Slow 2015? Not for construction.

When I was still with my previous company, many developers told me that they always face the potential of delay due to the shortage of construction workers. It was the booming years a few years ago. Fast forward a few years later and the construction sector is still booming. The reason? Well, remember the property market was hot until 2012 and only started slowing down in 2013? Well, those projects which started in 2011 and 2012 and even 2013 is still ongoing or only just about to finish (2011 projects). Thus, the effects of the slowdown in the property development has not yet been felt and probably would not be felt because the affordable properties are still hot and all the new launches are concentrated in this area. Just look at the announcements from all the bigger developers from Eco World to IJM to Mah Sing and even SP Setia. This is the same case for smaller regional based developers too.

According to a report in a local English daily, the strong momentum would continue because of a few mega infrastructure projects under the 11th Malaysia Plan. Maybank Investment Bank Research (Maybank IB) said that it believed the mega projects would continue even with deficit concerns. The only hiccup would be a likelihood of a slower projects from the property developers. Of course the current negative sentiment from the plunging oil price would probably cause some delays in the award of new projects. However, it believed that the really major ones including Klang Valley Mass Rapid Transit (KVMRT) 2, KVMRT 3, the Penang Integrated Transportation Plan, Klang Valley highways, and the Pan Borneo Highway would still proceed.

Personally, I think the construction sector has a secured long term future because Malaysia’s MRT project has yet to complete. With the continuous urbanisation, more people meant more cars and thus heavier jams. These would have to be continuously mitigated through even more highways especially to connect newer areas to the city centre. This will always be true for Malaysia because I seriously could not imagine majority of all the senior managers taking public transport at this moment. Perhaps when push comes to shove they would but until that happens I think the highways better be ready. Even looking at just Penang, jams are happening frequently and when it’s bad, it’s worst than Klang Valley. Reason? There are no alternative roads. Jam means just wait and wait and wait when it is within Penang island.

So, for those thinking of buying some ‘safer’ stocks to hold, either for potential re-rating and thus appreciation or even some dividends, instead of property counters, why not buy construction counters instead? Maybank IB said, it likes ‘Gamuda’. Seeing is believing. On all the projects, look for the name of the construction company. When you see a repetitive name in many projects, those would the company that you should buy. For these observations, you may not need any analysts. Happy buying.

written on 15 Jan 2015

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The slow but resilient luxury condo market in KL

This particular news about KL condo scene, I think I got it from two first hand information. A friend related to me how tough it was to rent out her condo nearby KLCC because there were just too many competitions from the market, plus many newly completed ones too. Another friend who travels to China frequently, the CEO of
88home.co
, Ms.Olivia Lim said, “Let’s put the luxury condo scene into the right perspective. When the buyers that we are trying to attract are from overseas, the prices per sq ft that we are talking about today still seem reasonable. What else with the rental yield in Malaysia is still high compares to most country in Asean” As per Knight Frank Malaysia in its Real Estate Highlights for H1 2016, it said that the market outlook for the high end condominium segment in KL is affected by current weak sentiment and both the potential buyers or even investors are adopting
a “wait-and’see” attitude.

It (Knight Frank) also shared that there was now a widening gap between supply and demands well as mismatch in product pricing and affordability. This was one reason why developers have been much more innovative in their push for more sales. I just came back from a mall today and this was what the real estate negotiator told me when I was walking pass his booth. “Mr, this project is by X developer (pretty branded) and you get easy ‘ownership scheme package with support from financial institution. Times are really pretty bad OR that’s the remaining units after the handover of keys. Anyway, the project that was being pushed to me is an existing high-density one, nearby a MRT station.

Other things that Knight Frank Malaysia shared was this, “While the impending completion of the LRT extension line and Phase 1 of the ongoing
Sungai Buloh-Kajang MRT line
 by end of 2016 will continue to promote more transit oriented developments (TODs) along the transportation routes, more developers are also looking to expand their land banks into the suburbs to offer a wider mix of affordable housing products that cater to the domestic market.” In brief, choices will increase and not reduce. Choose wisely please.

One positive thing it shared is that the property prices in Kuala Lumpur has remained resilient in most locations. It then shared what my friend shared a few months earlier. The rental market has lesser demand due to the slump in oil and gas and with more competitions, owners are much more open to lower rentals just to keep tenants. It shared some recent pricing levels for primary markets. The selling prices of high end condo / serviced apartments within the KL city ranges from RM1,300 – RM1,800 per sq ft while branded ones are above RM2,000per sq ft. Mont Kiara wise, the new ones are being launches at between RM800 to RM1,200 per sq ft.

Looking inside the city centre, there are some renewal projects worth some attention. Location such as adjacent to KL 118 which was formerly the Stadium Merdeka is reviving its glory years due to mega project development and the rail construction contract linking Kuala Lumpur and Singapore is released. Potentially, KL is a destination of growth by 2020. While I think the
HSR will benefit both countries
 but certainly any new connections between KL and Singapore would be a good story for the KL property market.

Anyway, my personal thoughts from this report by Knight Frank is that the market does not look too bad. Of course, one look at all the world business news would reveal that more retrenchments may be coming including one from an international bank as well as more from an international oil company. Well, I would prefer to think that for the Malaysian property market scene, as long as it does not get worse moving forward, it’s already considered positive. Any other thoughts? Or is the market totally different from what Knight Frank Malaysia has shared? Happy analysing.

written on 9 Aug 2016

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Slow, slow, slow. No grow. Property market Malaysia in 2020.

A good friend who’s a prominent property expert asked me about my opinion about an article in edgeprop.my  He said that perhaps real estate analysts should be more positive for Malaysia property market 2020. I told him that after reading the article thoroughly, I think the article is at worst, negative.  In fact, there were many positives inside the article. For one, it does not say that the Malaysian property market will be facing a crisis in 2020.

With a world economy of today, with the two largest economies in the world still in that very weak truce, the risks are definitely higher. Then, we were treated to the news that a drone killed the most powerful Iranian general. Latest news though is that both sides are saying that they do not want any escalation into a full-blown war. I mean this kind of news / announcements from both sides should be considered a positive one even if it came from a negative situation. Now we come to the article.

Article in edgeprop.my
   KL Property Index had a mixed year in 2019. It toughed a high of 964.6 points in February 21 2019 and declined to a low of 747.62 during the year. On Dec 31, it is in the middle, closing at 830.62 points. The performance is better than the benchmark FBM KLCI.

Top declining property counters included Yong Tai Bhd (down 56%), Eastern & Oriental Bhd (down 42%), S P Setia Bhd (down 30%) and LBS Bina Group Bhd (down 20%). Some of those who appreciated included Iskandar Waterfront City Bhd (IWCity) which surged 110% during the year.  YNH Property Bhd gained 109%

CGS-CIMB analyst Ngo Siew Teng shared if one looked at the data collected by National Property Information Centre the total residential property transactions rose 2.1% year-on-year (y-o-y) in the third quarter of 2019. The increase was supported by the Home Ownership Campaign which ended on 31st December 2019.

MIDF Research said, “We expect property sales of property developers to be unexciting in 2020. As such, we expect outlook for property sector to remain lacklustre in 2020 and maintain our ‘neutral’ view on the sector,” Please refer to the comprehensive
Article in edgeprop.my

Sluggish, the adjective used by the article in edgeprop.my also meant slow-moving, inactive and flat. I think this is not such a bad sign yeah. It gives an opportunities to many in the M40 household category to read more and understand more. Perhaps they may buy a property in 2020 if they continue to have a stable job. Just remember that the T20 earns a much higher income. If the M40 wants to catch up, it will have to be through investments.

Relying on salary increments will be uphill because that same 5% increase in salary for the T20 and a 5% increase for the M40 will mean the gap is getting larger. This is the increment forecasted for Malaysian working professionals for 2020.
Malaysians, we will have increments for 2020. High or Low?
 Happy reading articles from my point of view yeah.

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Slow transactions today? Upswing by end 2015 or 2016

Currently, transactions are slow. Very slow in fact. However, according to UEM Sunrise Bhd, an upswing will happen end 2015 or beginning of 2016. According to newly appointed managing director (MD)/chief executive officer (CEO) Anwar Syahrin Abdul Ajib, property sales in the affordable segment has slowed down and the toughest was the loan application part. Recently, Selangor has announced new rules for property purchase in Selangor. One example, the minimum purchase price for foreigners is RM1mil for the Hulu Selangor and Sabak Bernam districts and RM2mil elsewhere. This ruling would however not affect UEM Sunrise.

A more important point is that despite the fact that 60% of UEM Sunrise’s land is in Iskandar, they are not worried about the China developers. The reason given was that these China developers are maximising space and building high-rise buildings while UEM Sunrise is offering landed projects and thus a different segment altogether. Personally I do not agree fully to this assessment but we shall see what happens next in Iskandar for UEM SUnrise vs the China developers. My reason is because if the sentiment turns negative due to sudden deluge of supply, even landed property sales would slow down and we must remember that 60% of UEM Sunrise’s land is in Iskandar.

UEM Sunrise is excited about their development in Melbourne. It involves turning an eight-storey carpark into a 92-storey mixed development of 940 apartments, 200-key hotel and some retail components. The development will be launched in November and sits above the Melbourne underground station with three blocks of shopping malls across and 80 metres away from Royal Melbourne Institute of Technology. Sometimes, it is these news which gets you excited. How many times have you heard of a carpark being turned into a huge mixed development? No prices were mentioned but for Melbourne, I think this project is likely to be a small unit apartment because bigger units would be very expensive.

written on 25th Sept 2014

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Property market: Nothing much in 2016 as per Maybank Research

Just days ago, in a forum organised by PropertyGuru, the panelists agree that 2016 is going to be a ‘flat’ year where property market is concerned. This negative assessment is however considered positive as the prices are not expected to be dropping, merely stagnant. I wrote an article and summarised the findings as well. Read it here:
Flat 2016? Good 2018, 2019 and Great 2020?

 In an article in The Star,
Maybank Investment Bank Research is singing a similar tune. It said that the slowdown in property demand would continue for another 12 months. In brief, nothing much is expected within 2016.

Maybank said that it has not seen any broad-based pick-up yet. Due to the slowing economy in Malaysia, the overall property sales would remain weak. Banks are also very cautious and this has affected the buying sentiment as well. Besides that, many developers are also delaying new property launches, choosing to focus on affordable housing and clearing unsold inventories first. Company margins are also expected to be affected as the developers are definitely offering more rebates, discounts and marketing incentives. The research house said,
“Rising compliance costs will also eat into developers’ margins. Elsewhere, various housing schemes under the Government have created a large incoming supply of affordable housing and this could pose a threat to existing players.”

Maybank Research also summarised the results announced within November and December 2015 thus far. Some have underperformed like
Glomac Bhd, Mah Sing Group Bhd and UEM Sunrise Bhd. Two has performed better than expectations;
Eco World Development Group Bhd and SP Setia Bhd. Both were due to stronger-than-expected progress billings at their landed property projects.” Sunway Bhd’s results were in line due to a steady or strong income from
its investment properties and construction division. This helped to offset the slowdown in the property development business.

Many may see negatives but I personally think that despite the slowdown since 2014, not all developers have shown bad results. In any crisis, results are bad for majority of all companies. As at today, many property developers remain resilient and you can see that many were quite flexible too. Delay some, change some and suddenly profits are secured even if not on growing mode. Oh yeah, if we truly love properties and yet we are worried about the short-term, it’s definitely okay to buy some of these property stocks. When times get better, we can always sell for cash and use it to buy their properties instead. Currently, I have very little property stocks as I still think secondary market is where the value is. Let’s see what happens in 2016 yeah. Will keep updating.

written on 21 Dec 2015

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Slowdown? Prices per sq ft increased for ‘strong interest’

This project ‘wrapped’ itself around The Star newspaper today (19 Nov 2015). It’s those cover wrap which costs a fortune to advertise. Yes, I think it’s part of the project launch advertising and promotion activity. The project is 8 Conlay by KSK Land Sdn Bhd. Well, luxury projects are having a bad time in Singapore. Just google for lots of negative news. However, amidst the slowdown in total transactions here in Malaysia, one developer had just launched a new project with an upward revision of its price per sq ft. Original price per sq ft is within the luxury category at RM2,700 per sq ft. For its launch, the price per sq ft has been adjusted to RM3,200 per sq ft. This moved its gross development value by nearly RM 1 Billion! (From RM4.5 billion to RM5.4 billion).

Does this mean the whole market is coming alive again? I seriously do not think this is representing the recovery of the property market BUT it does prove that there are many super wealthy people who loves Kuala Lumpur city centre. Specifically, Jalan Conlay. This project is an integrated one and has branded residential, retail and hotel components. Its managing director Joanne Kua said, “We are aware of the recent property slowdown but among the 70% reserved units, 80% of them were reserved by Malaysians.” The developer is also going to market 8 Conlay to the international market and said that it is not too worried about the project. 8 Conlay is positioned as a branded luxury which she said normally commands better capital yield for the longer term. This is a higher level than the regular luxury units.

A good point to note is that the RM3,200 is not considered a record for Kuala Lumpur city because Joanne said that they are benchmarking it with other branded residences around the world. This is where the current price tag per sq ft remains one of the lowest. The project is on a four-acre land and has two YOO-interior designed branded residence towers of 57 and 62-storey blocks that will be connected via two sky bridges at level 26 and 44. These are complemented by a 68-storey five-star hotel, services suites and a lifestyle retail component. Kempinski Hotels, the oldest luxury hospitality group from Europe will provide services for the branded residence towers as well as managing the hotel tower.

I think this is a niche market. Not every developer should try to do this because a ‘lifestyle’ product is a very subjective one and many times, what we believe the super wealthy may like may not be what they actually like. For Conlay 8, based on the current results, it does point to the fact that it has met the buyers’ expectations of branded luxury. Maybe it’s the developer’s ability to sell the concept or maybe it’s due to the top notch luxury brands that accompany it. As a Malaysian staying in KL, I would welcome more of these developments. This is especially if it can also help to brand KL as another branded luxury property destination for the super-wealthy. Anyway, this was something which Singapore managed to do pretty well with its Sentosa. Perhaps it’s now out turn. Happy anticipating.

written on 19 Nov 2015

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Slowest GDP growth since 2009. Not a good news but …

I am someone who thinks the Malaysian economy is diversified enough. Gone were the days when petroleum were holding us by the neck. Now, the effect is much smaller. As for the GDP growth for 2019, the number was lower than my own estimation. I think the
Home Ownership Campaign could have been successful in hitting its target
but this does not mean the economy is growing in all other sectors.

Article in malaymail.com
 According to Bank Negara Malaysia (BNM), our economy grew 3.6% in Q4 2019 and this has caused the full year growth to be dragged down to 4.3%.  This is the lowest since 2009 and sits within the lowest end of BNM’s own GDP growth prediction of 4.3 – 4.8%. It said that there were supply disruptions in the commodity sector and this was a major cause of the lower number.  In 2018, the GDP growth was 4.7%.

The Covid-19 (coronavirus’s official name) will affect Malaysia’s Q1 2020 number according to BNM governor Datuk Nor Shamsiah Mohd Yunus. Major driver for 2019’s performance was a higher private sector spending. Private consumption grew strongly by 8.1 per cent (3Q 2019: 7 per cent), while private investment registered a higher growth of 4.2 per cent (3Q 2019: 0.3 per cent). Please do refer to the full report in the
Article in malaymail.com

Actually, the good news that I am referring to is the private consumption. Let’s be objective here. Without a job, could people spend more? If it’s very true that everyone is struggling to make ends meet, then who are these people who are spending more. Please admit that the economy is not good but it’s definitely not as bad as what everyone is claiming everytime there’s a meeting among friends.

By the way, at least 3 of my friends are driving a new car bought last year. All are non-national cars. Another attractive lady is now considering a new Mercedes Benz even though I already tell her that Volvo is a great option too. Haha. So we could already see that Q1 2020 is gone because of Covid-19. Let’s hope that things stop getting worse after end February 2020. Thus, I think the money which people intended to spend in Q1 of 2020, they could still spend it on Q2 or Q3 of 2020. Please take care of the hygiene and please get yourself checked if you are not feeling well. This is NOT the time to take a panadol and just sleep a few hours…

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Slowing down property market, cutting corner developers, what a combination.

A friend asked me just yesterday if she should consider buying a new condo project in Penang. It is 700 plus sf and comes with one car park. I said, ‘Huh? Only one car park?’ It was priced at RM650psf. I told her, I do not like any condo project which still gives just one car park. Makes you wonder, why? Is the developer out of touch with the condo market? Then, when she told me the developer’s name, I said, ‘I also don’t like the developer.’ Typical developer which cuts corners. Sometimes, it’s hard for tigers to change their stripes. In this case, the developer is a small one and not even considered a tiger, yet. Nevertheless, she gave me just two choices. One is this Penang project and another is a KL project from another small developer, a SOHO unit of just 550sf.

With only these two choices, I said, I would choose the Penang one. Reason being, Penang remained to be just an island and as long as growth continues at just current pace, prices of properties will only be increasing. Land prices are also increasing due to scarcity. Plus, I do not like
SOHO
. If the project sells well, do you think they would offer more? Another developer in Penang which was selling at RM750psf has also called some potential buyers and said that now they give extra 5% discount as a special deal. A few friends who went to a recent property show said that, ‘Nearly all the projects are existing ones!’

Let me tell you my personal opinion about developers again. If a developer has been building its brand name continuously, every time it launches a new project, at least 30% would already been easily sold. Thus, the marketing would just have to concentrate on the remaining units. For any developers who are still acting ‘dumb’ and treats all the buyers to be ‘fools’, think again. Project comparisons can now be done easily online. Price psf is now available and spread so fast that once you have announced it and you change it later, people would know about it. Developers which cut corners once, may be forgiven. Cut corners again the second time and you may fool many new buyers. if you cut corners again the third time, get ready to sell your projects much lower than every other developers if you would like to fool newer buyers because they would only buy you if you are much cheaper than others.

My friend’s decision after asking two other friends was to look for other projects. Thus, this particular developer which has not been professional from the beginning has lost yet another sale. Of course, there are a lot more other unsuspecting buyers who thinks that it is value and would buy from them, so good luck to both the buyers and the particular developer. When market is booming, any developer can sell easily without doing much marketing, without doing their best. However, when it comes to a slowing down property market, the cutting corner developers would be the ones most affected.

written on 19 April 2014

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Slowing down? Unlikely.

Hands up, how many say 2015 is going to be another slow year for property transaction numbers? I see a lot of hands there. Well, I think all of you are right. However, are we looking at a prolonged slowdown? Well, the prices that some of the embassies are selling their land indicates otherwise. The reason I say so is because there are not many developers who would like to buy a piece of land worth RM225 million and then do nothing to it for a few years. Please correct me if I am wrong. Even if internally generated funds, this is still bad because it meant that the developer would have less cash for other potential investments. If it’s through loans, then the longer the developer delays, the higher the interest that it will be paying for that loan of RM225 million, right? That piece of land that we are talking about is the land of the German government. Referring to an advertisement by Savills Rahim and Co, the expected total price for the two pieces of land would be RM225 million. Yes, ONLY the land. It is unlikely that the buildings would be maintained. It has to be flattened and a much higher density residential be built. I think it would be residential. Oh yeah, this is already higher than what was reported last year, the indicative price then was just RM200 million. WIthin one year, over 10% up. The piece of land is sited near the KLCC and you can walk to the KLCC LRT station as well as the Raja Chulan monorail station. Unfortunately, these kind of location are getting lesser, thus the premium will likely go higher.

Another comment from the president of the Malaysian Institue of Estate Agents (MIEA), Siva Shanker supported the notion of great location equals to  easy to sell properties. He said, “It doesn’t matter as the purchaser will be in it for the long term. It’s a big opportunity as you might not be able to buy an address like this again. Whoever is buying the properties is not a speculator that’s looking to flip it and make a profit in a few years.” Of course, please be reminded, when you buy in these kind of location you should also be prepared in case the market slows down and you need to wait a little before selling it. This is because even if you can afford to buy, the people who can afford to buy from you are not the mass market people that we are talking about. The market is likely to be smaller, thus higher premium due to exclusivity.

If you think the German government is reaping huge money, well, it was also reported that the French Embassy land in Jalan Ampang may be sold for an estimated RM700 million! Haha. Yes, it’s a bigger piece of land and the sale is by tender. The agency handling this would be CB Richard Ellis Malaysia. It is expected to be sold next year. I would love to know which developer is the final winner for this tender.

There’s little choice for these embassies. The profits they obtain would allow them to maintain the embassy for a very long time. Instead of employing lots of security guards, they can rely more on the security provided in a higher end purpose-built, high-rise office buildings as well as better facilities too. In fact for an embassy building by itself, it is likely that the number of security guards must be many times higher because intruders can come in from many different directions. Moving would save them money, headaches as well as having access to much better environment as these office buildings are likely to be nearer to malls too. Oh yeah, they do not even need to employ gardeners too. Let’s see what’s the plans are like for these lands. Of yeah, if you are thinking of a RM1 million unit, well I think it’s going to be tough. 🙂

written on 25 Dec 2014 (Yes, I am writing this on Christmas Day)

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Slowing GDP, new GST and property price up/down?

Slowing GDP growth in Malaysia for 2015 versus 2014 is real. So, are we going to get to buy cheaper properties soon? In a report, MIDF Research said that growth for Q1 2015 was expected to be between 5.0 – 5.2 percent. It may be on the higher end if we take the ‘crazy’ buying into account one month before 1
st
 April or the implementation of Goods and Services Tax (GST). Read here: hhhhhh. For Q2, the GDP growth is likely to be even lower. It is expected to be between 3.5 to 4.0 percent. Major reason, as per every analyst report thus far is mainly due to GST.

What’s the actual effect of GST on the consumer price index (CPI) or better known as inflation? MIDF said it will add another 2.0 – 2.5 percentage point to the current CPI. If oil prices move up, then it will be higher, between 2.5 – 3.0 percentage point. Note, MIDF said that IF the consumer spending remain strong, we may have a better GDP growth. From this, you can see that no one could predict what it would be like. One thing’s for sure, every market supported by Gen-Y and millennials would be very vibrant. Perhaps they may turn the current negative sentiment into a positive one and showed GST has no bearing on how they spend. 🙂

Seriously though, I do hope that the demand would reduce and people would think twice before spending. This is because if the demand remain strong, the prices are going to go up. No retailer would want to reduce their profit margin if they do not need to and this is a business fact. However, every business would be willing to reduce their profit margin should demand suddenly fell to a point that they are uncomfortable with.

Coming back to the question of whether property prices would go down with GST? Nah, seriously, no. However, has the type of properties being offered today versus 2 years ago changed? Seriously, yes. I remember prices were pushing higher than RM600,000 2 years ago. Today even the bigger developers are talking about affordability. Yes, it is happening because the demand has gone down. It’s always funny because when demand is high, prices just have to go up because of ‘rising costs.’ Yet, when demand is slowing down, suddenly the ‘rising costs’ disappear. Hope you understand my meaning. Happy buying or waiting.

written on 10 Apr 2015

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Slowing market and the auction potential

It’s not important to know about the slowing property market and do nothing. It’s more important that we learn about some potential ways to take advantage of this situation. Remember, UMNO. Uncertainty Means New Opportunities. After some following up, finally managed to get my good friend to share for our learning. My honour as his schedule is packed to the brim plus he must have time for his baby daughter. Today, let’s speak to MNP Auctioneers (Central) Sdn Bhd Managing Director Stephen Soon for his expert views about the slowing market and auction potential. MNP Auctioneers is also the official auctioneer for Bank Negara Malaysia’s banknote auctions.

1) In a slowing property market, does it mean a better ‘auction market?’ Why is this so?

Property market has been going up steeply in the previous years when loan approval rate was high and developers made it so easy to own a property. These have therefore pushed the property prices to unrealistically high side. Although foreclosure properties have always been chased after by many who have gained so much returns than usual but many other sceptical buyers still felt that new launches and subsale are more straightforward and more secure to invest.

However, the situation has changed drastically when property-unfriendly factors such as higher RPGT, stricter loan approval and currency exchange impact take place. More and more people started to look into buying auction properties. With more realistic (lower) price card on hand, foreclosure auction properties are getting more popular. Property buyers are more willing to learn the skill and knowledge to bid. I am seeing many new faces participating in auction fairs. Some business owners reckoned that they should slow down their operation amid the current slow economy and invest their money into auction properties instead.

In another scenario, slowing property market has a very direct impact with slowing economy, therefore increases the chances of more bank auction properties coming into the market due to the generally weaker loan repayment capability. Therefore good news for the auction market as we now have more varieties of properties for selectìon.

2) Based on your auction experience thus far, is the price gap between an auction property versus the market price increasing?

That depends very much on the characteristic of an auction property.

First scenario – The first-time reserve price of an auction property is determined by current market value as confirmed by a registered valuer. Many times the properties were sold even during the first auction itself as the prices on auction were below recent transacted price or asking prices of the similar properties (Please take note that most valuers practiced comparison method to value a property; that is, it uses previous similar transactions to determine market value. The cache is, that transactions may not be too recent).

Second scenario – Non-prime properties such as those with poor external or internal condition, unfavorable location and developer setback (such as wind-up) will lead potential buyers to wait until reserve price dropping further before entering into auction hall to bid

3) Besides just the price gap, are there other reasons why we should consider property auctions versus just the secondary or the primary market?

1.
Direct bidding from bank auction without any uncertainty on its willingness to sell – save time and hassle to negotiate;

2.
Open and Transparent – Well informed on the Property details and its conditions of sale before attending an auction fair to bid

3.
Free and open bidding platform to enhance confidence to bid

a.
bidder controls its budget to bid;

b.
better information flow when relevant details are available to do due diligence and searches

4.
completed property, if compared to primary market

5.
lower holding cost;

6.
higher investment returns;

7.
Certain waiver of the state housing restrictions;

4) Based on your experience, how long do you think the current slowdown in the property market would last? What would cause the market to start recovering?

In my humble opinion, the slowdown will last for the whole year of 2016. The current economic downturn is due to both internal and external factors. Rising inflationary impact, less government spending, general confidence crisis and stringent business environment are the key to prolong the slow down. At least you will not see the good-time of early 2010 return at anytime throughout the year.

Thank you Stephen for such a comprehensive sharing. I think it’s very clear. Perhaps auction can be another serious consideration with the current market. Who knows you may find a ‘gem’ which you like but somehow has not been sold during the past 2 auctions and the price is now crazily low? Nothing is impossible. It’s all about handwork and luck. Happy joining as another new face in auction. 🙂

written on 8 Jan 2015

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In a slowing market, sanity returns. How true.

Market is slow. Everyone knows. I already have one agent friend who could barely make ends meet and is now a UBER driver. The net pay may not be huge but it gives certainty. With more people on a wait-and-see mode, demand has slowed and with supply still continuing, more choices are available and property prices are softer. Just two years ago, there was no way that any sane seller would be willing to give you RM20,000 discount as soon as you asked for it. In my two recent viewings, one in Sungai Buloh and another in Ipoh, the sellers were more reasonable. The agents told me that RM20,000 discount is possible. The bank valuation was slightly higher.

However, these two were not desperate sellers. The one in Sungai Buloh was selling because he is moving with his family to Mont Kiara, a big sized condo. His lifestyle has changed and a condo would be much better. The one in Ipoh was selling because she needed more funds to be ready for a commercial property purchase. She was looking to expand her business. In recent years, she was renting and was forced to move despite putting in over RM300,000 worth of renovations. She has learnt that for a business, owning a place is much more safer than renting a place.

Another two colleagues were looking for good deals and one has started viewing furiously. In fact, he has viewed many properties over the past two weekends and even this weekend. Before this, he has NEVER put in any effort to view any units at all. The other one wanted to have lunch with me to decide whether to buy and upgrade and selling his current place or to hold on to his current place but buy an investment property instead. So, should we be buying now? Read here:
Sometimes, secondary is a better choice

Seriously, I do hope everyone noticed that market is slow versus a distressed market are two different things. During a crisis, there are many sellers but very few buyers. If I have a place to stay, I would do nothing and wait. If I have some spare cash, I would be worried to buy a home because property is extremely illiquid and if something happens, my funds would be tied for a very long time. In fact there’s just no way that I want to expand my business during a crisis, I may just lose everything that I have built. Currently, the market is regaining its sanity. Read here:
Speculators, Interest Rates and Over-leveraging

The crazy rentals of yesterday may be drying up. Normal rental rates? It will continue, people could not just sleep on the streets. Even the seemingly bullish prices in prized areas are no longer moving up.

These current ‘shifting’ of one property to another may be continuing for some time. At least until the mood starts to get better. Currently, with the many reports about slowing China, about the possibility of oil prices hitting US$10 per barrel and even the heightened security risks meant that some stretched sellers would prefer to offload some units first while waiting for the uptrend cycle to return. For those who has been in the market for a long time, they know that good times do not last forever and this applies to bad times too.
Repeat buyers will always buy…

If we know some areas well, then we may be presented with an opportunity to buy some undervalued property. This is not the time to bid the highest but this is definitely the time to bid lower than the usual. This is also the worst time not to view, not to read more and not to attend seminars. The decision to buy or no buy should be backed with knowledge and not the pessimistic view of your colleague who owns just one property. It should also not follow that colleague who has clearly paid too high a premium simple because they believed there is no limit. Remember this:
MRT stations willchange the area dynamics

Where there are better choices, even if not as good as the hotspots yet, these secondary areas would start to flourish. Hotspots? I wish those buyers who keep pushing up prices all the best.
Lower end, higher end and mixed blend?

Happy deciding.

written on 18 Jan 2016

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Smaller increments for many. So, bad for everybody?

It’s year end again. Increments coming soon. Bonuses too. Are you getting one from your boss? Question. When over 90 percent of employers are giving increments, is this considered bad news or good news? As someone who has worked for the past 20 years, there were a few years where I received no increments and a few where there were no bonuses or the bonus was just a small token. What about a bonus of 2 months then? If you were to ask me, when over 90 percent of all employers are giving increments and the bonus is 2 months, it’s definitely good news. Imagine a company suffering from losses, would it provide increments and bonuses?

This was an
article in TheEdgeMarkets.com
 about the Malaysian Employers Federation’s (MEF) Salary Surveys for Executives and Non-Executives. The article says that the forecast is a ‘BLEAK’ one. Then, it went on to quote MEF president Tan Sri Azman Shah Haron as saying that 92.4% of the respondents granted salary increases to executives compared with 94.3% in 2017, while it was 92.7% for non-executives (2017 — 94.6%). “The overall average forecast salary increase for executives in 2019 is 4.86% compared with 4.88% in 2018, while it is 4.89% in 2019 (4.88% — 2018) for non-executives.

78.2% of the respondent companies will grant bonus to all executives as compared to 77.7% in 2017, and for non-executives it is 78.7% compared to 76.9% in 2017.” The average forecast bonus for 2019 also dipped for executives at 2.06 months compared with 2.18 months in 2018 but the bonus for non-executive increased to 1.97 months compared with 1.95 months of actual bonus in 2018. Three reasons for this would be due to the global economic slowdown, increasing social costs and political uncertainties following 14th general election were among factors influencing the employers’ cautious attitude.
Article in TheEdgeMarkets.com here for reference.

Okay, if you are getting a 5 percent increment, that means you are above most of everyone in Malaysia. Anyone getting a bonus of 2.5 months is also above most of everyone in Malaysia. Remember to spend these ‘extra’ money wisely yeah. If the economy is really not doing well as per what the article implied, then more savings would be better than lesser savings. Don’t save everything inside Fixed Deposits yeah. Read a bit more about the potential opportunities in the property market or even the share market. This may just be a good time to enter after 5 years of slowdown in transactions for the property market and many undervalued stocks in the BURSA. Happy taking action!

written on 2 Dec 2018

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2018: Average increment is 5-6 percent.

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RM4,000 is equivalent to an extra RM70,000 worth of ‘property’

Buying a property with our own money, that’s most important. Our own money should usually come from savings over a couple of years. It can come from our parents too but should not be from some other speculative sources. This ensures the property price do not rise suddenly. When property prices rises too fast and too soon, the only reason is because the demand has suddenly increased and this will usually push up prices because supply of houses cannot suddenly appear. Building a new property takes years. How do we save? One way we could save a lot of money is by NOT buying a new smartphone every year or every time a new model arrives.

Briefly, if you did not know that there are good smartphones below RM1,000 then this may be an article for you. 😛  Google for names like Huawei Nova, OPPO or Vivo will reveal many good choices. By the way, even iPhones have below RM1,000 models yeah, not just that latest XR or XS. Assuming we ‘die-die’ must buy that above RM4,000 phone, do we know what have we lost in terms of ‘property?’ Take a look at the image. RM4,000 phone divided into 12 months is equal to RM333 per month. RM333 per month is enough to pay for an extra RM70,000 in property price. If the price per sq ft is RM500, then RM70,000 meant we could have bought a property which is 140 sq ft bigger. This is a size of a medium room in a condo of less than 1,000 sf. So, is it a choice between a RM4,000 phone or an extra 140 sq ft room?

Thinking slightly ahead, if we are a junior executive with our first property, an extra room of 140 sq ft would allow us to rent that room out for an extra RM500. That’s an extra RM6,000 per year which is actually enough for ANY model we like. Alternatively, this rental over a period of 5 years is equivalent to RM30,000 which helps in downpayment for a second apartment which meant that our property investment journey have started. We always blame the money being smaller today but the truth is, 20 years ago, this opportunity that I have just mentioned is not easy to do. There’s just not enough demand and supply then. The world have changed, especially where personal finance is concerned. Think about it and keep using that smartphone in your hand carefully. Cheers.

written on 20 Nov 2018

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Our important SMEs. Covid-19 Stimulus Package 3 aimed at the SMEs. Details here.

SMEs of Malaysia contribute about 40% to the economy and employs 70% of the working people.  Briefly, their contribution to many companies in terms of sales is huge. When people have money (salaries from the SMEs), they can sign up for broadband, buy a car, buy a home and well buy anything they desire. We also have a Finance Minister who understands the SMEs yea. A few days ago, he said this, “Therefore,
MOF will propose to the cabinet and if the cabinet approves, the prime minister will make the announcement next week.”

Today, the following was announced by Prime Minister Tan Sri Muhyiddin Yassin. An additional RM10 billion stimulus package for SMEs and this is consideered stimulus package 3 on top of the earlier RM250 billion. This will benefit 4.8 million workers in the country. He said, “We hope this will help the SME and help the workers to continue working. We hope this additional package worth RM10 billion can help lessen the financial burden of the SME, and subsequently guarantee that two-thirds of the total workers in this country will continue being employed.”

Some details here:

SME companies with Malaysian employees earning RM4k salary and below:

Company with less 200pax – RM600 per pax for 3 months

Companies with 76 – 199pax – RM800 per pax for 3 months

Companies less than 75pax – RM1200 per pax for 3 months.

Tracking is via SSM & Perkeso. Staff must be remain hired for at least 6 months.

Micro Grant of RM3,000 (for SMEs registered with LHDN before Jan 2020).

Other money lending and credit facility advised to follow bank’s loan moratorium

Skin Credit Mikro BSN & TEKUN Nasional – interest reduced from 2% to 0%.

Discount / Waived of lease for rentals in govt premises for April-June. Private companies are encouraged to offer discount and waiver. Tax benefit will be provided for those who offered discount more than 30%

Foreign workers levy discount on 25% for contracts ending in April until December 2020. (Maids/pembantu rumah is not included)

Moratorium 30 days after MCO for documents submission to SSM. Accounting docs extended by 3 months.

Owners of buildings and retail lots who gave a rental reduction to the SME tenants will be given additional tax deduction equivalent to the deducted amount for the months of April to June 2020.

I think we will have more charts and graphics tomorrow.  Will update as and when someone sends more to me yeah. As of now, let’s be happy that the government acknowledges the importance of SMEs to the economy and has announced measures to help SMEs survive through this period of zero sales since all premises must be closed except for the essential services.

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Potential is everywhere. Find one and grow with it whether it’s a SME or a MNC.

It was reported in many medias today (16th May 2018) that the government is reviewing 17,000 contractual political appointees so as to reduce government expenditure.
Here’s one in TheStar.
 Here’s
another one in Mkini.
 What this also mean would be that the job market may have up to 17,000 new job seekers needing a job because they have lost theirs. I think an obvious employer of choice may be SMEs because in my previous role with a prominent job portal in Malaysia, SMEs always tell me that it’s hard to hire people because the good ones prefer higher pay and thus more willing to join multinationals (MNCs). In my 20 years of working experience, I have worked with a multinational (MNC) which is very well established, to the point that even sales people are no longer paid commissions but only basic salaries! Oh yeah, my travelling allowance was calculated in US$ then (1998 – 2002). I have also worked with a SME which eventually got itself listed and today is part of a global MNC. I have also worked with a Singapore based MNC which grew very fast and is now part of a global MNC.

Why join a SME instead of the usual obvious higher salary choice; MNC? Let me share in two parts. First part is whether or not that SME is offering a career instead of a job. The reason why I joined two different SMEs in my working life is due to the potential career growth. Both the top managements shared with me the same super growth story. I started with the first one as a senior executive and left when I was a manager. The VP then who is the group CEO today told me that if I joined and performed, my career will be like a rocket. I believed him in 2002 and joined. In the process, due to its growth, I got share options and the shares were worth much more than the usual 2 months bonus for MANY years.

In the second one, the CEO attracted me with share options and a COO role which meant the whole company is under my ‘command.’ When I calculated the potential share options, it’s again worth many times more than the typical 2 months bonus of a MNC. The catch? Hey, the life’s much tougher yeah. The resources are much lesser which meant one needs to do much more than just ONE role. The benefit? The experience gained is many times faster. Plus how many of us would eventually get to play a role as a COO? Even if it’s just in a SME with a few million ringgit turnover every year and a potential to be listed in the near future?

Now, the second part. This is about the SME. As the CEO of the SME, do you see your staffs as a partner or as an employee. If you see them as an employee and you pay them a lower salary than a MNC, then rest assured that you will only hire those who could not get a place in a MNC. SERIOUSLY.  However, if you see them as a partner and you share with them the potential career growth and even share options as a minority partner, you will usually get the best from them because these people would do their very best for THEIR company. If you see them as partner, you will bounce ideas with them and many times, your employees may surprise you with a much better solution!

According to the World Bank, SMEs account for 97 percent of businesses in Malaysia and employs nearly 70 percent of the total workforce.
Here’s one latest article in Leaderonomics.
 By the way, in case everyone now thinks I believe SMEs are better employers than MNCs, it is not. There are many things which MNCs could provide which SMEs would struggle in. Stability of a job and pay for example. Usually the job in an established MNC is very stable and even the bonus may be fixed one too. If one happened to be the top 10 percent performers in the organisation, the future is also very bright and I have friends who are already part of the management in MNCs here in Malaysia. MNCs would also provide that ‘I am with this MNC’ statement during festivals. One would feel good even when giving out name cards because everyone knows the MNC’s name / brand. Those working with SMEs may struggle to explain what their company is doing to all their friends and relatives, usually. Haha.

Anyway, who knows some of us may even set up our own enterprises and hire people ourselves? Happy finding a role that best suits you whether it’s with a SME (which may or may not grow super fast) or with a MNC. Of course, with a higher pay comes a higher potential for investment yeah. Not higher expenses.

written on 16 May 2018

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You need to smoke? I build a place for you to smoke.

I have many friends who smoke. I prefer if they would not smoke in front of me. I hate people smoking right beside me when I am eating in my favourite nasi kandar restaurant. I am paying to eat and NOT to inhale second hand smoke. So, I am very supportive of having smokers smoking 3 metres away from nearest tables in a restaurant. I also think that’s far enough.

In Singapore, people stand on designated spots to smoke and they have been doing it like forever. Malaysia has started not too long ago but it seems that we will now have a designated smoking area for food courts and parks. In fact it will be constructed at a cost of RM1 million. Read on to understand.

Article in thestar.com.my
  Housing and Local Government Minister Zuraida Kamaruddin said that eateries and restaurant operators could provide designated smoking areas that were at least 3m from their nearest table. She added, “This is to satisfy the smokers and show that the government is concerned with their plight. We provide the facility, so that they are more willing to comply with the no-smoking policy.”

Beyond these facilities, she also said that RM1 million had been allocated by her ministry to local councils to set up designated smoking areas in public areas such as food courts and parks. These smoking areas may have a canopy and if the area requires the construction of a permanent structure, approval by the local council must be obtained. Please read the full
Article in thestar.com.my

I know this. If smokers need to smoke, they will smoke. it’s actually not about how many extra steps they needed to move away from an eatery. It’s also not whether it’s raining or it’s sunny. It’s definitely not because of whether there’s an actual smoking place or not. They could just stand somewhere and smoke and then go back to eating their meals. So, I am not sure what the smoking structure which will be built will be like.

In the airport, smoking room makes sense because it’s extremely convenient if one has to walk all the way to outside the airport structure before they could smoke. It’s huge, I know. A food court? An open one? Well, let’s wait for more details. Happy smoking 3 metres away.

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SO FAST. Vacancy tax coming in 2021, probably.

Vacancy tax is coming if we read all the signs from the many articles in mass media (and blog..) Is vacancy tax truly needed? This was an earlier article on vacancy tax:
Vacancy tax will crash the property market? (click to read)
 Perhaps a better question would be is vacancy tax truly needed for property market Malaysia, today or in the near future or even in 2021 as per what was announced by Minister of Housing and Local Government Zuraida Kamaruddin. She also mentioned that this tax will help to persuade developers to be more sensible and responsible when they do projections for their projects, especially high-rise developments.

Article in edgeprop.my
  The Housing and Local Government Ministry (KPKT) is formulating a tax that could be imposed on developers who fail to sell their properties as early as 2021. This is aimed at reducing overhang of residential units in the country. Minister of Housing and Local Government Zuraida Kamaruddin shared that the introduction of the vacancy tax DOES NOT require Parliament’s approval as there are no amendment to the existing Act.

She said that as soon as the new tax decision is approved by Cabinet, KPKT will look at implementing the tax as early as 2021 as per news report on Malaysia Reserve. She said, “So, as long as the units obtain the Certificate of Completion and Compliance (CCC), and yet they are unable to sell the units or the units failed to be filled, the developers will have to pay.

“In the future, they will do better projections when they develop houses, while ensuring the projects’ viability and developments that could attract buyers, and not just develop as they wish. With this preventive measure, they can plan better.”  Please do refer to the full article here:
Article in edgeprop.my

By the way, I agree that if owners purposely left their units empty and refuse to rent it out, they should be taxed with this vacancy tax. By not releasing the unit for rental, they are causing the home supply to be reduced and rental to go up. This vacancy tax should then be levied on these owners whether they are developer or individual owners. It can be both primary or secondary market. Both are as bad if it was done on purpose. Anyway, this is not something new and has been implemented in many countries.

Anyway, we will await for more details because I have yet to read on how the mechanism would be and also whether it will be approved by the cabinet. Will write about it if there are further news. As for implementing this suddenly and aimed at unsold units from developers, let’s just note that this may not just affect the developers yeah. Home owners who bought the same project earlier may also be affected too. So, this has to be taken into consideration too.

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So, I wait till March 2019?

After someone read this article:
Waiting for cheaper properties, March 2019
, he asked a simple question. “So, this means I should wait till March 2019 to buy?

In brief, NO. The reason is simple, if you have found a place you like in a mature neighbourhood and somehow the price is 10% below the usual market price, I think it’s best to buy rather than wait till March 2019.

If you found nothing because you have not viewed anything and does not even know which area you like to buy, then you can wait till March or beyond, I think you are still not going to buy. 😛

There are reasons why the completed properties were still NOT sold yeah.

One major reason, the price might have been too high previously and people just could not afford or does not think it’s attractively priced enough.

So perhaps a 10 percent reduction could make it cheaper.

How cheaper? Let’s use a RM500,000 property as a benchmark. The mortgage per month as per the image above is RM2,214.

Please refer image above.

Now what happens when the property price is reduced by 10%? RM500,000 will become RM450,000.

Assuming everything stays exactly the same, then the monthly mortgage will drop to RM1,992 per month.

The difference is RM222. That’s about RM7.40 per day. What this tells us is that actually, it’s not really that super substantial.

Not drinking Starbucks latte everyday would have saved much more.

Then again, any savings is welcomed because now we have extra RM222 for over 100 cups of Kopi-O?

So, if there are properties which we have identified as completed but unsold, it’s worth waiting till March.

We must also note that another reason why the property was completed and not sold was because people just do not like it.

Perhaps it’s the design, maybe it’s the location or maybe it’s next to some sewerage pond etc.

If it was not attractive previously due to some of these reasons, is 10 percent enough to make it attractive?

Well, it’s RM7.40 savings per day to make us like the property by March 2019 if we did not like it previously (only if it’s RM500,000 or higher).

Decision is definitely ours to make. The answer is therefore, waiting till March or not really depends on many factors but the savings is definitely not substantial if the property we are looking at is sub RM300,000 for example.

The savings will be just slightly more than RM100. Happy understanding.

written on 10 Jan 2019

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Money is not the root of evil if we are really really rich

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Why am I receiving so many great offers?

I am not sure if it’s just me but these days, I get no less than a few offers for property in my Facebook page every day. This, coupled with the SMSes meant that I have so many opportunities to get rich via property investment, if only I have enough ‘bullets.’ These attractive offers include ‘RM1,000 to book a unit,’ ‘Zero downpayment,’ ‘Most facilities in Klang Valley,’ ‘Earlybird rebate,’ ‘Free car park,’ ‘Undervalued,’ ‘Final few units only,’ ‘Huge cashback,’ and more. Unfortunately for me, I do not have unlimited funds. Lots of these properties would be within the KL / Selangor areas. Thus, I am missing out on all these offers? I am so….. sad. Haha. Anyway, I continue to share with some of my friends via WhatsApp.

First question would be, are all these really that great? To be honest, sometimes, these deals do exist because of the current market situation. As all of us know, during hotter times, even without much special deals the people would buy. Under today’s situation sometimes, the developer may have priced their launch at a higher price to maintain their usual margins and after a while, they have realised that it’s best to provide some discounts or special deals before even more new developments are launched. These days, the ‘attractive period’ for new launches are shorter.

As soon as people realised that your property has remained unsold for over 12 months, rest assured that the possibility of them buying is even lower. Information is available easily for them to check. Many projects still has remaining units even after the keys were handed over. For some, the developer’s leftover units meant the prices would only go nearly as high as what the developer is offering. Sad but real, today.

Second question which is the most important, should we still buy them? Honestly, if the deal is a really good one and fits what you wanted, why not? Just be cautious and not be taken away by all these ‘cashback offers.’ The more they offer you, the harder it was for them to sell today. The harder to sell may also mean much lower demand. When the project is completed, do not be surprised that the price can actually be lower than what you bought, before your cash back. Of course, we can always hope for better times when we get our keys. If that happens, then everything should be just fine.

Final question, have you chosen the best choice among the many? Do not look at just these offers. Check online at sites such as iproperty.com.my, property guru.com.my or even propsocial.my for even more information about the area that these properties are situated. Understand what are the typical prices. Would it be easy to rent in the future if it is not for own stay. Long time ago, these information were not available. Today, please take advantage to do some checks before signing your cheque. The advice remains, buy objectively and property investment should do fine over the long term. Anytime is a bad time to buy if you got yourself a bad deal. Happy scouting.

written on 5 Nov 2015

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So tough for a good kopi ping?

I was having lunch today and I ordered a kopi ping. I think it must be one of the worst I have tasted this year.  The colour was pretty much the only telling sign that it was a glass of iced coffee.  There was hardly any coffee taste. The coffee powder must have been way overused for way too many cups or even the original powder used was of the lowest quality you can find. After much thoughts, I think I will not reveal where this place is. I will remember that I shall not order from them anymore.

To make a good cup of kopi ping, the coffee powder, even is the cheapest variety of RM4 / kg should not be used for more than 10 cups. The condensed milk should be of milk variety and not palm based. Water should be near boiling. This is so as to extract the best value of coffee taste because the typical time to make this coffee is less than 1 minute. Thus speed is of essence. For kopi ping, the amount of coffee should be more because ice can dilute the taste. Last but not least, the coffee maker must love coffee because if not, how can he make a great cup?

Oh yeah, I have never worked in a coffee shop before. Haha. However, everytime I am at any buffet spread, I love to make a cup of coffee for anyone. Thus far, everyone likes the combination of coffee, milk and sugar. Don;t worry, I did not try it. It’s based on just experience and the fact that I make the same cup of coffee everytime. To make a good cup of coffee at the buffet spread, put in the sugar first, then followed by coffee up to nearly 50% of the cup and the milk filling up to the remaining 40%. Of course you need to leave the 10% because otherwise how to get the cup back to your table without spilling it?!! Try it. You’ll love it.

written on 24th dec 2013.

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Soaring and Tumbling after GST like Australia? Not likely.

Property transactions soaring since 2009 – 2011. Property transactions started tumbling in 2012 and continued in 2013 and should still continue in 2014. What about the effect of GST? Would everyone be rushing to buy 1-2 quarters before GST and push up the prices further and 1-2 quarters after GST, the prices come tumbling down, like what happened in Australia many years ago?  CEO-Agency of property consultancy
PPC International Sdn Bhd
 Siva Shanker says that buyers would be snapping up properties one or two quarters before GST but property prices would then find a level and stay there. It is unlikely to follow the example of Australia.

He further said that his personal views are that 2013 and 2014 are slowdown years. 2015 is when the footing is found and recovery would start from 2016 onwards.
CH Williams
,
Talhar & Wong
 managing director
Foo Gee Jen
 says that he expects an 8-10% jump in price after GST and the landed property at an even stronger 10-15%. He said, he does not see an oversupply in landed but for condo, especially SOHO and SOVO he sees an oversupply already building up.

In my personal view, I think many of us including myself know very little about GST. It is after all the first time in our history that GST will be implemented. Thus, when we hear people saying GST will push prices up, some would immediately make a decision to buy. Haha. Then, when someone says that GST induced price up is temporarily, some may think it’s best to invest in something else first and wait till the situation becomes clear. How long should we wait for the situation to become clear?

Always invest with a big picture in mind. GST is a new form of tax replacing the current one that we have. Do not buy with GST in your mind as the main factor affecting it. This is just like when someone tells you that Stock ABC is going up because so and so is buying into the company. Yes, you may earn big money but it may also meant that you lose big. Fundamentally, why did you buy in the first place. For retirement? Then, there should not be a change just because of GST. For your children? Then, starting earlier is definitely better than later because no one actually knows the best timing to buy.

Happy ‘GST’ thinking if you still think GST is the main reason for buying or not buying.

written on 9 May 2014

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Social Capital Considerations in Purchasing Property

An article by my good friend who’s launching his book next month.  It’s a guide to everyone who’s thinking of buying a property.  Happy reading.

— start — “Man is by nature a social Animal” – Aristotle Source:
https://commons.wikimedia.org
 (image in public domain)

What are the factors most people take into consideration when purchasing property?  Three (3) common but by no means exhaustive factors are location, accessibility and design.  Frequently and habitually, people focus on the physical aspects or in other words, the physical locations, physical accessibility and physical design.  This is understandable and perfectly fine as the physical aspects are more easily measurable, comparable and tangible.  However, due considerations should also be given to the social aspects and this article will attempt to shed some light on its importance.

Borrowing a concept from academia, Social Capital Theory delves into the social aspects of our lives.  The great Greek philosopher Aristotle famously proclaimed, “Man is by nature a Social Animal”.  Applying Social Capital considerations, the factors presented earlier iterate as social location, social accessibility and social design.

Physical location is commonly oriented towards the degree of proximity to economically desirable locations such as the city centre, work place, commercial areas, public amenities, recreational and entertainment facilities.  Social location, on the other hand, is oriented towards the degree of proximity to one’s loved ones, family, relatives, friends and acquaintances.  Relationships and social networks require regular maintenance through contact and interaction or they will fade over time.  Is the location of the property conducive to maintain and enhance your personal relationships and social network?  Is the social location of the property rich or is it at a backwater?

Physical accessibility relates to physical location and commonly refers to the ease of access to the property in terms of public transportation and private vehicles.  Security access and pedestrian convenience also fall in ambit or physical accessibility.  Social accessibility refers to a different dimension altogether, it refers the social and cultural accessibility of the community on which the property is located.  Is the community open and accessible to you?  Is the community conducive and nurturing to your personality and lifestyle?  Do you see yourself easily blending in and becoming a meaningful member of the community?

Physical design concerns the building design, structural layout, material specifications, finishes, fittings, colour scheme and all other physical details of the property.  Social design relates to physical design and delves into the lifestyle usage of the property.  How well is the property designed to facilitate social interaction among the occupants?  How well is the property designed to facilitate social interaction with your neighbours and other members of the community?  Conscious and purposive social design produces design features such as enhanced family areas, “traditional-style” verandas, fenceless gardens, concrete benches at the gate piers, communal back lanes and other features that promote interaction and socialization.

As is evident, approaching the commonly cited factors of location, accessibility and design from the lens of Social Capital considerations give a different but equally important perspective.  As “social animals” we derive happiness and contentment in life from social interactions with our loved ones, family, friends, colleagues, and others.  In other words, our quality of life is dependent on both physical and social aspects.  Applying Social Capital considerations into our property purchasing decisions makes for a more comprehensive, thorough and holistic evaluation.

For more elaborations on Social Capital Theory and the application of Social Capital considerations in the context of purchasing properties, obtain a copy of
Layman’s Guide to Purchasing Property 2.0 Social Capital Considerations
 by Dr Wong Teik Aun.  Official book launch and autograph session is scheduled on Sunday 13 January 2019 in Penang, Malaysia.  For more information kindly email
teikaun@yahoo.com

About the Author:

Dr Wong Teik Aun has over 10 years of experience in the property and finance industries.  He established his own consultancy firm providing project marketing and management services.  He worked with a public-listed company on an international joint-venture development project.  He has experience in retail management, research publication and real estate agency sales.
— end —

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Soft market does not mean buyers jump in (it’s not the area they want!)

What are your thoughts about the property market of Malaysia for

2018, 2019 and perhaps 2020 and beyond?

Is this the time to be fearful? Or is this time to be greedy? Warren Buffett said this with regards to investment. “Be fearful when others are greedy and greedy when others are fearful.” So, is the time now to be fearful or to be greedy?  With regards to the property market, this is what real estate consultancy firm Rahim & CO international Sdn Bhd is saying. It says that the downtrend since 2013 is still continuing for 2018. Its Executive chairman Tan Sri Abdul Rahim Abdul Rahman said that despite this downtrend in number of transactions, the value did not drop much. He said, “This shows that prices have not gone down so much as opposed to the number of transactions. Although developers are under pressure to lower their prices but they can lower their prices so much only after taking into consideration cost of building.”
The full article in TheSunDaily here.

I think the next thing that Rahim & Co research director Sulaiman Akhmady Mohd Saheh shared may not be agreed by everyone. He said “An average terraced house would cost Malaysians 5.3 years of their household income.”
(What he meant is that assuming someone in M40 earns about RM100,000 per year (RM8,000 plus per month, this person can afford to buy a terrace home that’s just slightly over RM500,000. There’s no such home in SS2, Desa Parkcity or even Kelana Jaya, for example. However, he said AVERAGE, so perhaps that would still make sense in some cheaper areas because even today, as long as one is willing to make a little sacrifice, landed terrace homes, even below RM500,000 are still available lah)

Rahim & Co further shared that from its research, Johor’s housing affordability rose to 3.9 years, from 3.7 a year ago despite transaction value falling in the state, while Selangor’s and Penang’s remained flat at 5.2 years and 6.9 years respectively.  Meanwhile, it’s 8.4 years for home buyers in Sabah and for those in Kuala Lumpur, it’s 6.8 years of household income. In fact both Sabah and Kuala Lumpur showed slight improvements in terms of affordability. Rahim shared that 2018 property market will be flat but will not gointo a recession.  For a full article, please do refer
to thesundaily.my article here.

It’s pretty obvious that what Rahim & Co is sharing is that the market is flat. There has also been an oversupply of some types of properties too. The continuous downtrend in the number of transactions started in 2013. Then, why are buyers not jumping in yet? What are they waiting for? Perhaps this would better explain the reason why. There’s a

mismatch of the demand and supply coupled with negative sentiment

(mostly uncertainty). Last but not least would be the fact that MRT is not yet popular as at today despite it passing through many newer neighbourhoods. Acceptance of these newer neighbourhoods are not there yet. Buyers still prefer the usual areas preferred by most of their friends / buyers currently. I think all these would require time. Not so much of doing something but more of slowly getting people to accept it.
Affordability would definitely help in driving

this because in many areas, RM550 per sq ft is not possible to build and yet in some areas, there are still many below RM500 per sq ft even today. I love property market because it’s so vibrant. Happy noticing something ahead of others yeah.

written on 20 Feb 2018

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SOHO / studio units – my personal opinion

A friend asked me for the 3rd or 4th time, why I have not bought any SOHO / studio units. I asked her, why do you like these small units? She said it can fetch high rental. Actually, that’s quite a true statement. Imagine paying just RM300,000 for a nice 500sf SOHO unit, furnish it and renting it out for RM1,800 – RM2,000 if you are lucky. Today however, can you still find a lot of these RM300,000 SOHO? A simple check that majority of all the SOHO units are already priced at RM750sf or higher. Thus, it may not be possible to get such an amazing rental yields anymore.

What about capital appreciation then? Surely it can continue to go up? Well, if you are a first time buyer, looking for property to buy and stay, would you buy a 500sf SOHO for Rm500,000 or a RM400,000 condo somewhere in Kelana Jaya? Even if second hand? If you just got married and have is expecting a baby and would like to upgrade your current 700sf apartment, would you switch to a smaller unit? Even if you love SOHO / studio unit very much, if it is priced at RM800,000 would you still want to buy it? Let’s assume the unit is in an amazing location, would anyone pay a rental of RM3,500 to stay there? Of course, it is so easy to argue YES. Think about it, these people, if available are the minority and would never be able to occupy the thousands of small units everywhere nearby your unit.

Thus, my opinion of SOHO / studio unit remains. If you are able to get a very good priced one from some seller somehow, please buy. However, if you are buying at RM750 psf thinking it will continue going up, good luck. I am not a property  guru and cannot predict anything. If you ask me though, a RM400,000 condo in Kelana Jaya versus a SOHO / studio unit somewhere nearby KLCC which is already RM900psf or higher, my choice is clear. Take care.

written on 12th dec 2013.

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This person sold land to buy Koi fish (RM300,000 land…)

This person sold land to buy Koi fish. (RM300,000 land…)

How much would you pay for one koi fish? Would you sell your land and then use the money to buy ONE koi fish? Specifically, one RM300,000 koi fish? Nope, this has got nothing to do with scams. Koi fish is indeed considered something worth investing as far as koi enthusiasts are concerned. In fact, an excellent koi fish breed can really be worth more than a luxury property! Not for me lah. Now, let’s read the news first.

Article in nst.com.my
  Mohd Zulkifli Husin spent all the money he earned from a land sale to buy a koi fish worth RM300,000 each. The breed he bought is the Sakai Kohaku breed which if often the winner in international competitions.  Zulkifli is a hardcore koi fan and has been involved in breeding koi since 2015.

About the koi fish he bought, he said, “The fish is still at a koi farm in Japan and I have been getting offers from koi enthusiasts to buy it with the latest offer at RM450,000. I am not ready to sell it because the market price for this koi breed can reach up to RM600,000 each.”

Zulkifli shared that currently he has about 40 koi fish of various breeds in his house pond including Omosako Shiro Utsuri, Doitsu Showa, Benikiko, Sanke Sakai, Dainichi Showa and Momotaro Kohaku, all worth more than RM500,000. Do read the full article here:
Article in nst.com.my

Now let’s know a little about koi fish

Here are the top
10 most expensive koi types in the world.
 While the 10th till the 2nd placed most expensive koi seems ‘affordable’ the top one is out of everyone’s expectations yeah. It’s ONLY US$1.8 million (RM7.56 million). The type is Kohaku. This is the same type which the buyer Mohn Zulkifli Husin bought when he sold his land. Meanwhile no.6 Doitsu is a breed from Germany.
Doitsu is a word derived from Deutsche.
 Refer below. Koitsu is a scaleless koi fish breed.

photo source:
kodamakoifarm.com

Not all koi fish is from Japan

So, now we also know koi fish does not necessarily all come from Japan! Koi also means carp. Yes, koi is an expensive carp but there are a lot of much cheaper carp fishes out there yeah. We also eat carp fishes too! Just not koi lah. Now that we know more about koi, the next time we see some koi fishes in a pond, try and identify the type and perhaps guess the price of the breed yeah.

Investment does not need to be property yeah

I love property and I will also continue to prioritise property over koi fish of course. However, koi fish does have their own supporters too. What I want to say is that if there are demand and we understand enough, then that could also be an investment too. Another friend doing very well with antiques including Nyonya items and even old bank notes which I know very little about.

Many friends who are well versed with the stock market continue to tell me that the stock market gives higher returns. I do believe them, especially the ones who did well with their investments. We just need to continue focusing on what we know best and keep doing it. Keep out speculations because that means we do not know enough. Now, that’s dangerous. Happy investing yeah.

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Some countries have started their ‘reopening’

The image below shows the COVID-19 cases as at 20 April 2020. We could look at it very negatively and see the huge 2.4 million number of infected people. It means there’s a long time more to go before countries can say they have it under control. We could also choose to only look at the 3% Serious or Critical cases out of the total active cases. It means that the fatality rate for COVID-19 is considerably low and the best defence is still to ensure we are healthy everyday so that ‘touch wood’ if we somehow get it, our condition will remain only at the mild condition.  President Trump of the U.S. has outlined plans to start reopening of some states which have shown improvements in
COVID-19 infections. Earlier article here.

Image Source:
https://www.worldometers.info/coronavirus/

Germany begins reopening. (read here)
 Germany takes its first steps back towards normality on Monday, with smaller shops in some regions opening up for the first time in a month after politicians declared the coronavirus “under control”.  From florists to fashion stores, the majority of shops smaller than 800 square metres (8,600 square feet) will be allowed to welcome customers again, in a first wave of relaxations to strict curbs on public life introduced last month.

South Korea relaxes some social distancing rules. (read here)

  “It is safest to maintain the intensive social distancing, but it isn’t easy realistically. We need to find a middle ground,” Prime Minister Chung Sye-kyun told a televised meeting of government officials.

Norway begins reopening of nurseries which were closed due to COVID-19
   Norway, which says it has COVID-19 under control, on Monday (Apr 20) started opening up pre-schools after a month-long closure, an AFP correspondent reported.  Authorities have said the reopening was possible because children have been less affected by COVID-19, although some parents have expressed reservations over the decision.

Denmark reopens some businesses, setting off stampeded for haircuts
 The development shows how desperate people are to return to normal life. Denmark stands out as one of the first European countries to impose severe restrictions on movement after the threat of Covid-19 became clear. Thanks to its early response, Prime Minister Mette Frederiksen says it’s now possible to try to return to normal sooner than others.

If you ask me, I think it’s very important to really having it under control before any relaxation of the current Movement Control Order (MCO) is started. Considering businesses are allowed to operate, I am not so sure how many Malaysians are rushing back to work because when they come home after office, they will also have to continue taking lots of precautions especially if they are not staying alone.

Normalisation is a great thing. I really hope the economy is not too affected and that we could recover fast and perhaps even hit that
9% GDP growth for 2021 as forecasted. Read here.
 Perhaps what I really want is for Malaysians to be really mature and really take social distancing as well as precautionary measures very seriously. I think I could. What about you? WHat are your views about the current COVID-19 situation and the potential for MCO to be relaxed?

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Some famous property investment quotes from around the world

Many people say a picture tells a thousand words. In property investment, I would say do not be fooled by just the pictures. However, I personally love all the profound quotes which tells you in one line why property investment is good or why property investment should be considered or even why property investment is full of risks! There are property gurus who has been in the industry for as long as I can remember. There are also some lesser known ones but this does not mean they are not as good. Anyway, I have no quotes to offer for property investments. None for the next 10 years at least. Haha. Read some of the nice ones below and enjoy.

This one spells out what I dream of for my future.

I want to be a successful landlord. I like real estate – Two Chainz

It’s always good to buy where you are familiar with first.

The problem with real estate is that it’s local. You have to understand the local market – Robert Kiyosaki

Remember, learn. You can’t always think you know it all just because you have profited from earlier buys.

“In my experience, in the real-estate business past success stories are generally not applicable to new situations. We must continually reinvent ourselves, responding to changing times with innovative new business models”. – Akira Mori

Every investment has its risks. Be careful

“Don’t stretch yourself too much with a mortgage. Buy within your means.. it’s not worth the sleepless nights.” –Sarah Beeny

Haha. How true!

“The best investment on earth is earth.” -Louis Glickman

Reminder on the word ‘common sense’. In other words, think objectively and not be a follower all the time.

“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”   -Franklin D. Roosevelt

Buy, Rent, Buy, Rent, Buy, Rent

“Landlords grow rich in their sleep.” -John Stuart Mill

I am not sure if this can be proved but perhaps this is still true today

“Ninety percent of all millionaires become so through owning real estate.” -Andrew Carnegie

This is one of my personal reasons for buying property

“Owning a home is a keystone of wealth.. both financial affluence and emotional security”. –Suze Orman

Time, Time, Time, this should NOT be a gamble or speculative.

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” – Paul Samuelson

Make sound decisions with your learned ability to be objective

“Know what you own, and know why you own it.” – Peter Lynch

Ok, that’s all from me. Google for more if you want but the most important thing about property investment is this. ‘Do not be afraid of moving slowly. Be afraid if you are standing still’  Just as everyone has learnt, inflation will always be there and so would the need for a roof over your head. You can buy a roof over your head or you can rent a roof over your head but you must have a roof over your head. Think about it. Sure, you can buy a camping tent for RM29.90 and sleep in it for the rest of your life too. There’s a reason why they said, ‘Home Sweet Home’ or ‘Home is where the heart is’.  Happy learning and reading.

compiled and written on 3 April 2014

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Some resources we have access to for our investments

It’s important to have resources to guide our investments. Starting right is half the battle won. Today, I will recommend three sites for all of us. These are the three sites that should give us an idea where we are today and where we could possibly arrive at in the future. We can even predict what will happen to our EPF savings if we get only an increment of 5 percent per year for the next 35 years! First one is close to what most of us are doing; our careers. You can visit the
KWSP / EPF’s site
 which provides to us an EPF Savings Calculator. Please refer to image. For those of us who started with RM2,500 as basic pay, we can predict what will happen to us when we work till 60. Yes, 36 years of non-stop working. Scary yeah. Haha. We also assume average increments of 5 percent and average bonus of 1 month per year. Actually, the final result is not shabby at all. Even with these consistent and I would say conservative numbers, we will have RM648k when we retire! So, for fresh graduates, the key is to work hard and climb the corporate ladder, regardless of our major.

Second one is about our foundation; savings. Do we save enough for retirement? According to some financial planning experts, if we save 1/3 of what we have today continuously, we would have 2/3 of what we have when we retire. Here’s the article:
Save one-third to have two-third when we retire
.
The website to take a look at how much we can save and how much our savings can grow is this:
www.calculator.com.my
.
Let’s look at some assumptions. In the beginning of our career, it’s not easy to save RM1,000 per month. Do note though that when my wife was working in Sandakan and her salary was RM1,300 she could still save half of it! Haha.
 Yes, she stayed with her family.
However, further down the road when our income becomes higher, saving RM1,000 becomes easier and later when we are a senior manager, saving RM1,000 is considered super easy. So, if we save RM1,000 per month till we retire with an annual interest rate of 4 percent, we would have very close to RM1,000,000! For those who would like to save more or lesser, use the calculator and see for yourself!

For those who would like to see how much would our home become 30 years later when we have finished paying for it, you can use this:
www.timevalue.com
. With some assumptions such as continuous price increase of 3 percent every year, you will be happy to note that the affordable apartment that you bought today may just be close to RM1,000,000 30 years later. Note that all these are based on ASSUMPTIONS yeah. Plus the apartment you bought has to be completed and people are staying there lah. It cannot be in the
middle of nowhere, not connected, not completed
etc etc. I also do not dare to think what’s the actual value of RM1,000,000 by then. Perhaps it’s the same value as RM400,000 today. Actually, even if it is just RM400,000 in value, it’s not bad at all. It meant that you have hedged against the inflation and your home value stayed the same 30 years later. No huge gains either though.

Hope you would benefit from these three new resources. If you know of any good calculators out there, please share with me too. Every time we share, we gain together. Happy calculating!

written on 22 Jan 2017

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Press Release: Something For Everyone: GLOMAC Grants Giveaways To Housebuyers

KUALA LUMPUR, 30 Aug 2021 – With the theme “Something for Everyone”, Glomac  Berhad (“Glomac”) today launched its latest sales campaign with a lucky draw grand  prize of a brand new Proton X50. This was announced at a simple hand-over  ceremony of a Proton X70 to the lucky winner of its 30th Anniversary Reward  Campaign Lucky Draw contest.

The latest campaign, which will run until 30 November 2021, also offers other  amazing prizes, attractive sales package and cash incentives for homebuyers to win  in addition to the Proton X50. “Something For Everyone” also features online game  contests that allows participants to win monthly prizes such as shopping vouchers,  iPhone 12 devices, Samsung tablets and many more. The online contest is set to  commence in mid-September 2021 and will run until the end of the campaign.

“To find out about our latest campaign, do log on to
www.glomac.com.my/somethingforeveryone
”, said Ms Kim Neoh, Glomac’s Head of  Sales & Marketing.

According to Glomac’s Chief Operating Officer in Operations, Zulkifly Garib, this  latest campaign is one of a series of campaigns that Glomac has started conducting  since a year ago. “Our previous campaigns such as the CNY Campaign, HappyNest  Campaign, and 3R Campaign have given us an insight of what the market prefers  with regard to marketing promotions. Taking the cue from the impact of the  pandemic since last year, Glomac is continuously enhancing our online engagement  with our prospects and customers through our virtual show units and e-booking  process, being the new norm in selling”, he further explained.

Glomac residential properties priced at RM300k or more purchased during the  campaign period will enjoy the chance of winning the Proton X50 and the other  prizes.

Glomac is currently developing its
121 Residences
and
Plaza @Kelana Jaya
high rise developments with landed developments such as
Primrose
(Saujana KLIA,  Sepang),
Dahlia Sari
(Saujana Perdana, Sungai Buloh) in Selangor and its
Freesia
(Saujana Jaya, Kulai) in Johor.

For more information on “Something For Everyone”, please visit
http://www.glomac.com.my/somethingforeveryone.&nbsp
;

-End of press release –

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Soros: Hard landing for China. China disagrees fully.

China’s advice to Soros: “better” stay away from renminbi and HK$. I read an interesting article from Reuters about China’s state media and George Soros. Earlier, Soros told Bloomberg TV that he sees a hard landing for China’s economy and this will lead to a global deflation. In brief, deflation in economics is a decrease in the general price level of goods and services. Many times, this may be caused by the rising unemployment or a crisis etc which caused most of any investments to stop, demands fall and every seller desperately trying to get a buyer, thus causing general prices to drop. So, why did Soros do? He revealed to Bloomberg that he has personally been betting against the S&P 500, commodity-producing countries and Asian currencies and buying US government bonds. He has mentioned nothing specific about Yuan or HK$.

Well, the People’s Daily overseas edition said this in response. “Soros’ challenge against the renminbi (yuan) and Hong Kong dollar is unlikely to succeed, there is no doubt about that.” The article added further that this is because China’s economic fundamentals remain sound, despite slower growth, volatility in its stock market and the yuan’s depreciation against the US dollar. This opinion piece was written by a researcher at the commerce ministry. The latest announced data revealed that China’s economic growth slowed to 6.8% in the fourth quarter of 2015 and this the slowest quarter since 2009. In terms of yearly growth, the total of 6.9% in 2015 meant it was the worst in 25 years.

I prefer to believe the China’s side of the story because China will be the engine of growth for a long time to come. Sorry, it would not be that recovering economy when we talk about this part of the world. I think every economist is clear about this and only have differences in opinion about the actual time when China would become the largest in the world, economically. That’s one reason why the current restructuring must happen. It’s bitter pill to swallow but we do need a stronger China both in quantity and quality. Xinhua added, “China has been constantly improving its market regulatory system and legal system. As a result, reckless speculation and vicious shorting will face higher trading costs and possibly severe legal consequences.” Happy following the China story.

written on 26 Jan 2016

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