Iskandar Capital. 3,000 acres. Mixed-Income Housing in Johor.

Someone asked this some time back. Since Johor has the highest number of overhang properties (means completed and yet has remained unsold for 9 months after completion), surely developer should stop building and continue selling the current stock until it finishes first, right? If the developers continue building, then it will cause the overhang problems to get worse right? Perhaps this person is right, I am not sure as I am not the targeted buyer, a Johorean and also not a property developer.

Anyway, the answer will have to be answered by the potential buyers and the property developers. We do have one latest update about a developer who will be developing a 3,000 acre site in Iskandar Puteri.

Article in edgeprop.my
  Iskandar Capital Sdn Bhd has announced that it will be developing a mixed-income housing (MIH) project that will be developed in Wawari, a 3,000-acre sustainable development in Iskandar Puteri, Johor.

Datuk Khairil Anwar Ahmad, who the chairman of Iskandar Capital Sdn Bhd said that the MIH is a model that promotes fair, equitable, inclusive and affordable housing for all income levels in Johor.

He said, “Through this initiative, the low income (B40) and middle-income group (M40) can be neighbours living in one community. Iskandar Capital is committed to continue supporting the state government in safeguarding the interest of the local community and increasing the number of home-ownership among Johoreans.”
Article in edgeprop.my

Two questions about the overhang properties

However, I have 2 questions to ask. First one is, do we know the reason why people just did not want to buy the overhang properties? If the reasons include price too high for some, unattractive type of property for some, wrong location for some and even the buyers just do not like that particular developer, then does continue selling the same ‘wrong’ property works? Perhaps some of the stock can be cleared but if someone did not like the property a year before, would they like the property a year later?

Second question is whether the developer will be building the same kind of properties as the overhang. If the property developer is simply building the same kind of undesirable properties, then this property developer is really trying to lose money… If the property developer realised that if they build at right price, some will buy, if they build the right type, some will buy, if they built at better locations, some will buy then should they build or should they not build?

Let’s hope the overhang was also caused by the market situation too

We can see that property transactions did increase as soon as lockdowns were lifted. In other words, one cause was also because people just could not complete their transactions. This may be one of the reasons. However, for JB, the catalyst will be how JB and Singapore is more integrated. We need to have a clearer update on the Rail Transit System because this will help to drive up demand for properties because there are many people who are staying in Singapore because they hate travelling daily. They are thus willing to pay S$700 just to stay in a room instead. What’s clear is this.

Current demand must be from Johoreans who are working in JB first. So, any new developments must meet requirements of this group of buyers first. Else, it will be very hard to sell yeah.

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Iskandar: Car wash business down because of new toll increase.

An interesting article caught my attention few days ago. It said that due to new toll rates on both sides of the causeway, the business of several cash wash outlets in the city have experienced a decline in business. It quoted one Bangladeshi worker as saying that business has gone down 50% or more. He also said that majority of the Singaporean customers at the out let he was working in are regulars. he elaborated further that the car wash outlets at Taman Pelangi and Taman Sri Tebrau are favourites for these Singaporean customers because they could also patronise the nearby eateries and clubs while their cars were being washed. Second Bangladeshi worked interviewed at the next car wash outlet said that business has declined 30-50% since August. He was quoted as saying that instead of 2 – 3 visits per week, these days the Singaporean customers only sends their cars for washing on weekends or during long holidays. The article further quoted one customer saying that it’s much cheaper to wash his cars in Johor Bahru versus Singapore due to the exchange rate. RM10 vs S$10. He said he has cut his visits to Johor Bahru from four times a month to once per month.

Seriously, I did not know that Singaporeans sends their car for washing on a weekly basis in Johor Bahru. I think this may be because only the rich owns a car in Singapore and thus they want to keep their car clean looking all the time. I also did not know that these days for the purpose of writing an article, we no longer talk to the business owners but to their workers instead. Perhaps this is more real, I am not sure. From the above, we can see that the car washing business in these few areas such as Taman Pelangi and Taman Sri Tebrau are thriving because of business from Singapore. This includes also the food outlets and clubs. What would be the effect if the toll continues without any changes for the next few years at current rate? I think it may be tough to survive because 30-50% is a lot and may even be either a break-even or a continuous loss making.

I think after a while, it should be back to normal. Just like the tough Hong Kong people who continues to thrive though life was hard then (watch old TVB dramas to understand), the Malaysians and the Singaporeans would somehow get over it and it will be back to business as usual. Perhaps instead of RM10, a simple reduction of RM2 would entice more Johoreans to wash their cars. Perhaps a car wash coupon booklet can be sold to these Singaporean drivers instead which would entice them to come more often or even send their wife’s car for washing if not theirs. Oh yeah, for these Singaporean drivers, the actual difference is upon entry, they pay extra S$5.20 and upon exit, they pay extra S$5.30.  Total to and fro would be S$10.50 which is equivalent to the cost of washing a car in Singapore, as per the article. I am not sure if there are eateries or clubs nearby the car wash outlets in Singapore though which may turn out to be the REAL reason as to where these Singaporean drivers would wash their cars. Let’s wait and see, at least a few more months to know for sure.

written on 17 Oct 2014

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Iskandar and Chinese companies, another RM 2 billion coming

RM2 billion is indeed a HUGE number. Very few of us would ever have even a fraction of this amount in our lifetimes. For Iskandar Malaysia to continue growing, it would need billions, the more the merrier. Well, another RM2 billion is on the way from three big Chinese companies. According to the Johor Domestic Trade, Tourism and Consumerism Committee chairman Datuk Tee Siew Kiong, the talks are ongoing and he is confident that these investments will happen. This number includes a
RM400 million expansion

for the second phase for Shandong’s D&Y Textile and Garment Group. Textile and garment manufacturing can still survive in Malaysia, even versus the world? Well, this reinvestment sort of proved it can still happen.

The remaining would be from two more new investors who have not yet set up their operations in Malaysia. One is in tyre production while another is in the green technology sector. In fact for the tyre company, Malaysia beat a few other potential countries including
Indonesia, Thailand and the United States
. Actually, if they are thinking of the United States because of the tyre experts, I think they could easily attract these experts here. Similar pay for them BUT 4 times better lifestyle definitely. Many years ago, my senior HR Manager friend told that he always attract these US expatriates by telling them that “Your Salary may be similar in number or may be slightly lower BUT the lifestyle you can afford is 3 times or more here in Malaysia.” By the way, the expertise may even be available in Singapore.

In terms of the size of potential markets, I think it’s clear the growth is
definitely in ASIA today
 and the foreseeable future. I like China, as a growing economic superpower for the world. I also like the fact that relationship between both countries (Malaysia -China) continue to be strong. Happy believing.

written on 5 July 2016

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Iskandar property price to surpass Greater KL

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Iskandar? Hold 20 years?

Remember just three years ago, Iskandar as a topic of property investment was hotter than your frying pan? Well lately, every article is about how Iskandar should no longer be a place for you to invest because of a host of issues. Oversupply, oversupply and oversupply. Haha. No joke, if there are articles which does not focus on this word for Iskandar, it must be a fake article. The latest one I read said that there is only one way for Iskandar moving forward. That way is ‘down’. The last few sentences included a word of caution. If you should buy into Iskandar, be prepared to have an exit strategy two decades later. There was no further explanation why two decades, is it because the maximum profit would be obtained then? Is it because if you buy now, the market will be down continuously and you can only sell two decades later?

In the whole article, it was also mentioned about how so many prominent personalities were so bullish about Iskandar and how much money that they poured into Iskandar. For example, Robert Kuok, Lang Walker, Peter Lim and many other big players. All their investments were stated but no mention about if all of these prominent personalities or big players have pulled out. Perhaps the reason is because they have not pulled out but have gone into hibernation mode? I have no idea but personally, if these investments have NOT been sold to any other investors at fire-sale prices I think the overall picture is still intact. Come on, for the whole of 2014, even the property market in Singapore has been going down. Is it also because of oversupply? Please do note that majority of the units are government controlled based on demand from the citizens and PR. For 2015, the number of units being built would be lessened further which meant that everything is being planned well ahead, right? If so, why are the prices still on a downtrend? Actually, as soon as the Singapore property market weakens, it would automatically pour negative sentiments onto Iskandar. It’s just two bridges away, what do you expect?

It also said that for the past 3 years, Singaporean investors were pouring money into Iskandar and thinking that the jobs would pour in and thus demand would increase and they can then sell the properties they bought. Haha. If I am a Singaporean investor thinking this way three years ago, I think it’s time they understand the bigger picture on Iskandar. 3 years to suddenly turn empty pieces of lands into factories, complete with all infrastructures and lot of jobs, all paying high salaries and all the Johoreans who work in Singapore all flocking back, you must be joking. Sorry if that’s the thought because property investment which happens in such a way meant bubble will be bursting soon. Seriously, EVERYONE buying to exit in a few years’ time? Well, happy investing with the amazing 3 year ‘Get Rich’ mentality then.

written on 5 Jan 2015

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Recent updates: iskandar, Johor. Ferry, RTS and flights.

Connectivity is key to the economy and the economy will then support property market yeah. Especially for a city next to Singapore. Especially to attract tourists from other countries. Some latest happenings in JB.

Ferry services across the Tebrau Straits to boost connectivity with Singapore? Johor’s International Trade, Investment and Utilities Committee chairman Jimmy Puah today said ferry service and water taxi are among the new modes of sea connectivity being planned. At a press conference at the state’s administrative centre, he said, “We are exploring new ways as the Causeway and Second Link are already in their maximum capacity,” he said at a press conference at the state’s administrative centre here. Any new facilities must be private initiatives as the government has its economic constraint. The government will play a facilitator role in bringing up these proposals from the private sector. Pasir Gudang and Changi ferry jetty are the proposed locations of ferry service. We need study all the proposals before submitting them to the federal government.”
Here’s the article in thesundaily.my

(Personally, I think ferry services would be good to supplement holiday periods. However, I do think that once RTS is in place, the ferry services may become a secondary choice unless there are some other reasons to take the ferry. For example,watching the dugongs or even to some small islands for a retreat.)

Johor Bahru – Singapore Rapid Transit System (RTS) would require more land than initially planned. Johor’s new Menteri Besar Osman Sapian said, “We need a bigger area for the RTS project, so the number of land owners affected has also increased.” He also shared that some owners of land plots marked for acquisition had demanded higher compensation. (HMMMM…) RTS is scheduled to start by end-2024 and will be a 4km line connecting the Bukit Chagar station in Johor Baru to Woodlands North. Construction of the link is expected to begin next year. Osman also said that based on current market value, more than RM300 million (S$101.5 million) would need to be paid to land owners in the Kim Teng Park residential area. The 10ha area has 1,500 residents and 300 homes, comprising single-storey terrace houses, single and double-storey semi-detached houses and bungalows.
Full article in StraitsTimes here.

(I think it’s important that the compensation be already FINALISED. Frankly, there’s no point in doing this only at the last when the route has even been decided. It’s also encouraged to say that ‘some owners’ because if some owners want higher compensation, then what about ‘all other owners?’

Johoreans could no longer fly to Macau directly from Johor. Actually, that’s not the real issue. The main issue is that people from Macau could no longer fly into JB directly. Perhaps they would need to fly into Singapore first and then only visit JB after that. The date that AirAsia will stop the flights would be 1st August 2018. Johor State Women Development and Tourism Committee chairman Liow Cai Tung said, “This morning I had a discussion with AirAsia Group Chief Executive Tan Sri Tony Fernandes, and he clarified that the main reason for stopping the service was that it was not generating revenue for the company.” She views this decision with great concern as it will affect the development of Johor’s tourism industry. She stressed that the State government will continue to strengthen its cooperation with AirAsia and interested parties in order to promote Johor’s tourism industry. (It’s extremely important for the tourism ministry to understand what would be the main attractions for people from Macau or even Hong Kong because if there are nothing special that JB has to offer versus Singapore, then it’s going to be tough to help AirAsia convince people to fly in. Once this has been identified or even created, it will guide AirAsia’s decision better.)
Full article in theedgemarkets.com here.

Happy following!

written on 21 June 2018

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Johor Bahru attracting lots of foreign retailers! People and economy

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Iskandar – Largest reclamation project in Malaysia?

I read in The Star today that China’s
Country Garden Holdings Co Ltd
 and
Kumpulan Prasarana Rakyat Johor (KPRJ)
 have plans for a super huge reclamation project for luxury homes in Pendas, near Singapore. In the report, ‘sources’ said that the land area may be a few thousand acres and thus it should be one of the largest single project in Iskandar Malaysia. Country Garden is also the developer who famously launched 9,000 units of condo in one go in Danga Bay. I like the name of the project, ‘Forest City’. I think GREEN is going to be a theme for this development, especially when it is also for luxury homes.

I have many Johorean friends who said that they are not sure who these buyers of the projects are because there are just not that many Johoreans who can afford the new projects launched today. I do agree with their assessment because when I look at the prices, it is no longer lower than any Klang Valley projects or even the higher end Penang developments. Yet, when I look at Singapore’s own plans for ever more development, I realised that perhaps these projects are necessary as well. If you get a lot more of the internationally qualified professionals to work in Singapore today, where do you house them? HDB flat? Definitely not. It has to be some nice apartments at minimum or condos preferably.

Perhaps Iskandar allows them a ‘way out’. These are professionals anyway and I do not think they need to clock in on time by 8am and clock out on time by 6pm. Thus, the jams etc may just not bother them so much. Just to have an idea on the typical 1,100 – 1,300 sf condo rental in Singapore today, I went to key in ‘expat rental in Singapore’ and found a result to share.

The next question, are there really so many of them that they can occupy everything that the developers are building today? Seriously, no one can answer you that. Developers would tell you, ‘of course’. If we look at Singapore’s population growth, it was 2.4% in 2012 and total population is at around 5.3 million (2013). Fertility rate is only 1.2 which meant that majority of the growth would be external.

Ok, that is external, what about the internal demand? Surely that can help a bit? If all the education institutions in Iskandar is fully operational, then the educators should need another few hundred units. What are some of these institutions? Raffles University, Southampton University, NMIT, MMU, Newcastle University and Management Development Institute of Singapore (MDIS). These do not include the international schools.

Only time will tell as we continue to see more supply news and demand potential news continuously.

written on 17 march 2014

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Yes, if LINKS are provided, I think Iskandar is okay.

A reader commented on my latest article about Iskandar as crap. Haha. It’s okay, we must accept all comments as constructive. He said that if given a choice, he would use S$400,000 to buy in many other international countries, for example a landed property in Australia or even in Lisbon which comes with automatic citizenship. First of all, I know a tiny bit about buying properties in Australia. As a foreigner, we are not allowed to buy from the secondary market. Ever wondered why all the projects being marketed in this part of ASIA are mostly small units at around AUD400,000? Yes, reason is pretty clear, the Australians themselves are not great fans of these small units. I know NOTHING about Lisbon and I have never been there before. Thus, perhaps it’s truly attractive to buy a S$400,000 property there and obtain a new citizenship. Perhaps the added advantage of watching Portugal football league would be indeed a plus too. I would certainly not be buying Lisbon if I am still working in Singapore though.

The reader mentioned that as soon as High Speed Rail (HSR) completes, it would be more attractive for him to buy in Muar or Malacca instead. It’s much cheaper! In terms of cheaper, I could not agree more. In fact, maybe even less than half the usual price. However, attractive to buy in Melaka and Muar? I love Melaka, so let’s assume I agree that it’s more attractive. Reason being I can start a business in Melaka and do well due to it’s huge tourism industry. However, Muar? Sorry, I seriously doubt the attractiveness of Muar versus Iskandar. Then again, I have visited Muar just once and thus may not be qualified to comment versus the reader. Again, if I am working in Singapore, I would not buy both Melaka or Muar.

Reader said that in Singapore it’s everything about integrated entertainment, transportation, education, medical and thus it is live, work and play. It’s funny because some of my developer friends in Iskandar is telling me that the same can be done in Iskandar today, except for the public transport. For that, it’s best to get a car instead. I do not even wish to argue about what would happen in future for Iskandar. As for Singapore, of course if the middle income Singaporeans are already able to have all these, I really do not think any of them would want to move out. Besides the above few, Singapore is also safer, definitely. I feel safe too when I walk back to my hotel at night there. In Malaysia, I would prefer to drive and not walk, no matter how near.

I think the reader was also very angry with some projects in Iskandar for some reason. He said that those who chose to buy in Austin Hill would be living in isolation and have just the TV set in the evening. Actually, when I travelled to JB, despite all the safety warnings, I did go out for happy hours in the evening and perhaps I am just lucky, it went well thus far. Plus, he said that one has to waste time to crossover daily and he also said that Malaysia has a frequent changes of policy of can do today but cannot tomorrow. He further said that what if you buy foreigner price today and later have to sell to local? I assume it’s for lower price. As for policies, I think Singapore, Hong Kong and many other countries’ cooling measures were also ‘sudden’ and none were done with a long waiting time……..

Seriously, I love to accept his views as I am sure no one should force anyone to accept his opinion as the only opinion. However, please read my article again, here:
No way that Singaporeans / Malaysians in Singapore staying in Iskandar
. My sole, only and most important point remain to be this. To me, HSR is way later. 2020? 2022? Whatever. For any real catalyst to happen before then, it has to be more LINKS. In other words, reduce the time that one has to waste when crossing over from one side to the other. If that link enables one to commute within 45 minutes or even one hour, then the reality of staying in condo versus a HDB flat is definitely on the table as a choice. Otherwise, even if I work in Singapore, I am also not that crazy to use 4 hours daily to cross to the other side and back. I would rather pay rental and stay in a small room instead.

written on 10 Juen 2015

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Iskandar Malaysia – medium term prospects concern

Many reports have shown the slowing down of transactions in Iskandar. However, if we look at land transactions, it is continuing and is not showing any slowing down signs thus far. The latest deal was by Greenland Group of China, buying 13.96 acres from Iskandar Waterfront Holdings Sdn Bhd (IWH) at a cost of RM600 million. The GDV planned is around RM2.2 Billion. Actually, in terms of land cost compared to GDV, this is indeed considered to be on the high side. It is around 27% of the GDV. This has yet to include the cost of construction such as labour and materials as well as cost of compliance.

Thus far, IWH has already inked 17 deals with local and foreign partners to develop properties worth RM127 Billion in GDV in Iskandar. The plans were for Johor to be turned into a waterfront metropolis facing Singapore. In fact, these continuous interest in Iskandar augurs well for its future growth even if there are many who are worried that with such a huge number of units flooding the market, it may not be able to absorb them all. Maybank IB Research also expressed their concerns for the medium term for Iskandar because of the massive incoming supply of residential and retail properties in hotspots like Danga Bay and Nusajaya.

Just looking at the planned launches (serviced apartments, hotels, office and retail spaces) by Country Garden, Hao Yuan, Guangzhou R&F Properties Co Ltd, CapitaLand and Greenland Group, the hotspot areas, ie, Danga Bay and Tanjung Puteri is already an enormous supply of high-rise mixed development projects and thus may put pressure on asset value. What’s the catalyst? if we hope for just the current two links between Johor and Singapore, the supply really does seem enormous. If however the
RTS (Rail Transit System) or the HSR (High Speed Rail)
 is built, then the number of people who are working in Singapore but wants to stay in a decent place instead of a small room in HDB flat for S$700 per month would meant that demand for properties in Iskandar would increase many times.

The only concern however would be that the prices must still be reasonable enough. If every new condo is RM1 million or higher, get serious, not many would be able to afford one. Not even if these people are earning 2.5x more than if they work in JB.

written on 14 April 2014

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Iskandar’s oversupply of homes? Well, 666k homes are needed actually.

News about Iskandar Malaysia are mostly negative, especially those which were widely shared. Remember the recent one which I felt that I had to write my personal comments against it? Read here:
That scary article about the US$100 billion Chinese investment in Iskandar

The positive ones are usually only reported in the local media and quietly forgotten. Well there’s another positive one. It’s a statement from the Tunku Mahkota Johor Tunku Ismail Sultan Ibrahim. Reported in
NST
, he said, “I have been following the development of Iskandar Malaysia and we are now half way into the 20-year plan since Nov 2006. With a population of 1.7 million that is expected to increase to three million in 2025, we need 666,000 houses, so it is not true that there is an oversupply of 410,000 houses.”

In brief, as long as the population continues to grow and Iskandar hits three million in 2025, there are no oversupply of houses. I am not sure if the population numbers would also include some from across the causeway but the Singapore government has projected that its population should hit 6.9 million by 2030. Its current population stands at 5.66 million (
countrymeters.info
). In brief, 1.34 million new population within 14 years. Roughly 100,000 per year. Some of these new population may choose to stay in condominiums in Iskandar versus the HDB flats if there are convenient links between the two countries. As it is, even Singapore’s PM, Lee Hsien Loong hopes the SMEs would take advantage of Iskandar’s lower cost of operations to expand their businesses. Here:
Singaporean PM, SME, Iskandar

Tunku Ismail, who is the chairman of Fastrackcity shared three areas that Iskandar Malaysia would have to focus on. They are security, connectivity and work creation. These three areas would help Iskandar reach its goal and target by 2025. I do think security needs beyond beefing up. Whatever has been done should also be disseminated to the world because we can ask majority of any Singaporean today and their perception of Iskandar is that it’s unsafe. Connectivity is not just the high speed rail. It is also the
RTS makes more sense, HSR can wait

Well, happy believing. As a Malaysian, I believe it too even if I do not own any high-rise in Iskandar yet.

written on 6 Dec 2016

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Iskandar needs MORE homes yea, hundreds of thousands more.

When it comes to property investment, my personal guide has always been the 4Ps; People, Price, Policy and Preference. The first P which is People. Without population in the first place or a continuous growth in population, we can forget about the potential for the property we are about to buy. This explains the mature and the upcoming neighbourhoods. The second P is Price and if the homes are just too expensive for the general population, how would we sell in the future? The 3rd P; Policy may have some effects. For example, Free-Trade Zones or even Tax-Free Status. These policies would usually help to build up some potential catalysts for other Ps to start moving up. In Iskandar, it has often been stated that there’s just too many homes versus the demand for it. Let’s look at an article in
dailyexpress.com.my: Iskandar Malaysia needs 1.2m residential units by 2025

Well in the article, this was what Iskandar Regional Development Authority (Irda) Chief Executive Officer (CEO) Datuk Ismail Ibrahim has to say. Iskandar Malaysia needs another 1.2 million residential properties by 2025.This is because of the economic region’s rapidly growing population. He shared, “When we launched Iskandar Malaysia in 2006, the population was about 1.49 million. Today, the population has grown to 1.95 million and by 2025, it is forecast to reach three million. This growth resulted from migration, many are coming here to seek employment. Based on this, we anticipate for residential properties to climb to about 1.2 million units by 2025.” At this moment, there are only about 700,000 residential units currently available in Iskandar Malaysia.
Please refer here for that full article for reference.

He then shared something very important. This is the 2nd in the 4Ps of property investment. He said, “When we talk about supply, we must be able to meet the demand based on household purchasing power. That is why it is very important for us to work together with authorities and housing developers to ensure the supply of future housing matches demand, especially from the less affluent groups.” (By the way, this is also the reason why we cannot let the market correct itself. If we need more affordable homes, the government must intervene and make it happen. It is very certain that more homes are definitely needed. The only issues is the type of job that is currently available and this will determine the salaries being paid which will in-turn determine the price level of the homes that these new professionals in Iskandar Malaysia would be able to pay. In brief, homes are NEEDED but the request for lower property prices must be HEEDED. Happy following the story of Iskandar Malaysia.

written on 8 Aug 2018

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Aiming at RM25 billion, has gotten RM17.7 billion

We believe what we want to read and believe, true? I think so. Iskandar is in the news every week and I think for the recent two years mostly for negative news. Haha. Oversupply is always mentioned. Safety is always mentioned. Slow moving where FDI is concerned are mentioned too. I was in JB for a good friend’s wedding and had the opportunity to visit a few malls and even drove all the way to Johor Premium Outlet, Hello Kitty Park and even my daughter enjoyed Barney and Friend’s show too. It certainly does not look
anywhere near dying to me… 🙂

Recently, reported in many medias,
 Iskandar Regional Development Authority (Irda)
 announced that they are on on track to achieving their RM25 billion investment target for the southern corridor. Within H1 2016, a total of RM17.7bil new investments was secured. IRDA’s federal commissioner, Nor Hisham Mohd Yusof said, “Nearly 60% of the investors are foreigners, with the bulk of them being mainland Chinese investors investing in the property segment.” IRDA will be focussing heavily on the logistics and creative industries for the next six months.

My advice is that wherever we intend to invest, whether they are in Iskandar or even in neighbouring Sentosa etc, read more and then visit the place. Many times, if this is not our first purchase, we could already see some signs, both negative and positive that is happening. It’s best not to rely only on any particular media report and certainly not just one
 particular property talk.

The question we should always ask would be, the possibilities based on the numbers and I think for Iskandar, it’s important to look at it as next to Singapore for example. Singapore must continue growing and it has a number of options for lower cost output centres. Of course, it need not be Iskandar, can also be Batam, Bintan etc etc….  Happy believing.

written on 6 Sept 2016

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Iskandar property price to surpass Greater KL.

Reported in propertyguru.com.sg recently was a piece of news about Iskandar, Malaysia. It quoted a few property experts with their personal expectations for the Iskandar property market. According to the Ishmael Ho, Chief Executive Officer of Ho Chin Soon Research the prices of residential and commercial properties in Iskandar’s Flagship A and B zones would rise significantly. He said that many sceptical customers would regret for not investing there earlier. Ahyat Ishak, the author of the best selling book entitled ‘The Strategic Property Investor’ shared his prediction that the property prices in Iskandar would surpass those from Greater Kuala Lumpur by two-fold during the second half of Iskandar’s 20-year master plan.

In terms of promised investments versus realised,
Iskandar Regional Development Authority
’s (IRDA) CEO Datuk Ismail Ibrahim revealed that Iskandar received RM202.45 billion in total investments from 2006 to March 2016. Of this, 51 percent or RM103.5 billion has been realised. Ahyat also shared that Pasir Gudang would potentially be the next area of growth.
Eco World Development’s CEO and President Chang Khim Wah added that Iskandar’s eastern side is strategically located near several ports like Johor Port in Pasir Gudang and the Port of Tanjung Pelepas. There are continuous enhancements like completion of the Eastern Coastal Highway, Senai Desaru Expressway and the ongoing upgrading works on the Pasir Gudang Highway. This meant that the east side appeals to businesses.

 I like Iskandar, as an economic region right next to Singapore. Or as a
manufacturing hub
 to at least ensure both countries’ continue to be competitive versus our bigger neighbouring countries. My
personal views
 some time back. Do note that if Iskandar benefits ONLY Malaysia, it will not be successful. It has to also benefit Singapore. Unfortunately or fortunately, I have yet to buy anything in Iskandar yet. Perhaps the current slowdown may just provide something I could not resist? I will also be personally driving down from KL to Iskandar in July. It’s time I get some sights of the sites and decide. Quoting my good friend, Rozalina, ‘Happy Believing.’

written on 10 May 2016

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Iskandar Property Digest – Nov / Dec 2013

Medini zone granted tax exemption
 – The earlier announced of 30% property gains tax announced in October to cool soaring property prices will not apply to Medini.  This is to provide catalyst to get more investments into Medini.

Property prices to stabilise
 – With two new cooling measures; increase the minimum to one million ringgit for purchase of property as well as a 30% RPGT, prices in Iskandar is likely to stabilise. This should be a good breather.

RM4.5 Billion worth of land sold
 – A China public listed company has come into Iskandar very strongly. Guangzhou R&F Properties Co. Ltd.  It is buying the 6 plots of land for a development which includes high-rise residential units, low-density housing, retail properties, offices, a hotel and a shopping mall. This is the Hong Kong-listed firm’s maiden overseas venture.

New commercial assessment tax? –
Beginning 1st january 2014, Johor City Council (MBJB) will be increasing the assessment rates. The rates has not been revised since 1995. It is hoped that with this, there would be improved road conditions, garbage collection and recycling facilities.

New release mechanism for bumiputera property units
 – A new mechanism is being worked upon to release the unsold bumiputra units in the state. This may involve the property developers paying a fee and thus avoid extra holding costs. Current process meant that the developers have to complete 50% of the project of wait 9 months from the launch date before they can apply for the release.

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Iskandar, RM1 million onwards

Some say this will stop Singaporeans from buying. Some say this will have no effect whatsoever. My friend who’s a HR Director said this when he tried to hire an American expatriate to join a US MNC in Penang. ‘I will triple your retirement funds immediately’. What he meant was, if the American comes to Malaysia, his existing retirement fund in US$ will triple, due to the exchange rate. The American came and joined his organisation in Penang.

As per the Ministry of Manpower of Singapore the average income for citizens and PR is S$3,000 (2012) per month. I believe by the time these workers reach half of their working life; 40 years old, their salary would be S$8,000 if not higher. S$8,000 is not actually a lot if you know about the property prices for condos / landed in Singapore.

If we look at it from the RM and Iskandar perspective, we are talking about RM20,000 income per month and RM1 Million property. Paying a 10% downpayment means RM900,000 loan. Assuming the interest is 5%. Based on a 20 year repayment period, the total mortgage payment comes to less than RM6,000 per month. RM1 million is a good number, not low but definitely bears no long term negative effect on foreign purchase of properties in Iskandar. I must say though that if Iskandar is 2 hours away from Singapore, then the above reasoning does not count.

If I have a choice of travelling to and fro work within 45 minutes and I pay just 25% of my income for a much larger condo / landed property, I am definitely tempted. Yes, I know, majority of everyone would say NO. However, 1% saying yes meant Iskandar better get ready 55,000 RM1 million properties. 🙂

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Iskandar as Singapore’s output hub, seriously.

Read carefully and read more and you will see many manufacturing facilities in Singapore are starting to move to Iskandar. The reason is very clear. It is never going to be cost efficient when the land that you are buying to build your plant is many times more than the rate of exchange due to scarcity and whatever other costs are all in a currency which has grown much stronger, not just against Malaysia but against majority of all currencies in the region. Frankly, producing in Singapore to sell to other countries, even if it is to the developed ones will be very tough. Imagine if I produce in Malaysia and you produce in Singapore, as long as I can obtain the same type of certifications as you, who do you think will sell more?

I know, some would like to now say that there are much more talents in Singapore. I do not think this is a valid argument or else all the multinationals operating in anywhere within Malaysia today would have closed and moved to Singapore. Oh yeah, even those in Indonesia, Thailand and the Philippines too. In a recent article in the media recently, it was announced that another multinational company with its head office in Singapore would most probably be moving to Iskandar Malaysia. It specialises in the distribution of tropical vegetable oils and their derivatives According to the Johor Tourism, Domestic Trade and Consumerism committee chairman Datuk Tee Siew Kiong, it is a European company and it plans to invest RM250 million for this new setup.

Honestly, the headquarter of all these new or existing multinationals can continue to be in Singapore. Of course, if there are better links, these expats can also stay in Malaysia but perhaps now, they can continue to be based in Singapore. In other words, the rest of the manufacturing side can be within Iskandar and perhaps this is where the best of both worlds would occur. Good connection to the world vis Singapore and a competitive production cost in Iskandar Malaysia. Well, why not produce in China since the cost is likely to be lower? Please ask around about the cost of manufacturing plants and labour in Shanghai before you conclude. Secondly, who will be managing them if the manufacturing plants are so many hours away. As for R&D, I think many would prefer this part of the world, for now. Happy blending and surviving together against the world!

written on 5 Nov 2015

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Don’t simply buy Iskandar properties because

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Iskandar for Singaporeans: Reversal or realisation?

An article by TODAYonline newspaper was forwarded by many in Facebook a few days ago. It was a very long article about the many middle income Singaporeans who have chosen to stay in Iskandar instead of within Singapore. They include a teacher whose daughters are all still studying in Singapore and the whole family travels on a daily basis into Singapore from their home in Nusajaya and by evening, they have dinner together in Iskandar. He said that the daily travelling is a small matter compared to the better quality of life in Johor. He has a three-storey house in Horizon Hills. Yes, a TEACHER in Singapore is able to afford a home inside Horizon Hills. Typically, a landed property within the Horizon Hills is RM1,000,000 (S$370k) or higher.

The article also quoted a retiree. I think for a retiree, the reason is clearer. Will not comment. Another said that they would miss Johor’s friendlier people when they move back to Singapore in a few years’ time. She said, ““Because they look so relaxed, I also feel more relaxed.”  Of course, it cannot be everything positive. One of the family said that when it’s dark, they would stay indoors. They prefer to watch TV instead. It then quoted an investor who said that the current oversupply is crazy and that the demand is nowhere near supply. The investors who are already there said that areas such as Nusajaya would be a better bet than Danga Bay.

Everyone knows that Singapore is a major destination for Malaysians who want to earn more money. Even my cousin brother who could earn around RM3,000 here prefers to earn S$2,800 there because once converted, it’s RM7,500. However, this works ONLY if he really saves money and not simply waste them on the latest smartphones, branded watches or even dining instead of eating at food courts. 🙂   For majority of the middle income Singaporeans, staying in a landed property would never happen in their life time. What about staying in a full facility condominium? Let’s not think about the bigger sized ones. Let’s look at just the 1,000sf ones. This is the actual price, today. Source: PropertyGuru.com.sg

It is hard to predict when the perceived or real oversupply in Iskandar can be cleared. However, when we look at the potential of more middle income Singaporeans thinking about condo or landed versus the current HDB flats they are staying in, perhaps it is clearer that Iskandar may stand a good chance of being their next new home. Sorry, no predictions. Buy if you want, don’t buy if you don’t want. I have no property in Iskandar yet.

written on 4 Apr 2015

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Iskandar: Three more theme parks in final talks

Reported in Bernama, Iskandar Regional Development Authority (IRDA) is in final talks with at least three theme park operators. Announcements could be as early as end of 2015. It’s chief executive Datuk Ismail Ibrahim said these projects would be part of the RM30 billion targeted investments for 2015. According to him, Iskandar Malaysia has achieved 48% of the target set for 2015 and is on target to hit the targeted RM30 billion in committed investments by end of the year. He did not name the theme parks but said that they are from the countries well known for their international theme parks including Japan, North America, Europe and Australia. It may include both indoor and outdoor theme parks.

Besides these theme parks, IRDA was also looking to have more hotel operators of five- to six-star hotels and opening more meetings, incentives, conventions and exhibitions (MICE) in Iskandar. When asked about the effects from a falling ringgit versus the Singapore dollar, he replied, “Although we have nine economic sectors, we are not dependent on one or two. So overall, while perhaps we maybe affected by oil and gas, which is one of the sectors that we are promoting, but on average there will be other sectors that would definitely push the average up, returning at the rate of 7-8%. After all, at the end of the day, it is all making the region more competitive.”

The last sentence is very important, not just for Iskandar but also for the mighty neighbour, Singapore. Mighty as in the currency. There are already the potential for Singapore to go into a technical recession if their growth for Q3 2015 is also negative. Their Q2 growth is already negative and one major reason stated was because of their manufacturing sector. To be very honest and direct, there is no way Singaporean manufacturers can compete with the world by operating in Singapore using SGD and paying for fixed assets in SGD.  Maintain the strategy and planning in Singapore but start to use what Iskandar has to offer. This is where both sides would benefit. Iskandar’s growth is limited without Singapore but on a longer term basis, these Singaporean companies may need to make the right decision and manage their costs more effectively. Of course, if they believe Batam is better, sure do go ahead but staying put in Singapore is definitely not an option anymore.

written on 30 Sept 2015

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Iskandar? Too expensive? Depends on type who is the buyer, right?

When people google for ‘properties in iskandar too expensive.’ they were redirected to kopiandproperty.com Opps.. I do not remember writing any particular article about Iskandar being too expensive though. I still think whether it’s cheap or expensive depends on the type of working professionals we have there. If we are talking about the typical condo for expats in Singapore versus Iskandar, it’s pretty cheap. However if we are looking at some of the more luxurious condo prices, it is pretty high for many Johoreans, well until they get a much higher paid job. Hopefully with the slowdown, the developers can be pressured to build even more affordable ones instead? So, you see I hope the prices are good enough for people to buy and yet rising moderately so that people would still buy.

Source: iProperty.com

Come on, if we know that the property prices stay stagnant for the next 5 years, what would buyers do? Not just in Iskandar but anywhere in the world?

This is the reason why prices may rise.

Here’s a very comprehensive report by Ms. Reena Kaur Bhatt in iProperty.com
On an overall basis, 60 percent of all transactions were for properties within the price range of RM220k to RM500k. (Hmm.. does not seem expensive… right?) We see highest transactions growth for homes priced between RM420k to RM540k. The two areas with the highest median price per sq ft (YES, these are the expensive areas) include Gelang Patah and Iskandar Puteri and both are still around RM400 per sq ft.
Here’s an earlier article about Iskandar vs KL.
The city centre of Johor Bahru remains the most searched as well as having the most number of leads. (I think this also tells us that the buyers are mostly Johoreans themselves. Perhaps even some who are working in Singapore too.)
Here’s the full report by Reena in iProperty.com again.

Of course, much earlier, there was also this
scary article from bloomberg.com
 with a title of ‘$100 billion Chinese-made city near Singapore ‘Scares the Hell Out of Everybody’ If you were to read the whole article, actually it’s not that scary lah. The article even concluded with this sentence,
“It will take a while for all the parts to fall into place: infrastructure, manufacturing, education, healthcare and growth in population,” said Ho at Rowsley. “But I have no doubt it will happen eventually.”
Some latest news from Iskandar perhaps?
Iskandar Malaysia’s progress and next decade

I really do think Iskandar will work and I do think it has to work for both Malaysia and Singapore’s sake too. Partnership is better than going it alone lah. All our neighbours have huge populations yeah. Cheers.

written on 16 March 2018

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Iskandar trending the Singapore property market? Prices Down 13.5%!

As reported in many medias, the prices of private condos in Singapore are falling in 2014. Read here:
Singaporean economy, property prices down and Iskandar
. It was reported now that residential prices in Johor has also fallen in Q2 2014. It has inched down by 1.6% on an overall basis. This is said to be the first decline in over 2 years showing that the days of never ending ever higher prices may be falling now. In fact, average prices of high-rise condos fell 13.5% in Q2 2014 compared to Q1 2014! This is as per a report from Maybank IB Research. The reason is similar to SIngapore; due to the cooling measures introduced by the Malaysian government beginning January 2014. Besides that, the huge upcming supply by end of 2015 meant that prices would remain weak or flat in the medium term. The numbers are pretty huge. According to Landserve study, 18,718 units of high-rise apartments are expected to enter the market by end 2015 and another 40,474 by end of 2017.

Actually, with SIngaporeans being the largest investors in Iskandar, any slowdown in their own country would meant that their appetite to invest overseas would also reduce. This I feel is a major cause and not just due to the cooling measures. Look closely and you would notice that the Johoreans more often than not would prefer landed while Singaporean investors would prefer high-rise. Thus the landed prices has not fallen as much compared to the high-rise ones. Their (Singaporean) reasoning is when its completed they can then rent the condo out for a good return on investment. Well, I think this thinking would be tough based on current sudden explosion of new units into the market by end of 2015. Nevertheless, this situation will change positive again when the Singaporean property market restart its climb. As for when, it may be later than sooner. Read here:
Singapore property, prices continuously declining into 2015

What everyone must note is the major difference between a potential bubble bursting versus a potential oversupply. Potential bubble bursting is going to affect the whole market and prices would suddenly face a huge pressure. It should normally have a situation where the availability of affordable properties are close to none and everyone just could not afford anything anymore. A check online showed today is still not yet the situation. Potential oversupply however would depend on what the market situation is at that time. Just one university increasing its student population and number of lecturers would take up a huge chunk of the condo supply, not to mention the continuous expansion of the Singaporean businesses in Iskandar, especially during the property slowdown period. I am not sure if there are better chances compared to currently.

Moving forward I think the trend would continue to mirror that of Singapore, especially if the integration between Iskandar and Singapore continue to deepen. Not all the time because this would also depend on the confidence level for Iskandar amongst all investors and not just the Singaporeans.

written on 5 Nov 2014

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Iskandar will not have a casino

Johor MB Mohamed Khaled said there is absolutely no truths in reports about JB having a casino. The reports in a few online portals are mischievous. Nevertheless he admitted that the approval is not for state to decide but it’s from the federal government. He completed his views on casino by saying that even if the federal government approves such a project, the state will object to it. This is indeed a very interesting piece of comment indeed. The state to object even if the federal government approves it.

Almost all of my friends said that a casino would mean Iskandar will boom even more, even faster. Actually if we seriously think about it, yes perhaps but a casino would mean huge investments are needed. We are not talking about having just a few slot machines and we call it as casino. Would the casino players be interested with the third casino within two other huge ones in Singapore? Actually I seriously doubt so. I think the investment would need many years to break-even BUT if the casino developer is building the casino only as part of its huge integrated development, then yes it should be very doable. I may not be able to afford but I am very sure a lot of investors would love to buy a unit in such a development. Just look at what happens to the price per sf when the condo is nearby a huge and successful departmental store here in Malaysia. Of even condos with ‘KLCC view’. Sorry, I have never bought properties based on views but a lot of people do. So, it’s worth investing.

If you ask me, would I want a casino to be built? Let me follow the example of what Singapore did. How about opening a casino but disallowing any Johorean from visiting the casino? Let the Johoreans who must visit a casino go over to Singapore. Meanwhile, the promotion may now start to attract Singaporeans over. Do not reinvent the wheel, do as per what the two casinos in Singapore is doing; arrange transport to and fro for the interested people, launch promotions. So, the answer is Yes, if the state of Johor allows it to be built. If the state of Johor says no, it is ok, let’s continue doing all the other world class theme parks, world class universities, world class hospitals etc to attract more investments. 🙂

Hey, Iskandar does not end without a casino, ok.

written on 4 Jan 2014

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Iskandar with new Rapid Transit System

Wait. It is still in progress but will only have another update perhaps end 2014. Targeted date of completion is also 2019. Which is 5 years away. So, if RTS is not built, what would happen? Well, I feel that more road linkages can be built between Singapore. More buses perhaps? In fact, I am quite sure if RTS is built now, it will be a massive loss financially because there are just not enough population support such a huge project. There may be more people working in Singapore. There may also be more residents of Singapore buying in Iskandar but the number is definitely insufficient to support this. We need more. I think end 2014 would be a good time.

Now, what will happen if RTS is built successfully? Let me ask you. If you are a middle class Singaporean living in a HDB flat. Sure, it is clean. Sure, it is safe. Sure, you have MRT. Sure, you have mini markets and schools nearby. Sure, you can reach your working place in 30 minutes. Now, what if I tell you, for 10 minutes extra with RTS, you can also stay in a clean CONDOMINIUM with squash courts, swimming pools, BBQ pits and more, departmental stores nearby, international schools which cost much lesser than in Singapore, top 1% universities in the world nearby and the price is just S$400,000 or lesser if you happen to be a Malaysian who has PR there and does not need to buy RM1 million and above? Don’t look at me, you decide. 🙂

RTS is a future catalyst. Just like what KLCC did to all the surrounding properties. Just like what happened to all the properties nearby MidValley, nearby IKEA / The Curve. Just like what happened to all the properties nearby or next to the MRT stations coming up in Malaysia. KK would never be such a huge success without an international airport. All these are conveniences. When we buy properties, sometimes we get lucky and the catalyst are built next to us. For example, my Kelana Puteri condo. I did not know Paradigm Mall would be built there. If I did, I would have bought one more unit!

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Iskandar, RM1 million onwards

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It does not matter which way to go, if we do not know where…

If you are reading articles in kopiandproperty.com, I think you are not lost in your property investment journey. Not yet anyway. Haha. Actually, to really keep abreast with all property news, we need to read more than just one property site. Personally, I read investment related news online on a daily basis. I have not been buying newspapers for the past 7 years. My subscription for The Edge ended last year. They did not have any new attractive packages, so I did not continue. Where knowledge is concerned, I would personally recommend reading continuously for 6 months to have a better grasp of where the market is right now. Sometimes, we read one negative article and we ignore the property market totally. Wrong action. Occasionally, we read a positive article and we believe the market is ripe to buy. So, we go out and buy something considered over-priced. Double-wrong action.

In our property investment journey, it is very important to have some sense of where we intend to go. Otherwise, it’s going to be tough to decide what type of properties to buy, where to buy, why buy and even fundamental questions such as should I buy for own stay or should I buy to rent out? I end with literature this time. Perhaps a good question to start would be:
Who is our target market?

As for the journey itself, let me quote what Lewis Carroll wrote in the famous Alice in the Wonderland.

“Alice:

Would you tell me, please, which way I ought to go from here?

The Cheshire Cat:

That depends a good deal on where you want to get to.

Alice:

I don’t much care where.

The Cheshire Cat:

Then it doesn’t much matter which way you go.

Alice:
 …So long as I get somewhere.

The Cheshire Cat
: Oh, you’re sure to do that, if only you walk long enough.”

If we do not have a direction but we continue along a certain path, then we should reach somewhere. Don’t laugh. This is quite true for me. I did not have high hopes for unit trust units. However, I think if I can continue buying on a monthly basis, it should not be a loss over a long period of time. In total I have already invested bit by bit for unit trust units for over 10 years. It really did not give me exceptional returns but when I look at where I started and where I am today, I think I have benefited. Due to the  automatic deduction for it, my salary has been smaller than what it should and this made me spend less. No wonder I have no money for a new smartphone. I am still using my 3-year old
OPPO Find 5 Mini.
Have an awesome 2017 dear readers of kopiandproperty.com

written on 20 Jan 2017

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It is in this order:  salary – savings – invest. Which stage are you at today?

I read an interesting tweet by Elizabeth Tai, a personal finance writer
who writes from the Malaysian perspective. Do read her articles here
.  Elizabeth was asking about the tendency of writers to just write about investing when everyone should start by focusing on savings too. She’s right. The fundamental for financial management is about saving money.  What happens after one has saved enough is to start investing. The reason is a fundamental one.

The reason why we need to save is so that after some time, we are able to use some of that funds we saved for investment. With investment(s), then our wealth would grow faster than if we had just saved, saved and saved. Long time ago, when the life expectancy of Malaysians in general was around 60 years, saving money alone was enough. Imagine working for 30 years and retiring at 55. The savings over the last 30 years when we were working would be enough until the day we bid goodbye to this world.

Today, the life expectancy is 75 years and this will continue to rise with every passing year. This is why saving money every month and keep doing it religiously is no longer sufficient. No one can save enough unless they were saving like ‘crazy’ for 30 years (when they were working) so that they have enough to last the 20 years after they retire and their income has stopped.

However, before we even come to the stage of saving money, we need to first start with earning enough money. In this case, the starting is monthly SALARY. It is super important for anyone who thinks they need a higher pay to understand why they were paid lowly in the first place. if it is because of qualification and they do not have the means to pay for tertiary education, could they find out and learn a new skill which they could learn and thus earn a higher pay instead? Here’s one place to read
further on some the available courses. (IF ONE TRULY wants to learn)

As for those who already own a home and a car and thinks they are doing just fine, then perhaps it is time to find a second income stream. There are many ways to do this. Selling something online via part-time basis. Check out all those tutorials from the online shopping sites on how to start. We can also start writing a blog and making it big enough to turn it into a Sdn Bhd after a few years. (kopiandproperty.com is one such blog). Alternatively, it can even be as a real estate negotiator. Just get all your friends and family members who want to buy a property to buy through you.

Once we have started to earn enough salary every month, please do not spend it all. SAVE and after you have enough, then INVEST will be next stage. To know why is personal finance so important, please read
Elizabeth’s articles
 or my good friend Suraya’s
famous blog at ringgitohringgit.com
 and please start taking personal finance very seriously. Happy understanding actually taking positive steps.

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Happy News? It will get harder to get bankrupt in Malaysia

Did you know that if someone owes RM50,000 and they could not pay for at least 6 months, the person could be declared a bankrupt if the creditor file a petition in court? It does not matter whether this debt is because of credit card or because of a home loan you took to buy a house in Malaysia or even because of the failure of a business and thus inability to repay the business loan from the bank earlier. yeah, especially now with the COVID-19, the risks to fail is even higher. Lockdown for example meant no business at all.

In fact, an average of
16,000 Malaysians go bankrupt every year (click to read)

 Well, for someone who may face issues with their payment and facing that possibility of being declared a bankrupt, they may have a reprieve in the future if they could delay this possibility till then. Perhaps go and tell the creditor to give a few more months of notice?

Article in freemalaysiatoday.co
m

  De facto law minister Takiyuddin Hassan said in the Dewan Rakyat that the government will soon table amendments to Section 51 of the insolvency laws to increase the threshold of an individual to be declared bankrupt. He said, “Yes the government is concerned after Covid-19, and will table amendments to Section 51 that will increase the threshold for an individual to be declared bankrupt. I cannot announce (the details) yet. It will be tabled at this sitting.”  Do click here for the full article yeah.
Article in freemalaysiatoday.com

What do you think? In Singapore, someone who owes S$15,000 (RM46,000) could be declared bankrupt BUT this has been increased to
 S$60,000 (RM184,000) due to COVID-19 until October 2020. (click here to read)
  Actually, currency aside, S$15,000 can be considered very strict. It meant that this is a deterrent so that people do not simply borrow and then choose not to repay.  Well, if Singapore has increased this during COVID-19 period, then perhaps it’s also apt that Malaysia may be doing something similar to help those affected by the current pandemic. Let’s see what is the final number which will be tabled since it will be done during the current sitting.

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Visit homes of errant defaulters more often please

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It’s 2015 Chinese New Year

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It’s all about waiting, I am not joking.

Someone asked me jokingly before, “Charles, to you property investment is a must, so do we buy everytime we have enough downpayment?” I answered, “No, you should wait.” Wait? In Cantonese, “wait till the clouds come” or in Hokkien, “Wait for what?” Let us talk about the three WAITS.

Wait number 1.  Waiting for a property and the area that you and your partner both love, if you are buying as a couple. Please do not buy a property that you love and your partner says that he will / can get used to the property or can grow to love the area. A home can be a sweet one and a home can also be a source of arguments. Real example. “I already told you I
do not really like the area before we buy.
”

The reply? “If you do not like why you did not object harder last time? Now property completed and you start complaining?” I have one friend who bought in Cyberjaya and hates it. He said, he thought he would like it in the future when he paid the downpayment. Sigh…

Wait number 2.  Waiting till you REALLY have enough to buy. Okay, for this I give you a tip. It can also be aiming and buying a cheaper property too. That usually helps too. Assuming, we really was able to save JUST ENOUGH to buy, should we overstretch ourselves? Why we should not overstretch is simple. Do you love to do stretching for one whole day? A home loan which is bordering on our actual affordability borderline will stretch us for years unless we get the promotion that we needed. So, how many people in the whole organisation get promoted within the same year? You are right, usually not many, most of the time a minority number.
Hitting a jackpot? Well… Stay grounded please.

Wait number 3.  Third wait is for the best time to buy.  Unfortunately and fortunately the best time to buy can both be when everyone buys or when
everyone stops buying.

You see, when the market is really hot and you happened to jump in early, that is when the incoming tide would lift up all boats. Just remember to sell for profits and not be too greedy. When the market is slow however, that is when people stop
hanging up your phone or slamming the door

when your offer sounds a little low. Not even ridiculous yet. So this third wait requires sone objective assessment and some knowledge about property investments. Do start reading today if you want to buy many months or years later. Else, better hope you are lucky!

Happy waiting productively yeah.

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written on 3 Oct 2017

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It’s always about the need and the money when it comes to property.

Would you believe me if I tell you that there are still long queues of people when it comes to new property launches today? By the way, it still happens but no longer most of the time or most of all the projects. However, there’s this little city where property remains a premium both in terms of prices and availability. Thus, as long as there are new developments with the right price at the right place? People will queue up to buy. I meant, long queues…

Article in South China Morning Post

 Do look at the image below. Yeah, this is one recent event and it was a queue for Sun Hung Kai Properties’ offer of 335 flats at its Wetland Seasons Park residential project. For EVERY unit, there were up to 20 buyers submitting bids for it. Sizes start from 386 sq ft and price for this is HK$4.83 million (RM2.56million). As many as 7,370 potential bidders registered to bid. Note: 335 units ONLY. 7,370 BIDDERs. Besides the smallest, there is also the largest three-bedroom flat which is priced at HK$7.41 million after discounts.

Image Source: scmp.com

These prices look good when compared to a 20-year old residential estate with a 441 sq ft lived-in home in Kingswood Villa in the same neighbourhood is asking for HK$5.48 million (RM2.9 million).  Midland Realty’s residential division chief executive Sammy Po said that these were pent-up demand because of the uncertainties during the protests. Po added this very important final sentence. “Even those who choose to wait and see still need to buy homes at some point.” Please refer to the article for a very good reading.
Article in South China Morning Post

In Hong Kong, the supply of new homes comes from a few super huge developers. Here in Malaysia, it comes from hundreds of developers. Thus, when everyone starts building and the market suddenly slows down, the unsold units will pile up… Plus the fact that Malaysians do not think of property as something they desperately need because of how the prices continuously go up.

Many Malaysians even think that renting is still the best option. It’s good to actually consult these Hong Kong buyers yeah. They will tell you why renting is a disadvantage because owners are known as LANDLORDS. What do we have however is a lot more opportunities. Just look at the unsold unit numbers as well as the many buyers who bought during the height of the booming property market and now thinking of selling at a lower price than they anticipated when they bought the unit previously. Happy understanding that it’s always about the need when it comes to property. Prepare the money…

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It’s always best to start investing 5 years ago. Agree?

This article was first published in August 2016 issue of Ivory Living.

Not too long ago, a friend posted the image on the left. It was ‘liked’ by many and I think we should all remind ourselves again. Regret is good if we learnt something from it. Else, it’s just nothing but regret. Let me start by telling you a real life regret that I have many years ago when I was buying a condominium in Tanjung Tokong Penang. As I was already familiar with condominium and its potential, I booked a unit within an hour. The sales person was happy as she had an ‘easy’ buyer. It was The Peak Residences and the price I bought was LESS THAN RM300 per sq ft. Oh yeah, it came with two car parks even if it’s front and back. After one week, my brother-in-law bought a unit and I actually called up the PIC and inquired about the availability. There were still available units in Block B going for just slightly over RM300 per sq ft. I told my wife and we had a few sleepless nights thinking about all the possibilities. We decided not to proceed in the end. If only I had proceeded to buy and struggled a bit I would have two units of The Peak Residences at around RM300 per sq ft. The price has doubled today.

Honestly, this is a positive end. What if after my wife and I bought the second unit, one of us got retrenched? What if the property market crashed as predicted by many of my friends when we were buying our unit? We would need to pay for the unit we were staying plus two more condo units which may not fetch
positive rental returns
! Selling would have been tough too. Yes, all these may happen too and not just the positive ending ones. That’s why there’s no need to regret. Today, I continue to scout for good opportunities and would still be very careful and would still NOT buy two units regardless of how confidence I am.

I love stocks and I normally buy stocks which people would normally look at me with a strange look. Many years ago, I bought Vitrox, a small Malaysian company based in Penang. I knew some of the people working inside and they work extremely hard and some even stay behind for OTs and even during weekends. The CEO himself is involved in many charitable work and I believe this is a good leader. Pricing wise, it was only 67 cents when I first started. In other words, 1,000 units would only be RM670. Since I believed in my personal assessment, I continued buying the shares up to a point that I felt that if I were to buy any further, it would be extremely dangerous. I refrained from touching my ’emergency funds’ or even sold my property to fund it. I felt diversification was important. In other words, I should have somein property and some in stocks. Well, Vitrox suddenly jumped due to successive good results and today, it’s trading at RM3.56 (20
th
 May 2016). IF ONLY I had bought more then, the profits would have been enough to cover down payments of more properties! However, what if the world market collapsed? We should think about
investing and not ‘gambling.’

My parents bought insurance to ‘protect’ me when I was younger. When I started working, I increased what they bought. When I got married, I increased the amount I bought. I added in a medical card despite my company covering me with a medical card. I bought insurance for my two children too. It has been smooth sailing for me all these years and I am so glad I have not claimed much from all the coverage I bought. Should I regret that I have
wasted a lot of money
 because if I did not buy them, perhaps I would have had more money for travelling, a new smartphone or perhaps upgrade the current car I drive? Seriously, what if something did happen?

Dear fellow investors,, there’s little need to regret what we did or what we did not do. Personally, the most important thing is always to understand what we should do and make a decision to do it. Anyone without sufficient business experience but starting a business would most probably fail. This is the same as buying a property without even checking what’s the current value and what would be the risks involved. Simply following a friend does not work.
For stocks, when everyone is buying
, the prices would have shot up very high and we may be the last one to buy and the first one to lose money when the market crashes. Do our own analysis and buy with the understanding that the market may suddenly crash. Look at past history and we would know it might happen again. Seriously, the best time to buy anything may be 20 years ago. The second best time is today. Please do not wait another 20 years but please be very careful too. Happy investing.

written in June 2016

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It’s always about competitiveness or nothing left

An article I read in CNNMoney got me thinking again about competitiveness. How competitive are we in the world we live today. If each and everyone of us are no longer competitive, the whole nation would lose a lot of opportunities. Have we ever wondered about the possibility of us losing our jobs simply because someone else could do a better job than us for less money across the globe? In an estimate by The Economic Policy Institute, it said that between 2001 and 2013, Walmart sold at least S$49 billion worth of Chinese-made goods. Due to these imports, it estimated that 400,000 jobs were lost in the US.  It said that this estimate is conservative.

Walmart replied with this statement, “Unfortunately, this is an old report with flawed economic analysis that assumes that imports equal job losses, and does not take into consideration that countless jobs are added through the global supply chain, distribution and logistics, among other areas of the business.” Walmart also defended the success of its buy American program.It quoted to an estimate from Boston Consulting Group that it will produce 250,000 direct jobs and 750,000 indirect jobs for the U.S.

We are not going to debate on whether The Economic Policy Institute is right or Walmart is right. I think it’s very fair to also blame the consumers for buying these China made products right? After all, without buyers, no one would be selling as well. Secondly, it should also be noted that if these goods produced are really extremely inferior in quality, why are people buying them? Still remember long time ago when Japanese goods were seen as inferior? What about the days when Korean products were said to be inferior. In fact looking back just over 5 years ago, no one would think of China smartphones when they think of quality. Today, try the latest Xiaomi, OPPO and VIVO and you would understand why so many of the famous brands of just years ago have fallen to the side.

We need to be competitive. The only way to be competitive is to learn faster, improve more and take calculated risks. Look at all the newer startups from Malaysia today. It’s time to see the world as the actual marketplace. Fortunately, we can start with ASEAN first before taking on the world. Wherever possible, support our own brands first. If you think only those of the western world is better, I wish you all the best because soon, we may be indirectly killing all our own startups. Happy learning and happy investing.

written on 10 Dec 2015

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It’s coming… next recession. (not us but then again will affect us)

It’s not a prediction for Malaysia but then again, if it does happen to the largest economy in the world, it will affect us yeah. It’s only by how much.
Article in TheStar here. Another recession is looming.
  The article says that the reasons for this prediction is because the high level of asset prices today already looks like the earlier trend in house prices that preceded the 2008 crash. Somehow the prices were incorrectly inflated because the Federal Reserve policy of low interest rates went on for too long. This time however, expectations are that interest rates are rising and this will cause equity prices to fall and dragging down household wealth, consumer spending and economic activity.  When that happened, banks that held mortgages and mortgage-backed bonds saw their net worths decline sharply. In fact, a total of 140 US banks failed in 2009!

The article however says that properties are not as overvalued as they were in 2006 but the major risk of recession comes from a stock-market slowdown will shrink consumer spending and push the economy into a recession. The only reason for high stock prices today is because long-term interest rates are extremely low. Today the interest rate on 10-year Treasury notes is less than 3%, meaning the inflation-adjusted yield on those bonds is close to zero. Due to this, investors hunt for higher yields elsewhere and this is usually equities. (stocks) It does say that most recessions are short and shallow because Fed usually responds to recessions by cutting the federal-funds rate substantially. However, for this upcoming ones, the Fed will not have enough room to cut rates. It meant that if the recession do come, the recession will likely be deeper and longer than the usual recession. The final conclusion is quite alarming. The writer says this, “Unfortunately, there’s nothing at this point that the Federal Reserve or any other government actor can do to prevent that from happening.”
Full article in TheStar here.

Investments always carry with it some risks. However, look at it this way. If we bought stocks of a good company and the recession comes, the sales revenue of this company will usually go down. However, during the recession, all the other companies selling the same thing will also be affected. The not-so-good ones will usually wither. Then, when the economy recovers, guess what, much fewer companies are now operating. Suddenly, the stock price will appreciate. For property investments, if we are not having a long term view of 5 years or higher, I think it’s best not to go into the property market. It’s not usually that profitable for the property market unless it’s during a booming period. As for the booming period, it’s always a dangerous time too. Just look at buyers who bought in 2010 versus buyers who bought in 2012. The difference is pretty huge… So, news of a recession is just another thing that we will have to face when it comes to investments. Happy investing.

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written on 29 Sept 2018

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It’s not as easy as Airbnb. Especially when it’s a ‘resi’

In Penang, my good friend who’s a real estate negotiator always point to me that ‘this condo cannot do Airbnb’ or that condo cannot do ‘Airbnb.’ Well, I think it’s not just in Penang. Getting into Airbnb may not be that straightforward yeah. Especially those who bought into high-rise units, promised by the lucrative venture of Airbnb and then learnt that Airbnb is not allowed. Here’s one which has really happened.
Full article in PropertyHunter.com.my

Last year, on 16th October 2017, the Kota Kinabalu City Hall (DBKK) confirmed that it is illegal for Sabah residents to lease their properties through Airbnb. This was what the former Assistant Sabah Tourism, Culture and Environment Minister Datuk Pang Yuk Ming, “Airbnb is a business, but if an apartment is built as residential property, it cannot be used for commercial purposes.”  This move is also linked to protecting the interests of hotels, especially international hotel chains. According to the Minister, international hotels play significant roles in the development of tourism in the state.

Facts of the case. As stipulated in the House Rules of Jesselton Residences under Clause 2.1 Use of Housing Units and Common Areas, homeowners are not allowed to use their units as a hostel, office, SOHO, workers’ quarters, Airbnb, motel, hotel, homestay or any means of the housing to a group of people. The high-rise in the case is The Loft Residences. On 3 August 2018, Shelley Yap Advocates and Solicitors issued a notice to cease and discontinue all commercial activities related to short-term lodging/rental to the owners of the Loft Residences. Owners are to cease such operations within 90 days from the date of the notice. Failure to comply with the notice shall result in a fine of RM2,500 per day and keycard(s) to the units shall be deactivated by Syarikat Kapasi Sdn Bhd, the Developer of the Loft Residences. The Loft Residences does not fulfil the fire safety requirements set by the Fire Department for short-term lodging by way of license.
Do refer to the article in PropertyHunter for reference.

At this moment, I think this regulation differs from state to state. Thus, if we are to refer to Airbnb website and we search for units within the Klang Valley or even in JB, we are still able to see lots of units which were built for residential being advertised for short-term stay. Personally, I have no objections to such short-term rentals because this has been done for a very long time. I do however hope to have the Federal government and the state governments to have one harmonised set of rules and regulations because uncertainties are never good for the market. If we want to encourage ‘second income,’ this can be a second income. However, if the government really decides to disallow it, perhaps a stricter measure is needed.
This is what Airbnb is saying recently and it’s pretty good for the economy. Click to read
 Meanwhile the
hoteliers are hoping that Airbnb is regulated so that the playing ground becomes a fair one. Click to read
.  Happy following and renting…

written on 10 Aug 2018

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It’s progressing. That Prihatin stimulus package.

When the economy stalls (not slows…), countries come up with stimulus plans to give businesses and the most vulnerable that breathing space. By the way, it is not supposed to provide the businesses with any profits or even the employees with the same salary they used to enjoy. It’s meant to help, that’s all. Thus, even more important is the implementation of the stimulus. As everyone may have known, sometimes this takes time. Fortunately, not this time. This time, it’s on time. (wow… I used 4 times of times this time)

So, what’s happening thus far?
Article in themalaysianreserve.com
   The government has received over 3.26 million new applications for Bantuan Prihatin National (BPN). The payment will be made next week after verification and approval. To date, 7.74 million eligible recipients have received their payment worth RM5.47 billlion.

As of April 26, the number of approved applications for the wage subsidy programme has risen to 195,000 employers involving 1.5 million workers. This amounts to a fund of RM1.35 billion. The government has allocated RM13.8 billion for this initiative.  (This means more applicants should be applying yeah)

Beyond these payments, Finance Minister Tengku Zafrul said this with regards to tackling the devastating effects from the COVID-19 pandemic. “We have embarked on a plan towards short-, medium- and long-term economic recovery. We are in the middle of engaging with stakeholders to ensure the plan is robust and comprehensive. The support from all segments of society is important in making the plan a reality and a success.” Please do refer to the full article here:
Article in themalaysianreserve.com

Everyone knows the prediction for GDP Malaysia in 2020 is not that pretty.  However, what has really helped is that these stimulus will reach directly to the people who will need to spend the money. In other words, the money will be multiplied within the economy. This was also announced yesterday:
“Yes, you can now operate at full capacity.”
  It’s not for all but it is now more relaxed versus earlier when even essential services could only operate partially.

My relative (senior manager in a manufacturing company) told me that the operation costs were higher because the number of workers allowed is lower and the procedures to ensure social distancing and safety meant a lot of time, effort and costs have to be spent. At least now with the same time, effort and costs, companies can now operate at full capacity. Oh yeah, do read what the predictions for 2021 Malaysian GDP is yeah. Let’s wish what is predicted will come true. Then, 2021 can be a good year for everyone after a gloomy 2020. Yes, let’s wish for some friendly policies for the property market too once this MCO is lifted.

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A supper thought. A new cafe. Kids and their choices. Oh dear…

After spending an hour in
Decathlon Sri Damansara (nice place to buy sports stuffs)
, it was time to leave. We had an early dinner and I was a little hungry. My wife and kids were also a little hungry. It was 9pm. Should we go to for nasi kandar restaurant perhaps? Our favourite mamak place just outside the home? Hmm… maybe not this evening. It was 9pm when I arrived at
Donutes in Bandar Menjalara.
 It was a new ‘cafe on the block.’ It’s a 24-hour cafe… and it was full of people even if there are still some seats available. Images below.

By the way, it’s already not possible to turn back time. Anyone below 30 today are very used to these cafes and the price that comes with it. This is why after 30 years, they suddenly ask where has their money gone to. Earlier article here:
Actually, where has my money gone to?
 However, perhaps what we could do is to ensure that we do not go there every week. Perhaps once per month instead?

My wife told me the full bill was RM55.00. We ordered two drinks, 4 cakes and 1 bun. At first we wanted just 2 cakes for sharing. My daughter and my son refused to share one same cake and both wanted a different one. So, we bought 3 but there’s an offer of buy 3 free 1, so in the end it was 4 cakes for the price of 3. Of course, the price is also because of the nicer environment if compared to a mamak restaurant.

If we had gone to a mamak instead, it would have been two teh tariks (RM3.60), two roti telur (RM5) and the bill would have come to less than RM10.  It’s a choice yeah. Less than RM10 or more than RM50. Savings over one whole year of 52 times would have been tremendous yeah. I promise that for the next 5 times, I will opt for mamak instead yeah. Fortunately, my kids are fine with mamak too. The reason for Donutes was simply because we wanted to try a newly opened shop. Happy choosing between a cafe and mamak yeah. (think of your property down-payment before deciding.)

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It’s the duration, not the distance. ok?

My friend visited me the other day from Penang. Born, schooled, got married and working in Penang. A pure Penangite. She went shopping and at 545pm, she travelled from city centre back to my condo in
Damansara Damai
 within 40 minutes. There were some slow jams here and there. When she arrived, I asked her how was the journey. She said, ‘wah so far.’ My face changed because in Penang previously, despite the fact that my friend’s company located just 4.5km away from her house, she needs 30 minutes driving to reach her office. Today, in KL, despite the distance of my home to office being 22km, the duration was just slightly more and she said, ‘it’s far?’

It’s time we become a little more international. In many of the developed countries and even including those
‘most liveable cities,’
 the people are staying ever further away due to prices. they are definitely not going to stay in a cramped tiny little home just so that they could stay within the city. Sorry, not even the fringes. It would be the suburbs. Google this word to understand more.

If we think objectively, is the
distance more important than the duration
? I have friends who stay in Cheras needing over 45 minutes to arrive at office. (peak hour) This is despite the distance being just 8.5km.  In my previous home,
Kelana Puteri
, the distance was 18km but I typically arrive home in 45 minutes. I must leave my home before 7am everyday though or I will be late for office. To me, duration is much more important than distance. Yes, it is true, during non-jam periods, the distance becomes important but I work 5 days every week while I only go out shopping once every weekend. I would take duration as more important anytime.

Another reason why duration is more important is because when you buy a new property, the
further the distance, the price is lower compared
 to one which is nearer. Thus properties within a 5km radius from city centre is typically more expensive than those which are within a 15km radius. Properties outside the 15km radius would be even cheaper unless it is some sort of integrated townships with easy access to public transports and malls etc. The difference in price can be easily a few hundred thousand ringgit for the same sized home. When we
think objectively, the 15km difference is a mere 15 minute difference,

or lesser. I have no issues to pay much lower and drive 15 minutes more. After just 2 weeks, I would not even feel it anymore. For some areas, the difference may be even higher because of price per sq ft calculation.

Personally, I will always choose duration and not the distance. To my Penangite friend, it is true that the distance seemed far but the duration showed that it is really not. Then again, anywhere more than half an hour is considered ‘extremely far’ for any Penangite. So, I think I must understand her comment. In Penang, there are a few hotspots too, as per the locals. I do not subscribe to those views. That’s why residents in
Tanjung Tokong would forever say those who stay in Sungai Ara
 are living in a faraway place. I benefited much from looking at property investment based on ‘duration’ and not ‘distance’ and I will continue to do so. Do join me if you think I make sense. 🙂

written on 13 June 2014 updated on 6 Apr 2016

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Banks are refusing to lend or buyers are unable to buy? Different things… ok.

If we like a property and we need a place to stay, would we buy? If we apply for a home loan for that particular property that we like with the bank, would they lend us? The answer to both is a YES. The similarity to both would be ‘affordability.’ We read about articles that the

banks are no longer lending.

We have also read about

buyers are no longer buying.
Hopefully, we do not think too much or believe too much about all these because it is untrue. As per National Property Information Centre (NAPIC), the total transactions in terms of units for 2016 was still six figures. If buyers are not buying and banks are not lending, then these numbers must be fabricated..? Fortunately, NAPIC is not in the business of fabricating numbers.
When it’s down, they show it is down…

Today, let’s talk about two separate issues; banks are refusing to lend and buyers are unable to buy.

Banks are in the business of LENDING MONEY. They can offer us a credit card or a car loan or for our property purchase. If they do not lend us money, they will NOT earn profits. Some latest results? Well, all the banks that I have read thus far has shown good profits. For example:
CIMB’ss net profits up 38 percent in their latest half.
 Meanwhile Malaysia’s 4th largest lender,
RHB Bank’s latest quarter shows a net profit increase of 43 percent.
 Another set of result?
Maybank’s net profits are up 43 percent in their Q2.
 For them to earn higher profits, they need to lend. I hope everyone has gotten the point? No lending, no profits. Higher profits, higher lending. Of course, when the economy slows down, less people will borrow and of course the results would no longer be so positive. These days, even credit card sales people are having a hard time, right fellow Malaysians?

Buyers are unable to buy. When the people starts to lose their jobs, they would start cutting back on home purchase. Seriously, they would definitely rent instead. At this moment, the unemployment rate for Malaysia is at 3.4 percent. It’s true that there are industries which are slowing down or even closing down. However, a few of my good friends are now in Europe. Their company of over 100 staffs are having their annual company trip and it’s to the EUROPE. I think my company’s trip this year would be to somewhere within Malaysia as long as I can get something acceptable based on the company’s budgets. Second reason, property prices are way too high. If possible, do google for
RUMAWIP
,
Rumah Selangorku
 and even
PR1MA.

If buyers could accept secondary properties, there are still loads of choices. Okay, they are NOT in hotspots….. Well, I think many are saying it’s buyers’ market today? 🙂

Both statements are actually not true, in my personal and humble opinion. Affordability is an issue because of sentiment in
combination with acceptability.
Thus, when we look a little harder, opportunities are available. Hey, even auctions could be a good hunting spot now. There are certainly lesser interest today. Happy thinking and thinking. Cheers.

written on 4 Aug 2017

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