Low petrol prices and the property market, not easy.

A good friend forwarded to me the price for RON95 beginning 1st March 2016. The caption says, ‘great news keep coming.’ To be very honest, I love low petrol prices. However, low petrol prices also comes from low oil prices. Well, low oil prices is a big issue when about 20 percent of the country’s GDP is from the oil and gas sector. That’s Malaysia, of course. Oil price is also an issue when your country has a huge oil and gas industry despite not being a producer. Due to the bad times, these companies will close down and move out. Yes, I am talking about Singapore. Low oil prices may meant the country budget based on oil at US$50 per barrel would have to be recalibrated. Despite such low petrol prices, car sales fell by double digit in January 2016. Economy is really not well. This is Indonesia today.

To many of us, low petrol prices may seem like a welcoming news but the actual implication to the whole economy may be totally different. What happens when the whole economy slows down even if the petrol price is cheap? Well, it meant that the hard times become harder. The measures that a government can take would also be more restrained because revenue from oil has fallen a lot. When the whole market sentiment is negative, do we believe people would think about buying something as expensive and as sticky as a new home? The bad news from the oil and gas companies are still continuing! Read here:
Oil and Gas, hard time continuing

Of course, there are definitely great news with low petrol prices. Perhaps now the local domestic travel would increase, come on, driving to and fro KL and Penang would only cost me lower than RM95 using my Persona. AirAsia reported very good results just this week. The share price has jumped. It seems that there is a target of getting RM105 billion from tourist spendings in 2016. It’s simply because travelling to countries like Malaysia has become even more cheaper. Yes, Ringgit is still down though the downtrend has switched to slightly uptrend, depending on what happens to the largest economy of the world. Perhaps all those restaurants, clothes shops and even developers would be more willing to take a slightly lower profit margin instead? It’s a bad time now, it’s not a good time to talk about greed. It’s best to talk about sustainability. We shall see what happens. A good friend joked that he has no worry about the property market as he can hold. I do hope everyone can be like him. Happy refuelling and driving with the current low petrol prices.

written on 1 Mar 2016

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Low profit margin and assets valued at multiple billions?

Sometimes, we look at the the price of a certain product during a sale and we know that it’s IMPOSSIBLE that the product could be priced so low. Surely the seller needs profit? Well, it may be sold at a loss and this is actually a real marketing strategy adopted by many, especially when competition is tough or when a newcomer just joined the market and needed the extra attention and hopefully their price offering becomes a viral marketing. It’s also known as ‘loss leader strategy.’

If we look at the
definition of ‘loss leader strategy’ in investopedia.com,
 this is what it says. “A
loss leader
 is a product or service that is offered at a price that is not profitable, but it is sold to attract new customers or to sell additional products and services to those customers.”  This is why for hypermarkets where the competition is strong, there are many products being sold at a loss with the hope that when customers step into the store to buy that product, they will also be buying other products where the profit margin is higher. This is precisely why the profit margin for hypermarkets are in low single digit numbers.

Article in edgeproperty.my
  “Could it be that the new investor is interested in the retail business or is it interested in the assets Tesco holds?”  Another agent who spoke said that Tesco’s “real estate value is high.”  Based on financial reports on non-current assets, Tesco has some RM3.43 billion in assets.
The Edge
 also reported last year that the retailer was mulling a venture into property development at its larger stores as an alternative source of revenue.

Some sources also told the business weekly that “about 10 of Tesco’s stores in the Klang Valley alone are worth about RM1 billion”. It also has “some eight stores” in
Ipoh
 and Penang, and more in Johor. Another estate agent said that it may be better off investing RM100 million (estimated value of Ara Damansara store) into commercial assets which could provide a 6% yield instead.  Please do refer to the full
Article in edgeproperty.my

Do you know why developers with deep pockets prefer to buy land and hold on to it instead of holding just cash in hand? The cash in hand may appreciate by a few percent per year, maybe. Meanwhile the land’s potential value in the future, even at just a few percent per year is going to be worth much more. The land’s value depends on the development value of the land.

If the residential units being built on the same piece of land is now priced higher, then the land price will go higher. In brief, higher gross development value (GDV) will be the catalyst for land price. Thus, if a developer intends to develop only 5 years later, buying that same piece of land today will definitely be cheaper than buying it 5 years down the road when the GDV is likely to be higher than today. It gives the flexibility to the developer who owns the land as well versus having to look for a similar piece in the future should the same piece of land is no longer available. It’s a huge decision for Tesco definitely. It used to be the store I frequent most of the time. These days, there are so many new competition which has also upped their game too. Happy following.

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Extremely low rental yield may also mean bubble building

There are a few reasons why property bubble may burst. Here’s a few:
Spotting signs of a property bubble, 3 points (Updated)
 Besides these few reasons, there is one which will start to inflate the property bubble. Remember this earlier article?
When rental falls, so too would property price
 The reason why when falling rental will affect property prices is because of the yield becoming too low.

When the rental yield drops to a very low level, say 1%, then the buyers will not be willing to pay the same current price. He will negotiate for a lower property price, citing extreme low yield as his main reason. If the seller refuses to budge, he will choose to move on. When sellers start to lose in some negotiations, the price would start slipping and when news get around, the prices may weaken further. Note that this would most probably not affect the usual hotspots. Reason?
Prices up because of ‘location supply scarcity.’

In some cities in China, the rental yield is so low that the owner would need 100 year to get back their investment.
Here’s the full article in South China Morning Post (SCMP)
 It says that yields in 13 cities have slipped below 2 percent. (Note that there are also many people I know here in Malaysia who is struggling to rent their newly completed units out unless they do it with a lower rental).

According to the article, despite the fact that property prices in a city like Xiamen is trending downwards, the yield is still very weak,at just 1 percent. Some cities have seen their property bubble bursting. Qui BaoXing, a former vice housing minister shared that for China, the usual gauge of home price to household income is less relevant. More relevant would be the rental vs the home price. Anything above a ratio of 30 is dangerous. Xiamen is now at 100 percent while Shenzhen is 67 percent. (Yes, these numbers show danger)

I think we need to be really savvy when we are
looking at properties to buy today.

The first criteria for rental investment is definitely rental yield. This is the reason why buying in primary / first-tier cities tend to provide the buyers better rental yield. Demand for housing is still growing due to urbanisation. We should be worried if we are still proceeding to buy a property which is giving totally negative rental yield today. The only consolation is that if the price per sq ft is still considered low based on a 10 minute radius, then the property price should be quite stable.

I think I agree that sometimes, rental vs house price is more relevant. In some countries, people would do everything they could to save their home. They believe a roof over head is a must. I think when Malaysians are faced with such a situation, they would choose to stop visiting Starbucks, cafes and even gym memberships just to make sure they do not default on the home loan payment. This is why I think property investment is going to be safe for a long time yet because we are Malaysians.

written on 8 Aug 2017

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Low Risk and High Returns for investments

Between property investment and stock investment, which one is low risk and high returns? Low risk could be both, actually. There are certainly safe stocks to buy. For example, the blue-chip counters. However, high returns? Does it apply to property investment? Let’s look at the definition for both low risk and high rick as a start.

Investopedia says this about low
–
risk investment.

Low-Risk Investment

By nature, with low-risk investing, there is less at stake—either in terms of the amount of invested or the significance of the investment to the portfolio. There is also less to gain—either in terms of the potential return or the potential benefit bigger term.

Investopedia says this about high-risk investment.

High-Risk Investment

A high-risk investment is one for which there is either a large percentage chance of loss of capital or under-performance—or a relatively high chance of a devastating loss.

What is investment to me?

Personally, I define investment as something which I could UNDERSTAND why I could get the returns. If it’s something which I do not understand, then it’s just a purchase with potential returns. For unit trust, I am able to know the stocks which the fund manager is buying into. I may not know the companies enough but I guess I have to trust the fund manager. I know that when these stocks do well, then my fund does well and I will get good returns. When these stocks fare badly, then I suffer losses. Simple enough?

What about buying into companies through the stock market?

If it’s a share of a company listed in BURSA, then I must understand what the business is about! For example, we buy a hotel stock, then please drop by that hotel and see if it’s fully booked. If we buy into a car company, then start looking at car sales charts, are they selling ever more cars or fewer cars? However, if we are buying into a company which business model is something we are not familiar, then it’s no longer investing yeah. It’s called speculating. This is why even the stock market can be an investment or a gamble, depending on how we do it.

What is a property investment then?

If it’s property investment, then it’s a save-enough-downpayment and qualify for a bank loan kind. Property investment has nothing to do with any get-rich-quick scheme. Buy this year, sell for big profits next year for example. Anyone trying to sell you a property and tell you that the price sure go up next year is most probably going to run away with your money. Alternatively, buying to get lots of money back is foolish because those are your money actually… The only reason we could get cheated is because we were greedy.

Property investment is fine even in smaller towns

My parents bought their first property in Teluk Intan for RM35,000. That was in the 80s. The same house is now priced 10 times higher. They bought their second property in Ipoh for RM85,000. That was in the 90s. It is now RM540,000. Over a long period of time, due to effects of inflation (money getting smaller in ALL countries) and salary amount going higher, the property prices will just follow. This is more apparent for properties in bigger cities in Malaysia.

So, to all the personal finance people out there who does not understand about property investment and does not even own any property, please do study about it a little more. There is really no need to keep misleading people that property investment is low risk and low returns because it is not. As for the advice about buying a certain stock, if I am 100 percent sure about that particular stock, then I will keep those secrets to myself. Cheers.

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Press Release: Low Yat Group picks homegrown supermarket chain Star Grocer as retail partner

Poised to serve approximately 100,000 Bandar Tasik Puteri residents by 2030

KUALA LUMPUR, 9 December 2020 –
Low Yat Group (LYG) has today picked homegrown supermarket chain, Star Grocer to be its retail partner for its Bandar Tasik Puteri urban development in Rawang, Selangor.

The Star Grocer supermarket, with retail size of 55,000 square feet, will be located at Paradise Fair, the lifestyle hub of Bandar Tasik Puteri’s urban development.  With Star Grocer as its anchor tenant, LYG is now poised to serve an approximately 100,000 Bandar Tasik Puteri residents by the year 2030.

Spanning across 8.06 acres of prime commercial land, Paradise Fair is the first ever lifestyle-themed retail centre in Rawang. This 2-storey, street-level lifestyle retail hub will consist a supermarket, fast-food drive-thru restaurants and carry various local and foreign retail labels and brands. Paradise Fair has also been architecturally designed to ensure every retail lot is easily visible and accessible to customers.

“As a local business player ourselves, Low Yat Group is committed to collaborate with local businesses and grow together with them in the current challenging business environment. From a synergistic view point, we find Star Grocer the perfect fit.

“The residents of BTP and occupants of Paradise Fair, will need a place to shop for their grocery needs. We are confident Star Grocer is able to provide the convenience, affordability, quality service and easy access to daily necessities to our discerning residents,” said Mr. Andrew Goh, General Manager, Area Property – Development/Management, Low Yat Group.

Andrew added that the confidence stems from the fact that although Star Grocer opened its first supermarket at Desa Pandan, Ampang only in 2016, it has since grown exponentially and within a short time frame of four years, it has today, six outlets to its credit. Moreover, all of Star Grocer’s outlets are located in various urban development locations in Klang Valley, befitting the positioning LYG has for Bandar Tasik Puteri.

Meanwhile, Mr. Fabian Tan, Director of Star Grocer revealed that the company will be investing RM7 million for the initial set up of the retail store which is slated to be opened in the year 2022.

“BTP is tucked within a prime north Klang Valley township and has already hit 60,000 residents in year 2019. Such a rapid occupancy rate is what attracted us to Bandar Tasik Puteri where there is an apparent lack of supermarkets to provide daily necessity and services to the nearby residents.  We certainly foresee a high growth potential here,” added Fabian.

Low Yap Group is expecting continuous foot fall traffic of approximately 12,000 to 15,000 per month into Paradise Fair hub due to the strategic location of Bandar Tasik Puteri.

— end of press release —

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Competition heating up for banks to get ‘loan applications?’

To those who believe that banks are in the market to
reject loan applications
, do think again. Recently, after the OPR cut by Bank Negara Malaysia, there has been non-stop announcements from banks on their adjustments for their base rates. In fact, just two weeks ago, my colleague told me Maybank was offering the lowest rate around. 4.35 percent. Most other banks were at 4.45 percent. Well, Maybank has adjusted downwards but the best part is, this same colleague informed me that RHB is now offering just 4.25 percent. I think it points more to the fact that many banks are ‘hungry’ for more business.

The most recent one (26 July) would be Public Bank Bhd (PBB) which is trimming its base rate and base lending rate/base financing rate by 23 basis points effective July 27, 2016.This is following the reduction by Bank Negara in the overnight policy rate (OPR). its founder and chairman Tan Sri Teh Hong Piow said, “In line with the objective of the pre-emptive action by
 Bank Negara Malaysia to reduce the OPR
, Public Bank reduces its lending and financing rates to pass on the benefits to the customers. The move is poised to be a positive catalyst for the Malaysian economy to continue growing on a steady path amid increasing signs of moderating momentum in global economic growth.”

This famous banker also added the following which is positive for the market. “On a positive note, domestic demand as the main engine of the Malaysian economy will remain supported by monetary accommodativeness, healthy financial condition and stable inflation in the domestic economy.” I think the
sentiment is still negative
 but all these small little good news would continue to lend support to the market. A Facebook friend who’s already semi-retired commented recently, ‘Interest rates today are already considered very low versus the years after 1998.” I think what he wanted to say is that it’s a good advantage to have today. Happy deciding what to do next.

written on 26 July 2016

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Lower car sales growth, not a good sign.

Slowing property transactions in Q1 2015? Well, car sales are also slowing down its growth. Last year, a total of 666,465 units were sold. This year? A total of 670,000 is expected by Malaysian Automotive Association (MAA). In other words, almost unchanged from last year. MAA is forecasting this due to the slow numbers for the first half 2015. This number is underpinned by expectations that the second half would show better numbers. If they do not, then the total sales for 2015 is worst than 2014! I think the possibility is there, especially from the always almost negative sharing of Malaysia’s economic situation in Facebook. Thoughts would translate into actions, right? Or No?

Personally, if I need a car, I would buy a car. In better times, it would be a new car. If I feel my job is very safe, it would be a slightly more expensive car. Perhaps a Segment C car. Currently, perhaps wiser to get a second hand car instead? After all the prices of second hand cars have also been going down. What if I have a car and is working well? Answer is simple. I keep driving my current car. This explains why the numbers are definitely not going to be bullish. The number corresponds also to the lower number of transactions for properties in malaysia for Q1 2015.

However, if you were to ask if the car sales reflect a worse time? My answer is not really. I note that majority of my colleagues who are senior executives or higher who bought new cars were almost always non-national ones. Most of the time, Japanese ones. In other words, the more expensive ones. How could they buy more expensive cars if they are not doing well in terms of their earnings? So that they can save on petrol since it is said that these cars consume less fuel than a Proton Persona? (my current car) Read here:
Sen wise, Ringgit foolish

Unless of course, all of them are buying the more expensive car and postponing their property purchase instead? If they are, I feel bad on behalf of them. I think the decision is not the best one.

An awesome car is out of the reach of many. I meant Segment D ones like Accord, Teana, Mazda 6 and even Passat. Anyone not buying any of these cars, please stop feeling that you are on to of this world if you are driving just a Segment B car which most probably is just a taxi in many countries. Why not think how much savings from your lower car instalment can help you in your investment goals instead? Buy a good car which does not break down every few months. Do not buy a car which needs you to spend lots of attention and more money for sports rim etc, just so that your friends feel jealous of you. Truth is, what’s the gain? I am still saving for my first Segment D car in the future. Happy deciding.

written on 1 July 2015

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Lower end, Higher end and Mixed Blend?

This article is written in response to a discussion I had with a few friends who are also property investors. What’s happening to property market Malaysia? One of them kept pestering me if the market is good enough to buy luxury properties today. I told her that her term of luxury property is not the same as mine. I rate her ‘luxury’ condo choice as only a slightly higher end condo, that’s all. Nowhere near luxury yet. Let me explain my opinion which is ONLY my personal opinion. Some say, lower end means those low cost flats. Higher end means RM1,000,000 and higher. My personal opinion today? Low end would be RM300,000 or below. Affordability should only be up till RM550,000 for those who has household income of RM10,000 or higher. Above RM1,000,000 is luxury. In terms of price per sf, I would rate anything below RM350 per sq ft as lower end and RM750 per sq ft above as quite high end. RM1,000 per sq ft or higher would be luxury.

What about those in-between? I call them the ‘mixed-blend.’ The mixed-blend are properties which happen to be in an area which is considered a premium hotspot. Yet, due to the very high price per sq ft, the slightly not so rich Malaysians who still wanted that address would buy something smaller. Thus, perhaps a 1,000 sq ft but that said high-rise may cost them RM850,000 or higher. The address is certainly a posh one but the size is definitely not. Perhaps this is okay because these days we do not host many friends visit anyway. Should the hotspot address alone provide such a high premium? It really depends on the buyer. If they feel it’s worth it, why not? If the question is asked to me, my answer is no. With a family of four and my parents staying with me, it is impossible for me to buy just a 1,000 sq ft condo no matter how awesome that area is said to be.

The good thing about these mixed-blend homes is that there are still people who would buy them. Location will always be the primary reason for property decisions. This is despite the fact that the number of these areas with LRT or MRT stations are definitely increasing. The number of malls are also increasing. The number of international schools are also increasing.

The bad thing about these would be that this target market is definitely not huge. If I am super-wealthy, I would not want to buy a high-rise in an area where all the other units are higher priced than mine. So, I seriously do not think these mixed-blend homes would attract the super-wealthy. Yes, I am neither super-wealthy nor interested to buy these mixed-blend homes.

Thus, if the sole purpose to buy is with the hope that the RM850,000 home would soon rise 20% to RM1,020,000 when completed, please think again. I would wish my friend all the best but I think the situation today is BBB. Definitely not the 2009 – 2012 BUY, BUY, BUY but has turned to, ‘Better Beware Brother.’ Read here for the BBB article:
Is there really such a thing as BBB today?

If possible, buy to stay first. It is unlikely that the property market of Malaysia would suddenly turn around anytime soon. It will be safer since you can still stay there and wait for better times even if the price did not rise to the point that you wanted. Happy deciding whether it’s low end, higher end, luxury or even mixed-blend.

written on 22 Sept 2015

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Lower foreign buyer threshold is loved by the real estate agents.

Press Release:
Lower Foreign Buyer Price Threshold WINS APPROVAL OF 71% of Malaysian Real Estate Agents: SURVEY

Kuala Lumpur, Malaysia (December 5, 2019)
— The real estate industry views positively the government’s recent Budget 2020 announcement to temporarily reduce the minimum price threshold for foreign buyers. That is the conclusion of the Juwai IQI survey of 386 Malaysian real estate agents, conducted between 6 and 21 November 2019.

Nationwide, 71% of surveyed agents approved, calling the lower threshold either “a little good” or “very good.” More than one-third, or 35.1%, of surveyed agents believe the lower threshold is “very good.”

What’s your opinion: is the government’s move to temporarily reduce the foreign buyer price threshold from RM1 million to RM600,000 a good decision?

The real estate industry was most positive about the lower thresholds in the states of Kuantan, Penang, Melaka, and Sarawak. In each of those locations, more than 40% of respondents considered the lower threshold to be “very good.” Kuantan had the highest rate of approval, with 75% of agents from that state calling the initiative “very good.”

The survey asked, “What’s your opinion: Is the government’s move to temporarily reduce the foreign buyer price threshold from RM1 million to RM600,000 a good decision?” Respondents could choose from “very good,” “a little good,” “neither good nor bad,” “a little bad,” and “very bad.”

In every state with sufficient survey responses for analysis, at least 62.5% of respondents consider the lower threshold to be “a little good” or “very good.”

The states with the highest number of negative responses, in which agents call the lower price thresholds either “a little bad” or “very bad,” are Melaka (15.8%), Kuala Lumpur/Selangor (7%), and Sabah (8.1%). Nationwide, 8.6% called the change “a little bad” or “very bad.”

Juwai IQI Executive Boardmember, Kashif Ansari, said:

“It’s crucial for Malaysians to understand the real-world impact of this innovative public policy initiative. Is it good, or is it bad? In its 2020 budget, the government proposed helping the industry sell some of its unsold new homes by temporarily lowering the minimum price threshold for foreign buyers on high-rise property in urban areas from RM1 million to RM600,000. The lower threshold will only apply between January 1 and December 31, 2020, after which date the threshold reverts to RM1 million.

“The fact that everyone agrees upon is that the markets are suffering from an excess of unsold property. By lowering the price threshold for a short time, the government hopes some of these unsold properties will find buyers. Developers will then have the funds to invest in and begin construction on projects more suited to the local buyer in today’s market.

“The states of Kuala Lumpur, Penang, Selangor, and Johor together have an overhang of 9,315 high-rise units valued at RM6.775 billion. The market in Kuantan is quite challenging at the moment, so it’s reassuring the industry there believes this policy will help.”

Data from the Valuation and Property Services Department of Malaysia (JPPH Malaysia) shows that Kuala Lumpur has the highest overhang of unsold completed condominiums and apartments. As at the first quarter of 2019, the high-rise overhang in KL stood at 2,544 units, worth about RM2.338 billion, followed by Penang with 2,684 units valued at RM2.13 billion, Selangor (2,113 units; worth RM1.144 billion) and Johor (1,974 units; RM1.163 billion).

“Our recent reports found that mainland Chinese buyers account for RM8.4 billion (US$2 billion) of total Malaysia residential property sales per year, and less than one per cent of all transactions.

“The trade war encourages global corporations to relocate their operations to Malaysia due to the country’s productive labour force and strategic location. These new investments in factories and distribution centres also lead to a certain amount of housing investment as foreign businesspeople move to Malaysia.

“Malaysia is an essential player in the Belt and Road Initiative, as 80% of China’s trade moves through the Straits of Malacca. The difficulties in Hong Kong have contributed to a strong increase in demand from Hong Kong. Total numbers of Hong Kong buyers will not be as large as some imagine because Hong Kong itself has a relatively small population.”Chinese buyers made 16.5 per cent more enquiries on Malaysian property in the third quarter than in the same quarter of 2018. In the first half of 2019, Malaysia was the fifth most popular country for Chinese property buying inquiries in the world.

“With the lower threshold in 2020, we forecast stronger interest from our buyers. Malaysia is especially appealing to buyers motivated by lifestyle, retirement, or education. It has affordable standards of living, high quality of life, medical facilities, and accessible educational institutions. Malaysia consistently ranks among the best places to live.”

— end of press release —

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Oh dear. Lower GDP growth forecast for 2020. Positive number though.

Someone asked me some time back, how come news which many perceive as negative, my article may still have a positive spin to it. I think it’s really a perspective basis yeah. I know, bad news will ensure more clicks and I know that’s why many will post bad news on their FB post for example but I think I am ok to forego these kind of clicks / views. So, we have another piece of news which as usual everyone perceive as negative. Forecasted GDP growth for Malaysia has been lowered by Moody’s to 3%. The original number forecasted by them was 4.5% before it lowered the prediction to 4.2% in February 2020. Just one month later, it’s now 3%.

Article in themalaysianreserve.com
  Of the cut from 4.2% to 3%, this is what Moody’s senior VP Christian de Guzman said, “The combination of weaker global growth and heightened containment measures related to the coronavirus outbreak, as well as a recent sharp drop in oil prices, have prompted us to further lower our GDP growth forecasts for much of Asia Pacific (APAC) in 2020.”

Moody’s sees China’s (A1 stable) economy expanding 4.8% in 2020, Macau (Aa3 stable) is expected to drop 20% for 2020. Hong Kong (Aa3 stable) is expected to shrink by 3.5%. Moody’s said,  “Meanwhile, we no longer expect Japan’s (A1 stable) and Singapore’s (Aaa stable) economies to expand.”  Growth in Europe and the U.S is anticipated to decline as well.  The global sentiment will be driven lower with a rising Covid-19 infection rate and this will snowball into a deeper economic contraction in Asia and beyond. Please do read the full
Article in themalaysianreserve.com

If you still cannot see why I think our forecasted 3% is still a positive number, I shall not say any further yeah. Let’s hope this 3% is already on the low side.  As for whether the current stimulus is good enough, I would personally prefer stimulus number 2 as well. It may be more prudent to do more than to do less just to be prudent on the deficit number.

Another example of a different perspective?  Covid-19 numbers for Malaysia. A few people kept posting and saying that the numbers are going up so fast and that we are doomed. Yet, refused to even acknowledge that our death rate remains on the low side even when compared to many advanced nations.

By the way, it’s just
0.7% for Malaysia thus far. 10 deaths per 1306 total infected. (South Korea at 1.17% and Japan at 3.41%). Info Source here.
  I used these two countries because people kept using these two as comparison that our doctors and nurses are not as good as theirs which is totally untrue! Someone even commented that we did not test enough people. Sir… if we tested even more people, this number will be even lower… Please ask some statisticians to understand what I meant.

Then, some will now pull politics in and say something about the now super famous Health Minister. It’s as if this person is the one affecting all these numbers? Dear everyone, the MAIN REASON why our numbers are low is BECAUSE of the profesionalism of doctors, nurses and the management team of Health Ministry and has VERY LITTLE to do with the new government or that new Health Minister. Savvy? Still, no one knows what may happen but I will continue to pray that our COVID-19 numbers will always remain on the low side and that all our front-liners are safe from harm. As for the Health Minister, please stay at home. Thank you.

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Lower GDP growth for Malaysia expected for 2016

GDP growth is a very good barometer for the property market. Especially so for the major cities here in Malaysia. Would anyone dare to buy KL properties if the economy is in negative zone? Well, 2016 is going to be
‘slower’ year for Malaysia
 according to AffinHwang Capital Research. As per reported in NST, it is revising its growth outlook for Malaysia downwards, from 4.5 percent to 4.2 percent for 2016. Major reason stated is a
SLOWING WORLD economy
 and slower semiconductor sales. One major cause, the slowing of exports for electrical and electronic goods which is actually 36 percent of total exports. For 2017, GDP growth will be higher, at 4.4 percent.

Current account surplus will continue and remains SUBSTANTIAL at about RM250 billion or 2.1 per cent of GDP in 2016 compared with RM34.7 billion or 3 per cent of GDP in 2015. Do note that there are many
advanced nations where there has been no account surplus for many years.

The expectations from AffinHwang economists, Alan Tan and Lim Yee Ping for the Overnight Policy Rate (OPR) is that it should be maintained at 3 percent. The potential cut would be the reserve requirement (SRR) should the external environment deteriorates. It expects the inflation rate to be manageable at 2.5 per cent for 2016. Happy following and understanding.

written on 19 July 2016

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Your fixed deposit will earn lower interest, maybe.

I think most people’s money in the Fixed Deposit (FD) is already earning a lower interest; below 2% in interest at this point in time. Yes, I know this is really not a good time for those who rely on just the FD and has little diversification on anything else. Some say too dangerous but just remember that earning below 2% for the next 20 years is also very dangerous to our wealth too. A sample of what to expect as per image below:

Source:
http://imoney.my

There is now news that this sub 2% FD rate may be lowered further. MCO 2.0 has started and this has definitely given even more pressure to businesses and due to this, an even lower interest may be a pre-emptive move before the economy deteriorates first. Anyway, this is the expectation since many businesses are not operating during this period. As informed in many media, there’s a chance that this 14-day MCO 2.0 is just a starting point.

Article in themalaysianreserve.com
.
  OCBC Bank (M) Bhd’s economis Wellian Wiranto said that the MCO 2.0 will give pressure to the GDP growth for Q1 2020. He said, “Indeed, we see the risk that the economy will shrink on both a sequential and year-on-year (YoY) basis in 1Q, with growth rates of -0.6% quarter-on-quarter and -0.1% YoY respectively. For the year as a whole, the growth rate now is likely to be at 5.7% YoY in our new baseline thinking.”

He also said that Bank Negara Malaysia (BNM) may slash the Overnight Policy Rate (OPR) in the upcoming Monetary Policy Committee (MPC) meeting on Jan 20, 2021, to 1.5% as there is a “dim prospect” of large-scale fiscal help. Do refer here for the full article:
Article in themalaysianreserve.com

What will happen with a lower OPR?

First thing that will happen is that the FD rate will go even lower. Of course for people who are borrowing to buy a property, then this reduction is good for them. Their current repayment will be lower. For new buyers, they will be able to enjoy a lower repayment per month or for the same repayment, they could buy a slightly more expensive home. This will be the same for businesses who borrow.  This is why interest rates are lowered. Basic idea is for people to move their lower interest rate investments into some potentially higher ones.

Conclusion

I do think BNM would have a lot more data to study prior to making their decisions. As I have written earlier, a lower interest rate is also basically showing that the economy is likely to weaken and thus steps are taken in advance. We will have to wait for that final decision on 20th January which is just next week. Time to really understand more about more investments and not just have one choice. That’s also considered no choice.

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To lower property prices, just reduce number of facilities in high-rise units.

There are many ways to lower property prices. Everyone would have their own opinion. Build more units but smaller ones. Ask for higher density and the prices should become lower. Buy land much further away and build further away. Alternatively, reduce the quality of materials. Instead of European imported ceramic tiles, it could be imported from cheaper countries. Even better, instead of tiles, why not just finish the floor with cement? Wah…That should help lower property prices.

Well, today we look at the high-rise facilities. Many developers are advertising to the world that they have the MOST number of facilities. Much more than the other nearby high-rise un its for example. Question for everyone. Do building fewer of these meant that the property price could be made lower? Does this mean if there were no facilities, then would the developer be able to lower property prices?

Photo by Engin Akyurt on
Pexels.com

Article in nst.com.my
 In the article, an unidentified senior property consultant was quoted as saying that if developers were to build fewer facilities in their future high-rise residential units, then the costs would be reduced and perhaps they could then lower property prices for all potential buyers.

The senior property consultant also shared that reducing home prices are the right thing to do if developers want to stay afloat amid the current Covid-19 pandemic and they can entice buyers with more affordable properties.

With regards to developers he said, “To achieve their sales target and maintain profitability, developers are building smaller apartments with fewer facilities. Some developers tend to build more than 30 facilities, including an infinity pool with floating cocoon, pavilion garden, BBQ deck, herb and zen garden and they take up valuable land resources. These are not free for the property buyers as the developer has incorporated the cost in the selling price.”
Article in nst.com.my

We just need to also note that most people buy high-rise units with nice facilities because the facilities are nice and they believe they will use it often. More often than not, they may use it very sporadically instead. However, moving forward people would still continue to buy a high-rise because he likes the facilities. If there were no facilities, he would also not be willing to pay a premium too.

In other words, if we assume building fewer facilities could lower property prices, we need to also understand that the price increase would also take this into account in the future. This is especially if the condo with minimal facilities were to be compared to another with many nice facilities in the same neighbourhood.

I do think whether high-rise units or even gated and guarded developments, they need to ensure there are enough facilities being built. I do not think many gated and guarded developments would have buyers who are buying simply because these places provide security. Truth is, nicer landscaping would carry a premium.

A proper club house would also get a higher property price too. Perhaps in some situation, it is true that fewer facilities help lower property prices. Just remember that these properties would also not increase in price faster than those with proper facilities yeah.

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Higher interest rates means higher or lower property prices?

When interest rates go up, cost of borrowing increases

Briefly, if interest rates are raised by Bank Negara Malaysia (BNM) in H2 2022 as per forecasted
 (earlier article here about when it will rise)
, it means that the cost of borrowing increases. For people with an existing home loan, it means higher repayment is now necessary. May not be a lot for those with one property but if the property is currently being rented out with a negative yield, then this negative yield will become worse.

Now imagine the scenario for a home owner with 2 properties or someone with 3, 4 or 5 properties. Even worse, for a home owner who is paying but is unable to rent out the property yet. This is why the decision of whether to increase the interest rate (BNM calls it the overnight policy rate; OPR) is not an easy one to make. It may affect not just the businesses but also the working people too.

What about people intending to take a home loan?

For people intending to take a home loan, it means two things. They can still continue with the purchase for a property of the same price and paying a slightly higher monthly repayment because of higher interest or they could also choose to keep the monthly repayment by buying a cheaper property instead. How would this affect the property price then if this is how the potential buyer will decide?

Well, the buyer’s decision would also have to depend on the decision of the seller. In a demand and supply equation, how the price would move really depend on whether seller or the buyer has stronger negotiation power.

What happens at the seller’s side?

Let’s look at the seller side too. If the interest rate is increased, it means that their potential buyer may ask for a lower price from the owner so that the potential buyer could have the same monthly repayment amount despite a higher interest rate. If the owner refused to reduce the property selling price, that means the buyer would have to fork out a higher downpayment and also have a higher repayment every month.

Who will win in this negotiation?

Seller wants to maintain or sell higher while buyer wants a lower price or they may choose to move away from the purchase because they do not fancy paying higher than what they were prepared to pay. If the property is a sought after property, the seller usually wins because the number of buyers are more than supply of properties for sale. Usually these would be the more popular and mature neighbourhoods.

However if the property is at a less sought after location, the potential buyer may win because there are more choices and there are also other similar locations too. If the property is a new one and the developer has unsold units, then the seller loses all negotiation power because the property developer is more likely to ensure potential buyers are not scared off just because of higher interest rates.

Interest Rates and the Property Price movement

This is why interest rates up does not mean property prices would immediately rise or fall. In fact there’s always the double-whammy for property buyers too. Interest rates are up but the sellers may have very strong negotiation power and the buyers may then be forced to pay the same price and yet with higher monthly repayments.

In many countries, especially some advanced ones, this is already happening. Somehow, the buyers are usually at the weaker end of the negotiation table. Malaysians are considered lucky as choices remain aplenty in many less popular areas. Thus when interest rates go up, the prices may not follow. Happy evaluating and buying that property of your choice.

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Penang: Visitors do not visit you just because you are CHEAP

Reported in a local English media. Malaysian Association of Hotels (MAH) Penang Chapter chairman Khoo Boo Lim said domestic tourism was expected to increase this year as more people reduced their spending. One main reason is because many Malaysians would be spending their money locally with the decline in Ringgit’s value. He said that the current exchange rate favours foreign tourists. Penang state tourism bureau Penang Global Tourism (PGT)’s Chief Executive Officer, Ooi Chok Yan has the same thoughts. He said that with the weaker Ringgit, locals are now travelling within and more foreign tourists are coming but Penang needs to be more accessible. For example, more direct flights would help tremendously. He quoted the George Town Festival as having the ability to pull tourists and cause them to return to Penang.

Do tourists visit Penang because of Ringgit’s depreciation? If this is the major reason, then why did tourists flock to Penang even when ringgit was far stronger than today for many years before today? Secondly, if it’s simply because of Ringgit, then Penang better be worried because regionally, Ringgit is unlikely to be cheapest over a longer term. Look around please. Thinking further, does this also mean that Singapore will face huge problems soon as tourists would be shunning it totally and perhaps dropping into Japan more since the Yen was an underperformer for the longest periods of time?

Personally, after having been to 21 countries in the world, even if the Japanese Yen becomes stronger, I would prefer to visit it anytime over Singapore. The reason is because Japan has so many things which Singapore does not have and Tokyo has as much of the modern stuffs that Singapore has. However, in real numbers, as per Wikipedia, in 2014, Singapore welcomed 15 million international tourists while Malaysia welcomed 27.4 million. Japan had just 13.4 million. Stop wondering, start understanding that the efforts by the tourism boards of the countries play a part in putting forth the real VALUE of visiting instead of just putting the blame on currency when things do not work accordingly.

Coming back to the state I worked for 14 years since my graduation. For investment, especially for property, Penang should be a natural choice. This is if we consider Penang to be behind Singapore and Malaysia remains stable and Penang continues to grow to the Singapore of today in say 15 years’ time? Think ahead, buy today. Waiting is a better game to play when we have something which will worth more in future. Penang has the following which I think is second to none. We get to enjoy great varieties of really good food, by far more affordable hotels than many regional countries, visitors get to stroll along a UNESCO heritage city, real jungle tracking and not man-made safaris, beach activities on real natural beaches, sufficient shopping frenzy and a whole lot more.

When it comes to property ownership, I do not think many foreigners can enjoy the sunrise from a freehold condominium (with same protection as a local buyer and generally few restrictions) overlooking the sea or the beach in many other regional countries too. Let’s be extremely objective and give the right information and the positive outlook to the world. To the media, if you intend to help Penang, stop writing articles as if everything must be politically related or sensationalized with a ‘useless’ article title and it would really help Penang a lot more. I think I love Penang more than you. Happy visiting Penang for all the right stuffs, ok? My next trip is on 12
th
 March 2016.

written on 15 Feb 2016

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Lower transactions and property value in 2016

It does seem that it’s never ending cycle of bad news for the property market of Malaysia. Okay, if we really read about some other prominent markets, the bad news have also started. For some, like Singapore, it has moved to a ‘arctic cold’ stage for the agents. This was a recent comment from my good friend Michael Geh, Senior Partner of Raine & Horne International Zaki + Partners Sdn Bhd. In an article in The Star, Foo Gee Jen the Managing Director of CH Williams Talhar& Wing’s (WTW) said that the residential value and transaction numbers for 2016 would be LOWER than 2016. Buyer sentiment will be subdued for 2016. Foo also mentioned that another cause is the uncertainty in the job market which I think is more of sentiment instead of actual rising unemployment. For the property market’s sake, I hope I am right.

Foo added however that demand for residential property in established areas will continue to remain healthy. Actually this is not hard to see. People are still crazy for that few oomph areas and are willing to pay a premium for it even today. Read here:
Property prices too high? YOU might be the main reason

He added that the secondary market is likely to be more lively compared to the primary market even if it is nowhere near the level of a few years back. Please believe him on this and stay focussed on secondary as your primary focus. My personal thoughts:
Buy secondary. 30-40% cheaper

He then mentioned that the high-rise market has a mismatch between supply and demand, especially in the Klang Valley. He specifically mentioned that there is a huge supply of shoebox / Mickey Mouse units and due to this, it will take a long time to fill. Let’s be objective and stay savvy. There’s really a limit to how high these small units which are also known as mosquito unit in Hong Kong can rise. Read here:
The BIG idea for small units, be real.

With the falling ringgit, there has been more institutional investors compared to retail buyers for the local properties. Last year, a totalof 2.05million sq ft of new mall space entered Klang Valley in 2015. This means that malls in less popular areas willface huge difficulty. Fortunately, this would also be helped by the increasing demand by the young as well as tourists. Read here:
Malls, malls, malls everywhere, rate of survival?

I think Foo remains pretty optimistic with the market even if everyone should be very careful with what they buy currently. The property market may not be turning around so soon and in a dinner just last week, another agent friend has started driving for UBER and his girlfriend rejoined the corporate world. Last weekend though, the property agent who showed me around the Sungai Buloh area told me that he had just re-entered the real estate industry last year after a stint in the corporate world. He likes the real estate world better. Wishing everyone the best and happy investing.

written on 14 Jan 2016

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Of lower unemployment number and higher GDP recovery

High unemployment is not good. Lower unemployment numbers are good.

No jobs, no money. No money, no recovery.  No recovery definitely cannot buy property. Thus, a lower unemployment number will mean  higher the recovery that we could expect for the economy. ONLY if the economy is moving that people could spend more. Only when we spend more that the economy will continue moving. Looks like a chicken vs egg situation yeah. The one thing which affects all these would be sentiment.

Photo by Markus Winkler on
Pexels.com

You see, the spending has to come from those with more money, not those without enough. When sentiment is negative, many of these with more money people would not want to spend money, preferring to keep the money safely in the bank. That’s why interest rates have to be lowered so that some of these people may take those money out and invest.

This will soon bring about multiplier effects and by then, we may again see many unrelated companies wanting to become a property developer. Right now, we have many unrelated companies wanting to become a glove manufacturer. Just remember to evaluate these companies based on fundamental and not based on some out-of-this-world projections yeah. Okay, coming back to unemployment rate. Remember, the lower the unemployment, the better. Image below showing the latest numbers from August 2020.

Image source: Tradingeconomics.com

Yeah, if we just look back a little bit, we would noticed that our typical lower unemployment rate versus now has always been below 4 percent. Actually, at 5.3% our unemployment rate is still considered okay. The unemployment percentage for the world for 2020 is 5.42%. In other words, there are countries which are better and there are those which are worse but I think it’s safe to say that with COVID-19 vaccines coming and the economies all reopening, the number for us and the world will continue the downtrend.

Image source:
https://data.worldbank.org/indicator/SL.UEM.TOTL.ZS

By the way, this is not meant to make you feel we are awesome. This is to tell you that we are not as bad as what you think; that the whole world is doing fine and the only country which looks xxxx is Malaysia. Also, I think everyone needs to know that my views for negative articles are usually higher than the positive ones. Do not ask me why. Maybe people just love bad news for whatever reason. So, I need to continue writing facts yeah.

Thanks for reading and being updated and happy sharing if you also think we are the ones making our country feel terrible and would like to share some factual numbers. Take care.

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‘Healthiest’ Malaysian banks since 1998. Wow!

Do you believe the Malaysian economy is still doing fine? I know, majority would answer, NO. How could it be right, since we have bad news everyday? It’s okay, I give you one piece of good news about the banks’ ‘health’ condition today. In a Bloomberg article published in a local English daily, it was reported that total bad loans are at its lowest levels since 1998 for Malaysian banks. Bad loans are loans which were borrowed but never paid. Thus low levels of bad loans meant that majority of everyone who borrowed were able to pay their loans on time.

Before we cheer and jump for joy, Standard & Poor’s said that we should be careful with this piece of good news because this may be a cycle and the current numbers may already be the bottom and it can only start going up from now. S&P credit analyst in Singapore Ivan Tan said, “Loan quality is possibly at a cyclical peak. The non performing loan ratio is probably as good as it can get.” The lowest point was reached in April where the non performing dues as a total portion of total loans fell to 1.17%. Yes, this means that only 1.17% out of the total loans could not be paid on time.

Another reason why the banks are ‘healthy’ is because the unemployment rate remains extremely low at just 3%. This meant that Malaysians were able to continue servicing their debts. Thus, one good sign to know when the bad loans would start increasing would be the total unemployment rate. One negative blip is that the number of bankruptcy cases among Malaysians are increasing year after year. Would this be continuing? Well, according to the Consumer Association of Penang (CAP), a total of 55 Malaysians are going bankrupt every day and Malaysians are using up 44 percent of their income to pay for their debts. If this shows an uptrend, then the bad loans would definitely be increasing in future.

Personally, I would certainly hope that majority of everyone who reads kopiandproperty.com are using 44 percent of their income for property and not on the unnecessary. Happy spending.

written on 9 July 2015

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LRT 3: Bandar Utama to Johan Setia, Klang, updates

Transit Oriented Development (TOD) is a very popular term these days. Everyone wants to buy as close as possible to some of these stations while developers around these stations would be highlighting this fact continuously as well. Anyway, good news thus far. First, we have good updates about
MRT Line 1
 which seems to be well on track to start by end of the year and the whole line by June 2017. We also have progress in
MRT Line 2
 which has also seen progress and should also be on time as this is now the second MRT project and we already have many experienced people in the construction. There’s also the
LRT extension
 which will open next week!! Now, let’s get ourselves updated with LRT 3.

This new line starts from Bandar Utama to Johan Setia and the total development is 37km long. Take a look at all the stations in the image. The latest one was an adjustment from the original. Instead of cutting through Taman Muhibbah, there would now be a station at Pasar Besar Klang instead. As per Prasarana Malaysia Bhd, it has already completed the pre-qualification process of the RM9 billion and the first set of contracts to be awarded in two to three months time. Currently, what is happening is that land acquisitions have started. The project delivery partner MRCB-GK project said that only the ones that could give assurance of quality and timely delivery within their cost parameters would be chosen. He reiterated, “We will not settle for less.”

I think it’s now clear that growth of Greater Klang and beyond has to be complemented by an integrated public transportation system. The early years were really not good but I do see positive changes these days. The connections are now much better and I think many people have also started realising that buying further may be the only choice and due to this, the public transportation must buck up to support the trend. I also believe with the ever increasing costs, for example, when I came to KL 3 years ago,the parking fee near my office on a daily basis was RM5, then RM5.50, then RM6 and today it’s RM8. Another open area nearby charges RM10! What about the toll rate? Petrol seems to be cheaper than previously but when we add in the jams, actually, it’s a huge bill every month. Thus, I really do look forward to all these new lines and new stations. I hope many would think like me? Haha. Perhaps the jam may be lessened in the near future.

written on 22 June 2016

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LRT in Penang, Tunnels and up to RM27 Billion Transportation System

I hated the jams when i was in Penang just one week ago. Just 1.5km in Jalan Perak took me close to 45 minutes. This is crazy! So, when I saw this piece of news, I am very happy and I think Penang is moving in the right direction is this comes true. It was reported that GAMUDA Land is the favourite to land a job as a Project Development Partner (PDP) in the implementation of key components of an integrated transportation plan within Penang island. As usual, favourite normally would be the one who wins. (Thanks to the one who leaked the news) Other companies in the running include famous names such as IJM Corp Bhd, MMC Corp Bhd, Scomi Group and WCT Holdings Bhd. The last company is a key builder for KLIA2.

Project Development Partner meant that they are the project manager and they will have to ensure the project is completed on time. Project is valued at RM5.5 billion. All these potential PDP needs to have a minimum of RM3 Billion turnover and a track record of a minimum of 15 years in order to participate. I also like this requirement. Even if the price quoted by the most qualified company is higher than the other untested companies, I would still give it to the most qualified company because this is not a small project. Imagine you award it to an untested company and it is supposed to be completed in 5 years and this company built for 3 years, then delayed for 2 years and eventually stopped!!?? The state had just wasted a minimum of 10 years. Not 5 years because the project would have to be restarted!

Two key components mentioned would be a 17.5km LRT from Komtar to Airport and a link from Bayan Lepas to Tanjung Bungah. With sufficient stops at key areas, I think this LRT can be a success IF the state is serious in limiting the number of cars into both the town area and the Industrial Area. It’s so JAMMED all the time even today. The payment is not with cash but will involve allowing the successful company to reclaim a sizeable amount of land in the state. This should be a win-wins for both parties but the company would need really deep pockets or is able to raise cash for such a project.

Where are the two areas which will be reclaimed? They are the southern part of the island, up to 2,000 acres of which some 600 acres would be for the future expansion of the Penang International Airport and to enlarge the Free Industrial Zone. Another option is the seagrass land located in between the Penang Bridge and the river mouth of Sungai Pinang. I think both pieces are okay but if I am the developer, I would prefer the seagrass land. 🙂  I think the price psf is going to be higher but I am not the PDP. To me, this current plan seems much better than the ‘Gurney Tunnel’ project which until today I personally feel is still lopsided because the reclamation happens before the tunnel building. Perhaps I just do not have enough details.

Looking forward to a smooth traffic flow Penang in few years’ time then. Just hope it would not be another project which will only complete in 2020? There are already many projects in Penang which are either to be completed in 2020 or beyond.

written on 6 July 2014

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‘My project is’ xxx metres from a LRT / MRT? Here’s one 6 metres away.

These days, brochures will always tell all potential buyers how close their development is from the LRT / MRT station, usually a future one. Developers are trying their best to outdo the other projects by telling the buyers that theirs are nearer. Distance wise, it has to be below 500 metres so that one can walk to the station in around 5 minutes. Typical walking speed is 5km per hour. That’s roughly 420 metres per 5 minutes. For me, I think 800 metre would be the maximum level people could tolerate. That will take 10 minutes. In the morning, it’s okay. Well, what if the distance away from the station is just 6 metres? Wouldn’t that be awesome? There’s really the case for Kelana D’Putera Condominium which will only be 6 metres away and the LRT line will even run through the grounds of the condominium. It will take up drain access, cut away some trees and in close proximity to windows of units.
Please refer to edgeprop article here.

Kelana D’Putera Condominium management committee chairman Jeffrey Lau, as quoted by the daily, said he found a Detailed Environmental Impact Assessment (DEIA) from 2015 which showed that the nearest station (Persada Plus now Station 6/SS7) was initially, approximately 500m away. He said, “In that DEIA report, it was stated that even at almost 500m away from us, the residual impact from the LRT3 project would be very strong. It also stated that the noise levels ‘exceeded acceptance limits’ for both day and night.”  Lau further shared, “Cars are parked along Jalan SS7/26, which is only 5m wide, all the time and the traffic will only increase if a station is added.”  Since the station will not have a park-and-ride facility, LRT users are likely to park their cars along Jalan SS7/26. During emergencies, fire engines and ambulances will have a hard time maneuvering through the narrow road.

The Star
 reports that LRT3 project director Patrick Hwang Chee Leong said: “Due to cost optimisations directed by the Finance Ministry, we are now undergoing a review and redesign of all stations, including stations near Kelana D’Putera. We shall brief the residents after our new design is completed. He added, “On a positive note, we believe that when the new LRT station is operational, it will result in a reduction in traffic volume as commuters shift from private vehicles to public transportation, which will cause a 30% drop in forecast future traffic volume.” Hwang also noted that the pedestrian crossing from the commercial area to the original station’s location was 700m, while the new location reduced the length to 200m, a more pedestrian-friendly distance. Lastly he said, “We thank the residents of Kelana D’Putera for highlighting their concerns, and hope that our statement offers them greater clarity. We welcome the residents to continue to communicate with us on issues that concern them.”

I think in this case, everyone would just need to wait for the final confirmation from the authorities since the new LRT route was only just decided not too long ago. Personally, I would love to have a LRT station just steps away but it should not be at the expense of everything else; safety issues, other inconveniences and even privacy. I used to stay in Kelana Puteri and I can safely say that Jalan SS7/26 is always full of cars parked along the road. So, the safety issue raised is not an imaginary one. Let’s have a solution and not just the reasoning of ‘cost-cutting.’ This is the new Malaysia after all where transparency is now very important.

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written on 21 Aug 2018

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LRT Penang, positive signs from SPAD.

This is a piece of news which is positive for Penangites and me. Seriously, Penang needs a LRT.
The jams are getting heavier by the day
. Okay, if it’s a tram, I guess it is still okay but having visited cities with LRTs instead of trams, I think I favour LRT more. I also think Malaysia has more LRT expertise compared to tram. Penang State Local Government, Traffic Management and Flood Mitigation Committee chairman Chow Kon Yeow said SRS Consortium, the Project Delivery Partner for the Penang Transport Master Plan (PTMP) has met SPAD last week for discussions. “They have met and its seems favourable to the state,”

In fact, Penang government is hopeful that conditional approval would begin for its first line Bayan Lepas light rail transit (LRT) project from the Land Public Transport Commission (SPAD) by July. Chow then added that once approved, the state may start a three-month public inspection beginning August, to allow public feedback. The construction should start in 2017 and the operations for the first phase should happen in 2023 while the full line should be operational by 2030. Once approval is obtained, Special Purpose Vehicle (SPV) will be set up to administer the implementation of the projects.

Penang Transport Master Plan
 includes the Bayan Lepas LRT project, along with the Pan Island Highway link and the reclamation of two islands off southern Penang. The RM27 billion PTMP projects also consist of a 6.5-kilometre undersea tunnel, three highways and Penang Sky Cab. It was reported recently that the Sky Cab has not been approved recently. I only wish that all these could be implemented soon as possible. Keep politics out because this is for the stat’s future. In other words, Penangites future. Happy reading.

written on 17 June 2016

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LRT with a sudden boost in ridership needs to keep up

I believe public transport will help elevate more secondary areas into ‘acceptable’ and in future to be ‘desirable’ locations. This is so important for some of us who could not afford expensive properties and yet wants a home sweet home. We should not only have those few loved areas all the time. This is Klang Valley after all, the most
prominent property market for Malaysia

with huge growth potential.

In an article in TheStar recently, some LRT commuters are complaining about the inability to board a train due to overcrowding on peak hours and high traffic areas such as Kuala Lumpur City Centre (KLCC) station. It was said that some had to wait for a few hours before they could board the train. The overcrowding was so bad that these commuters had to queue behind the ticket barriers as there were no space to go in. This has happened due to the increased number of riders with the completion of the
Kelana Jaya and Sri Petaling LRT line extension projects.

Some reasons were given by the authorities and even assuming these reasons were valid such as rain or peak hours but I think it’s important for the situation to continue to improve. If the number of trains are not enough to cater to the rising number of passengers, get more. If the frequency is insufficient, increase them. Improve the maintenance so much that we are indeed world class. Our neighbour should be a good example even if recently there has been more issues.

As per
Prasarana Group
 Communications and Strategic Marketing head Lim Jin Aun, with these new LRT stations, Prasarana will also be introducing new trains in stages, especially for demand during peak hours. He said, “For the Sri Petaling and Ampang Lines, we have ordered 20 six-car trains for the line extension and 30 six-car trains to replace the existing fleet. It will be fully deployed in stages by end of 2016. With the 23 new stations, total ridership increased by an additional 23,000 per day.

I love that the LRTs would in a few months time be completed by the first phase of
MRT Line

1. I also want to trust that Prasarana is already doing a lot of new things to make it work. I told my wife two weeks ago that we should take the LRT to KL city centre during one of the weekends. She was worried about carrying the stroller etc. I told her, we should still strive to make it work, somehow. We shall see.

written on 18 July 2016

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Penang’s LRT plans vs Tram proposal. Let the best option wins for Penangites.

Just a week or so ago, I wrote about the fact that financing, constructing and behaviour changing are three different things. Here’s that article:
Financing, constructing and behaviour changing.Three different things really.
  I was referring to the Penang Transport Master Plan, specifically the LRT. Even if financing has no issues and construction starts and ends on time, that last part which is the behaviour changing would need a more thorough plan. Just because it’s built does not mean the people would all dump their cars at home and take it. Remember, convenience of having a public transport may be trumped by the inconvenience of having to walk a couple of hundred metres to reach the nearest station or even the waiting period for transit buses to the station. Somehow, Penangites are very used to driving. Yes, they hate jams but from my survey a few years ago, none is willing to drop the convenience of driving just yet. Unless of course the Penang state government has policies to support this LRT plan. Singapore can be one super-duper example to follow. Make it ‘too expensive’ to drive is one of them.

Then, I come across this article which is an open debate between a PhD postgraduate student from the Centre for Transport Studies,
Imperial College London. (Ranked 8th in the WORLD by QS World University Ranking)
  and former former MBSP councillor Joshua Woo,
“LRT safer than trams for Penang”
. Please refer to the
full article in FreeMalaysiToday here.
  I do not wish to comment on who’s more ‘correct’ but here are a few facts for everyone to digest.  It says that a it was recently highlighted that there are around 1.4 million motorcycles and 1.1 million cars in Penang. Taking the bus will take at least two times longer relative to motorcycles and cars. It was also shown by the the Halcrow report
clearly showed
 that BRTs and trams are significantly cheaper to build, maintain and operate versus the LRT.

The writer also shared that the
annual ridership
 for the Penang LRT is forecasted to be significantly higher than most MRT lines in London, Singapore and Kuala Lumpur on a per capita basis within its first year of operations. If this forecasted ridership fails, then the Penang state government will have at least RM1.2 billion in loss of ticket revenues over 10 years.This will threaten the financial viability of the LRT project and the state’s financial health. As at today, no one from the Penang government has come out to refute these findings. The writer shared that with the 96.8% car modal share in Penang, it’s worthy to improve transport safety and reduce traffic congestion is to increase Penang’s public transport modal share from 3.2% to a more respectable level of between 10% and 20%. Currently, the Penang state government  has set itself a target of achieving a 40% public transport modal share by 2030. This will most likely not be achieveable because the SRS PTMP is heavily focused on roads over public transport.
Full article for reference here.

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RM9 billion LRT3 construction starting March 2017

Beyond just the construction of
Mass RailTransit (MRT) Line 2 which has started
, we will also be having
Light Rail Transit 3 (LRT3)
 starting construction in March 2017. According to a
few media reports
, the LRT3 project’s Phase 1 will be completed by August 2020 (this is only 3.5 years away)  while the completion of the whole project within six to seven months thereafter. Prasarana Malaysia Bhd’s President and group chief executive officer Datuk Seri Azmi Abdul Aziz said, “We already completed some parts of the land acquisitions and would see some early phase of the project to start as early as March.” Need to know a bit more? Here’s
the official website.
  In brief, this is a 37-km line linking 31 stations between Bandar Utama to Johan Setia in Klang. There was an earlier article about it here:
LRT3: bandar Utama to Johan Setia Klang, updates

The most important thing I found out from all the articles is that Prasarana is also looking at the contribution from non-fare revenue. They believe it MUST be increased. They are thinking of doing this through
property development and retail. For example joint-ventures with property developers and getting more retail outlets into its stations. It is looking at all the light rail transit (LRT) and monorail stations which will be transformed to be transit-oriented developments with more retail offerings such as convenience services and products, as well as other retail attractions. Currently, the contribution from this non-fare segment is 20 percent and it is looking to increase this to 30 percent for 2017. By 2020, the target is to increase this to 50 percent. (YES, definitely a tough one but realising this is very important. Hong Kong’s Mass Rail Transit (MTR) Corporation is the best example on how to run a successful public transportation company. It has been successful with its property ventures. Here’s one of the articles explaining why.
MTR’s property development aspects

I am really positive with how Klang Valley would become when all these are completed. Connectivity means more economic activity. However, we should also be aware that it’s important that all these new public transportation infrastructures are operated profitably or with as little subsidy as possible. The reason is simple, if this is a public transportation, once fares are set, it is extremely hard to increase it. This is despite the fact that operations costs would rise every year. Any operator relying solely on tickets to cover all its operations costs would likely fail and need government subsidy continuously. Some of the projects that Prasarana is venturing into? A
40-storey high rise building above the Dang Wangi LRT station
, residential and mixed developments at Jalan Klang Lama and Melawati bus depot. It has also brought in retail outlets, convenience stores and ATM’s into some of its stations. In fact it is also the operator of the Metro Southern Line in Makkah, Saudi Arabia, and technical collaborations with the Bangkok and Jakarta MRT. (Yes, Malaysia is ahead than these countries). Happy reading and perhaps even moving to Klang in a few years time? I think properties there are still more affordable than many popular hotspots within Klang Valley today.

written on 3 Feb 2017

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LRT3 is moving along, RM9 billion and 26 stations

Many continue to believe that their property choices remain the same even with more LRT and
MRT stations.
 Yes, there’s also the BRTs. Be reminded, buying undervalued for potential appreciation is a
cheaper option
 compared to buying hotspots and selling it when it goes even higher. There’s also that ceiling price where the majority could no longer afford and even if they try, the banks would not want to approve. Banks need to protect themselves too. Another piece of good news for accessibility to even more secondary areas. Yes, it’s by 2020 but the construction should start in 2016. Yes, this timeline has been delayed too but better late than never.

It’s important to note that the
more choices
 that I wrote earlier does not need to be around or nearby MRT stations. LRT 3 is another consideration too. In many media reports recently, Syarikat Prasarana Negara Bhd announced that for the competitive tendering for the 37km project, they have identified 96 applicants who met the requirements of a weightage-based evaluation criteria. In brief, these 96 would proceed further to tender for the LRT 3 project. This will be initiated by Prasarana and project delivery partner, MRCB George Kent.

LRT 3 is a 26 stations light rail transit project stretching from Bandar Utama to Klang. Understand it in brief. Image attached. Travelling between the two end points would take 53 minutes over a 37km distance. It is expected that by 2020, it will serve a total of 74,000 passengers per day. LRT 3 is expected to start operating in 2020. To those who needs to drive, park and ride, there’s a total of 6,000 parking spaces within 10 stations. The 26 stations are
here.
  Happy searching.

written on 10 May 2016

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Luck happens only when we prepare well, period.

Sorry, I do not believe in
buy, buy, buy (BBB) mode regardless of the property market
. For some of us who bought because we saw a huge group of people buying, let’s hope we are lucky. A few friends asked if the market is recovering since there has been a few launches which received overwhelming responses. Please be reminded that there are reasons why people bought. It may be their third or fourth property investments. Some of the older folks may even be buying for their children who’s studying nearby and needs place to stay. One day in future, I would also want my daughter to stay nearer to her university and not having to travel 50km daily or stuck in 1.5 hour jam daily to reach her university, right? For some of these buyers with a totally different reasons to buy from some of us, should the property price stay stagnant, they can hold.

Assuming it’s
our first property purchase
 and when the whole development of over 1,000 units are completed, how long can we hold in a slow market? That is a question some of us should answer first instead of jumping into the pool. Many of those who jumped into the pool may be capable swimmers. Alternatively, are we prepared to stay in the property we bought and stop renting the current place or even selling off our current home? If the answer is no, better be prepared for this potential happening. Some of my colleagues hate travelling. Everyday when they arrive at work, they would complain about the never ending jams. Yet, they are still buying into some hot areas because they said everyone likes that place, so it should increase in price. They chose to ignore the thousands of new units coming up. When I asked if they would choose the public transport instead since there are now even more stations, their answer is a strong, ‘NO.’ Haha.

Actually the days when the property prices can increase fast is over. For a
RM250,000 condo to rise to RM500,000 in 5 years
, it is possible because we still have many couples who can jointly purchase the RM500,000 property. Moving forward, the only ones who can afford to buy our RM500,000 property for RM1,000,000 would be the top few percent of the working population. The question is, would they? If they are knowledgeable about the property market and are willing to change their lifestyle and buy further away, then the chances for them to pay ever higher for a
property in a hotspot becomes even lower.
 The number of areas which is becoming ever more accessible within KL and Selangor is increasing and not reducing. Be reminded that many of the hotspots today were not favourite spots some time back. BBB should still stand for Better Beware Brother. Luck comes only to those who prepare well. Else, hope for one.

written on 10 Jan 2017

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LuLu and Malaysia, RM 1.3billion investment for retail

Another new comer into the hypermarket scenes coming. Yes, perhaps this particular segment install full of growth potential. Anyway, it’s also survival of the fittest. Look at the few brands which has already changed hands or name. It’s not easy. Margins are low as well. LuLu Group, the owner of the largest hypermarket chain in the Middle East will be rolling out 10 hypermarkets initially and will be investing RM1.3bil (US$300mil) in Malaysia’s retail market over the next two years. Its first hypermarket will be opened in Jalan Munshi Abdullah in Kuala Lumpur next February.

It is currently operating 118 hypermarkets and shopping malls in the Middle East and India and it said that it provides world-class shopping experience, highest quality products, competitive prices and excellent customer service. Seems like this is not the usual affordable chains we have here but more of the boutique type of supermarkets? The ones I love to shop at but seldom buy a lot due to the prices? Hmm… Shall drop by next February to take a look. It will be open in following retail developers. They include Greenhill Resources Sdn Bhd (Setia City Mall), KLIA Properties Sdn Bhd (for their new project in Bangi) and PNB Commercial Sdn Bhd (Perling Mall in Johor Baru). Other hypermarkets would be in Kota Baru (Kelantan), Shah Alam (Selangor), Ipoh (Perak). Malacca, Penang and Kuala Terengganu. LuLu employs over 35,000 people and in Malaysia, the total workforce it will have would be 5,000.

I love to walk and shop along supermarket aisles. Many times, just getting to know new brands, new items and sometimes buying some new brands just to try them out. I feel this is a good therapy for stress. It’s not expensive too since these items are mostly food stuffs that I would be sharing with my family anyway. Compared to perhaps buying a new car? Haha. Anyway, I go to a supermarket no less than twice per week. Would definitely drop by this LuLu when it’s open. I do wonder why the name’s LuLu though. Happy shopping.

written on 23 Nov 2015

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Lunch? Dinner? Groceries? Order through orders.my  Help businesses. Thank you.

My good friend told me about this latest platform which is growing by leaps and bounds a few days ago. I checked it out and found out that
orders.my
is a FREE platform for sellers. In other words, if you are thinking of starting a small business selling your secret recipe Loh Mai Kai, then you can
register your business at orders.my (click here)
 and they will help you tell the world about it. If you are a shop struggling to gain more customers because of the current COVID-19 pandemic, this is also one way you can diversify your customer base too.

By the way, a simple search reveals that just cooked meals alone, you have 621 local delivery sellers. Beyond just cooked meals, you may also look for Bakery and Breads (68 choices is aplenty), Coffee and Drinks (Oh… latte, don’t miss the latte!), Desserts and Cakes (WOW), Fresh Fruits (stay healthy please), Fresh Seafood (help the fishermen yeah, these days, it’s getting harder for them), Fresh Vegetables and more…
Click here and start searching.

Let me show you what I found in terms of some of my favourites yeah. Yummy. Mama Chee has lots of dumpling choices.

How can anyone resist some Nyonya food? I found this one from Masakan Nyonya Utara.

By the way, ordering is super easy if you are using your mobile phone. Just need to choose the  food you like, Whatsapp your order or scan to order immediately. Delicious food would arrive at your doorstep or you may even drop by to pick it up if it’s nearby and you like to also take a look at the actual shop.

Go on, help these small businesses so that all of are going to survive this current COVID-19 pandemic. I know, you already know how to cook some of the food but I think we should also occasionally do something good for the society. Ordering food, drinks and groceries? Oh, this is super easy.  If you happen to be a seller reading this right now, perhaps it’s time to start sharing your secret recipe with the world and make the recipe owner super proud okay? Plus earn some money to support your household income too. Here’s their
Facebook page. Very lively and lots of happy announcements too.

On behalf of all these sellers, thank you. Yes, I will be sharing my experience and the food very soon too.  Oh yeah, this is
NOT a PAID article
 yeah. When you order your lunch for delivery, there’s also no box to fill up a referrer name. They will not know you ordered because you saw it here. Last but not least, just note that every time you order, the seller selling to you will be happily serving you because they are NOT charged any
commission by Orders.my

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‘Luxurious’ coffee and avocado toasts? Skip it to be rich!

I am an old-fashioned guy. I do not believe in quick-rich schemes or even 5 percent returns per month type of ‘investments.’ (They are fake by the way). Read here:
Why do some people still get cheated? Sigh

With regards to property investments, I always believe savings is the best starting point. Too bad, I am still just a working professional and could not afford to retire yet. I work hard and I believe smart people who does not work hard will not achieve much, unless they are lucky their whole lives. So are you like me, looking at property as a vehicle for us to become rich enough to provide for our loved ones? Then, keep reading and listening from those who has done it and is today enjoying the fruits of their ‘savings’ which was used for an investment. There’s one below.

For those needing real tips on how to be rich, this is the advice from someone who grew his wealth via properties. His name is Tim Gurner. He is an Australian. His company owns 5,000 apartments worth AUD2.7 billion today.The full article in
today.com is here.
 He shared, “When I was buying my first home, I wasn’t buying smashed avocado for 19 bucks and four coffees at $4 each.” I think he wanted to say that whatever we do, there’s little need to overspend on the unnecessary. I just came back from Perth and the cheapest economy sandwich loaf in Coles supermarket was less than AUD1. (RM3.22) That would last us easily a few days! Well, this is if we are really crazily saving up for some investments. From a cup of coffee in the food court for RM2.50 to a pack of 3-in-1 White Coffee for RM1 or even a pack of black coffee with sugar for 50 sen. Are we really spending only when we have more to spend or are we spending everything we have?

In Malaysia, we
have ever more cafes
 and this is also the one where many millennials spend their time and their money. One cup of freshly brewed coffee and a slice of cake? It would easily be RM16. Are there cheaper choice? Well, yes but it would not look so cool. 😛 Add this indulgence into the tendency to ‘appreciate’ better things in life; branded stuffs most of the time and we suddenly get a huge group of people who says they could not afford their first property because everything is not right. There are even articles supporting this fact which to me is just XXXXXXXX. My parents (both educators) even needed to borrow money from relatives when they bought their first home! Was property not cheaper then? It’s not easy then, not easy now and certainly not easy in the future. Happy investing. (save first!)

written on 19 May 2017

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Luxury car sales are up and yet property transactions are falling?

Last year, many friends changed new cars. Except for me who traded in my Persona for an Exora, all of them changed ‘better’ cars. Yet, these same friends were the ones who kept complaining that money has depreciated, so many things have become so expensive and GST will somehow kill the economy. As usual, they would tell me that they can save more fuel with their cars. Read here:
Sen Wise, Ringgit foolish
 In conclusion, a bad year of 2015 for Malaysia, I heard? Recession even, some say even if totally untrue. Read here:
Malaysia in recession? Not in 2015

Well, as per reported in a local media, for Malaysia’s largest Mercedes-Benz motor vehicle dealer Cycle & Carriage Bintang Bhd (C&C Bintang), it was an extremely good year. It’s net profit is up by five times to RM52.12mil for 2015 when compared to the year before. This came about from higher revenue as well as 55 percent up in sales, helped by the hybrid models. These days, driving luxury is no longer enough for some. It must be luxury plus caring for the environment. (Do note though that for the car to only use the electricity portion, most of the time, it must be driven in low speeds….) One day, when I am as rich as them, perhaps I would do the same thing. Haha.

In comparison, the whole automotive sector barely moved last year as per The Malaysian Automotive Association. With these great numbers, should it not reflect a better market sentiment? Actually, total property transactions are still dropping. Retail spending seemed to be weak. Many who wanted to buy are now waiting to buy. Actually, a better way is to buy your first home, stay in it and wait. It usually works way better than waiting to buy. In terms of the opposite direction between the sales of luxury cars versus the appetite for properties, we should be a little more analytical. The prices of many ‘liveable’ areas such as Desa Parkcity and some condos in Mont Kiara or even Bangsar are still holding on strongly. Why? Answer is the same as that of luxury cars. The number of people getting richer are increasing too.

We should not have the wrong assumptions that bad times are the same for everyone. Many times, it is during these trying times that opportunities open up. Read here:
In a slowing market, sanity returns. How true
 Do you know why good businesses set up during bad times fare better? Well, setting up costs lesser and there are far fewer competitors too. Due to these lower cost structures, once business volumes pick up, the business would achieve far higher economies of scale compared to a new business being set up during good times with higher costs and much more competition. As many property gurus would say, we should buy when there are many desperate sellers. We should start selling when everyone is queuing to buy desperately. This really did happen towards the end of 2012. Happy waiting for the start of a new cycle….

written on 24 Feb 2016

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Luxury car sales? Combined it is still a few thousand units monthly in this small market.

It’s confirmed. 2019 car sales in Malaysia surpassed the 600,000-unit mark and this has beaten every year before that all the way back to 2015 when it was also over 600,000 units. By the way, this was an earlier article on car
sales, economy and property. Quite a contrary to what people are thinking yeah.
So, what has happened to the economy which has enabled SO MANY people to buy new cars then? Well, 2019 should be just another year of 4.X percent for GDP growth.

Overhang property numbers still going up. Oh dear, perhaps people are buying cars since they could not afford a property then? if this is really the case, I am worried for the future of all these new car buyers yeah. However, my personal thought is this. People buy cars because they already have a stable job and perhaps even a property and that’s why they want to park a new car inside their home. No point in renting a home but parking a nice car in the porch right. Think about it seriously…

Article in themalaysianreserve.com
   In 2019, the national car brands gobbled up lots of market share from the non-national ones. National carmakers Proton and Perusahaan Otomobil Kedua Sdn Bhd’s (Perodua) 2019 market share stood firm at 56.4% and this is higher than the 48.8% reported in 2018. Non-Malaysian brands lost 112,300 units of what they sold in 2018. Perodua alone sold 240,341 units and Proton sold 100,183 units.

Luxury segment also lost some shine in 2019. Mercedes-Benz Malaysia sold just 10,020 cars versus 13,500 cars the year before. BMW / MINI brands meanwhile sold 10,400 cars in 2019 versus 13,300 vehicles in 2018. Volkswagen sold 5,559 cars versus 7,001 a year earlier while Volvo showed an INCREASE from 1,413 cars in 2018 to sell 1,883 cars in 2019. For even more information on which car brands went up or pushed down, please read
Article in themalaysianreserve.com

Look closely and we will notice that just adding the numbers of these few luxury brands stated above is already over 2,300 units every month on average. These are not the only luxury brands in the market yeah but the rest of luxury car grouping has a smaller number than these few brands. This over 2.3k number is still a good number and shows that people continue to be able to get car loans approved or even paying cash for them.

By the way, I think there are also many other people who opted for those reconditioned cars from Japan. At least 2 friends opted for those as they say price is a superior option to choose them. Secondly, watch Volvo yeah. Increasing numbers show promise. Volvo should be selling more cars with the XC series… as well as that new S60 sedan. The S60 could achieve the 0-100km mark in just 4.4 seconds. Haha. Yes, I will continue to save my money for one in the future yeah.

By the way, looking at the car sales numbers for 2019 certainly do not reflect what people are telling us; that everyone is doing very badly… Happy understanding.

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Young people will stop buying property and cars? Noted

Header image from paultan.org (click here to read)

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