Relaxing Family Day, New Property Open Day, Mother’s Day in Ipoh

I happened to be in Ipoh this weekend. After a sumptuous dim sum breakfast with my family, I decided to drop by a Craft Bazaar by Kinta Properties. It was supposed to be for Mother’s Day as well anyway and thus I went with my wife and my baby daughter. As soon as I arrived, I saw two ‘old’ friends. Mei Yee and Sook Wah. Both were in their Kinta Properties uniform, obviously working hard as usual. They greeted me and said, ‘WOW, your baby daughter is a mirror of you’. I laughed and said that don’t you know these days, you can use printing technology? Both of them laughed. Good friends are not easy to find, keep them, especially friends from Ipoh since I intend to retire there in future. I continued to walk around, got a free balloon for my baby, my wife did one of those colouring sticker thingy and then we went for the real reason why we went there, to view the latest launching by Kinta Properties, Grand Retreat 2.

Klebang is an area which is not considered high end. In fact, it was considered very far away. Well, let me tell you what are some of the things I found out on the way there. It was 19 minutes away from my home in Ipoh Garden South. Kinta Properties has a huge piece of land there. They have launched numerous other projects there and for the earlier residential ones, there are already cars parked inside the compound. There’s a new Jusco being built. A new Econsave. Many other new residential projects by many other developers. Now, for the actual show unit. I actually liked the unit. My wife even remarked, ‘the master bedroom is bigger than our first apartment’s kitchen and living room’. I laughed. Actually, if I am now based in Ipoh, the unit seemed perfect. My family and my parents and sufficient rooms in case my brother comes back for a weekend getaway. The price is considered high but not in comparison to the size of the unit. Kinta Properties call this part of Ipoh, Bandar Baru Sri Klebang.

Think clearly, for the size and concept and the developer’s name, if this property is in Ipoh Garden South, I dare not even go visit their show unit. Let’s see what will happen a few more years down the road. Total of 650 acres to be developed. For any developer who is established and have dedicated staffs who works hard, I think the answer is clearer.

written on 11 May 2014

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Release of quota after 6 months, with conditions.

One major concern on cashflow for developers would be unsold units. Beyond just money, it will also be delaying their next project. For some of the developments, the Bumiputera quota is something they need a solution to. To a developer, they just want to sell all the units and could then focus on their next project.
Article in edgeprop.my here.
Perak Menteri Besar Datuk Seri Ahmad Faizal Azumu said beginning 1st April 2019, housing developers in Perak will be allowed to apply for properties under the Bumiputera quota to be released to other buyers if it remains unsold by the Perak Housing and Property Board (LPHP) within six months. He said that the time frame reduction to six months is to ease the burden on housing developers.

He added, “If the properties are unsold after six months, the developers may apply for 50% of the Bumiputera quota to be released to other buyers, on the condition that the properties have achieved 30% physical construction and 60% of the non-Bumiputera lots have been sold. They may apply for the remaining 50% to be released after physical construction has reached 80% and 90% of the non-Bumiputera lots have been sold.” He also announced that the ceiling price for “Rumah PerakKu I” and “Rumah PerakKu II” will be increased so as to attract private developers. “The prices of Rumah PerakKu I houses will be increased from RM70,000 to RM90,000 and from RM140,000 to RM180,000 for Rumah PerakKu II houses. “In line with the price increase, the minimum build-up of Rumah PerakKu I houses in zone A will be increased from 860 sq ft to 900 sq ft,” he added.
Article in edgeprop.my

Frankly, when it comes to property, it’s extremely important to make it big enough so that a couple who bought it could also continue staying there after they have a bigger family. The price difference between RM140,000 and RM180,000 is RM182. The potential gain is however much more because these homes could be built with better specs too. Let us be reminded that when a home is too shoddily built, the maintenance will be far higher and for the owners, the value will not appreciate too. This meant that the price could not help them hedge against inflation. Just look to HDB flats in Singapore. They are well built and over the years, some have risen in
 prices to hit SGD 1 million too.
Happy understanding.

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

written on 18 Feb 2019

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Relevance of top 5 future home trends in UK vs Malaysia.

I read an informational article in The Star Online today. ‘Top 5 Future Home Trends’. I would not say its findings are extremely surprising but it’s really relevant to anyone and everyone who’s thinking about investing in property. It reinforces the idea that property investment is for the long term further. If we assume UK to be an advanced market and Malaysia as a developing one going towards advanced, thus we may see the same situation happening in Malaysia in the very near future. Malaysia’s property market is also considered very established and safe and it follows the Torrens system. Read more here.
Torrens System.

The Five Trends are as follows:

1. The lifestyle delay

First-timers are buying property later.

The article said that single young adults are likely to stay in their parent’s homes or rent instead of buying a home. Personally, I think another potential reason might also be that the type of properties that the first timers want today does not commensurate with their take home pay. Thus, they may need more time before they are able to have sufficient money or perhaps share the mortgage when they get married. Be objective, what kind of properties do you think a 28 year old Degree Holder senior executive wants today? Flat? Low Medium Apartments? Get real….

2. Risk-free society

Risk-aversion impacts choice of place

A safe environment is critical. With the availability of information, everyone knows about the latest happenings and typically negative news spread much faster. Thus, everyone wants to buy where everyone else wants to buy. That’s why these days you see Condos becoming ever more popular and their advertisements typically comes with ‘4 levels of security’ or ‘Limited Card Access with CCTV’ etc. Be reminded that landed properties which are gated and guarded may be loved by majority but not everyone can afford such a property these days, at a hotspot area nonetheless.

3. Heavy Meddle parents

The article mentioned that 1/3 of UK’s Gen-Y buyers expect handouts from parents.

I seriously think for Malaysia, this is not an expectation but more of a certainty. Many parents who worked hard previously are now wealthier and thus are able to assist their sons and daughters in their first purchase. Perhaps even buying a property as nearby as possible to them. Thus, we can see certain popular areas becoming even more popular. If I am a parent paying for my children, I would not want them to buy a place which is VERY FAR away from me, certainly.

4. Maximising behaviour

Buying with mobile shopping tools

I actually written an article about this before. You can read it here:
Why technology is changing property buying behaviours
. Information are now available at the tip of a finger. No one buys without knowing more, knowing what others think, knowing what others they look up to buys.

5. Unique belonging

Gen-Yers want to stand out as individuals

Personally, I have worked with many awesome Gen-Ys who is smart and form their own strong opinions. They want to establish something for themselves by themselves. Thus, if you notice the newer projects are becoming ever more sophisticated, ever more special. You cannot sell just a  ‘Condo’ anymore. You need ‘The first one with a garden overlooking the best KL nights has to offer’ or ‘Why settle for the ordinary when you are special’?

As you can see the findings are hardly something you heard for the first time. Yet, it helps you to understand what you are buying today and how it may affect you when you want to sell it later. Are you buying in advance so that when the Gen-Ys are ready and have more money and wants to upgrade, they can buy from you? Or are you buying something which the Gen-Y likes and yet could not afford but they are okay to pay you good rentals for it? Investment requires you to make informed decisions.

written on 24 March 2014

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When the REN is killing his potential deal

The below was an actual conversation between two people. It happened two days ago. A Real Estate Negotiator (REN) and a potential customer. They were on their way to visiting a condo unit in Gelugor, Penang. The unit was at Level 19. Their conversation as follows:

Potential Buyer:  How many floors are there for this development?

REN: We are looking at a unit on Level 19. It’s considered near the top. Total floors I think is 28 floors.

They arrived at the lift, went into the lift and the number of levels shown is until Level 35. 🙂

REN: Sorry, I remembered wrongly.

After viewing the facilities which the REN does not know well, the potential buyer asked about the car park.

Potential buyer:  Where is the car park located?

REN: Oh, I have not yet checked but I have the car number plate for the current tenant.  It’s XXX XXXX. Just need to find the car and we know where the car park lot already.

Potential buyer: Oh… (Does not know whether to smile or …..)

— end of the conversation —

To be a good REN is not hard, really. By the way, I believe REN is a professional and thus should provide a professional service. This is because RENs get paid when the transaction is a done deal. I am speaking as both the buyer or the seller since I have been both before

Before. As a seller, I need my REN to represent me VERY WELL. The REN should ask me what would be the top three attractions that I personally like, as the seller. If the REN does not even know how to sell my property well, then how could I trust him? As a buyer, I need the REN to provide me with more information about the development, read about the area more and be ready to answer some of my usual queries. If I have to find out everything by myself as a buyer, then why do I need the REN?

During. Whether as a seller or a buyer, I expect the REN to know my development very well. For example including how to book the facilities, where is the actual car park lot, where can visitors park their cars or even if there is an internal jogging track. Yes, of course the REN should ask the owner well in advance or do his homework very well. The REN should also understand why I am selling if I am the seller so that he could provide me with the right advice on my price, offer etc. If I am the buyer, I expect the REN to know if I am buying for my own home or for investment. He can then advise me much better.

After. As a seller, I expect the REN to update me on home viewings, the potential buyers and perhaps adjust my expectations accordingly after many viewings for example. As a buyer, I expect the REN to call me and follow up and to offer further viewings of the same development or even very similar developments as the one I viewed. The REN should be able to offer me sound advice too on these comparisons for me to make a clearer decision. He should serve with the expectations that both the buyer and the seller would be his customers forever. It is certainly not a hit and run…

See, actually it’s not that
tough to be a good REN, right?
 The best RENs earn HUGE money. The typical ones would struggle and the bad ones would never survive even a few months. The best RENs earn even more money as the year passes because their customers, both the sellers and the buyers would continue to use their services and even recommend their services to others. THINK. If the REN is a blur sotong (cuttlefish), would these recommendations happen? Treat it as a career and the world is full of opportunities. All the best RENs.

written on 17 Aug 2017

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Investing for our property investment success. Learning from Asia’s Property Queen.

I bought
Renesial’s book ‘Property Jewel’

when I was deciding whether to rent or to sell my apartment in 2004. I can consider the book as a catalyst to my property investment journey thus far. I always believe that when it comes to property investment, there is no time for us to ‘experiment.’ It’s also too expensive to make mistakes too. This was the reason I finished reading her book in 2 days and I think by the end of reading it, she has transferred a lot of her experience and knowledge to me.

These days, the property market moves even more faster because of the number of choices (types of properties, areas to buy, developers, public transportation and even more) available to us. We should keep ourselves updated by going for enriching seminars by property experts. Of course, one of the most famous ones would be
Dr. Renesial Leong, popularly known as Asia’s Queen of Property.

Dr Renesial Leong is a columnist, Master trainer and best selling author of the very FIRST series of guide books on Malaysian property investment.

Her upcoming seminar is entitled, “How you can profit from properties in 2018.” I would encourage everyone to sign up so that you start your property investment journey well prepared. 2018 is going to be an exciting year for those who know what to invest in.
Register here. This will be a great investment towards your property investment journey.

The Ultimate Survival Guide to Property Investment and How to Chart Your Path Towards a Sustainable Retirement

Dr Renesial Leong will be sharing on the following:

Is the Malaysian Property Market Going to Crash?

What to expect in the property market in 2018 and how to profit from it?

Is Property still my safety net?

How to weather this storm of uncertainties.

What are the signals and tell-tale signs to look out for in 2018?

The Do’s, the Don’ts and the Maybes for 2018

Best moves to make to ride along this wave

Doing what most property investors do today , will not cut it anymore, as the property cycle moves on, investors who embrace the changes, focus on sound investing fundamentals, and take long-term perspective to their investing will always come out ahead in the long run. Staying on top of the economic fundamentals will be essential to not only survive but prosper in today’s market realities.

One of the basic laws of life: There will always be opportunities for those who recognize and pursue them. The lucky people are simply those who have taken more chances than the average.

When it comes to property investing you need a strategy for seizing opportunities, one that consistently demonstrates your passion for and commitment to your field. Stick with a plan, and you’ll reap the rewards.

This seminar
 conducted by Dr Renesial Leong is for a selected group of property investor
 who know how to take advantage of the changes in the property market. Every time there is a change in the property cycle, FORTUNES are made, but only by KNOWLEDGEABLE property investors who can take calculated actions.

“It is critical to understand that Education and Knowledge is a pathway to your success and the most important asset to any property investor and creating wealth in it.”

Learning is a continuous journey. Learning from one of the best, that’s an opportunity.
Grab it here.

Details for the seminar:

DATE AND TIME

Sat, April 21, 2018

10:00 AM – 4:00 PM Malaysia Time Malaysia (Kuala Lumpur) Time

Add to Calendar

LOCATION

Langkasuka Gallery

1st Floor, Oasis Village

Oasis Village Square

Petaling Jaya, Selangor 47301

View Map

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Dr. Renesial Leong: “Chart your path towards a sustainable retirement”

Final reminder to sign up yeah. A few key topics I like include ‘Is the Malaysian property market going to crash?’ The answer is not important. We must learn to see the reasons why so that we are able to monitor this by ourselves.  Another topic I like, “What are the signals and tell-tale signs to look out for in 2018?”  There are so many new launches, new concepts, how do we know which would be more beneficial to us? Truth is, everyone is different but it’s essential to know what are all the reasons so that we make the best decisions for ourselves.
Dr. Renesial Leong, popularly known as Asia’s Queen of Property
 would also share more in her seminar.
Dr Renesial Leong is a columnist, Master trainer and best selling author of the very FIRST series of guide books on Malaysian property investment.

Her upcoming seminar is entitled, “How you can profit from properties in 2018.”
Register here. This will be a great investment towards your property investment journey.

The Ultimate Survival Guide to Property Investment and How to Chart Your Path Towards a Sustainable Retirement

Dr Renesial Leong will be sharing on the following:

Is the Malaysian Property Market Going to Crash?

What to expect in the property market in 2018 and how to profit from it?

Is Property still my safety net?

How to weather this storm of uncertainties.

What are the signals and tell-tale signs to look out for in 2018?

The Do’s, the Don’ts and the Maybes for 2018

Best moves to make to ride along this wave

Doing what most property investors do today , will not cut it anymore, as the property cycle moves on, investors who embrace the changes, focus on sound investing fundamentals, and take long-term perspective to their investing will always come out ahead in the long run. Staying on top of the economic fundamentals will be essential to not only survive but prosper in today’s market realities.

One of the basic laws of life: There will always be opportunities for those who recognize and pursue them. The lucky people are simply those who have taken more chances than the average.

When it comes to property investing you need a strategy for seizing opportunities, one that consistently demonstrates your passion for and commitment to your field. Stick with a plan, and you’ll reap the rewards.

This seminar
 conducted by Dr Renesial Leong is for a selected group of property investor
 who know how to take advantage of the changes in the property market. Every time there is a change in the property cycle, FORTUNES are made, but only by KNOWLEDGEABLE property investors who can take calculated actions.

“It is critical to understand that Education and Knowledge is a pathway to your success and the most important asset to any property investor and creating wealth in it.”

Learning is a continuous journey. Learning from one of the best, that’s an opportunity.
Grab it here.

Details for the seminar:

DATE AND TIME

Sat, April 21, 2018

10:00 AM – 4:00 PM Malaysia Time Malaysia (Kuala Lumpur) Time

Add to Calendar

LOCATION

Langkasuka Gallery

1st Floor, Oasis Village

Oasis Village Square

Petaling Jaya, Selangor 47301

View Map

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China’s Renminbi is now IMF’s reserve currency

The world is really changing for the better. Renminbi (RMB) will join IMF’s basket of currency reserves. This meant it is now on the same level as US dollar (THE MOST USED), Euro, Yen (Japanese) and Pound. The last change made to this basket was in 2000, when the Euro replaced the German mark and French franc. My dear Bank Negara Malaysia (BNM) governor said something very important as reported in some media today. She said, “Of course, the US dollar will still be the dominant currency, but having others like the euro, yen, sterling and now yuan (RMB), is an important development.”

This will provide a much needed stability to the international monetary system. To understand this, please also understand China is already the second largest economy PLUS it has the largest foreign reserves of the world and does have a continuous TRADE DEFICIT for years. Somehow many investors just fail to notice this and kept buying ‘expectations’ instead of the real underlying performance of today.

Anyway, BNM’s Zeti said that RMB is already at a level that Malaysia is comfortable with and we are definitely looking for further opportunities with the RMB. It said that BNM is also promoting awareness among importers and exporters on how they can benefit from greater use of RMB and not be subjected to volatility of “third currency” in bilateral trade. Be honest, the third currency is just one other currency acknowledged as the best. It’s time for better stability and the world should be using just one “third currency.” After all, we should never be held ransom by any single currency of the world today.

Oh yeah, last but not least, I seriously hope that the Federal Reserve of US would really start normalising the interest rates in December. Yes, this month please. Stop all the expectations from the market and just do it since there are already some signs that the economy is doing better. Read here:
I hate it when US economy has bad news

To those who believes Ringgit is still on the way down versus the US$, do hedge against this ok. Don’t just talk and then do nothing. As for me, I remain stubbornly supportive of undervalued stocks WITHIN Malaysia. Haha. Happy investing!

written on 1 Dec 2015

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There are advantages in buying renovated units. If you can accept yeah.

The first time I bought a property, it happened to be a renovated unit. The owner sold it because he was moving out to stay at the upper floor of his newly bought shop-house. He has extended the bathroom in the master bedroom which meant that I saved many thousands of ringgit in advance.  My first condo in the Klang Valley was in Kelana Jaya and it was also a renovated unit. The kitchen was fully renovated with kitchen cabinets and I think I saved many thousands of ringgit just for that cabinet alone. So, yes, when it comes to secondary units, I prefer to buy renovated units. Below are some reasons I love them.

WE SAVE MONEY.
 Typically, an extended bathroom so that it’s bigger and more comfortable would have been many thousands of ringgit. A kitchen cabinet of 10 feet alone would have been a few thousands too. Some may have electrical cooker and hob built into them and these are again, thousands of ringgit depending on the brand. Curtain railings done meant a savings of a few hundred ringgit and we just need to get the measurement to do new curtains.  That still good looking and comfortable sofa set would also be a savings of a few thousands too.

WE SAVE TIME.
 A friend just said that all the renovation timelines given by the contractor is never accurate. It’s usually off by a couple of weeks. (I think it also depends very much on whether the owner decides to change this and that half way too…)  Anyway, typical renovations may take 1 – 2 months. Very extensive ones will take longer yeah.

However, it’s not just the duration of the renovation which is long. It will also mean we needed to occasionally drive over and check the work progress and this also takes away our precious time as well. Might as well use those extra time for a dinner with family instead? Or to bring the kids to the playground instead? Lots of things to do versus just driving over and checking progress…

It’s not all good with renovated units. Usually, the renovated units have a higher price versus the non-renovated ones. Just remember that just because you have spent RM100,000 in renovations does not mean that you can sell the unit at RM100,000 higher in the future yeah. It’s usually a loss because the new buyer may not have the same taste as you or they pretend they do not like your renovations. Haha.

What if you really and totally dislike the renovations? Move on to the next unit lah. Surely it’s better to buy an empty unit then. If you want to renovate the unit to your highest satisfaction, its best to get an empty unit and start everything from scratch. Depending on how you do it, it’s really possible to reduce the overall expenses to a minimum. Time and effort must still be spent though unless we have a contractor who knows our wants and needs very well.  Happy buying a renovated unit or if you are getting an empty unit, then happy renovating.

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Renovation gets higher returns?

Recently, a friend said that she does not mind buying a house with little renovations because if she were to renovate it would probably be just the kitchen anyway. This brought me back to what I am looking for when I look for properties. If it is for my own stay, the renovation MUST meet what I want. For example, if the owner loves a dash of red here and there and the kitchen cabinets are all in pearly white colours, I must say that I would not be buying the property because the renovations are way too far from what I would want to do.

However, let’s assume I intend to buy to rent out. Then, I would prefer renovated units. In fact renting out a renovated unit would mean a much better premium compared than empty unit. For those who are thinking of renting, they would appreciate if there are renovations and also the furnitures and fittings but none of them would go to the extent of renting a place only when the renovations meet their expectations! That is why renting out fully furnished would be advisable too, my personal opinion.

In terms of buying a unit, if the renovations has been extensive, it would actually be cheaper to buy the property instead of carrying out the renovations myself thus losing both time and money. Please be reminded that if the typical property price in the area is RM500,000 and your renovation cost you RM100,000, it is HIGHLY UNLIKELY for you to be able to sell your property for RM600,000.

My friend has more or less shortlisted what she termed as a good buy. One unit with full renovations at a premium of RM20,000. This is a very reasonable premium to pay because for RM20,000 today, you cannot do much and typically even the renovation specialist would give you a sly smile if you were to tell him that your budget is just RM20,000 for renovation. Thus in my personal opinion, renovate as per what is needed and not so extensive that when you wanted to sell, you feel that the buyer is shortchanging you because he is unwilling to pay for YOUR RENOVATION.

written on 28 dec 2013, updated on 25 mar 2016.

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Starting it right. RENs can be a career of choice.

Real estate negotiator (RENs) can be a career of choice with the right support. There are many good agencies in the market out there. It will not help if we join one where no one knows anyone and there’s zero trainings and guidance provided by the agency. Joining a good agency will determine the success of one’s REN journey. This is true whether it’s for a newbie or even a non-newbie! I had the opportunity to speak to a newbie and a non-newbie recently.
Both are from Chester Properties (Melaka Branch)

One of them was a full-time housewife who wanted to earn some pocket money to help the family. The other only wanted to join as an admin person. To her, selling seems daunting. Let’s listen to the newbie tell us how she managed to do it.
Her name is May.

First question I asked her, ‘Was it a tough time when you first started?’ She laughed and said that the first 3 months were the hardest. She did know know if she had ventured into something useful. She does not have her own listings and had to start to find them. However, she had access to shared listings and this helped her start. Team leads would also follow her on viewings at first and this helped to calm her.

When asked for the three ingredients for her success as one of the
Top Rookie Star
 award winner, she says without any doubt is having the
RIGHT TEAM LEADER.
 Her team leader is always willing to share, always patiently explaining and even went out for viewings with her to give her the confidence and in turn providing her with the usual viewing tips. Beyond just the close support from the team leader, the company provided her with
WEEKLY TRAININGS
 which helped to move her up with industry knowledge faster. For example, trainings about SPA fees, RPGT and more. She said, ‘I was only a housewife, I do not know all these but after attending all these trainings, I become more confident in speaking and sharing with customers.’ The third reason why she’s successful is because there’s
TEAMWORK
 even between different teams in the branch at all times  Everyone is ever willing to teach and share. (I think this is a CULTURE which should be ingrained in all agencies. No point in having top stars but the juniors never improve).

Her advice to new RENs: There is no substitute for working hard. One must keep learning and have the discipline to attend all the trainings arranged by the branch. She then shared something which I knew all along. She spoke about an awesome and no-nonsense person. The person in charge is Barry Ong (Also known as Bong). Let me share about Barry as well. Many years ago, a REN called Barry whom I just got acquainted helped to sell my condo which was already put up for sale in the market for 3 months without success. The price I wanted was RM430k. Barry told me to move out ALL my remaining stuffs and then repaint the place. Imagine this, a REN asking the owner to spend extra before he would sell my place. Anyway, I trusted him and spent an additional RM2,500 but he sold my condo for RM460k!  He is currently the person in charge of Chester Properties (Melaka Branch)

The second person I spoke to DID NOT even join as a real estate negotiator. Her name is Fatimah. She joined as an admin exec. Her result after 5 months of performing her admin role? She’s becoming a good admin but at the same time, she managed to sell 15 units of properties! I asked what’s the three reasons for her success. She said the first one is
COOPERATION
 between all the teams. The enthusiasm among her team-mates helped to push her to be more confident too.
OPPORTUNITY
 is also given to all. As as admin, she got the chance to also join and listen to all the sharing
 about properties both internal and external. Beyond just that, she reports to
Carine, someone
 who gave her the
ENCOURAGEMENT
 to look beyond just doing admin role. Due to this, when she asked if she could sell, she was taught how to do it successfully.

She said that in the beginning, she knew nothing about real estate. She was just looking for an admin job and was hoping to join a friendly company. However,
a team lead Johari
 told her this.
“Don’t think. Just Do.”
 Successful people needs to take actions!

All the best to both of them as they continue their adventure in the real estate world. Cheers.

written on 10 Aug 2018

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RENs in Malaysia. Exceptional or should be an Exception?

RENs in Malaysia. Exceptional or Exception?

kopiandproperty.com is a real estate negotiator (REN) friendly site. We help new RENs to quickly understand property market and investment. We help refresh the experienced ones with updates on property market too. Thank you for reading and sharing all these years since 2013. Wow, kopiandproperty.com is 8 years plus already.

We also believe it’s important that any buying / selling of properties should be done professionally and we should stop having all these hanky-panky going on in the property market. Illegal brokers, illegal agents and more. I have worked with many RENs in Malaysia. Exceptional ones, good ones and not up to par ones. Yeah, also the exception ones. Means I do not wish to deal with them anymore.

Exceptional RENs?

Exceptional ones include the one who managed to convince me that buying a property in Kelana Jaya despite still being based in Penang is definitely possible and a good choice too. She connected me to an opportunity. Bought it for RM183,000 via this friendly agent and sold it for RM460,000 via another knowledgeable agent.

Another one was someone who helped to ensure my tenant got the support needed when there was a heavy rain and one of the windows started leaking due to the heavy rain. He arranged for repairs the very next day and my tenant stayed with me for the next 4 years! Both were awesome Real Estate Negotiators.

Not up to par RENs?

Many instances yeah. Example, ‘what’s the size of this unit?’ REN: Oh, the size is xxxxxx. Wait, let me recheck. Oh it’s xxxxx. Me: “how many feet extra do I have for the backyard?” REN: Oh, I do not know, let me go measure now.” OMG… Are you really the appointed REN for this property developer or you have too many appointments and this particular one is just not your cup of tea?

Second instance. I arrived at the viewing unit and the REN arrived 5 minutes after me. Then, the REN said sorry because he has FORGOTTEN to bring the keys to the unit. OMG… you have wasted a few hours of my time. Plus, why did you not arrive earlier, go into the unit, see if things are not in order, switch on the fans etc? You want to earn professional fees as a REN right? It’s not just opening the door…

Photo by
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Rental as a determinant of the property market. Sounds clearer.

I read a good article about the property market, property prices and rental by Rachel Ong, Professor of Economics, School of Economics and Finance, Curtin University. Here’s
her thought in an article in domain.com.au
  In the article, she shared that whenever property prices are rising, it is usually assumed that it’s because of a shortage of supply versus the demand. Thus, the easy solution to this is just to build as many units as possible to push the supply side to go up and thus the prices to stop going up. (Sounds very familiar, right? More affordable homes so that everyone can own a home and property prices will stop going up. By the way, theoretically, it does not work that well, even when the government is controlling majority of all supply of new homes. For example, Housing Development Board of Singapore. Home prices are still rising…)

Okay, what if we look at this demand and supply differently? Rachel shared that the ‘price’ indicator of demand versus supply should be based on the RENT and NOT the property price itself. In other words, to know if there’s too much demand or whether there’s a shortage in supply, we look at the monthly rent numbers instead. The reason is simple. Rent reflects the ‘cost of consuming housing’ or also known as the cost to living in a home. This meant that IF it is true that supply is really lagging behind the demand, then we should expect rents to rise. In brief, what she is explaining is that when there are fewer home choices and people need to rent, they will be willing to pay higher rentals. House owners who are staying in their own home and wants to sell their homes at higher prices should not be counted into the equation of property prices rising due to high demand. Here’s that
full article again and there are also some interesting charts in the article too.

She has a point. If I am an owner of two homes and I could sell my house at a higher price, it does not mean that the supply in the property market is insufficient. It only meant that people are agreeable to pay higher prices for it. Rental is different. Just look at some of the condos rental today. Many have actually fallen and when we buy these condos today, the rental yield is likely to be close to zero if not negative. This reflects better on the demand for homes and certainly if the rental yield is falling, it tells us two things. The property price may have risen way too high or that there are still many choices when it comes to renting one. For both these reasons, the solution is definitely not to build even more condos because we are going to ‘kill’ the whole market. Perhaps we can have some study on the rental for the Malaysian market in order to have a better idea? This should be very interesting.  Happy understanding.

written on 9 Aug 2018

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Rent or Buy – Penang Property

My close friend asked me today. Should she buy a property if she intend to work for only a few years in Penang. I asked her, what’s her rental and she said RM800. It’s not a lot but RM800 x 12 x 5 years = RM48,000.  If I ask you to give RM48,000 away, you would almost kill me. Yet, truth is, you are giving it away. Since she decided to follow my advice to buy, she asked, what to property should she buy in Penang.

Let us focus on what to buy. This question can sometimes be hard. For example, if my friend can afford a RM500,000 mortgage, should she buy a landed property or condo? Landed in Penang? Am I joking? Let me remind you, Penang consists of an island and MAINLAND. RM500,000 allows you to still choose landed properties in Penang even if it may be a little far away. Choices in Balik Pulau would be limited at this point in time as prices has moved but for mainland, if you are willing to buy slightly further away, RM500,000 is ok.

In terms of distance, let me tell you that everything boils down to getting used to. If you currently drive 10 minutes to work and I asked you to drive 30 minutes, you may feel it is far. However, if you drive everyday, after some time, you would not even feel it. Thus, never ever put distance as a main consideration. Focus on what you really want. If you love landed tremendously, proceed to buy.

Please do not ask me when to buy your first property because if you are currently renting, then anytime is a good time to buy. However, if it is for investment instead of your first property buy, then the answer may be different.

Read on
‘Penang Property Potential’
 to know more on investment.

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4 reasons renting fully furnished has been good for me.

Would you like to rent out your unit fully furnished?

Every time people asked me about buying a unit and renting it out, I will ask them many questions. Most of the time, they did not know that renting out the unit is really not as simple as just renting out the unit. Some examples? Daily rental? Monthly rental? Target market? Are they students? Private university students? Local university students? Are they office people? Rent out bare unit? Rent out partially furnished? Renting out the unit FULLY FURNISHED? You see, there are many questions to answer. Today, we focus on just one. Renting out fully furnished and the 4 reasons why.

#1  Lower risk.

Yes, I personally think its lower risk. If your tenants are not that financially well off, why would he pay extra few hundred Ringgit to rent your place? Assuming its RM400 extra, that’s already an extra of RM1,200 at the beginning. It’s an extra RM4,800 per year! Secondly, if the person is really needing just a place to stay, there is NO need to rent a fully furnished place. Any place,
cheap would be just fine
. I remember when I was renting a student house previously, the main theme was just ‘cheap.’ The rest will somehow fall into place. It’s still true today.

#2 Better tenant.

Seriously, better tenant? Well, my tenant of that RM700 unit remained my tenant until he bought a landed property in Gertak Sanggul in Penang. He paid RM700 when similar units were rented out for RM550. He rented my unit for nearly 4 years. He has always paid rental on time and when he moved out, I think the apartment was still in one piece. Even the washing machine, LG brand was still working! After 8 years of continuous usage. Thus far, all my tenants have remained friends because all of them have rented for many years. Well, a good homeowner is a plus too. Yes, that’s me. Haha.

#3 SMALLER marketplace. Oops??

Marketplace is smaller. Yes, those who would furnish their units well and renting them out are fewer. So are those who wants to rent fully furnished, these are fewer too. What this meant is that your competition would be lesser even if your target market is also smaller. In this marketplace, there is very little need to negotiate hard. If you need to, there’s something wrong with the tenant, please allow him to rent someone else’s unit. Following is a true conversation with a tenant about 12 years ago in Penang.

Potential tenant: Wah, your place is just so-so but you want to rent out RM700? I have seen a few furnished units for just RM550.

Me: I agree. That’s why if you prefer those units, its best that you take them. I think it would be foolish if those units are similar to mine and you still want to negotiate because the price difference is so huge.

#4 Someone has done it successfully

By the way, this is just my personal experience yeah. However, I can safely tell you that I have been renting out fully furnished for many years and all the units are spread across many different towns and cities here in Malaysia. There were definitely some months when it was empty but generally once rented out, it’s continuous and my tenants have always been good to me. (maybe because I am good to them as well?). So, this can be a model to go since it’s tried and tested too.

Conclusion

When tourism returns, AirBnB will be awesome again. When it’s for students, the number of rooms could be higher than if it’s for office people. I have friends who rent out empty units and said that it’s so fast and easy. Just remember that as long as you have a strategy which you prefer and it works, stick to it.  Oh yeah, remember to treat your tenant well too. I always believe good people will meet good people, if you get what I mean. Happy renting out your unit for continuous rental income.

Edited article on 8th March 2021. First written in July 2015.

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I only rent out, fully furnished.

Thus far I have only been renting out my units under a
fully-furnished
 condition. Not even partially furnished. I have even recently influenced a full investor to rent out his home fully furnished and I will share his excitement in the below few points. There are no right or wrong. Some prefers to rent out empty units because there is less to worry. The maintenance is likely to be lower. The market for these tenants are easily many times larger than those who only wants fully furnished and willing to pay a premium. Very true then, very true now. Let me tell you my few reasons in renting out fully furnished.

Lower risk. Yes, I personally think its lower risk. If your tenants are not that financially well off, why would he pay extra few hundred Ringgit to rent your place? Assuming its RM400 extra, that’s already an extra of RM1,200 at the beginning. It’s an extra RM4,800 per year! Secondly, if the person is really needing just a place to stay, there is NO need to rent a fully furnished place. Any place,
cheap would be just fine
. I remember when I was renting a student house previously, the main theme was just ‘cheap.’ The rest will somehow fall into place. It’s still true today.

Better tenant. Seriously, better tenant? Well, my tenant of that RM700 unit remained my tenant until he bought a landed property in Gertak Sanggul in Penang. Nearly 4 years. He has always paid rental on time and when he moved out, I think the apartment was still in one piece. Even the washing machine, LG brand was still working! After 8 years of continuous usage. Thus far, all my tenants have remained friends because all of them have rented for many years. Well, a good homeowner is a plus too. Yes, that’s me. Haha.

Marketplace is smaller. Yes, those who would furnish their units well and renting them out are fewer. So are those who wants to rent fully furnished, these are fewer too. What this meant is that your competition would be lesser even if your target market is also smaller. In this marketplace, there is very little need to negotiate hard. If you need to, there’s something wrong with the tenant, please allow him to rent someone else’s unit. Following is a true conversation with a tenant about 12 years ago in Penang.

Potential tenant: Wah, your place is just so-so but you want to rent out RM700? I have seen a few furnished units for just RM550.

Me: I agree. That’s why if you prefer those units, its best that you take them. I think it would be foolish if those units are similar to mine and you still want to negotiate because the price difference is so huge.

The deal did not happen but my unit was rented out for many years, at a premium until I sold it off. Funny? True though.

Oh yeah, about a friend who told me how excited he was in renting out his place. He was staying in Klang and he was moving out to a bigger place. Rental for landed has always been bad and it’s Klang too. His price was a few hundred above the usual market rate for a non-furnished unit. Somehow his agent called him and said, ‘you are lucky, there is really a family who wants to rent your place at your price because they are waiting for their new home to be ready.’

Well, there is NO GUARANTEE for anything. Many times, all these depend also on the homeowner and not just the tenant. I always believe good people will meet good people, if you get what I mean. Calculative people will somehow get calculative tenants too. Haha. I have seen many friends telling me how calculative their tenants were. Sigh, I have to remain calm and not simply say the problem might also be them too. Happy renting one or renting out.

written on 21 Aug 2015

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Rent-to-own is definitely a good alternative. (Expand and Enhance)

kopiandproperty.com attended the “Asian Tiger: A New Journey – Budget Commentary 2019” yesterday. It was organised by the Real Estate Housing Developers’ Association (Rehda) Institute. It’s good to have all these events where the experts share their opinions and perhaps the relevant government ministries could learn and implement some of them. Many good points were presented but I think for potential property buyers; first time home owners, this is quite important. Socio-Economic Research Centre (SERC) executive director Lee Heng Guie recommended that the Housing and Local Government Ministry (KPKT) should take the initiative to work with the private sector to promote the rent-to-own concept. He said the perception that owning a home is an urgent need must change if individuals cannot afford to buy them within a short period.”

In the recent weeks, we have been very occupied with the
 Peer-to-Peer (P2P) financing model.
 The impact to the first-time home buyers is however lower when compared to a good Rent-to-Own scheme. Three reasons I say so; downpayment, affordability and future.   Downpayment is the single hardest issue for most first-time home owners. Many say that’s because the value of the ringgit is getting smaller, frankly it’s just how many of us spend the money these days. There’s too many things to buy / want. Just look at the recent 11.11 and we know that many were buying things they did not even need!  A rent-to-own scheme allows first-time home buyers to start with renting and eventually upgrade to owning it after a few years. There is no high barriers of entry and generally most first-time home buyers could sign up.

Second thing is affordability. Many young working professionals are now renting homes they could NEVER afford in the future. For example, rental of RM2,500 for a property which may be priced at RM600,000 in the market. The only reason for the low rental was because there are
many new units coming into the market and there is a price pressure for all existing units.
 One day, the demand will catch up and that’s when rental will rise. At the time, the first-time home buyers are caught between paying higher rental versus buying a cheaper home by themselves instead. Rent-to-own meant that the potential buyer is already renting a place they will buy in the future. Certainty is good.

Third thing is future. Not many understood that in the future, the Malaysian property market would just be following what has happened in many advanced property markets today. Property prices would not be dropping unless we face some financial crisis or even SUB-PRIME crisis. When we look back at these financial crisis, it is evidently clear that they recover within 18-24 months and property prices will continue its climb, just like everything else in the market. It’s unlikely that handbags, handphones and even branded handcream increases in price but the property price stays stagnant. Rent-to-own helps to ‘force’ a future in property for these first-time home buyers.

Do not worry if property prices will rise way too fast compared to income, they usually should not. Else, everyone suffers. Here’s an earlier article:
When prices rise double income for 5 years?
 However, everyone must understand that property remains a basic need and it’s not possible not to plan to have one. Perhaps all father-in-laws should also help in asking the future-in-laws to get a property before they get married. Happy scouting for that first property. It need not be that dream property because after a few years, we could always upgrade to a better property.

written on 13 Nov 2018

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Rent-to-own scheme for People’s Housing Project (PPR)

I remember a senior manager for a developer in Johor who told me this many years ago. He says that everyone should have a home that belongs to them so that they do not continue to face the prospect of ever higher rental or being forced to move every few years. He shared, ‘The reason why low cost units could not be sold is sometimes because the people who wants to buy them could not get a loan. They have no permanent or the typical office jobs but in actual fact, the loan needed for the unit is far lower than the price for such a unit. Banks should be flexible with this.’ I think he has a very good point but I also understood from a senior manager of a recovery department in a local bank that many times, when it comes to recovery, things will no longer be straightforward. It’s very hard to just put the blame on banks alone. There’s always two sides to a coin.

When the majority of the people needing a home has a home, then the property market will be much more stable. It also meant that the supply is not too far away from demand and vice-versa. Many may be renting, like those for the People’s Housing Project (PPR). These tenants may have reason to rejoice. Reported in the media, the Urban Wellbeing, Housing and Local Government Minister Tan Sri Noh Omar said that People’s Housing Project (PPR) tenants will have a chance to own the units through a rent-to-own scheme. Here’s the
report in iProperty News.
 However he said that before these tenants are offered the opportunity, they would be scrutinised first to make sure that they are really the original tenants and the unit was not rented out to someone else. (Frankly, if this is to be done, it better not be announced in advance. Else, the idea is noble but the implementation is not effective or efficient)

Noh also revealed that should these tenants be offered the rent-to-own offer, it is without the need for any deposit. In fact, if the tenant has a good record of payment, the amount paid will be taken into account too. He also shared that as at December 2017, there are already a total of 84,490 units of PPR units nationwide, involving 122 projects. Current rental is RM124 per month while the selling price per unit was RM35,000 for Peninsular Malaysia and RM42,000 for Sabah and Sarawak. (Yes, this price definitely meant it is heavily subsidised.)  There are two categories of PPR. For the
first category, the construction cost of the PPR is borne by the federal government but the site (land) is provided by the state government. In the second category, the construction cost and land are provided by the federal government. In this case, the ownership for the first category can be given by the federal government while for the category 2, it would have to be discussed with the state government.
Full article in iProperty News here.
Happy following.

written on 15 March 2018

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RM800k condo.  RM2,000 rental. Even recovery cannot save you.

The amount does not represent any particular condo yeah. Just an example after I was asked by an acquaintance if he should proceed with the purchase of a condo in a ‘hot’ area. He told me that the rental cannot cover the mortgage payment currently because of current negative situation.  However, when the property market recovers, rental will go up and very soon he will have a positive return. Again, that anticipation that when property market recovers, everything will be just fine.

Remember many years ago when the anticipation was how much higher prices could continue rising? It was as if the sky was the limit. Then, everything stopped and the overall transaction numbers kept dropping year after year from 2013 all the way to 2017. Perhaps 2017 was the bottom, thus 2018 saw a super small positive change in the number of transactions. 2019 saw another increase with the support of Home Ownership Campaign (HOC).

Be pragmatic.  If the rental cannot cover the mortgage payment, please do a little homework. Are there many other similar units with similar rental on offer? It’s quite easy to check these days, unlikely many years ago when nothing was online. If there are many other similar units and you want to increase your rental, you will just lose the tenant.

Be realistic. Why would the rental be going up?  Is it because the development is suddenly very popular? If not, then please note that rental usually changes on a yearly basis and rental depends on all other similar units elsewhere and not just the development you bought. Plus, I have not heard of too many of ‘price suddenly go up’ kind of condo.

Be objective. Why are you buying?  Is it for rental returns? If it is, then start by looking at the potential rental first before looking at the pricing of the unit.  Is it for potential capital appreciation?  Then, the next question is, could you hold? How long could you hold because pandemics such as COVID-19 can happen anytime, as what has happened.

Be long term. When is not as important as the Why.  If it’s for your own home sweet home, then everyone is telling you that it’s a buyers’ market now. If you are a buyer, you have advantage. If you want to wait for the lowest possible rate before you buy, current rate is already the lowest within 10 years. It may go down further but if you have a property in hand, you will still enjoy this lower rate too.

Stop hoping that when the waves come back, it will lift all boats. The sinking boats will still sink. Stop thinking that Malaysian household income could rise suddenly. It will definitely be gradual and it will be slow.  This is why property price will just have to follow instead of racing ahead. The days when property prices were low and when rental yields were even up to double digits have passed.

It can only come back when property prices have stayed stagnant for a couple of years to allow rental increment to catch up. Rental increment can only catch up if the salary increments also catch up. This is why job market is a key thing to watch. Even the inflation has gone to below zero currently.
Inflation is negative growth
 So, is it still a buy?  RM800k and RM2,000 rental is definitely NOT a buy.  However, property market continue to provide opportunities if one is willing to watch and get ready to pounce when it comes.

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When we have to pay rental, it’s ‘forever.’

If we google online for ‘should I rent or buy a property’ we will find lots of articles telling us both sides of the story. One example with even calculations would be this article in
 January 2018 in TheStar.
 If you are still reading kopiandproperty.com (KnP), you may have realised that I love people who love to rent because readers of KnP can then buy and rent to them for as long as they want to rent. As for the debate on the costs associated with buying (those never ending taxes and maintenance costs and more…), I also do not wish to comment. Let’s just agree that BUYING will incur higher costs than renting. In fact renting also gives us the flexibility to rent a different place every other year while we are stuck with the same property that we bought for a very long time. Final decision is the same, if you intend to continue reading KnP, buying is simply better. Haha. Two reasons and one real example below. We start with the actual example.

Real example.

According to Mercer in an article in
South China Morning Post (SCMP.com): Soaring rents make Hong Kong the most expensive city for expats, according to Mercer.
 Mercer says that the prices of beer and hamburgers in Hong Kong is okay BUT it is now ranked the most expensive city for expatriates among 209 cities worldwide amid soaring accommodation costs. RENTAL is what the whole article is about. The reason? Expats do not usually buy a place. For a short term stay, the costs to buy a place will be prohibitive. The example of the type of soaring rental? “A two-bedroom flat of international standard goes for US$7,671 (RM30,500) per month in Hong Kong, compared with US$5,700 (RM23,000) in New York.”  Will the rental for these units continue to increase? Haha. I believe majority would answer Yes. Mercer compared a lot of other things as well, not just rental and for all those other stuffs, Hong Kong’s quite okay! For example, a fast food meal in Hong Kong is much cheaper than Sydney… A bottle of beer meanwhile is only 30 percent of the usual price in Sydney…
Full article in SCMP.com here yeah.

An earlier article here, also about how RENTAL alone would have caused workers to work like crazy and still live under the poverty level.

Reason 1 – ‘Expensive’ will continue.
 Hong Kong is expensive, everyone knows that I believe. By the way, all my Hong Kong colleagues say that it’s too expensive to live in Hong Kong unless one has rich parents. They were all talking about the cost of a property and quite a few said that they have friends who have invested / intends to buy a property in Malaysia. One said in order to afford a small apartment, he will need to get married.
Earlier article here: Marriage provides affordability
 One thing’s for sure. The price of a property will keep getting higher unless of course some sort of financial crisis happens but if it happens, many people would lose their jobs too. I am not too sure if that’s such a viable option to force property prices to drop… This is NOT limited to Hong Kong. It happens to all major cities in the world including the two I came back from just a week ago; Sydney and Melbourne.

Reason 2 – Power usually favours the owner.
I think many will disagree with me on this one. They will point out the fact that these days in many places in Kuala Lumpur, the rental is soft or has gone down. Let’s take a step back and relook the situation. The owner bought the place 5 years earlier and started to rent out the place and over the years continue to rent ever higher because the house prices were also rising. Then, the market slows down for 2-3 years and rental softens. Is the owner renting out his place at a loss even at lower rental rates? For a while perhaps but on a longer term, it’s unlikely yeah because salaries continue to go up and this is why companies are also willing to pay higher rental for their expats. For the local management team, perhaps higher housing allowance with each passing year. What happens if the owner bought at the peak of the property cycle then? Rent out at a loss to cut his loss and wait. As long as the property is a good one, it’s just time before the ‘power’ returns to the owner.

Last but not least, despite all these higher costs associated with buying a property versus renting a place. Please note, I did not say renting a property because one may NOT even be able to afford to rent one whole place in the future. The situation is the same for property buyers, in the future they may only be able to co-own a property with friends or stranger(s) or they buy a very small unit. If you ask me, I would prefer a much bigger space even if it’s co-ownership versus opening the door to my flat and I see just my bed, a sofa next to it and a TV on the wall. When the buyers could not afford to buy one whole place, do we believe one could still afford to rent the whole place? 😛  Happy following and understanding.

written on 26 June 2018

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Rental data for property market Klang Valley by October

After my talk at the recent Havoc Hartanah KL 2016, a real estate negotiator sat down for a glass teh tarik with me. He was from a leading real estate agency in Malaysia and he asked me if there are still units which can provide positive yields. He has not come across any! In other words, every property he wanted to buy would only give negative yields or extremely low yields.

I told him that I would suggest that he look at rental first. For example if he is aiming for the RM1,300 to RM1,500 range, search under rental first. He can then jot down the names of those projects which are being rented out at the range that he wanted. Next search the prices of those projects. Those that could give positive yields can then be viewed and negotiated with. He laughed and said he had never thought of looking at rental first. I wished him the best.

Today, I read other piece of good news for him. Rental information for Klang Valley would be available from October 2016 onwards. It will be provided by JPPH. It was reported in The Edge Property. JPPH will start providing information on rental on subscription basis from October 2016. It will cover Klang Valley for now and the information would be based on the stamped tenancy agreement. With this data, JPPH is also able to give fairer value for properties based on rental yields. Of course, this may not provide every single information we need.

Right now, we can use property portals for comparison but nothing beats official data right. I remember over 21 years ago when I wanted to rent a room. There were no benchmarks. It’s a take it or leave it kind of situation. For someone looking at renting in a new place for the first time, all these information do help too. Of course for those thinking of investing, this will ensure he does not pay too high, else yield would negative. Happy referring and investing. Do note that it’s based on subscription basis.

written on 24 Apr 2016

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Press Release: iProperty.com.my – Rental Demand For Spacious Landed Homes Boosts National Demand Figure in H1 2021

– Terrace house is the most popular property type with +14.1% YoY demand growth.
– Rental yields have decreased across all building types in H1 2021.
– Improving consumer sentiment have boosted national demand growth and demand for rental property in city centres began to increase in H1 2021 from the lower base of H1 2020.

KUALA LUMPUR, 5 OCTOBER 2021 — iProperty.com.my today announced that Malaysia’s residential rental property demand experienced positive Year-on-Year (YoY) growth in H1 2021, increasing to +1.9% from -5.6% in H1 2020. In contrast to H1 2020, growth in user visits have outperformed the growth in rental property listings in H1 20211. The increase is due to significant YoY demand for terrace homes at +14.1% and for serviced residences at +8.0%. This is an interesting shift from H1 2020 where condominium was the most in-demand residential rental property. The announcement was made during an online virtual conference of the bi-annual iProperty.com.my H1 2021 Portal Demand Analytics (Residential Rental Market), which provides a macro view of current demand trends in the Malaysian residential rental market.

Premendran Pathmanathan, General Manager for Customer Data Solutions & Quality, iProperty.com.my, said, “In the previous instalment of the Portal Demand Analytics, we noted that the pandemic had started the trend of property seekers looking for bigger living spaces. As a result, terrace houses have become the most popular property type in H1 2021. Moreover, the first half of 2021 continues to favour tenants as renting makes more financial sense due to a lower monthly commitment when compared to purchasing the same property, especially in times of high unemployment. Indeed, many landlords are absorbing some of the income shocks and are pricing down their rental units as they compete to attract a limited pool of financially stable tenants.

On a positive note, the ongoing vaccination program has resulted in more than 80% of the adult population being vaccinated as of September 2021. This high vaccination rate announcement will serve as a great confidence booster for the property market. As we transition to an endemic phase by the end of October, we hope the property market will continue to recover for the remainder of the year and going into 2022.”

Rental demand improved in H1 2021, but rental yields decreased for all property types
Demand for residential rental properties in city centres began to build up in H1 2021 as lockdown restrictions were relaxed and various economic activities resumed as usual. In particular, some notable business and residential hubs in Kuala Lumpur and Penang have experienced double-digit YoY demand growth. These areas include Mont Kiara, Mid Valley City and Kuala Lumpur City Centre in Kuala Lumpur and Pulau Tikus, George Town and Bukit Mertajam in Penang.

On the flip side, the latest unemployment figures from the Department of Statistics Malaysia (DOSM) is 4.8% in June 2021, following four consecutive months of lower unemployment figures. With certain demographic groups facing financial constraints, some landlords will continue to face challenges finding tenants for their properties.

Rental yields across all building types have dipped. In 2020, the pandemic supported a tenant’s market, putting renters in a good position to negotiate rental prices. This trend has continued in H1 2021 where the drop in asking rental prices was higher than the drop in asking sale prices, thus reducing the rental yields. The rental yield for Terraced Houses decreased to +2.9% from +3.3% in H1 2020. Meanwhile, the rental yield movement for condominiums and serviced residences have declined by 0.3% and 0.2% respectively, whereas apartments have retained at +4.4%

Kuala Lumpur’s affluent suburbs are renter’s top choice
Kuala Lumpur’s YoY rental demand has improved from -2.9% to +2.6% in H1 2021. The affluent suburb of Damansara Heights is the most in-demand area in Kuala Lumpur. Most rental visitors were looking at bungalows and semi-Ds priced above RM5,000 (3,000 sq ft and above). Other affluent suburbs in Kuala Lumpur such as Mont Kiara, Bangsar, Desa ParkCity, KL Sentral and Sri Hartamas saw more than +10% YoY demand growth and generated rental prices above Kuala Lumpur’s median rental price of RM2,000. Meanwhile, in Pantai, visitors were interested in condominiums and serviced residences priced between RM2,500 to RM5,000 (1,000-1,500 sq ft).

In terms of preferred property types in Kuala Lumpur, many renters were looking for condominiums and serviced residences priced between RM1,500 to RM2,000 (1,000-1,200 sq ft). Apartment units priced between RM1,000 to RM1,500 (700-1,000 sq ft) are also popular.

Strong demand for Selangor’s terrace houses
Selangor was the only major state to record a decline in overall rental demand in H1 2021 with a -1.0% YoY drop. However, the decline was attributed to a slight increase in rental property listings, which surpassed user visits. Based on National Property Information Centre (NAPIC) Q2 2021 data, condominiums and serviced residences account for the highest overhang residential properties in Selangor, at 2,019 units and 2,025 units respectively. Nevertheless, the rental prices of terrace houses have held steady at RM1,700, in line with a strong +25.5% YoY demand, particularly for spacious and affordable units in suburban areas.

Rawang is the most in-demand area in Selangor with a +57% YoY demand growth. Together with Rawang, Tanjong Dua Belas had many rental visitors looking at terrace houses priced between RM1,000 to RM1,500 (1,500-2,000 sq ft). One area that is gaining popularity is Setia Alam, mainly contributed by the workers of several prominent glove manufacturing factories looking for affordable high-rise accommodation in the area priced between RM700 to RM1,000 (700-1,000 sq ft).

Mainland Penang’s high-rise homes trending higher
Penang’s overall rental property demand recovered from -13.7% in H1 2020 to register a +1.8% YoY growth. However, condominiums still registered negative YoY demand at -5.1% as the increase in rental property listings far surpassed the rise in user visits. According to NAPIC, Penang has a significant condominium overhang with 4,163 units as of Q2 2021.

On the pricing front, the state’s median rental dropped by RM100 to RM1,400. Serviced residences, in particular, recorded a significant decline from RM2,500 in H1 2020 to RM1,300 in H1 2021. This drop is due to reduced rental property listings on the island and an increase of affordable serviced residence listings on the mainland in Perai, Simpang Ampat and Bukit Mertajam. The rental prices for such units in these areas are between RM1,000 to RM1,500.

Simpang Ampat is the most in-demand area in Penang, with many rental visitors interested in condominiums and serviced residences priced between RM700 to RM1,000 (700-1000 sq ft). Meanwhile, in Bukit Mertajam, the second most in-demand area in Penang -, visitors were browsing for apartments, serviced residences and terrace homes priced between RM700 to RM1,000 (1,000-1,250 sq ft).

Johor Bahru District towns attract many rental visitors
Johor’s rental property demand jumped to +6.6% from -19.5% in H1 2020, while median rental prices dipped by RM 200 to RM1,200. Similar to Penang, condominiums and serviced residences recorded the most significant drop in pricing, with a RM300 price decline from H1 2020 to RM1,200 in H1 2021. According to DOSM, the percentage of people staying in their own property in the Johor Bahru District has decreased from 73.2% in 2014 to 69.7% in 2019, while the percentage of renters has increased from 23.4% to 28.4% in the same period.

As the most in-demand area in Johor, Pasir Gudang had rental visitors looking for terrace houses priced between RM1,000 to RM1,500 (1500-2000 sq ft). Coming in second is Ulu Tiram, which had visitors browsing for apartments priced between RM700 to RM1,000 (700-1,000 sq ft) and terrace houses priced between RM1,000 to RM1,500 (1,500-2,000 sq ft).

— End Of Press Release —

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When rental falls, so too would property price

Do you believe the condo rental is dropping even for units with KLCC views or nearby KLCC? Let’s look at Singapore first. According to Singapore’s major newspaper The Straits Times, prices of high-end condominiums in Singapore continues to drop and the major reason is because of falling rents. It gave a new examples such as one unit in The Sail which was sold for S$1,475 (RM4,270 per sq ft). At this price level, it is the lowest for more than 5 years. In Cairnhill, a four-bedroom unit measuring around 3,000 sq ft was sold for about $1,300 per sq ft. This was a price last seen since 2007. While some of these were still sold for a profit, there are already units where the owners were selling at a loss. One example, all three deals at Orange Grove Residences in 2016 were with a loss of nearly S$1 million (RM2.89 million). Note, this is LOSS.

Actually, this situation is not limited to just Singapore. Coming back to condos nearby or around KLCC, the rental is softening and the renters have so many more cheaper choices. My friend’s condominium was rented out only recently after being put on the market for more than 2 months. The rental she was asking for had to be reduced continuously when she learnt that there are newer condo units being rented out for even lower than her unit! Viewings are plenty and non-stop. However, with more choices, it meant that renters were really spoilt for choice!

Prices for some of the less core areas are under even more pressure. This is because everyone is trying to look for cheaper alternatives.
Condo oversupply

meant that it’s either renting out at a lower rate or having to pay the whole mortgage amount every month. Not an easy choice currently. Oh yeah, take a look at the rental prices for some quite attractive condos nearby KLCC. The information is from iproperty.com.my Just over 1 year ago, my friend could still rent out her older condominium units for over RM3,000. Today, there are plenty of choices for below RM3,000 and newer too. For some owners who just could not hold on with such low rentals, they would be selling and definitely for a lower price. No buyer would buy at a higher price when the rental is weakening today. Happy renting.

written on 18 Apr 2016

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Rental housing for B40 under Residential REIT by Rehda

Without a property, it’s usually poverty when one retires because by then, the income has stopped and yet one still has to pay for monthly rental. However, it is equally important to note that the downpayment is a huge issue and many times, rental is the only option a household may have at this point in time. In this case, it’s extremely important to have a rental which could cater to their needs. In this case, perhaps a public rental housing scheme for the B40 group of households here in Malaysia. This is the proposal by the Real Estate and Housing Developers’ Association (Rehda).
Article in TheEdgeMarkets here.

Rehda Institute chairman Datuk Jeffrey Ng said the association’s research arm, Rehda Institute is in the process of formalising the proposal with the assistance of investment banks and accountants. Basic idea is for a residential real estate investment trust (REIT) to provide public rental housing for the bottom 40 (B40) income group as an alternative solution to home ownership. He said, “Once we have formalised it, then we will be making submissions to the two ministries (housing and local government, and finance). If they are agreeable, then the next step is to go to [the] Securities Commission [Malaysia].” Ng shared that under this proposed REIT scheme, the government can provide land for social or public rental housing in suitable locations in urban centres, and the REIT undertakes the project at its own cost. The REIT will also be given the right to rental returns from the development for 30 years at prefixed rental rates.
Article in TheEdgeMarkets here.

The more options for the households needing a proper home, the better. My only advice is for all these programmes to have a good enforcement team when it comes to maintenance. If maintenance fee is needed to be paid, then it must be fully enforced and actions taken immediately when the payment is not forthcoming. If we do not do this, it will be very unfair to all the rest of the people who needs a proper home and they are paying. Just look at the old low-cost flats and we may understand why building is NOT the solution but the maintenance of the built is. Happy choosing the scheme most relevant to your needs currently. (Remember to use this as a stepping stone for a home of our own, not as an end to the need to have a home)

written on 21 Nov 2018

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Renting News: When ‘neighbour’ increased the rental, I will follow too. Does it happen like this?

Renting News: When neighbour increased the rental, I will follow too. Does it happen like this?

What may happen if rental in Kuala Lumpur increased very fast?

If rental in KL city centre increased very quickly, people may rent at the fringes of KL city centre. If the whole KL city is very expensive, people will rent homes with a Selangor address. This is common and this is why prices always rise from the place with the most demand first. When the supply can no longer keep up, the supply would have to be expanded somehow. Else, the rental will increase until the market collapses. Either people stop coming to KL to work since rental is just too high or the owners start to reduce rental voluntarily. 🙂

Imagine renting a room within KL city centre for RM1,500? People would have to rent lower by moving away instead. Okay, people would now say then why rental in Shah Alam also high in comparison? 😛 Haha. There are also people working in Shah Alam mah. These people may be coming from other places and thus the demand will increase and thus rental will also increase too.

Coming back to the article which I read.

Article in nst.com.my
  KGV International Property Consultants (Johor) Sdn Bhd executive director Ir Samuel Tan says that the current fast and furious rental market in Singapore may help the rental market in Johor.

Tan said, “Singapore’s relatively outstanding performance in crisis management over the past three years earned itself brownie points in attracting investment as well as the choice of the rich and wealthy to settle down or work. However, Singapore’s living cost as a whole will rise further albeit at a more gradual pace moving forth.”

“We believe Johor Bahru being the closest neighbour to Singapore will be able to tap some spill-over in terms of business opportunities, investment across sectors as well as a choice of accommodation. As it is, many businesses and manufacturers based in Singapore have already relocated some or all of their operations to Malaysia to capitalise on the lower cost.” Do read the full article here:
Article in nst.com.my

It’s possible IF there is a BETTER link

The Rapid Transit System (RTS) was supposed to be ready earlier… then someone went to delay it. Now, it will only be ready by 2026. I do not think Jan 2026 yeah, probably second half of 2026. Please make my prediction wrong and start it earlier. Now for the question. How many expats would want ot be based in JB if they have to brave hours of traffic to and fro daily just to get to office and go home? It seems the answer should be ‘not many.’

Or maybe the companies employing these expats have higher bargaining power lah. Means the expats listen to what the companies say versus looking for another company which would house the expats in Singapore. So, the employers are able to influence these expats to stay in JB versus staying in Singapore instead. We will see what happens but if rental really does not stop rising, this will become a very realistic option. It could even become a norm yeah. Good for JB market.  Go Go JB rental market!

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Rental increase NOT more than 5 percent per year, okay?

Rental increase NOT more than 5 percent per year.

Yesterday, I was in a casual Toastmasters meeting. It was a typical fun, laughter and everything under the sun chit-chat. A senior member who is already a senior manager and has been a T20 household for a very long time said that renting is a great option so that one is not tied down to any property.

Renting is better is true for some but not for all

I quickly reminded everyone that while the view that renting is better is true for this senior manager, it is not true for everyone. The reason is a simple one. This senior manager earns more than most working people. Thus, he has the choice to rent and he could even choose to rent somewhere expensive too versus most people who just needed to rent a simple and inexpensive place.

Renting is forever, this is the sobering truth

Remember this. Renting is forever because no homeowner would tell you that you can continue to stay just because you have paid rental to her for the past 30 years. If your salary stopped after you retire, she will offer you perhaps a 50% discount for 6 months. After that, you will need to move because she is not running a charity.

So, how much can rental affect us? Well, inequality in wealth will happen and China is taking this very seriously that they have now said that rental increase every year CANNOT be higher than 5%. They are not saying no rental increase yeah. They are saying that rental increase is capped at 5%. Let’s look at the news and then we look at what the conclusion is.

Article in South China Morning Post
China will cap annual rent increases at 5 percent to rein in runaway prices and make homes affordable to job seekers. Ministry of Housing and Urban-Rural Development vice premier Han Zheng has pledged to avoid using property as a tool to boost the economy.

Under the “Housing for All” policy, rental charges in urban areas – defined as population centres with more than 500,000 residents, will not be allowed to rise by more than 5 per cent in a year.

Vice-minister Ni Hong said, “New immigrants to our cities and many young people cannot afford to buy houses or rent homes in good locations.” Ni Hong added, “Only when the young people have hope does the country have a future. The [government] places a great deal of [priority] in solving the housing difficulties faced by new immigrants in big cities.” Please do read the full article here:
Article in South China Morning Post

5% increase in pay is really not a lot.

Every year when the salary increment is announced and the increase is 5 percent, everyone would feel ‘nothing much.’ That’s quite true, actually. Increment is merely to keep up with the inflation. Without a job promotion, then the increment will just sustain the working professional for another year.

Imagine RM5,000 salary, a 5% increment is RM250 per month and around RM8 extra per day. Based on the just the cost of a bowl of noodle here in the Klang Valley, than this RM8 per day is to allow the person to eat one extra bowl of noodle per day plus a glass of iced chinese tea. Sometimes, may not be enough. This is IF the salary is RM5,000. What if the salary is lower?

5% increase in rental forever is a lot…

Assuming our rental is RM1,500 per month for a small apartment unit. At 5% increase in rental per year, then the rental will double in 14 years. When we reach 38 years old, rental doubled. That’s when rental becomes RM3,000 per month. When we reach 52 years old, the rental doubled again. That’s when rental becomes RM6,000 per month. Of course by then, the value of RM6,000 may just be the value of RM1,500.Maybe a bowl of noodle at that time would be RM30?

If we are very healthy, we continue working until we are 66 and the rental doubled again. By 66, our income may have stopped. Or perhaps cut by half or more. If we have to pay rental until they day we bid goodbye, that’s easily another 10 more extra years.

I wanted to show the calculation to show how serious this is but it’s okay. I hope everyone knows how crazy the final number would be if we kept saying that we can save by renting versus buying.

Can I just invest but not into property then?

Of course you can. In fact any “good investment is a good investment” because when we invest, we did not get to spend that money. So, we are not just saving but we are accumulating the gains from our investments too. So, yes, if we could invest and get returns which are faster than the rate of rental increase, please continue investing and at the same time continue renting.

Just remember, there are now countries where the government needs to step in so that rental increase is SLOWER. That’s also a very important fact in deciding whether to continue renting of ‘losing’ a bit (mortgage higher than rental) by buying instead. Happy deciding and there is no such thing as the best way or the only way. Whichever way works, just do it.

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Property Malaysia? Rental will be weak for some time

Remember my article about the potential of sudden drop in property prices? Read here
Please tell me honestly, who wants property prices to fall?
  Actually, times are getting extremely tough these days. My colleague who has a unit in the KLCC area told me that she has yet to find a tenant who’s willing to pay her the usual rental. I told her that it may be best to rent out sooner rather than later. In fact she has engaged quite a number of agents and on and off, there were viewings but somehow, nothing serious yet. As she has started paying for the second unit, she has started to worry how long would she have to pay in full all by herself.

She recently learnt that an expat renting another unit within the same condo had just moved out to myHabitat for a bigger sized and cheaper unit. Slow times may be here for a while yet. Supply of new condos are also coming in strong, thus causing prices to weaken further. Earlier readings:
Luxury condominiums oversupply in Kuala Lumpur
  The owners of these new units are quite desperate in looking for tenants, else they would have to pay the mortgage in full! There are definitely quite a number who owns more than one unit, a major reason why they are willing to accept lower rentals. Of course, not everyone would think of this oversupply as a bad thing. Read here:
Rental is softening.Good news I guess.

Okay, beyond just the oversupply numbers, I think the sentiment plays an important role too. I know, we want to believe that rentals are down because of the closure or scaling down of many oil & gas players. Actually, it takes only a few lower priced rental transactions to start the downtrend. Thus, it’s impossible that the whole rental market is due to just the oil and gas people moving out. The current cautious sentiment meant that some of those who are taking pro-active actions have started to reduce their expenditure. If I have just found a job and wanted to rent in KLCC area, I would find out that negotiation for a lower rental is much easier, thus why not?

Is the low rental happening only this year, 2016? I personally believe the high rental rates of yesterday is not going to return anytime soon. This is the case even if 2017 is said to be the year of property prices recovery. Imagine we had earlier rented an older condo within the KLCC or its surroundings for RM4000. Today, we may have moved to another bigger condo and newer too for lesser. The older condos may have to provide us with a very attractive rate before we would reconsider and the owner of the current one may not want to lose us! I think they would still be worried, even come 2017.

I told my colleague that during slower times, we just have to manage accordingly. Even if the property market cannot suddenly bounce back but anyone telling us that property prices will keep dropping is certainly out of his mind. The fortunate thing is that she did not over stretch herself even during the boom years. Seriously, we should
Stay safe, buy within affordability and stop bubble building
.
 I believe she will take appropriate actions and in the years to come will reap huge rewards from potential capital appreciation. Happy investing.

written on 29 Jan 2016

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Rental is softening. Good news I guess.

In one conversation with a close friend many months ago, she said she wanted to find a property which offers good rental yield and good capital appreciation. Today, one piece of news should offer her an opportunity to get this at the same time. According to Knight Frank Malaysia research and consultancy executive director Judy Ong, the rental market of “selected property sub-sectors [and locations] may undergo a period of consolidation in terms of slower market activities, pricing and rentals.” This softening will happen despite demand still outstripping supply in Greater Kuala Lumpur. Okay, this may not be such a good news to the current owners but based on the prices they had once paid in the beginning, the current softening is not going to adversely affect them.

As for the factors, it is really no different from one report to the other. It’s always the upcoming Goods and Services Tax, the oil prices and I think due to these, the negative sentiment is still prevailing. Actually I like this situation if it is really happening. To me, certain property locations are already too high to sustain. Come on, when rental yields are already negative, that’s already the sign that property prices are NOT sustainable. Who would like to buy a place, pay high mortgage and rent low rates? Increase rental rates then? I think the choices are way too aplenty nowadays for one to dictate the rental rates. Yes, this is definitely a sign that those who are renting may get more negotiation power moving forward.

Knight Frank also said that within first half of 2015, close to 5,000 new units of luxury condominium segment will be delivered. I think this is another very clear alarm that it is really time to think before we buy today. How many ‘high-end’ Malaysians are there in Greater KL to absorb all these? I seriously do not think majority of these owners would be moving into these units anytime soon. Thus, get prepared that the occupancy numbers would drop further. What’s the current occupancy number? Read here:
High-rise occupancy is 69% in KL.

Well, this may well represent an opportunity for my close friend to buy then. She has always been looking at the more luxury units. In fact this may just meet what she wants, high rental yields and high potential capital gain. Do note that market is always the same. Supply too much, prices come down, developers build lesser, supply starts tightening, prices start moving up again and the cycle continues. The only question as usual is, where and when do we enter? I will let my close friend decide.

written on 21 Mar 2015

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Would you rent if the rental is too high?

I love to ask this following question to the participants during my talks.  Which one do you prefer? Higher property price appreciation or higher rental yields?

Usually, the answer is I want both. Great answer. Does not happen, sorry. (I know some courses say it is possible. Sure, go and follow that course and do well. No one is stopping you yeah).

Coming back to the answer. Price appreciation and higher rental yields do not happen at the same time. At least not within a short period of time. Please allow me to explain very briefly.

Property Price can rise with every transaction

Property prices could rise with every transaction.  In good times (bullish times), your neighbour on your left sold his unit for RM400,000.  Your neighbour on the right knew about it and sold his unit at RM420,000 three months after.

You got to know about it and 6 months after your neighbour on your left, you sold your unit for RM440,000. Property price for this same unit has just oved up by double digits within the same year. These price movement was definitely not because of salary becoming higher suddenly or raw material prices go up suddenly. These are secondary units… remember?

Property price can drop with every transaction

In a slow market, your neighbour on the left sold his units for RM400,000.  Even assuming the potential buyers know about it and went to view your neighbour on the right’s unit, will your neighbour on the right sells his unit for a lower price at RM380,000?

It depends on whether he could hold or how desperate he is, right? If he could hold, then it is almost a certainty that the price may actually be the same; RM400.000.  If the home has better renovations, the price could even be higher.

If he could not hold, then it has got nothing to do with the market, it’s because of him… Even during a good market situation, to sell immediately, he would still have to sell lower…

What about rental then?

Now we look at the rental. Your neighbour on the left rented out his unit at RM2,000.  The neighbour on the right knows about it, so what do you think the rental will be?

RM2,000 lah, similar. When you try to rent out your unit, on the same floor, how much would the rental be if everything is similar? RM2,000 loh…

So, within that same year, the rental will be almost the same and is not going to move up just because of different transactions. Unless of course the demand rose suddenly for that area or someone is renting out a tastefully designed unit. Else, if conditions are normal, the rental will be the same for the year.

What happens 12 months later? (after contract ends?)

What happens the next year then? Maybe, your neighbours could increase the rental by 5%, then you could also increase the rental by almost the same number. This is why rental increment is way slower because it’s yearly most of the time versus the price increase which could happen with every transaction.

If house price stayed the same, rental yield slowly increases

If we purchased the home 5 years ago and the price have stayed almost the same, then with a slowly increasing rental over the last few years, our rental yield slowly increases. It will come to a point whereby the rental yield could be double digits just because you bought the property much earlier.

Someone who bought the same property as us but they bought it recently, the price would have increased. Thus, the rental yield for this new owner is going to be way lower than us. In effect, someone who bought 5 years earlier would have both the capital appreciation (price increase) and also an increasing rental yield (slowly increasing rental every year).

Look at rental yield first before matching it to the property price we are buying

There are enough information on the market to indicate if we are overpaying too much for a property. When the property price is too high and the rental is too low, the demand for that property at that price will be slow. Buyers would not want to buy and then having to top up every month. The owners who still want to sell would have to lower their selling price. This is why sometimes, we can get a value buy.

Would you rent if the rental is too high? The answer is no. You would rent somewhere else instead.

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