Why buy secondary property? 6 things you should know.

My First Home

My first home was from the secondary market. My second home was from the developer. My third home was from the secondary market. My current home is also from the secondary market. My future home is from the developer. I have worked for 23 years and by the time I move into my 5th home, I would have worked for 25 years. On average, I move once every 5 years. 🙂

I do think by the time keys are handed over and renovations are completed, it would already be in the 2nd quarter of 2023. I think it’s okay. The more time I have the better. I still do not know where the renovation money would come from yet. Perhaps I need to start saving more every month.

Alternatively be better with stock investments? That topic is later. Today, we talk about the reasons I bought properties from the secondary property market.

Advantages of
Secondary
 Property

1. Choices are aplenty.
Actually, the number of available units may just be one or a few but if we look at the secondary property market, the number of choices are aplenty. We could even buy secondary units from mature areas where there may no longer be any land to build new properties.

2. Location Availability.
In fact when it comes to landed units for example, there are definitely no new units in mature neighbourhoods anymore. Thus for certain type of homes, the availability is only within the secondary market.

3. Prices are negotiable.
Beyond just prices are negotiable, there is a possibility for good deals. If we are lucky, we may get to buy a unit from an owner who’s moving back to her home country for example. This is very different from a fixed price from the primary property market.

4. Quick Turnaround.
We buy, we get a loan and we get the keys within a few months. Even if it’s a leasehold property, we could still get the keys between 6-9 months unless we are truly unlucky. Thus, if we needed a place to stay, this is the fastest. If we needed a place to rent out to others, this is also the faster choice too. My unit in Penang was sold and completed within 1 month because the buyer bought it in cash. Yes, it happens.

Disadvantages of
Secondary
 Property

5. Looks Older.
Let’s face it. Everything we buy, we want it to look new. Thus, sometimes we may lose interest with the property simply because of its design, maybe even because of its neighbourhood of narrow lanes for example. This is also the reason why secondary properties usually carry a discount versus new properties even for similar units.

6. Need for Repair.
The piping, the electrical lines would have to be checked and changed if necessary. Once we move inside and we want to change, our nightmare will begin. So many times, these are the potential costs. There’s also the maintenance for many of the items such as the front gate… (landed home), the paint job (internal and external), cleaning and more.

Conclusion

If any speaker were to tell you about a certain property, they may have incentive to do so. If you actually like the property, then proceed to buy. Do not buy because of the speaker. It’s not his home.

If the real estate negotiator were to tell you about a certain property from the secondary market, ask him lots of questions and do your own due diligence. Again, it is not his property. It’s yours.

If you ask me, my answer remains the same. I have bought both and I do think both primary or secondary property have their own advantages and disadvantages. You buy the one which fits your needs the most. The rest are not that important anymore. Of course, do not overstretch yourself just to buy one to please your friends. It’s really not worth it.

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Why did BNM keep the rates unchanged?

Fixed deposit’s rates should stay the same. Mortgage rates should also be staying the same. At least the older folks do not need need to feel even more worried. As for the home buyers, current rates are already low… Bank Negara Malaysia (BNM) has decided to keep the Overnight Policy Rate (OPR) unchanged at 1.75%. By the way, this was my thoughts about interest rates just recently. Read it here.
Rate cuts need not be too hasty

Article in nst.com.my
 Bank Negara Malaysia (BNM), at its Monetary Policy Committee meeting today, held the OPR at 1.75 per cent following cumulative 125 basis points (bps) cuts over four straight meetings since January this year.

United Overseas Bank (Malaysia) Bhd senior economist Julia Goh said, “Bank Negara sounded more upbeat with highlights that the global economy continues to improve and Malaysia’s economic activity recovering from the trough in April. It expects the improvement to continue into 2021, though the pace of recovery will be uneven across sectors.”

She added, “The recovery will continue to be supported by the fiscal stimulus packages, monetary and liquidity measures, as well as the stimulus effect from the cumulative 125bps reduction in OPR between January-July.”

Bank Negara’s next monetary policy decision is due in November, which marks the final meeting this year. Please do read the full article here.
Article in nst.com.my

I think in her own assessment, Julia has explained briefly about the reason why BNM has left the rates unchanged. BNM believes the recovery has started and thus the current monetary stance is already accommodative enough and does not need further stimulation. Remember, there is really no need to be too hasty unless situation really gets critical. By the way, BNM has always been ahead of the curve thus far in their accommodative stance whenever needed.

After all, fiscal policies will also now move in as well, especially the many infrastructure projects which I personally think is good for the future. Whether it’s that High Speed Rail KL – SG which a meeting should be held very soon or that MRT Line 3 which is actually a connect-the-final-dots for the MRT coverage and even that never ending saga; ECRL.

Oh yeah, this was what happened when I visited Genting Highlands just 2 weeks back.
I spent RM500 in Genting Highlands
. This was not all. I also visited 1 Utama mall as well which is my favourite mall and well, I did have to circle a bit more before finding car park slots.
Surprised? Malls start to show vibrancy again
  When I bought my new LED TV, I asked the shop if his business was affected. He replied that sales had stayed almost the same. All these were part of the reason why BNM thinks recovery has started and they would prefer to see how much it goes before deciding further. The next meeting is in November 2020. Let’s hope they maintain the rates again…

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Why do we need a Residential Tenancy Act?

Did you know that everyone may be signing a totally different tenancy agreement today when we rent a home? Depending on negotiation power, the agreement may be extremely lopsided to the owner (most of the time) or the tenant (sometimes). If we have a Residential Tenancy Act, then there is no need for anyone to draft their own tenancy agreement but to follow a standardised one based on legislation. There is also no need to argue on who gets more because the Tenancy Act is supposed to be fair to both sides; landlords and tenants.

Article in freemalaysiatoday.com
   Deputy Housing and Local Government Minister Ismail Muttalib said the government is expected to table the Residential Tenancy Act in 2021 to monitor the rental market and protect tenants and house owners. Currently, the rental market is not monitored by any particular agency.

The bill is expected to protect tenants from being forced to vacate premises without proper notice and act as a framework for the rental property market.
Article in freemalaysiatoday.com

Some advantages to the landlord?

The hardest part has always been to remove the tenant if they stop paying rental. It could take months. Please do not try to remove the tenant by force yeah. With a tenancy act, it usually comes with very specific grounds for the homeowner to regain possession of their home. In other words, the remedy is now a standardised one and the process is likely to be very clear too.

There may not be a need to pay lawyers for a draft of the tenancy agreement since it’s now a standardised agreement. Just need to print out a copy, fill in the necessary details and have it signed and then stamped. Of course, even now one is able to download some free copies from online but truth is, it may not be as water tight as needed. Remember yeah, the home is worth a few hundred thousand and the rental may just be over a thousand ringgit. Make sure the tenancy agreement is a good one.

Some advantages to the tenant?

it does provide a more standardised and predictable rental protection. Now, the landlords could not suddenly terminate the tenancy agreement or increase the rental just because they receive a better offer or that there’s now more demand versus supply in the market.

It may even include some rental ceiling to some areas to curb from excessive rental increase. By the way, if it comes to the need for legislation, the rental would have already reached some critical levels and the homeowner may just be laughing to the bank every month they receive the rental from the tenant.

Well, let’s hope it does not get delayed any further and will really be tabled this time so that it can help the market. May not help all home owners or all tenants if they have a much better deal currently but it should provide a standard to the whole market as a whole and I take that as a positive thing.

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Why Gold and Silver and Not Other Precious Metals?

This article is contributed by Ian Tai, the author of bestselling book
“Gold: Maximizing Your Wealth Investing in Precious Metals”
. To get free training about gold and silver investment by Ian, visit
www.GoldSilverMethod.com

Apart from gold and silver, there are another two more commonly known precious metals, platinum and palladium. There is one main reason why gold and silver are favoured over platinum and palladium. This is because they are associated very deeply as money, a lot more than platinum and palladium. Although it is no longer used as a medium of exchange, gold and silver had impacted the global economy today. Here’s how:

Why the US Dollar is Chosen to be a Global Currency?

Let us start with gold. As quoted by JP Morgan, one of the greatest financiers in America, ‘Gold is money. Everything else is credit.’ To make it practical in today’s context, the US Dollar was chosen as the preferred global currency because the US Federal Reserve has the most amount of gold compared to other governments in the world. At present, they have 8,133.5 tonnes of gold.

Euro to Rival the Dollar –

In Europe, as individual countries, their national currencies could not contend the US Dollar for global status. They do not possess as much gold as the US Federal Reserve. However, when the Euro Dollar was introduced, it was then able to challenge the US Dollar as an alternative to the preferred global currency. This is because collectively, they have some 11,000 – 12,000 tonnes of gold, surpassing the amount reported by the US Federal Reserve.

Why Ringgit Can’t Compete and China Can?

Malaysia which possesses some 30 – 40 tonnes of gold is unable to have the Ringgit to contend for global currency status. Since 2011, China had made the amount of their gold reserves undisclosed. In 2010, the People’s Bank of China had reported to possess some 1,054.1 tonnes of gold, making the nation the 6
th
 largest in the world.

Many perceive that the amount is somewhat understated. If China is to increase its gold holdings by another 5,000 – 10,000 tonnes, which I believe is a tiny drop in the bucket compared to China’s US$ 3 Trillion in international reserves, then, the Yuan would be highly in demand and could be another substitute to the US Dollar. Obviously, China which has a thriving export economy will not want their Yuan to appreciate against the Dollar. Thus, it is logical for them not to disclose their gold holdings regardless of whether they have the gold or not. This is how gold impact the global economy today.

Silver as Money –

In ancient times, gold is used to buy land and properties. Silver, on the other hand, is used to buy daily goods and services. Traditionally, the value of 1 ounce of gold is fixed to 16 ounces of silver. This is because there was 16 times more silver circulating in the economy than gold. When the US Dollar was introduced, the US$ 20 bill was known as a “Gold Certificate” while the US$ 1 bill was known as a “Silver Certificate”. The US Government had decided to round up the 16 to the nearest ten to 20.

In the 1960s –

This was a time when the Gresham’s law of money was widely practised. People bought things with “Silver Certificates” and keep real physical silver coins. This is because people knew there is something wrong with the US Dollar. The US Citizens went to the bank and exchanged US$ 1 bills for Silver Coins in massive quantities until 1964 when the US Government put a ban to it.

Distrusting Silver –

Silver coins started to appreciate in price. It went all the way up to US$ 50 per ounce in the late 1970s. It was a challenge for the government to make the general public distrust silver. To do so, first, the US Government had ‘manipulated’ the trading market by ceasing ‘buying’ activities and allowing only ‘selling’ activities. This had infamously caused the Hunt brothers, billionaires of that era, to go bankrupt.

Second, the US government had disposed massive amount of its silver holdings, some 200 – 300 Million ounces per annum into the open market, distorting global supply and demand. This had sent silver down to US$ 4 – 5 per ounce in the 1980s and 1990s. Soon, people fixated their attention to the stock market and completely forgotten about silver. Sounds like mission accomplished to the US government.

Silver as an Industrial Metal –

Unlike gold, miners have also forgotten about silver. It is unprofitable to produce silver. Today, silver is mined as a by-product to more profitable metals such as gold, zinc and copper. Mexico and Peru are the only two countries in the world which produces silver as their core business. At present, silver is also used widely in electronics, medical, automotive industries, and even in manufacturing solar panels. With new applications, silver is now becoming an indispensable metal to the world with increasing urbanization.

Inventories at All-Time Low –

Without realizing, the world consumes 1 Billion ounces of silver per annum and rising. Mine production is supplying 800 Million ounces of silver and is struggling to keep up with potential rise in demand. Starting in 2009, governments around the world have very little silver holdings left in their vaults. They have disposed most of them in the 1980s, 1990s, and earlier period of 2000s. This means, they could no longer inflate global supply of silver, causing a massive jump in silver prices as we witness today. Still, at US$ 17 per ounce, silver is trading at 60 – 70% under its peak price of US$ 50 per ounce and thus, making it attractive.

Happy learning a little more about gold and silver just like me.

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Why High Density condo is better for me

Until today, I have never bought any ‘low density’ condo. My friend said, ‘low density’ means anything below 300 units. I do not agree and have even written an article about
‘Low Density, are you sure’
. Anyway, does not matter, I shall assume my friend is right in terms of using the number of units to determine the ‘low density’ or the ‘high density’. I do not know how to rate Country Garden’s
9,000-unit
 condo in Iskandar though. 🙂   When I talk about condo, I meant condo projects with full facilities; swimming pool, tennis/squash court, walking path / jungle track, playgrounds, fish ponds, gyms etc. For those condo projects without any facility, I have no interest. Definitely not for own stay. Why high density condo is better for me?

Quantity of facilities. Typically, the swimming pool size is not just bigger but definitely twice or three times bigger than a so called, ‘low density’ condo. The argument is that low density means lesser units, thus there would be lesser residents using the facilities. Thus, a smaller swimming pool, a smaller gym, perhaps no tennis courts, a very small children’s playground would do, so few units, how many kids are there anyway right? WRONG! If you ask me, if my condo is truly low density, then I should pay a premium for it and I would expect an even better if not equivalent number of facilities compared to a much higher density condo! Why would I be contented with everything smaller or non-existent? Think rationally, low density means low quantities of facilities?

Usage of facilities. The understanding that more units means more usage of the facilities are not true at all. I was at my swimming pool today, total kids or adults in the huge swimming pool and the two jacuzzi pools and even the children’s pool? Less than 25, including my wife, my baby and myself. I repeat. Huge swimming pool, TWO jacuzzi pools and One Children’s pool which is twice the size of a my friend’s low density condo. Total units for my condo? 733.  Ok, if all the residents come out and use the facilities at the same time, there would not be enough space but… you think if the all the residents in the low density comes out to use their small pool, there would be enough space for them? 🙂

Maintenance fee. Even with much more facilities, many more security guards and a much bigger compound / area to cover, typically I pay lower maintenance fees. I think this is much better than paying almost the same if not higher despite having smaller / non-existent typical facilities and staying inside a similar sized condo which definitely give the same kind of feeling of either spaciousness or the lack of it. Low density, fewer facilities, smaller space to cover, should the fees not be lower? Unfortunately, it is almost most of the time higher.

More opportunity. Just like the stock market, after a while if you are holding on to a stock which has very few transactions, it will not be easy to buy / sell. With a high density condominium, the number of transactions are definitely many times higher and this will in turn help to increase the prices too. Yes, for the first year I think the pressure is on the sellers but after that, the advantages of having a transaction every now and then with a price which is inching upwards is definitely much healthier! A ‘high density’ condo definitely has much more transactions.

My friend also told me that for high density condominiums, the people staying there are most of the time ‘poorer’. I agree somewhat because I think I am considered the poorer ones. Today, when I drove into the car park, even if many of the cars are only slightly more expensive than my Persona but I saw Mercedes E320, BMX X5, those huge TOYOTA MPVs and when I parked my car, right next to me was a BMW 5 Series, not so new, perhaps a 4-6 year old car.

Always remember, when you buy a condo, buy it because everything in it fulfills your requirement; location, facilities, reputable developer and more. However, when you are still paying just RM550 – RM600 psf and the developer tells you that the project is low density, just smile and understand that for such a low price psf, ‘low density’ simply means you should ‘lower’ your expectations of whatever you will ever have with a high density condominium. This is why for me, I would continue to buy high density condominium instead of ‘fake’ low density ones.

written on 13 April 2014

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Why I engage real estate agents / negotiators

My friend asked me how am I going to sell my properties in Penang. Would I be using any free online advertisements? I told him that I am using the services of a real estate agent. He remarked that if I do that, I would need to pay agent’s fee. I replied gladly, yes if they sell for me, I would pay agent fee. In my personal opinion, to sell your property properly, you should use an agent. While Malaysia has yet to enforce licensed real estate agents strictly, I would give to agents because of three reasons.

Convenience. Assuming you priced your property correctly, how many views do you think it will need for you to sell? Conservatively, five. If you are working, who would open the door if buyers want to view? You limit the viewing to weekends? You worked so hard on weekdays and you still want to ‘work’ on weekdays? If you still answer yes, you may stop reading now. All the best in selling your property. 🙂

Money. Your time is money. If you take a half-day leave, how much would that cost you? If you bring the buyers to view during weekends, that should be double as it is considered rest day. If you have a family that you asked them to wait while you bring the buyer to view, that’s a pity. Why waste the time that you could have used for more productive reasons, for your family, going back to hometown etc?

Lastly, safety. If a buyer called to view and he said he wanted to view in the evening, say 8pm, do you feel safe to open the door yourself? You want to bring a friend? Great. What if the buyer is viewing with a few other people and there are just two of you? Be real, even agents take precautionary measures these days, why not you?

I do not want to go into how much savings you can save versus what if things really do go wrong. To me, every profession has its reasons. You can buy a scissor and cut your hair too. Why pay so much to cut your hair? Think objectively, make decision swiftly. When you sell, you are looking for potential profit and not potential trouble. Majority of the profits would come from capital appreciation and not from your savings by not paying the agent fee. This is why I prefer to use real estate agents. Happy selling.

written on 11 Jan 2014

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Why you should visit property fairs

My friend said the property market is going to crash soon. His friend’s friend said so. The developers said that prices cannot come down and it has to go up due to costs. If that is true why there were so many complaints when DIBS scheme was cancelled by BNM. My agent friends said that transactions are slow these days. Yet, another agent said, cannot be slow because his business continue to be good. Tell me, who is telling the truth? Actually the best would be to feel the market sentiment yourself. That’s why I go to property fairs.

Whenever people said demand is there because there are still so many people in their 30s who has yet to buy a property. Just be at the property fair, look around, do you find a lot of couples, looking like engineers / accountants and scouting for properties? Taking brochures? If there are really quite a number, you do not need to ask, it is true. Do you see developers putting up HUGE banners saying ‘RM18,000 free gifts if you book today?’ Try to google that project, see if it has been selling for the past 12 months. Do you see some developer booth full of people and everyone seemed interested? Go and sit down and listen. Perhaps it might just be the property you want.

I also love to attend free talks, seminars. I love to look at people who sit at those talks. Look at those who are listening. Are they people like you? If yes, then I think the market is still ok. You can also visit the Auction booths. People say ‘auction properties’ very dangerous. Is it true? I have a friend who has bought a few lelong properties and he is still buying. I also have friends who bought in Melaka many years ago from a developer and got their investment burnt until today. If you do your homework well, the risks are reduced. If you buy because your friend told you to buy, I hope you are lucky. Oh yeah, these are the reasons why I love to visit property fairs.

written on 23rd dec 2013.

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4Ps (People): Most important property investment reason

I was sharing the
4Ps for Property Investment in Datum Galleria
 yesterday and the first P is People. It is beyond just population growth though. As long as the city receives a lot of travellers, that’s people too. Imagine a city which is growing and is visited by ever more people year after year. What will happen to the demand for property? Yes, RISING. That city is of course our Kuala Lumpur. I have moved here for the last 5.5 years and I have asked myself this question a few times, “Would I have been more successful if I have moved earlier?” The opportunities are definitely more diverse even if I like Penang because its growing steadily instead of at a fast pace like KL.

In an article in NST,

the latest MasterCard’s 2018 Global Destination Cities Index, our Kuala Lumpur is still ranked 7th. By the way, it’s 7th in the WHOLE WORLD. This is our 3rd year at the same spot. In 2017, we welcomed 12.58 million international travellers and most probably this will increase by another 7.1 percent in 2018. That means we should have 13.46 million international visitors in 2018. Foreign leisure and business travellers spent an average of 5.5 nights and spent US$124 (RM514) in the city for 2017. In a sign that we remain ‘affordable,’ total visitor spending wise, KL is ranked only 13th. The top 3 countries where the visitors come from include China (comprising 16.8 per cent of foreign travellers), Thailand (11.8 per cent) and Indonesia (10.3 per cent). (IF only we have HSR, this may change?)  Please do take a look at the top 10 list as below:

Global top 10 destination cities

Rank City 2017 arrivals 2018 growth forecast

1). Bangkok – 20.05 million 9.6%

2). London – 19.83 million 3.0%

3). Paris – 17.44 million 2.9%

4). Dubai – 15.79 million 5.5%

5). Singapore – 13.91 million 4.0%

6). New York – 13.13 million 4.1%

7). Kuala Lumpur – 12.58 million 7.5%

8). Tokyo – 11.93 million 1.6%

9). Istanbul – 10.70 million 19.7%

10). Seoul – 9.54 million 6.1%

NST article for reference here.

There’s no doubt that the demand for accommodation (property) will increase because every month Kuala Lumpur hosts over 1.1 million international visitors. Assuming they are all sharing rooms, this is still 550,000 rooms needed per month. As long as we continue to be attractive to foreign students who come here for UK / Australia / US degrees via twinning or fully completed here, the numbers will continue to rise. Yes, I know the foreign students do not fly to and fro every month but their parents would definitely be visiting them too. Medical tourism is another attraction.
Malaysia earned RM1.3 BILLION in 2017 for medical tourism.
 Let’s not forget the increase in demand from business travellers too. ASIAN cities already occupy half of the top 10 list. Frankly, it will soon be majority. Happy understanding the potential.

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written on 6th Oct 2018

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Why is another rate cut important and why rate cuts need not be too hasty?

For a 65-year old who has no income

When a 65 year old with a few hundred thousands in the bank heard of another rate cut, he sighed. He has no other income and relies on the interest from his fixed deposit for his daily living expenses. The latest fixed deposit rate for him may just be 2% and for a RM500,000 he will earn just RM10,000 or RM800 plus per month… It used to be 50% higher or more.

Someone struggling to pay his home loan

When someone with a home loan he was struggling to pay every month, another rate cut is much welcomed. This will help him save probably up to a few hundred ringgit every month and this is a breather. Of course, if he had bought something more affordable earlier, he may not be facing such a high pressure every month.

Looking for another rate cut?

Question. Are you waiting for another rate cut? As part of a monetary policy, rate cuts are aimed at making people use their money for investments versus just leaving it in the bank. It is supposed to spur business expansions since it is now cheaper to borrow. It may also encourage more people to buy properties since the monthly mortgage is now lowest in a decade… What do the experts say then?

Article in themalaysianreserve.com
  RHB Bank Bhd Group MD Datuk Khairussaleh Ramli sees no further cut in the OPR this year following the reopening of various sectors in the country.

Malayan Banking Bhd (Maybank) group president and CEO Datuk Abdul Farid Alias has the same views as that of Datuk Khairussaleh Ramli.

CIMB Group Holdings Bhd CEO Datuk Abdul Rahman Ahmad who was appointed group CEO in May said there is a possibility for another OPR cut this year.

AMMB Holdings Bhd (AmBank) last Thursday anticipates BNM to cut the OPR to 1.5% or 1.25% to support the economy battered by the Covid-19.

Do read the article in full with lots of actual comments from the leaders of these banks.
Article in themalaysianreserve.com

Current rates are good enough

I do think we should only cut rates further if we continue to see a deterioration in the economy month after month. For example, if July worse than June and is August worse than July and September is anticipated to be the worse in Q3 2020? Also, do we know if the rate cuts thus far has actually spurred new investments which we wanted so that it could propel the economy or just the stock market alone?

Flexibility and using it sparingly

In many countries, rates are already at close to zero and any further cuts meant a negative rate. I guess we should have the flexibility to cut rates when we needed to; spare the bullet until it is truly necessary. 1.75%, if we take 0.25% per cut, we only have 7 bullets left before we arrive at zero. Of course, if the economy starts to be on track again, then BNM may also rein in the speculative activities by increasing the rates too.

The next BNM Monetary Policy Committee meeting is on 10th September. We shall see.

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Why kopi and property.

Kopi is Malaysian word for coffee. It means I love being a Malaysian and I love kopi. My number one favourite remains to be a cup of balanced latte. Stronger coffee compared to the milk is ok but not the other way. The best would still be good beans and the right mix of milk. A balanced cup, that’s my cup of perfect latte. Property is something interesting to me. It can be a long-term investment or a short-term speculation. It can be the best decision or the worst investment option. I hope to share my little experience with those who wants to have a cup of good coffee and a dose of investment in property or even properties.

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Why Malaysia need 8 Million homes based on current population?

An article was widely shared recently. The main headline was that Malaysia needs 7.8 million homes. This is based on the 30 million population and a ratio of 4 to 1 home. The article further stated that as of today, Malaysia has around 4.7 million homes. Thus, you can see the huge gap between the actual needed versus the actual built ones. Actually, how many homes do we need in Malaysia? Majority of the answers are around 100,000 per year. Well, truth is, we have yet to build up even this level. This explains why many are saying the reason why property prices will continue to increase is because there’s way too few homes being built.

Actually there’s another point which is very important too, just that I do not think anyone would have this number except for the state land offices. The urbanisation is ever increasing and in the not so near future, Greater KL alone would have over 10 million population. This meant that the homes in the small towns may not be needed or even some may be abandoned once the young ones move to cities. The new homes to be built would thus have to be heavily skewed towards this trend. In fact, when you travel to smaller towns, I think the ratio of home is much lower than 4 : 1. The reason being, there’s just not that many population to go around with the existing number of homes. It might have been even 10 : 1 in the same home long time ago (during my father’s times) but today, perhaps just 2 : 1 or even lower. If the kids made it big in the cities and love their parents and can care for them, this would meant that even that their home in the village or small town would be sold off or just left empty.

In UK, the ratio is now 2.4 persons to one house. When you look at this number, it is also important to note that one major reason would also be because of the house prices being way too expensive and thus, the newer ones in good areas are now built smaller. Once you build them smaller to make it affordable, you cannot have too many within that home. Imagine a SOHO for 4 pax? Nah, I do not think this is the number for any SOHO. a typical family of 4 would still feel comfortable only with a 1,000sf home or higher. Anything lower, they can make do but definitely not an ideal space. I have stayed in a 700sf apartment for 5 years with my wife, my sister and even my brother, for a while. It’s cosy of course but not awesome. Thus, this ratio would continue to decrease because the units built in the better spots would be ever tinier to maintain affordability. In fact, Hong Kong launched this:
177sf micro-flats, so that it’s affordable enough.

The question of how many homes are needed depends very much on how the country continues to grow and where is the growth. Thus the plan for more homes is more on building in the right places and where possible, at the right prices. While the government wants to encourage the building of families and thus are always building units which are bigger, it can perhaps also think about building these smaller units too, especially for the younger population which would be getting married later than earlier. Instead of all of them fighting for huge units which they would need so soon anyway and thus pushing up the prices even further, maybe just maybe these smaller units may help in stemming the price increase. Happy thinking and investing.

written on 11 Nov 2014

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Buying a property. Way too Far, too High and too Soon (updated)

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Why not leasehold property? (updated)

My cousin sister has moved into her spanking new leasehold condo last year. After waiting for 3 years plus including some minor renovations, she has moved into her new home which she said comfortable and how lucky for her to have gotten such a place amidst all the high prices these days everywhere in Klang Valley. Yes, it’s a leasehold. The current place that I am staying is also leasehold. My next condo that I am moving to next month? Leasehold too. Am I crazy over leasehold properties?

Many years ago, she asked me about the property. She said, ‘but it’s leasehold’. I told her, the current place you are staying also leasehold, do you feel anything wrong with it? She laughed. Anyway, I briefly explained. When you buy 99 years, you may be 30 years old. When you are 60 years old, your lease still have 60 years to go. By then your children is 30 years old. When you reach 90 years old and your son reaches 60 years old and your grandson reaches 30 years old, you still have 30 years left on your lease. When you are 120 years old, your son is 90 years old, your grandson is 60 years old and your grandson’s son is 30 years old, your lease expires. At that time, your grandson’s son’s son just born. Seriously, you expect the government of the day to just ask the hundreds if not thousands of people in your condo to MOVE OUT? Just like that?

Let’s be very honest. If if prices are exactly the same and the location is the same, I would take freehold anytime. However, if you noticed, leasehold properties are typically cheaper. Perhaps 15-20% cheaper sometimes. Most of the time, the leasehold properties are also in good areas. As an example, Kelana Jaya. Another example, Damansara. Long time ago, Damansara was also shunned upon. Today, the only ones not sold yet would soon be snapped up because the MRT station will be up to Sungai Buloh.

I hope you already get what I mean. If not, fine, please don’t buy leasehold. 🙂

revised on 1 March 2014

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First home? buy leasehold

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Penang was the place I started my career right. I got a job there 1 month after arriving home from Bristol Business School, UK in 1998. After that, I was working in Penang for 15 years. My daughter was born there too. I was already there before Karpal Singh Drive was ready, way before Penang was awarded the UNESCO Heritage City status and way before Queensbay mall was completed. Yea, the Penang when I was there until the time I left was a different one. Today, I am based in the Klang Valley. I have been here for the past 6.5 years. Add the 15 + 6.5 years and you could sort of guess my age. 🙂

By the way, it’s one of those places where you get MNCs paying you huge money as a senior manager and you could enjoy world famous delicious hawker food during lunch and during the weekends, the beach is a very short drive away. Oh yeah, let’s not even talk about the current Penang International Airport which has enough connectivities to many cities outside Malaysia too. Penang is also one place where holidays would mean it’s packed to the brim.

I bought my first property in Penang in 2002. I purchased my second one in 2004. Okay, as at today, I still have properties in Penang and have sold a couple because I needed some money to buy properties elsewhere… Let me share all these and perhaps you may also think fondly of Penang as I do. I am honoured to be invited by PropertyQueen for this FB Live session. Title of the session is, “Why Penang could be the first place you buy a property right after MCO.” I will share the LIVE session in my page too. See you on 11th April (Saturday) at 2pm yeah.

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Why are people still buying properties?

Actually, the question can also be, why are people NOT buying properties? This is because in any discussion at all, especially with one group which has not yet purchased their first property, the question is always, when should we enter. However, if we are in a discussion with a group of seasoned property investors, the question would always be where is the next potential area / development to buy. Two extremes they may be but they reflect the situation in most markets, except for the over-heated ones. Anyway, why are people still buying properties? Some reasons below.

Can’t rent forever. Okay, maybe some would
prefer to rent forever
. Not everyone thinks like that and many love the feeling of opening the door to their own home. Some may even have father-in-laws who would insist the new couple to own their own home and not rent just a room.

Urbanization
. I was just speaking to a Penangite the other day. He asked for the property prospects of Penang vs KL. I think we need to understand that all major cities in the developing world would always be attractive to people from smaller towns. They want job / business opportunities and only the city may provide them that chance to be rich.

Repeat. Every time we are successful in our investments, we tend to repeat them. As long as we did not buy the wrong property, the prices of the property we bought would definitely be on the way up. Some slower, some faster but the trend is simple. Under normal circumstances, the only way is up. In fact,
who wants the prices to come down?

Asset. Investment portfolios are changing and property is fast becoming a darling for many. It’s however very safe to say that property investment is solid (you can touch it), clear (you can see it) and safe (most of them, anyway). So, have you included real estate as part of your portfolio yet? Please don’t tell me that you have
yet to start investing
.
……………..

So, the above would be just four simple reasons to answer the question many people have asked me. Nope, I have not gone into other factors such as demographics (we are a very young country), new public transportations such as LRTs, MRTs (soon), buying for upgrades and even affordability. In case
we did not notice the cheap ones
, actually they remain available and unlike the luxury ones, Malaysia has yet to reach the stage where a 500 sq ft apartment would be used to rent out to over 10 pax! Okay, why are people still buying properties? Please answer………….

written on 1 September 2016

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Why Plasma TV instead of Smart LED TV. (for my new condo)

Charles, why did you buy Plasma TV instead of LED TV? You do not know Plasma TV is an outdated technology? Today, everyone is talking about SMART LED TV. This was not just one remark but was one of many. To be honest, I know it is an older technology. However, do you know what is outdated? Outdated means something has expired. Tell me honestly, how long has Plasma TV been around? It has been around when LCD TV first started. From LCD, it went to LED and today, SMART LED. After all these years, LCD has been replaced, LED technology continued to be improved and SMART LED today. Yet, Plasma TV is STILL selling? let me tell you just three reasons why I bought Plasma TV.

Affordability. I should just say I am stingy but it was really cheap! RM1,600 for a 51 inch Samsung Plasma TV in Harvey Norman. First, you cannot buy any LED TV which is same size. Secondly, it is less than half the price of a slightly smaller SMART LED TV. With the huge savings, think of the surround sound home theatre system that I can easily buy? Alternatively what about a very cosy L shaped Sofa Set with soft fabric cover which is washable? I could go on, but it is ok, you get what I mean. RM1,600 vs RM4,000 was a very easy choice.

Entertainment Value. You watch a great movie on your SMART LED TV and I watch the same movie on mine. To be honest, go read expert opinions, I may just enjoy it very slightly more than you, especially if it is an action packed movie. Do look at the comparison chart which can be found online easily. Okay, let’s assume we draw on this one. Then, tell me why are you paying so much to ‘draw’ with me?

Long term viability. Some one would now scream, but LED TV lasts longer! A Plasma TV may last anywhere from 20,000 – 60,000 hours. Let’s assume it lasts only 20,000 hours and everyday I watch 8 hours which I don’t. Do you know how long would it take for the Plasma TV to ‘die’? Only around 7 years. Don’t tell me you want to watch the exact same size, same design, same technology SMART LED TV for more than 7 years? FYI, after watching my PLASMA TV for 2 years, I can buy a SMARTER LED TV for less than half the price you pay today and I can almost tell you that even the size will be larger than yours. Oh yeah, by then, I have TWO TVs, one same size as you in my master-room and another SMARTER and BIGGER in my living room.

Sorry, I did not even want to start about internet or whatever Smart features there are. Trust me, I would not need them as much as paying so much extra. If you do, great, Smart LED TV is for you. I also know, majority will still buy Smart LED TV but that’s the reason why I can buy mine so cheap. I must still say thank you for helping to support my decision. I also know that some friends who come to my house in near future would ask, ‘That’s Plasma TV?’ I would smile and tell them, yes, ‘I bought plasma TV instead of LED TV.

written on 12 March 2014

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Why property investment is a bad idea? Please let me share this okay?

I will be speaking in this Real Estate Summit (RES) 2021 and my topic is definitely considered a controversial one.
“7 reasons why property investment is a bad idea.”
 Over the years, I have come to realisation that property investment is a good idea to some and a bad idea to many people too. Thus, I must share all these things in people’s minds so that everyone would be able to make a better decision! Property is not for everyone, okay?

Joining me in this sharing is WK Ng who will provide his side of this topic too. I really look forward to this because I know WK would share a lot of his personal experience. I do not really like to listen to just speakers speaking about theories. Both of would be sharing real experience yeah.
Register and join us. Click here.
It’s free yeah.

All other speakers are as per image below. Must-Attend okay? I was invited by the organiser of this event Miichael Yeoh who speaks more times than most people eating spaghetti in their whole loves!

Date: 24th July 2021 (Sat)

Time: 10am – 6pm.

In the mean time, take care and keep reading kopiandproperty.com

Thank you.

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Why property market ‘up’ will be good for banks

As long as it happens in one market, it would also be the same for another market.
Reported in Theedgemarkets.com
 was a piece of news about the revival for Singapore’s property market. This will help the Singapore bank stocks. The reason is clearly stated, together with some calculations. It shared that the property market is also pretty healthy. According to analyst Ng Li Hiang the transactions comprise of units with lower property prices, smaller number of speculators and property investors who tend to prefer larger units, and real buyers opting for small housing units. This is based on some assumptions, okay. Anyway, do read the full article to understand more:
TheEdgeMarkets: Singapore property market revival augurs well for banking stocks

Do note that this is happening despite the cooling measures still in place and without any signs from the authorities that it will be lifted soon. Here’s an earlier article:
Cooling measures in SG? One more year at least says Capitaland Ltd

Besides that, do note that Singapore has just averted a technical recession when it achieved 2.5 percent in GDP growth in Q2. (Technical recession happens when an economy has two quarters of consecutive negative growths.). Remember the fact that as long as unemployment rate remains low and everyone has jobs and could pay their bills, the demand for property would continue. The unemployment rate in Singapore is ONLY 2.3 percent (March 2017). This is LESS than half of that largest economy which is still on tract increase rates because it says its growth is as expected; good. Unemployment rate in the U.S is 4.6 percent (end 2016) Perhaps this is because America has
Mr. Trump as their president
.
 🙂

Home loans are considered ‘safe’ loans. If we are tight where money is concerned, we would somehow still try our best to pay for the home. If we did not, we would not even have a place to stay! This is why when the overall loans for homes are up, the banks would definitely report better profits too. Recently, all the banks whom I read about were reporting profits.
When banks show better results, it’s a good sign

I think the next sign we should be looking for would be the total transaction numbers for residential homes in Malaysia. Average price should be on the way down because the
number of affordable homes are on the way up.
So, there are now two clear actions to take. View more units and decide on the best out of those and buy one. 🙂  Else, start buying bank stocks if we do believe that Singapore may provide an advance notice, just like what happened with cooling measures a few years ago. Happy following.

written on 17 July 2017

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Actual conversation, maybe not actual words but the gist is there. Why property prices are not falling yet? Happened on 6th October with a good friend in a nice cafe in Mont Kiara.

Photo by Viajero on
Pexels.com

Good friend:  I am still waiting for the property price to drop before I buy.

Charles: It will not be easy for prices to drop yeah. What would be the price you are waiting for?

Good friend: I am not sure but I heard from my friends that the prices will be falling very soon since moratorium is now over.

Charles:  Not sure about your friend’s comment but did you know that 98% of people who applied for moratorium extension got extension? It means that if these 98% of the applicants will have to sell their properties, it should be next year already.

Good friend: Surely some of them would want to sell their properties.

Charles:  Oh, there are definitely many sellers for properties.  Within 1H 2020, there were over 75,000 residential property
transactions in Malaysia. (official numbers here)
There are certainly no shortage of buyers and sellers and certainly the banks are also approving these home loan applications too. However, if you are one of those sellers, would you be selling your property at a cheaper price than the market?

Good friend: Of course I won’t. I am not in any financial distress.

Charles: (laughs). You have just answered your own question about why the property prices are not falling, yet.  Not many would be willing to sell their properties below the perceived property market UNLESS they really needed the money.

Good friend: Oh but I heard many developers are giving heavy discounts already.

Charles: Yes, but is that what you wanted?  To buy a property from the developer at a super heavy discount which is also given to a few other hundred buyers? Getting the keys at the same time as the other few hundred buyers who got the discount? Trying to sell the property at that time against all those few hundred other buyers?

Good friend: True also but then what about those auction properties then? Those who bought too high previously, definitely the properties are now in the auction hall. Am i right?

Charles: I share with you a real experience. Last year, I was auctioning off a landed property and it was the 4th auction. In other words, the property price is already super attractive since every subsequent auction after the first one, another 10% is knocked off the previous auction price. In the end, there were more than a few potential buyers and the winner bought it at the second auction price.  It’s true that there are good deals but we really must take action. Else, when it got too attractive, we will have too many competing bidders.

Good friend: Then, I should buy now? Should I not wait until the market gets better?

Charles: Market is bad, we want to wait for when market gets better. When market gets better, we think we want to wait for clear signs of recovery.  When there are clear signs of recovery, we complain why prices have suddenly increase so much within the last few months? Haha. This cycle always continue right?

Good friend: (laughs).

Charles: Property prices are not falling yet is really not a valid reason to wait yeah.  Better really identify where you really want to buy. Get ready the funds and actually going ahead and buy if you suddenly found a unit below the market price currently. Else, someone else would yeah.

It was a good conversation. I have not met her for many, many months and she’s one of those millennial friends whom I regard very highly. Entrepreneurial, willing to work very hard to achieve her goals and not afraid of challenges. However her experience with property investment has not been a great one. Properties she had bought has been during the times nearing the peak or the prices per sq ft were a little on the high side. Perhaps time will be able to help her.

She just need to keep her business going because that would be where she earns all her money anyway. Till the next coffee session. Yes, next time I shall treat her since this time, she paid for my breakfast and my tea. Happy understanding why property prices are not falling… yet.

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Wondering why property prices are not going down?

Image Source: housingwatch.my

Statistically, the availability of property price numbers for the Malaysian property market are usually 2 quarters behind. In more advanced countries, this is usually faster. Anyway, as long as we have some updates, we would still know the direction that the property prices are going. According to
housingwatch.my
, the Housing Price Index (HPI) shows a drop in Q2 2017 versus Q1 2017. This is quite significant because the drop which is actually still an increase is now below the average increase for the past 26 years.

Take a look at the image. For the past 26 years, the average HPI has been 6.5 percent. Notice the double digit quarters in 2013 and the continuous 8 percent or above for the many quarters after? Yeah, those were the years when everyone started shouting that the property prices were rising way too fast.

Wondering why property prices does not seem to be going down? Instead of an overall median property price view or even the usual statistics that many experts are saying, how about going back to the basics? The question about whether property prices could go up or come down depends on the buyer and seller equation.

Can buyers afford your (seller) selling price? Would sellers agree with a lower price that the buyer wanted?

Actually, this is the most basic reason why property prices would fall or rise. Look at the HPI, it is still showing that property prices are rising, even if the rise is now lower than the average. Actually, if majority of all buyers are buying the newly launched affordable homes, the HPI will trend downwards from the contribution from these lower priced transactions. It is not the case currently. Majority of all transactions are from the secondary market.

In essence, it tells us that most people are still buying because they are buying in mature places. In mature places, assuming there are 1000 units of secondary properties, how many would be in the market at any point in time? Perhaps 5 or 10? Yes, this tells us that the

supply is indeed smaller than potential demand.

When demand is by far higher, then the prices inch upwards. This is the reason why HPI is showing an increase even after years of slowing down in the market. Perhaps since 2013. The HPI is based on the number from transactions. It is not based on the prices on offer in the market. Okay, for the final question of “BUT my salary is rising slower than even the HPI of 5.6 percent!” How could people still afford to buy? Here’s an earlier article.
Property prices rising higher than income, true. Why can we still buy?
  Happy believing (home owners) and happy anticipating (home buyers). For the rest, happy reading!

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written on 8 Jan 2018

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Why property prices would fall, my view

Until today, I do not believe there is such thing as a totally free demand and supply based pricing. This is despite the fact that prices are now more transparent than ever and news travel much faster, perhaps even in the blink of a mouse click. The more common reasons would be the distortions caused by the government’s affordable projects. In the past, this has been carried out pretty slowly by one agency. Today, there are multiple programmes for
affordable homes
 from both the federal government and the state government. Some private developers are also bidding for these projects too despite the perceived lower margin, or is it? Lower margin per unit but much higher number of units means total value of profit in number may be even more attractive! Come on, building a 20 storey and a 40 storey, in terms of added fixed costs are not two times. Okay, why would prices fall? (Don’t laugh, you know the reasons below too.)

Another financial crisis. If there is another financial crisis, the prices would fall. However, when the
financial crisis happens
, the first to be hit would be those overpriced properties. If you are currently staying in a RM250,000 condo and people tell you when crisis comes it will fall to RM125,000, then my advice, just hold on or if possible buy another unit. Soon, your money would triple or quadruple. Tough times don’t last but opportunities are at its highest during tough times.

Pricing by ‘amazing’ developers. In every state, there are some developers whom everyone knows that their build quality is suspect. That the materials they use are substandard. However, these developers continue to prosper by using the most
awesome strategy; pricing
. They only need to price their properties slightly lower than the surrounding and voila, they can sell easily. Haha. So, yes, even during good times, prices may still ‘fall’ and buyers love all these ‘fall’ in price and then hoping that the developer may just become good this time. Well, chances are it’s tough because they already sell you 10% lower, don’t you wonder about their ability to buy even better quality materials if they charge you lower?

Building costs go down. Yes, for example, cement price goes down. Labour cost is now much lower. Other materials such as steel, bricks, paint, everything somehow just became cheaper.
Land prices go down
 because those who bought at higher priced today suddenly wanted to sell it lower. Yes, when this happen, property prices would fall. Everyone would then be able to buy good projects at lower prices. Really?

Willingness to
 accept lower margins.
 All businesses exist for profit. Well, some have higher margins and some lower. When the developers feel extremely charitable, they may sell at a much lower margin and this ‘savings’ may be passed to you. Frankly, if we are the developers, would we want to operate in a very low margin business? I think the choice is clear. When margins get way too low, many developers may not build….

Are you smiling now? Yes, I have given three reasons why in my personal opinion prices would fall. I certainly still believe prices would fall but seriously, if the main reason you are not buying is to wait for prices to fall, happy waiting. Be reminded, until today as I write this, there are still
apartments which are affordable
 (below RM300,000) though further away from KLCC. There are still medium low cost apartments at just RM200,000 though not in great areas and there are huge number of landed properties for less than RM550,000 in “faraway” areas. Supply, demand, prices, they just can’t run away from each other.

written on 31 May 2014 updated on 8 July 2016

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Why rebate, why not launch ‘correctly’

I have a small group of colleagues whom I lunch with on and off and the topic is usually property. One thing we have in common is our dislike for rebate. Why must the developer give huge rebates? Well, if it is due to the current slowdown and they are able to give rebates, does that mean the launch price too high? If they are able to offer a HUGE rebate, should we not wonder if they have a huge profit margin? If they do not have a huge profit margin, should we not worry about the quality then if they actually cut the price through offering huge rebates? I was walking past one developer in Ipoh Parade yesterday I heard one sales person telling the prospective buyer that the rebate is up to 20 percent! Huh?

I do not think any developer would start construction unless they have a healthy gross margin. The reason is very simply. From land acquisition to key handover, it is easily 4 years. Thus, even assuming that they have a 30% gross margin, the ROI per year remains to be low.  The only thing in their favour is that the actual profit in number is huge. Assuming a RM500 million gross development project and a 30% gross margin, then their gross margin can be RM150 million which is very attractive since not many developers would have RM500 million cash in the first place to earn such a profit.

The typical net profit margins of the listed companies are also publicly announced and it’s definitely much lower. It does not change a lot. Read here for some of them:
Developers and their profit margins, recent updates, Sept 2014

Be wary with any rebates which are double digits percentage in nature. Sometimes, the developer do offer some sweetener such as Angpow during Chinese New Year or even a small rebate and I think this is quite normal especially under current slowdown. However, anything significant needs further checking. Perhaps versus the property prices in the surrounding areas etc. Be careful and buy based on what you need and not what the sales person tells you. They are paid to sell but if you simply buy, you will have to pay for it for a very long time.

written on 22 Sept 2015

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Expert Series – Why Retirement Homes, Why Ipoh? – Part 1

Readers of kopiandproperty.com knows that I am an Ipohan. A proud one as well. Frankly, I will definitely retire in Ipoh. However, I am nowhere near the retirement age yet. However, I wrote about retirement homes way back in 2014 and I recently have the pleasure to interview someone who is trying to change the typical perception of retirees and retirement homes. For those looking at retiring and want to know more about retirement homes, I have invited my friend Executive Director of Total Investment Sdn Bhd, John Chong to answer some tough questions about retirement homes in Ipoh. He started this journey of ensuring retirees have a higher quality life many years back. I think he might still be wet from all the cold waters poured on him thus far. There would be two parts to the interview. Let’s look at Part 1 as below.

1) Penang and Kuala Lumpur or even Iskandar have international connectivity. Ipoh does not. Why should I choose Ipoh instead if I am a foreigner and not a Malaysian.

mini-theatrette-in-green-acres-clubhouse

International connectivity is only one out of many factors which determine whether a place makes a good retirement destination or not. There are, arguably, other more important factors such as affordability, congestion level, healthcare services, environmental quality, etc.

In this regard, Ipoh has several advantages compared to Penang, Kuala Lumpur or Iskandar. Ipoh has a lower cost of living and property prices here are significantly lower than those afore-mentioned cities. As a result your retirement
fund can be stretched much further in Ipoh. For this reason, in 2014, US News had named Ipoh as the third most affordable place in the world to retire.

Ipoh is relatively free of traffic jams and most places can be reached within 15 minutes drive. Compared to major cities, the pace of life is slower, the scenery here is magnificent and the quality of air and water is better here. This translates to better quality of life and longevity.

Healthcare in Ipoh is first-world, the architecture in Ipoh is an eclectic mix of modern and new, there’s plenty to do here. In terms of connectivity, Ipoh is highly accessible by road and rail. Kuala Lumpur and Penang are only 2 hours away.

So if you want better affordability, an unhurried pace of life, better quality air and water, with the conveniences of a modern city – Ipoh would be the perfect place to be. These are also some of the reasons why our Canadian and Hong Kong residents have chosen GreenAcres for their retirement.

2. I know retirement homes are popular in Australia. I am just not confident about the ones in Malaysia. Is this going to be around for the next ten years? Why do you say so?

Lush greenery surroundings

Yes, retirement homes are very popular in Australia – in fact, GreenAcres is developed with the assistance of Australian consultants.

Since retirement villages are new to the Malaysian market, it is not surprising that it would take the people some time to get used to. We are positive that the concept of retirement villages will catch on in Malaysia since we are undergoing a demographic shift. In 2016, 9.5% of the population (or approximately 2.9 millions persons) were aged 60 years and above and this trend is increasing. By 2035, Malaysia would be classified as an ageing nation. This would mean that the demand for senior-specific housing will only increase over time.

In tandem with this is the rise of employment mobility where increasingly many children are exploring employment opportunities away from home. Many households are dual income households, and as such, many elderly parents face the prospect of having to live alone and this again underscores the need for proper solutions for seniors housing.

Most legitimate retirement villages will also have safeguards in place for residents. At GreenAcres, residents need not worry as we have put in place protection for the residents in any eventuality. The lease for the unit is endorsed onto the master title and therefore remains secure. In the instance the project is taken over by another entity, your lease will still be honored.

3. I am not a single. I have my own house. I have many family members who love to take care of me. Is a retirement home needed for me?

Firstly, we must emphasize that a retirement village is not an old folks home. It is a lifestyle development that is meant to provide a superior alternative to staying in your own home. Some of the advantages of a retirement village are as follows:

Cost :

Home ownership is expensive. Maintaining your own home has its costs. Things that would contribute to the cost would be repairs for the homes, replacing items for the homes, lawn maintenance, and so forth. For large homes these costs can be substantial. As you age there is also a need to renovate the home to include age-friendly features, as well. Homes in GreenAcres are specially designed with age-friendly considerations.
The homes are more compact in size, and are within a gated and guarded 13 acre development translates to ease of upkeep for the residents. Each home is specially designed with more than 10 age-friendly features such as wider doors; lower and larger switches; wider and longer handles on furnishings; bathroom grab rails; taps with lever handles; seats in the shower; ramped entryways at the main entrance; step-less bathroom; emergency call buttons; and levers handles on all doors. We maintain the lawns and the public areas.

Stresses on family:

When you live as a couple without round-the-clock care, there are risks to be considered. Many things could happen. As we age, our bodies get more fragile, and minor accidents could have major consequences. If you live with your spouse, your family could not be living nearby to provide you the care you need, or they could be working when these incidences happen. These incidences would create much stress for the family – mentally, physically, and financially. In a retirement village, such as GreenAcres, there’s a community management team which provides round the clock emergency response and monitors for emergencies through a system integrated into the homes with emergency call buttons therefore reducing the stress on the family.

Social capital:

In the same scenario, you could be living in a residential estate without your peers or in an estate that you could be far from other neighbors. As we age, we lose friends and social capital. Researchers have long known about the health benefits of social capital. For example, Harvard School of Public Health researchers found that elderly people who have active social lives may have a slower rate of memory decline – half the rate amongst the most sociable elderly people. Some studies have also shown that people with many social ties have lower mortality rates. Isolation is a risk factor for all chronic diseases. Some researchers have measured the mobility of seniors and found that greater social connections translate to higher physical mobility scores and even encourages older people to pursue health seeking behaviors – such as getting health screening, not smoking or walking around. Studies have also shown that the rate of cognitive decline was 70 percent less in people with frequent social contact.

One of the key concepts behind GreenAcres is to provide the sense of belonging in a community of peers which is why we invested in an RM 10 million clubhouse which is the heart of the development. If you visit GreenAcres, the entire development is designed around providing social capital to our seniors – homes are close to one another. We support active ageing through a dedicated community management team which designs frequent physical, intellectual and cultural activities which are suitable for seniors so they always have company and do not stop growing. Elders can be with other people, learn new skills, travel, share stories and lives, and these are all great to boost the immune system.

Feel free to browse through the
GreenAcres Retirement Village site here.
 Part 2 which talks even more about retirement homes would be up tomorrow. Happy reading and perhaps considering. Feel free to write to
them for even more enquiries too.
If you would like to ask John even morequestions, do send them to me and I will pose it to him. No one needs to make a sudden decision. Drop by the actual site, tour the actual amenities that you will enjoy. Understand more and please do ask them tough questions. Retirement is to be enjoyed. Cheers.

written on 13 Nov 2017

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Why rush? Why not immediate, since you are gambling

I was speaking to a young friend during the weekend. She had just started working for a few years. She was rejected recently when she applied for a housing loan. It was her first ever home purchase. I asked why and she sheepishly replied that the repayment per month is a little hoo high. I asked why not buy something more affordable first. She said it’s good to buy something which may appreciate much faster instead of waiting for many years.
“Buy something which appreciates much faster.”
 If this is true, why are there so many people who are still not yet rich and are still working and complaining about their bosses everyday?

I told her honestly. Buy within affordability. There is no such thing as fast or expressway to huge profits. She told me that she was following a prominent property speaker who told her to try and buy properties for no-downpayment. I shared with her that if everyone in the whole market are all buying with no-downpayment, what would happen to the property market? She answered that everyone would own a property. I told her, everyone would own a useless property since the market would have collapsed when the majority are buying without sufficient downpayment because the truth is, they could NOT afford it yet! Yes, that mortgage crisis which started in the largest economy in 2008 may this time happen in Malaysia.

Let me share a better tip instead. Instead of buying without any downpayment, why not borrow lots of money, drop by a casino and bet on the “BIG” or “SMALL” instead? Within seconds, if your choice is right, you have just doubled your money just like that. If you think this is wrong, then why would you think that you are entitled to buying something which you could not afford so that you can gain profits that you do not qualify in the first place? Yes, I do not like when people are buying thing which they just couldn’t afford yet. Stop telling me that the more they wait, the more expensive the properties would be. I seriously do not think you browsed any property listings lately. The only reason nothing affordable could be found was simply because they were looking at all the expensive and popular areas!  Well, after staying in such an ‘unwanted’ area for the past 1.5 years, I am still doing well. Sorry yeah, I do not buy any of these ‘get rich quick’ reasons. Of course I have no powers to stop anyone from getting rich quickly. So, I will just wish you all the best and hopeful for the best for the more honest and real investors out there. Happy buying.

written on 13 Dec 2015

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Why scratch your own face? Case of established developers.

My personal opinion why if given a choice, I would buy from established developer? There are also so many other developers, whether they built the biggest, tallest, most spectacular or even cut corners all the time. Let’s focus on just the established ones today. Most of the time, for primary properties my first question to my friend when they asked me whether to buy or not is, ‘who’s the developer’. The reason why I asked is because of four reasons:

1) Less risk. Note that there is no such thing as no risk. Example, even if it is a SOHO project right next to Sungai Buloh but the established developer said that it is part of a huge integrated development with its own mall, offices and other residential components, I would believe it. Reason being this particular phase of the project may have a GDV of RM250 Million but their overall project GDV might be RM5 Billion! Seriously, would any developer fail a RM250 million project and risk being talked about and thus affected their remaining RM5 billion GDV projects. Just to add, Eco World reported recently that it will have a GDV of up to RM43.5 billion to keep it busy for the next 8-10 years.

2) Lower tendency to be ‘bad’ now. If you already have a good brand name, carries a premium and a loyal group of buyer followers, why start to be ‘bad’ now. You have no idea how hard it is for these companies to suddenly change their modus operandi to become one of those cut corner developers because they actually do not have to. Why? Note their premium? Thus, in terms of overall gross margin, their worry is much lower compared to newer and smaller developers who may not have the goodwill / premium and thus may be more prone to cut corners.

3) Expertise and design. Due to their sheer size, they can afford to hire much better people and this is reflected in their expertise and design. Have you been to a project where there were just too many corners or some corners in the house are just ‘useless’? I have been to condos where their living room is so huge. before you say, that’s their concept, let me tell you that their kitchen is nearly non existent and it can hardly accommodate one person frying an egg! I have also been to projects which despite their size being just 1,012 sf, I could not see the difference in it versus another ‘cut corner’ developer whose condo size was said to be 1,300 sf.

4) On Time Delivery.  Don’t you just hate it when you receive your condo late? It is very rare for established developers to be late in their delivery. Reason being, if you are a contractor, would you rather work for these established developers who gives you project all the time or a small one which gives you work on and off? Personally, when I bought my condo, my colleague told me that she bought hers ONE year earlier. My condo was completed in slightly less than 3 years and her’s were completed only one year later! My sister’s condo was also completed nearly two years in advance compared to the
condo I forced her to cancel
. This is not a myth, even if not 100% of the time.

Actually there are still may reasons but it is ok, I think I have made my point clear. Should you buy only from established developers? Of course NOT. Haha. Buy when you have evaluated the project objectively. Buy after you have viewed the project show unit. Buy if you know that the developer’s Director himself is staying in the same place as the buyer! However, if you want to be nearly totally safe in your decision, buying from established developers may just be a better bet.

written on 27 April 2014

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WHY should RTS start only AFTER 2024?

I crossed from JB to SG and back three times in 2018. One of those trips on a weekday took 3.5 hours. Reports say that there are 100,000 people on average crossing the border on a daily basis. If everyone took 3 hours, that’s 300,000 hours wasted. (Unless of course everyone was reading a book) This was why whenever anyone were to ask me what’s the catalyst for Iskandar (JB) my answer is the RTS between Johor’s Bukit Chagar and Singapore’s Woodlands North, where it will join the upcoming Thomson-East Coast Line. The reason is because the RTS trains will be able to carry up to 10,000 passengers per hour in each direction, translating into an additional capacity of 60,000 users crossing the Causeway during peak hours. The higher the connectivity, the more potential growth in economic activity. This is part of the 4Ps (POLICY) and it’s vry important.

A concerned Singaporean friend asked me about my thoughts after he read the news about the potential delay of RTS (SG – JB)
This is the article in FreeMalaysiaToday: RTS service likely to start after 2024
.  In a written reply to Parliament, Singapore’s transport ministry said that Johor Bahru-Singapore Rapid Transit System Link (RTS Link) Project was falling “behind schedule and not progressing well”. Singapore’s transport minister Khaw Boon Wan said based on the bilateral agreement, the joint venture company (JVC) comprising Singapore’s SMRT and Malaysia’s Prasarana Malaysia Berhad should have been constituted by June 30, 2018.

These milestones had been missed and Malaysia has been failing to confirm its joint venture (JV) partner thrice last year. Latest request was for an extension till Feb 28 to name its JV partner. He said, “As a result of these delays, the JVC has not even been incorporated to-date, let alone signed the concession agreement.”  The final sentence in the article was this sentence. “As a result of these delays, the commencement date of RTS Link services will likely be delayed beyond the original target of 31 December 2024.”
This is the full article in FMT for reference.

Frankly, I seriously hope someone with decision making authority would give everyone an update; our side of the story if indeed there is such a serious delay. Silence is not golden in this case. The RTS is not because we want to earn ticket prices or for convenience sake. It’s for enhanced economic activity. A Singaporean SME could choose to expand via JB because now the bosses could even come over JB and visits his plant on a daily basis and the workers could drop by the HQ for a face-to-face meeting anytime.  I have been in the corporate world for over 20 years. I can safely tell you that a video call can never beat a smile and a handshake. Happy following.

written on 15 Jan 2019

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Why technology is changing property buying behaviours

Recently Facebook paid US$19 Billion to buy WhatsApp. I think majority of us would know about WhatsApp or is using it daily. US$19 Billion to buy a Technology Company with only 55 staffs. This has never happened long time ago. Technology has changed the world many times over. In fact, even for the property market, technology has changed the dynamics tremendously. Today, if you were to see a RM500,000 property being sold via a A4 sized leaflets printed on both sides, most probably you will not proceed any further. However, if you are somehow still attracted and are interested, your next action would likely be to go online.

Borderless. There are more overseas buyers of Malaysian properties because they now have access to more information. These information allows them to consider a lot of things before they decide to fly here, take a tour and then buy. It has also enabled buyers from Penang to buy Iskandar and even KLites to buy Ipoh and more. This is all due to accessibility of information. Property investment is no longer confined to just buying your neighbourhood all the time.

Transparency in sharing. Investors can work together. Property Agents can co-broke. Sharing of information meant that good news, bad news are all online for all to see. Everytime I consider a property, I would always type the property name and negative comments to check it out. Of course some of the comments do not make sense but this transparency meant that properties which are not worth buying is now made known. If you are looking to sell and you kept on putting a high price, the buyers may also see that your property has been in the market for a very long time. 🙂

Anytime. Anywhere. If you happen to drive along a road, saw a new condo which you feel the design looks nice, what do you do? Whip out your smartphone and search it out! Apps from Iproperty and PropertyGuru has enabled me to know a lot more compared to last time when it was virtually impossible for you to find out more because by the time you have access to information, you may have forgotten the condo’s name! Besides that, if you happen to love a property and posted it in WhatsApp, within seconds you may have helped the developer sell a few more units!

Earth-Friendly. Guys, stop killing more trees will you. Even BNM is trying to push everyone away from using cheque books. This is also for developers who continue to build GREEN buildings, yet advertise using leaflets, magazines, newspapers and more. How about changing these to using Microsites, Apps, Blogs etc? Nothing bad, except that buyers need more information since there are no size limitation online unlike other traditional medias. So, be prepared to tell more.

Technology has changed many things. In the property world, it has changed it so much that it is safe to say that today the amount of information online has far exceeded that of traditional media. When people started to use Internet 20 years ago, those people were in their 20s. Today, the same group of people are in their 40s or older. These are the people who can afford the latest smartphones and these are also the people who can afford a better property. Now, I have to go back to researching about the next condo I hope to buy. Of course, by using my Macbook Air and my faithful Google.com

Jointly written by Gina Lim and Charles on 1 March 2014

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Wage Subsidy? 2.64 million Malaysians have money to spend

Why wage subsidy is very important to the economy.

We recently saw the very hotly debated i-Sinar. Some say the requirements are too tough. Frankly, if one does NOT need it as a last resort, please do not apply for it. This is for a new handphone or downpayment for a new car. This is for people needing the money for meals because their income has stopped. Period. If there are still other ways, try other ways first. Anyway, I think I am talking mostly to myself but it’s okay, this is my blog, I can talk all I want.

Photo by Breakingpic on
Pexels.com

2.64 million employees to benefit

We have an announcement about wage subsidy where a total of RM12.5 billion has been approved for a total 322,177 employers and 2.64 million employees.
News in themalaysianreserve.com here.
 Briefly, on average every employer who gets this are hiring around 8 people. This wage subsidy is a super important component to the economy but this is NOT aimed at making employers profitable. Its sole aim is to keep everything as normal as possible. Businesses to still operate and employees to still have their jobs. Perhaps with a lower pay even but the subsidy comes in as additional assistance.

Multiplier effects

Much of these would be spent by the working people and this will provide a multiplier effect to the economy. Just in case some may not understand why RM12.5 billion may have an effect of up to RM50 billion to the economy here’s a brief.  One gets a salary of RM1,500.  Spends the money at the nearby convenience store.  The convenience store could stay open and they will order from the wholesaler. The wholesaler can stay alive and they will order from the manufacturer. The manufacturer could continue operations and pay their workers who will use the money to repeat the process of consumption.

Savings for rainy days

This is why any monetary assistance has to be as direct as possible to the source versus just giving any business a huge amount of money. Seriously, we kept telling people to have 6-12 months of savings so that we could survive some months when we lose our jobs. I just want to remind all businesses again that survival is a joint responsibility as well. Save for rainy days should be applicable to all. Not just the employees themselves.

My thoughts

I do think the COVID-19 vaccine is probably coming within Q1 of 2021. Fully vaccinating everyone will definitely take time but once that starts, the sentiment would already turn positive. That’s just a typical human reaction. When we FEEL safer, we tend to be more confident and when we are more confident, the business climate would also change. Just look at the stock market. It’s definitely not due to fundamental all the time…

Revenge Travel

In fact by then, travel bubble may just be extremely common and if we refer to recent travel bubble between Hong Kong and Singapore as a reference, people will be ‘revenge travel.’  They just want to fly to somewhere to spend their time and money! Too bad, this has been postponed. Else, both Cathay Pacific and Singapore Airlines would have benefited tremendously. By the way, if we did not notice yet, the most biggest impact is because no travel is allowed.

My wish

I do wish that everything will become a non-issue within Q1 2021. We have already been ‘played’ by COVID-19 since March 2020. Time to leave it behind and hopefully learn that when we need to stay at home to beat something, we must stay home. Oh yeah, whatever election better not happen and ANYONE even trying to do things which will cause elections to happen, please just condemn that person okay. STOP supporting only the party you like and condemning the rest. This is Malaysia and kita jaga kita. Cheers.

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Why we may fail to buy THAT property which we WANTED.

Yesterday during a FB LIVE session (click here to view)
, this question came up a couple of times. “When will property prices be falling?” or “Will COVID-19 cause prices to fall?” Briefly, for those who are waiting to buy a property for 20, 30 or 40% below the market, they will have to wait longer. The latest forecast says that Malaysia’s non-performing loan to peak at 1.7% or 1.8% for 2020.
This was a forecast by S&P Global Ratings
  What is 1.7% of 1.8% then? Is it high or is it low?

Using very simple analogy, the bank lends RM100 out. RM1.80 turns into bad debt. Of course, if it’s a housing loan, then the bank could still auction the house to recover the debt too.  What 1.8% at the highest point is showing is also that most borrowers (nearly everyone) are still able to pay their mortgages. If they could pay their mortgages, what are the chances of them suddenly thinking of selling their properties at lower prices?

Perhaps we could ask ourselves this question. If we could still pay for the home, would we do fire-sale for the home or not… So, the first reason why we may fail to buy that property we wanted is because unless these owners become desperate, they are not going to sell their properties at 20% below the market… If we want to buy properties which are priced 20% below the market, we need to wish for many of these owners to go into desperation mode. Hopefully not.

Second reason?  We assume that there are a number of these owners who are really in trouble and wants to sell their properties by 20% below the market value. If the person happened to be a your close family member, they may tell you FIRST. So, you get to buy that property at 20% below market price. However think about it, how many of these desperate sellers are your close family members? So, if they are not your close family members, they will sell to THEIR close family members… or their neighbours… or even that real estate negotiator who’s also a property investor too. Certainly not to to you… because they do not know you.

Third reason? There are just not enough of these below the market properties to go around yeah. You see, in some areas, the prices could already be 20% below the market but not many buyers. In popular areas however, as soon as there are a few of these 20% below market price properties pop up, there would certainly be a long line of potential buyers. One of my close friend, a Gen-Y saw a new property listing at the condo she was staying within a few minutes the listing was posted online. It was 10-15% below the market price. She called and took a two hour time off to view and immediately pay the deposit for it! So, how many of us watch the property listings every other minute…?

There are a lot more reasons but perhaps a better waiting game is also by befriending many good real estate negotiators who may tell you about such a good deal first before they tell others? It’s also vital that you have already understood the area you intend to buy and the market price yeah. As soon as an opportunity comes along and you want to think about it, someone may have bought it first. There is no time to investigate and research because when the property is truly attractively priced, the window to buy is really a small one. This is why we need to stop thinking that we can wait and wait and wait because someone told us that it is currently the buyers’ market. So, all owners are surely desperate to sell their unit to us. Happy understanding and I do wish you could get that unit at the area you want at the price you truly wanted okay. Cheers.

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Why we may not want to push prices down for everyone.

There were debates and there are still debates even after vacancy tax has been put on hold. The argument for vacancy tax is that it will force developers to be more stringent with their assessment before they build or price their products. This will help the market to have a more controlled supply of properties which the majority wants. This point definitely have its logic yeah.

However, we need to note that the vacancy tax is not proposed to help ensure future market becomes better. The vacancy tax which was proposed was aimed at the unsold units in the market currently. The planning part would have been completed way before this situation. Anyway, I have said the same in my article earlier but when some experts say something similar, we must quote them instead.
Vacancy tax will crash the property market?

Article in freemalaysiatoday.com
 Henry Butcher CEO Tang Chee Meng says that the vacancy tax from the government will interfere with the property market. He said, “Housing developers in the country are already very regulated. Introducing the vacancy tax will add to the burden and cost of undertaking a property development project.” He also shared that if the vacancy tax is implemented, then the developers will be forced to dispose the unsold properties at a lower price and this will be unfair to the buyers who had bought the units earlier at a higher price. He added, “It is also not beneficial to the banks who had provided end-financing to the earlier buyers who bought at a higher price as the valuation would now come down.”
Article in freemalaysiatoday.com

Well, I think the storm has passed for now?  The Ministry of Housing and Local Government (KPKT) has said that they will think of other measures to counter the current issue if unsold units in the country and will not be using the vacancy tax to do it. They did not say they will never think of vacancy tax at all in the future yeah. Also there’s no guarantee that this measure could only be used against developers too.

By the way, in Australia, foreign owners who bought a home but uses it less than 6 months per
year will be subjected to an annual vacancy fee. (click here to read)
. This is aimed at foreign buyers who bought and then left the property empty. Perhaps we could think of how to attract foreigners to purchase properties here and ‘encourage’ them to use it or tax them if they bought but did not use? That would be interesting. Let’s see whether there’s this potential in the near future.

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How to get my client to decide faster? Buy or no buy?

This is part of Charles Tan’s Objection Handling 101: PLAN – PROBE – PROPOSE series. For this session on 4th April 2020 (Saturday) at 11am, it will be conducted in BM yeah.  Yeah, I think more suitable for Malaysians instead of foreigners. Unless of course you also understand BM too.

Actual scenario for sales people:   Ever faced a situation where we spent a lot of our precious time explaining everything we know about a certain product / service and after we have put in so much effort, the client says, ‘no comment’ or ‘let me think about it.’?  Perhaps it’s not the explanation part yeah. It may not even be the product / service issue. So, where did we go wrong then?
If you like to listen to the English version, click here yeah.

Else, the BM version is coming soon where it will also answer some additional questions posed by some listeners during the English session too. (Click below to click ‘Interested’ ok.  Cheers.

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