Jump to content

Kuala Lumpur & Malaysia Property (MY#1)


Recommended Posts

Am I correct in thinking that Malaysia, is one of the few Asian countries where its possible to hold the property deeds as a non-resident foreign national? Anyone know any other spots in Asia where non resident foreign nationals are able to own property in their own name and in addition have a transparent legal system? :blink:

 

You can own property, same as a local, in Hong Kong.

But virtually all property here is structured as a 50 year leasehold from the government,

so individuals, whether local or foreign, are not the gebuine permanent owners.

 

Many believe the government will simply rollover the lease, at maturity. else the whole of HK will lose out.

 

Mabon,

Thanks for that comment. I may be going back to Malaysia (Penang) in about two weeks.

Link to comment
Share on other sites

  • 2 weeks later...
  • Replies 71
  • Created
  • Last Reply

Growing water shortage concern: Kuala Lumpur, like other States in Malaysia, remains concerned over a possible water shortage in the near future in view of unevenly distributed rainfall and growing pressure on water supplies for domestic and industrial purposes. To overcome the problem in Kuala Lumpur, interbasin or interstate water transfers are expected to become an increasingly common feature of water resources development planning.

 

Plans for development and management of water resources: Under the Seventh Malaysia Plan (1996-2000) a new national study will be undertaken to identify potential water resources, carry out feasibility studies of water resources development projects and formulate a long-term national master plan with an integrated approach to the development and management of those resources.

 

Studies are conducted on water resources assessment: The study will assess the quality and quantity of water in all States, including Kuala Lumpur, for domestic, industrial, irrigation, hydropower and other uses for the years 2000 to 2050. The results of the study are expected to enable the government to plan an overall priority programme for phased development of the recommended water resources projects.

 

/see: http://www.unescap.org/DRPAD/VC/conference/ex_my_17_wrp.htm

Link to comment
Share on other sites

The gf and I will be visiting Penang this weekend- in case any GEI posters

know any property agents there that they can recommend, or are able to meet for a coffee

 

(we already have one recommended. thanks very much, A.)

Link to comment
Share on other sites

The gf and I will be visiting Penang this weekend- in case any GEI posters

know any property agents there that they can recommend, or are able to meet for a coffee

 

(we already have one recommended. thanks very much, A.)

 

 

 

Dr Bubb

 

Its a funny situation in Penang at the moment since the election in March. The opposition party won the state of Penang and there is a rift with the central government (Native Malay run). They have threatened to pull a number of major civil projects such as the monorail. The second Penang Bridge is under pressure as it it several months late. Basically the Malay don't like the situation as the Chinese have control of the state.

 

I am not sure if you are planning to invest or if it is a vacation for you but please ask all of the relevant questions.

 

Nevertheless have a good time its a fun place!!

 

Matsali

Link to comment
Share on other sites

Dr Bubb

Its a funny situation in Penang at the moment ...

 

Thanks for those comments, M.

We have just arrived at our hotel after a long slow journey in heavy traffic. And you are right- although Penang obviously needs a monorail, there's plenty of scepticism here about whether it will ever happen.

 

A chinese guy from Singapore told us that he heard about the Coming Monorail when he moved to Penang 9 years ago, and after 9 years it still hasnt happened. Maybe it never will.

 

A bridge is needed too. Perhaps with the two projects coming (Light, etc), there will be enough high profile attention on Pnenang to force them through. That would be the optimists view perhaps

Link to comment
Share on other sites

FOUR DAYS INVESTIGATION into Penang's property market leaves me more bearish that when I arrived. I will later post a longer piece on this, but I wanted to post a few bullet points while they are still fresh in mind.

 

BULLISH

 

+ Prices for qualitry properties at good locations are dramatically cheaper than in "major Asian cities" like: Hong Kong and Singapore. Some good projects here range in price from Rm350-400 psf (Times Square in the center of Georgetown and at Platino, to Rm.400-500 psf for top projects on Gurney Drive, at 600psf for the Serviced Flats in the Marina area of E&O's new project at Seri Tangjung Pinang (STP.)

 

+ Penang's continues to attract foreigners, given its mostly pollution-free environment, its rich cuture with an interesting historical heritage, good food, reasonable shopping, and profitable business environment.

 

+ Penang is the most sought after location in Malaysia's successful Malaysia My Second Home (MM2H) program. ... Capital gains on property purchses were eliminated in April 2007...

 

BEARISH

 

- Massive supply will be hitting the market...

- Much of the new projects that have reached completion, and received OC's remain unoccupied. Several of teh projects we visited that has received their OC's in the past six months or so, showed only about a 20% occupancy,

- The purchase mechanism transfers price risks from the devlopers to the buyers and the banks, so the

developers have an incentive to go on building, even when the market is saturated

- The mechanism (explain) and the lack of tarnsparency, means that an oversupply is not quickly translated into lower prices

 

INDICATORS

- DEveloepr stock prices peaked about X months ago, and are noew about XX% off their highs. The normal cyclical p[attern is that the dveloper share prices will peak 6 -1 2 months before the physical market, so a downturn in physical may start soon,

- An article in XXX spoke about a peak in late 2008, and much lower prices by 2009

 

ANECDOTAL

- One of the agents that showed us some properties, confessed that he had sold "all his properties" some months ago, and is now awaiting a downturn

- Another friend who showed us around has experienced..

+ A launch we attended ("The Spring") by IJB sold out on its first day of launch

 

EXPECTATIONS

- The rising glut of properties, and coming shift in buyer sentiment, will soon impact on bank's financing terms

- XXX

 

Property prices could fall by 20% or more over the next 2-3 years, if the banks tighten, and the appetite of foreign buyers is hit by the emerging credit crisis

 

Top 10 Quoted Malaysian Developers / Charts : http://www.advfn.com/cmn/fbb/thread.php3?id=17072022

 

10 Top Prop Dev code mktcap no. shs. Clse High Low % off R'ge P'tile

 

1 SP Setia-75.. 8664 4360.8 43 10.14 : 430. 560.. 312 -23.21% 248 47.6%

2 IOI Property. 1635 3665.4 46 03.33 1100 1420 1070 -22.54% 350 8.6%

3 KLCC Prop's. 5089 2839.6 59 09.34 : 304. 370.. 255 -17.84% 115 42.6%

4 IGB Corp-50. 1597 2815.1 60 14.89 : 189. 249. 150 -24.10% 099 39.4%

5 RB Land Hldg 5215 1346.6 96 05.68 : 237. 292. 179 -18.84% 113 51.3%

6 Sunway City. 6289 1331.6 97 04.67 : 285. 498. 246 -42.77% 252 15.5%

7 E&O Prop's .. 3468 1226.5 NA 06.59 : 186. 300. 172 -38.00% 128 10.9%

8 Guoco Land.. 1503 1120.7 NA 07.00 : 160. 302. 105 -47.02% 197 27.9%

9 Sunrise ....... 6165 1083.2 NA 04.48 : 242. 336. 193 -27.98% 143 34.3%

10 Sel Prop's.. 1783 1085.8 NA 03.44 : 316. 380.. 286 -16.84% 094 31.9%

============== 20,875 ====== === === === -26.66% 11,236 0.0%

Link to comment
Share on other sites

FOUR DAYS INVESTIGATION into Penang's property market leaves me more bearish that when I arrived. I will later post a longer piece on this, but I wanted to post a few bullet points while they are still fresh in mind.

 

BULLISH

 

+ Prices for qualitry properties at good locations are dramatically cheaper than in "major Asian cities" like: Hong Kong and Singapore. Some good projects here range in price from Rm350-400 psf (Times Square in the center of Georgetown and at Platino, to Rm.400-500 psf for top projects on Gurney Drive, at 600psf for the Serviced Flats in the Marina area of E&O's new project at Seri Tangjung Pinang (STP.)

 

+ Penang's continues to attract foreigners, given its mostly pollution-free environment, its rich cuture with an interesting historical heritage, good food, reasonable shopping, and profitable business environment.

 

+ Penang is the most sought after location in Malaysia's successful Malaysia My Second Home (MM2H) program. ... Capital gains on property purchses were eliminated in April 2007...

 

BEARISH

 

- Massive supply will be hitting the market...

- Much of the new projects that have reached completion, and received OC's remain unoccupied. Several of teh projects we visited that has received their OC's in the past six months or so, showed only about a 20% occupancy,

- The purchase mechanism transfers price risks from the devlopers to the buyers and the banks, so the

developers have an incentive to go on building, even when the market is saturated

- The mechanism (explain) and the lack of tarnsparency, means that an oversupply is not quickly translated into lower prices

 

INDICATORS

- DEveloepr stock prices peaked about X months ago, and are noew about XX% off their highs. The normal cyclical p[attern is that the dveloper share prices will peak 6 -1 2 months before the physical market, so a downturn in physical may start soon,

- An article in XXX spoke about a peak in late 2008, and much lower prices by 2009

 

ANECDOTAL

- One of the agents that showed us some properties, confessed that he had sold "all his properties" some months ago, and is now awaiting a downturn

- Another friend who showed us around has experienced..

+ A launch we attended ("The Spring") by IJB sold out on its first day of launch

 

EXPECTATIONS

- The rising glut of properties, and coming shift in buyer sentiment, will soon impact on bank's financing terms

- XXX

 

Property prices could fall by 20% or more over the next 2-3 years, if the banks tighten, and the appetite of foreign buyers is hit by the emerging credit crisis

 

 

 

 

Thanks Dr Bubb useful research, look forward to seeing the full version. M

Link to comment
Share on other sites

HAS MALAYSIAN PROPERTY PEAKED ALREADY?

 

The Malaysian property market lacks transparency- but I am beginning to think that it may have peaked already.

My detailed reasons for this will follow, but as first evidence I will offer a look at the charts of the major Malaysian property developers. Most seem to have peaked in Summer 2007, and many are 30-50% off their highs.

 

Such a large correction often predicts a start of an important cyclical down turn, This signal hjas worked well in the US and the UK. And I believe it is normal to see the Developer share prices peak 6-12 months (and most often about 12 months) ahead of the physical property market

 

Here's the largest developer, SP Septia (MY:6641), which fell by 63.9% to its low, and a top quality developer E&O Properties (MY:6012), which has fallen more than 50% from its July 2007 high at over Rm 4.00.

 

S.P. Septia ... update .............................................. : E&O Properties ... update

001an3.png...aaa4ga7.jpg

 

Most of the stocks have experienced a modest rally since their typical mid-April lows.

 

I have examined the charts of the Top 10 Malaysian Developers / see : Advfn thread

Link to comment
Share on other sites

Ive been living in KL now for about 5 years and been too chicken basically to invest or buy a house for my own purposes "off the plan". Often these cookie cutter landed properties are sold on a square foot basis and are computer modeled to fit as many landed properties on a lot as physically possible. Sometimes there is just walking space of a few feet between bungalows and carefully crafted "interior water features" to overcome the fact that if you open your curtains you can look at your neighbour on the toilet 8 feet away. The latest trend is for 3 story units to be made to minimise land usage while selling 4000sq feet.

 

I really like a development called Duta Nusantara which was a planned gated community and those brave enough to buy from the plan in 06 are asking and perhaps getting a double what they paid for now the properties have been built. It seems those with "connections" can buy into these exclusive developments at pre launch prices so the punters have to scramble for what is left.

 

I was shown a place at Duta Nusanara last weekend by a well heeled lawyer who owned 3 of these properties. He had leased them to families working for oil companies who have good lifestyle salary packages rent was around RM$15,000 per month! He wanted to flip them quick because he had through his contacts reserved another 6 bungalows off the plan and needed to come up with RM$15 million ringgit for down payments.

 

Seems a lot of rich people enjoy buying from the plan and flipping quick but I 100% agree with the above comments. When the music stops you dont want to caught in this mess. In 1997 many reputable developers had misappropriated deposits and contributions from owners and their projects were never completed. Consumers cant expect much protection from the government to protect their interests and you are expected to keep making contributions to your property even if it is completed years later than promised.

 

Personally for my own use I have bought a ready landed property but I accept that by doing this I wont get a capital gain. At least I like what I have bought though and where I live.

Link to comment
Share on other sites

Thanks for those comments, KB

 

....He wanted to flip them quick because he had through his contacts reserved another 6 bungalows off the plan and needed to come up with RM$15 million ringgit for down payments.

 

Seems a lot of rich people enjoy buying from the plan and flipping quick but I 100% agree with the above comments. When the music stops you dont want to caught in this mess....

 

For me, it seems to be difficult to know "when the music stops".

Has it happened already? I get the sense that new properties are still selling well, but the secondhand market

is stagnating, and people are finding it harder to sell. Certainly, in Penang, there were plenty of secondhand

properties for sale, and they did not seem to be selling.

 

If stagnation has set in, it is only a matter of time before sellers will start cutting prices, and the slide will be underway.

 

But how to follow the market in Malaysia? It doesnt seem very transparent, and I havent found up-to-date

weekly or monthly indices yet.

Link to comment
Share on other sites

ThinkProperty's Survey

=========

 

Will the collapse of the US-subprime market significantly affect Malaysian property prices?

Don't know 16.52%

No -- 41.52%

Yes - 41.96%

 

What is the general outlook for property in Malaysia over the next 12 months?

 

Negative : 21.88% (hmm. about half of the number that said "Yes" above)

Positive.. : 35.71%

Neutral... : 42.41%

 

Are you a foreigner?

Yes, I am a foreigner : 20.28%

No, I am a local ....... : 79.72% (locals are worried too.)

 

/source: http://thinkproperty.com.my/realestate/com...+out+the+survey.

 

 

Link to comment
Share on other sites

  • 4 weeks later...

SENSE ON OIL - AT LAST !

 

The Malaysian government agreed to lift fuel prices, by cutting the heavy subsidies.

 

Gasoline will go up 41% to 2.70 Ringgit (about 84 cents a liter), while diesel will increase 63% to 2.58 ringgit a liter. To help cushion the impact, the government will give owners of small and medium sized cars a yearly 625 ringgit rebate, enough to cover the increasefor up to 800 liters.

 

"Subsidies in Malaysia, introduced in 1983, have kept its fuel prices among the lowest in Southeast Asia. But the surge in global fuel prices has made the subsidies too onerous for the government. Had Wednesday's price increase not been introduced, Malaysia's fuel subsidy bill would have reached about 50 billion ringgit this year, or about one-third of government expenditure. With the price increase, the government expects to save 13.7 billion ringgit, part of which will be used to subsidise rising food prices."

Link to comment
Share on other sites

  • 4 weeks later...

Dr Bubb, have you looked at the Southern tip of Johor next to Singapore? In June 2007 I was about to purchase land to build a Balinese Villa at a place called Ledang Heights; the little squabble between Merril and Bear Stearns about the valuation of some CDO at that time made me very nervous ,as such an argument highlighted the risk of a domino effect through the credit system. Fortunatley I pulled the plug and didnt go ahead.

However, this area next to Singapore has been given special status by the Malaysian Government. Given that Singapore is set to become the Switzerland of the East the Malaysians are positioning themselves to benefit from this. ISKANDAR -http://www.wpi.com.my/. This development is worth keeping an eye on for possible future investment.

Sincerely

Hogwild

 

 

Link to comment
Share on other sites

Dr Bubb, have you looked at the Southern tip of Johor next to Singapore?

 

I have. It is cheap relative to Singapore.

But there's loads and loads of supply coming in the future

 

THere's even a thread on GEI:

http://www.greenenergyinvestors.com/index.php?showtopic=2947

Link to comment
Share on other sites

  • 2 months later...

Location, Location, location ? No !

 

It's Location, Timing, and Branding that matter- says this video:

Link to comment
Share on other sites

  • 1 year later...

We are headed to KL for a few days in Late April...

 

and are checking to see what events will be going on,

 

New Property Launches :: http://www.theedgeproperty.com/events-new-launches.html

 

(At KLCC):

1/

HOMEDEC 09 (HOME DECORATION EXHIBITION) : 4/29, 4/30

Category : Conventions, Exhibitions

The big showcase and most vibrant marketplace for house owners who are planning their home renovations, redecoration, and refurbishment. Interior design clinics, seminars on home d�cor tips will be held concurrently.

 

HOMEPAGE http://www.homedec.com.my/KL-About.html

 

http://eventful.com/kualalumpur/events/hom...73-0@2010043000

 

2/

We will just miss, finishing Sunday 25 April:

The 2010 LUXURY PROPERTIES EXHIBITION know as PIE 2010 @ KLCC.

 

The ONLY EVENT that will be held in Malaysia with the luxurious property investment show in one prestigious venue brought to you by Exhibition Guide International group of companies - The region no1 premiere property exhibition organiser.

 

More Institutional and professional investors will be attending the show. The show is "the must attend" event for quality and established developers and financial institutions.

 

PIE 2010 show highlight high-end properties that boast of prestigious addresses, marvel design, breathtaking surroundings, safe community, quality finishing and investments opportunity for the serious property buyer of buying residential or commercial property for investment purposes - in the region or abroad.

 

This PIE 2010 @ KLCC show will attracts from various parts of the world. We have pavilions ready for overseas' exhibitors ( Australia, UK, Canada,USA, others) wishing to explore with our investors locally and vice versa.

/see: http://www.pieshow.com/overview.php

 

3/

Exclusive Property Investment Show 2010

Event Date:30/04/2010-02/05/2010 .. Time:11.00am - 9.00pm

Venue:Mid Valley Exhibition Hall

Comments:

Visit us at both 337 in the fair or our Sales Center

/ see : http://www.midvalley.com.my/store/exhibiti...mvec/mvec2.html

/ and : http://www.scegi.com

Link to comment
Share on other sites

Recovery weighted down by new supply

DTZ Research in its Q1 report for 2010 summarizes the Malaysian market as follows:

Posted Date: Apr 15, 2010

 

The Malaysian economy registered a positive growth rate in Q4 2009 after three consecutive quarters of contraction. Positive growth is forecast for 2010.

 

• Prime office rents continued to experience downward pressure as companies remained cautious about expansion amidst a time of substantial new supply.

 

• Overall retail occupancy rates and rents remained stable in Q1 2010. However, the outlook remains challenging due to the considerable amount of new supply scheduled for 2010.

 

The residential sector continued to experience selective improved demand, particularly for niche residential properties and high-end landed residential properties. However, high-end condominiums in Kuala Lumpur experienced a drop in capital values and stagnant rents due to the high level of new supply.

 

• There were no investment transactions over the quarter. Investor interest continued to be dominated by domestic and government-linked companies. Foreign investors are likely to return to the market during the later part of the year, although limited net sellers will increase competition for available stock.

 

Read more at DTZ site: http://www.dtz.com/Global/Research/Propert...+Lumpur+Q1+2010

Link to comment
Share on other sites

THE PROBLEM IS...

Because of the low risk to the developers, they build-build-build,

until the market is completely saturated. Even worse, because new properties cannot be sold until completion maybe three years later, the overbuilding continues 2-3 years too long. This insures YEARS of soft market, which KL and other parts of Malaysia may be in already.

 

(this article explains the current system, which takes risk off the builders):

 

Sell-Then-Build – A Blind Risk With Buyers’ Money?

The Housing Development (Control & Licensing) Act 1966 currently provides two systems of selling and buying residential properties in West Malaysia.

Posted Date: Feb 10, 2010

By: HBA

 

Sell-Then-Build – A Blind Risk With Buyers’ Money?

 

The Housing Development (Control & Licensing) Act 1966 currently provides two systems of selling and buying residential properties in West Malaysia. First, the sell- then-build (STB) system. Second, the build-then-sell (10:90 variant) (BTS) system.

 

Under the STB system, the homebuyer pays the purchase price of the property according to progressive stages of work done. The first 10 per cent is paid when the contract of sale is signed and the remainder 90 per cent is paid according to the stages of work done as stated in the schedule of payment.

 

Under the BTS system, the homebuyer pays the purchase price of the property in two stages: the first 10 per cent is paid when the contract of sale is signed and the remainder 90 per cent is paid when the property is delivered with vacant possession supported by the certificate of completion and compliance issued by the developer’s architect

 

Developers prefer the STB system. Homebuyers prefer the BTS system. Why are the parties’ preferences different?

 

To answer this question, let us consider the scenario from each parties’ view. Let us imagine for a moment that we are housing developers.

 

The housing developer

 

As housing developers, we know that the housing development business is risky. The risk we take is using and losing our huge capital to fund the development. In other words, there is no guarantee of completion. We may lose a lot of our money.

 

In this light, the STB system is a blessing. Under the system, our risk is transferred to another party, namely, the homebuyers. We use homebuyers’ money to build the houses. In business terms, we use OPM (other people’s i.e. homebuyers’ money) to make money. This OPM is good money because it is bank interest free.

 

Furthermore, our profit need not be shared with the homebuyers. It goes straight into our company’s coffers. It pays for the Mercedes Benz, the overseas vacations and the million RM bungalow home we always wanted. That is a great deal!

 

Sometimes, we would hear of another housing developer abandoning or stalling its housing project. Despite that, we observe that all would not seem so bleak for the company and its directors. The worst scenario would be that the company is wound up. Its directors are protected by the corporate veil rule that says the company and its directors are separate persons. So, the company is sued and finally wound up. But the directors may avoid liability for the stalled project.

 

In fact, we also observe that some of the directors would form another company under a another name and develop a new housing project. The project may be later abandoned or stalled. The new company may be wound up. And the same story is retold.

 

That is amazing! As a housing developer, we get to use OPM to make money. The OPM is interest free. If we are successful, we make big money. If we are unsuccessful, our company is wound up. Our directors would not have to bear the company’s losses or be held accountable to the homebuyers.

 

What happens to the losses? Who bears them?

 

Because we are using homebuyers’ money to complete the houses, the homebuyers will share the losses. Naturally, homebuyers will cry foul and ask the government for help. Due to its social obligations to the rakyat, the government authorities will find a white-knight to complete the project. Often, the homebuyers may be asked to pay a top-up to get their houses completed by the white-knight.

 

By then, our company would be wound up. As the saying goes, life moves on and after a few years, the ugly episode of the bad housing development is conveniently forgotten.

 

As developers, we say: We want the STB system. We will fight tooth and nail to keep the STB system alive. We have grown accustomed to using OPM. We will oppose any party that wants to change the system!

 

The homebuyers

 

We have considered the developer’s preference for the STB system. Let us now imagine we are the homebuyers. What would be our view?

 

Under the STB system, we, as a homebuyer, are paying a lot of money, be it from our EPF or family savings, before getting our houses. What if the developer is unsuccessful? We may lose all our money!

 

Suddenly a developer interjects and shouts, “If you don’t trust the developers, do not buy from us. Buy from the secondary market”.

 

Calmly, we say, “Yes, we would not buy from you. Be rest assured of that.”

 

“But we know our friends may miss getting a chance to read this article. We know that you will persuade them to buy your STB properties. You will print colourful pictures and use enticing words to woo them. You will use sale gimmicks and smooth talk to persuade them to accept your business risks under the STB system.”

. . .

 

Conclusion

 

We have considered opposing views on the housing development systems in West Malaysia. Clearly, the parties’ preferences to the systems differ. Will BTS become mandatory? We hope so. Under the BTS system, homebuyers can avoid being scapegoats to the developer’s business goals and profit margin.

 

By Robert Tan

 

/more: http://www.iproperty.com.my/news/1273/Sell...%E2%80%99-Money?

Link to comment
Share on other sites

KLCC AREA MARKET COMMENTS

 

1/

A client wanting 10% return...!!!

That is the very reason why this market will continue to go south price wise.People expect a return and this market doesn't give a return so why buy ..My area of interest is KLCC and IMO it gives 3 -4% max gross yield in 90% of cases if you use realistic rental rate.(If you use 2 year old rental figures from a long contract started a few years back then you will get a higher yield but when that contract finishes you will be looking at 3%( realistically) -4 gross yield or less in most cases(2% or less nett after maintenance and assessment/quit rent).A friend was getting 7.5k for a KLCC unit from an Embassy on a 4 year contract.The contract finished and after 5 months empty it just got rented again at 5k with new furniture! )Yes unfortunately rents continue to fall around KLCC and so yield Based on todays prices keeps falling too.In fact the yield say 18 months ago when prices were say 1200 psf (and MUCH HIGHER rents)were far more compelling than the situation today.Today prices have dropped but so have rentals and from what I can see the yields 2 years go were far higher EVEN though condo prices were higher than they are today.So yes we all want higher yields to encourage us to buy but prices remain at a level that doesn't encourage any buyers.People buying today clearly need to think harder before parting with their cash IMO.If people think buying today is good value then they must be far smarter than I am because I fail to see any value in the market place and no driver for higher prices!So the wait continues...and continues and we wait for the bailouts to end .

 

So Chong When you find 10% yields..tell us all where!!

 

2/

Yes, 10% is a rediculous return to "expect" or ask for if that is a client of yours.

I wouldn't necessarily be as gloomy as to say 90% of property returns only 3 to 4%. Such numbers are indeed prevalent but confined to the overpriced condos of KLCC golden triangle that reached for the stars a few years back, and where many investors thought indeed that all multinational expat managers had RM 20,000 housing allowances that they didn't care about. It is because of such disparity you find some KLCC properties with such miserly returns.

 

Normally however a smart buy can get you 6 to 8% gross, and slash 1.5% or so for service charges and other costs to get net. It is not uncommon today to pick up a RM750K Mont Kiara three-bedroom that can easily rent for 4K per month. with equipment being new and under warranty, and service charges being under 400 per month, you can net 40,000 per year. ...

 

Some properties are good buys for long term investment and won't make good rental return, some are good for rent but not great appreciation, you need to study the whole city and open up your options to desirable locations that are undervalued. Seems reasonable though that a property that returns 10% rent will not just be sitting there waiting for someone to want it

 

3/

My post states my area of interest is KLCC and my ideas relate to that area mainly.I stick with my broad numbers.Another important point considering actual iproperty investment yield is vacant period between between tenancies and frankly I imagine from one tenant to the next one may have to wait 3 months or longer.(I say longer but lets say every 2 years you wait 3 to 4 months to find a tenant which is very probable at the moment from cases I am aware of)This is just another number to reduce the ACTUAL investment yield.If investors look around KLCC today

 

4/

KLCC property was inflated over the past few years and bought by inexperienced investors in the hopes of long-lasting high rentals, before falling back to normal. Some corporations and expats didn't care about the high rentals and actually paid them, but overall it wasn't sustainable and the crunch was a big wake up call.

 

Today's rentals if calculated on those inflated prices of a few years ago will produce what you say 3% or so, however such prices are not what is on the portfolios of professional investment houses or seasoned investors, and that is where the difference emerges. People who owned KLCC properties before the inflation had RM700 per sq. ft. on their books and therefore today's rentals are around 6% or so for them and that is good. Those who are buying today are also not interested in any RM1000+ because they're only good for remarkable classified ad and they know that the price is neither realistic on the current terms nor reasonable in terms of rental yield, they are only interested in units that are offered at reasonable prices. I am currently examining a unit for a client that is 1500 sq. ft. and offered at 1.1 million only. It is walking distance from the Petronas towers and the park and has all the amenities desirable.

 

So yes I am sure the successful IT director who just turned to property investments and bought a K-residence condo apartment unit a year ago at two and a half million ringgits is complaining about how low the rental yield is and that the 15K per month they were expecting is not happening. That however is not where the market really is and if he was to offer his apartment right now he would still struggle in selling even if he takes a 20% loss on what he paid. So if you calculate rental yields on ACTUAL market prices of what these apartments are worth today and what it would be bought at by the mainstream buyer, then you will find that your figures adjust.

 

As for an apartment being empty for 3 to 4 months, that is just bad management. I know a close friend and her apartments are never empty for more than the week it takes to clean the place out, and I would never be managing a unit and have it lying empty for that long. It is normal for a unit to be empty for months if it's just delivered by the developer and the whole building is up for rental/sale offers, but not later on when the building is at normal occupancy.

 

Otherwise the location and choice of the unit was bad in the first place or the rent request is unreasonable.

 

5/

Re:Properties with 10% rental return 2 Months ago Karma: 0

I believe you’ll have a good chance to get 10% yield if you buy from developer (under-construction). Of course, it depends on other factors as well.

 

If it’s completed/in subsale market, it is fairly difficult to get 10% yield. Normally, you’ll have a better chance with smaller units i.e. studios.

Mostly, sellers will mark-up the price to make the current rental just enough to cover installment. For subsale cases, you can buy now and forecast that rental will increase over time due to huge future office/commercial projects around the area. Urban redevelopment may make an area of low rental to become high in the future. Examples of planned future redevelopment in the news are Kg Baru, Datum Jelatek, Stadium Merdeka area, Jalan Cochrane area & Tamansari.

 

Examples:

Melur apartment / near Sentul LRT. Developer’s price is only about RM120k, but now you can get rental of min RM1000 p/m. Now, market price is about RM220k.

 

Putra Villa condo / near Gombak LRT was sold at min RM170k. now can command rental of RM1500 p/m.

 

Casa Mutiara’s studio is only about RM100k+ when opened to public. In 2007, subsale was around RM160k. Now can get rental min RM1500 p/m.

 

For Maytower, it’s even lucrative. Capsquare is not even fully opened yet. Same with Amcorp studios.

 

Similarities from these examples are NEAR TO LRT STATIONS + HIGH-RISE BUILDINGS

 

/source: http://thinkproperty.com.my/realestate/For...tal-Return.html

Link to comment
Share on other sites

Malayasian Property / NOTES from DTZ report : No low before 2011-12?

===================

 

(Residential)

+ Demand for niche residential properties remained strong in Q1-2010...

+ By contrast, demand for high-end condominiums in KL generally remained sluggish, with the average selling price falling 6.3% from RM574 psf in Q4-2009 to RM538 psf in Q1-2010,

+ Notable new launches of high-end condominiums in KL included the launch of Tower B of Verticas Residensi, The Pearl @KLCC, ...

 

Upcoming condos in KLCC area in 2010

Project----------- : Units

My Habitat Tower 1 : 168

My Habitat Tower 2 : 215

The Troika............. : 229

Ampersand............ : 071

Hampshire Place.... : 186 / Total : 887

 

+ Average condominium rents were also stagnant, at RM3.56 psf. The lack of movement is likely due to the large amount of incoming supply as occupiers are faced with an abundant choice of supply

+ Future Supply---- : (2010) : (2011)

City Centre............ : +0,800 : +2,500 -est, eyeballing chart

Outside City Centre : +1,400 : +3,300 -est

 

(Office)

+ The occupancy rate of office buildings in KL increased slightly from 87.0% in Q2-2009 to 87.2% in Q1-2010 due to the lack of new supply

+ Office rents continued to drop over the quarter, albeit marginally. The average prime office rent fell from RM6.08 per sq ft per month in Q4-2009 to RM6.02 psfpm in Q1-2010.

+ About 14.90mn sf of new office space is in the pipeline for 2010 to 2014, the majority of which is scheduled to complete in 2012.

 

/see: http://www.dtz.com/Global/Research/Propert...+Lumpur+Q1+2010

 

+ + +

 

Here was my "best guess" on how the 18 year cycle might be applied in Penang, Malaysia.

zzzz.gif

 

In KL, it looks like the cycle peaked about 3 years earlier, in 2008. Normally, the cycle requires at least 3-4 years off the top, to make a low. So we could see a bottom as early as 2011-12.

 

New thread: Malaysia: Economic Musings and Forecasts:

http://www.skyscrapercity.com/showthread.php?p=55422983

Link to comment
Share on other sites

The Pearl @ KL City Centre to set new paradigm in luxury / Oversized units?

By Rosalynn Poh of theedgeproperty.com / 18 March 2010 20:30

 

the_pearl22.jpg

 

KUALA LUMPUR: Flora Bliss Property Development Sdn Bhd will soon be making its mark on the city’s skyline with the launch of its luxurious RM793 million The Pearl @ KL City Centre (pictured) on March 18. The project is located along Jalan Stonor, with units sized from 3,109 to 11,087 sq ft. Flora Bliss Property Development is a joint-venture between Kuwait Finance House (Malaysia) Bhd, Bank Rakyat and Inai Berkat Sdn Bhd.

 

“We believe The Pearl offers features that will hit a pulse with many potential investors who are looking for a true space to call home within a dynamic city like Kuala Lumpur. The ultimate value it provides now, and down the road in the near future, is something any savvy investor can foresee. The Pearl truly is a luxury among luxuries – a home most can dream of and only a select few can own,” says CEO of Kuwait Finance House (Malaysia) Bhd (KFHMB) Jamelah Jamaluddin.

 

Units are semi furnished and fitted with a specially designed kitchen, wardrobe and appliances. Every unit has a private lift lobby. Prices for the units start from about RM900 psf.

 

“With features that boast extraordinary quality and luxury, we believe The Pearl lends a heavyweight push towards bringing a paradigm shift in the Kuala Lumpur luxury condominium landscape that will definitely entice investors, both within and abroad,” she adds.

 

Malton Bhd is the project manager for The Pearl @ KL City Centre

 

/see: http://www.skyscrapercity.com/showthread.p...2494&page=5

 

More photos

1/

4442424269_16322450b8_o.jpg

2/

4493071786_0c02f6bb60_o.jpg

3/

Pavillion_Residence__31_.JPG

 

Hmm... Where's the showflat?

Link to comment
Share on other sites

kl_monorail_all_train_routes_map.jpg

 

Kelania Jaya Line

=====

(Terminal Putra)

Taman Melati

Wangsa Maju

Sri Rampai

Setiawangsa

Jelatel

Dato Keramat

Damai

Ampang Park

( KLCC )

Kampung Baru

Dang Wang / Bukit Nanas

Masjid Jamek - Plaza Rakyat

Pasar Seni - Kuala Lumpur

( KL SENTRAL )

Bangsar

Abdullah Hukum

Kerinchi

Universiti

Taman Jaya

Asia Jaya

Taman Paramount

Taman Bahagia

(Kelana Jaya)

 

=======

 

KLCC Area Condos

001bnl.jpg

 

Link to comment
Share on other sites

Vision City - near Medan Tuanku Monorail, looks tasty

Is KL beginning to embrace its pedestrains, at long last?

 

4ba0438502d2f.jpg

 

More photos: http://www.skyscrapercity.com/showthread.p...9978&page=7

 

4ba043a823c9f.jpg

 

Architect: http://www.arcspace.com/architects/sparch/...ision-city.html

 

The original Vision City was intended for completion more than a decade ago but when financial problems halted the construction work it left the site with a massive piece of bare concrete structure. The current owner acquired the development rights with the intention of dressing up the existing mass, located four monorail stops from Kuala Lumpur’s main shopping district, into a new icon for the neighbourhood and the city.

 

Sparch’s vision for the development goes beyond the brief of interior fit out and facade cladding as that would merely amount to a conversion of use of the pre-defined spaces. To truly transform the current spaces within the block and also its relationship to the street, Sparch cracked open the monolith, hollowing out the central portion to create a hybrid space - a voluminous garden naturally ventilated but sheltered from the elements - that is an extension of the urban fabric.

 

Previously abandoned: http://en.wikipedia.org/wiki/Vision_City,_Kuala_Lumpur

Link to comment
Share on other sites

KLCC Area Condos

001bhi.jpg

 

Pricing indications:

=====

Panaroma

The Meritz

K-Residence

Four Seasons Hotel & Apts

Binjai Residency

The Troika

- - -

The Oval

The Avare

Park Seven

Stonor Park

Suria Stonor

Dua Residency

3 Kia Peng

Pearl@KLCC

Ampersand

 

(10 Most Expensive - Aug. 2007 prices)

10 most expensive condo developments in Kuala Lumpur.

 

Project-------------- ( Launch ) Completion : Aug.2007

1. One KL............ ( RM1200 ) Feb.2009 : RM2000 , #94

2. The Troika........ ( RM 920 ) ???.2009 : RM1800 , #164

3. K Residence..... ( RM1000 ) ???.2008 : RM1600 , #180

4. The Meritz........ ( RM1000 ) Apr.2008 : RM1300 , #110

5. Marc Residence ( RM 750 ) Aug.2007 : RM1200 , #607

6. The Avare......... ( RM1000 ) Nov.2008 : RM1200 , #78

7. Park Seven....... ( RM 750 ) Q1- 2008 : RM1000 , #105

8. Pavilion Residence ( RM 900 ) ???.2008 : RM1000 , #368

9. Idaman Residence ( RM 700 ) Oct.2008 : RM 950 , #248

10. Ampersand @ Kia Peng ( RM 860 ) post'09 : RM 900 , #71

 

/see: http://www.overseaspropertymall.com/region...n-kuala-lumpur/

 

Is Mark Residence overpriced? :: see post #53

Link to comment
Share on other sites

DESIGNED TO GENERATE BUBBLES

 

The Malaysia property market is designed to create bubbles. That's how I see it.

 

The design feature is built-in because genuine price discovery is delayed until completion of projects, sometimes years after they are sold to their original purchasers. Years worth of supply can be stored up and invisible to buyers. Then, after a market turn, the pent-up supply can keep rolling into the market, long after the slide begins. With this mechanism, the bubble can be blow to become bigger than if the supply was more transparent. And the eventual crash may be bigger too.

 

001ch.jpg

 

Malaysia's builders have become great at marketing, and ply their product around Asia and around the world, seeking new buyers (who may have no idea that many, many flats are already under construction.) The developers sell properties for completion 2, 3, and 4 years forward. And payments come is in stages, as the properties are being built. So the developer has very little, or no price risk on pre-sold properties. So they can build, build, build, until the buyers stop buying. On the way up with prices climbing in a cyclical upswing, the new supply is not fully visible in the market, since it is difficult for owners to sell before completion. Those who may not see the hidden supply may go on buying, long after prices and supply have moved beyond sustainable levels.

 

Many people buy "to flip", hoping that prices will rise before they resell on completion. Perhaps as few as 25-30% of the buyers have purchased with the idea of moving in after completion. This means that perhaps two-thirds or more of the properties are available for rent or sale after a project is completed.

 

In a more "normal" market, such as Hong Kong, properties can be resold before completion. And a big inventory of properties under construction will tend to hold down prices, since buyers will have the choice of buying from developers directly, or buying in the secondary market projects which are under-construction, but not yet complete. In Malaysia this rarely happens, so the glut of properties can grow and grow, as properties are held by speculators hoping to flip, but who have no access to buyers until the moment of completion.

 

In 2006-8, prices got lifted to "silly" levels, with many people holding projects thinking they would cash a big profit upon completion. But that had no way to sell. Meantime, the builders kept building, finding new buyers, who were not yet in the game, to buy their new projects. And existing owners sat there hoping that prices would hold up until completion.

 

But prices have not held. In fact, the unseen glut became so big, that it looks as if excess supply will go on pouring into a glutted market through 2010, into 2011, and even until 2012.

 

With all this supply coming, and builders still launching new projects, KL prices have further to fall IMHO.

 

It amazes me that few have mentioned this rather important and dangerous design feature. Perhaps too many people are compromised by their positions, and the profits they expected to make by allowing a property bubble to grow bigger still. It is down to property investors to discover this dangerous reality for themselves.

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.


×
×
  • Create New...