out.”
Here’s that article in Edgeprop.my

I think his remarks can be said to be a fair one.  Unless all the costs are on the way down, the prices would not be trending downwards, right?  Actually, materials are just one part. The construction method is another component which can help the overall cost to drop tremendously. Instead of the usual 3 years, how about halving the time needed to build them. How about the state governments become many times more efficient than today. Why must it take months and months for approvals? All these may be just time but to the developers, time is money. If they can realise their profits in shorter periods of time, they would not need to be cost this into the final price of the home. Anyway, remember the Build Then Sell that was once touted as a game-changer.  This Build Then Sell concept can only come true when all parties work together. Homes are completed in 12 months instead of 3 years.  If a developer has to stretch his construction to three years, many would have collapsed with the Build Then Sell concept. Imagine if the time from land acquisition to construction can be within weeks? Happy understanding.

written on 14 Aug 2018

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No transactions, no changes in prices lah.

Last year (okay, only a few weeks back), a friend in Penang said, “Charles, you see lah, the property market is so slow, yet the property prices still show an increase. Makes sense kah? I think this figure is not real. Just look at all those advertisements, some condos are showing nothing less than 20 percent drop in asking prices.” He even told me the name of the said condo. 🙂  Anyway, I shared with him that
dropping prices, especially for condos
 in certain areas are quite real. It is true even when those condos are nearby some established neighbourhoods. However, there are still areas where the condo prices have not moved much and there are certainly areas where the prices are still inching upwards. Yes, I shared with him some names too. Below would be my answer based on just numbers yeah.

Source:
https://sbhshgovapmacro.wordpress.com/category/determinants/

Everyone should note that the median property prices, whether up or down depends on the actual transactions and not the advertised selling price. This is why the price would usually inch upwards even if the total transactions are not really moving up. This is true for all countries, usually unless there are some special circumstances. For example, owners seldom sell lower (If you are the owner, would you sell lower unless you have no choice?) and buyers are more prone to buy in mature neighbourhoods. (This is why

hotspots are usually premium priced
)  In brief, assuming there are 10,000 homes in the mature neighbourhood (some favourite hotspot whether in Penang or KL), how many units would be up for sale at the same time? Perhaps 50 units? (SUPPLY) Well, how many would want to buy into that same area? (DEMAND) Surely more than 50. Demand vs Supply, it always show in the final transacted price; who is more powerful, the seller or the buyer…  That’s the reason why the Demand vs Supply chart is a famous one.
Here’s a brief explanation in WIKI.
As for the image, take a look at the left side.

When supply increases and the demand follows, the prices would continue along the same line. If the demand slows down and the supply increases, then the prices would drop. Of course, this assumes everyone is rational and everything is perfectly ‘competitive.’ In real life, this seldom happen. That’s why there are areas which will move up much faster than the less favourable ones.

Ask the PJ folks

or even ask the real
Penangites and you would understand my meaning
.

Of course, these days, the number of non-Penangites in Penang as well as new migrants into Greater KL is increasing at a very fast pace. Not everyone may think so highly of some traditionally favoured areas and many may not be able to afford too. That explains the growth of new areas and why some huge developers are into areas over 30km away from KL city centre today. Happy following.

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written on 29 Jan 2018

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No violations, paid extra for breathtaking view and change of developer

In Penang it was recently reported in The Malay Mail (14 July) that one proposed high-density project in Taman Casa Permai, Tanjung Bunga does not violate Penang Hill’s development guideline and thus will proceed as planned. This was clarified by the state executive councillor Jagdeep Singh Deo who said he has already checked the project plan submitted and found that the project does not violate the height limitation. If it violated the height limitation, it would never be approved. In fact Penang’s guidelines are tighter than the national guidelines which allow hill developments up to 150m or 500 ft height. The developer concerned is Hunza Properties (North) Sdn Bhd who took over the project from Boon Siew Group (BSG). A total of 270 condominiums would be built there, together with a six storey car park. Each unit of the condo would be sold at RM2 million.

The residents also said that when they bought their property in 2006, BSG promised them that there would be no further developments. That was why they paid extra for their units. I seriously hope that this clause is in black and white between the developer and the residents. However, even if it is in black and white, it should be stating that the land could not be sold to other parties. Or else, even if BSG said they will not build, it did not explicitly agreed that other developers buying the land from them would not. It is definitely not the fault of Hunza in this case when all it did was to buy the land, submit the necessary requirements and gotten approval for them. As for Boon Siew Group, it would depend on what was signed then.

Another thing is that buyers must also be aware that promises such as ‘breathtaking seaview’ from your balcony is just that. It is not ‘breathtaking sea view FOREVER’ Promises such as ‘right next to a secondary forest’ does not mean that the forest would be there FOREVER. Another promise is the ‘travelling time of just 5 minutes to city centre’. Typically they would tell you this is based on the best traffic situation; NO jams. Always note that it is developer’s fault if they put it in black and white and they did not fulfill their responsibilities. However, if it is not in black and white, going to your assemblymen is not going to help. As a buyer, we must always be very clear and know that developers are building for profit and no developer would be willing to forego any huge profit when the opportunity arises.

written on 27 July 2014

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Nomura and RHB, their likes and downgrades.

In this article you will learn a lot about some stocks you can buy and some stocks you may want to think twice before buying. As reported in a local English daily, below is a summary. The research is by Nomura Research as well as RHB Research. First of all, I do not own any property stocks currently. The very last one I bought was a few years ago but I sold it off after 6 months for a profit of less than RM200. Haha. However, if there are any property stocks in Malaysia which is said to be ASEAN’s top pick, I must write and share, just in case some of you missed this. According to Nomura Research’s ASEAN property yield picks, Mah Sing Group Bhd is their top pick because of above-average yields and dividend growth in 2015 and 2016. It’s ranked top out of 28 property stocks and REITS in the region. Basically, the 2015 forecast dividend yields MUST be higher than the market’s as well as the sovereign 10-year bond yield, and that the dividend per share (DPS) or unit (DPU) is projected to grow faster than the market in 2015 and 2016 forecasts. In short, if you are looking for a stock which will give you higher returns compared to the overall average market yield, then Mah Sing is your top pick.

Okay, next stock you can think of would be the Sunway Reit. It fulfills the two conditions above BUT, it’s current share price has already factored in this growth. In short, it’s fully valued and unless its DPS and DPU were to change, there should not be any further upside to the stock price. In comparison, Nomura said the Singapore REITS it covered has a DPU growth in 2015 and 2016 of 1.5% to 1.6%

RHB Research downgraded the Malaysian property sector to “neutral”. This is because property transaction volumes would continue to decline in 2015 even versus 2014! Yes, another 3% – 5% down. Two major reasons would be a slower growth and a high loan rejection rate. I like the fact that the loan rejection is high. I think this would put the pressure on the buyers to buy more within their means and when developer’s could not sell, at least they will think of ways to reduce the price further, somehow. Perhaps more freebies? It expects the property prices to be stagnant and it said it would be tough for developers to pass any incremental costs to the consumer. This is without any doubt because the current margins of the developers would still allow them room to absorb some minor increase or even to sell at a more attractive price by lowering their usual profit margin. Not all are bad. RHB likes Tambun Indah Land and it maintains a ‘BUY’ call on it. Next few companies were all downgraded. Eastern & Oriental, UEM Sunrise and UOA Development downgraded to ‘neutral’ with respective target prices of RM2.27, RM1.65 and RM1.84 respectively.

Oh yeah, why I do not have any property stocks today? Property stocks are cyclical in nature. The margins and the upside is also quite a certainty. Thus, if you seriously want a very stable dividend from stocks, get REITs instead. If you love Mah Sing, research all their projects, buy one which meets your expectations. These are the two reasons why I no longer own any property stocks. No right or wrong. Just personal preference. Nomura and RHB Research loves them enough to recommend them too. If they make sense, buy and reap the potential rewards in future.

written on 17 December 2014

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Problem. Some have started to stop paying their loans. Amount is RM27.86 billion.

What is Non-Performing Loan? (NPL) These are the loans which the borrowers have not been paying for 6 months or more.
BNM’s link here for reference.
  For example, our mortgage is due but we do not have the money to pay for it. We could choose not to, the banks will send a reminder and then another reminder and perhaps they may send us a notice that they will auction our house many months down the road.  They may then engage licensed auctioneers to conduct the public auction so that the property gets the highest possible price. The borrower will still get the surplus amount if any yeah.

What happens if the borrower has just failed to pay for the first few months and they have not yet reached the 6-month period? Well, these are known as gross impaired loans (GIL). While not all GIL will eventually turn into NPL but it is already a good indication of what may happen when the period for NPL classification arrives. Briefly, NPL ratio in Malaysia has remained low even by world standard but if GIL keeps increasing….

Article in themalaysianreserve.com
   Affin Hwang Investment Bank Bhd (Affin Hwang Capital) said based on a YoY basis, the outstanding gross impaired loans rose 6.5%. Based on a year-to-date, the number is up by 4%. With this, the banking system’s bad loan ratio also icnreased by 1.57% in February compared to 1.5% in December 2019. It said, “Notably, the working capital, residential property, construction and commercial property segments make up the bulk of impaired loans by ‘loan purpose’.”

The research house also said the system’s liquidity coverage ratio is at a comfortable level of 148% while the loan to fund ratio was unchanged at 83.3% in February.  As for the core earnings per share growth, there will be a contraction of 20% fYoY in 2020E. RAM Rating Services Bhd’s (RAM Ratings) said, “The common equity Tier 1 (CET-1) ratios of the banks in our sample were above 12% as at end-September 2019.  This is significantly higher than the minimum regulatory requirement of 7%.”   It’s a comprehensive article.  Please do read:
Article in themalaysianreserve.com

Super briefly, what the above is telling us is that the financial situation for many borrowers may just get worse first before it could get better. It tells us also that our banks are now facing this situation from a position of strength which gives us some assurance that it is still under control. It tells us also that the share prices of some of these major Malaysian banks are really attractive now based on their potential results for 2020, as long as what is being analysed by the analysts do not become much worse.

Let’s google for some reference. Think of a bank you love. Say Maybank?  Type in “Maybank share price.” The numbers will give us a guide of their share price versus the dividend yield for example. That number; dividend yield may just be much higher than Fixed Deposit rates today. Buying some undervalued shares with extra money may be a good decision when sentiment turns positive. Example?

If you buy a 1,000 units of a RM10 bank stock. That’s RM10,000 in price paid.  It’s dividend yield is 8% which means we will get RM800 at the end of their financial year which is great because RM800 is still more than double the FD rate.  However, if the stock price rises by just RM2 because the sentiment turned, if you were to sell the 1,000 units of shares, it will give you RM2,000 profits. Of course you should sell versus waiting for the dividends… right? 😛  Happy following.

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When Non-Performing Loan (NPL) is high, we need to be worried

What is Non-Performing Loan (NPL)?

Investopedia says this about Non-Performing Loan. “A non-performing loan (NPL) is a loan in which the borrower is default and hasn’t made any scheduled payments of principal or interest for some time. In banking, commercial loans are considered nonperforming if the borrower is 90 days past due.”

In Malaysia, Non Performing Loans (NPLs) are defined
as loans overdue for more than 90 days
. Below is a chart from
ceicdata.com
 NPLs in Malaysia has been on a downtrend as Bank Negara Malaysia (BNM) wants the banks to be responsible with their lending.

Meanwhile the banks become conservative and only loan to the ones who really qualifies for the loan. Actually, in 1998 the NPL was higher than 10%. I think it was as high as 16%. We do have a positive situation here in Malaysia. The NPLs are now below 2%.

Now for the question, how high is considered high?

Generally, above 10% would be considered unhealthy. Banks may be reluctant to lend if their NPL number is more than 10%. However, I consider anything above 5% to start to be alarming. Let’s look at some of the more advanced economies and their numbers. Indonesia is included too because this will be the economy to focus on as one of the largest economies of the world by 2030.

Australia has about 1.1% in NPL. (Chart Below)

Australia’s NPL was highest in 2010 / 2011 and has continued to be dropping since then.

Meanwhile the European Union as a group has NPL number which is twice that of Malaysia. (Chart below)

European Union’s NPL numbers rose to its highest point in 2012 and has been on a reducing trend since then.

Hong Kong SAR’s NPL was highest in the year 2000 and this has been on a reducing trend since then and is oday below 1%. (chart below)

We can also see that Indonesia’s NPL is also on a downtrend when compared to 2006 / 2007. It’s currently around 3.2%. (Chart below)

Singapore’s NPL meanwhile has always been rather low and is currently at around 1.3% which is slightly lower than Malaysia’s NPL

United States has the same NPL % as Malaysia too.  They are at 1.6% and has been usually hovering higher than 2%. They were highest in 2010 and this was just after the 2008 Mortgage Crisis which was because of the real estate lending. (Chart below)

Conclusion

I do hope our BNM remains very vigilant to ensure our Non-Performing Loan numbers remain low. As for the question of whether the NPL is high, actually the answer is very subjective. Can see from many perspectives. Compared to some of these advanced economies, we are doing okay lah. Not that high actually. So, for now, it is safe to continue scouting for properties and continue to buy. The bank would not simply approve your loan application anyway. Cheers.

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Header Image by
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Non Performing Loan – Still safe or danger on the horizon?

Negative news sell. Positive news less. I know because all the negative news writeups are more popular than all the good news. For example, the articles on crisis will beat the articles about Malaysia being ranked more competitive etc. Thus, that’s why newspapers love to use negative news as headlines too. As long as it is done objectively, I think it’s good. For example, a recent article which said that with the potentially higher interest in the years ahead and higher cost of living, Malaysians may find themselves in danger due to their current debt position. Some reasons given are that many may not be ready with unforeseen circumstances such as loss of jobs or health emergencies. In fact for majority of the people, they are spending most of their incomes just to pay their loans. Hands up, who falls into this category? The statistics show that the debt-service-ratio of households in Malaysia stood at 43.5%. The typical acceptable level of debt-service-ratio is up to 30%. Major reason? SPENDING MORE THAN THEY OWN.

Honestly, this situation is not just in Malaysia but also the world. Creature comfort goods are wanted but somehow many does not seem to buy within their means. When people think about LCD TVs, they think about 40 inch LED RM2,000 or higher ones instead of the 32 inch LCD ones for RM999. Instead of a 6kg washing machine for RM600, they think they are saving more by buying a 10kg washing machine at one go at RM1,400. There are even those who think that by buying a VIOS, they are saving on petrol which is utterly rubbish because based on calculations, even if you drive for 10 years, you would still not save enough to beat my trusted Proton Persona. (7.4km/100km) today. Is it because of ONLY low salaries? Or it has to do more with the mindset? A mindset which wants to be ahead of everyone else but yet could not yet afford it? A mindset where, since I cannot pay for it once and for all, I can still pay for it by instalment, even for a new refrigerator?

I think it’s important that everyone be very honest with themselves. Be objective when you buy. It was said that all the fresh grads are starting with low pays. This is true even during my times but if you are willing to learn and work hard, soon you will start to be heads and shoulders above the rest. The structure of the company is a pyramid which meant that not everyone would be promoted. Only the better ones would and from these better ones, some would then go further up to the senior management category. Many aspire to start their own business but majority of these businesses fail in the process and only the few good ones continue to be bigger and more profitable. I seriously think majority of the time, it is not just based on the income but the mindset of the people. Are we thinking like the wealthy? Who buys via cash instead of credit? If we are, let’s become one. Save enough, buy one on cash. Are we doing like the wealthy? Living below what they earn? If we are, then do not splash on too fancy items. Somehow in a few years’ time, we may really be wealthy!

Non-Performing loans from all of us would get worse when we overspend even more. Once we settle ourselves into their category, coming out is going to be tough. Thus, danger on the horizon or rainbow after the rain is really up to us. When I first started working, I have even bought a second hand fridge and a second hand washing machine before. Both lasted me many years of good use until I sold them for a pittance. Do I feel like a loser? Sorry, not at all because the items were bought with my own money. Why should I feel bad? Want to be like wealthy people? Spend like them, buying within our means. Happy buying.

written on 24 Nov 2014

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NOÖRA at Desa ParkCity received overwhelming response and take-up rate

KUALA LUMPUR

(Nov 29, 2022):
 Property developer ParkCity Group’s first integrated development at its award-winning township of Desa ParkCity in Kuala Lumpur has received overwhelming response with 73% of its residential units taken up at its Priority Sales event over the weekend of Nov 26 and 27.

The Scandinavian-themed project Noöra saw overnight queues as prospective buyers turned up as early as 4pm the day before the Priority Sales event held for those who had registered their interest earlier. There were similar scenes at previous project launches at Desa ParkCity in the past, testament to the township’s enduring popularity among property buyers and investors.

Noöra is located on a 6.63-acre freehold plot on the southern fringes of Desa ParkCity. With a projected gross development value of RM1 billion, the project features 1,156 residential suites within two 52-storey towers, and a 50,000 sq ft retail podium.

Targeted at single dwellers and young millennial families, the residential suites range in sizes from 520 sq ft to 1,282 sq ft and priced from RM900 to RM1,000 per sq ft.

Meanwhile, the retail component called Noöra Walk will be fully managed by ParkCity to best provide a curated retail experience with offerings such as co-working spaces, fitness studios, F&B outlets, grocers, and other lifestyle propositions and services. This offers Noöra residents added convenience on top of the extensive facilities within Desa ParkCity.

Living made simple and
 Noöra’s name

Noöra’s name which means light in the Scandinavian language, reflects the project’s bright and airy spaces that are designed to meet the needs of post-pandemic living.

“Following the Covid pandemic experience, most of us have realised what matters in life is not about material trappings and the single-minded accumulation of wealth. Our priorities have shifted, and we are now more appreciative of simple yet rewarding living,” said ParkCity Group CEO Datuk Joseph Lau.

“The Scandinavian ethos ticks most of the boxes when it comes to providing a simpler and more sustainable way of life,” he added.

ParkCity worked with a team made up of globally renowned architects and designers including Serie Architects (UK) and Scandinavian design advisory Liti Design to offer Noöra home buyers functional yet comfortable homes. Besides simplicity, the project’s design also emphasises sustainability and integration with nature.

The vision for Noöra is to craft an “inclusive community living” by curating and integrating spaces for co-working, co-living and co-mingling. Noöra’s communal spaces adopt the Fourth Place spatial concept where these spaces act as extensions of the homes, allowing for both personal and social activities, be they work, play or rest. The amenities at Noöra include workspaces for individual meetings, group discussions, a common kitchen, yoga decks, and a sky lounge replete with a lookout pavilion and roof garden.

“We always listen to our customers’ needs and wants. Each project in Desa ParkCity is unique. Being a part of this development means being part of a community that values wholesome community living,” said Lau.

“It is a community that feels like a family and Noöra is our latest addition to the family,” he elaborates.

A self-sustaining township

Desa ParkCity is a 473-acre self-sustaining master-planned township. Its development is guided by five pillars: FAMILY, NEIGHBOURHOOD, COMMUNITY, CONNECTIVITY and CONVENIENCE.

It boasts award-winning projects and facilities which include retail entertainment centres The Waterfront and Plaza Arkadia as well as the very popular pet-friendly Central Park. The township also features an international school and a medical centre.

ParkCity and Desa ParkCity have received multiple awards over the years including from the FIABCI World Prix d’Excellence Awards, the ULI Asia Pacific Award for Excellence, The Edge Malaysia Best Managed & Sustainable Property Awards and The Edge Malaysia’s Property Excellence Awards (TEPEA).

Among the latest accolades is The Edge Malaysia-PEPS Value Creation Excellence Award (residential category) at TEPEA 2022 for South Brooks, a condominium in Desa ParkCity.

For more information on Noöra and Desa ParkCity, visit

www.noora.com.my

-End-

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NOÖRA @ DESA PARKCITY by ParkCity Group to be launched end-Nov

Media Release: — start —

NOÖRA @ DESA PARKCITY is slated for launch in the fourth quarter of 2022 Noöra will be a 52 storey integrated development located on a 6 63 acre plot at the southern part of Desa ParkCity Noöra comprises two towers offering 1 156 residences ranging from one to three bedroom units and a dedicated retail component first residential suites development in the township that has a retail portion attached

“About 45% of the 6.6-acre site are open spaces,“ said ParkCity group director for design Azfar Sufyan at the Noöra experiential media event yesterday.

Scandinavian design is the essence of NOÖRA @ DESA PARKCITY. It provides a solution for simple living by fusing minimalism and functionality.

Most of the units integrate a proper study or work space with additional study rooms, work lofts, reading nooks and study booths available on every amenity floor. Besides the work lofts, there are communal kitchen and communal workshop to encourage social interaction.

Each Noöra unit has a built up of 520 sf to 1,282 sf and is priced from RM400,000 to RM1.4 million, with a maintenance fee of 50 sen psf.

CONVENIENCE AT YOUR DOORSTEP
The highpoint of living at Noöra would be the convenience of the retail component. With about 50 000 sq ft net lettable area spread over three floors of retail, it offers a plethora and retail experiences, including leisure, entertainment and dining options, as well as unique eateries all curated for convenience and comfort
With ParkCity retaining ownership and managing the entire retail portion this will add value to a co living environment, including services such as co working spaces, fitness studios, artisanal cafes and other F&B, and convenience stores

Please feel free to read more from the Media Kit.

— end of media release —

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Perhaps the normalisation will be pretty quick. I had to queue at…

After the Economic Recovery Plan (ERP) announcement on 5th June at 3pm by Prime Minister Tan Sri Muhyiddin Yassin, many articles immediately appear on mass media. Many experts gave their assessments. Some may be more positive, some may be more negative. Some say the ERP is focused on the SUPPLY side but does not take care of the DEMAND side. As for kopiandproperty.com, I managed to invite
Sr. Michael Geh the FIABCI President (Malaysian Chapter) to share his views too. If you like to listen and learn, click here.

Actually I think the most important thing we must start to see would be how quickly the normalisation would happen. COVID-19 is going to be around for a long time more and it is just not possible to wait until we have no COVID-19 cases before restarting. As for normalisation, someone shared photo of malls today (Sunday) and wow, there were certainly crowds. Malls are not empty, definitely. As for me, I went to buy soil. Haha. Soil as in tanah for my plants lah.

Do take a look at the image below. I think I was the number 10 in queue. This is the scene at a garden centre. Many people, all wearing masks. There were many cars and I had to park by the roadside and walk probably 100 metres in. Some of us may wonder why everyone has suddenly become so interested in gardening? By the way, gardening is not considered a necessity. At best, this is an interest.

So, now the malls have more visitors. The garden centre is full of people. This afternoon, my wife had to wait for nearly 30 minutes at a restaurant which was fully occupied (with social distancing) and so many people were waiting at the same time for their orders. All wearing face masks of course. Perhaps normalisation in Malaysia will take a much quicker time than what many people thought. If this is the case, I think we are on the right track towards economic recovery. Well, perhaps we wait for a couple more weeks to be sure. Happy understanding.

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Normalisation will take time. Cruise trips too.

I was discussing with a good friend (via Whatsapp of course and not in some cafe okay) and we were talking about normalisation after the MCO. By 10th April 2020, a final decision will come from the Health Ministry based on the numbers of new infections on the ground. I do have my thoughts but let’s leave it to the 10th. Yes, I do have built up enough fish supply to last slightly more than 14th.
Here’s where I ordered my fresh fish. Helping local fishermen too.

What we were saying was that after the MCO, people will need to get hair cuts and for ladies, they will need to go back to their favourite hair stylists! Then, both of us agreed that this will not normalise so soon. I am very sure if I see that the barber shop is full of people, I would prefer to go some other day… And in the beginning, I would definitely be wearing masks day in and day out too. Even cinemas, how many would suddenly rush to catch a movie if they saw the whole cinema was full of people and more than half were not wearing masks…  Then, I read this news about cruise ships.

Article in SCMP.com
   Cruise ships could cost over US$1 billion each but has now lost some of its appeal due to the COVID-19 pandemic. In 2019, the cruise ship industry served some 30 million passengers and this was expected to rise to 32 million in 2020.  This forecast was made before the Covid-19 pandemic. Then, we start to read of news about cruise ships which had people infected with COVID-19 and how people were disallowed to disembark while COVID-19 tests were being conducted on board.

The world’s largest cruise liner, Carnival has idled its entire fleet until at least May 2020.  NYSE-listed Carnival which owns 122 ships valued at over US$55 billion has seen its stock price dropping from US$51.90 on January 17 to US$8.80 as of April 1. Currently, Carnival is trying to find as much as US$9 billion to keep the company running for the next few months. In the last decade, cruise lines were on a building spree and there are currently 106 cruise ships on order with delivery dates from second half of 2020 till 2028. It’s a comprehensive article with lots of numbers and figures, please refer to the
Article in SCMP.com

Before the COVID-19 pandemic started, my wife has periodically reminded me that we should plan for a cruise trip. I was actually thinking of one during the school holidays but the total for a family of 4 leaves me sweating… Haha. Well, I could start saving money again. I seriously think that cruise ships will continue to serve a market for the premium travellers and this will continue after the COVID-19 pandemic is over. Perhaps the only question most of us have in our mind is, when. Added to the fact is when would the whole world’s COVID-19 pandemic be over.

Let’s be serious yeah. Even assuming Malaysia’s peak is in mid April as predicted by World Health Organisation, this does not mean Malaysians will dare to travel again right after the MCO if the whole world is still in red alert. So, yes normalisation will take some time and this happens only when the world has COVID-19 under control. This is why it is affecting the world economy. We are all linked after all… ‘It’s a small world after all…’ This was the magical song in one of those rides in Disneyland. Very true then and very true today.  Stay at home, please.

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Not a ‘business as usual’ solution. Kickstart with fiscal injection.

The RM250 billion stimulus
was announced yesterday. Article here.
  The discussion has already started in FB. Some say thank you. Some say it’s not enough. Some say it should be more detailed.  Some say where is the money going to come from? Well, how about just hear  what the Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz has to say about the state of the economy currently.

Article in malaymail.com
 Tengku Zafrul said, “I’m confident the financial system can support us as liquidity is still present in financial markets and that’s the reason why we are able to offer this huge financial package which amounts to RM250 billion.  Our fiscal position is strong and, in these three to six months, more companies will start thinking outside the box.”

Tengku Zafrul said he and everyone in the ministry were worried about the Malaysian economy. One solution to ensure the economy continues to flow is to put money in the pockets of Malaysians. Beyond this, he added, “The solution must not be a ‘business as usual’ one. The important thing to do is to kickstart the economy with fiscal injections and the package announced by the government today does just that.” Please do refer to the full
Article in malaymail.com

Monetary policy alone will not enough.
Overnight Policy Rates (OPR) has been cut. (earlier article here)
 The Statutory Reserve Requirement
(SRR) has also been lowered. (earlier article here)
 Many times, money which people may get may not be spent and instead kept in the bank instead because of the handed out may not be spent but is saved instead. We can look to Japan to understand how people kept saving even though they have already saved a lot simply because they were worried for the future.

Thus, it is important for the government to kickstart the economy through fiscal policies.  The continuation of the infrastructure projects will definitely ensure many multiplier effects to the economy.  More jobs for the contractors means more workers and these workers will also get money to spend and the economy continues to move. Hopefully we will be able to come out of this stronger. Stay home please.

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Longer repayment periods not the best answer lah.

There are many reports about the willingness of banks to lend to first-time home buyers. Most of these reports are saying that the banks have stringent loan approval process. These are so stringent that most buyers could not get their loans approved. Well, the banks are not agreeable to this assumption. Actually, in 2016, the banks were actually giving out more loans to the property market than in 2015. In other words, they are lending.
Banks are lending more to the property market; 8 percent higher than 2015
 In fact many Malaysian banks are reporting good profits during their recent quarterly report. This shows that banks are still lending. Else, there is no way that they could increase their profits.
When banks show better results, it’s a good sign

There are now calls for the bank to consider two-generation loans.
The article in freemalaysiatoday.com here.
  This is said to enable the potential buyers to be able to get their loans approved. Sorry, I disagree with this proposal. The reason is very simple. There are still plenty of choices and in fact, with the number of affordable high-rise units being built today, we should start to see a more stable market within a few years’ time. These affordable units of RM300,000 or thereabouts were built and aimed at first-time home buyers who must buy a new unit instead of

scouring the secondary market for available units.

There’s little need to debate. Just go to any major property site, search for properties within RM300,000 and we will find choices. Perhaps not the choices we want but the problem with the market today is that everyone just want to buy where everyone wants to buy. Funny but true! Anyone buying out of these usual areas would be asked,
“Your area not far away meh? Not jam meh? Why not buy in that X area, it’s more popular.”

On a longer term, compelling the banks to lend when they know it may increase their non-performing loans is not such a wise idea too. Just look at those ‘too big to fail’ banks in the advanced nations. These banks would actually be the reason for the next crisis which some say it’s not too far away. Here’s one prediction about what will happen when we spend too much. Please read:
Unsustainable spending will bring next financial crisis

By the way,
we can only spend too much when the banks keep lending. If we only spend what we have / earn, it will not affect the banks lah. Do you know how much do Malaysians owe the bank? This was a slightly earlier report.
Household debt vs GDP is now 88.4%, down from 89.1%

Besides, two-generation loans would also mean that people may think about stretching their affordable limit even more. Look at the buyers today, most of them want to buy something perfect instead of buying first and upgrade later. THe same applies for car ownership too. Once people believe they have extra money from lower repayments due to much longer repayment period, car sales would go up. I think we know… car is not an asset. My conclusion? Let’s just keep it to our generation when it comes to housing loans. Happy applying.

written on 14 June 2017

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Not all well in the printing world, will get harder?

Many reports have been written about how the internet is helping online retail sites to slowly take more market share from brick and mortar retail outlets. I personally still shop much more at malls than online sites. My favourite online site?
11street.my
 Somehow when it’s a pair of shoes, walking in it feels better than just to know if the size is right. Touching the fabric of the shirt and putting it on and then showing my wife before buying it seems more appropriate. However, the effects are real. Online media is the way of the future. Companies like
iproperty.com.my
 and
property guru.com.my
 are already valued much higher than the traditional media companies of today. If the media companies themselves are not doing well, what about companies supporting them? One has just declared that it has thrown in the towel after three years of continuous losses.

Here’s the full article in TheStar.
Malaysia’s pioneer newsprint producer to be wound up.
 The company is Malaysian Newsprint Industries Sdn Bhd. It is a regional paper manufacturer and supplier and partly owned by The New Straits Times Press (M) Bhd (NSTP) and Hong Leong Industries Bhd (HLI).  In filings with Bursa Malaysia, Media Prima Bhd and HLI said the board of their associated company MNI had on Tuesday appointed Lim San Peen of PricewaterhouseCoopers Advisory Services Sdn Bhd as the interim liquidator. (This means it will now be sold and the proceeds distributed to its share holders) As there will be loss provisions, it will have a negative impact to both Media Prima and HLI for their financial quarter ended June 30, 2017. MNI has Malaysia’s first newsprint mill. Its other owners include
Oslo-based Norske Skog and Rimbunan Hijau group.
Please do read more in TheStar article here.

A KL based friend has a printing company. Actually, she’s doing pretty well. Maybe because she supports hundreds or thousands of writers who wish to publish their books instead of a few huge customers. Maybe it’s also because she takes in all kinds of printing work. Maybe because she is okay with low margins but from lots of orders. Yes, I hope that I will be engaging her soon. Haha. My first book. Another has a printing company in Penang, no idea if he is doing well but he still owns the business. I think all businesses would face lots of headwinds. Diversification and finding new niches would be very useful for its survival. Any business that has been around for a few years are guaranteed to have competitions. Sometimes we just fail to stay ahead. Fortunately, kopiandproperty.com is still just an interest. Haha. Happy working hard everyone and keep learning and growing!

written on 1st Aug 2017

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Not an easy time for developers. Results are affected.

We occasionally read about some developers receiving some bookings when they launched their properties online even during the COVID-19 period. Frankly, even if the numbers look okay, this is still a very small representation to the whole property market. Current times are not the best times, especially for property developers. Sales galleries, even if they are open will definitely not see any huge crowd.

I do think viewing the property in a sales gallery is fine but that jittery feeling of trying not to touch anything at all when viewing will make everyone nervous. The husband reminding the wife not to touch anything or the wife asking the sales person not to stand too near them are just the usual things that would happen. Anyway, you get my idea. Soon, it should be better hopefully. Let the normalisation continue to happen.  Another developer just announced their results today.

Article in edgeprop.my here
.  GuocoLand (Malaysia) Bhd’s net loss widened to RM10.13 million for the third quarter ended March 31, 2020 (Q3FY20), from RM6.96 million a year earlier. Quarterly revenue was slightly higher, rising by 3.05% to RM98.06 million, from RM95.16 million in 3QFY19. This is helped by the higher progressive revenue earned from its on-going Emerald Hills project.

In a filing to the exchange yesterday, GuocoLand attributed the losses to higher selling and marketing expenses, administration expenses, as well as finance costs. It said, the selling and marketing expenses grew by 50.49% to RM3.54 million, from RM2.36 million a year ago, mainly due to more sales and marketing activities on its on-going projects. Guocoland said, “The group’s business operations have been impacted by the implementation of Movement Control Order by the Malaysian government in mid-March 2020, where it has inevitably disrupted its operations in the property development, property investment and hotel segment.”
Do read the full article in edgeprop.my here.

If you like to know a little about this listed property developer, just need to google yeah.  Image below on their latest share price and some vital numbers.

Highest point within the past 12 months would be 75 sen while the lowest point was 37 sen. Current price is at the middle yeah. More clarity on their actual performance would only come when the COVID-19 situation gets better. As for now, maybe can visit some of their projects and see if it’s worthwhile to buy the stock if not the property itself.  Happy visiting.

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It’s not an investment if we do not understand what we are investing into.

This is what Investopedia says about Investment vs Betting / Gambling

“In an investment, you are providing some individual or entity with funds to be put to work growing a business, starting new projects, or maintaining day-to-day revenue generation. Investments, while they can be risky, have a positive expected return. Gambles, on the other hand, are based on chance and not putting money to work. Gambles are highly risky and also have a negative expected return in most cases (e.g., at a casino).”
 (click here to read more)

Investment Scams can happen because we just do not understand

One major reason why investment related scams happen is because people do not know enough about investment itself. If someone comes to us and tells us that if we invest into the ‘scheme’ we will get returns of 1.5% per month and we believe, it meant that we are no longer investing. We are just gambling.

Why do I say so? Well, if 1.5% return is possible per month, that friend will not need to sell to us. They can sell to the banks and the banks could buy billions and billions of it. If they sell to us, we can only buy hundreds or thousands.

Banks will earn exceptional profits if the 1.5% return per month is real

Why would banks buy? Erm… Banks pay us 2% (or lower) for Fixed Deposit. If banks can earn 1.5% per month, it meant that the banks would earn exceptional profits! 1.5% x 12 = 18% returns per year. Banks only pay 2% for fixed deposits, so the banks will gain a gross 16%! Why did the bank not invest then if it’s really 1.5% per month? The reason is because banks INVEST. They should not gamble using our hard earned money.

Buying a property can also be a gamble yeah

Long time ago, there was this actual conversation.

Question: Why did you buy the property? Answer: My friend say the market is the best for buyers now.

Question: What do you intend to do with the property?   Answer:  My friend say can rent out and wait for the price to go up. Then, can sell.

Question:  How much to rent out? Who are you targeting? What price you want to sell?  Answer: No idea lah. My friend helping me…

I do not even wish to ask if the friend is someone from real estate industry or not. I hope my friend’s blind “property investment” will turn out fine.  My friend was not investing… he was just buying because his friend was asking. He has the money and he bought a property. Period.

Investment returns will take time because businesses need time

If we invest into a start-up, it may yield us returns we could only dream of. Or it could go bankrupt. It will take time. Probably a few years if not more.

If we invest into a business, the business can do well or it could not survive the Covid-19 lockdowns. It will take time, probably a few years if not more.

If we invest into a listed company and we know what it does, we would also know that it will need the business volume to increase for the revenue to increase and then for the profits to increase which will in turn be pushing up the valuation of the company upwards. The share price would then move up.

Bet big, win big. Everyone knows… right?

Every investment has its risks. When we do not understand the business, when we do not know why the prices could go up or come down, when we did not do due diligence at all, then the money we have put in may not be an investment. Then again, some people say that investment is putting money into an asset and as long as it gives returns, it should be an investment.

Well, just remember that when it gives exceptional returns which are beyond what a business could provide, then that’s no longer an investment. You just got lucky, hat’s all. It is unlikely that one can be lucky every time. Happy understanding.

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“Not bad?” Look around, ok? 6.4% from EPF is good.

A friend remarked today that the 6.4 percent declared by Employees Provident Fund (EPF) is “not bad.” I saw an article saying that this return is “so-so.” Objectively, it was achieved in a year which so many thought Malaysian economy was spinning into a crisis. It was also a year when Ringgit ended up as Asia’s worst currency. Fortunately, it has recovered to be one of the strongest in Asia currently. Of course, everything hinges on the largest economy and the actions of Federal Reserve. Our neighbour declared 2.5 percent for 2015. Many of its people believe it’s a good return because it was achieved in a year when everything was bad. Hmmm….. I wonder.

I have written about EPF earlier. Read here:
EPF “punts” to profits versus other investment options

I always believe an organisation is only as strong as the leadership at the top. I like the current EPF’s CEO, Datuk Shahril Ridza Ridzuan. His profile? Some education bits here: He has been called to the Malaysian Bar and the Bar of England & Wales. He holds a Bachelor of Civil Law (1st class) from Oxford University, England in 1992, a Master of Arts (1st class) from Cambridge University, England in 1993. Oh yeah, he said that EPF will increase the diversification into more foreign assets from 25 percent as at 2015 to 27% by end 2017. Investing only within Malaysia means options are limited or share market is distorted because EPF is an extremely huge investor.

He further elaborated, “EPF had remained fairly prudent in its investment approach throughout the last year, with slightly more than half of its assets in fixed income. “This protects the capital and maintain the minimum dividend. Whereas the equities and real estate portion protects us against inflation.” Seriously, if you ask me, I have no issues with EPF’s current strategy. If majority of everything is only in fixed income, we should understand that the returns would be like the FD rates that we receive. Of course, wombats not rely on just EPF. Read here:
EPF alone is not enough, beware

In terms of diversification however, it cannot be good years throughout and one must be ready to expect some volatility too. Foreign assets are a totally different cup of tea and even if EPF has the experience, thorns’ guarantee that it will turn out as per their expectations. As a property investor, it has never crossed my mind yet to invest overseas. I think there are still lots of opportunities here but another major reason is because I am also not familiar enough.

2016 is going to be a very tough year, for all of us. Read here:
Best time ever or worst time ever for property market 2016?
  I look forward to EPF’s announcement in February 2017. Last but not least, my view is very clear. If I would like to invest in unit trusts, I would use my savings to invest in unit trusts and not use my ‘retirement money’ in EPF. Read here:
I am not using my EPF front trust, my view

As for those who have renounced their citizenship so that they can withdraw all their EPF money and invest somewhere else, I also wish them all the best. If 6.4 percent is compared to my personal property investments thus far, I think it’s a very low return. However, with property investment, I am assuming much higher risks too. Happy enjoying these returns we prepare future retirement.

written on 22 Feb 2016

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Not built, so compensation will be paid for PR1MA developments.

Anyone here bought PR1MA projects and is today staying in one?  Please share your experience yeah. What about those who bought and is now informed that the PR1MA project is cancelled?  Well, for those projects which will not be proceeding, compensation will be paid so that the government reduce their losses. Yes, I do wonder how much the compensation would be, assuming that this has already been decided and these compensation for ‘failed’ PR1MA projects will be paid. This was what was shared by the Housing and Local Government Minister Zuraida Kamaruddin.

Article in edgeprop.my
 The Housing and Local Government Ministry will pay compensation for the 24 development projects under PR1MA Corporation Malaysia (PR1MA) that have been cancelled. It’s minister Zuraida Kamaruddin said the compensation would depend on the value of the land for the area involved. Out of 94 PR1MA projects, 70 will continue while 24 would be cancelled and compensations will be paid.

She said, “Most of the land was purchased by the ministry. Only some have made an offer letter at that time, that is, they have done the initial work. We will take that into account. If any work has been done, we will compensate. These projects were cancelled after it was discovered that the lands were not suitable, not strategic as they were far and there is no market value. We will see what can be done with the land.” For full article click here yeah:
Article in edgeprop.my

Yea, I think I am like many of my friends who are waiting for more details on the compensation to be paid. Plus also whether all these ‘unsuitable’ land which had been purchased, what would the land be used for? I am sure we will get a clearer picture soon since the amount is unlikely to be small since the total is for 24 developments. Even more importantly would be what would the ministry do in order to ensure these do not happen again. Plus all the 70 projects which continue should be smoothly completed so that it could benefits the buyers yeah. After all PR1MA presents an opportunity for many first-timers to own a quality home at an affordable price point. Happy buying and staying yeah.

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Not crazy lah, just a choice which we could afford, today.

A friend sent me this piece of news.
 “This guy paid RM39,999 for a laptop”
 His remarks go along the line of ‘this guy must be xxxxx.” I replied, “It’s just a choice which he could afford.” Seriously, when it comes to buying things we like these days, it’s all about affordability of that choice. We could not buy because we could not afford, period. Of course, now we have credit cards which makes buying easier and paying back HARDER. Haha. I must admit that within 2017 itself, I have bought three new pairs of shoes but it is really because of their massive discounts. I did not pay full prices for them. Now imagine that guy who bought the RM39,999 for the laptop did not buy the laptop, he may not have enjoyed the fastest gaming speed possible to play his most favourite game He may have even lost in some of those multi-player games because he was slower by quarter of a second? He may then lose his bragging rights or even the prize money that was offered. This may just be the reason he bought the laptop. This is why we should just let it be…
 (Beatles’ famous song)

iPHONE X (Pronounced as TEN and not X, ok) has been launched. The base model should start from RM4,200. Many friends have indicated in Facebook that they are thinking of getting one. See, this is another way to tell everyone that they could afford this new smartphone. Perhaps all of them already own a property or two and thus no longer need much savings. 😛  Okay, plus the fact that this is what all the iPHONE supporters would call a perfect phone in the world of Androids. They even have a term for the photos taken on their ‘powerful’ camera,
 íPHONOEGRAPHY.’
 A few actually grumbled that the new iPHONE is too highly priced already. Well, they can buy the current models which prices have been slashed. Still iPHONE lah. As for how much is APPLE earning as a company, here’s one.
APPLE is a listed company and this is their gross profits.
Pretty decent and based on my usual readings so far, it should be within the top 10% of all companies.

Whether it’s RM39,999 or RM4,200 or even my three pairs of shoes at around RM600, it’s really just a choice which we could afford. As for key learning, let’s just note that what we could afford now would affect what we could afford in the future.
Take a look at this savings chart to have an idea how much just RM1,000 can grow to.
 What we could afford in future may just be lesser because of what we bought today. However, if you really need that something, buy that something. Just make sure you could afford it today, tomorrow and future. Yeah, its true. We may be earning much more money in the future too. Just remember that that RM50 note you have today may just buy you one meal in the future, even in Malaysia.
My mum told me that a bowl of laksa was just ‘sepuluh sen’ 10 sen.
Haha. Today it can buy you ONE sweet at the mamak restaurant. Happy buying whatever we could afford.

written on 14 Sept 2017

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Not going to invest, regardless of the government of the day.

Many friends, way before the 9th May 2018 election say that they were very cautious in buying a property because it is too illiquid. What if something bad were to happen and they could not dispose it off quickly? One of the bad thing that could be happening? Well, the economy of Malaysia going bankrupt in a few years’ time. I replied that I could not answer for them since I am not an economist but EVEN an economist could not predict a crisis accurately at all times. Sometimes, one of their many predictions happen and everyone thinks they are the most accurate economist of the world. Well, just for everyone’s information,
Malaysia was given an investment grade sovereign rating (read here)
 way before the election and these international rating agencies certainly are not under the payroll of the previous government. International Monetary Fund adjusted their economic growth prediction for Malaysia upwards.
Please read here.
 Okay, hope it’s clear that it was NOT due to the economic factor that these friends were not buying. More likely due to their lack of understanding of what’s a good property to buy, perhaps.

The election has passed and there are now chants of a BETTER Malaysia. The main reason is because our new Prime Minister is Tun Dr Mahathir. A close friend once asked me this question many years ago, ‘Why do you think highly of Dr. Mahathir?’ This was after I told her that I bought ‘A Doctor in the House’ and I think it’s a good book. (I read it twice). Anyway, I even bought her a copy of the book which has been translated into Chinese. No idea if she has read but a few weeks back, she told me she had full admiration to our Tun Dr. Mahathir. 🙂  Coming back to our question to the many who did not invest in properties way before the election, do you think they will buy one now? I think the answer is crystal clear. Some would say that the situation is quite uncertain. Would the economic plan by the Team of Eminent Persons really work? Let’s just say that everyone can just search the keyword of ‘Zeti’ among my 2,600 articles and you should understand that I have full confidence in her. Beyond just his knowledge about economics, Tun Daim is someone whom I regard as a nationalist too. With his wealth, he could be based anywhere in the world but he is still here in Malaysia, as a Malaysian among us Malaysians. For Robert Kuok, he built his business empire in many places but regards Malaysia as a home. Please read his book yeah. In brief, none of these eminent persons needed any salaries from the government.

By the way, if anyone were to
rush into the market and buys a wrong property,

it will still be a loss regardless of what our Team of Eminent Persons could do, okay? I asked this question recently in one of my talks. ‘If you hated a property last year and that same property is still up for sale this year, would you suddenly fall in love with it? Considering circumstances remain the same?’ The answer is No, even if that same property is up for sale next year.
Article on unsold units here.
 Property investment is really an investment. It’s for a longer term than one or two years. Do we really think Malaysia has no future? If that’s the case, please do not buy property and keep all our funds liquid. If we believe there’s a future, then we just need to look at the advanced property markets in the world today. Property investment will always be a good one even if everyone should diversify and not keep all our investment eggs in one basket. Oh yeah, I realise now that those friends were just against property investment. If this the case, they are not going to invest, regardless of the government of the day. Happy investing.

written on 16 May 2018

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Not such a good news for property market, Malaysia

Malaysian economy is projected to be growing but on a declining mode by UBS Investment Bank. It’s Senior ASEAN and India economist Edward Teather said that the causes include a slowing domestic and investment growth due to the current fiscal restraint, prudent monetary policy and a maturing credit cycle. For 2014, Malaysia would grow by 5.5 percent, dropping to just 5 percent in 2015 and a further drop to 4.7% in 2016. Not everything is negative, the fiscal deficit is expected to decline to just 3.5% of GDP in 2014 and by 2016, dropping to just 2.7%. This meant that the route towards a balanced budget is on track. Consumer Price Index would however grow to 4.2 per cent before dropping back to 2.5% in mid 2016. In fact the policy rates are expected to be maintained from now till 2016. With the current volatile economic environment, I think UBA may be right. Bank Negara may continue the current accommodative stance until the growth is quite certain. Plus, if UBA is right and the growth really do slow down, it does not make sense to raise rates any higher or the grwoth may be even lower. One positive point mentioned is, “The depth of Malaysia’s financial market, current account surplus and external financial asset holdings also put Malaysia in a relatively healthy position to weather capital flows.”

Property market mirrors the economic fundamentals of a country. The property market cannot be vibrant if everyone is worried about losing their jobs. If the economy is not growing fast enough, the income growth would also be stagnant and there’s no way property market can climb up. Climbing down perhaps. So, would the property market be having a slow or slow and steady or slow and declining days moving forward till 2016? Do not be too negative. If we look at the projection, the GDP continues to grow, just that the percentage of growth slows. Then again, once GDP numbers becomes huge, it cannot be still growing by leaps and bounds. My hope is that this projection is a much more conservative one and that it may not be accurate.

Based on majority of the reports thus far though, property market is expected to still be slow for 2015 and not many have predicted a 2016 recovery as yet. One major reason is still contributed by the uncertainty created by GST. My comments here:
GST and Property, nothing much, sorry.
 REHDA which is the association of Malaysian developers has also said that their members are negative for 1H of 2015. Many plans were replanted and sizes reduced smaller to cater for affordability. Based on many of the negative ongoing developments, perhaps UBS’s prediction may be true. Nevertheless, if you are still renting, it’s best to buy now and stop renting. Today, you hold more edge as a buyer than a seller.

written on 11 Dec 2014

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