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Banks should give priority to potential B40 home buyers

The government should help all Malaysians who need a home, to buy a home. While not forcing them to buy immediately, perhaps the government could build homes and set these Malaysians on the path of renting to own instead.

Of course, it could also be via providing them with financial knowledge.

These days, when it comes to properties, there are many concerned ministries involved in helping B40 households own a property – a move that may not be so readily welcomed by the risk officers in banks.

According to Edgeprop.my, Housing and Local Government Minister Datuk Raja Kamarul Bahrin Shah Raja Ahmad advised banks and financial institutions to help the B40 households own a home by giving leeway to applicants.

This is to support the government’s inspiration to prioritise the B40 group in the area of house ownership. He mentioned that banks should also consider the income from their part-time jobs.

He said, “Most financial institutions combine the income of husband and wife to determine whether or not they qualify to take a housing loan, so why not take into account their side income as well?”

He added, “But of course the applicants will have to show evidence of their side income for a reasonable period of six to 12 months to support their applications.”

He was speaking to reporters after checking the development of the “Rumah Idaman Rakyat” housing project by Syarikat Perumahan Negara Berhad (SPNB) at Kampung Santong near Paka.

The project offers 229 units of affordable houses, 70 units of which are single-storey terrace, 60 units of double-storey terrace, 76 units of semi-detached houses and 23 units of shop lots, expected to be fully completed by June 2020.

Raja Kamarul also said that they will monitor the purchase of all SPNB houses to ensure that it only goes to deserving buyers.

He said, “Yes, we have been deluged with complaints about the selection of buyers of SPNB houses and other low-cost houses being based on certain quarters’ whims and fancies.

“We will ensure that it will not happen again under the new government. We want to ensure only those who are qualified, especially first-time buyers, will own the houses.”

Source: Free Malaysia Today

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Penang sees RM2.6b in investments: What does this mean for property?

According to an article in Freemalaysiatoday.com, “Aspen-Ikea JV invests RM2.6 billion on metropolis in mainland Penang”, Aspen Vision City Sdn Bhd, a joint venture (JV) company between Aspen Group Holdings Ltd and Ikea Southeast Asia, has invested more than RM2.6 billion in its 99.15 ha master-planned metropolis in mainland Penang.

Aspen Group president M Murly said that RM105 million was invested in the first phase of Central Island Park with a 50 metre-high water jet, currently a hotspot in Penang since its grand opening in October 2018.

He also spoke about Vervea which was completed in December 2018.

“We are targeting to open Vervea for business from the first quarter onwards. We welcome all established local tenants and brands that can cater to the community’s needs in the urban township.”

There will also be a new hotel coming up by Marriott International Inc Hotel Development Asia Pacific. The Marriott will operate a 308-room, five-star hotel under the Aloft brand in Batu Kawan.

Marriott’s senior vice-president Kevin Chen said this hotel for Aspen Vision City makes it Marriott International’s 29th hotel in Malaysia. Another 25 are either in the planning phase or under construction.

He said, “This makes Marriott International the largest international hotel in Malaysia.”

Marriott International Inc is based in Bethesda, Maryland, United States, with a portfolio of more than 6,900 properties, including 30 leading hotel brands spanning 130 countries and territories.

IKEA Penang’s team was in Ipoh recently to sign up more members for its privilege card.

It’s safe to assume that IKEA is going to target almost everyone within a 1.5-hour radius from the Penang store because it is not going to be enough to cater only to Penangites.

As for the Batu Kawan area being a hotspot, that largely depends on the employment opportunities that will open up there, apart from IKEA.

This is where more manufacturing plants (FDIs hopefully) will help tremendously with the development of the area. More workers will mean more demand for homes, especially for homes nearby the manufacturing plants.

This will enable more businesses to get set up and even more people to move into the area.

Source: Free Malaysia Today

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Poor transportation connectivity could derail benefits of congestion tax

As the name suggests, the congestion tax proposed by the government can benefit Malaysians by reducing overcrowding on roads, while improving the quality of life for millions of city dwellers once implemented.

This augurs well for Kuala Lumpur City Hall’s ambition of a 20% cut in carbon emissions by 2022.

However, as the country embarks on this new journey, long implemented in other developed countries such as the United Kingdom, Singapore and Hong Kong, concerns have arisen in terms of its implementation and quality of public transportation, which are vital towards helping reduce the current heavy traffic flow.

There needs to be a seamless public transportation system involving buses and inter-city rail connectivity for the congestion tax to have a positive impact on traffic flow and the environment.

More than buses, the rail systems is obviously a better option, as it is not just more environmental friendly, but also one of the safest transportation modes.

A contributing factor to the success of rail transport in developed countries is high environmental awareness, something which the government must create among Malaysians.

“Last mile connectivity at city train stations is still lacking.With people needing to get to work or their destinations on time, unreliable transportation modes would be avoided.

“Nowadays, you can see the roads are getting more congested going into Kuala Lumpur, and not everyone can take earlier trains, to go to work, due to other daily routines,” Thought Partner Group Malaysia group managing partner Abi Sofian Abdul Hamid told Bernama.

He said if connectivity is bad or the public transportation service unreliable, people would start driving, as they believe they have better control of time. Our road capacity is simply not adequate,” he added.

Currently, the Klang Valley is seeing a number of major rail projects that will boost rail services, namely the Light Rail Transit 3 (LRT3) and Mass Rapid Transit 2 (MRT2) projects, with a combined value of RM40 billion.

The projects are scheduled for completion by February 2024 (LRT3) and July 2021 (MRT2).

The RM1.4 billion Klang Valley Double Track (KLDT) phase 1 project is expected to be completed before end-2020 and is expected to reduce point-to-point train travel times for the KTM Komuter to 7.5 minutes from the current 15 minutes.

The project will also alleviate problems such as delays and cancellations due to failure and derailment, especially when most of the KTM track network is older than 20 years.

The KVDT phase 1 covers the upgrading of 43 km of rail tracks, stretching from Rawang to Salak Selatanand from Sentul to Simpang Port Klang near the Mid Valley Mall.

Meanwhile, Phillip Capital Management senior vice-president (Investment) Datuk Dr Nazri Khan Adam Khan said as Malaysia aimed to become a world class economy, the local transportation network should also evolve and emerge to become more efficient than before, including last mile connectivity.

“Although the World Economic Forum has ranked the Malaysian public transport system in the top 20s for the last three years, I believe we need to improve further.

“We have a good MRT, LRT and train system, but I think for the last mile connection, we are still not there yet. We probably need to consider fast commuting transportation such as high-speed trains that connects different cities,” he said.

Hence, Nazri believed that it would be possible to implement the congestion tax in Malaysia, provided  issues with public transportation and last mile connectivity are resolved.

“We need to get the right formula to do this. We can learn from developing countries that have implemented it (the congestion tax) successfully,” he said.

A quick check on the current public transportation services revealed that from 2008 to 2017, the KTM Komuter ridership peaked in 2015 with 49.69 million passengers, the LRT Kelana Jaya Line recorded its highest ridership in 2017 with about 83.58 million passengers and the LRT Ampang line hit 63.27 million passengers in 2014.

According to Rapid Rail Sdn Bhd, the Kelana Jaya line was the busiest and most popular LRT line with an average 290,000 riders on weekdays. The Ampang Line has a ridership of 190,000 on average on weekdays, while the MRT and Monorail has about 160,000 and 36,000 users.

At present, the KL Monorail line is serviced with five sets of two car-trains with an average ridership of 37,093 passengers daily, compared with 71,943 in 2015, 63,614 in 2016 and 48,748 in 2017.

Last month, the government announced its proposal to replace toll charges at four major highways with a congestion charge and said the move could save taxpayers billions of ringgit.

It is to hold discussions with Gamuda Bhd to acquire four highway concessions, namely the Damansara Puchong Expressway (LDP), Sprint Highway, Shah Alam Expressway (Kesas) and the SMART Tunnel.

Gamuda has significant stakes in highway concessions — 70% in Kesas, 52% in Sprint, 50 per cent in SMART and 44% in Litrak.

Finance Minister Lim Guan Eng was reported to have said the acquisition exercise for these highways at a “fair and reasonable” price would also save taxpayers from having to pay compensation of about RM5.3 billion to the toll concessionaires.

Echoing this, Nazri opined that there should be a favourable price for the highway operators on a “willing buyer willing seller” basis.

“Currently, shares of Gamuda and its partners that own highway concessions are bearish.

“This is likely continue for at least six months until the government completes its discussions with Gamuda and finalises the legal, regulatory and financial requirements (for the takeover of the highways),” he said.

Source: Edge Property

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The state of Malaysian housing supply

Definition

  • Number of launches comprises properties launched in 3Q2018
  • Property overhang comprises units that are completed with the Certificate of Completion and Compliance /Temporary Certificate of Fitness for Occupation (TCF) but remained unsold for more than nine months from the date of launch or after 1st Jan 1997
  • Existing stock are units that have been issued with the certificate of fitness (CF) or TCF prior to the review period
  • Incoming supply comprises units where physical construction works are in progress including starts and CF/TCF which have not been issued during the review period
  • Planned supply comprises units with building plan approval obtained within a review quarter. The units have not started physical construction works
  • Future supply comprises incoming supply and planned supply

Source: Edge Property

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Incentives for homebuyers

For most Malaysians, buying a house is tough. A high upfront payment coupled with a life-long mortgage commitment can be daunting, so it makes sense to take any help you can get to lower the cost of owning a home. Besides the many freebies and promotional packages that property developers are offering, the government has come up with several incentives to assist the rakyat, especially the lower income group and first-time homebuyers, such as stamp duty exemptions, deposit assistance and low-interest rate loans. Here are some of them.

Stamp duty exemptions 

  • Stamp duty exemption on the instrument of transfer and loan agreement for sales and purchase executed between Jan 1, 2019 to Dec 31, 2020 for homes priced up to RM300,000
  • For homes priced between RM300,001 to RM500,000, the stamp duty exemption on the instrument of transfer and loan agreement is limited to the first RM300,000 and only for SPA completed between July 1, 2019 to Dec 31, 2020
  • For first-time homebuyers who are purchasing homes priced between RM300,000 to RM1 million, stamp duty is exempted on the instrument of transfer for the purchase of homes from Jan 1 to June 30, 2019
  • Waiver of stamp duties on instruments of transfer for purchase of residential properties priced up to RM1 million and for loan agreements of up to RM2.5 million, that come under the six-month National Home Ownership Campaign 2019 (HOC 2019) which runs till June 2019

Youth Housing Scheme

  • The scheme offers a 100% loan to single or married youths to own their first home
  • Only eligible for the purchase of properties worth between RM100,000 and RM500,000
  • Limited to 20,000 buyers on a “first come, first served” basis
  • Monthly financial assistance of RM200 to borrowers for the first two years
  • 100% stamp duty exemption on the transfer of ownership and facility documents for properties priced up to RM300,000
  • Maximum financing tenure is 35 years provided the borrower’s age does not exceed 65 years at the end of the tenure
  • Eligible for Malaysian citizens aged between 25 and 40 years old; first-time homebuyer with a household income of no more than RM10,000 per month

First Home Deposit Funding Scheme (MyDeposit)

  • The scheme assists first-time homebuyers in paying the deposit for a home amounting to 10% of purchase price or a maximum of RM30,000 per unit for private housing and housing projects on the secondary market priced RM500,000 and below
  • The house is not allowed to be sold for a period of 10 years
  • The owner is not allowed to rent out the house, but use it for own stay only
  • Eligible for Malaysian citizens aged 21 and above; first-time homebuyer with a household income of between RM3,000 and RM15,000 a month

Bank Negara Malaysia’s Fund For Affordable Homes

  • •An RM1 billion fund established by Bank Negara (BNM) to assist first-time homeownership  among the lower income group to purchase affordable homes that are priced at RM150,000 and below in the primary market
  • Maximum financing rate is 3.5% per annum
  • Maximum loan tenure is 40 years or up to 70 years of the applicant’s age, whichever is shorter
  • Participating financial institutions: AmBank, Bank Simpanan Nasional, CIMB Bank, Maybank and RHB Bank
  • Available for two years starting Jan 2, 2019, or until the RM1 billion is fully utilised
  • Eligible for Malaysian citizens with a maximum monthly household income of RM2,300; must be salaried workers or self-employed and do not have any record of impaired financing for the past 12 months

My First Home Scheme

  • Allows first-time homebuyers to obtain 100% financing from a panel of banks and financial institutions, enabling them to own a home without paying a 10% down payment
  • Limited to residential properties valued between RM100,000 and RM500,000
  • The home must be for owner-occupation, not for any other investment purposes
  • Financing tenure must not exceed 35 years subject to borrower’s age not exceeding 65 years at the end of the financing tenure
  • Eligible for Malaysian citizens or employees in the private sector of up to 40 years of age; first-time homebuyer with a monthly gross income not exceeding RM5,000 if single borrower or a monthly gross income not exceeding RM10,000 if joint borrower (family only)

Mortgage guarantee

For first-time homebuyers with a household income of up to RM5,000 per month, the government will allocate RM25 million to Cagamas Bhd to provide mortgage guarantee facility under the My First Home Scheme for loans by participating banks, which will allow eligible borrowers to obtain 100% financing or more, subject to fulfilling the scheme’s criteria.

Source: Edge Property

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Timely release mechanism of bumiputera lots will reduce price of property

Recently, there were news reports stating that the Perak state government will allow housing developers to apply for properties under the bumiputera quota to be released to other buyers if the properties were unsold by the Perak Housing & Property Board after six months. The said policy is to take effect from April 1, 2019.

It was also reported that 50% of the bumiputera quota can be released to other non-bumiputera buyers with these conditions:

  • The physical construction has achieved 30%
  • That 60% of the non-bumiputera lots have been sold.
  • The balance 50% of the bumiputera quota can be released with the following conditions:
  • After physical construction has reached 80%
  • That 90% of the non-bumiputera lots have been sold

Housing developers who sell bumiputera lots to non-bumiputera buyers without the state’s prior approval would be subjected to fines or double the levy payment.

Proactive initiatives

The National House Buyers Association (HBA) welcomes the move by the Perak state government to allow the early or rather ‘timely’ release of bumiputera lots as such a move will lead to lower house prices in the long run. Such proactive initiatives should be emulated by other states in Peninsular Malaysia.

With this step, developers will be able to reduce holding costs and thus bring down house prices PROVIDED they do not conveniently ‘up their profit margin’.

There are many costs incurred in building a house that common buyers can relate to such as the costs of the land and the construction including labour and building materials.

However, an important cost factor that many people may overlook is time — the longer the housing developer or the building contractor takes to finish building a project or to sell off their properties, the higher the cost incurred.

Under the New Economic Policy, property developers are required to reserve a certain number of units of their developments, say a minimum of 30%, for only bumiputera purchasers. The bumiputera quota differs from state to state and usually ranges from 30% to 50%. Furthermore, these bumiputera lots are to be offered at a discount ranging from 5% to 15%.

For housing developers, it would be quite mind boggling to understand and meet the various states’ policies with regards to this. They are after all, not charitable organisations and any additional cost incurred by them will be passed on to buyers.

What happens if the developer is unable to find enough bumiputera buyers for the bumiputera units? What if the State Housing Board is unable to find qualified bumiputera buyers?

The longer it takes to sell the bumiputera units, the higher the cost for the developers as their capital is locked down in those unsold units. The holding cost will eventually be transferred to future house buyers both bumiputera and non-bumiputera via the house price. Most developers will factor in their budget, the anticipated ‘holding cost’ for a period of three years since the current mechanism dictates so.

Developers have been complaining about the release mechanism of bumiputera units as being not transparent, not consistent, and differs from state to state.

HBA had called for more transparent and consistent policies for the automatic release of bumiputera units and the move by the Perak state government is indeed a step in the right direction.

Such policies that benefit the rakyat must be heralded.

Back when the New Economic Policy was first announced, the percentage of bumiputeras in urban areas might have been considered low. However, as we approach the year 2020, the percentage of bumiputeras in urban areas can be considered high. Hence, this requirement may be less relevant today.

Ideally, it is good to have a balanced ethnic mix in every housing area but this may be difficult to implement. For instance, it would not be too practical to implement a strict 30% bumiputera quota for areas such as Kepong or Cheras in Kuala Lumpur while a 30% bumiputera quota would not be sufficient for areas such as Shah Alam, Selangor or Datuk Keramat in Kuala Lumpur.

HBA believes the move by the Perak state government to allow faster release of bumiputera units is a step in the right direction and will ultimately benefit all in the long run. Hopefully, with the new initiative by Perak, the housing market may see a reduction in house prices by say, about 5%?

Source: Edge Property

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More went under the hammer in 2018

The number of properties put up for auction is rising. Data collated by online auctions listings platform

AuctionGuru.com.my showed that there was a total of 32,611 properties worth RM15.56 billion that went under the hammer in 2018, an increase of 15.4% year-on-year (y-o-y) in volume and 27.6% in total value.

AuctionGuru.com.my executive director Gary Chia has observed that the number of newly completed properties put up for auction rose last year.

“These new [foreclosure] properties were handed over to owners less than three years or five years ago, some are completed units that were sold previously under the Developer’s Interest Bearing Scheme (DIBS). There were also more foreclosure properties in new developments such as in Semenyih and Ampang,” he tells EdgeProp.my.

Introduced by property developers in 2009, DIBS allowed buyers to purchase a property with almost zero entry cost, no down payment and no bank loan, until the property is built and handed over to the buyer.

The easy homeownership scheme spurred many to jump on the property investment bandwagon. It was abolished in 2014.

Among the properties which went under the hammer last year (2018), 85.5% of them were residential properties (27,877 units worth RM10 billion), according to AuctionGuru.com.my data.

About 11% or 3,663 cases were commercial properties worth RM4 billion while there were 1,071 land plots worth RM1.5 billion, making up around 3.3% of total cases.

A test of holding power

According to Chia, the past two years have been a testing period for property investors as most of the units purchased during the property boom (in 2012 and 2013) are now completed and handed over.

“For those speculative investors, who themselves are wage earners struggling to make ends meet, they will find themselves stuck in this buyers’ market where choices are many and varied,” he notes.

What’s most challenging about the current property market, Chia says, is that salary increments among wage earners have not caught up with property price growth thus hampering affordability, while banks are cutting down exposure to mortgage loans due to concerns that borrowers may have problems servicing their monthly instalments.

Difficulties in securing mortgage loans have also affected auction market transactions as Chia notes that a number of successful bidders have seen their 2% deposit forfeited as they could not obtain a loan.

“Most of the cancelled cases were foreclosure properties priced below RM500,000. We are cautious of the current trend where developers and the government are focusing on affordable housing below RM500,000; the problem is not the price, it’s the loan servicing ability of low- and middle-income buyers,” Chia reckons.

Penang

Khoo & Associates Realty business development manager Long Soo Keat has noticed that more newly completed high-end, non-landed homes went under the hammer recently, since the fourth quarter of 2018.

According to Long, the primary and secondary property markets in Penang continue to be robust due to high demand, especially on Penang Island. Houses listed on the sub-sale market normally find buyers within a relatively short time. “Only certain properties in bad shape will see no takers or be put up for auction,” he says.

“We normally only receive one or two foreclosure cases a month, or sometimes none. A majority of the properties are either low-cost housing or properties which are in bad condition.

“However, the number of foreclosure cases have increased to around three or four a month and some of the properties are high-rise residences priced around RM600,000 and above since 4Q2018,” says the auctioneer from Penang.

East Malaysia

Over in East Malaysia, Ernte Real Assets Sdn Bhd vice-president (strategy and planning) Clement Ang notes that there are no significant changes in terms of the number of foreclosure properties.

“Unlike the Klang Valley, Penang or Johor Bahru, East Malaysia seldom experiences oversupply as most property purchasers are own-stay buyers. Only a small portion of high-income earners could afford a second or third property for investment. Therefore, developers will build according to market demand,” he explains.

AuctionGuru.com.my data shows East Malaysia (Sabah and Sarawak) had 2,389 properties valued at RM550 million that went under the hammer in 2018, the second lowest among the regions.

East coast

The region that has the lowest number of foreclosure properties is the east coast region — Kelantan, Terengganu and Pahang — which registered 1,206 auction cases worth RM550 million last year.

Central region tops the list

The central region which includes Selangor, Kuala Lumpur and Putrajaya has the highest number of auction cases in 2018 — a total of 17,712 properties valued at RM9.7 billion.

The Northern region (Perlis, Kedah, Penang and Perak) is next with 6,860 auction properties worth RM1.9 billion followed by the Southern region (Johor and Melaka) with 4,444 properties valued at RM2.3 billion.

Selangor, Kuala Lumpur, Johor and Penang have the highest number of auction properties.

Selangor saw the most properties put up for auction last year with 12,742 properties worth RM6 billion while Kuala Lumpur recorded 3,177 cases valued at RM2.8 billion.

Johor has a total of 3,719 properties worth RM2.1 billion and Penang 2,599 properties valued at RM955 million.

Growing interest

The auctioneers have also noticed a growing interest in auction properties based on enquiries although this has not translated into real sales.

Ernte Real Assets’ Ang notes that he receives dozens of phone calls daily to check on auction listings. The majority of them are serious buyers who have done their price research and are keen to know the details of the property.

“But when it comes to bidding, there is no significant increase in the number of bidders and transactions. Perhaps, the interested buyers still see room for the prices to go lower,” he opines.

According to Ang, only one or two deals are concluded for each auction session which could see an average of 20 properties going under the hammer.

“Before 2018, around 25% to 30% of the auction cases could find new buyers in each session, regardless of property type,” he says.

Good deals, no takers

Chia from AuctionGuru.com.my has seen quite a number of good deals on the auction market — properties with their reserve prices at below market price but with no takers.

For instance, an auction listing on EdgeProp.my of a two-storey terraced house in Bandar Hillpark in Saujana Utama, Selangor has a reserve price of RM328,000, or around RM234.45 psf for a leasehold house with land area of 1,400 sq ft (built-up of 1,500 sq ft).

A secondary market listing on EdgeProp.my of a similar property is asking for RM430,000 or an average RM307.14 psf based on land area size. Compared with the sub-sale listing, the auction property price is 30% lower.

Despite the many negative perceptions over auction properties, auctioneers see good opportunities for buyers now to shop for properties in their desired location and within their budget.

However, many are reluctant to buy auction properties owing to concerns over hidden costs such as maintenance fees and utility fees owed by the previous owners, but Chia explains that in most cases, the financial institutions are willing to undertake these costs.

“However, there are also some cases where the banks do not undertake the cost. To find out, the bidders just need to check with the auctioneers, during or before they bid for the property,” he says.

Chia offers another tip — let the property be auctioned a few more rounds. Every time a property is up for bid, the property reserve price will drop at least 10%. The longer you wait, the higher the chance of one getting the property at far below market rate.

However, the overall auction buying process requires a lot of research. Ang opines that for own-stay first-time homebuyers, the advantage of purchasing auction property is that it is already built and one could get to know the neighbourhood before making a decision.

 

Source: Edge Property

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How effective are property makeovers?

To property owners eyeing rental income, finding a reliable tenant in a short time is important to maximise rental yield as the longer the property is left empty, the higher the holding cost such as monthly instalments and maintenance fees, for the owner.

According to Ingenious Makeover Sdn Bhd director Thormy Goh, there seems to be an increasing number of property owners who have turned to the rental market because they could not find a buyer for their properties in the secondary market. And based on his experience, well-furnished units are more appealing to tenants.

“Unlike purchasing a property where buyers are price sensitive, tenants would not mind paying a bit more for a unit as long as it meets their daily needs and desire for lifestyle living. To attract such tenants, interior design plays an important part,” says Goh.

He says a well-designed and fully-furnished unit could fetch around 20% higher rental than a bare unit or those with basic furnishing such as ceiling fan and water heater.

EdgeProp.my’s current rental listings showed that a basic furnished unit (built-ups of 1,112 sq ft to 1,202 sq ft) in Pearl Suria at Old Klang Road, Kuala Lumpur, is asking for RM2,000 to RM2,200 a month; while a partially furnished unit’s asking rental ranges between RM2,200 and RM2,600 and a fully-furnished unit is asking for a monthly rental of RM2,600 to RM2,800.

Property makeover company The Makeover Guys Sdn Bhd managing partner Vince Koh recalls his experience as an inexperienced landlord who tried to get higher rental income.

“I was once a property investor looking for short-term gain but realised that speculation was not a sustainable way of investment. Since I couldn’t find the buyer and I was quite tight on cash, I decided to renovate my apartment in Bandar Utama and hoped to rent it out with higher rental to cover my monthly instalment,” he tells EdgeProp.my.

He spent around RM12,000 to purchase the basic fittings and appliances as well as some loose furniture such as sofa, kitchen cabinet and beds.

“The unit was rented out at RM1,000, which was around market price. But I realised later that if I had spent a little more effort and money on interior design and furnishings, I might be able to get better rental,” he adds.

Koh’s business partner Gavin Liew, who is also the managing partner of The Makeover Guys, took a different approach in property investment, targeting premium tenants.

Liew had wanted to rent out his first property — a unit in Subang Perdana Apartment, Subang Jaya, at a rental of over RM1,000, which most real estate agents had told him would be an unachievable target.

But he was unperturbed. The first thing Liew did was to renovate and give the place an interior makeover.

“It took me around five months to complete the task. It was a tiring process as I handled everything myself, from the design to looking for contractors, to hunting for items such as fittings and furniture, and then to decorate the unit,” says Liew.

But all the hard work paid off. After the five months of work and an investment of around RM13,000, the unit caught several tenants’ attention almost immediately and within a month, it was rented out for a princely sum of RM1,500 a month — a record high in Subang Perdana back in 2010, according to Liew.

“Interior design is like icing on the cake, it is okay to do without but if it’s nicely done, it could have a significant impact on rental or pricing,” Liew offers.

Competing for quality tenants

Established since 2015, The Makeover Guys observed that the local rental market has seen significant changes in its tenants’ profile, but most property owners have not caught up with the change and many especially the older generation, consider those who rent as those who could not afford to buy and own their own homes, says Liew.

However, times have changed. According to Liew, nowadays, many young professionals who work in city centres are high-income earners who prefer not to be tied down by a property purchase.

“For the younger generation, they can choose to work and stay in any place or country in the world. That’s the main reason they choose not to own a property. For these young professionals, they want instant gratification, they don’t mind paying higher rental if the apartment fulfils all their requirements, both daily and lifestyle needs,” he opines.

Koh concurs, adding that traditional fully-furnished units that come with basic furniture and air-conditioning units no longer attract tenants the way they used to do due to rising affluence.

If property owners could spend more effort and investment to create a stylish-looking home, they would have more bargaining chips in getting high rental value and good quality tenants.

MIP Properties negotiator Catherine Wong says nice interior design and home furnishings raise a property’s attractiveness to tenants with deep pockets.

“People appreciate beautiful interiors that also offer everything that one needs in a home such as built-in wardrobes, cabinets, appliances, loose furniture and even cutlery!” she adds.

To landlords looking for expatriate tenants, Wong advises them to engage professionals to refurbish or design the unit’s interiors.

“Interior design is important to serve the aesthetic purpose and to improve the living quality,” says the real estate negotiator who was formerly an interior designer.

One of her clients, after heeding her suggestion to makeover a 2,020 sq ft unit at Residensi 22 condominium in Mont’Kiara, had attracted an expat tenant who was willing to pay RM8,500 a month for the tastefully designed, fully furnished and ready-to-move-in unit.

EdgeProp.my listings data show that the average asking monthly rent for units at Residensi 22 is RM7,995 a month or RM3.64 psf.

A value-add tool

Many landlords in Malaysia choose not to renovate or decorate their rental property as they assume that it requires heavy investment to hire an interior designer and to carry out the renovation or design works. Many fail to realise that a thorough makeover that involves hacking walls and renovation works is often not needed because sometimes minor touch-ups can give amazing results, says The Makeover Guys’ Koh.

In one of their early projects, the owner of a bungalow with a 5,000 sq ft built-up in Damansara Heights, Kuala Lumpur sought their help to renovate the property as it had been put up in the market for sale for some time but failed to attract buyers.

“It was a well-maintained and fully-furnished bungalow. It even has an expensive chandelier in the living room but the problem was the interior design which was rather old-fashioned, so it was difficult to attract current trendy young buyers,” says Liew.

With a budget of around RM65,000, Liew and Koh changed most of the furniture in the house, the lights as well as some slight touch-ups by creating feature walls, adding in a carpet and accessories like decorative items and plants.

Following the makeover, the property was sold at the asking price without any negotiations because the buyer liked the interior design besides the address.

“Evoking emotion [in the potential buyer or tenant] is important if you want to get a better deal,” adds Liew.

Meanwhile, MIP Properties’ Wong advises owners of old houses in established areas to consider giving their property a facelift with renovation wet works, such as repainting the entire property, changing old bathroom tiles or parquet floorings and changing the light fittings to give the house a new look.

“With the wet works done, even without new furniture, the house will still get a fresh look and be more attractive to potential tenants,” she offers.

Although location could be the fundamental factor that supports property values, maintenance and interior upgrades are just as important for owners to have better bargaining power when selling or renting out their properties.

On the other hand, one should not go overboard. Goh from Ingenious Design advises property owners to be prudent about spending on interior design in order to maximise rental yield. Owners of normal rental high-rise residences should set aside around 5% of the property price (or market price if you have bought the property decades ago) for renovations and furnishing while owner-occupiers should consider setting aside around 20% or not more than 30% of the purchase price to ensure future sales gain as renovations usually don’t count in property valuations.

 

Source: Edge Property

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Bank Negara keeps OPR unchanged at 3.25% with inflation seen to stay low

KUALA LUMPUR (March 5): Bank Negara Malaysia’s Monetary Policy Committee (MPC) has decided to keep the overnight policy rate (OPR) at 3.25% at its meeting today, as it anticipates that Malaysia’s growth would be sustained in 2019 with continued support from private sector spending, while inflation would remain low in the immediate term.

It also sees stable labour market conditions and capacity expansion in key sectors to continue to drive household and capital spending, though support from the external sector is expected to soften in tandem with moderating global growth momentum.

“On balance, the baseline forecast is for the Malaysian economy to remain on a steady growth path. However, materialisation of downside risks from unresolved trade tensions, heightened uncertainties in the global and domestic environment, and prolonged weakness in the commodity-related sectors could further weigh on growth,” the central bank said in a statement.

It said this after noting that global growth momentum has been slowing with unresolved trade tensions remaining a key source of risk that is affecting global trade and investment activities.

“Tighter global financial conditions and elevated political and policy uncertainty could lead to financial market adjustments, further weighing on the overall outlook,” it added.

Bank Negara Malaysia

Inflation restrained by policy measures
In terms of inflation, the central bank said it is expected to remain low in the immediate term mainly due to policy measures that include the lower price ceiling on domestic retail fuel prices until mid-2019, and the impact of the changes in consumption tax policy on headline inflation.

“For 2019 as a whole, average headline inflation is expected to be broadly stable compared to 2018. The trajectory of headline inflation will continue to be dependent on global oil prices. Underlying inflation is expected to be sustained, supported by the steady expansion in economic activity and in the absence of strong demand pressures,” it said.

Hence, the central bank is of the view that “at the current OPR level, the degree of monetary accommodativeness is consistent with the intended policy stance”.

“Recognising that there are downside risks in the economic and financial environment, the MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation,” it added.

Source: Edge Property

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Penang International Aiport to undergo 1.2b expansion

GEORGE TOWN: The Penang International Aiport (PIA) expansion project will be carried out via a private finance initiative (PFI).

Finance Minister Lim Guan Eng said the Federal Government was short of funds and the expansion project was expected to cost more than RM1.2 billion.

“We will open the tender for the expansion project this year,” he said at the DAP service centre in Air Putih, here, today.

“We hope that the process can start this year and the private company appointed by the end of this year.

“A PFI will help us undertake the expansion project more efficiently as well as save our cash resources.”

Lim said the expansion project, which would raise the airport’s capacity to 16 million passengers per year, would attract more tourists as more international airlines were expected to fly directly to Penang in the future.

He said this would boost the economy, especially the tourism sector.

“For example, we can see from Qatar Airway’s direct flight to Penang from Doha that there has been an increase in tourism and this increase is not only from the Middle East but from other countries, including Russia, Eastern Europe and even America because they can use the direct flight from Doha to Penang,” he said.

The state government has been seeking Federal Government funds to expand PIA to serve as a low-cost carrier terminal for years.

The airport, which was previously plagued with flash flood problems, was enlarged in 2012 to meet its current capacity of 6.5 million passengers.

The capacity was supposed to be sufficient to last until 2020, however, it was exceeded last year with 7.8 million passengers.

Lim said a similar PFI funding approach would also be utilised for Kedah’s first international airport in Kulim.

“As for Kulim, that is handled by the Kedah menteri besar.

“We are planning to use the PFI model for the construction of other airports in the country in the future, as it will save the government a lot of money,” he added.

Kedah Menteri Besar Mukhriz Mahathir had previously announced a special purpose vehicle company, KXP Airport City Holding Sdn Bhd, to look into developing the airport.

The company will begin operations on March 4, with the cost of building the airport estimated at RM1.6 billion.

Chief Minister Chow Kon Yeow told the New Straits Times that Penang welcomed the expansion plan and hoped that it could start as scheduled.

On an unrelated matter, Lim said he would look into allegations by a few retirees that they did not receive the RM500 one-off aid from the government.

“This is the first time I had heard of this. As far as I know, the aid was given out last year, so I am not sure. I will check,” he said.

Last year, the government announced the one-off aid for retirees while presenting its budget.

Source: New Straits Times