Already 40, it’s too late. Says who? You?

Okay, I admit. I will be 40 this year. So many of my good friends are 40 as well. I was chatting with one friend who has two kids, only one lovely wife and stays in a landed home in Cheras. He said, “property investments must start earlier. If I had known this when I was in my twenties, I would already own a few properties today. Now already 40, how to take risks by buying properties. The prices are crazy. The place I m staying today is already over 1 million. There’s no way I will take the risk and buy. I need to save money for my two kids education. Ringgit is also getting smaller. It’s going to be tough to send them to university in the future.” Well, here’s my thought about university education.
Education, really that expensive?

As for property investment, even at 40, I will continue to consider if I find a good property deal. There are three reasons why even at 40, we should still consider property as an investment.

There’s still value to be found.
 Seriously, when we really do follow some properties or areas that we love, there is a probability that we may come across one where the owner somehow just wanted to sell cheaper. Yes, this happened to my friend who bought a condo nearby KLCC for 15 percent lower than the usual market value! The owner was moving out, asked an agent to post the property and within 5 minutes of the property being posted, my friend saw it and called. Viewing was arranged a few hours later and deposit was deposited within the same day! Keep following the property and the area we like. Remember,
luck tend to fall unto those who work harder.

Still 30 years lah.
 Yes, we can still get a 30-year loan even at 40. It’s normally ’35 years or 70 years of age, whichever is EARLIER’  Since we can still stretch this to 30 years, even a RM500,000 property becomes affordable for many households. Well, as long as both the income earners are not driving fancy cars lah. No savings meant no 10 percent deposit and well, no investments. By the way, a Malaysian man would typically live up to 72.7 and woman would live up to 77.3 (As per WHO data as at end 2015)  By then, based on the usual property price increase of slightly less than inflation rate, we would still have a home that we could sell and use the money to live till we say bye-bye.

If not property, what else?
Let’s face the reality. There are really not that many options when it comes to investments. With property, we can view the place, the surrounding and the area. If we like it, chances are there are other who like it too. We can even compare the prices of similar properties within the area and can even look at the prices in more advanced property markets to understand the potential. This is different from ONLY fixed-deposit because the rate is only slightly higher than the official inflation rate today. It is also different from stocks because we may not understand the business of the company enough. Well known ones are already fully-valued. Unknown ones, we are scared. Haha.

Last but not least, the demographics of Malaysians are still positive. We are expected to become an
ageing nation only by 2035.
Today, however we can see that the diaper brands for babies are increasing every few months. Kids eat free restaurants are also increasing while even the BIG BAD WOLF has more children books than the adult ones. The signs are there. The question is only whether we have saved enough for a property or not. Happy viewing.

Please LIKE
kopiandproperty.com FB page
 or
Sign Up for free
 to get daily updates about the property market.

written on 15 Feb 2017

Next suggested article:
2017 prospects for property market Malaysia? Well….

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


40 years loan tenure? This is the BEST for the buyers?

SERIOUSLY, I am not sure if this is the best for buyers. I also wonder if there were consultations with working professionals like myself. Perhaps they have by far more professionals who has browsed through by far more data than me. Reported in
TheEdgeMarkets.com article here,
  Housing and Local Government Minister Zuraida Kamaruddin said, “Bank Negara Malaysia (BNM) is proposing a more flexible loan package with flexible interest rates and an extended maximum loan tenure for affordable home buyers.” She added, “We have engaged with Bank Negara and a few banks during a few sessions and Bank Negara has come up with some more flexible and relaxed terms with regards to loan application and approval. One of it is the extension of maximum loan tenure from the current 35 years to up to 40 years.”  Currently, the maximum loan tenure is 35 years or or until the borrower turns 70 years old, whichever is earlier.

Beyond that 40-year loan, there will also be flexi loans, flexi interest rates and a step-up scheme, which allows the amount of repayment to commensurate with the growth of the borrower’s income over the time. She also shared, “This is something that is easier and more relaxed for the homebuyers so that they can plan themselves. With this sort of approach, we hope Malaysians can change our mentality and know how to plan [according to their] financial capability, As an industry, we cannot remain static. We must know the needs of the market and respond positively to the demand of our customers. Our doors are always open for discussion, let us know how we can assist the industry to enhance efficiency. (I appreciate her conclusion), she said that her ministry will be working towards consolidating data and information and at the same time address data gaps that may exist, so that the policy makers, authorities and stakeholders can all count on an efficient centralised data or property information system that is effective, accurate, useful and timely. (This is extremely important and I will follow this very closely…)

Dear minister, if the majority of all the homebuyers could PLAN by themselves, they would not need so many flexibilities. Truth is, there are MANY who knows how to plan accordingly and it’s best that they are the examples to follow. By the way, what will stop the buyers who could afford a RM300,000 home to now try for RM350,000 home because the tenure is longer and thus the monthly repayment is the same? Are we also providing enough information so that these buyers could really decide by themselves the kind of property they could afford to buy instead of buying the MAXIMUM they could? As usual, wait for the formal announcements then. Oh yeah, the new housing policy is still pending announcement…

written on 9th oct 2018

Next suggested article:
Definitely not something to be proud of. 38 percent of youths have personal loan

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


40 years later – Malaysia property market in my personal view

This article was rewritten and published in the showguide of MAPEX JB 2014.

A reader of kopiandproperty.com asked me for my views on the Malaysian property market 40 years from now. A very interesting question indeed. Unfortunately, I do not have a crystal ball to allow me a glance into the future. However, based on some readings as well as own observation, let me share my personal views about the Malaysian property market 40 years later.

We focus on three prominent studies and one very casual observation.

Size of economy.

If we look at the current property market for Malaysia, the demand apart from some areas in Iskandar are all due to local demand. What if I tell you that in around 40 years, Malaysia’s economy would grow 800% and the per capita income would grow 559%? Total population would be 40 million. HSBC published a study on which economies they think will be top 30 in the world by 2050. Their report is based on a host of statistics and of course projections. I do believe this study is grounded on real numbers and was not done by one researcher who searched online data from google or wiki. 🙂  A brief economic league table by HSBC can be viewed below.

Source:
http://www.businessinsider.com/these-economies-will-dominate-the-world-in-2050-2012-1?IR=T

Competitiveness.

Supporting HSBC’s earlier projections, we can refer to IMD’s Competitiveness Study which is one of the most authoritative study on nation’s competitiveness. The latest showed Malaysia ranked at top 15 in the world. This is a ranking which money cannot buy and we are not talking about some international rating agencies which gives different ratings to different countries based on what they ‘think’ and not what the numbers really say.

Source:
http://www.imd.org/news/World-Competitiveness-2013.cfm

Current demographics profile 2013

Next, we look at the Malaysian demographics profile today. Look at the first highlight. Nearly 50% of the population are aged between 0-24 years old today. Imagine a country where 50% of the population are between 0-24 years old today. The demand for new housing would come this group of population. Current property market is also well supported because of the current 41% of the population who are aged 25-54 years old. Those who are 54 years old are fathers who are helping their children buy their first home as well as those with few years of working experience buying their first affordable property.

Baby shops

Last point is an easy observation. I remembered when I started working in 1998, there were many IT shops in departmental stores. Today, a new type of shop emerges, not just within the departmental stores but basically mushrooming everywhere! Baby shops. There are easily a dozen shops selling baby products in any departmental stores that you go and have you ever notice an empty shop? If you think PC Fairs are crowded, it means you have never been to Baby Warehouse sales before. Look at the area allocated only for baby products today. Look at the never ending current brands and new brands coming up for milk powders, for baby wipes and even baby crackers. These babies would eventually grow up and when their parents were about to retire, they would enter the job market and the cycle of property buying continues.

These are the four reasons why I believe property market in Malaysia would continue to prosper. These are also the reasons why I continue to view properties and continue to read even more about the Malaysian property market. Happy viewing and buying.

Charles Tan

http://www.kopiandproperty.com

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


40 years later – Malaysia property market in my personal view

What would happen to the Malaysia property market 40 years later? A very interesting thought indeed. Unfortunately I have no crystal ball to help me. A friend asked me this question. I would like to give my own personal views about what would happen. The state of the property market would depend on the
state of the economy, the health of the nation
. I do not want to predict, let me present some studies done by really good research entities well known in the world. The last reason is mine and it’s just based on observation.

Let’s look at just three things. Size of economy, competitiveness, baby shops. All these would depend on the people.

Size of economy. HSBC published a study on which economies they think will be top 30 in the world by 2050. Which is around 40 years from this year. Their report is based on a host of statistics and of course projections. I do believe this study is grounded on real numbers and was not done by one researcher who searched online data from google or wiki. 🙂  Let’s look at a brief economic league table by HSBC here.  You can access the full report here:
The World in 2050

Competitiveness.
IMD’s Competitiveness Study
 which is one of the most authoritative study showed that Malaysia has continued to be very competitive versus all other countries. Before you even start to say, it can’t be true, let me give you a few examples which has not been the case in the past. Not many countries in the world where you can get a business registered within the same day, get your new passport within 1 hour as well as having all the different government agencies under one roof in a prominent centralised location. My mother renewed her IC at 930pm two weeks ago!  You can read more here:
IMD Competitiveness Study.

Baby shops. When I started working, there were very few if any
baby shops
. There are baby departments in the supermarkets but baby shops were non existent. Today, no matter which departmental stores you go to, there are dozens of baby stores, children clothes stores. This is a very encouraging sign because babies today would be adults in the next 30-40 years and this meant that the demand for properties would continue well into the future. If we look at the current median age of Malaysia, we would find that properties will be in demand, from the affordable ones to upgrades and to luxury ones. Basically, if there’s one certainty, it’s
demand for property!

These are the three reasons why I believe Malaysia would continue to prosper. I have a lot of friends who said the grass is greener on the other side but ‘Grass is greener on the other side because the other side only tells you their good side’. These are also the reasons why I continue to view properties even though I may not have any ‘ammunition’ at this moment as I am still waiting for a
good price for my property
.

Next suggested article:
More opinions on property market Malaysia

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


Hap Seng: Bluechip, property, listed entity

This is the first time I am writing about Hap Seng Consolidated Bhd even though I have reviewed this stock before a few years ago. I do not own any units of Hap Seng today and has never bought any units before. I love companies which has shown
good growth story and UNKNOWN to many
. Seriously, whenever people talk about bluechips, it must always be a stock which everyone in the whole Malaysia including the uncles and aunties also know. Majority may win but majority are not always right. That’s why there are very few millionaires and there are even fewer billionaires.

Hap Seng was reported by Bloomberg as Southeast Asia’s best-performing stock. It has returned almost 400 percent to investors in three years. Hap Seng is a property, plantation and building-materials conglomerate. Despite the falling palm oil prices and a
slow property market in transactions
, its after-tax profit over the last four years has doubled! Think very carefully. This a result under bad times. Oh yeah, performance today is not a barometer for continuous success. Thus, please still only buy once you have personally evaluated and felt that you may not lose your money by investing in them.

Managing Director Edward Lee said in an interview in his office in Kuala Lumpur.“The biggest opportunity right now is to acquire good assets, whether it’s plantations or property, If you grow your business organically it will take some time, whereas when there’s good companies we can acquire, the gestation period will be a lot shorter.” It has RM600 million in cash today. A number which majority of all developers could only dream about. Last year’s operating profit includes about half from its property business, 17 percent from palm oil and around the same proportion from credit financing. Hap Seng also owns quarries, has building supplies and fertilizer companies, a trading division and runs seven Mercedes-Benz dealerships. All of its plantations are in Sabah, on the northern tip of Borneo, as is much of its property holdings.

Due to the share price having quadrupled from 2012, Hap Seng’s price-to-earnings ratio is now at 17.9 percent. For everyone’s information, if this company is no longer growing aggressively, 18 percent price-to-earnings ratio is considered fully valued for me personally. If it’s growing, then to maintain the same price-to-earnings ratio, its share price would grow in tandem. Do you believe they can sustain their momentum even during current situation? Let’s just say I may buy 3,000 units just to get dividends or for a potential short break within Malaysia. Happy investing.

written on 8 June 2016

Next suggested article:
Investing in stocks? How about “net cash” ones?

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


4,000 cut, locked out even.

If 4,000 people are cut from a huge international bank, what would happen? Well, it will definitely be attracting a lot of negative publicity not just for the bank but also the banking sector. Is this the start of more negative changes to come? Standard Chartered bank started its dismantling of its stock broking, equity research and equity listing desks worldwide. 4,000 jobs in retail banking is out and in Asia, 200 job cuts has happened. The workers arrived for work only to find out that their job was gone. Before everyone said, why is the bank so heartless, do note that when you need to ‘fire’ 200 people, you would not want them to get the letter and start creating chaos in the whole office. I think when it comes to this point, there’s not a lot of choices. Some in Singapore were escorted from their desks. It’s tough to imagine. Thats why all of us should at least make sure we work hard and always continue to learn so that even if we are suddenly let go, we can at least still find a job sooner rather than later.

It was reported that this is not a sudden decision. Standard Chartered has been troubled for two years. Of course the comparison was due to the record profits the whole decade before. I do not think banks are losing money but because of high expectations, many things have to be done to fulfil those expectations.  Lots of other things happen including falling commodity prices, slowdown in a lot of its emerging countries together with a surge in bad loans and rising regulatory costs. A fraud in China also made it lose US$175 million. Closing the losing money business would enable the bank to save up to US$100 million a year beginning 2016. Actually, all the major banks are also facing these kinds of potential bad loans and rising regulatory costs. Especially as the whole market slows, businesses may start to face pressure, laying off some of their workers who could not find a new job quickly and everything deteriorates from there. Now do you know why China has started to ‘warm up’ its property market instead of waiting further? Read here:
China Property Market Boost – All the measures

Personally, I think the most major thing that has happened is not just about the market changing but it’s also how the online is evolving. There is really less need for ever more tellers or desk-bound finance staffs. Even the number of branches would no longer need to be opened at lightning speed. Still remember when there were bank branches that were open even on Sundays? Today, majority does not even bother to open on Saturdays. When you issue a cheque these days, you are charged ever more money to process them while an online transaction costs you 10 cents (RM). With your smartphone transferring money to your loved ones can be done within minutes compared to driving to a bank, find a parking bay, get down, take number and queue and then submit your forms, wait for the teller to complete the process, leave the bank, pay for your parking ticket and drive home. It’s VERY clear right.

Then again, retail banking is not just about these transactions, there are a lot of other services right? Well…. yes and it can all be performed online. In fact all these hotlines from the developed countries are already handled from the cheaper English speaking countries in this part of the world, Asia. It has been said that once everything can be made more transparent and everyone can be sort of evaluated, even the mortgage application can be fully automated. Perhaps not so soon and not in Asia but do not bet on it not happening. Seriously, I do not think this will happen only to one bank. As smartphones continue to take up shares versus the non-smartphones, the retail segment for banking will increase in size but the staffs needed would continuously be reducing.

written on 11 Jan 2015

Next suggested article:
China, the new ‘World Bank’?

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


41,990 sq ft land next to Berjaya Times Square RM3,300 – RM3,500 per sq ft

A good friend commented the other day that the number of property transactions are going down because the economy is very bad. I reminded him that the
economy is far from ‘very bad’
 but sentiment can definitely be classified as ‘bad’ plus negative too. His wife disagreed with him too and said in fact, this is the best time for people with money. I laughed and agreed. The negative sentiment does not seem to include land sales though. Just look at all those announcements of huge parcels being bought by many developers,
ever further away from city centre
.

Another piece is now open for sale via a tender and it closes on 1 August 2016. It’s in the central business district and is smaller than one acre. The plot is located at the Jalan Imbi/Jalan Pudu corner and right next to Berjaya Times Square. It measures 41,990 sq ft. As per reported in Starbiz, Jordan Lee & Jaafar Sdn Bhd executive director Yap Kian Ann said, “It is freehold commercial and comes with an approval in principle for serviced suites or serviced apartments, which is just one step away from a development order. In that particular area, there aren’t that many parcels of land for sale. There are more in the
Kuala Lumpur City Centre
.” The indicative price was between RM3,300 per sq ft (psf) and RM3,500 psf, or RM230 to RM245 per plot ratio. The land comes with a high plot ratio of 14.3 which is considered higher than usual. Buyers can build higher. The higher the plot ratio is, the less accurate the price per sq ft as well. Else, the price per sq ft would be higher than the sky.

The location is also attractive because it is opposite the leasehold 19.4-acre
Bukit Bintang City Centre (BBCC)

development. The plot is also within walking distance of Bintang Walk, Sungei Wang Plaza, Pavilion KL and Lot 10. Besides that, it is 100 metres away from from the monorail station and about 500m from a future MRT station. Less than one km away is the Merdeka PNB118 development by Permodalan Nasional Bhd. When completed, it will beaming the top 10 tallest towers in the world. This is then followed by Tun Razak Exchange project by master developer TRX City Sdn Bhd. Let’s see which developer wins this small piece of land yeah.

written on 8 July 2016

Next suggested article:
Hap Seng’s Kuala Selangor land buy and GDV of RM9.3 billion

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


Malaysia: 42 percent senior citizens have zero savings

A sobering fact was reported in a local daily. 42 percent of senior citizens had zero savings. 85 percent of these said that the reason they never saved was because
they did not have enough to save
 when they were young. Let’s take whatever they said at face value. Now, let’s look at the current generation of today. Well, majority are still saying that they do not have enough to save. Yet, what is amazing is that sales of iPhones and Samsung Edge are still amazingly high here in Malaysia. Perhaps these buyers are different. They happen to have lots of extra money, thus they were just using their extra money to buy these gadgets, at the EXPENSE of a good debt. Hmm…..

One in five Malaysians over 60 are also working and nearly 70 percent said they had to
keep working to support themselves
. 21 percent over retirement age are still working. I have to admit that I intend to work even past retirement age but it must be something I love. For example, becoming a full time editor to kopiandproperty.com? However, I hope that I am working because I love to work and not because I have to work past my retirement age. Yes, this puts me into the 11.6 percent who are working past retirement age because they wanted to keep themselves occupied.

What this tells us is that Malaysia is definitely not the only country where the ageing population will find it hard to cope after retirement age. Hong Kong faces the same problem. Read here:

Prepare today, tomorrow is too late
  Singapore too. Read here:
working beyond the age of 65?

The few major causes? Insufficient savings contributed also by the lower levels of education and thus lower levels of jobs paying lesser salaries. Last but not least, low financial literacy. Truth is, even if we have bought just one home which appreciates slowly in tandem with the inflation rate, by the time we retire, that home would give us enough money to live more comfortably, even if we have little EPF savings. Just look at Singapore’s HDB flats. Even with control from the government, prices still continue to rise and this gives the elderly something to defend against the rising cost of living.

Think and act. A friend just told me that she would keep her property so that when she could no longer work, she would sell the property for money to sustain her life. ‘What about your son?’ I asked. She said, ‘It’s best we plan for ourselves too. If they take care of me, that’s great. If they did not or could not, at least I could.’ I think she is right. Happy planning ahead.

written on 4 Aug 2015

next suggested article:
take note of these retirement issues

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


450 potentially interested property investors is a good sign

It was the Bank, Law, Tax (BLT) talk today. Yes, it’s organised during a time when everyone within the property world are negative except for those who must say good things about it. Haha. Yes, I am personally confident that I would be able to find good deals within 2016. At least one, I hope. What’s BLT? Read here:
Bank, Law, Tax Seminar. Free Tickets all snapped up

I think for the organiser, it was a successful event. 450 people turned up and even at the end of the event, there were still people surrounding the speakers and many wanted their photos to be taken with them. Yes, it does seem funny because this is not a K-POP concert even if the trio of Miichael, Chris and Richard looked like a Korean trio; albeit of older generation. However, one of them told me that they are a K-Prop (Property) group. One things for sure, perhaps for these people they have learnt something useful, something new or something which they can take action upon in the near future.

For the 2016 property market, I think it shows that there is no shortage of people still interested with the property market despite the gloomy assessments thus far. I wrote about this earlier:
Property market is slowing.Agree. However, there’re today MORE interested people

I learnt that at least one took a bus yesterday night so hat he can arrive this morning. He left after the event to catch a night bus home to Penang.

Property is a funny investment category. Many are interested, majority do not understnd, many would delay or are afraid to take any action. Come on, how many of us make RM500,000 decisions easily? It may even cause bankruptcy. Read here:
Bankruptcy before property, not after property, perhaps

The first trading day for the stocks ended in a disaster and as at currently, BURSA Malaysia remain in the red when compared to 2015. Everyone is worried. Do they know that property market is the worst to enter or exit when we are worried because it is so SLOW when we needed to buy or dispose off the property should the next crisis strikes?

Today, we have another 450 who may potentially be buying their next property in the near future. Maybe some are buying for their first home, some for investment and minority are those who are buying third, fourth, fifth or more. This is definitely a good sign even if these days the property fairs are no longer as crazy as a few years ago. Perhaps it’s also a sign that the property buyers are more cautious and want to know more before committing. Either way, I wish them all the best. Today, the BLT seminar has managed to introduce more interested people into the property investment world. Happy scouting.

written on 9 Jan 2016

Next suggested article:
Latest study: Expansionary zone for Q1 2016

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


47 MNCs and 6,312 work opportunities

Many years ago I read about an entity called InvestKL. Their goal was to attract 100 multinationals (MNCs) to set up their regional hubs in Greater KL. As usual, lots of questions such as what is the size of these 100 MNCs, is the goal realistic, how much can these 100 MNCs help Greater KL etc. Well, their targets include Fortune 500 companies or Forbes Global 2,000. So, yes it’s not simply any foreign companies. Latest update, they have already managed to attract 47 MNCs to date and thus well on track to hit 100 MNCs by 2020. Actually majority of the names stated in the latest report such as Hobsons, Cameron, Valmont, Zurich, SPIE, Indra Sistemas, Saipem dan Codemaster are not well known to me. Some other MNCs attracted thus far include Schlumberger, Cargill, Linde, Clariant, Epson Precision, Hitachi Systems, Toshiba, Agusta Westland, IBM dan Aecom.

Big names are important, of course but the most important thing in my opinion is the reported 6,312 new jobs created and that 2,598 of these have been filled by locals. More often than not the salaries offered are pretty good because by paying in RM, they would have saved substantially compared to their originating country. Thus most of the time, MNCs tend to pay 20-30% higher than the typical salaries offered. (Yes, they do and that’s why applications tend to be much higher) This is not all, 466 were filled by expatriates. In other words, at least 466 units of high end condominium has also been filled by these expatriates. This is definitely positive for the owners of these high-end condo units.

I wish them the best but I do hope that they would focus on industries which is also complementary with what the nation should aim towards. High technology and not the manual works. In other words, the jobs created by these MNCs should be of high end technological based and not just the usual business outsourcing hubs which ultimately the lower costs countries would win in the longer term. No worries, for now even for business process outsourcing, Malaysia is still leading compared to even our regional peers. Yes, this is true even if there are some Malaysians who are saying that the standard of English in all the regional countries are getting better while Malaysia’s getting worse.

written on 22 Feb 2015

Next suggested article:
Next 5 years, better invest in Malaysia – Fortune.

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


486 acre Bandar Malaysia, shortlisted 4 preferred bidders

The show must continue, especially for a piece of land which is considered prime. Yes, this is the Bandar Malaysia’s 486-acre project. According to the adviser for Bandar Malaysia, CH Williams Talhar and Wong (WTW), a total of four companies/consortiums have been shortlisted and approved by 1Malaysia Development (1MDB) as potential development partners. Bandar Malaysia is just 3kms away from Tun Razak Exchange and this makes it even more attractive, if all that were planned fall into place including the High Speed Rail too. This is a redevelopment of the former old airport in
Sungai Besi and is designed to provide Greater KL with support as a new engine of growth.

These four were shortlisted from the 12 proposals submitted and they included proposals from domestic private developers, government linked companies and foreign parties. These proposals were assessed and evaluated by WTW and the final four bidders would next face a detailed due diligence, clarification and negotiation process with 1MDB Real Estate and WTW before a final recommendation is made to the 1MDB board of directors. According to Danny Yeo, deputy managing director of WTW, the winner would be finalised by end of October and executive a definitive legal agreements by end November 2015.

Some may be wondering about 1MDB since we read about it everyday from the many comments and sharing in Facebook. Well, no matter what you may believe or however bad you think 1MDB is, it remains a going concern and many of these plans are still continuing. Property happens to be one part of it. It is important for us to note that where Bandar Malaysia is concerned, it is way too important to be stopped. Development is part and parcel of continuous growth. Greater KL as a plan is vital as this is the capital of Malaysia to the world.

Finally, whether more MNCs would be coming into Malaysia or choosing Thailand or Indonesia instead would depend on the right developments being put forward. I am interested to know in more detail about the actual development plan as well as the partners / consortiums. My preference is for an international player partnering with a local partner. I think this gives the best of both worlds. Especially if the partner may also come with some very attractive financing options too. Happy reading and waiting.

written on 14 Sept 2015

Next suggested article:
MRT 1 completion and MRT 2 stations, the proposed ones

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


49,000 sq ft land size and RM548 million GDV

Reported in a few English dailies. How much returns can we expect from a plot of land with the size of 1.12 acres (about 49,000 sq ft)? No idea about the actual net profit but what about a gross development value of RM548 million? Suddenly my jaw dropped. Wow. Well, one boutique developer is doing it and it seems to be very successful too. It’s Expressionz project, just off Jalan Tun Razak was very well received and it reported a takeup rate of 70% thus far of which over half are foreigners. Buyers would only need to move in with their luggage, everything else is taken care of including even the sound system.

There are many sizes and layouts to choose from including even a penthouse. Price per sq ft is reported to be RM1,400 on average. Based on the typical average luxury property prices which are around RM900 per sq ft, this RM1,400 per sf is on the upper half but since it is supposed to include all furnishings, I think the price seems okay for many of these wealthy buyers wanting just a place within the city to relax. I do not think many families would be moving into such a development but for an expatriate with a partner, it looks enticing. The development would be ready in year 2018.

By 2018, I also hope that the property cycle in terms of uptrend would continue. Nope, I do not want the 2009 – 2012 periods to come back. Just the usual and typical small increases per year. That would be just fine. Demand for more homes in Malaysia is huge but current uncertainty as well as affordability for new launches has certainly sapped a lot of enthusiasm from the market. Q1 2015 saw a drop in transactions when compared to Q4 2014. Read here:
Residential property transactions sees a slight drop nationwide in first quarter of 2015
   In fact, 2018 should be the year where a huge number of all those affordable units launched last year and this year would be ready too. Happy anticipating yeah.

written on 31 Aug 2015

Next suggested article:
Better sentiment or better pricing and higher transactions

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


This article was first published in Property Insight July 2018 edition.

Title: Deciding to buy a property? Think of the 4Ps.

The first question that comes to mind before anyone buys their very first property is where to buy. That’s the reason why the mantra has always been location, location and location. One strongest reason for thinking location first would be familiarity. We already know enough about the neighbourhood to be able to make an objective assessment. Have we however wondered about they ‘why’ for the location? What was it which attracted us in the first place? If the answer is that we want to stay close to our parents and they love the neighbourhood, then there’s no need for any other reason. In fact, even if we have to pay a premium, we should stay as close as possible to them. They have worked their whole lives for us and have spent their time, effort and money for us. The least that we can do would be to be there when they need us. Location is thus one way to ensure we are closer to them. For any other reasons, perhaps it’s worth a little more time for some research. The below would be the 4Ps (People, Price, Policy, Preference)

People.
More people equals higher demand for property. Beyond just trying to google for information about population, we could also do the following. We can drive around the neighbourhood. Do we see an active mall, even if it’s a small one powered by an anchor tenant. Or do we see a ‘half-dead’ mall with only half the shops open? Do we see many new rows of shophouses, many which are open for business or under renovation? Or do we see rows and rows of shophouses with ‘For Sale’ banners by many different real estate agencies? Do we hear of a new branded university starting its operations in the near future and this university is considered a popular choice? What about a popular international school brand or even a relocation of a new SRJK (C)? Are there other typical signs such as Starbucks, McDonalds and even a 24-hour mamak restaurant which is rather busy all the time? All these are signs to support our purchase. It does NOT need to be in the typical hotspots of today.

Price.
 This is another important factor which has helped secondary areas to become acceptable and later a hotspot. If given a choice, everyone would want to stay as near as possible to their working place. Thus, the only reason they could not buy a place close to their office is due to price. It’s either same price but much smaller or lower price but further. What happens then if one insists in staying nearby but paying almost the same price as years before? They can opt for smaller sized homes. This is already happening in many advanced markets of today. When given a choice between landed versus high-rise and both are similarly priced and next to one another, it’s a no-brainer that landed as a choice wins hands down. However, price will continue to change property investment decisions.

Policies.
In Singapore, car prices are not considered very expensive even if they are priced in S$. However, owners must bid for a Certificate of Entitlement (COE) which is another significant amount of money. Beyond just the car price, when one drives into the city centre, one would incur additional tolls and the parking is also expensive. HDB flats also do not come with a car park and anyone needing to park would have to pay car parking space rental for it. With the right policies in place, everyone would be ‘encouraged’ to take public transport. There are already suggestions for more expensive car parking fees and even tolls similar to that in Singapore when people drive into the KL city centre. At the moment, no signs of it happening anytime soon. Of course, beyond just making it expensive, we also note that the approval of new residential developments are tweaked to give more flexibilities to the TOD ones.

Preference.
Nowadays, everyone is talking about Transit-Oriented-Developments (TOD). Many property experts are saying that buying a property next to the LRT / MRT / KTM is already a must. Many of the younger professionals are already getting used to public transport because their office and their home are just stops away. This is a preference because if the preference to own a car does not change, then TODs will fail. People will buy thinking they could adapt but they could not. Thus they pay a premium to buy a TOD but in the end they continue to spend a lot on petrol and toll. When the jams get too crazy, more people would prefer to stop driving. All these would take time but suffice to say, as soon as the preference chances, we are looking at Malaysians Ride This (MRT)

These would be the 4Ps that we should evaluate objectively when it comes to buying our dream property. Other things to take note of when we are buying a property? We must be aware of the duration for the drive and not the distance. There are further places with a lot less jams than nearer places. Renovation should be based on what we need and not what we love. Future buyers may not share the same thoughts about our design. When we spend too much on renovation, it’s very unusual for future buyers to love our renovation so much that they pay a premium for it. Treat all areas as equal because when it comes to property investment, there are always the 4Ps (People, Price, Policy and Preference). Remember, even if we are thinking of buying just one property, it’s great to use this template to look through the area objectively. Happy buying your home sweet home.

Please LIKE
kopiandproperty.com FB page
 or
Sign Up for free
 to get daily updates about the property market.

— end of article —

Next suggested article:
I prefer today, not yesterday

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


5.8% is not high enough. Now there’s a 9% prediction for GDP Malaysia

GDP is defined as “the total value of goods produced and services provided in a country during one year.” Very briefly, a growing economy means more jobs, higher earnings for businesses and a generally more positive sentiment. With a more positive sentiment, people buy more, businesses also expand and this helps the economy to grow even more. For 2020, the GDP forecast for Malaysia by our Bank Negara Malaysia (BNM) is between 0.5% to negative 2% for 2020?

A few people questioned the forecast of 5.8% for Malaysia for 2021 the other day after I have published this article:
GDP Malaysia 5.8%. Question is which year?
 Well, it’s just a forecast. With forecast, no one knows for sure until after it has happened but all these forecasts would have their own supporting calculations and estimations too. Perhaps this latest one will raise even more eye brows.

This is a forecast by the International Monetary Fund (IMF) and they say that Malaysia’s GDP for 2021 will grow at 9 percent and this will be the fastest among ASEAN-5 countries which are expected to have a combined GDP growth pf 7.8 percent. These ASEAN-5 countries include Indonesia, Thailand, the Philippines and Vietnam. It’s not all good news lah. IMF says Malaysia’s GDP will contract by 1.7% for 2020.  This is almost the same as the lower end forecast of Malaysia’s Bank Negara Malaysia (BNM).

Article in nst.com.my
    The International Monetary Fund (IMF) has projected a GDP growth which is even more higher than Fitch Ratings’ 5.8%. It says the Malaysian GDP growth would hit 9% versus Indonesia (8.2%), Thailand (6.1%), the Philippines (7.6%) and Vietnam (7%). Global growth wise, for 2021 it will be 5.8% versus a projected -3% for 2020. This is caused by COVID-19 lockdowns.

It said, “The advanced economy group is forecast to grow at 4.5 per cent, while growth for the emerging market and developing economy group is forecast at 6.6 per cent.”  There’s a catch. This 2021 rebound is dependent on COVID-19 pandemic under control by second half of 2020. Once this happens, then the lockdowns may be relaxed and consumer and investor confidence could be restored. It also assumes that governments were able to prevent widespread firm bankruptcies, extended job losses, and system-wide financial strains. The article is a comprehensive one with more details. Read here:
Article in nst.com.my

Don’t worry too much whether the forecasts are up by how much or down by how much. What’s certain is this. The predictions for 2021 are generally positive for Malaysia, ASEAN countries and the world. Think ahead but make your actions now. This is why they say the door for opportunities are not open all the time. If we accept the forecast for 2021, then the action is 2020. It’s definitely not in 2021 when prices would have already moved up again.

Have you researched the stocks you want to buy already?  Were they losing business or did the price went down because of sentiment? Have you started looking out for those areas which you love?  Have you identified the actual few names that you will now keep monitoring the property prices being listed online? Without these actions, we will do nothing.  Please do not just listen to free concerts online yeah. Listen to it but at the same time, do something productive for our financial future too.

Please LIKE
kopiandproperty.com FB page
 or
Sign Up for free
 to get daily updates about the property market. Else,
follow me on Twitter here.

Next suggested article:
What happens in that largest country may also happen here

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


5 Advantages for REITs for first time investors

If you have been reading kopiandproperty.com for a while and thinks property investment is interesting but you may not have the necessary down-payment yet, then perhaps Real Estate Investment Trust (REIT) can be a stepping stone too. In fact, there are many advantages for REITs too when compared to going into buying a property itself. Here are 5 advantages of REITs for your reading and understanding.

Here are the 5 advantages of REITs?

#1 – Super affordable to start.
A RM500,000 property means we need a minimum of RM50,000 just for down-payment. Well, with a REIT, we do not need 10% down-payment to buy. We can have RM500, RM5,000 or even RM50,000 and we can still choose to start with buying the REIT stock we love. There are many choices, so just choose the one we like the most by knowing which property they manage. In fact, we could just choose to buy as much as we could afford too.

#2 – Liquidity.
Unlike buying a property which will take months or at least weeks if we could afford to buy via cash, when it comes to REITs, we can buy today, sell today. We can also buy today, sell 3 months later. The timing is really up to us. Here, we have liquidity when we need them. Suddenly we found something we must buy? Just sell the REIT and get the money to invest / buy in days. This is unlike buying a property which will take many months to complete the buy and another few months to sell.

#3 – Steady dividends.
When we rent out our property today, we may not even have positive rental yields. Let’s not even talk about steady dividends. Well, when it comes to REITs, they usually declare as much dividend payout as they could unless they need the money for further acquisitions. So, every year, the investment will give returns. Steady dividends would be something expected too unless some unforeseen circumstances happen to that property which was being managed.

#4 – You ‘OWN’ a commercial property you love to visit.
Every time we visit a mall we love, don’t we wish that we are the owner of the mall? Well, with a REIT we would. We can choose to buy that particular REIT and now we can proudly say that we are the “owner” (partial owner is still owner okay…) of a famous and popular mall. So moving forward, we can say I am visiting my mall and contributing to its success too. Haha. Anyway, many property “experts” also tell everyone they own 50 properties etc… Some times, these ownership is just a 1% stake. So, if they could claim, you can claim to own the mall too. 😛

#5 – Professional management.
 It’s not possible to be able to manage all our property investments easily unless we are professionals with years of experience. This is why sometimes it’s best to leave all these management to the professionals. Well, when I referred to some of these REIT mangement teams, I do think the professionals who are managing these REITs are experienced people. Usually with years and years of real estate industry experience too. So, their decision will be better than ours too.

How to start?

If we think these 5 advantages are good, then
Here are the list of all the REITs in Bursa currently

Screenshots as below for an overview. There are also the websites for every REIT for reference.

Read more about REITs here from Bursa Malaysia too

Why I should not buy a REIT then?

There are many reasons. First one is that you think earning a salary is good enough and investments are not really necessary. By the way, I have friends who are in senior management even before they reach 40 and they are earning incomes of over half a million every year and does not even own a car! We had coffee session recently and she was still wearing the same shirt which I have seen over 5 years ago! So, if we earn so much and we do not simply spend, of course we do not need to invest.

Second one is that we are just allergic to property. Many years ago, a friend told me that every time she buys a property, it will not work out well. Well… she bought into a small office unit at RM950 per sq ft because she was promised that the rental will cover her mortgage. It did not work. She also bought another property which she is staying and it’s nearby everything she loves. She said the price appreciation is very low. Erm… if we buy into a fully appreciated area, we will need a much longer time versus just 1-2 years. So, she is now ‘allergic’ to property kind of investment… Maybe should skip REITs too.

Okay, enough of reasons. I am not selling REITs anyway. I also have no specific REIT recommendation too. So, invest or no invest, you decide lah. Your future is yours and my future is mine. Action is louder than words. All the best in your investment journey in the real estate world or outside too.

Property News Malaysia?
Sign up for daily investment news updates (FREE since Nov 2013 and FOREVER).
 Alternatively, Follow me on
 Telegram here
.

Please LIKE
kopiandproperty.com FB page
 to get daily updates about the property market beyond kopiandproperty.com articles. Else,
follow me on Twitter here.

Next suggested article:
Investing is as exciting as watching the grass grow

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


5-bedroom sold for RM329 million. Hong Kong lah.

I am very sure many would be asking if the price is for real. Well, this was reported in Singapore’s leading property portal, propertyguru.com.sg  One five-bedroom luxury villa in Hong Kong has been sold for HK$630 million (RM329 million) by property developer Wheelock Properties. It was sold to an unidentified buyer, reported by Bloomberg. It was not even the first. This is already the third luxury home that Wheelock has sold at the Mount Nicholson project, which it is jointly developing with Nan Fung Development. The sale price for the first two previous villas sold was higher than this one. This third unit was sold with an 11 percent discount compared to the first villa Wheelock sold in February. The second villa was sold in April for HK$740 million.

The article stated that prices are lower due to the
downturn in the broader property market
.
According to Wheelock’s Assistant General Manager of Project Marketing Cello Chan, the price difference does not mean anything because all three units were different from one another. He mentioned, “Every villa has a different-sized garden, pool and location, so direct comparisons aren’t possible.” It was not reported on the actual size comparisons for all three but this third unit has the following features. It is 8,054 sq ft and it comes with a 5,906 sq ft garden, underground parking for two cars and a private swimming pool.

There is no way that a full-time employee like me can even buy these luxury villas in Malaysia but I think this tells us one very important thing. Even during a downturn, people with
deep pockets would still continue to buy
. The truth is, even for Hong Kong, HK$630 million is hardly a small thing. Just watch TVB dramas and you would understand what I mean. Moving much further down the scale, even full-time employees who manages to identify a good value property, I think the best choice is to buy. It’s very true that this may not even be the lowest point yet but no one in the whole world would be able to tell you
what is the lowest point
. Looking at history however, as long as we buy what the average Malaysian would like, our investment should be safe. Happy deciding if you qualify to buy luxury villas.

written on 21 July 2016

Next suggested article:
Singapore fund favours Hong Kong property assets for now

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


5 properties, 6 Months, Profits from stocks

A friend started reading many property investment books few months ago. She has accepted my two lunch invitations though she loves to eat by herself as she spends her time efficiently and effectively, for investment. She asked me if Ipoh is worth buying. I said, for rental, no. Even Penang is tough when we are talking about rental yield. She’s more of a Bursa Malaysia’s stocks supporter for a very long time and I think she’s awesome at it. Using lots of those charts which helps to increase chances that she may hit the right stock within a short period of time. While I do not really like such way of investing but that’s my own opinion. Who cares, as long as she is able to make sufficient profits for 5 properties within this year!

She asked me if it is doable or even possible. I said, why not. As long as it is a property which you intend to rent out and you have the required 10% for first 2 and 30% for 3rd, 4th and 5th, why not?  Furthermore, as soon as the rental starts to cover the mortgage, you can continue to save money for your next investment already. She laughed. I think the possibility is quite high that she can pull this off somehow even if not all within this year itself. She is diversifying her investment portfolio, something very important because it’s bad to put all eggs in one basket.

She told me that her friends who bought in Penang in 2009, 2010 has earned crazy money. I said, at that time, close your eyes and simply buy, you will still earn loads of money. Today, if you are expecting something like that, you have to be lucky. However, if you are aiming at say 30-50% potential capital appreciation versus FD rate of 3%, then yes, property market still has that kind of return if you buy the right locations but this kind of return cannot last forever or Malaysia will suffer a ‘mortgage crisis’ of our own.

She told me she is now 30% into her goal but she would not tell me anything until she has completed her project of 5 properties within 6 months. I wish her all the best. As she is aiming at rental, she should be safe and not speculating on new properties which at this particular moment is pretty slow.

written on 24th May 2014

Next suggested article:
Investing in property – the basics (updated)

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


5 Questions First or One Question First, before you invest in anything?

There’s a Facebook page I visit often, Property Insight Malaysia. An interesting view came up today, it said that before you do any investment at all, there are five questions that you must ask before that. They are: Is it a solid company or investment vehicle?  Does it provide good income? Is there good opportunity for appreciation? Does it protect against inflation? Is it easily reversible? All these are important questions, without any doubt. However, I think somewhere along my sharing for the past 5.5 months, I wrote indirectly about ‘Are you ready’ Personally, I always believe this is the first question one should find out before you do any investment. For example, if you are thinking about investing in shares, do you ask the question of ‘is that share good?’ or do you ask ‘what’s the typical PER for companies in this industry?’ The latter requires you to really read and study and get sufficient knowledge before you embark on your investment.

When you buy property, your first property, do you ask, ‘is this location good?’ or do you ask, ‘how much is the price psf for this location, what about the neighbourhood and the rental returns at this particular moment?’ Again, the latter requires you to have read some books, attended some seminars, paid for some workshops and read kopiandproperty.com for the past 3 months.

When you decide to start up a business, do you ask, ‘can this business earn profit?’ Or do you ask, ‘what’s the typical breakeven duration. what’s more important, higher rental and higher catchment area or lower rental and lower cost and thus giving you more chance of not losing huge amount of money should the business does not work out for the first few months.

Nothing is easy. Nothing should be easy because if everything is easy, then everyone can do it and I think if everyone are millionaires, there’s no point in you aiming at just becoming a millionnaire, right? I always believe, if you did not do sufficient homework and you somehow still made it, it’s just pure luck. The thing about pure luck is this, if you do not work hard, it stops following you after a while. Personally, my advise for anyone wanting to buy property is to really read property news for 6 months and know more before you buy your first property. I know, some are much faster than me. If you do not want to invest a lot of money, then buying a property magazine with lots of articles and read continuously, together with online property news as well as visiting property fairs will help tremendously. Yes, you can do all these and be successful even if you did not subscribe for one article per day from kopiandproperty.com

Luck follows those who work hard. I believe, before you ask any questions of which one is best. Get to know first, how should you consider, which one is the best.

written on 22 May 2014

Next suggested article:
Latest update, Interest Rate, Malaysian economic situation

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


5 Reasons why I like Kelana Puteri, today.

I have no intention to sell Kelana Puteri. Not yet anyway. However, if you would like a HIGH DENSITY condo with the following five reasons, you may want to think about buying a unit, either for own stay or for investment.

Price Affordability. At just RM400,000 – RM450,000, depending on whether it is renovated or not, this works out to just RM379 – RM426 psf. Whether or not the new launches are high density or low density or even an entry level condo with minimum facilities, RM426 psf is unheard already. Typically new launches today are RM500psf or higher, even if it is on the fringes of what you consider as far. In other words, compared to new launches, this is 17-31% lower.

Price Comparison. Irregardless of whatever condos you may be comparing it against nearby or surrounding it, Kelana Puteri is not just competitive but it’s the lowest priced. This is despite the fact that the rental is comparable to the slightly higher priced condos nearby, if your unit is fully renovated and furnished. Think Zenith, Kelana Putera, Kelana Mahkota. Unless the other condos do not increase in price, otherwise, Kelana Puteri’s price psf would continue to inch up.

Location. It is in the middle of everywhere. Sunway, Damansara, Puchong and of course right next to places like SS2, SS4, SS3 etc. Food courts are nearby. Famous Pizza, Crab restaurants, Steamboat and during lunch a famous chicken rice which you have to queue up are all just 1-3 minutes away. Paradigm Mall or Kelana Station is just 10 minutes if you really want to walk. I bought it few years ago because of its location and I still love the location today after having stayed there for nearly one year. If you have kids, there’s a good children’s clinic just 60 steps away. Touch wood but if there’s emergency, Kelana Jaya Medical Centre is just 50 steps away.

Facilities. I do not want to talk about things I do not use but it has a walking track and a children’s park which is very usable. My baby loves the kiddy pool and every evening I can see people swimming in the huge pool and there’s even a coach teaching small kids how to swim for a fee. There are two tennis courts which are no longer new but are fully usable. There’s two squash courts but only one is usable today and this is used every week by a few people whom I should be able to beat easily. J There’s a very good beautician too whom my wife frequents every few weeks. According to her, it’s cheaper than Penang!

Design. There are condos which design I do not like. Kitchens which are too small. Nowhere to hang my clothes to dry etc. Kelana Puteri has a well thought of design and you can easily have a wet and dry kitchen too if you wish. The rooms are not huge but it is more than sufficient and ALL rooms has windows! The living room is also easy to design and sun light shines in everyday easily. I do not like DARK living rooms and I prefer the hot sun anytime because truth is, I can use curtains to block the sun light easily.

These are only five PERSONAL reasons why I like Kelana Puteri. If you think like me, then you may want to come and take a look. There’s no need to contact me, I have no intention to sell currently. However, go to any online sites and I bet there are some units for sale. Happy searching for your unit of choice.

Written on 4 April 2014

Next suggested article:
Shah Alam’s ‘Damansara Heights’ – RM88psf (only the land lah)

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


5 signs why office demand new norm is back to norm. (even if not immediate)

I have had a few ‘discussions’ with people about new norm and norm. Many kept saying that after this pandemic is over, new norm is to work from home. Offices will close down. Demand for offices will go down. May I remind everyone that moving forward… with the need for social distancing… do we believe demand for office will go down or at least maintained or even go up? A 200-staff company may even prefer to house the staffs in two separate locations instead of one. It’s also known as risk management in the corporate world.

As for examples of norm, let’s start with a world famous INTERNET company as the best example of whether working from office or working from home is more ‘norm.’

Sign #1 – It’s best to work remotely or from home versus in office?

Before I start this article, read this from the
world’s most famous online / internet company; google.com
“The plan would call for around 60% of Googlers coming together in the office for a few days a week, while another 20% will work in new office locations and 20% are anticipated to work remotely.”
  (What Google is saying indirectly is that 80% will work from office… and only 20% are working somewhere else.)

This is not the only case yeah.
Another one: Goldman Sachs wants its bankers to be back to office.

Another one: Facebook reopens its offices for staffs.
Another one: Morgan Stanley says that if you want NYC salary, you better work in NYC.

Sign #2 – Are rental rates holding steady for the popular office units?

Many months ago, someone asked me what will happen to the offices since everyone is now working from home. I smiled and replied that the new norm is going to be back to the norm. In other words, offices will continue to be needed. To know if there is oversupply or not, look back at rental rates. If there are any oversupply, rental rates will just fall and not just fall for the offices which nobody wants. It will also be falling for those offices which everyone wants. If rental rates are holding steady, the oversupply for these good units are not happening.

Sign #3 – Are demand for goods and services going down?

Actually, if new norm meant that the demand for goods and service are falling, then very soon, many people will be unemployed. If this happens, then the demand for offices would drop in-tandem. However, we can see very clearly that demand for goods and services remain strong and there is even one term for it. It’s called Revenge Buying.

Demand is merely delayed due to circumstances but it will return once it’s possible to buy. When all these demand continue to be strong, businesses would continue to prosper and with more businesses coming into the market, they will need an office too.

Sign #4 – Demand and Sentiment for Homes at advanced nations or those which has managed to control COVID-19 better

UK: House Asking Prices hit record high
(When people confidently asked for higher prices, what does that tell you?)
AU: Suburbs with homes which prices are above AUD1 million.
(when homes are priced above AUD1 million even in suburbs, what does that tell us?)
SG: Is housing still affordable for first-timers
 (when articles are asking this question, what does it tell you?)   I know, someone would like to point out that this is residential. Frankly speaking, if the whole residential market is dropping… then hope commercial will rise yeah… And when everyone feels confident… guess what happens?

Sign #5 – Any large corporates announcing they are moving out of their HQ and offices?

We could continue to listen to speakers who may have their own reasons why they say new norm is all about online and technology and not physical office plus technology
OR
 we could try and find and read news about large corporates announcing they are moving out from their huge offices into a much smaller office and sending all their staffs to working from home.

By the way, there’s really not many and in fact if there are, the reason is not because they want to ask all their staffs to work from home. Sometimes, when a large corporate grows larger, they will move and they may even choose to move out of the CBD in order to get a bigger space to house all their staffs together versus having a few separate offices. These happen all the time. The only difference moving forward is that maybe it’s better to house staffs in a few officers versus within one office tower. This will provide flexibility when one of the office space had to be vacated.

Office Space (including commercial space) will always be needed (even sales galleries, classrooms, retail and more)

It’s just not conducive to have close / formal chats / discussions with an important person (can be friend, colleague, client and even potential client) in a cafe. There’s just too many distractions and do we wish for someone at the next table to hear what we were discussing?

I know, it’s possible to zoom since there’s video. Let’s not talk about the potential secret recording which we could not see or know.  That’s up to how much you trust the party you were speaking to. Let’s speak about interactions. A handshake and a tap on the shoulder is far more powerful than a emoji reaction. Unless of course we stop being humans. A cheers with a knock on the glass is far more emotionally appealing than you holding your glass and knocking the glass on the notebook camera. Get real…

If we are buying a RM900,000 property, do we really want to just view a 360 video and have a zoom video call with the sales person and then we decide to buy? I am not such a person. If you are then congratulations, you are far ahead of most people I know. Not many people I know could buy something so expensive without actually having any physical connection to it.

I could go on and definitely someone related to technology could also keep giving even more ways that technology could do all these even without the need for office. I have never said technology could not enhance our work and increase our productivity. I am just saying that office space will continue to be needed. Please do feel free to work from home if needed, the decision is ours to make.  Happy working.

Love articles like this and more?
Sign up for daily investment news updates.
 Alternatively, Follow me on
 Telegram here
.

Please LIKE
kopiandproperty.com FB page
 to get daily updates about the property market beyond kopiandproperty.com articles. Else,
follow me on Twitter here.

Sign up for KopiWeekly. (only once per week of property, finance, investment news and more)

Next suggested article:
New norm is about flexibility, not smaller offices only

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


Another 5 theme parks in Iskandar?

How many theme parks do we need to have in Iskandar before it’s too many? I think this is a subjective question right? If there are five water theme parks within the same area, that’s too much. If there are five different theme parks with different entertainment value, it should still be okay. What about more than five? Yes, IRDA just announced that they are in talks with several operates to bring five more international theme parks into Iskandar within the next five years. This deserves a WOW because I have yet to even visit the current ones there. Perhaps I would drop by next year with my two kids.

IRDA’s Chief executive Datuk Ismail Ibrahim said the talks were with parties from Australia, Indonesia, Japan, Europe as well as North America. He allayed some fears too because he said that the parks do not necessarily have to be outdoor. They can be indoor and ICT based too. One may be launching by the year-end or early next year. I think if he can say this, the chances are already pretty good. The current three there include Legoland Malaysia, Hello Kitty and Angry Birds. The one I love to visit the most is without any doubt, Legoland. This is not just a special one for Iskandar but it is attracting many visitors from overseas.

What would I love to see in Iskandar? Well I wish there would be a Disneyland even if I know the chance is very slim as there’s already one in Japan and nearby Hong Kong. If not Disneyland, I think it’s time we have a good one from Europe. If possible perhaps Europa Park from Germany? Look at it’s roller coaster in the image.
If not Europa Park, then perhaps the PortAventura Park from Spain? It’s suitable for Iskandar as it is a seaside based theme-park with both the usual as well as water slides and even live shows. Perhaps we can have a great sea-view when we are on the roller-coaster, upside down. Haha. Okay, enough of excite meant for now. Let’s wait for the next announcement from IRDA then. Happy visiting Iskandar theme parks.

written on 14 Aug 2015

Next suggested article:
Ringgit down, so buy, buy and buy Iskandar? 🙂

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


5 trends for property market Malaysia

I read an interesting article about the five trends in property market Malaysia from a BM Website;
gilahartanah.com
. Thus, I think it’s good to translate and share with everyone including my personal comments. This is where more investors can read and decide which are the trends they would like to believe in. There’s really no need to listen and follow only one source, two sources or even the most famous property guru in the market. Haha. The five trends are as follows:

Trend #1: It’s a renter’s market and they are smiling happily

Actually the number of people renting homes in major cities are increasing, that’s for sure. The only issue is that the number of condos flooding the market is even faster which meant many house owners are now ‘throwing’ rental. Instead of leaving it empty and earning nothing, many are willing to take something. The focus is to survive until better times.
(Seriously, if one can pay rental for a condo in a great location, it’s wiser to buy a secondary unit in a farther area. With completion of MRT Line 1 first 15 stations by end of 2016, this opens up many new opportunities. The remaining 16 stations will be completed by July 2017. Read here:
MRT stations will change the area dynamics
)

Trend #2: Investors with the most cash would be winners.

Many projects completing within 2016 were those which started in 2013. It was in November 2013 that DIBS was stopped. Due to this, many of those who were looking to flip as soon as the project is completed are now trapped due to the rejection ratio, rising interest rates and slowing demand. Some of them may be willing to sell to break-even and some may be selling below the price they bought because they did not want to face bankruptcy. This is why investors with cash will have the most number of opportunities.
(Do note that those who bought at too high price points will suffer because when we look at some of the newer launches of today, by building higher density, the developers are able to offer at even lower price points compared to those in 2013! Affordability is key and this is mostly applicable to properties worth +/-RM500,000. Read here:
Property investment: size, area, price, affordability
)

Trend #3: It’s getting harder to get a home loan.

Banks have lent too much due to the hotspots in Johor and Kuala Lumpur since 3 years ago. Bank Negara has also issued a guideline to all banks to get them to be more conservative in their lending. This meant that even more applicants would fail in their applications for a home loan. The estimated rejection rate is 50 percent.
(Actually, it’s higher. Read here:
Jan 2016: Whopping 62 percent loan rejection
. This will likely continue because banks are now worried about the rise in non-performing loans, especially from borrowers in the oil and gas industry.)

Trend #4: The public will continue to focus on affordable homes.

It’s a fact that everyone needs a roof over their head. During those 3 years of HOT times, developers were building homes which were priced beyond the average Malaysians. Actually these luxury properties were aimed at foreigners, investors and even buyers who has strong financial standing. Thus, despite the falling prices for some of these luxury properties it is still not affordable enough. This meant that demand for affordable homes will continue to increase and will be the trend throughout 2016.
(I have written about this before. Read here:
I do not believe majority can buy RM900 per sq ft, sorry
 Instead of trying to over-stretch ourselves, it’s good to understand how much we could really afford,safely. Read here:
Stay safe, buy within affordability and stop bubble building

Trend #5: Property prices will continue to rise.

Why are the prices still inching upwards even with lower demand? Reasons stated include GST and the depreciation of Ringgit meant a higher cost of construction. Currently, developers are trying to maintain their prices. The margins of the luxurious ones are bigger but for the typical mass market homes, it is lower and not many developers would want to sell below the cost of construction.
(I beg to differ slightly. I wrote about this before:
Increase selling price due to GST, it depends on margin
 Besides that, the prices would normally inch up because of demand versus supply. Look at the popular areas, the prices are moving up faster than the less popular ones. This has nothing much to do with GST or even the Ringgit. It has more to do with supply scarcity within that particular area versus demand. Read here:
Demand vs Supply, Location versus price, your decision
 Thus, in order to beat others in getting one, the buyers would offer ever higher prices. Read here:
Prices up because of location supply scarcity
)

How many of these trends are applicable depends on what is our aim currently. If there are many loving to rent, then we need to love buying properties instead. Keeping cash and wait is not as good as buying a good property and wait. Loan approvals will always depend on whether you over-stretched or now. I seriously would hate it if the banks lend money easily. It would make me scared! Affordable homes is the only way to go moving forward because the developers themselves are willing to sacrifice some profit margins. This will not last forever be reminded. Last but not least, there is no way property prices would drop unless we face another crisis. Oh yeah, except kept for the crazily high ones. Happy investing.

written on 25 Mar 2016

Next suggested article:
More supply equals lower prices? Or less demand?

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


5 years, 5 malls, can market still absorb?

Many months ago, when Quill City mall was opened, a colleague remarked that this mall should not last long. His reasoning was because Quill City Mall was too near to the established and bigger ones in Bukit Bintang. Besides, the crowd during weekend would definitely be slow and many businesses may not last long enough to be profitable. In fact parking after 5pm as well as during the weekends were FREE. One can only see how ‘desperate’ the mall is   , right? Well, Quill City Mall is still growing today. The FREE car parks were no longer available, not even during the supposedly slow weekends. This is the case even though it’s not fully completed and the residential part has yet to start.

So, we assume Quill City Mall to be safe for now but would developers be pushing for ever more malls? Some of you might be smiling cynically when you read this piece of news. We have always been informed that there are way too many new malls today in the Klang Valley. Yet, OSK Property Holdings Bhd announced that they are targeting to another five shopping malls within the next five years. Okay, fortunately, not all the five is in the Klang Valley. This does not include the one they have just opened; Atria Shopping Gallery in SS22, Damansara Jaya.

The next one would be in Cheras and the new mall is part of the integrated development there. By 2020, all the additional five would have been completed. After Cheras would be the largest mall in Kedah in Sungai Petani. It will have one million sq ft of net lettable area. (NLA). Fourth one would be in Section 13, Petaling Jaya (200,000 sq ft NLA) and the fifth one is in Melbourne, South Bank area, near the casino. The final one would be in Cyberjaya (350,000 NLA) which is also part of OSK’s mixed-integrated project.

Are there too many malls? Well, from how OSK Property is planning for a few more before 2020, it does seem that as long as the management is done right, these malls can move up to be a popular neighbourhood mall. There’s really no need to strive to replace the bigger ones such as Mid Valley or even One Utama. I agree. That’s why I look forward to even more of these neighbourhood malls and do be reminded that the population within Greater KL alone would rise another 65% by 2020. Thus, the new mall numbers may have to also match this growth or else, sooner or later, no one would dare to go Mid Valley or One Utama or Sunway Pyramid. Just finding parking would have taken us hours….

written on 30 May 2015

next suggested article:
Kelana Jaya, upcoming RM1.8 Billion GDV by Sunway.

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


50-70% of loan rejections for property buyers, transactions to improve in November

In a news report in a local daily (24 September 2014), according to Real Estate and Housing Developers’ Association (Penang) chairman, Datuk Jerry Chan, 50-70% of home buyers have their loan applications rejected. He also said that while transactions has dropped so far for 2014, it will improve from November onwards. The reason for the continuous slowdown was due to the government’s cooling measures which got the banks more stringent in their approvals. He said however that post GST, if the purchase is for own home, it will have to continue, as long as developers do not raise prices. As for Penang, for the island, units below RM1.2 million would do well while for mainland it would be RM400,000 and below.

No surprises on the transactions part, every agent friend I know tells me of how buyers are taking much longer time to decide and many are wasting their time. Bank approvals has dropped to just 50-70% is a new thing to me. I thought it was improving but I think I was wrong. People are STILL trying to buy properties they could not really afford based on their current pay. I hope everyone realises that this is also the main reason why prices continue to inch up. Truth is, its always demand and supply.  If you still want to try to buy higher priced homes, developers would of course price their properties accordingly, perhaps giving you additional renovations or airconds but they will sell at prices that you think you can still afford!

GST is always an issue everyone loves to talk about despite the fact that if you have travelled, you would note that majority of the countries you travel to are already on GST. Seriously, if you seriously think you should stop buying or start buying properties because of GST and not your actual need or affordability, you are wrong. GST was not targeted at property and it should not be driving your decision. The worst case scenario I read so far was that property prices rise by 4% due to GST. As an example, for a RM500,000 loan, it will rise at max, RM100 per month. If your decision is based on this RM100, you are seriously not buying based on your affordability. So, yes, I understand why the loan rejection is so high.

Oh yeah, I received a Whats App message from my brother-in-law just 2 days ago. One property developer said that they are launching a referral programme for existing buyers to recommend their friends and families to buy and the commission / incentive can be up to RM100,000. The property that they are supposed to refer the buyers for? Not something newly launched and considered a premium product. Makes you wonder about the actual property price. 🙂

written on 25th Sept 2014

Next suggested article:
Affordability Availability: Penang Properties (Island).

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


50% discounted properties is not reflective of Malaysia property market says MIEA

Press Release by Malaysian Institute of Estate Agents (MIEA) – DEBUNKING THE HALF-PRICED VALUE OF PROPERTIES

We refer to a recent article in a daily under the heading “Houses at half-price, anyone?”.

MIEA President, Ms. Chan Ai Cheng

We in Malaysian Institute of Estate Agents (MIEA) took a stand to ‘debunk’ the notion. Its President Ms. Chan Ai Cheng said that this question refers to two named developers who have advertised that they are selling properties with a discount of 50%.

We came to understand that this one developer in KL made a big hue in their marketing campaign and put up one shop lot for sale at that discounted price, just one unit and no residential properties involved. The other a Johor developer also reported to have placed units for sale at the same 50% discounted price citing reason that the units are undesirable. These are isolated cases and should not be used as a yardstick that it is happening all around the country.

We do agree that developers do adjust the prices from time to time to keep up with the required sale and the need for cash flow. Majority of the developers do offer discounts but not as dramatic as reported. In a recent poll conducted by MIEA with real estate practitioners who are on the ground and knows exactly the happenings showed no such evidence.

In fact, property prices in established localities are holding on and in newly well-planned townships. Here the developers have no intention of reviewing their selling prices as demand is strong.

As much as we get excited with news flash here and there, it is always good to note that there will always be anomaly in the market but it is also very important to do your own research and let data guide your thoughts. It is important to understand that “Developers Packages” are what makes buying properties from the developers very attractive.

This normally involves low or ‘0’ downpayment, rebates, freebies and 100% loan financing etc. When stripped to the nett prices, this may give an illusion that prices have fallen dramatically when in fact different prices are being quoted at different points of marketing, e.g., Price before and after discounts to make it look that the price is low.

The public must be aware that buying a property is one of the safest investments and the best hedge against inflation and as such, over time, property price increases as it is a medium to long term investment. The rule of investment selection must always be applied.

To prove this point, the Malaysian House Price Index as reported in the NAPIC Report by Jabatan Penilaian dan Perkhidmatan Harta (JPPH), that over the last 10 years, the index has changed from 100 since 2010 to 199.1 in 2020.

Though admittedly the growth rate over the past 3 years have been less than 5% due to the challenges in the property market, the key takeaway is that the Malaysian property market is resilient.

Source : NAPIC, JPPH

The table below also proves an interesting point in that though the Volume of transaction has decreased over the last three years. The average property prices have gone up looking at 2020 and Q1 2021.

In a survey conducted by MIEA among its members, out of 502 respondents 28% stated that the property prices in the secondary market have remained unchanged while 22% stated that the price went down by 10% and another 5% said prices increased more than 10%.

As we all know there is no fire sale with the exception that those who were really affected by the lockdown had to sell and, in such situations, the price in most cases have reduced.

Ai Cheng further reiterated that as an association we also have the solemn duty and responsibility to protect the interest of the public and isolated incidental and sensational reports of this nature can disrupt the sentiments of buyers and sellers. The property market is stable though there are price movement based on demand and supply.

We confidently foresee that as soon as the lockdown ends and sectors open up, there will be much interest generated in the property market, we will see an upswing in sales when the economy and the stability of the government is secured. She suggests that the public should take advantage of the various incentives the government has already laid out both for the primary and secondary market and take advantage as buyers of your options.

— end of press release —

By the way,
kopiandproperty.com published an article about this ‘50% discounted property earlier. (click to read)
The founder, Charles failed to get his close friend to sell to him at 50% discount. Yes, this 50% discount is really a great article puller but is definitely not applicable to the market today, not the primary, not the secondary market too.

Love news like this and more?
Sign up for daily investment news updates.
 Alternatively, Follow me on
 Telegram here
.

Please LIKE
kopiandproperty.com FB page
 to get daily updates about the property market beyond kopiandproperty.com articles. Else,
follow me on Twitter here.

Sign up for KopiWeekly. (only once per week of property, finance, investment news and more)

Next suggested article:
MM2H reactivation. Concerns and suggestions by MIEA

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


5,000 registered. 22,000 by state and 20,000 by private developers?

Remember an earlier article about the number of people registered for the low cost and affordable homes in Penang.
Penang affordable properties – 51,238 applications!
 In a news article in TMI, local government exco Chow Kon Yeow said that within two to three years’ time, all the people’s needs for affordable homes would be met. He said that through Penang Development Corporation (PDC), a total of 22,000 affordable house would be built. Added to this 22,000 would be another 20,000 units to be built by private developers. This is a whopping 42,000 units and not inclusive of PR1MA units yet!  Chow revealed that actually there are only a total of 4,000 – 5,000 who have registered thus far for the affordable homes. A total of RM500 Million was allocated to PDC to build the units. I am not sure if this RM500 million is as a subsidy or a partial payment because RM500 million divided by 22,000 units meant that each unit would only cost RM22,000 to be built.

He mentioned something very important for Penang property market too. In 2013, 84% of all transactions were in the secondary market. This meant that secondary market in Penang is very vibrant and might be one of the reasons why transactions numbers did not drop much in Penang compared to many other primary property markets. If we look at online portals today, there are still mid-range apartments for RM300,000 or lesser even in the island itself.
Experts said, ‘affordable properties’ NO MORE (nonsense)
  This is not just within Penang but also elsewhere. In fact the prices jumped mostly in primary while for secondary, it has only be inching upwards because it was not the main focus from 2009 – 2012. Most of the time, the bigger units, mostly condos became highly prized by many and thus it became highly priced. It’s always an equation of demand, supply and expectation.

I am not qualified to buy the affordable units but I think it’s so important for a full transparency to the stages in which the affordable units are being built as well as making the ‘winners’ of such units public. Seriously, just recently, there were cases of the people being cheated because they paid deposits to ENSURE they get affordable units. This is not good because if it’s true these people need the units, why did they not register for the affordable units. Why did they pay deposits which are much lower than the actual cost of the unit itself? It’s a sad case for these people who got cheated but the truth is, they were also trying to cheat their way to an attractive affordable unit. Let’s continue to ask for all these needs to be met transparently.

written on 28 Oct 2014

Next suggested article:
Affordable Penang Properties – where are they?

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


RM50,000 for one (1) car park, would you pay?

To be very specific, 8 years ago, I paid RM10,500 for an additional car park when I bought my Penang condo. I told my brother-in-law and my brother to buy one. Both did not eventually as they felt RM10,500 was very expensive just for an additional car park. Over the years, the price for a car park has slowly risen from RM15,000 to RM20,000 followed by RM30,000, RM40,000 and today my friend, Ken Lim of
penangpropertytalk.com
 told me that an affordable housing project in Penang is selling one (1) extra car park for RM50,000! He called the developer concerned and the final conclusion was that this extra car park was optional. Nevertheless, without the network of LRT or even a monorail, most homes would have two cars and thus the pinch.

Actually, I seriously believe that these car parks would become more expensive. When it was RM35,000 I showed my wife the calculation which shows that if we have that cash, it may be better off buying that car park than rent. After all, when you sell your home, an additional car park carries a premium of above RM40,000 most of the time. Calculation as follows:

Assuming rental of one car park is RM100 / month. This comes up to RM1,200 / year. To earn an interest of RM1,200 with an interest of 3.5%, one would need to deposit RM34,286 into the bank and not touch this amount for a very long time. Thus, an additional car park may be worth RM35,000 if the rental is RM100 per month. Of course for KLites who are reading this, you would be scratching your head. RM100 for rental per month? My area is already RM150 per month! When I was staying in Kelana Puteri, I paid RM160 for a covered car park for my wife to park. The rental in Penang is always lower, whether it is for an equivalent condo or apartment or even a car park.

RM50,000 meanwhile is in a totally different league altogether. This assumes that the car park rental would soon reach RM150 per month? I asked another friend who owns a condo unit in Straits Quay. She said it would cost RM70k for two additional car parks plus a small storage area. Another agent said the usual premium for an additional car park can be up to RM50,000. Perhaps we wait for the developer to clear the air soonest possible. According to
penangpropertytalk.com
, the latest update is that the additional car park is OPTIONAL. This is the project that we are talking about:
800sf CONDOMINIUM for just RM299,000 – Better be quick

One car park is definitely not enough today. The decision would be a tough one to make if the RM50,000 price tag remains. I think majority would opt not to buy. When this happens, get ready for a lot of cars parked haphazardly just outside the condo. I am not sure if this is what the developer may want because this is Aspen’s maiden project and I am sure they would want to do a great job for their buyers. Perhaps any unsold car park can be rented out for a cheaper rate to the residents instead? This can be a source of income for the condo committee too.

written on 27 Jan 2015

Next suggested article:
An Update of the RM299,000 condo in Penang. ‘Short cut’ offered.

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


H1 2018 launches are mostly RM500,000 and below. (affordable enough?)

Bank Negara Malaysia’s research shows that homes needed to be sub-RM300,000 in order to be affordable to most Malaysians. In fact, they have suggested some strategies which I wrote earlier too.
Bank Negara’s 6 policy options. I like them all

The oversupply situation is well, still high currently and usually due to the prices which are not considered that affordable when compared to the median household income today. A question of whether the prices will become affordable in the future? Well, ss long as the prices do not increase while the median income continues its upward progress, it may become affordable in the near future. Remember yeah, a RM200 increment is already equivalent to ability to pay for a property which is RM40,000 more expensive. (Technically lah… I know when we receive RM200 increment, we also have other things to buy.)

As for the new launches in the market, the proportion of residential properties launched in the price range of RM500,000 and below experienced a jump to 65 per cent of total launches in the first half of this year (H1 2018) compared with 52 per cent in the second half of 2017, according to a Real Estate and Housing Developers’ Association Malaysia (Rehda) survey.
The full article in TheStar.com.my here.
 A good news is this: sales performance grew by 6.0 per cent, with 6,764 units being recorded sold. Two- and three-storey terrace houses took the lead with 2,858 units sold, mostly located in Sepang and Shah Alam, followed by apartments/condominiums (2,047 units) located mostly in Cheras and Segambut. Typical launching prices for Kuala Lumpur and Selangor is between RM500,001 to RM700,000 category.

In the survey, the “Top three suggestions from the respondents to encourage provision of affordable housing were reduction of development charges, lower land conversion premium and exemption of capital contribution.” Majority of developers in the survey said they have up to 30 per cent unsold stock. Three major reasons for borrowers unable to get loans include, “Contributing factors to the financing issue include lower margin of financing offered, ineligibility due to buyers’ income and adverse credit history,” he added.
Please refer to the full article for reference in TheStar here.

By the way, if the survey is true and the developers mostly have 30 percent of unsold stocks or lower, this is considered positive. It meant that their launches are still mostly, affordable to the buyers. Imagine if they tell you that for every new project, their unsold units are 50 percent or higher. That would be disastrous. Happy following the journey of affordable homes. (Hint… I am still waiting for our Minister of Housing and Local Government’s grand plans for the property market)

written on 12th Oct 2018

Next suggested article:
Stay safe, buy within affordability and stop the bubble from building

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...


51.57 acre land in Bangsar belongs to S P Setia solely, soon.

Reported in NST was an analysis by Kenanga. S P Setia will be acquiring a piece of land in Bangsar for RM431.9 million.
The piece of land is only 51.57 acre. The land belongs to a joint-venture (Setia Federal Hill) which is 50 percent owned by S P Setia. With this purchase of the remaining 50 percent stake in Setia Federal Hill, it will own the RM20.2 billion gross development value potential. Total development period is estimated to be 15 years. According to the report, the price tag of the remaining 50% stake in Setia Federal Hill is attractive because the implied cost-to-GDV ratio is only 4 percent. (Usually land cost may range closer to 10 percent or in some hotspots, even higher)  The purchase will be funded by the proceeds from the Islamic redeemable convertible preference shares completed in December 2016. Kenanga says that with this purchase, the net gearing for financial year 2018 (FY18) will increase from 0.24 times to 0.28 times, which is still at a healthy level.

What is net gearing ratio? In brief, according to Investopedia:

The net gearing ratio is calculated by dividing the total debt, including long- and short-term liabilities and bank overdrafts, by the total shareholder
equity
. Expressed as a percentage, this ratio reflects the amount of existing
equity
 that would be required to pay off all outstanding debts.   (Generally, the lower would indicate a healthier and stronger company even if not all debts are bad and sometimes, in order to grow faster, the company would take up additional debts to fund its growth. If we look at some of the listed property developers, 0.28 net gearing is definitely on the healthy side too.)

In the same analysis, Kenanga said that while they were surprised, they think it made good sense and that they are maintaining their TP of RM4.10. It believes that the valuation of I&P has yet to be reflected in S P Setia’s current price as its share price has not been rerated much since the announcement of the I&P acquisition. It said that many investors are also wary of property stocks which meant that any potential investor should take a longer-term view of the stock before its value is reflected in its stock price. S P Setia closed at RM3.20 today, implying a potential upside of 28 percent.
Here’s that Kenanga analysis in NST for reference again.
(I think this upside Pretty significant actually, especially for those who like S P Setia but is not yet loaded enough to buy one of their properties.) Happy reading.

written on 12Mar 2018

Next suggested article:
SP Setia’s FY18? Launching RM7 billion and hitting RM5 billion sales. Where?

Share this:
Tweet
Telegram
WhatsApp
Like this:
Like

Loading...