Exclusive Interview Datuk Seri Michael Yam

Property Insight Malaysia

Your Advantage in Property Investing

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Bulk Purchase: Good or Bad?

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PropertyInsight
Malaysia
From The Editor
Your Advantage in Property Investing
The Greatest
Investment Ever
A
www.propertyinsight.com.my
mong the worlds elite, its a well-known fact that
most, if not all the tycoons in the world have cre-
Editor ated their wealth directly or indirectly through
Tan Thiam Hock property investments. If you aspire to join the
ranks of the affluent or would simply like to grow your
Writers wealth further, its essential to include properties in your
Mira Soyza investment portfolio.
Rubaa S. Why invest in properties? The case for properties is
their ability to match or in most cases, exceed inflation. You
Contributors may have noticed that in the past three to five years, prop-
KK Chua erties in prime locations have doubled in value. Indeed,
Faizul Ridzuan they are an excellent hedge against inflation.
Dato Ong Theng Soon One of the major factors to consider is the cost and
Herbert Leong returns of investing. Our current low interest rate environ-
ment can be both a boon and a bane. On the one hand, low
Designer interest rates offer cheap financing options for investing in
Asharah Kamarul properties and hence reduce your investment cost. On the
other hand, low returns on your savings mean that your
Sales & Advertising hard-earned money will struggle to keep up with inflation.
Jenny 012-3321801 Hence, when it boils down to the choice of putting your
Marina 012-8882680 extra money in the bank or investing in rock solid proper-
ties, the latter is undoubtedly a clear winner.
At Property Insight, our goal is to equip readers with
the right knowledge to make informed investment deci-
Publisher sions. We endeavour to offer timely and relevant property
Armani Media Sdn Bhd (1032085-H) investment tips and tricks, all in an attractive reader-
No. 32-3, Jalan Pekaka 8/4 friendly package. Therell be something of interest to every-
Sec 8, Kota Damansara one, whether youre an apprehensive first time home buyer
47810 Petaling Jaya, Selangor or an astute investor.
Tel : +603 6156 3366 Our inaugural issue is packed with information
Fax : +603 6156 3399 gleaned from discussions with several prominent leaders in
the industry, including Datuk Seri Michael Yam, President
Printer of REHDA and Othman Omar, General Manager of PKNS.
KHL Printing Co Sdn Bhd (235060-A) Critical information on finance matters, legal issues and
Lot 10 & 12, Jalan Modal 23/2, value enhancement will also be mainstays of the magazine.
Seksyen 23 Kawasan Miel Phase 8, Oh yes, properties may make great investments, but
40300 Shah Alam the greatest investment ever is in yourself. Armed with the
right information and knowledge, the skys the limit.
Selangor, Malaysia
Enjoy the issue and happy investing!

The Editor
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Disclaimer
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 Property Insight
Malaysia

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DEVELOPERS PRICING STRATEGY - SECRETS REVEALED

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ARE WE CREATING A PROPERTY BUBBLE?

POST-BUDGET - ANALYSIS & IMPLICATIONS

HIGH-RISE APARTMENT: PLAN OF ATTACK

7 TIPS ON MAXIMISING BORROWINGS

MILLIONAIRE INVESTORS ROUND TABLE

YB SENATOR DATUK SERI SIVA SHANKER AHYAT ISHAK HO CHIN SOON FAIZUL RIDZUAN ELIZABETH SIEW
DATO' ABDUL RAHIM MICHAEL YAM President of Malaysia Investor / Speaker Director of Investor / Speaker Advocate & Solicitor;
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Best Office Development
Malaysia 2013-2014
 PROPERTY UPDATES
News You Can Use
Hua Yang Buys Land
in Seri Kembangan
18 June 2013 Hua Yang Berhad
has recently purchased a 3.73-acre
leasehold land in Seri Kembangan
for RM56.9 million, through its
wholly-owned subsidiary Prop Park
Bhd. The land is currently occu-
pied by a night bazaar called Mines
Downtown and is located right op-
posite The Heritage Service Apart-
ments.
Hua Yang plans to transform
the entire area into a mixed devel-
opment of residential apartments
and commercial units, with an
estimated total Gross Development
Value (GDV) of RM285 million. The
A New Gamuda
Township in Rawang?
13 June 2013 Gamuda will be ac-
quiring 724.3 acres of leasehold land
in Kampung Sungai Serai, Kuang,
about 11 kilometres south of Rawang
town, for RM620 million. Owned by
TPPT Sdn Bhd, the land is classi-
fied as agricultural land with lease
tenures expiring between 2092 and
2095. It is located immediately next
to the Rawang South Interchange of
the North-South Expressway where
the Guthrie Corridor Expressway and
LATAR Highway meet. The lands
6
JULY 2013
development will enjoy easy excess to
the city center via two major high-
ways SILK highway and BESRAYA
highway. In addition, the land is also
located within 300m from the Ser-
dang KTM and 120m to the Mines
Shopping Fair, making it an ideal
location to be developed.
The Groups land acquisition
is in line with its objective which is
to expand their existing land bank.
By doing so, Hua Yang will be able
to maintain their core business as
a property developer as well as to
enhance their future revenues and
earnings.
neighbouring areas are: Petaling Jaya
(28 km), Kuala Lumpur (30 km) and
Shah Alam (28 km).
With Gamudas successful track
record in township developments,
the enormous land is a likely candi-
date for a comprehensive and
integrated township master plan.
Among the public transportation
within the proximity are KTM,
MRT Line (under construction) and
Bus Rapid Transit service (pro-
posed).
Kuok Brothers-
Khazanah to
Jointly Develop
Puteri Harbour
Land
22 April 2013 Southern Marina
Development Sdn Bhd, a joint ven-
ture company between the Kuok
Brothers Group and Khazanah
Nasional Berhad has purchased
12.5 acres of land from UEM
Land Berhad for a RM182 million.
Known as TM2 and TM3, the
land parcels are located in Puteri
Harbour, Nusajaya which is one of
the five flagship zones of Iskandar
Malaysia.
Southern Marina proposes
to build a mixed development that
comprises high-rise residential
and retail/commercial units with
water front views of the marina
and Straits of Johor. The develop-
ment will have an estimated gross
floor area of more than 2 million
square feet, and an estimated gross
development value exceeding RM1
billion.
www.propertyinsight.com.my
 PROPERTY UPDATES

LATAR
Bandar Tasik Puteri,
Rawang interchange to benefit
more than 55,000 residents

7
www.propertyinsight.com.my JULY 2013
 PROPERTY UPDATES
A
n interchange is to be
constructed at KM12.9
(west) of the LATAR
expressway which is
expected to improve con-
nectivity to Bandar Tasik Puteri. To be
completed by the third quarter of 2015,
the interchange is expected to benefit
more than 55,000 residents there and
act as a catalyst for future growth of the
township. An agreement was concluded
recently for the construction of the
interchange by the Low Yat Group, the
developer of Bandar Tasik Puteri.
With a total investment of over
RM100 million, the interchange will
allow residents of Bandar Tasik Puteri to
directly access the LATAR Expressway,
which connects Kuala Selangor to Shah
Alam, Petaling Jaya and Kuala Lumpur.
With the completion of the interchange,
it is estimated the travel time between
Kuala Lumpur and Bandar Tasik Puteri
will take about 25 minutes.
Speaking at a news conference
here, Mr. Low Gee Soon, Executive
Director of Low Yat Group said the
8
JULY 2013
interchange will directly benefit the
residents of Bandar Tasik Puteri as
well as the over 700,000 residents of
Rawang and the surrounding areas. It is
anticipated that additional benefits will
include higher capital appreciation for
properties at Bandar Tasik Puteri as well
as spur further development in the area.
It is expected that with this inter-
change, property prices will appreciate
by at least 30% upon completion, based
on the effects of previous new highways
on existing townships. In addition, we
are the pioneer township developer
in Rawang and will be expediting our
future residential and commercial de-
velopments within Bandar Tasik Puteri,
said Mr. Low.
This project involves the construc-
tion of a semi-clover leaf junction, a
four way dual carriageway, two lanes
for loops and a two lane road into the
LATAR Expressway from Bandar Tasik
Puteri.
We will be looking to expand
on the product mix as well as look into
greater forms of commercial develop-
ments that will take advantage of this in-
terchange. This is in line with the strong
demand that Rawang has seen over the
last five years, with more developers
continuously launching new projects,
coupled with a greater range of product
offerings especially in the premium seg-
ment, said Mr. Low.
We are also seeing strong com-
mercial take up and new developers
sourcing for landbank in Rawang for
future developments. The prospect for
Rawang is looking very positive and
has been creating a pull factor amongst
property developers, Mr. Low noted.
Bandar Tasik Puteri is a township
development spanning over 2,670 acres
of land and is positioned as the Urban
Regional Centre (URC) of North Klang
Valley. The first phase of this township
was launched in 1998 and has to-date
developed 1,200 acres of the land, leav-
ing it with a balance land-bank of ap-
proximately 1,500 acres. Its land-bank is
expected to keep the Group busy for the
next 15 years.
Low Yat Group has over the
www.propertyinsight.com.my
 PROPERTY UPDATES

past 10 years transformed an oil palm

plantation into a bustling township with
facilities such as schools, a mosque,
recreational parks, a community library,
a 27-hole public golf course, dialysis
centre and college for the well being of
residents. Public buses are also available
for the convenience of residents.
Commenting on the Groups
property development, Mr. Low said the
Group has completed and delivered over
RM2.5 billion worth of property and has
plans for over RM5 billion worth of new
development.
The recent launch of Phase 2 of
Garden Heights, a premium 2-storey
semi-D residential development priced
from RM400,000 is 90% sold. He ex-
pressed confidence that the demand for
their upcoming Garden Heights Phase 3
will be as strong.
Bandar Tasik Puteri, with a total
GDV of about RM7.5 billion, has seen all
its affordable housing phases completed.
Now, phases which are based on more
premium designs will be built over the
next 15 years. PI

9
www.propertyinsight.com.my JULY 2013
 PROPERTY UPDATES
Southville City@KL South
Obtains Approval for Direct
Interchange, Improved
Masterplan Enhances
GDV to RM5.13 billion
M
ah Sings
integrated
township of
Southville City
recently ob-
tained approval for a direct inter-
change approximately 2.5km from
the existing Bangi interchange on
the North-South Highway. This
interchange provides direct access
to KL city center with only 25km
or a half an hours drive away.
Since the original acquisition
in May 2012, additional parcels of
land has been added to the project,
boosting the size to 424 acres
(from 412acres), and an improved
master plan for the project which
enhances its GDV to RM5.13 bil-
lion has been mooted. Currently,
10
JULY 2013
the project has obtained techni-
cal clearance for the final stage of
planning development.
Heeding the governments
clarion call for affordable mass
market housing for the middle
class, the first phase of the project
will be the Savanna Executive
Suites. A 3-bedroom suite from
956 sqft is indicatively priced
from only RM280,000, attract-
ing interest from close to 13,000
registrants. These potential buyers
also indicated interest for the
3-storey garden link homes from
RM760,000 and 2 and 3-storey
lifestyle retail shops from RM1.2 Artists impression
million. A sales gallery will be of Southville City clubhouse
opened in Nouvelle Hotel by mid-
2013. PI
www.propertyinsight.com.my

Meridin@Senibong, Iskandar
Malaysia A RM4.35 billion Integrated
Development Overlooking Singapore
M
ah Sings latest pro-
ject in Iskandar Ma-
laysia is Meridin@
Senibong, a 35.26-
acre freehold land
for a total consideration of RM365.55
million. Located along the Straits of
Johor with prime views overlooking
Singapore, Meridin@Senibong is
adjacent to Senibong Cove by Walker
Corporation from Australia and close
to Permas Jaya which houses projects
like The Straits View by Bandar Raya
Developments Berhad and The Ma-
rina View by Capital Extension Land
Sdn Bhd.
Meridin@Senibong will be an
integrated development comprising
serviced residences, hotel or serviced
suites, retail podium and a street mall.
The project, to be completed over four
to five years, is targeted for soft launch
in the first half of 2014, with registra-
tion of interest to commence in the
second half of 2013.
The prime location is only 8km
from Johor Bahru City Center via the
www.propertyinsight.com.my
Eastern Dispersal Link (EDL) and
6km from the Causeway to Singa-
pore via the Johor Bahru East Coast
Expressway. Meridin@Senibong will
enjoy tremendous visibility and acces-
sibility as it fronts the Coastal High-
way and can also easily access the Pasir
Gudang Expressway, Tebrau Highway
and Inner Ring Road.
It is just next to the matured
township of Permas Jaya, which
houses the AEON Permas Jaya Shop-
ping Centre, and close to no less than
six golf courses, sport and recreational
facilities. The Regency Specialist Hos-
pital and Sultan Aminah Hospital, as
well as the proposed Thomson Medi-
cal Hub are easily accessible from the
project.
Several schools are near Meri-
din@Senibong, including the R.E.A.L
Schools Cahaya Campus - which offers
both national and international syllabi
from kindergarten to primary and sec-
ondary levels, SMK Permas Jaya, SMK
Taman Permas Jaya 2, SMK Senibong
and SRJK(C) Chee Tong. In addition
PROPERTY UPDATES
to that, a site has also been identified
for the construction of SJK(C) Pei
Hwa 2 near Permas Jaya that costs
RM5.5 million.
Mah Sing Group Berhads Group
Managing Director cum Group Chief
Executive Tan Sri Dato Sri Leong Hoy
Kum commented, The acquisition is
due to our successful sales and delivery
track record in this region, where we
have been active since 2000. In fact,
we recently saw a 75% take up on our
balloting exercise during one week-
end in terms of pre-selection of units
in Meridin@Medini which is a sign
of strong investor confidence in the
Mah Sing brand in Iskandar Malaysia.
Meridin@Senibong is also close to two
of our very successful matured town-
ships; 6km from Sierra Perdana via
the Coastal Highway, and 11km from
Austin Perdana. Meridin@Medini
and Mah Sing iParc@Port of Tanjung
Pelepas is a 35-minute drive away. We
have established our brand in Johor
for 13 years, and look forward to build-
ing another iconic project here. PI
Artists impression of The Meridin@Medini,
another development under Mah Sing
11
JULY 2013
 PROPERTY UPDATES
Tropicana
Metropark
- Winning
Tranquillity
S
trategic, accessible and rich
with amenities winner of
Best Mixed Use Develop-
ment Award (Malaysia) at
the International Property
Awards in the 2013 Asia Pacific re-
gional competition and earmarked for
a Central Park, the iconic Tropicana
Metropark has it all.
Stretched across 11 million
square feet of floor area, the freehold
12
JULY 2013
mixed development is a brilliant inte-
gration of residential, office and retail
space, lavished with greeneries and a
man-made lake that magnifies its ex-
clusivity with a contemporary design.
The first phase of development
which is The Pandora Service
Residence comprises two residential
towers of 627 units; Tower A and
Tower B. Within the elegant struc-
ture, there are three design options to
choose from studio, two and three-
bedroom apartments with built-up
areas ranging from 600 to 1,200
square feet. Each unit will be provided
with additional features such as built-
in kitchen cabinet and air-conditioner
units.
Richly Recreational
Catered to those seeking a whole-
some living and working lifestyle, an
abundant of amenities is provided to
fulfil the need of its residents. Among
the facilities are fun-filled entertain-
ment hubs, educational centres, a
shopping mall, a hotel and learning
www.propertyinsight.com.my

centres amid an expansive land area
and dazzling urban life.
The landscape is designed to
encourage healthy and active living
by incorporating nine acres of green
sanctuary in the heart of Tropicana
Metropark a central park with
waterfront features. Residents will be
able to enjoy the tranquillity of a man-
made lake, pedestrian promenade,
jogging and cycling tracks, childrens
playground and indulge in the treat
of delicious eateries at the alfresco
provided.
The serviced residence will also
enjoy top-notch security with CCTV
www.propertyinsight.com.my
surveillance as well as host of modern
facilities such as multi-purpose hall,
childrens playground, floating lap
pool, jacuzzi and barbeque area.
Prime Location and Great Acces-
sibility
Cleverly situated between the
established and prosperous township
of Shah Alam and Subang Jaya, the
Tropicana Metropark is expected to
create a more vibrant environment
and draw more attention from and to
its neighbours.
Standing on a hill, it is presented
with the magnificent view of Subang,
PROPERTY UPDATES
and various landmarks around Shah
Alam. Its iconic central park also can
be seen from most of the commercial
and residential units, giving both
occupants and residents the enjoy-
ment of premium views and soothing,
stimulating aesthetics.
Developed by Tropicana Corpo-
ration Berhad (formerly known as Di-
jaya Corporation Berhad), Tropicana
Metropark will also enjoy direct access
from Federal Highway via a proposed
flyover which is expected to be com-
pleted by 2016. With a grand blueprint
in planning, the entire development is
expected to be fully developed in 2025. PI
13
JULY 2013
 PROPERTY UPDATES
Lakeville Residence Kuala Lumpur:
RM1.15 billion Serviced Residences for Small Families
M
ah Sing has acquired
12.38 acres of land in
Kuala Lumpur for a
total consideration
of RM72.8 million
or RM135 p.s.f. The land is in Taman
Wahyu, Kepong, only 700 meters from
the Taman Wahyu KTM Station and
merely seven stops to KL Sentral. It will
be developed into Lakeville Residence
with an estimated GDV of RM1.15
billion and to be completed in over
three to four years. It is targeted for
soft launch in the first half of 2014 with
registration of interest to commence in
the second half of 2013.
Easily accessible via Jalan Kuch-
ing and Jalan Ipoh, other access routes
include the DUKE Highway and Middle
Ring Road 2 (MRR2). Besides strad-
dling the townships of Kepong, Selay-
ang and Jalan Ipoh, Lakeville Residence
is conveniently located just 15 minutes
away from Kuala Lumpur City Centre
and Mont Kiara in the South, Petal-
ing Jaya to the South West, 20 minutes
to Rawang in the North West and five
14
JULY 2013
minutes to Batu Caves.
Tan Sri Dato Sri Leong Hoy Kum
said, This is one of the last pieces of de-
velopment land in this matured location
in Kuala Lumpur, and we believe there
will be keen interest for the products
that we have planned. The surround-
ing neighborhoods like Kepong and
Selayang have mainly older residential
schemes and it is timely for us to offer
well-designed homes with good concept
and facilities for the up-graders as well
as first time home buyers from the
surrounding established townships.
Based on our experience with our very
successful Perdana Residence and
Perdana Residence 2 in Selayang which
garnered overwhelming interest, we
believe the strong pent-up demand will
result in another successful project for
Mah Sing.
Targeting these buyers, the Group
intends to offer family friendly ser-
viced residences ranging from 950 sq
ft to 1,200 sq ft, with all of Mah Sings
hallmark concept, security and facili-
ties for the development. Residents
of Lakeville Residence will be able to
enjoy lake views on the North, West and
South. The Kepong Metropolitan Lake-
Garden recreational park is just 7km
away and the Forest Research Institute
of Malaysia just 8km away.
There are numerous schools in
the area, including SJK(C) Mun Chong
which is within walking distance from
Lakeview Residence, SMK Batu Lima,
SMK Hillcrest (Gombak) and even
international schools like Baseerah
International School (7km away), In-
ternational Islamic School (12km away)
and British Malaysian Institute (11km
away).
Being in a matured location, there
are various amenities and shopping
destinations close by, including Tesco
Extra, AEON Metro Prima Shopping
Centre in Kepong, Selayang Mall, Brem
Mall Jalan Kepong, an IT mall with a
Giant supermarket and Big Cinema
within the mall, as well the Selayang
Wholesale market. The Selayang Hospi-
tal just 6km away has been designed to
meet world class standards. PI
www.propertyinsight.com.my
 CONTRIBUTOR

GROUP or BULK
PURCHASE OF PROPERTIES
A game-changer?
The increasing popularity of bulk purchase
signals a new era in property investing.
Faizul Ridzuan evaluates the pros and
cons of mass buying.

Quantity, has a quality of its
own. Joseph Stalin. In the
last 12 months, there has been a
growing trend of individuals and
groups organising bulk pur-
chases of properties from developers.
Bulk buying is basically an activity that
allows few or many property investors
to invest in a single development as
a group. More often than not, buyers
participating in bulk purchases are
often promised many additional ben-
efits that wont be available should they
choose to invest individually. Sounds
good, right? Its actually not as simple
as it looks or sound. In this article, I
wish to share my thoughts on bulk-
buying, and perhaps offer a slightly
different take.
The Good
Lets imagine for a while you are
a fish seller today (most likely, this
wont be anyones dream profession
but just bear with me on this). Theres
a strong possibility that you could be
standing from morning to noon selling
100 fish to 100 customers. But what
if one guy approaches you early in the
morning and offer to buy all 100 fish?
Even if he wants a good discount youll
most likely consider since he is helping
you to clear your stock much faster
than usual. So instead of spending five
to six hours to trying to sell 100 fish,
now you can sell all your stock in less
than 10 minutes and youll end up with
lower profit, plenty of time, and holds
zero risk. Now, the fish seller above is
the developer. In business, how fast
you can clear your inventory matters
as this can make or break businesses.
The faster they can clear their exist-
ing stock, the faster they can move on
to the next project and make more
money.
Therefore its no surprise why a
lot of developers love group purchas-

15
www.propertyinsight.com.my JULY 2013
 CONTRIBUTOR
ers as they can transfer their risk to
the new buyers and then move on to
the next project. This is basic common
sensewhere the more you buy, the more
discounts youll get. They are normally
more inclined to discuss flexible terms
to these bulk purchasers. Among some
benefits participating group purchasers
can potentially enjoy are:
Discounts
Additional discounts since there are
many buyers buying from the same
group. Typical discounts can range
from 1% all the way to 10%, sub-
ject to number of units confirmed.
Easy ownership
Zero or low down-payment
schemes, to help the purchasers
from the group to buy this property
using as minimal cash as possible.
Early preview
Normally, there will be previews
held by the group for their mem-
bers, to discuss the property and
its prospects, sometimes before the
soft-launch of the actual project.
Networking
Networking with would be buyers of
the said development. This allows
one to collaborate with other inves-
tors of similar profiles.
16
JULY 2013
The Not-So-Good
While bulk-purchases can
sometimes offer tremendous benefit
and advantages to investors, it can
also cause investors to make serious
mistakes. The problem when you
are going as a group, other mem-
bers false optimism can sometimes
overshadow any small doubt you
might have. Its human nature to
be uncomfortable to go against
the masses and the following are
reasons why I dont like to be part of
bulk purchases:
1. The 3 Hs Hype, Haste,
Herd
Hype
Sometimes, in order to sell units,
the group members will be told by
the group leader (bulk purchase
organisers) that they can expect to
gain hefty profit after few years.
Some common pitches normally
thrown are: We expect investors
of this project to make xxx percent
returns in 3 years. In todays boom,
people tend to get very excited,
especially when they themselves or
the people they know have made
good money out of properties. They
think that PAST = FUTURE, and
combine that with a few more ec-
static members, logic and common
sense will be thrown out of the win-
dow and everyone will start taking
their cheque books out.
Haste
When people get excited, good prac-
tices like research are normally for-
gotten. Buy 1st, think later becomes
the mantra of the day. To get people
to commit, some will make special
offers only for the day like DIBS (no
interest during construction period),
iPAD/iPhone etc, to give people little
time to think.
Herd
We are all humans and we never like
to be different. Assuming you can
remain calm and logical, emotions
can still swing things over. Even if
you think that the development is
a crappy one, youll start doubting
yourself when you see everyone start-
ing to buy into that development like
theres no tomorrow. Our kiasuness
takes over and before you know it,
youre standing at the counter put-
ting down the booking fee on a prop-
erty you were never 100% convinced
is a good buy. Dan Rather once said
Once the herd starts moving in one
direction, its very hard to turn it,
even slightly. I couldnt agree more.
2. The discounts offered
werent real
Based on my limited observation,
most of the discounts offered arent
real. To illustrate this, let us use
condominium X as an example.
Condominium X has three blocks (1,
www.propertyinsight.com.my

2 & 3):
The 1st block was sold at
RM500 psf, and its fully sold. The
2nd block was sold at 550 psf, and
its also fully sold. The 3rd block now
are being hawked at 650 psf to the
group purchaser, and still has many
units as the RM650 psf is consid-
ered by many seasoned investors as
overvalued.
In order to move the 3rd block,
some groups will come and negoti-
ate with the developer to give them
say, 10% discount. But even at 10%
discount, the group members still
pays RM585 per sq ft, much more
than what the buyers of blocks 1 and
2 paid for their units. Therefore,
they will be in an inferior position to
compete with the earlier buyers later.
3. Hefty initial cost involved to
join the group
Most of these groups and
individual organising bulk purchases
normally charge their members good
money before they can participate in
such an event. The lowest I was told
was over RM2,000 and the highest
goes to above RM8,000 for a few
days seminar and the opportunity
to join future group purchases. Im
a cheapskate so I personally think
thats a lot of money especially when
there are some free/no-fee groups
out there that do the same albeit
informally over the internet.
About the Contributor
Faizul Ridzuan is a regular 9 to 5 employee, property investor and the author of the bestselling
book WTF? 23 properties by 30. In his spare time, he contributes as a columnist at property-
WTF. com.my. He can also be reached via his email or Facebook at writetofaizul@gmail.com.
www.propertyinsight.com.my
4. Potential vested interest of
bulk purchase organisers to
push for sale
Normally either the buyer or
developer will need to reward the
efforts of the organiser for spend-
ing their effort and time to organise
these bulk purchases. There noth-
ing wrong with such commercial
arrangements, but one need to be
mindful that the organisers are only
paid if you actually bought a unit.
So what are the chances that youll
get straight and honest advice from
the organisers? Its like asking a fish
seller whether you should buy fish or
chicken for dinner. If the fish seller
does not sell any chicken, chances
are he is going to tell you that fish
will be better for you, even though
they themselves prefer chicken over
fish. Sometimes, even the organis-
ers themselves are not buying the
project they are promoting. Caveat
emptor my friends (Latin for buyer
beware).
Conclusion
Now, does this mean that all
bulk purchase groups are bad and
should be avoided completely? Thats
certainly not what Im suggesting.
Bulk purchases and joining investors
clubs certainly has its benefits. It can
shorten ones learning curve, and
the discounts can be an advantage.
But one shouldnt neglect their own
CONTRIBUTOR
research and gut feel just because
someone out there tells you that
the project is a good buy. Whether
buying individually or with group,
you still need to perform your own
research and due diligence. Dont let
the hype, haste, and herd influence
you. You must be your own man/
woman, and be as cool as ice when
it comes to making decisions.
In my book, I have mentioned
the importance of networking and
how I have tremendously benefited
by being in the RIGHT network.
The key here is to be in the right
network that dishes out neutral
advice. I need to stress here that if
you are in the wrong network
thatorganises bulk buying, you could
be part of the herd that is heading
towards the slaughter barn. So
choose your network and group
closely, as they can really make or
break you.
Lastly, there are many free
mediums out there to help you do
your own due-diligence, especially
online. Internet property forums like
propertyWTF.com.my and forum.
lowyat.net are very useful research
platforms. With few thousand
investors in these sites, you can
expect decent, impartial input given
by the contributors should be able
to aid significantly in your decision
making process prior to joining any
bulk buying sessions. Take care, and
please invest safely. PI
17
JULY 2013
 FEATURE

Are Property Developers

Making Too Much Profit?
An Exclusive Interview with
Datuk Seri Michael Yam

Property Insight talks to the President of the Real Estate &

Housing Developers Association Malaysia (REHDA), Datuk
Seri Michael Yam on developers profits, rising prices, low
cost subsidies and the shortage in supply.
By Tan Thiam Hock

18
JULY 2013 www.propertyinsight.com.my

Developers charge exorbitant
prices with the excuse of rising
costs, but just look at the prof-
its theyre making. An average
wage earner like me cant even
afford a small house. Theres nothing
decent in the market going for below
RM500,000, laments a man on the
street.
This has been the general senti-
ment in the market of late, especially
among the middle-class, ever since
the industry experienced one of its
biggest price appreciations, in the
last few years. As a reference point,
a 2-storey terraced house in USJ go-
ing for RM350,000 in 2008 is now
priced above RM700,000. Prices of
properties in other prime locations
have also enjoyed similar escalations,
if not more.
Too Much Profit?
Flipping through prop-
www.propertyinsight.com.my
erty advertisements, its true that a
homebuyer would be hard-pressed
to find anything decent for less than
RM500,000 these days, especially in
prime locations around Klang Valley.
I think theres some form of look at the books again. SP Setia sold
discolouration because the govern-
ments first impression is that all
developers are making a lot of money,
at the expense of the buyers. But if
you apply that rule, then you can
say the same thing of Nestle, which
is producing food, or Proton who is
selling cars, or the banks who are
making money, says Datuk Seri Mi-
chael Yam, President of Real Estate
& Housing Developers Association
Malaysia (REHDA).
If you believe that property
developers make a lot of money, just
examine all the listed companies
annual reports. Ill be surprised if
anyone makes nett profits of more
than 20% turnover. The only excep-
FEATURE
tion could be Sunrise, because of
the low land cost of RM5 per square
foot. They didnt make money on the
construction, it was on the land. If
someone else makes more than 20%,
some land and had immediate recog-
nition of profit, not from operations,
he continues, to strengthen his point.
Yam contends that its not
even necessary to dwell on that, as
corporations are in the business for
a fair return on their investments.
There are 90 listed companies which
probably produce 60% to 70% of the
housing stock. The biggest property
developers are actually government-
controlled and government-linked.
So, you cant say its them or us, as we
are all in the same boat. The biggest
developer is UEM Land-Sunrise. The
second biggest is SP Setia which is
owned by the government and EPF.
Somewhere high up are Sime Darby
19
JULY 2013
 FEATURE
and also I&P which are also govern-
ment-owned, he explains.
Cost Components of a High Rise
Condominium
When people say that proper-
ties are so expensive, Yam tells them
to analyse it and heres his analysis:
When a developer sells you a high
rise residential unit at RM400 psf,
60% or RM240 of it is the construc-
tion cost. That is the minimum cost
for the developer who outsources to
the contractor to build it. Another
20% which is RM80, is the land cost
because that is the price the devel-
oper typically pays the landowner.
The remaining 20% is the developers
profit. If things dont go according
to plan, and another crisis surfaces,
and the developer ends up with many
unsold units, that 20% profit is fur-
ther eroded. Logically, who makes the
most money? Its actually the buy-
ers, because when its completed, the
price goes up 40%.
With those breakdown figures,
even in a worst case scenario, Yam
sees property prices in Malaysia
falling by a maximum of only 20%
Cost Components of
a High Rise Condo
Profit
20%
Materials
& Labour
60%
Land
20%
(Note: Interest cost for sell-and-build is minimal)
20
JULY 2013
to 30%. In the depth of the Asian
financial crisis, prices fell only 15% in
the Mont Kiara area, he quotes a real
life example.
The Multiplier Effect
Yam is quick to point out that
the property industry has a multi-
plier effect on other industries and
the economy. He estimates that it
impacts about a million people, in
terms of those working directly or
indirectly under the industry. Why a
million? When we make the decision
to develop a property, its not just the
main contractor and sub-contractors
who do the work. And its not just the
architects, engineers and quantity
surveyors who benefit from the con-
tracts and professional fees. You must
also remember the manufacturers
who produce the roof tiles, flooring,
window casements, glass, sanitary
ware, light bulbs and everything
else. Further along the line, we have
the interior designers and furniture
manufacturers like IKEA and Fella
who are also impacted, he elaborates.
Even further down, those who
benefit are the producers of instant
noodles like Mamee, because the
construction workers need to eat,
Milo, shoes, boots, even the massage
parlours and coffee shops, Yam con-
tinues, to make his case.
Housing the Nation
As the President of REHDA,
Yams priority is to look after the
industry and also REHDAs 1,030
corporate members. The housing
industry is constantly evolving. If you
look at the three principal necessities
in life, they are food, clothing and
shelter. As the housing industry is the
provider of shelter, the government
will see this as a major issue in re-
spect of taking care of the welfare and
well-being of the country. REHDA,
being the official NGO and sounding
board of the government, will always
be consulted, tested and pushed to do
more, he says.
Yam opines that the more im-
portant issue is how developers can
help the government in housing the
nation. In the past, if you look at the
scorecard of the developers, we have
produced one million units of low
cost housing. Theres a total of 4.2
million or maybe 4.3 million hous-
ing stock in the country. So, we are
saying almost 25% of this countrys
housing stock comprises low cost
houses, ranging from RM25,000 to
RM42,000, he estimates.
According to Yam, this require-
ment to build low cost units is a
prescriptive condition that is imposed
on every developer when they submit
a plan for any development, with few
exceptions. The logic of the govern-
ment is that developers make a lot of
money and they want the develop-
ers to commit part of their profits to
produce low cost, low-medium cost
and medium cost housing because
its good for the government, but its
not bad for the soul of the developer
either, he admits.
Although developers dont mind
fulfilling their corporate social re-
sponsibility (CSR), what theyre ques-
tioning is, Did the one million low
cost housing units we built go to the
right people? Statistics doesnt show
that there are one million poor peo-
ple. I think if you do a bit of survey,
quite a lot of these low cost houses
are probably empty, some have prob-
ably been rented out and some are
probably in the wrong hands, theyre
not with poor people. But we have
built them, he claims.
Unwitting Subsidiser
Developers are required by
the government to build low cost
units and sell them at a maximum
of RM42,000, in urban areas. Yam
laments that at current costs, theres
no way developers can build some-
thing for RM42,000. To build a
650 sqft low cost unit at RM42,000
would translate to less than RM65
per square foot. Can you believe it,
concrete, steel and all those materi-
als? he questions.
So, if the developers cant build
a low cost unit for RM42,000, where
does the funding come from? Yam
stresses that someone must be subsi-
dising it but its not the developers, as
people would like to think. Public-
www.propertyinsight.com.my
 FEATURE

listed developers need to achieve a

minimum return, and their CEOs are

In the depth of the Asian

bound by key performance indicators
(KPIs). How can a public-listed de-

financial crisis, prices fell only

veloper tell its shareholders that their
returns are only 5% of what they put

15% in the Mont Kiara area,

in? The shares would tank wouldnt
they? Although I am appointed by
the majority shareholders, Im also
there to defend the rights of the
minority shareholders. So you cant Datuk Seri Michael Yam
say that youre doing charity, youll
still want to have your, lets say, 20%
returns. So, whos actually subsidising
the low cost houses? Its the buyers of
non-low cost houses, unwittingly, he
reveals.
According to Yam, a middle-
class homebuyer who purchases a ter-
raced house at RM300,000 is prob-
ably subsidising RM20,000 for low
cost housing. These are just example
figures but the current business mod-
el is headed that way. The role of
subsidising low cost housing should
not just lie with the middle-class, it
should be everyones, including the
bankers, the car producers and the
food producers. Just like social hous-
ing where someone is so poor that he
cant even afford low cost houses, the
government will build the houses and
rents them out cheaply. Who is the
government? It includes all of us who
are taxpayers. This is what Im trying
to preach, he explains.

Shortage in Supply
How is the supply and demand
situation in the market? Yam esti-
mates that we need about 150,000
to 180,000 units of new housing
a year and explains that theres a
range because buying a property is
not like buying lunch. You must eat
lunch, but with property, if you dont
have the money or if you dont like
the product, you can defer buying
because you can continue to rent,
you can continue staying with your
parents, and so on.
How did I arrive at this figure?
My suspicion is that in 2005, about
400,000 students sat for their SPM
examinations. By 2013, these stu-
dents have reached a marriageable
age. If you reduce this figby 10%,

21
www.propertyinsight.com.my JULY 2013
 FEATURE
youll still have 360,000 people
who are ready for marriage that
would make 180,000 couples. These
180,000 couples would desire to
have houses. For the year after this
batch, the figure would probably be
185,000, followed by 190,000 and
so on. This year, 600,000 babies will
be born. So, the figure will be closer
to 300,000 in 25 years time, he
elaborates.
On the other side, Yam says that
supply was only about 100,000 per
year in the last three to four years.
Hence, theres a minimum 50,000
deficit to be carried forward each
year, which will end up as a pent
up demand at some point in time
because once people reach the age
of 40, they can no longer defer their
purchase.
Jurisdictive Bottleneck
Indeed, developers need to
supply more to the market. So where
is the production bottle-neck? Yam
thinks that one area is excessive plan-
ning, legislation and regulations. Im
also on the DBKL advisory board and
were trying to quicken the approval
process. Hand in hand with that, we
also need to tighten the
enforcement and penalty. So, were
now saying, we have a problem here,
we have to supply more, and to quick-
en the process, we must give private
developers more liberty to get on
their way. But, once the application
is approved, the developers better
fulfil it based on those parameters.
So, I also have to remind my develop-
ers, please remember the 4Rs Be
Responsible, Responsive,
Relevant and Respected, he con-
cludes.
22
JULY 2013
Q&A Session with
Datuk Seri Michael Yam
Property Insight has a further chat with Datuk Seri Michael
Yam for his outlook on the industry and his tips on property
investing. Here are excerpts from the interview:
Property Insight (PI): Property prices
have been going up drastically in
the past few years. Is there a limit to
where it can go, to a point where most
people cannot afford anymore?
Datuk Seri Michael Yam (MY): Eve-
rywhere in the world, its very difficult
to satisfy everyones idealistic desires;
the best place for the cheapest price. It
doesnt happen that way. When people
say that property is very expensive,
they are referring to places like Bandar
Utama, Taman Tun and all those af-
fluent locations. In reality, there arent
even 10,000 units there. So, its really
only for the top 2% to 5% of the popu-
lation. I think people may need to be
a bit more realistic. If they cant afford
it, dont talk about Bandar Utama or
Taman Tun areas, as they are expen-
sive. And the people are paying the
RM1.2 million to RM1.5 million for
their own use, because they dont want
to travel long distances.
Im not looking down on those people
who cant afford, but dont use that as
a benchmark. So, people who can-
not afford need to live further out of
the city. You go further, to places like
Lembah Beringin, Bukit Beruntung,
which are ahead of their time. Maybe
one should relook at those places
because the answer to bringing down
prices now and to provide more supply
so that prices can be kept in check
is the issue of accessibility, which is
transportation. So, MRT and all those
will help.
So, the way I see it, prices will contin-
ue to go up. There will be inequity in
the distribution. There will always be
the poor and the poorest who cannot
afford it. The state must come in, this
is through federal taxes, to build social
housing to rent out.
PI: Any areas which you think will
have potential to go up?
MY: I think Kajang, its really going
up. I think the double storey link hous-
es are going for about RM300,000 to
RM400,000, which is what you would
pay in Taman Tun and Bandar Utama
in those days. But the cost has gone up.
Things generally double in price every
seven to 10 years, so why not houses?
The other place which I have some
confidence in is Seremban, which is
coming up because of the train.
PI: What do you look for when pur-
chasing a property?
MY: I think there are 5Ws that you
should go through as a form of check-
list as to where and what type of prop-
erty you want to buy. Perhaps an easier
example is to look at housing and I
always like to propound this 5Ws the
first one is where, the second one is
who, next is which, the fourth is when
and the fifth is the wow factor.
Where
So, in terms of where, people talk
about this as being location, location,
location, but Ive seen properties being
developed in great locations but yet,
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 FEATURE

they were left abandoned and uncom-
pleted.
Who
So, when you pick where, it is
important to pick the second W which
is who, meaning who is the developer.
Now, often times you may have a good
parcel of land, but a very inexperienced
and weak developer in terms of
financial standing develops it and
because sales is not so good, practi-
cally over a recessionary period, he
cant complete. So, your money is stuck
there and the project is abandoned. So,
thats the second W.
Which
The third W is which. This would
relate to the pricing. So please, if you
only have a budget of say RM100,000
dont expect this to be developed in a
location which is in Zone A of Kuala
Lumpur. But even within that, you
can still apply the 5Ws to select your
property.
When
The fourth W is when, so this is tim-
ing, something my good friend Ho
Chin Soon talks about. Its really try-
ing to pick the best time to buy. This
projection and prediction is probably
as good as a weatherman, but there
are some things you may need to look
at, perhaps you see the stock market
starting to go up in an uptrend, you
can bet your bottom dollar that six to
12 months later, all these profits from
the stock market will translate into
brick and mortar. So, thats one area of
looking at timing. Its obviously look-
ing at the economic growth, whats the
GDP growth of the country but also
fundamentally, one should also look at
our population growth. We have a very
healthy population growth of 2.2% to
2.4%. So, thats your demand but you
also have supply. Now, you can check
the supply from the Ministry of Hous-
ing and from various sources, maybe
FOMCA or REHDA. And currently, as
far as Im aware, the average amount
of supply to the market is something
like 100,000 units per annum, when
the true demand is probably between
150,000 to 180,000. You can see the
shortfall happening in the last three
or four years and this deficit will be
carried forward, and suddenly one
day, all the people who didnt buy will
suddenly decide to join the queue
and thats when theres a possibility of
prices going up again.
Wow
The fifth one, which is probably a less-
er used W, would be the wow factor.
Even in some so called areas which are
not that fantastic, for instance, I can
think of two places, The Sunway Pyra-
mid and The Mines areas. If you look
at the past, 20 years ago, they were
disused mines and nobody thought
that they could be rehabilitated and
today the wow factor which is put in by
Tan Sri Jeffrey Cheah and also Tan Sri
Lee Kim Yew. In fact, they were ahead
of their time and now people look at
those places as something that is very
desired. If you look closer to home, in
the Klang Valley, you probably cant go
wrong but if you take it further afield,
you do have the wow factor happen-
ing in places like perhaps Janda Baik
and also as far away as Langkawi in a
place called Datai. Those give you the
wow factor and you want to own it.
Sometimes, it may not have something
to do with investment returns but its
just that the project is so nicely done,
that its a trophy investment that you
want. So, thats the fifth called the wow
factor.
PI: What should an investor look for in
a developer?
MY: There are many developers in
Malaysia. Firstly, you would want to
see whether hes a member of REHDA.
REHDA as an NGO and as an associa-
tion which has the powers of profes-
sional institution, where they can bar
people from coming in, or you must
meet this qualification or that paper
qualification. Essentially REHDA ac-
cepts members who have the approval
for the project, who have minimally
some financial standing and needs
to be recommended by another two
developers before they can become
a member. We have also taken steps
where members who dont follow

When people say that property is very

expensive, they are referring to places like
Bandar Utama, Taman Tun and all those
affluent locations... So, its really only for the
top 2% to 5% of the population.

23
www.propertyinsight.com.my JULY 2013
 FEATURE
the rules have had their membership
terminated. So, theres some corporate
governance with respect to being a RE-
HDA member, as opposed to someone
whos not.
Aside from that, I think its
important, as you would in a marriage,
to check the background of the family,
who their friends are and who they are
associated with. So similarly, for a de-
veloper, you start off by perhaps look-
ing at the balance sheet, look at the
track record, someone who has been
around for 20 years obviously has got
a fairly good report card and history.
But sometimes, changes in CEO and
changes in control may also change
the nature and the trust in the com-
pany. So, track record is good but also
look at who is in the management and
sometimes also you would have friends
who may be in the banking industry,
or maybe in accounting firms, you can
also cross check with.
There are about 90 public listed
property companies in Malaysia, and
in general you wont get a listing unless
you have a certain minimum stand-
ard and a certain minimum financial
achievement. So, that also helps.
24
JULY 2013
Dont be afraid to call the Ministry of
Housing and Local Governments to
see whether that developer has a blot
in its track record, or even REHDAs
secretariat. If they are very reserved in
their comments, you may want to tune
down further to see if theres a problem
or impending problem. So, I guess
thats some of the telltale signs you
want to look for in respect of who you
want to pick.
PI: What is your advice for the serious
property investor?
MY: Fundamentally, other than satis-
fying the emotional need of having a
roof over your head, its also something
the people like to invest in. Its a dif-
ferent asset class, other from invest-
ing in business, in stocks and shares,
property globally has been deemed as
a very safe and very good investment.
The recent events in the US dont seem
to bear true, but thats a different set of
problems. Instead of buying property,
people are actually buying a deriva-
tive product which not many people
understand.
If purely going into investment in
property, I think fundamentally youd
want to look at apart from the fact that
the building should be there, should be
well-built, should be trendy, should be
something which meets the needs uni-
versally of anyone who wants a home.
Fundamentally, property invest-
ment comes from the yield point of
view. If youve got a good yield, then
the capital values will reflect the yield.
If theres no yield, its probably not
worth that much money, because we
are talking about replacement cost. So,
yield becomes a very important
element in assessing whether its a
good investment. So, a benchmark
that you can probably follow is if your
fixed deposit in the bank is making
3.2%, the question then is Will you
buy a property, you get a 5% yield. So,
you get a positive carry of 1.8%. Thats
regular, you get it monthly if its rented
out, as opposed to a fixed deposit,
which sometimes end at three months
or continues to six months. In fact,
3.2% today is probably on a 6-month
term, whereas rental is monthly. The
other angle you want to look at is also
whats the borrowing rate? So, youll
pass the fixed deposit benchmark if
www.propertyinsight.com.my

Fundamentally, property investment
comes from the yield point of view. If
youve got a good yield, then the capital
values will reflect the yield.
you borrow at todays rate of 4.1% or
4.2%, and you get a 5% yield, thats
what you call a positive carrier. Thats
quite a good investment because essen-
tially what youre saying is that you get
rental of 5%, you are now paying your
monthly mortgage at 4.2%. So some-
one is actually paying for your interest
rate plus possibly even the capital. In
25 years, it gets paid off, you get regu-
lar income that pays off your instal-
ments and you still have 0.8% to put
in your pocket. In fact, your problem
is a tax issue, because you still make a
profit, which youll need to pay tax on.
The loan is tax deductible on the inter-
est, but not on the principal repay-
ment. So, I would say these are some of
the elements to look at in terms of
whether a property is a good invest-
ment. A little bit more complicated,
www.propertyinsight.com.my
but not much more complicated than
if you were to invest in insurance prod-
ucts, derivatives, endowment policies,
so on and so forth. So, I think brick
and mortar is as they say, as safe as
houses.
When I paid 25,000 for my
house in 1981, I sold my place in 1992
for 110,000 pounds. So, I made a
healthy 85,000 and at that time it
was probably RM6 to 1. I had cash,
and I bought my house in Damansara
Heights then for less than a Kajang
terrace house now. Its 9,000 sqft and
today its worth RM800 psf. So, you
can see the leverage. I left London but
I went back in UK again 20 years ago,
probably in 1993 or 1994 when there
was negative asset value in the UK and
there was a banking crisis. I bought
another property then at 90,000
FEATURE
pounds and today it is worth maybe
600,000.
The situation in the UK then
favoured only a few people who wanted
cheap houses. You dont want that to
happen and like stocks and shares,
once theres forced sale going on, it
doesnt reflect the true value. Its just
the market perception that things go
down. So, its always the timing, and
given that those countries are cyclical,
it always goes back up.
Theres also a good advice that
my friend gave me when I hit my
forties, which is to go out and to
borrow as much as I can. I asked him
why and he said: You expiry date is
approaching. And its true, now its
better as banks allow a person to
borrow until the age of 70. In those
days, it was only until 55. So, at 40,
you only had 15 years left. So, the
advice I give is to borrow as much as
you can to buy properties. Your belts
tend to tighten for a couple of years,
but generally salaries keep going up.
So, it becomes cheaper and easier.
Borrow to the hilt if you can, and the
property will appreciate and it will
catch up. PI
25
JULY 2013
 FINANCE

SECRETS TO
HASSLE-FREE
LOANS
In an increasingly competitive financing environment, the market
is inundated with a variety of property loan packages offered by
banks. Property Insight talks to Jared Lim of loanstreet.com.my to
reveal the tips and tricks of securing a fuss-free loan.
By Mira Soyza

26
JULY 2013 www.propertyinsight.com.my
 FINANCE

W
hen it comes to
purchasing a Step
property, there is 1
a task much more
gruelling than When you arrive at loanstreet.coms home page,
the research process buyers often you will see a calculator at the top of the page.
bemoan about the loan application. If youre looking for property purchase or to
From the preparation of the right refinance, just select what you need and change the
parameters around.
documents to spending time hopping
from bank to bank for information,
getting a loan is a tedious affair.
At the end of the day, you may find
yourself overwhelmed with informa-
tion that you dont even comprehend
or even worse, bound to a loan that
stifles your investment from realising
its full potential. Step
2
Back to Basics
For starters, property buyers You can choose whether youre looking for
floating interest rate or fixed interest rate,
need to fully understand the me-
flexi or non-flexi, Islamic or conventional, and
chanics of a basic term loan before
completed or non-completed property by clicking
making an application. A basic term on the tabs. Everything in the market that is suited
loan refers to one where you are to what youre looking for will appear below it. You
bound by a fixed repayment schedule can then select the chosen loan package.
and a set maturity date that you can- Tip: Hovering over the blue i button will provide
not deviate from. You are not allowed you with more information on the package.
to take the money out and when
additional cash is deposited into the
account, the bank must be instructed
to reduce it from the principal. If you
fail to inform the bank, the money
will continue sitting in the account
and will only be deducted when you
miss a payment (it becomes a pre-
payment).
As the industry became more
mature, the banks started offering
semi-flexi loans, where additional
cash is immediately treated as a pre-
Step
payment and deducted automatically 3
from the principal. On top of that, in
certain semi-flexi loans, the custom-
Step 3: Click the apply selected packages
ers are also allowed to withdraw the button and it will take you to a page to provide your
additional amount paid ahead of contact information. You will be asked if youd be
schedule, subject to the banks terms. interested in hearing from their panels of lawyers.
When you get a full flexi loan, Submit your application and wait for the call centre
you are given two accounts: a loan to contact you. Expect a call within one working day.
account and a current account. So,
if you are granted RM500,000 in
your loan account and at the same
time, you have RM100,000 in your
current account which is tied to the
loan account, your interest will be
calculated based on the difference

27
www.propertyinsight.com.my JULY 2013
 FINANCE
between your loan amount and the
amount in the current account, Jared
Lim of loanstreet.com.my explains.
The only flipside to it is that a
service charge is imposed on the cur-
rent account and the loan could come
with a higher interest rate. So, if you
are a little tight on cash flow, opt for
a non-flexi loan for a better interest
rate. On the contrary, it is advisable
to opt for a flexi loan package and to
park the money in your current ac-
count, as it enables you to reduce the
interest payable. If you weigh it pound
for pound, semi-flexi loans definitely
offer a lot of perks.
The next variable to be taken
into account is the interest rate. Typi-
cally, the average property buyer tends
to favour fixed interest rates for secu-
rity reasons, as the monthly commit-
ment is fixed and known beforehand.
With a floating interest loan however,
the interest rate fluctuates with the
changes in the reference rate as deter-
mined by the banks, due to shifts in
the economy. The plus side of getting
a floating interest rate loan today is
that the interest rate is substantially
lower as compared to fixed-interest
rate loans.
With a fixed interest rate
loan, you always enter with a higher
premium but youre protected from
future fluctuations. One thing that
people dont realise is that you are
also obligated to insure your property
with their product, and this is where
the additional cost comes into play,
he says.
Delving Deeper
Once youve done your window
shopping and decided on a property,
there are a few factors to consider be-
sides the type of rates (fix or floating)
TOP 4 BANKS WITH NO LOCK-IN PERIOD
(RESIDENTIAL HOUSING LOAN):
1) SCB
2) CIMB
3) Maybank (Islamic package only)
4) AIA
28
JULY 2013
and the loans flexibility:
Valuations: The valuation
process is crucial. People tend to
forget that if they buy a property for
RM500,000 and the bank values it at
RM400,000, they still have to top up
the balance.
Lock-in period: This is im-
portant for investors as it determines
if the property can be sold in the
short-term for a quick profit, and the
penalty imposed.
Loan tenures: Different
banks impose different conditions.
Some banks allow up to 30 years of
tenure, while others offer up to 40
years. The age limit is normally up to
65 or 75 years old.
Getting the Green Light
1. Preparing your documents for sub-
mission can be as daunting as meeting
your future in-laws for the first time;
both are major life decisions and both
require approval. In perfecting your
qualification, there are several things
that home buyers and investors tend
to neglect.
Determining eligibility is a
2-step process. The first step which
Loanstreet excels at is filtering. Lim
says. Eligibility will be based on
income versus commitments, and of
course any overt signs of bankruptcy.
Should you take the loan, your nett
income, existing commitments (plus
monthly loan repayments) and your
new commitment will be calculated on
a ratio. The ratio should not be more
than a certain percentage of your
total nett income. The higher it is, the
higher the ratio and vice versa, he
continues. It is only one of many fac-
tors considered by banks on whether
to qualify a loan application.
Debt Service Ratio (DSR) deter-
mines the repayment ability of loan
applicants. The way the DSR cal-
culation is done varies from one
bank to another; they also have
different DSR thresholds. Below is
an example of a DSR calculation:
E.g., John Doe has a monthly
income of RM4,000 salary
+ RM1,000 rental income +
RM2,000 commissions on average
a month.
His monthly commitment includes:
RM1,100 existing housing loan
installment + RM800 car loan a
month + RM1,400 repayment for
the new mortgage. He also has
Credit Card outstanding balance
of RM15,000 in total with no other
debt obligations.
Bank A:
Nett Income X = Salary (EPF +
SOCSO + Tax) + (Rental * 0.8) +
(Commissions * 0.5) = RM5,153
Commitment = Car Installment
+ House Installment + (CC Out-
standing * 0.05) + New mortgage
installment = RM4,050
DSR = RM4,050 / RM5,153 =
78.6%
Assuming that the maximum ac-
ceptable DSR for Bank A is 80%,
based on the nett income and
Bank As DSR calculation John
Doe should qualify for the loan.
www.propertyinsight.com.my

Thereafter, the second step is
the credit approval. Every bank has a
different score card. A lot of factors
go into credit scoring and among
them are your income, education
level, savings, credit history and
CTOS records. All these factors are
taken into account to determine if
youre eligible.
2. What constitutes a nett income
is your fixed salary after EPF and
tax deductions, plus monthly side
revenues, this is as such especially for
property investors.
The bank includes property rental in-
come as part of your nett income if:
1) There is a stamped tenancy agree-
ment which has been drawn up for at
least three to six months.
2) There is a consistent record of the
cash flowing into your bank account.
Different banks apply different
weightings on rental income. Thus,
Lim advises to bear in mind that the
bank cannot take the full tenancy
amount as your nett income. Its
not so much whether its a positive
or negative cash flow, but it all boils
down to net income versus com-
mitment. You have to also under-
stand that if youre paying the bank
CTOSexplained
When it comes to credit approval,
CTOS records can be a hindrance to
your quest in venturing into prop-
erty investment. But what exactly is
CTOS?
CTOS as explained by Loan-
street is a lead information system
widely used by the majority of the
countrys Financial Institutions, Com-
mercial Companies & Businesses,
Legal Firms and other institutions.
The company that owns CTOS
system will collate information on
individuals and companies from
various sources found in the public
domain. The information will then
www.propertyinsight.com.my
RM2,000 a month and profiting
RM500 from it, the RM2,000 will be
added to your monthly commitment,
he elaborates.
3. Its also crucial to leave a credit
trail. Many people do not have a
credit history because they think
they are being prudent with their
finances. However, when the banks
perform a due diligence check and
cannot find any history on you, they
cannot determine your eligibility.
So, it makes sense to keep at least
one credit card while being prudent
about your spending and repayment
habits.
4. If you are a director or an em-
ployee of a Sendirian Berhad (private
limited) company, you should also
disclose it. Disclose your salary if
youre an employee and, the busi-
nesss monthly turnover and income
taxes if youre the director.
5. Choose your lender based on their
track record. Some banks are known
to be a lot more lenient than others
so it wouldnt hurt to apply based
on their reputation especially your
chances of succeeding under normal
circumstances are pretty slim. As
long you dont give them a reason to
be translated into electronic format and
stored in their database to facilitate the
loan application checking process and
decision making by the banks.
Information for CTOS is derived
from various sources:
1. Legal notices in newspapers
6. Searches at the Registrar of Societies
2. Searches at the Companies Com-
mission of Malaysia (CCM) or
Suruhanjaya Syarikat Malaysia
(SSM)
3. Government Gazettes & Publications
FINANCE
check up on you.
Further Mark Down
Its human nature to wring out
the best possible deal for the sake
of survival, what more in a rat race
thats property investment. Thus,
youll find that there is a way to defer
additional costs and protect yourself
from losing money in case things
dont go through.
When you pay the booking
fees, you should always make sure
that the seller agrees to return you
the money should your loan applica-
tion fail or if the valuation price is
unsatisfactory. And your earnest de-
posit should be anything between 1%
and 3% in todays market, Lim says.
Lim further advises that valua-
tion should be done prior to paying
the full 10% down payment. Most
of the banks do not charge process-
ing fees anymore. However, you are
given the option (on your loan docu-
mentation) of adding your legal fee
financing to your loan to minimize
your initial capital outlay. There are
also options for zero entry cost loans,
where the banks will foot the bills for
you without you having to fork out a
single cent. The corollary to a zero en-
try cost loan is that the interest rate is
high and they will lock you in for about
4. Searches at the Malaysia Department
of Insolvency (MDI) or Jabatan
Insolvensi Malaysia
5. National Registration Department
(NRD) or Jabatan Pendaftaran Negara
(JPN)
(ROS)
7. Contact information provided by
creditors / litigators / trade referees
8. Information voluntarily provided by
the subjects
29
JULY 2013
 FINANCE
three to five years to recover the cost,
he explains.
Zeroing in on that lock-in
period alone, the zero entry cost loan
isnt suitable for long-term investors.
However, it makes sense for
short-term investors who intend to
sell their investments upon comple-
tion as long as the exit penalties dont
get evoked. For long-term investors,
it makes more sense to go for the
cheapest interest rate regime, or to
refinance to the cheapest interest
rate regime at the end of the lock-in
period.
Squeezing for More
According to Lim, getting an
80% margin financing is a dream
come true to investors. Get more than
90% and youll feel like youve died
and gone to heaven. Youll be happy to
know that there is such thing as 95%
financing. Some banks will buffer up
to 5% for your other fees like MRTA,
legal fees and valuation fees.
But of course there is also an
unconventional way of going about
it, after all every law has a loophole.
30
JULY 2013
There are cases where the buyer col-
ludes with the vendor to state that
the buying price is at the same rate
as the valuation price. For example, if
an owner sells the unit to a buyer for
RM630,000 but the valuation of the
property is at RM700,000, they will
state the sale price as RM700,000.
So, when the bank disburses the cash,
the buyer has successfully obtained a
100% loan.
Third, Fourth and Fifth Time is
the Charm
As you go along, the more
properties you collect, the harder it
gets to obtain a sizeable financing.
You can point an accusing finger at
Bank Negara, but bear in mind that
its only done to avoid uncontrolled
hike of prices. Once youve purchased
a second home, the subsequent
purchases are only eligible for 70%
financing and below. So, how do you
continue growing your investment
portfolio without having to fork out
a substantial amount of cash?
When it comes to circumvent-
ing the 70%, there are no straight
forward ways. You can, however, opt
for alternative investments such as
commercial properties. SOHOs,
SOVOs and serviced apartments do
not have 70% loan-to-value (LTV)
rule and falls under a gray area where
they function as residential properties
but fall under commercial property
titles. Lim says.
There are also other legal ways
to obtain a 90% loan after purchasing
your second home which is by way of
3rd party charge. So, you put another
persons name on the loan and the
most important rule to remember is
that your name must not appear on
the loan apart from being a guaran-
tor, he adds.
In a nutshell, when selecting a
home loan, its best to go for a pack-
age thats the best fit for your situa-
tion. Attaining an approval also boils
down to affordability and creating a
good impression. If you can convince
a bank that you can afford it and you
do not give them any indication you
will default on your loan in the future,
then youre on your way to becoming
a property owner. PI
www.propertyinsight.com.my
 FINANCE

Top 5 Loan Application Mistakes

Mistake 1: Mistake 2: Mistake 3:

Choosing the wrong lawyer
Its important to get a
competent lawyer. The cost of
having a solicitor that doesnt
represent you well, even in more
straight forward cases can cost
you an arm and a leg. If youre
selecting a lawyer who charges
less just to skimp on your cost,
youre going to end up wishing
you paid more when the transac-
tion doesnt go as smoothly as it
should.
Receiving your rental income
in cash
Even if theres a stamped
tenancy agreement, the banks do
not take into account income that
cannot be proven in black and
white. The key is consistent cash
flow in your bank account with
credit trail. Freelancers should
make a habit of depositing a set
amount into an account monthly
to demonstrate consistency.
No proof of tax payment and
EPF statement
The lack of an EPF state-
ment and non-tax payment can
jeopardise your loan applica-
tion. If youre a freelancer,
take an amount of money and
voluntarily contribute it to EPF
monthly.

Mistake 4:
Skipping out on the home-
work
If you fail to do adequate
research, you may end up get-
ting a loan thats not a fit for
your situation. It can affect your
investment in a costly way. Re-
member, knowledge is key.
Mistake 5:
Not knowing your limitations
Commercial property loans
have a lot more restrictions.
Some banks might not finance
factory or office lots that are not
on the ground floor. So you need
to start looking out for what the
bank can and cannot finance
and, understand their conditions
and limitations.

About loanstreet
Loanstreet is an independent Malaysian loan comparison website and provides
independent loan advisory service free of charge.

31
www.propertyinsight.com.my JULY 2013
 LEGAL

Purchasing Property:
The Legal Issues
Practising solicitor Dato Ong Theng Soon
shares his knowledge on the key considerations
when purchasing residential property.

32
JULY 2013 www.propertyinsight.com.my

P
roperty or real estate
investments offer one of
the best types of investing
nowadays in many ways.
It is secure. Unlike stock
and bonds which can be badly affect-
ed by recessions or economic cycles
like the recent global economic crisis
in 2008, property has the tendency
to increase in value as time passes. It
also offers an attractive route or exit
strategy to gain financial freedom
through capital appreciation and
rental yield.
How to Buy Property
Now that you have made up
your mind to take your first step in
this new adventure, your next ques-
tion should be, How do I go about
purchasing my first property? There
are a number of sources where peo-
ple can go to buy property. They can
be either buy property directly from
developers, sub sales through prop-
erty agents, sub sales directly from
owners or even via property auctions.
There is now a growing trend to
purchase residential property from
the developers.
Purchasing Residential Prop-
erty from Developers
All purchases direct from hous-
ing developers must use the Schedule
G (for purchases of houses) or the
Schedule H (for purchases of apart-
ments) respectively of the Housing
Developers (Control and Licensing)
Act 1996 as standard sale and pur-
chase agreements (SPAs). Payment
of the purchase price is by progres-
sive payment based on completion of
work as certified by the architects or
engineers.
The period of time for the
developer to hand over the keys to
you from the date of your SPA is 24
months in respect of the purchase of
a house under Schedule G sale and
purchase agreement or 36 months in
respect of purchase of an apartment
under Schedule H sale and purchase
agreement.
Payment of the last 5% of the
purchase price will be held by a firm
of solicitors as stakeholders for the
www.propertyinsight.com.my
defect liability period, which is cur-
rently 24 months from the delivery
of vacant possession.
Purchasing a Residential Prop-
erty by Sub-sale
Unlike property purchased
from the developer, the terms and
conditions of an agreement for pur-
chases from existing house owners
(more commonly called sub-sale) are
not governed by statute. Contrary to
popular belief, there is no such thing
as a standard SPA in a sub-sale.
The terms and conditions of a sub-
sale agreement need to be negotiated
carefully between the parties to en-
sure neither party are disappointed
or frustrated by the outcome.
However, it is common practice
that upon signing of the SPA, 10%
of the purchase price be paid to the
seller. After that, it will take about
three months or more for the process
to be completed. During that period,
the lawyer, banker and agent will
do the necessary to complete and
perfect the transfer. They need to
conduct land search, communicate
with developers, communicate with
banks, submit relevant documents to
the Director General of Inland Rev-
enue to determine the stamp duty,
get the agreements stamped, loan
agreement processed, determine the
apportionment of the outgoings and
utility bills, ensure registration of
the transfer and charge, release of
the purchase price and many other
procedures. Payment of the balance
of purchase price is usually made to
the solicitors acting for the seller as
stakeholders to ensure redemption of
the house (if the same is still charged
or assigned to a bank or financial
institution at the time of sale) and
payment of real property gains tax by
the seller.
Other than the SPA, a memo-
randum of transfer, which is Form
14A of the National Land Code 1965,
must be completed to transfer the
title from the seller to the purchaser.
In instances where the title has not
been issued, then if the purchase is
from a developer, the developer will
undertake in the SPA to transfer the
LEGAL
title when the same is issued; and
if the purchase is through a sub-
sale, the transfer will be through an
assignment of the SPA between the
developer and the seller (Principal
SPA) to enable the buyer to take
benefit of the developers undertak-
ing to transfer the title contained in
Principal SPA.
Freehold and Leasehold Titles
There are two categories of titles:
Freehold LEASEHOLD
Which gives the Which allows
owner perpetual the owner to
ownership stay in posses-
sion only for a
specified
period (varying
from three years
to 99 years).
When the
specified period
ends, owner-
ship reverts to
the authority
that issued the
title.
A land search by your lawyer
will reveal if the property is a free-
hold or a leasehold title.
Differences between a Strata
and Individual Title
Generally, a house is issued an
individual title for the piece of land
on which the house is erected; and
an apartment is issued a strata title
for the specific area on the spe-
cific floor of the building in which
the apartment or condominium is
located. A search can be done at the
relevant land offices or registries
to determine whether the title is
encumbered. If the title has not been
issued, a search can be done on the
master title on which the whole or
part of the housing project is erected.
33
JULY 2013
 LEGAL

How Much is the Stamp Duty?
Stamp duty is levied on the
document of transfer (i.e. the memo-
randum of transfer if the title has
been issued, or the deed of assign-
ment of Principal SPA if the title
has not been issued) based on the
purchase price as follows:
1%
on the first
RM100,000
How Much are the Legal Fees?
The first Schedule of the Solici-
tors Remuneration Order 1991 sets
out the fees to be collected by law-
yers for work done in handling the
sale or purchase of a house based on
the purchase price as follows:
1% on the first RM150,000
0.6% on the next
RM850,000
0.6% on the next
RM2,000,000
0.5% on the next
RM2,000,000
0.4% on the next
RM2,500,000
For each sale and purchase of
a house, the solicitors concerned
can only collect fees based on the
above scale from either the seller or
the purchaser and not from both of
them.
Completion of a Sale and Pur-
chase Transaction
Until the property title is issued
under the buyers name, the purchase
is not considered perfected. How-
ever, when the full payment has been
made to the owner, the transfer is
deemed to be completed, although
not perfected. The owner must give
vacant possession of that property to
the buyer. The buyer is the new ben-
eficial owner and the previous owner
no longer owns the property. Only
then, at that stage pending the Land
Offices change of title to the buyers
name, the sale and purchase transac-
tion is deemed completed.

Negotiable in excess of How Long does it Take for the

RM7,500,000 Title to be Issued?
2% It varies. A shorter period is
required for landed property, com-
on the next
RM400,000 pared to high rise buildings with
strata titles, which will take a much
longer time. PI

Disclaimer:
This document is intended as
a general guide only. The author of
this article disclaims all liability from
any damages caused by reliance on
this document. The author strongly
recommends seeking professional
legal advice prior to any transaction.
3%
on the remainder

34
JULY 2013 www.propertyinsight.com.my

Tips on Property Investing
Dato Ong Theng Soon reveals the secrets behind his
success as a property investor.
The Secret of Holding Power / Cash Flow
Have you ever regretted selling off your property too
soon only to see its value appreciating more than you
expected? This is probably one of the biggest mis-
takes any investor can commit. This is because they
fail to realise the importance of holding power or cash
flow. Holding power, according to Dato Ong, means
you have a well-paid job which you enjoy and it gen-
erates a positive cash flow, or you already have assets
generating extra cash on a monthly basis. It is the na-
ture of properties to always have the knack of readjust-
ing and coming back in the future. So its essential to
have a positive cash flow when youre in this business.
Holding power is the key to success in any property
investment, explains Dato Ong. Speaking from ex-
perience, he once bought an office which couldnt be
let out for a year. But because he had holding power,
he managed to hang on to the property and rented it
out at a good rate after a year. Fortunately, he didnt
sell the property and as it has appreciated, he can now
demand a much higher price for it.
Never Give Up Your 9-to-5 Job
Investing in property is never a short-term
venture. If you want to do well in this in-
dustry, you must avoid leaving your full
time job after acquiring just a few prop-
erties. It also takes a long time to see
positive cash flow or returns of your in-
vestment. Therefore, quitting your day
job after venturing into property investing
full-time is probably not the best idea. In
fact it is strongly discouraged. This is be-
cause there will be a particular time where
you might not have a tenant or unantici-
pated monetary obligations like changes
in the banks interest rate, so, having
a regular salary will help you bridge the
gap, exclaims Dato Ong.
About the Contributor
Dato Ong Theng Soon is a practising solicitor based in
Solaris Mont Kiara. He has vast experience in legal issues
relating to property.
www.propertyinsight.com.my
LEGAL
Have a Positive Mindset
Property investing is undoubtedly a seri-
ous business as it involves a huge sum of
money. Generally, people buy a property
in the hope that it will increase in value
over time and it can generate a positive
rental yield. However, not everything goes
as planned and sometimes, investors will
have to face a bad deal. Therefore, on
those days, having a positive attitude will
help you overcome the problem. Besides
that, investors should also be cautious in
whatever deal that they are looking at.
Always Do Your Own Research
Before making a decision, its vital for
property investors to perform extensive
research on the properties that they are
interested in. Depending solely on your
agent or the property owner is not good
enough. For instance, an investor needs to
find out the true market value of the prop-
erty or the actual demand of the property.
Having all these basic knowledge will help
the investor make an informed decision on
whether to purchase the property or not.
Dato Ong once made a major purchase
based solely on his agents recommen-
dation and it turned out to be one of his
greatest investment mistakes.
35
JULY 2013
 TAX

How to save tax for

property investors
Property Insight consults with tax expert Richard
Thornton, author of 100 Ways to Save Tax in Malaysia
for Property Investors, for his tax mitigation tips.

36
JULY 2013 www.propertyinsight.com.my

Property Insight (PI): What are the
types of taxes that a property inves-
tor in Malaysia should be aware of ?
Kindly elaborate on each type.
Richard Thornton (RT): There are
basically three taxes that will impact
the property investor. The funda-
mental one is the real property gains
tax (RPGT), which is the tax on re-
alisation of gains from properties. It
only applies to property disposals in
the first five years of ownership. The
rate has kept going up, at one time it
was 5% but now the top rate is 15%
for disposals within two years from
acquisition, 10% in years 3, 4 and
5. But theres something peculiar in
the 5th year, in the way the formula
works. I think that they didnt quite
get the formula right. It throws out
a fraction which can come out to a
minus figure. So, I think at the mo-
ment, the tax in the 5th year is being
implemented at 5% and not 10%.
So, thats real property gains tax and
thats what applies to most people if
they dispose within five years.
The other taxes people have to
look at, lets talk about stamp duties
first, because its a costly tax. Stamp
duty applies principally on the ac-
quisition of a property by means of a
sale and purchase agreement, some-
times transferred without agreement,
and the stamp duty can be at rates
www.propertyinsight.com.my
of up to 3%. The lowest rate is 1%
and the highest rate is 3%. So, its
something to be reckoned with for
every property investor because its a
large cost to be added to the cost of
the property.
The third tax that property
investors ought to be aware of is
income tax, because some people call
themselves investors, but they may
be likely to have an eye on making a
profit from disposing the property,
and that can be liable to income
tax. If that person is a developer
or a property dealer, income tax is
payable. If income tax is payable,
theres no real property gains tax,
as the former displaces the latter.
People who are involved in property
transactions and are dealing on their
own account are more likely to be
charged income tax because of their
special knowledge of the market and
circumstances.
Ordinary people who have
nothing to do with property or deal-
ings with property, will probably
get away with it. There are several
indicators as to whether a person
ought to be charged income tax
instead of real property gains tax,
such as undertaking renovations or
activities to improve the very good
property before passing it on, and
being unable to finance the property
on the long-term basis. If you buy
TAX
for the long-term, you ought to be
borrowing long-term, not borrowing
short-term and then saying youre
holding long-term. That doesnt
work. So, these are basically the taxes
that could impact a property inves-
tor, so far as the purchase and sale of
properties is concerned.
Of course, income tax also im-
pacts property investors where rent
is concerned. Thats another thing to
be taken into account, but rent, from
the property situation in Malaysia,
is always subject to Malaysian tax,
whether the property is owned by a
local or a foreigner.
For properties owned by a lo-
cal, the tax is going to be at normal
scaled rates for an individual, with
the advantage of personal allowances
and rebates where necessary. But if
the owner is a foreigner, on the basis
of a non-resident of Malaysia, tax
will be at 26% flat, on the rents less
expenses.
So, in summary, there are three types
of taxes that can impact property
investors:
Real Property Gains
Tax (RPGT)
Stamp Duties
Income Tax
37
JULY 2013
 TAX

PI: What are the key tax differ- stances warrant it. The Inland Rev- treat it as business income. Its quite
ences of investing in property as an enue is quite strict about what they hard, but its not impossible to meet
individual, as compared to investing regard as the circumstances. They their conditions. You dont have to
as a business (sole proprietorship, say basically, if you want to treat your do it yourself and get your hands
partnership and Sdn Bhd)? Would property income as business income, dirty. You can appoint a contractor to
it be more advantageous to invest your must provide services actively do all these things for you, and that
in property as an individual or as a and comprehensively. counts as doing it yourself actively.
business? Thats detailed a little bit more The other thing I want to say
in my book about what they mean about business income providing
RT: The question of who invests, by comprehensive, but it hasnt been services is that services provided
is perhaps less important than how tested very much yet all again, the by a management corporation are
they invest. You have mentioned in public ruling has recently freshened not eligible. Most people who own
your list the individual, the sole pro- peoples minds. What they mean condominiums or shop lots will be
prietor and the partner. For all the by comprehensive is very difficult paying a service charge to a manage-
people in that situation, the tax im- to know but they say its things like ment corporation to provide their
plication is the same. A sole proprie- maintaining the property structur- services for the property. If the owner
tor is an individual and a partnership ally and servicing the parts that need then rents out the property, he cant
is a collection of individuals. The to be serviced. If you have grounds say hes providing services himself
only thing thats different in terms of and outside youre servicing the instead of being provided by the
the vehicle to hold the property is the landscaping, the boundary fences, management. It has to be done by
difference between a company situa- the drains and things like that. So, himself, or somebody responsible to
tion and an individual situation. theres quite a lot that they expect him and it must be an expense that
But whats important about you to be doing actively, in order to he must bear.
holding property is the way it is taxed
due to the nature of their income
from property. If its a passive source
of income without activity, where
you just sit back and wait for rents
to come in, thats a passive invest-
ment. But if its an active investment,
where theres sufficient activity, then
the revenue will allow the person to
treat the income from that property
as business income. It makes a differ-
ence in some of the things, like the
ability to set off losses from other
sources against your income from
property if its treated as a business,
and capital allowances on fixtures
and fittings installed in the property.
All these you dont get if its a pure
passive investment.
So, people found it worthwhile
to classify their property as business
income and until 2011, this was not
difficult because under the Inland
Revenue guidelines, you were al-
lowed to treat four properties at the
same time, of which are rented out,
as being a business source. All thats
gone now. They have replaced that
public ruling with a new one and
they dont allow this anymore. What
they do now is strictly on the prin-
ciple that was established in a case
long long ago that rental income can
be business income if the circum-

38
JULY 2013 www.propertyinsight.com.my

PI: To qualify rentals as a business
income, do you need to set up a com-
pany, or can you do it as an individu-
al but treat it as a business?
RT: It doesnt matter very much
which person is doing it, whether an
individual or a company, except that
in the case of a company, it is easier
for income to be regarded as business
income than it is for an individual.
This was written up a long time
ago, in one of the cases, an individual
comes into the world for many pur-
poses and sometimes none at all, but
a company comes into existence for a
particular purpose, and theres a pre-
sumption that the purpose is to carry
on a business. So, its for that reason
that its a bit easier to justify business
income treatment for rents within
a company, than it would be if its
undertaken by a private individual.
If you, as an individual, own a
few properties, it would be easier to
classify your rentals as business in-
come, as youll be more likely to em-
ploy someone to manage it fulltime
with the responsibility of servicing
all the properties. The more proper-
ties you have under management, the
easier it is.
PI: How does a companys tax treat-
ment differ from an individuals?
RT: Weve talked about individuals,
sole proprietors and partnerships
as being dealt with in a similar way.
Whats different is a company. A
company gets to enjoy certain tax
benefits that an individual cannot
enjoy. The current rate of tax for
companies is 25%, unless they are
small companies able to enjoy the
beneficial rate, which is 20%, on
the first RM500,000 of chargeable
income in each year.
Theres a trap to watch out for.
If a small medium enterprise (SME)
with a share capital of RM2.5 million
is owned by another company, and
that company has a share capital of
more than RM2.5 million, then it is
not allowed to be treated as a small
company. Its a word of warning.
www.propertyinsight.com.my
Dont assume that because a
company has a share capital of less
than RM2.5 million, its automati-
cally eligible for small company tax
benefits.
So, thats the thing to be
focused on, more than anything
else, about using the company as a
vehicle, the ability to use the reduced
rate. A company is also likely to be
dealt with a bit more favourably in
terms of expense deductions than
an individual. However, it wouldnt
make a great deal of difference if an
individual or a company both provide
services actively and comprehensive-
ly, so the rental income is treated as
business income. The actual cost of
doing that would be tax deductible.
Another thing is to avoid being
an investment holding company. If
youre classified as an investment
holding company, even if you provide
services actively and comprehen-
sively, you cant treat rental income
as business income anyway.
In the case of a company,
sometimes if a company has a large
overall management, theres some
justification for having additional
deduction for things like salaries,
management expenses and direc-
tors fees. So, thats a possibility in a
company which is not usually there
for an individual. A limited liability
partnership is now enjoying the same
advantages as companies. So, that
would be one way to do it.
PI: In summary, what are the five
best ways to save tax for a property
investor?
RT:
1. Claim as much expenses as you
possibly can. For example, perform
repairs promptly so that your ten-
ants are happy with the services you
provide, and its tax deductible.
2. As an individual, you might try to
take advantage of having your rent-
als treated as business income. That
is possible but not always easy. If you
want that treatment, you have to ac-
tively and comprehensively provide
a whole range of services to your
TAX
tenant in your property. But once
youve done that youll find there
are certain other advantages too,
for instance, if you have incurred a
loss in another business, you could
offset that against your income from
property investments (loss relief ).
In fact, if you incur a loss in the
property business side, then you can
offset that loss against all your other
income.
3. Where possible, claim capital
allowances. If its within a company,
make the most of the accelerated
capital allowances for smaller assets.
A company which is a small com-
pany can claim 100% write-off in
the year of purchase for small assets
like household fixtures and fittings
or fixtures and fittings within a
commercial building, for any item
costing up to RM1,000. In general,
that is limited to a total in one year
of RM10,000, but where a company
is a small company, that is unlimited
to as many assets as possible up to
RM1,000 each. They are eligible for
a full write-off in year one.
4. If you are not eligible for capital
allowances, make the most of the
relief available for replacement of
items in your property. Unlike the
capital allowance system where you
claim the initial cost of what you put
in the property, anything that has to
be replaced because its damaged or
worn out, you can claim the full cost
of it when you put the replacements
in.
5. Claim expenses for the period
even when the property is not let
out. If its been let before and you let
it again, you can claim all expenses
incurred during the void period, pro-
vided its vacant because its under-
going renovation or because youre
searching for a new tenant.
So, those are some of the things
you can do to save tax and I would
recommend that you read my book,
100 Ways to Save Tax in Malaysia for
Property Investors in order to under-
stand that better. PI
39
JULY 2013
 AREA FOCUS

Kota Damansara:
No Mans Land
turns Thriving
Township

Looking at the hive of commercial activities at Kota Damansara now,

would you believe that it was once a barren land in the middle of
nowhere? As Property Insight is located in this happening place, we
bring you the story of Kota Damansaras coming of age.
By Mira Soyza
Photos by Jonathan Doyou

40
JULY 2013 www.propertyinsight.com.my

T
wenty years ago, Kota
Damansara was a no
mans land. Nobody saw
potential in the forest
reserve land or believed
that the area that was then known
as Pusat Bandar Sungai Buloh will
be a goldmine for investors. It start-
ed seeing the light of hope in 1992
when Perbadanan Kemajuan Negeri
Selangor (PKNS), who owned the
land, stepped in and started devel-
oping the area.
PKNSs Low Cost Start
Convincing the masses in the
potential of Kota Damansara how-
ever, was not an easy task. To start
the ball rolling, PKNS began build-
ing low-cost houses and flats. The
first 10,000 houses took them 10
years to complete and once the low
cost development had been created,
they started focusing on the devel-
opment of medium cost properties.
Along with the residential projects,
they spent almost RM1 billion lay-
ing an interchange and direct lanes,
constructing the infrastructure and
roads and building in water reticula-
www.propertyinsight.com.my
tion, for it to be the flourishing town
it is today.
Privatisation Brings Commer-
cialisation
With rapid growth in mind,
PKNS began parcelling out sections
of the land to private developers
to accelerate the growth of Kota
Damansara. Convincing the de-
velopers wasnt a walk in the park.
Among the developers who eventu-
ally agreed for a joint venture with
PKNS or bought land were Sunway
(Dataran Sunway and Sunway Giza),
Dijaya (Casa Damansara I and II,
Casa Indah), Encorp (The Strand)
and Sunsuria (Sunsuria Avenue).
According to the Simon Kwan,
Sunsuria Groups Director of Sales
and Marketing, Kota Damansaras
strategic location for commercial
and residential development was
the factor that spurred their involve-
ment. Our vision is to ensure cus-
tomer success and comfort in their
property investment. As we are
always looking for potential loca-
tions, the prospect of being involved
with the development of KD was
AREA FOCUS
not one to be missed, as we saw the
great potential and opportunity not
just for ourselves but of course for
our customers as well, says Kwan.
Bounded by Sungai Buloh
Industrial Park to the West, Tropi-
cana Golf and Country Club to the
South, and Bandar Utama to the
South-East, the attraction of Kota
Damansara was further enhanced
when accessibility to the area was
greatly improved with the opening
of the linkage to Lebuhraya Daman-
sara Puchong (LDP) via Tropicana/
Mutiara Damansara and in 2003,
the Kota Damansara interchange of
the NKVE. This became a pull factor
as it is now located adjacent to es-
tablished townships such as Mutiara
Damansara, Damansara Perdana
and Bandar Utama.
As a result, the town began
turning the heads of investors.
Today, Kota Damansara covers a
massive 1,588 acres of land and is
segmented into 13 sections. The
older sections are areas of the initial
low cost development while the
medium to high-end residential
properties are concentrated in the
41
JULY 2013
 AREA FOCUS

The proliferation of commercial properties has

been a driving factor behind the success of Kota
Damansara... The area of Section 12, where Dataran
Sunway, Giant and Sunway Giza are located, would
be the area which has enjoyed the highest capital
appreciation.

Tang Chee Meng, COO of Henry Butcher Malaysia

newer sections. Seri Utamas value (with 1,650 sq ft

A Whole New World
Today, 20 years later, Kota Da-
mansara is one of the busiest town-
ships in Malaysia. Drive around now
and, you will notice an abundance of
commercial centres at almost every
nook and cranny of the town. Among
the notable ones are The Strand, Data-
ran Sunway and Sunway Giza (Sunway
Nexis is currently under construction)
which are the favourites of entrepre-
neurs and professionals, as well as lo-
cal and foreign investors. With the in-
flux of dwellers, developers also began
bringing in much-needed amenities
such as Giant Hypermarket, Carrefour
(now renamed Aeon Big), Tropicana
Medical Centre and Tune Hotel, while
among the private educational institu-
tions here are SEGi University College,
International College of Nursing and
Sri KDU.
Massive Price Appreciations
Data by Prosper Realty shows an
impressive growth in the landed prop-
erty sector within the past three years.
In 2010, the 2-storey link houses with
1,600 sq ft built-ups at Bayu Daman-
sara had an average asking price of
RM550,000, but it sky-rocketed with-
in the next two years, to RM720,000
in 2011 and RM900,000 in 2012.
Villa Damansaras 2-storey link houses
with built-ups between 2,190 sq ft
and 2,286 sq ft that were going for
RM630,000 in 2010, made a 55.5%
leap to RM980,000 by 2012, while
built-up) escalated from RM540,000
in 2010 to RM890,000 in 2012.
In Kota Damansaras high-rise
sector, the serviced apartments in
particular have been rising stead-
ily over the last three years. Cova
Suites, with 1,059 sq ft to 1,449 sq ft
built-ups, transacted at RM340 psf
in 2010 while gradually increasing to
RM370 psf in 2011 and RM400 psf
in 2012. The successor to Casa Indah
I, Casa Indah II (built-ups of 1,215 sq
ft to 1,582 sq ft) which was valued at
RM400 psf in 2010, surged to RM450
psf in 2011 and RM500 psf in 2012.
Located strategically within reach of
the commercial centres, Palm Springs
Condominiums (built-ups between Among the hotspots are the
915 sq ft and 1,259 sq ft) saw their Dataran Sunway shophouses that
value leap up from RM250 psf in 2010 were launched in 2005 at an esti-
to RM350 psf in 2012. DRimba also mated price of RM800,000. Today,
enjoyed a healthy 32% appreciation they are being transacted at above
from RM270 psf to RM350 psf within RM3 million, boasting a massive
the same time frame. 300% increase over an 8-year period.
The proliferation of commercial Sunsuria Avenue, with a seven-storey
properties has been a driving factor office/commercial tower, has also been
behind the success of Kota Daman- enjoying a tremendous appreciation
sara. According to Tang Chee Meng, in value since its completion in 2010.
Chief Operating Officer of Henry The Sunsuria Avenue 4-storey shops
Butcher Malaysia, shops houses are that were launched at approximately
among the property types that have RM1.3 million to RM1.4 million have
appreciated the most throughout the enjoyed an estimated RM2.5 million
years. The area of Section 12, where of appreciation. To date, Sunsuria
Dataran Sunway, Giant and Sunway Avenue fetches a minimum of 6%
Giza are located, would be the area to 8% rental yield, based on day one
which has enjoyed the highest capital purchase prices.
appreciation so far due to the increase Meanwhile, the shops in The
in demand and the ballooning size of Strand that were launched at around
the population. RM1.18 million in 2006, fetches a

42
JULY 2013 www.propertyinsight.com.my

price of above RM3 million today, with
the ground floor shops enjoying 14.2%
of rental yield at RM7,000 a month.
The Core shop lots, launched
at prices between RM1.3 million and
RM1.4 million, are now enjoying price
appreciations of RM1.8 million to
RM2.0 million. The units have been
sold out, due to surrounding amenities
and developments, with an estimated
400,000 population catchment. Tang
explains that the close proximity to
amenities and facilities, as well as the
contemporary design that appealed to
younger investors, contributed to its
success.
In the industrial sector, Sunsu-
ria Technology Centre in Section 3
that was built on a 17-acre land and
comprising 48 units at the Selangor
Science Park 1, started selling at ap-
proximately RM2.8 million to RM3.0
www.propertyinsight.com.my
million. Today, the 1-storey semi-
detached factory buildings situated
right next to Sungai Buloh Industrial
Area are now selling at an impressive
RM5 million. Its proximity to com-
mercial centres, ammenities, fascilities
and several express ways has boosted
its value. The industrial property
could collect between RM17,000 to
RM25,000 of rental yields depending
on the unit size.
Where is it now?
Since its initial development by
PKNS 20 years ago, Kota Damansara
is near maturity.
Coming in as a late catalyst to
the already thriving township is the
development of the MRT line connect-
ing Sungai Buloh to Kajang, which
opens up more investment opportuni-
ties.
AREA FOCUS
Going forward, the development
of a new township will be commenc-
ing at the former Rubber Research
Institute (RRI) site in Sungai Buloh,
upon the completion of Sungai Buloh-
Kajang MRT line. Kota Damansara is
expected to benefit from this upcom-
ing development due to its proximity.
The increasing accessibility
to Kota Damansara will expand the
towns population catchment and cre-
ate new neighbouring townships apart
from Bandar Utama, Mutiara Daman-
sara and Damansara Perdana. Among
the future MRT stations in planning
are the Sungai Buloh station, Kg. Baru
Sungai Buloh station, Kota Daman-
sara station and Taman Industri Sg.
Buloh station, which will contribute
to better traffic flow once completed,
further enhancing the appeal of Kota
Damansara. PI
43
JULY 2013
 AREA FOCUS

Landed Properties (Kota Damansara)

Built-up : 1,811 sq ft (Transacted value) / psf

1000000 Villa Damansara : 2 - storey (Terrace)

800000 2010 (600,000.00)
600000 2011 (850,000.00)
400000
2012 (910,000.00)
200000
0 Land Area : 1,650 sq ft

Built-up : 1,808 sq ft (Transacted value) / psf

1000000 Bayu Damansara : 2 - storey (Terrace)

800000 2010 (610,000.00)

600000 2011 (735,000.00)

400000
2012 (825,000.00)
200000
0 Land Area : 1,650 sq ft

Built-up : 2,136 sq ft (Transacted value) / RM

Laman Bayu : 2 - storey (Terrace)

2010 (950,000.00)

1500000 2011 (1,350,000.00)

1000000
2012 (1,400,000.00)
500000
0 Land Area : 1,870 sq ft

44
JULY 2013 www.propertyinsight.com.my
 AREA FOCUS

Built-up : 1,801 sq ft (Transacted value) / RM

Damansara Emas : 2 - storey (Terrace)

800000 2010 (530,000.00)

600000 2011 (660,000.00)

400000
2012 (725,000.00)
200000
0 Land Area : 1,650 sq ft

Built-up : 1,781 sq ft (Transacted value) / RM

Seri Utama : 2 - storey (Terrace)

800000 2010 (560,000.00)

600000 2011 (700,000.00)

400000
2012 (750,000.00)
200000
0 Land Area : 1,650 sq ft

Built-up : 3,250 sq ft (Transacted value) / RM

Sierra Damansara : 2.5 - storey Semi-D

2000000 2010 (1,350,000)
1500000
2011 (1,700,000)
1000000
2012 (1,500,000)
500000
0 Land Area : 3,200 sq ft

45
www.propertyinsight.com.my JULY 2013
 Property Insight
Malaysia

pre s e nt s :

Property Investment Summit

POST 2014 BUDGET:
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ARE WE CREATING A PROPERTY BUBBLE?

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HIGH-RISE APARTMENT: PLAN OF ATTACK

7 TIPS ON MAXIMISING BORROWINGS

MILLIONAIRE INVESTORS ROUND TABLE

YB SENATOR DATUK SERI SIVA SHANKER AHYAT ISHAK HO CHIN SOON FAIZUL RIDZUAN ELIZABETH SIEW
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 CONTRIBUTOR

Getting Started in
Property Investing:
When and Where to Buy
KK Chua reveals his property investing
tips, gleaned from nearly a decade of
personal experience in the industry.

46
JULY 2013 www.propertyinsight.com.my

When is the best time to buy
property? I get asked this ques-
tion a lot. My answer: In my
opinion, the best time to buy
property was 10 years ago. The
second best time is NOW. Drawing
from my own experience, I bought my
first property, a PKNS medium cost
apartment in Kota Damansara, nine
years ago for RM92,000. Now, the
price of the apartment has escalated to
RM250,000 and I am reaping a whop-
ping rental return of 17% per year,
based on my initial purchase price.
Most property investors would give an
arm and a leg for that sort of returns.
Money is Made on Foresight, Not
on Hindsight
I am sure many of us, based on
hindsight, will be pulling our hair out
and asking ourselves Why didnt I buy
more? Realistically, we have to bear in
mind one crucial aspect; when we buy
a property, in most cases, it would be
at the prevailing market price and not
below the market price from a fire sale.
Moreover, at the point of purchase, we
wouldnt have the luxury of knowing
www.propertyinsight.com.my
where prices will be heading in the
future.
Best Hedge Against Inflation
One of the causations of the
increase in property prices is inflation.
Inflation is the general upward move-
ment in prices of goods and services
from year to year. For example, at
7% inflation, if you pay RM100,000
for a property today, you will pay
RM107,000 for the same property next
year and RM114,490 the following
year. In Malaysia, the national figure
for the average property price increase
is at 7% per year. At a 7% compound-
ing rate, prices will double every ten
years. That is why, time and again,
property is always the best hedge
against inflation.
Do What You Know
Do you need to know every-
thing there is to know about property
investing when you buy property? It
depends. Even if what I am sharing
is nothing new to you, knowing and
doing are two completely different
things. It will always be helpful to
CONTRIBUTOR
understand more about the nuances of
economic conditions, financial matters
and strategies in property investing.
However, you can have the best infor-
mation or forecast in the world, but if
you dont take action to buy, you will
lose the opportunity.
The point I want to convey is that
property investing requires us to take
action and to act upon our knowledge.
The big question is, How do we over-
come the inertia of inaction? Informa-
tion and knowledge are just as impor-
tant. When the opportunity knocks,
will you execute your strategy based
on the information and knowledge you
have? Just to share with you, when I
bought my first property, I didnt even
know how to apply for a loan, not to
mention what BLR is, but I took action
anyway.
Where to Buy?
For a start, perhaps you can
begin analyzing the area you know
best, namely the housing area that you
are staying in currently. Some of the
indicators that might be helpful in your
area analysis:
47
JULY 2013
 CONTRIBUTOR

New Housing Neighbourhood

Construction Factors
Amenities Supply and Job Growth
They say the best Demand Consider the liveabil-
Are there any new way to gauge the vi- ity of the area. For in- Are there any new
shopping malls or hy- brancy and growth The real estate nego- stance, a family might factories or plants
permarkets coming potential of an area tiator will be able to look at the quality of opening? If there
up? Also look out for is simply by count- enlighten you on the schools around the are, it only spells one
signs of the widening ing how many mov- supply and demand area, whether the thing: new job crea-
of roads, new high- ing cranes there are in that area. Bear in housing area is gated tion. With new jobs,
way connections or in the skyline. Apart mind, they are the and guarded, and people will need to
interchanges. Does from the moving ones who have first also accessibility to spend for necessi-
the area have any cranes, you can also hand information of hospitals and wet ties as well as for lei-
MRT/ LRT stations in look at the develop- the market as they markets. For work- sure. How active are
the vicinity? ment board on the spend most of their ing professionals, the commercial ar-
empty land site. It time in the market. they may place more eas within the area?
will tell you what is You may ask them emphasis on acces- Look for the pres-
coming up and how how many invento- sibility to MRT/LRT ence of retail chain
many units will be ries/listings they cur- stations, highways or shops or F&B outlets
built. You can even rently have as com- even airports. such as Focus Point,
go to the town plan- pared to a year ago. 7-Eleven, PappaRich
ning department of Are there more prop- and Starbucks.
your local municipal erties in the market
council to check out and are they taking
the upcoming devel- longer to sell? Are
opments in your area. prices falling, stag-
nating or increasing?

The above indicators will as- one property guru who actually tells fident enough to take action, you will
sist you in your basic analysis of the his students to look at 100 properties, know that is the best time. Remember:
potential of an area. But at the end of make offers for 10 and then buy one. I A good deal is a good deal regardless
the day, if you have decided to buy, you personally think 100 will take too long of which stage of the real estate cycle
will have to spend a few weekends to a time to accomplish. As long as you you are buying the property at. To all,
look and feel the property. There is have covered your bases and are con- happy hunting! PI

About the Contributor

KK Chua is the publisher of Property Insight magazine.
He can be contacted at kkchua@propertyinsight.com.my.

48
JULY 2013 www.propertyinsight.com.my
 Property
Tycoons
in the Making

Our property personality of the month is Sandeep Grewal,

co-founder of Real Estate Tycoon Club (RTC). He shares his
property investing story and personal tips with Property Insight.
By Tan Thiam Hock
 PERSONALITY
A
s he stands up to
greet me in his office,
Sandeep Grewal cuts
an imposing figure. At
a towering 6-foot-4,
the co-founder of Real Estate Tycoon
Club (RTC) looks every inch a Bolly-
wood star. But the real estate investor
and educator quickly puts me at ease
with his friendly demeanour.
RTC is a club that started out
organically four years ago. We started
out doing property seminars that are
very action oriented and we are still
doing property seminars now, and
theyre run by two companies, FREE-
MEN and RTC. What has happened
is that after the property seminars
by FREEMEN, the people went out
to buy properties and they encoun-
tered a lot of issues, like what to do
next. So, they started grouping up,
starting from 10 people, it went up
to 20, 30 and slowly over the years,
it has just been constantly growing.
They wanted to have a community
that comes together and to leverage
on more people, because when more
people get together, youll have better
negotiating power. Thats how RTC
came about, Its actually a team of
people who are running this them-
selves. Real Estate Tycoon Club is a
very ambitious name, but if you dont
aim for the sky, youre not going to get
anywhere, he explains.
According to Sandeep, many
members of the first group have
already achieved everything they need
to achieve and they dont need to
work anymore. Many of them are sell-
ing off their businesses and they are
coming back to teach other people,
not for the money, but for the fun of
it. Its a whole community thing thats
been organically going on for the last
one and a half years.
Sandeep concedes that its a bit
hard to keep track on the number of
members, as there are different levels,
but conservatively, he says they have
almost 800 members in Malaysia.
The active ones are at least about 100.
There are two levels of membership.
The first level is for people who just
want to find out whats it all about,
50
JULY 2013
to share property deals and to attend
educational events on property in-
vesting. Membership is still free and
you can just go to the website (www.
rtclub.my) to sign up and pay RM70,
which is the administration fee for
one year.
The second level of member-
ship is for more senior members who
have gone through their FREEMEN
training programme. All FREEMEN
seminars offer follow-up coaching for
three months. During that time, semi-
nar attendees are supposed to buy
property and then they will qualify to
be senior members.
We differentiate senior mem-
bers because they have the same
mindset and work together as a team,
contributing 100% to each other.
And after going out and finding the
property deals, they come back and
they teach from their experience. So
its the senior members who are more
experienced and they share with the
members at the entry level. The talks
are usually subsidized because a lot of
them are usually information shar-
ing and we get discounts for a lot of
things. To become a senior member,
it can take about six months, he
reveals.
Sandeep started the club with
his business partner Michael Tan,
who does the presentations and most
of the teaching during seminars.
Sandeep focuses more on the property
side, such as acquisitions and project
management. The duo started the
business as theyre passionate about
property investments. And while
theyre teaching people, theyre also
buying properties.
I was first Michaels customer
for his other business before. Then I
became his partner in that business, all day. Its the same with the entire
but it subsequently failed. Both of us club, he exclaims.
were not very happy with the things
that went on with the other partners. Turning Normal Investors into
So we left and started a few other Institutional Investors
businesses here and there, and finally RTC is all about buying proper-
decided that training in the property ties in a team, as a community. If an
industry was the easiest and the most individual buys one or two properties,
fun, thats what we enjoy. And it just hes considered a part-time investor.
came naturally, I mean I can liter- Most people stop at three, but if you
ally sit down and talk about property get four, five or six properties, then
www.propertyinsight.com.my

youre turning it into your own busi-
ness. Were taking it to the next level
whereby more people come together
and were doing it in a bigger scale. The
inspiration is to become an institu-
tion at the end of the day, to think big
because the rules are different when
you play at an institutional level. But
we want to get to those rules but as
individuals in a team. So, were talking
about things like how 10 people could
www.propertyinsight.com.my
work together on a property manage-
ment project, or do a reconstruction
project such as buying a property,
redeveloping and then managing it
and sharing the profit after that, he
elaborates.
Banking on Loans
Sandeep observes that there are
a lot of financial benefits, when you set
up your property investments under
PERSONALITY
a company, especially in getting loans
and financing. He quotes an example:
Lets say two of us want to go into
property investments and you can buy
RM1 million worth of properties on
your own on credit and Ive a limit of
RM1 million as well. If we get together
as a company, we can go for RM2.2
million, as we can push it a bit further
because the calculations for an indi-
vidual and a company are a little bit
51
JULY 2013
 PERSONALITY
Sandeep Grewal (standing, 2nd from left) with business partner Michael Tan (standing, 3rd from left) and their team.
different.
As an ex-banker, Sandeep is well-
versed with the loopholes and knows
how the banks see things differently.
For instance, now some banks look
into nett income, while some banks
would take gross income because
youre buying under the commercial
section. You have to know which banks
are using which calculation, so you
have to work closely with a lot of bank-
ers consistently, because these things
change in a month or two. OCBC used
to be my favorite because they used
to offer 90% margins for commercial
properties but theyve clamped that
down now. So now, were looking at
other banks. My consistent favorite is
Public Bank because theyve always
liked me for some reason. They are
more business-friendly so when you
set up companies, they are friendlier
to that. Maybank is good for individu-
als, and some people find Hong Leong
52
JULY 2013
good but theyve never approved any-
thing of mine, he shares.
Explaining further on the issue
of loans, Sandeep points out that if
you buy a residential property under
a company, the maximum margin you
can get is 60%, while its 90% as an in-
dividual. As a company, youll be better
off buying commercial and industrial
properties, anything that is not resi-
dential. Even as a company, the banks
have two classifications, whether its
your own business or whether youre
an investment holding company. If its
your own business, then theyll look at
you favorably and offer you a higher
margin, but if youre just an invest-
ment holding company, they will not
give you a high margin.
Every Property is for Your Own
Use
For every property that Sandeep
buys, hell claim that its for his own
use and he explains why, When you
buy your first residential property, just
say its for your own use and the banks
wont question that. Then, when you
buy your second property, they will ask
you what it is for again and if you say its
an investment, theyll slash the margin
to maybe 80%. You have to look at it
from a bankers perspective they want
security and so, if youre investing, its a
risk. If its for you own use, youll have to
keep on paying because you need a roof
over your head.
A Legal Loophole
According to Sandeep, theres a
loophole thats going to shut down very
soon. If you take a loan from Malaysian
Building Society Berhad (MBSB), they
may be able to offer you 90% financing,
even for your third property and beyond.
They are technically a subsidiary of EPF,
and they are a finance company but not
a commercial bank yet and hence, they
www.propertyinsight.com.my

are not under the law of commercial
banking. So theres an opportunity, but
they are coming in very soon. Its already
been announced and its just a matter of
time, he shares.
On the flipside, Sandeep warns
that MBSBs lending rates are high, and
they lock you in for a long period (7 to 8
years). The exit penalty is also very high
(3% to 5 %). So, its harder to cover your
installment and you have to buy and
keep for a longer time. But then again,
if you want 90% margins, youll have to
sacrifice something.
Lucrative Profits in the Long Run
Sandeep advises those who want
to invest in property as a business, to
be 100% into it. It can be more lucra-
tive than your full-time job. Just think
of it, if you buy a property and you flip
it off within two years if you can get
RM200,000 profits from that, thats
RM100,000 a year. Many people dont
www.propertyinsight.com.my
even make RM100,000 a year. Thats
why we encourage people to really go in
and invest. Dont stop, just do it consist-
ently for your first four to five years.
Youll only see real money in the 4th
or 5th year but you have to be consist-
ent. Theres going to be problems like
tenant issues but at the end of the day, I
feel that its really worth it because the
rewards are better, he says.
Time-wise, property management
takes up only one day a month. If you
have 10 properties you can handle it
within five days a month. And if you have
a system that automates the collection,
itll be even easier. Sandeep has an app on
his phone that sends out standard SMSs
on the 28th of every month and his due
date for all his tenancies is the 1st of each
month. He explains that usually, the next
day after the SMS goes out, hell receive
all the emails indicating that the money
has been transferred. So for the next two
to three days, hell be just checking to
PERSONALITY
make sure that everything is in.
Strength in Numbers
Sandeep opines that you wont
get very far if you invest in property as
an individual. For instance, RTC were
interested in the Bandar Sunway area
when Taylors College was coming up. The
members got the information before it
came out and went out as a team to look
for properties around the area. Some of
them looked at low cost, some at houses
and some at high rise units, and then they
came together to compare notes and to
decide on the type of property to invest in.
Then, we went out to buy the same type
of properties in the same areas. Its more
fun to work as a team even though youre
buying a property individually under
your own name. By working in a team,
you leverage on so much more. If you go
about investing alone, it can be very bor-
ing, and you dont get the full picture, he
contends.
53
JULY 2013
 PERSONALITY

Property Investment
Outlook Revealed
Sandeep Grewal shares his property
outlook and investment evaluation
techniques with Property Insight.

Property Insight (PI): Whats remembers what is important be-

the difference between investing in
properties five years ago and now?
Sandeep Grewal (SG): The
year 2008 was the best time ever.
I was happy, as each time I opened
the papers, I found a good deal. It
was not so hard because everyone
was scared. Our property market
was plateauing and it wasnt going
anywhere. In fact rentals were going
up, but property prices were not, so
it was a really good time to buy. Then
everything shot up and everybody
saw the money and came into the
market. The developers also got
engulfed in this hype and energy and
they started pushing their prices up.
Some prices out there today doesnt
make sense at all.
The normal rule of thumb is
when you buy from a developer, it
should be cheaper than what is al-
ready in the market, as youre buying
with risk because it is not completed.
But today, its different. The develop-
ers property is more expensive than
anything around it.
But there are also some devel-
opers that charge higher prices but
they deliver value. For example, SP
Setia till today, every project that they
have completed, they have delivered
the price of the value if not more.
Thats why they have a very strong
following. Same with Sunrise, what-
ever they built, they always deliver
higher value and makes sure the
people who bought from them make
money. The right developer actually
cause they are in for the long-term.
Some developers try and push
the prices too far just because the
market is willing to take it up. So,
they just increase prices until the
market is not willing to accept it.
Then they panic and start giving
offers and stuff like that. For in-
stance, what is happening in Johor
(Iskandar), the madness that is going
out there is crazy. We are also part of
it because we are buying whatever we
can right now. Its a great market to
be in but when youre in the market
like that, the developers dictate the
price. Even before they launch the
project, theyll have a 100 cheques
waiting. People dont know what the
price is, but they just want to buy. So
what do the developers do? Of course
they increase the prices.
So five years ago and now, espe-
cially in the development perspective,
you have to be a bit more careful.
Yes, for some of the new develop-
ments, the prices are higher than the
sub-sale, but if its justified (the cost
of construction is much higher these
days) and they can deliver the value
at the end of the day, then its good.
PI: How do you evaluate whether a
property is worth investing in?
SG: The first thing to do is to look
around (comparison). Lets say,
theres a residential tower coming
up. Compare properties immediately
surrounding the vicinity. And then
you select the property closest to your
product type, if theres one available. If
its a small unit, then look at another
small unit.
Find out what kind of rentals
that the property can command. Lets
say, your next door neighbour is pay-
ing RM2,000 rental, and you need
RM3,000 rental to cover your instal-
ments. Would he pay RM3,000 rental
to switch over and stay in your place?
After that, youll have to look at
the facilities, lifestyle, the pools, the
environment and the entrances. Peo-
ple are willing to pay for all that. So if
that makes sense, then its good. Once
youre done the direct comparison
with the product, youve got to look
at the new business activities. Why
would people want to come and stay
in that area? For example, it could be
enterprises, business activities, com-
panies and even transportation. The
MRT is very hot right now. The place
could have been dead before, but be-

54
JULY 2013 www.propertyinsight.com.my

cause of the new line of transportation,
the business activities in the area could
escalate, because people can now go to
work or shopping via public transport.
So first, you have to do your
product comparison and then ask why
people would want to come to your
place. These two are the most important
things. Of course, you also have to look
at the developer and their track record,
the product and the pricing, which are
equally as important.
PI: What areas specifically look inter-
esting to you at the moment?
SG: Weve been focusing on the Is-
kandar Region for the last six months.
I see this as a real opportunity. Whats
happening in Iskandar right now is re-
ally interesting. Some people are calling
it the Shenzhen of Malaysia, whereby
in Shenzhen, Hong Kong, the busi-
nesses crossed over because the cost of
www.propertyinsight.com.my
everything in Hong Kong is too high.
Technically and unfortunately, we are
the poorer brother of Singapore. Things
are going to cross over. Statistically, for
the last 10 years, Johor Bahru prices
have not moved. But in the last six to
eight months, they have moved tremen-
dously, because the Singaporeans are
coming over.
PI: Could you give us a specific invest-
ment where your members actually
received a very high return?
SG: Ive actually seen the appreciation
on one deal that we bought into. It was
a medium cost apartment developed
by Mahabuilders (a developer based in
Johor Bahru). Nothing fantastic about
it and the location is just average as
well, just that it has great accessibil-
ity to CIQ (Custom & Immigration
Quarantine Complex). The price was
about RM340,000 when we bought it.
And now after only three months, its
RM500,000 plus. Its crazy, but the rea-
son is because RM500,000 is the magic
barrier for foreigners. They are willing
to buy it at RM500,000 and banks are
valuing it at RM500,000. So thats the
value of the property. It was an amazing
deal.
One of the hottest things at Is-
kandar was the Sunrise project (Tiga).
Its at Puteri Harbour, a beachfront area.
They launched it at RM600 per square
foot. Today, the next development by
Tiong Nam is at RM1,600 per square
foot. I didnt get in at RM1,600 psf, but
Im willing to buy into good develop-
ments in Iskandar at between RM800
psf and RM1,000 psf.
JB prices have gone past KL, and
it only makes sense for one reason
were talking in Singapore Dollars. But
then also, not everything caters to the
Singaporean market, so dont go down
to Johor and buy everything. There are
certain segments, especially the newer
developments that are actually being
built, designed and catered to the Singa-
porean needs.
PERSONALITY
Theres a very big industrial move-
ment from Singapore all the way to JB.
Everyone is buying up industrial land
and industrial projects because
the cost of running a factory in Singa-
pore doesnt make sense anymore. If
you cross it over, even if you ferry your
top management staff over and get the
local JB people to work in the lower
management, it still makes more sense.
PI: Could you share with us an area
where you see good potential?
SG: Theres a lot of interest in
Cyberjaya. I feel theres potential, but
some people dont feel the same way. So,
let me just tell you my opinion of it. I
feel Cyberjaya was a failure for the last
10 years because they were trying to do
what didnt make sense, bringing in the
whole MSC status and everything, lur-
ing all these companies. These compa-
nies came here for the pure necessities
but didnt get what they needed.
So, they went to Penang because
Penang has what they needed. As it
ended up, MSC status is available
everywhere now. But they did one thing
right in Cyberjaya which is the MEX
highway that connects Cyberjaya to
Putrajaya and straight down to KL
within 15 to 20 minutes. That makes
Cyberjaya a beautiful place to live in.
The roads are big and its very well-
planned and everything is really nice.
So looking at Cyberjaya right now,
landed housing is very good because
theyre all gated and guarded, and will
do very well. The developers that are in
there now are SP Setia, UEM, OSK and
a few more.
However, Im not so sure about
the high-rise yet. Actually many of the
high-rise projects have been focused at
students. There are a couple of older
projects that you may want to look into.
Theyve got low-rise condos with nice
greenery. Those older projects or all the
newer ones which are gated guarded
housing will do well, as they
are wonderful places to live in. PI
55
JULY 2013
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PKNS:
Master Creator of
Major Townships
From its initial challenges in developing a township to achieving
a record profit of RM420 million in 2011, Perbadanan Kemajuan
Negeri Selangor (PKNS) has come a long way since it first
started. They share their success story with Property Insight
and reveal their future launches.
By Rubaa S.
 COVER STORY
B
eing the mastermind
behind 11 major integrated
townships Bangi , Shah
Alam and Petaling Jaya,
just to name a few Per-
badanan Kemajuan Negeri Selangor
(PKNS) will be celebrating their Golden
Jubilee next year. Established on 1st
August 1964, PKNS may be a veteran in
the property development industry, but
in no way is the company slowing down
their developments.
We focus mainly in property
development but we are also diversified,
with property asset management. We
manage close to RM900 million worth
60
JULY 2013
of assets, including Menara Worldwide,
Kompleks PKNS, SACC Mall and many
more, explains Othman Omar, General
Manager of PKNS.
Provider of Affordable Homes
Being a state developer, PKNS has
multiple roles to accomplish, and one of
them is to provide affordable homes for
the people. To achieve this goal, PKNS
subsidises a major portion of the cost in
their developments. PKNSs projects
are heavily subsidised. For our recent
project at Selayang Mutiara, we sold the
Semi-D houses for RM99,000 when it
cost us RM180,000 while the mar-
ket value is RM350,000. So whoever
bought the house, its like winning a
lottery, Othman explains with a hearty
laugh.
Venturing Beyond Klang Valley
Although PKNS is one of the
biggest land bank owners in the state
of Selangor, it has literally no land left
to develop in the Klang Valley region.
Most of our land banks that we have
within the Klang Valley are exhausted,
Othman says, adding that about 10,000
acres of land that is still available for
development are all located outside
Klang Valley. Hence, PKNS has shifted
its focus to creating townships such as
Antara Gapi and Kota Puteri.
Price Appreciation Spiralling Up-
wards
Maximum capital appreciation is
every investors dream come true. As en-
ticing as it sounds, achieving that is not
an easy job. However, its highly possible
with projects from PKNS, according to
Othman. On a whole, PKNSs properties
are priced 10% to 15% below market
price, along with additional discounts
for Bumiputera allocated units. This
leads to higher capital appreciation and
undeniably, good news for investors.
Othman affirms that PKNSs proper-
ties appreciate over the first four to five
years. PKNS has enjoyed significant
increase in value for most of its projects,
some up to 300% over the period of five
years.
Othman cites an example: Our
shop lot project at Section 7, Shah Alam
has now appreciated by more than
200%. We sold it for RM800,000 and
now, the selling price is RM2.5 mil-
lion. However, attaining such high
price appreciation does not happen
overnight. It requires strategic planning
and extensive research, which allows
PKNS to produce developments with
outstanding and unique attributes.
Othman mentions that adding value to
a development is essential for its price
appreciation. Hence, features pertaining
to green concept, lifestyle components,
gated and guarded community or even
www.propertyinsight.com.my
 COVER STORY

fundamental amenities can boost up the

value of a property.
Although the market is slower PKNSs properties are
priced 10% to 15% below
these days, PKNSs properties are still
doing extremely well, due to the vast

market price, along with

range of products, from low-end to
high-end, that they offer. Since the

additional discounts for

market is softer, we believe people can
get a lot of good deals. It is also better
for the investors, as the price is more
attractive now, with better packages
such as 105% financing along with other
Bumiputera allocated units.
attractive rebates, and also RM5,000
This leads to higher capital
appreciation...
to RM10,000 rebates for developments
outside Klang Valley, says Othman.
Despite going through the worst
global recession in 2008/09, PKNS still

Othman Omar,
made more operational profit compared
to the previous year. This is possible

General Manager of PKNS

because the people have downgraded
their expectations. Instead of buying
the high-end developments (RM1 mil-
lion and above), they go for projects that
are priced at RM800,000. Hence, they
choose our developments as we have the

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 COVER STORY

full range, he explains.

Progressing through Strategic Col-

Affordable house at Bukit Botak with modern landscape design.
laborations
PKNS is also a firm believer of
smart collaborations in the form of
privatisation, joint ventures and en-bloc
sales. They have about 100 JV partners
which include Encorp, Sunway, Tropi-
cana and many more. These partners
generally step in to provide investments,
financing, en-bloc buyers and expertise,
as well as to speed up the completion of
a project. Othman cites the example of
Kota Damansara, which was completed
in a short time due to the collabora-
tions with strategic partners. We built
the main infrastructure, earthwork and
interchange. As for the high-end details,
we brought in The Strand, Sunway Giza,
NEXUS and Tropicana Indah through
our strategic partners. This is faster, he
says.

Urban Regeneration (Zero Landbank

Strategy)
Due to the scarcity of land around
Klang Valley, PKNS has now adopted a
new concept called the zero landbank
strategy which comprises two different
components - urban regeneration and
reverse privatisation.
Urban regeneration is the process
of transforming old dwellings that are
no longer apt for modern day living, into
Living room with contemporary furnishing that suits the urban crowd.
something that fits the urban lifestyle
that people look for these days. We are
currently working on Datum Jelatek,
where we are re-developing the old flats
in Ampang, Ulu Klang and turning
them into a mixed development of four
residential towers and an exclusive retail
podium. Datum Jelatek has also recently
won a 5-Star Best Residential/Renova-
tion Redevelopment Award from Asia
Pacific Property Awards, says Othman
proudly.
Another component that PKNS is
practicing that goes hand-in-hand with
urban regeneration is reverse privatisa-
tion. Previously, other people will de-
velop our land. Now, we are developing
their land through this reverse privatisa-
tion concept, he explains. PKNS is also
A kids room with a fun look and feel.
in the midst of talking to a few factory

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 COVER STORY

owners and convincing them to move

into less expensive project areas such
as Selangor Science Park 2 and Bandar

Every house that you

Baru Sultan Suleiman. By doing so, they
can now redevelop the factory owners
land and pass down proceeds from the

buy from PKNS can

redevelopment to the respective factory
owners. We have also implemented re-
verse privatisation with private land and

actually subsidise 10
project owners. These projects are in the
advanced stages of development and are
ready to be launched soon.

houses for the

Besides that, PKNS is also re-
vamping old buildings such as Kom-
pleks PKNS in Shah Alam, where the

underprivileged family,
plan is to add three towers atop the
existing building. This again is another
component under urban regeneration.
In pursuant of this zero land bank strat-
egy, PKNS has managed to generate a
total of RM14 billion worth of projects
and has earmarked 17 of its existing
projects for this purpose. PI

Launches to Look Out For

Township Project Name Description Size Price Range Date of

(non-bumi) Completion

Kuala Selangor Casa Delmar Bungalow & Bungalow RM437,510 - Completed

Semi-D (1,756 sqft) RM483,741
Semi-D RM402,320 -
(1,734 sqft) RM417,868

Shah Alam Divina Semi-D 3,315 sqft - 9,289 sqft RM1,435,888 - Early 2014
(Seksyen 24) RM1,788,888

Shah Alam Pinang Heights Condominium 1,238 sqft - 1,421 sqft RM462,388 - Mid-2014
(Seksyen 18) RM520,888

Kota Puteri Catalina 2-Storey 1,837 sqft - 2,065 sqft RM340,888 - July 2013
Link Homes RM523,477

Bernam Jaya Citrina 2&3 2-Storey Cluster Citrina 2 (1,453 sqft) RM320,919 - November
Homes Citrna 3 (1,667 sqft) RM462,320 2013

Dalmira Bungalow 1,844 sqft - 2,085 sqft RM525,888 - April 2013

RM580,400

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 COVER STORY

Make a Date with Datum

Soaring skyscrapers with ground-breaking design, complimented
by luxury amenities and environmentally-friendly features thats the
brand promise of the Datum Series, a new selection of high-end
properties by PKNS. Property Insight takes a sneak peek at their
latest and upcoming developments.

A
fter decades of building
properties in new develop-
ment areas, Malaysians
will soon be witnessing a
new and exciting trend in the proper-
ty industry called urban regeneration.
The initiative to transform a pre-
developed area into a new lifestyle
development for the urban crowd is
what DatumCorp International (DCI)
is striving to achieve with their Datum
Series.
With this, PKNS, who is the sole
proprietor of DCI, will focus primar-
ily on high-end mixed-development
property in the most sough-after
areas within the Selangor region. Cur-
rently, there are eight projects under
DCIs belt, namely Datum Jelatek,
Datum Edu City 1&2, Datum SACC,
Datum Sports City, Datum PJ @ Sec-
tion 14, Datum In-City, Datum Bangi
1&2 and Datum Insignia.
These projects are mixed
developments comprising one or
a combination of residential, com-
mercial, office and retail elements.
All these components are introduced
to provide economic growth to areas
within the vicinity and its surround-

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JULY 2013 www.propertyinsight.com.my

ings. In addition, the placement of
retail outlets and residences within
close proximity is a popular trend,
especially among the urban lifestyle
crowd.
With this all-encompassing
concept, Datum Series will not only
see capital appreciation over the next
few years but will also provide job
opportunities for people of different
backgrounds, including homeowners
or entrepreneurs who intend to start
new businesses. Hence, over the next
few years, all these developments will
see a high influx of people who are
attracted to the facilities offered.
Additionally, Datum Series
will be built based on international
standards which are innovative,
environmentally-friendly, architectur-
ally outstanding as well as top-notch
functional, with Green Building Index
(GBI) certification. With all these
criteria in place, Datum Series is set
to attract both local and international
markets.
www.propertyinsight.com.my
Embracing the Green Concept
The environmentally-friendly
culture is firmly inculcated in PKNS.
With the noble purpose of saving our
natural habitat, all projects under
PKNS have to strictly adhere to the
Green concept, to achieve the GBI
certification. GBI-certified build-
ings inflict minimum harm to the
environment during construction as
well as throughout their life spans,
by utilising resources such as water,
energy and other materials that are
environmentally-safe.
Having that as their fundamen-
tal criteria, PKNS is now advocating
sustainable development. All their
current and future projects will
integrate a few, if not all the environ-
mentally-sustainable attributes such
as rainwater reaping, water cooled
environment control system, finest
engineering quality, flora replanting
and the use of solar energy. Just like
other projects under the PKNS ban-
ner, Datum Series is no exception in
COVER STORY
following their green philosophy. The
focal idea behind the planning and
design of the developments is to inte-
grate the environmentally-sustainable
features.
An Attractive Investment
Proposition
Being a high-end development
with inimitable and modern appear-
ance, Datum Series will no doubt
gain instant attention from investors.
With a vast choice of development
from residences to offices and retail
outlets, investors are given the option
to choose the type of property that
interests them the most.
Besides that, Malaysia has also
become a popular spot for investors
not only among Malaysians, but also
investors all around the world. The
Datum Series of properties are scat-
tered all around Selangor, one of
Malaysias richest and most developed
states. This makes the Datum Series
even more appealing to investors.PI
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 COVER STORY

THE DATUM SERIES

DATUM EDU CITY 1&2 (Subang Bestari)

Another project under the Datum Series is

Datum Edu City, an impressive project with a
mix of three apartment blocks, retail spaces
as well as two blocks of colleges. To be con-
structed on 12 acres of land, this signature
development will serve as an integrated edu-
cation hub in Subang Bestari.
DATUM SPORTS CITY (Kelana Jaya)

Resembling its name, Datum Sports City is a dis-

tinctive mixture of not only commercial and resi-
dential suites, but also a Performing Arts Centre
built on 19 acres of land. The current Kelana Jaya
Sports Centre is also expected to be redeveloped
and to undergo a top class transformation to pro-
DATUM IN-CITY (Petaling Jaya)
vide the people with a top-notch Sports City. With
an estimated GDV of RM1.8 billion, DCIs goal is
Exuberating sheer tranquillity with hang-
to generate RM387 million in revenue from both
ing gardens, lofty parks, pavements and sky
the Performing Arts Centre, as well as the upcom-
bridges, Datum In-City is an urban integrated
ing sports complex.
city in the making. Situated in Petaling Jaya,
Datum In-City is a residential and commercial
hub of eight towers that include corporate and
signature offices, SOHO suites, commercial
and retail spots, restaurants as well as high-
end condominiums. A development that in-
corporates the green concept to achieve top
tier GBI rating, Datum In-City has an estimated
GDV of more than RM3 billion. DATUM PJ@SECTION 14

A mixed development of a hotel, shopping po-

DATUM INSIGNIA (Seksyen 7, Shah Alam)
To be developed on five acres of land in
Seksyen 7, Shah Alam, Datum Insignia has
an estimated GDV of RM550 million.
dium, office tower and a serviced apartment,
Datum PJ is developed on a vast area of 9.7
acres. Situated at Section 14, Petaling Jaya
an established residential and commercial
hub, Datum PJ is expected to receive over-
whelming response from investors due to its
strategic location. Similar to other projects un-
der the Datum Series, this development is also
estimated to have a high GDV, of RM1.2 billion.

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 COVER STORY

DATUM JELATEK (Off Jalan Ampang)

Nestled in the heart of the city, Datum Jelatek is the first project
under the Datum Series that redefines the concept of luxury
living. Located in Ampang, Datum Jelatek is a rare combination
of four residential towers topped with a retail podium with an
iconic Sky Ring that is set to be the latest benchmark of Kua-
la Lumpur. This unique combination of residential and retail
property is definitely an attention grabber for property hunters
around the world. A development that is expected to be com-
pleted in 2015, Datum Jelatek has already won a prestigious
award for Best Redevelopment Residential/Renovation Malay-
sia from Asia Pacific Property Awards 2013-2014. Datum Je-
latek has also a staggering gross development value (GDV) of
more than RM1.2 billion. According to Othman Omar, General
Manager of PKNS, the target selling price for Datum Jelatek is
RM1,300 to RM1,600 per square foot.

Selangor
DATUM BANGI 1&2

With a total development Gross Floor Area

(GFA) of 74,456 sqm, Datum Bangi is unique
set of development with a mixture of 25-storey
serviced apartments, a 17-storey hotel, a 3-sto-
rey retail mall, office suites and three levels of
basements. This luxury concept of living is for
anyone who values lavish and comfortable life-
style. With an estimated overall GDV of more
than RM538 million, Datum Bangi will be a mile-
stone project in Bangi.

DATUM SACC (Shah Alam)

A development that is set to be Shah Alams

iconic landmark, Datum SACC will be built on
31.5 acres of commercial land. This project is
envisioned to make Shah Alam one of the most
liveable cities in Malaysia as well as to be the
future development of the city. Datum SACC
will feature a combination of properties such as
serviced apartments, office towers, a university,
retail bazaar, F&B outlets, theatre and a shop-
ping complex, targeting the urban crowd. The
design of this development goes hand-in-hand
with the Green City concept, Islamic Architec-
ture and Biophilic features to create a sustain-
able lifestyle for its residents.

67
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 PROPERTY ENHANCEMENT

Maximising
Profits
through
Interior
Design
Imagine yourself lazing on your ultra soft full grain aniline leather couch and gazing

at the artistic wallpaper that adorns your wall, or simply stepping into your cosy

dimly-lighted bedroom to unwind after a long day at work. Now, thats the magic of

Interior Design (ID). It transforms an ordinary house into a stunning home. But more

importantly for property investors, it enhances the value of their investments.

By Rubaa S.

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JULY 2013 www.propertyinsight.com.my

S
haron Loh, founder and
principal of GDY Design
& Construction, has been
in the industry for the last
seven years. Despite her
longstanding involvement in ID,
Loh actually started off her career as
an architect. But along the way, she
became fascinated by the intricate
details of ID and fell in love with the
business.
Lohs passion and flair for ID
didnt go unnoticed. Her company
won the Designer of the Year awards
by Designer Concept magazine for
both 2012 and 2013, and this un-
doubtedly enhanced their credibility
in the industry.
Changing Perception of ID
Over the last five years, peo-
ples perception of ID has changed
tremendously. They are beginning to
open their minds and are opting for
professional assistance when it comes
to renovating, decorating and furnish-
ing their homes.
Many people are into interior
design due to their lifestyles. Imagine
youre given a choice to either go to a
coffee shop or a caf. Im sure youll styles, compared to tropical design
choose a caf as the look and feel is
generally more appealing. That is how
a house that is designed looks like
compared to a normal non-renovated
house. Interior design gives you a cer-
tain amount of class and social status
that people want, Loh explains.
ID is a competitive business but
yet, homeowners still have the linger-
ing thought that hiring an interior
designer will cost them a fortune.
Loh laments that people still have the
mindset that interior designers are ex-
pensive. To overcome this, she usually
asks her clients for their budgets and
www.propertyinsight.com.my
On average, the
value of a property
appreciates by at
least 30% of the
selling price after
renovation,
Sharon Loh, founder and
principal of GDY Design &
Construction
then work her way from there. This
includes giving her clients a checklist
where they can remove any unneces-
sary item to suit their budget.
These days, people usually go
for modern contemporary and fusion
to RM2,800 monthly, she explains.
in the past years. Loh observes that
many people are now using plain
colours like white and grey in their
houses. To give it a modern contem-
porary touch, they usually add a tint
of bright colours like orange and red
to complement as well as to enhance
the entire design.
Loh also points out that they
sometimes have clients who prefer
tropical designs which involve a lot
of wood. For them, we will suggest a
fusion style where we do a crossover
between modern and tropical to give
it a more modern finishing, she says.
PROPERTY ENHANCEMENT
The Appreciation of Value
The core motive of anyone who
ventures into property investing is to
maximise returns, be it in rental yield
or price appreciation. Now, there are
a few ways to achieve that and the
most conventional option is to go with
interior designing.
Many investors are opting for
this route although they need to lay
down more cash initially. This is
mainly because the value of a prop-
erty fortifies upon ID. On average,
the value of a property appreciates by
at least 30% of the selling price after
renovation, Loh says. For example,
the selling price of a house in Kota
Kemuning was RM1.2 million three
years ago. After renovation, the value
uplifted to RM1.5 million, she contin-
ues.
As for the rental rate, the mini-
mum cost that house owner can spend
on renovation is between RM50,000
to RM60,000 for a condo that is close
to 2,000 square feet. I can give you
a ballpark figure as the rental yield
highly depends on the location. But
generally, an investor who initially
collects RM2,000, can now amass up
Many investors are reluctant to
hire an interior designer because they
fear that it will be time-consuming.
Even with the possibility of attaining
higher rental rates, investors have the
tendency of wanting immediate rental
returns after purchasing a property.
Loh stresses that interior designing
does not take a long time to complete.
She estimates that it will take roughly
two to three months for a basic reno-
vation if an investor wants to rent out
a property. However, if extension is
involved, then it will take about six
months up to a year. PI
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 PROPERTY ENHANCEMENT

BEFORE AFTER

BEFORE AFTER

Case Study 1

Location : Lake Fields, Salak Selatan at Sungai Besi

Type : 3-Storey Corner Link House (4+1 Bedrooms with 5 Bathrooms)
Built-up Area : 2,600 sq ft
Purchase Price : RM750,000
Interior Design Cost : RM390,000
Current Market Price : RM1.3 million to RM1.4 million
The Story : For this house, Loh used simple colours like black and white
with a hint of vibrant red to add a bit of colour to the overall
presentation. Sticking with minimum colours has given a mod-
ern look and feel to this house. Loh also used plenty of glass
to give it a contemporary look. She also played with diffused
lighting to complement the modern contemporary concept of
this house.

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JULY 2013 www.propertyinsight.com.my
 PROPERTY ENHANCEMENT

BEFORE AFTER

BEFORE AFTER

Case Study 2

Location : Taragon Puteri Bintang Serviced Apartment at Jalan Changkat Thambi Dollah
Type : Condominium (3 Bedrooms and 3 Bathrooms)
Built-up Area : 1,500 sq ft
Purchase Price : RM700,000
Interior Design Cost : RM400,000
Current Market Price : RM1.2 million to RM1.5 million
The Story : With a unique concept of modern classic and glamorous theme to work with, Loh
opted for an S shaped bar and black floor tiles to support the overall look of this
condo. She also hacked off the existing kitchen area and transformed it into an open
kitchen, which complements the concept that the homeowner wanted.

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 PROPERTY ENHANCEMENT

Top 5 ID Tips and Tricks

Paint softer, lighter colours in smaller rooms
A small room tends to look cramped and cluttered once
the furniture is placed in. To overcome this, try painting
1
your room in subtle colours like off white or pale pink. This
helps to give an optical illusion of space, making the room
look bigger than it really is.

Use mirrors to provide instant lighting to your living space

A mirror is a must have item when it comes to ID. It does
not only make your space look bigger but it also gives
2
extra light to your living room. Adding a mirror helps to
create an illusion of a bigger, brighter space. Large or small
area, a mirror adds light and dimension to your space.

Go green
Plants are inexpensive deco items that can instantly add colour and texture
to your space. They do not only beautify your house but also give out plenty
3
of fresh air, which is good for your health. However, fresh plants require high
maintenance as constant care is required. But, there are many faux plants in
the market that are equally as beautiful as the fresh ones but need minimal
maintenance.

Use wallpapers to transform your space

Adding wallpapers especially on your accent wall helps create the wow
factor in your house. It immediately transforms your dull and boring area
4
to a stylish and chic atmosphere. If your space is limited, experiment with
wallpapers with vertical lines. This helps to give an illusion of a bigger
space.

Light up the place

Lighting is a crucial point in designing your house. Placing the right type
and amount of lighting can help create a cosy and soothing ambience.
5
However, over-placing it is a recipe to disaster. These days, many people
opt for diffused lighting as compared to direct lighting, as it exudes a more
romantic feel in your home.

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JULY 2013 www.propertyinsight.com.my
 10
Tips ON
Investing
Overseas
No matter how much we wish it to
be easy, there are hard and fast rules
in making a property investment,
especially in a location that is far out of
sight. Herbert Leong shares some of the
key ground rules to a good purchase
beyond local shores.
 CONTRIBUTOR
1
Location, location, location
With so many active investors seeking stable returns
and good capital appreciation, it is crucial to select
the right property in the right location. The key mes-
sage that remains as true today as it did generations
ago is Location, Location, Location.
2
Knowledge is power
Do take the time to carry out extensive research
to minimise your risks. Investing in overseas prop-
erty can require a significant capital commitment,
so it is best to equip yourself with as much in-
formation and knowledge as possible. Seek pro-
fessional advice from a reputable, global prop-
erty consultant and carry out due diligence on
the developer for any previous off-plan projects.
A proven and demonstrable track record with a
commitment to long-term after-sales services will
put your mind at ease.
3
Determine your goal and look for your
exit
Think about why you are investing and what you are
looking to achieve from it. Many investors view pur-
chasing the right property overseas as a long term,
income-producing asset. The hold period for every
investor will depend on various personal circum-
stances and could change at any point, which is why
you should always select property that will appeal to
a wide market upon re-sale. This is a hugely impor-
tant part of the overall exit strategy who will want to
purchase the property in the future? Will there be suf-
ficient demand for that product in that location? Even
before you purchase a property, you would be well-
advised to think about your exit strategy, and how you
would see the marketability of your selected property
when it comes to selling it.
74
JULY 2013
4 Dissect a project thoroughly
Review the project carefully has the develop-
ment been marketed before? Are there only bal-
ance units remaining which will be the hardest
to resell? It is most common to benefit from the
largest capital appreciation by purchasing dur-
ing the early stages of marketing when prices are
normally at their lowest and developers tend to
offer the greatest incentives. Look at the facilities
available on-site as this will impact the service/
maintenance charges. Does the target market re-
ally need or expect a swimming pool or spa facil-
ity? Perhaps in some cities or some market sec-
tors, they may expect these types of facilities, but
not in all cases and this is sometimes a significant
additional cost to factor into your investment cal-
culation.
5
Study the market
Research and study various factors such as levels
of supply, demand, market trends, economic/em-
ployment data, pricing, future infrastructure links,
retail and leisure facilities. A significant over-supply
situation or a lack of demand due to limited trans-
port connectivity will heavily impact future pric-
ing and your ability to resell in a reasonable time
frame. Market reports are widely available from
major consultancies and plenty of information can
be sourced from the media that highlight regenera-
tion areas/schemes and major infrastructure pro-
jects that should have a notable impact on value.
www.propertyinsight.com.my

6 8
Management factor
Your overseas investment property could be located many
miles away (Melbourne and London are particularly popu-
lar markets for Malaysian buyers in addition to the nearer,
more traditional market of Singapore) so one must consid-
er how you are going to manage it and rent it out. Will it at-
tract long-term tenants and therefore involve less frequent
turnover/minimal void periods? A top tip is to engage a
good letting & management company. Fees will typically
be a percentage of the rental figure (ranging from 6% to
12%) but will take away many of the inconvenient aspects
of overseas property ownership and help maintain asset
value and revenue streams. Take local advice on average
occupancy and average rental levels to make sure you
9
have a sufficient income to cover all your outgoings. If you
are not buying a fully-furnished unit, selecting a furniture
pack for your investment property can be both cost ef-
fective and time efficient, with your vendor and managing
agent overseeing the whole collection and installation pro-
cess. Savvy investors tend to keep furniture to an accept-
able minimum and the rental deposit secured by the letting
agent will protect you from any unreasonable damage and
replacement costs.
7 Weighing the pros and cons
There is the constant battle of risk versus reward
and emerging markets versus established markets.
For the vast majority, people would rather invest in
a proven, well-established and geo-politically stable
market. Time and again, risk-averse high nett worth
individuals (HNWIs) place their money in safe haven
markets such as London (ranked number one in The
cities that matter to HNWIs Attitudes Survey, for
both 2013 and 2023 (f) in The Wealth Report 2013)
and Melbourne for security, long-term growth, and
a transparent legal system. Overseas investments
have become a more prominent feature of Londons
new-build housing market in recent years, especially
investments from Asia, which accounted for nearly
50% of new-build sales in 2012. The attractiveness
of safe havens will continue to propel capital growth.
10
About the Contributor
Herbert Leong is an Associate Director of Knight Frank Malaysia (Project Marketing). He
has 30 years of experience in the property development industry. For further information on
international property investments, please contact Knight Frank Malaysia at +603 228 99 688
or visit www.knightfrank.com.
www.propertyinsight.com.my
CONTRIBUTOR
Make your investment work for you
Investing in overseas markets should be emotionally
positive. Your rental property can also have a lifestyle
aspect and double as a holiday retreat or a home for
children who study overseas as well as generate in-
come and protect nett worth. Importantly, it can also
be a great hedge against inflation and exchange rate
fluctuations. The continued weakening of the Brit-
ish pound has made such investments even more
attractive to overseas buyers, generating consider-
able Malaysian interest in London properties. The
top tip is to see all avenues of investment strategy
and make your financial outlay work harder for you.
Law and order
When purchasing an overseas investment for the first
time, it is important to get a thorough understanding
of how the local market operates in relation to law,
taxation and finance. Taxes can vary significantly
between one country and another and Knight Frank
always suggests speaking to a specialist on these
topics. Eligibility for finance, ownership structure,
payment schedules and resale laws (foreigner and/or
non-foreigners) differ around the world and for many,
purchasing an investment property from an exhibition
is an ideal way of speaking to all advisors under one
roof. Knight Frank always has legal and financial ad-
visors present to offer clarification on any aspect of
the purchase throughout the acquisition process. The
tax position/stamp duty savings available can be the
difference between purchasing in one city or another,
one country or another, or delaying a purchase alto-
gether. Markets can also vary quite considerably. For
example, a top tip when purchasing in the UK is to
realise that the London market is unique and simply
travelling a short distance outside of London will pre-
sent a very different buyer profile and a whole differ-
ent set of challenges/characteristics.
Get professional help
Each purchaser has their own specific set of circum-
stances, which is why the most valuable tip when
it comes to overseas investment is to seek profes-
sional advice from qualified, reputable property con-
sultants who have a global presence and a proven
track record. PI
75
JULY 2013
 Property Insight
Malaysia

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 BOOK SUMMARY

Start from 0!
3 Years to a
RM10 million
Property
Portfolio
This book is about how a young man, armed with
only passion and commitment, overcame all odds
to accumulate a staggering RM10 million worth of
properties in only three years.
Reviewed byRubaa S.

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JULY 2013 www.propertyinsight.com.my

T
hey say dedication is the
key to success, and thats
definitely the case with the
author of this book. Dexter
Lim, a lad from a middle-
class family, began his investing journey
with no knowledge of the property
industry whatsoever.
Being an average person through-
out his life, Dexter was determined to
change the status and quality of his
life. Together with his then girlfriend
Natalie (now his wife), Dexter started
his own superman small business.
Unfortunately, it didnt do well and he
found himself back at square one.
Then in 2007, he got his first
break when he attended W.T. Kams
Property Fast Track seminar. With the
guidance of Kam, who is also the co-
author of this book, Dexter began his
arduous journey in property investing.
The First Property
The year was 2008. As Dexters
small business was not doing well, he
had only RM2,400 left in his bank ac-
count and had accumulated RM10,000
in credit card debts. Despite his dire
circumstances, Dexter started looking
for his first property using the following
criteria:
Dexters Game Plan
Apartment/condominiums below He wanted to know why he took one
RM200,000
At least 20% below market price
Positive cash flow, at least 2.5 times
the fixed deposit (FD) rate
Target market: Student/working adult
With this game plan in mind,
Dexter and Natalie started hunting
high and low for a good deal. Just when
they thought it was impossible, they
stumbled upon Natalies friend who just
moved into his new apartment called
RC, which is near Taylors Lakeside
campus. Smelling great potential, they
both started surveying the Bandar
Sunway area and shortlisted two apart-
ments SC and MP.
After weighing the pros and cons,
they decided to choose SC because it
has internet connectivity which is vital
especially in an area surrounded by
www.propertyinsight.com.my
BOOK SUMMARY
students. Then, they found an adver-
tisement for a property in SC that was
going for only RM130,000 although the
market price for that area was between
RM160,000 to RM170,000.
Knowing that this was a good
deal, they called up the agent and start-
ed negotiating on the price and man-
aged to bring it down to RM120,000.
At that point, they were riddled by
self-doubt and decided to flip a coin
to help them decide. The outcome was
favourable and they immediately issued
a cheque for 2% of the purchase price,
which came up to RM2,400 exactly
the last bit of money left in Dexters
bank account.
Then reality hit them again. How
were they going to pay the remaining
8% of their down payment and also the
legal fees? They decided to do creative
financing (a technique taught in Kams
Property Fast Track Seminar), by using
their credit cards to raise capital and
repay monthly installments over three
years. After that, they went hunting for
banks to provide them a 90% loan and
after much struggle, they managed to
get one. Finally, their first property!
Financially Free by 37
Dexter has one goal in mind to
be financially free 10 years before his
retirement age. With that idea in mind,
he started reevaluating his game plan.
year and two months to buy his first
property after attending Kams seminar
in 2007. The reasons were simple. First,
he didnt have a solid game plan and
second, he didnt have good contacts
(lawyer, real estate agents, bankers, etc).
After identifying the problem, Dexter
then came up with steps to overcome it.
His first step was to solidify his
game plan. He first calculated and
found out that both Natalie and he
needed RM7,000 or more monthly to
be financially free. He then set up a no-
brainer system by aiming to double his
property portfolio every two years and
by doing so, he would own properties
worth RM7.75 million by the ninth year.
The second step was to get into
the network and be one of them. Na-
talie immediately joined a foreign bank
and became a mortgage sales officer.
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JULY 2013
 BOOK SUMMARY

She was the spy who learned how
mortgage lending worked. The third
step was to delay their gratification.
Dexter and Natalie gave up on their
dream house, dream car and dream Dexter and Natalie finally decided that
wedding to accumulate property assets.
The couples game plan and hard work
paid off as they bought two condo units
in the second year, then doubled to four
condo units in the third year and then
went into commercial deals after that.
The Horrible Tenant
Dexters greatest lesson after
acquiring his first property was tenant
management. When he bought his first
property, Dexter wanted to rent it out
immediately. He began to source for
agents to bring in tenants and finally
selected a decent-looking couple, who
offered Dexter RM1,000 on the spot
and Dexter happily signed the Intention
to Rent form. Judging from their looks,
Dexter believed that they were sincere
and allowed them to bank in the deposit
into his account the next day. Little did
he know, this is when his nightmare
started. The tenants did not bank in the
deposit the next day and not even the
day after. After waiting for over a week,
will appreciate over the years. When
they needed to ask them to move out.
They spent five long hours negotiating
with the tenants and finally, they agreed
to move out.
Finding a Gem in a Hidden Place
While hunting for a new property
to invest, Dexter and Natalie found
a white building (RA) without any
signage along Persiaran Kewajipan
in Subang Jaya. Knowing that this
was a good location, they listed this
property in their Observation List.
After a busy period in their personal
lives, they finally got a chance to look
at this property again. Natalie started
to notice that many of her colleagues
were processing documents for the RC
property. This clearly showed that the
demand was increasing and it would be
a good idea to revisit this property. After
considering both RA Apartment and
GYC apartment (a medium high-rise
near RA), they decided to go with their
first choice as they believe RAs price
they finally got a good offer where the
owner agreed to sell the property for
RM170,000 while the market value
was RM220,000, Dexter immediately
accepted the offer. After that, they
immediately rented out the apartment
with minimal furnishing. Simultane-
ously, they looked for another below
value apartment in RA. This time, they
bought a unit for RM205,000 when the
market value was RM250,000 and even
got a tenant who left most of his brand
new furniture in the apartment when
he left a year later.
Killing Three Birds with One
Stone
Dexter then began looking back at
properties that he put into his Obser-
vation List earlier. He finally short-
listed three properties which were RC,

Have a Game Plan

For anyone who is interested to venture into property investments

or is already in the industry, one essential tip is to have a game
plan. The criteria listed in your game plan will act as your guide in
selecting the type of property that you are looking for.

Create a Strong Network

Having a good network with other investors is always a good

idea. You might just get the right deal through your established
contacts.

Hold Your Gratification

Property investments offer potentially lucrative returns, but only

to those who take action to invest. So, if you come from a mod-
est background, youll need to set aside most of your resources
and delay your urge to spend on luxury items. If you want to buy
your dream car or go for your long-awaited holiday, all these
have to be set aside for now, as youll need to keep your bullets
to invest.

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JULY 2013 www.propertyinsight.com.my
 BOOK SUMMARY

SA and SVE. After much consideration,
he selected RC as the rental market
for students was assured. After that,
he started to look for the perfect unit
and bought one at RM195,000 (market
value was RM 240,000). He then pur-
chased another two more units in RC.
After owning all these properties, both
Dexter and Natalie resigned from their
current jobs and ventured into the real
estate line so that they can look for good
deals every day.
The Turning Point Commercial
Properties
After purchasing only residen-
tial properties, Dexter and Natalie
decided to take the game to the next
level by purchasing their first commer-
cial property. After finalizing the joint
venture agreement with his partner,
Dexter started exploring prime areas
and shortlisted Damansara Uptown as
it has many multinational companies,
F&B outlets, retail and strong franchise
chains. When they thought they found
the perfect unit, things didnt work
out and they were back at property
hunting. After much failure at
closing a deal, they finally found
a four-storey shop in Setapak.
They locked the deal for RM2.1
million while the market price
for that property was RM2.7
million. With this latest
purchase, Dexters tripled his
portfolio and achieved his
RM10 million after three
years in the business.
All in all, a good
sharing of experience that
will benefit new prop-
erty investors. The book
comes with an RM500
voucher which can be
used as a rebate for
the authors Property
Fast Track Seminar
and is valid until 31st
December 2013. Visit
www.propertyfasttrack.com
for more details. PI

Buy Below Market Prices

Looking at Dexters case, he bought all his properties at

below market prices. This isnt an easy task as there arent
many properties available at below market prices. But Dex-
ter had a lot of patience to look around and to wait for the
right deal to surface.

Look for Joint Venture (JV) Partners

As an investor, you might want to look for JV partners after

acquiring your first few properties. This is because with JV
partners, you can afford to look for bigger deals, hence, a
higher amount of profit.

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www.propertyinsight.com.my JULY 2013
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