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Under Construction Vs. Sub-sale Property: What To Consider?

Under Construction Properties   Sub-sale Properties
  • “Sell and build” concept
  • Purchase from developers
  • Buyers might get discounts and freebies offered by developers besides free SPA and loan legal fees
  •  
  • Purchase in the open market from the previous owner
  • Conduct a property search at land office to ensure that the owner is legitimate and if the property has any encumbrances
  • Buyer bears all legal costs incurred for the purchase
  • Pros:
    • Value appreciation depends on location, phases, quality and inflation
    • Information easily available from walk in to sales gallery/showroom and fair or launch
    • Getting a blank canvas: Everything from fittings to stoves are going to be in the best condition when you are the first owner of the property.
    • Discounts galore as developers are aspire to sell off all units fast
    • The choice is yours, early birds get to choose the best units
    • It comes with warranty with a standard 18-month defect liability period
      Pros:
    • What you see is what you get, the unit, view, finishing and also your neighbours
    • The real figures such as rental and transaction price will be available
    • Immediate cash flow available by renting out immediately to offset the mortgage repayment
    • Save agent fee if buy unit with ready tenant who is already paying the rental
    • No risk of construction delays, you upgrade yourself to become a landlord immediately
    • Fast move-in about two months after the legal paperwork is executed
    Cons:
    • Taking on more risks such as quality of the construction and possibility of abandoned project due to lack of financing
    • Financially locked until completed as it takes 3-4 years for completion, it will be difficult to buy another property
    • Uncertainties on final product such as market demand due to the possibility of highway and public amenities developments nearby
    • You need to be patient as developers will take a while to act on the defects and repairing one may cause another to surface later on
      Cons:
    • Difficult to look for potential properties, a lot of hard work to find a good sub-sale deal such as checking the condition of the units, market valuations and rentals of properties and negotiate with different owners, agents and lawyers repeatedly until you find the right one
    • Seller hazards such as seller may change decision to not want to sell or increase price
    • You need to fork out extra money if the price is higher than bank valuation price
    • Buyer hazards when seller is willing to slash prices to get rid of it, such untoward event might have happened or owner might have used the address to borrow from the illegal money lenders
    Other Considerations:
    • What you see may not be what you get, do ask sales personnel about the fittings, furniture and electronics come with your purchase
    • Save some costs such as 10% initial deposit, loan application processing fee, stamp duties, legal fees
      Other Considerations:
    • High cash outlay in the initial stage such as 10% initial deposit, loan application processing fee, MRTA and fire insurance, valuation fees and costs, stamp duties, legal fees, repair or renovation costs.

    Key message: You must do sufficient background research to avoid buying an overpriced property or property which is not easy to rent out or re-sell.

    Reference: Under Construction Vs. Sub-sale Property: What To Consider?

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    Potential awaits in Dutamas

    DUTAMAS is an upcoming, upscale neighbourhood in Kuala Lumpur flanked by Mont’Kiara and Segambut. Compared with high-end Mont’Kiara next door, Dutamas offers alternative options for homebuyers and property investors who enjoy the perks of luxury living at lower prices.
    Once a lush part of Kuala Lumpur, the enclave has gained much popularity in recent years, thanks to new commercial developments in the area.
    Anchoring Dutamas is the Malaysia External Trade Development Corporation (Matrade) complex, which is currently undergoing redevelopment. Other landmarks include the Ministry of International Trade and Industry, the Kuala Lumpur Courts Complex, other government offices and the Federal Territory mosque. Situated not far from these are the gates of Istana Negara. The establishment of these landmarks in Dutamas has attracted government servants and professionals to work and live here.
    Another notable landmark is Solaris Dutamas and Publika mall, developed by Sunrise Bhd (as it then was) along Jalan Dutamas 1. Not only has the eclectic mixed-use development attracted more than 250 premium retailers to the Dutamas area, it has also drawn more upper class patrons and expatriates. Noted for its wide selection of wine and dine bistros and art galleries, the retail mall has made the once-quiet neighbourhood into a trendy address.
    Dutamas predominantly features mainly mid to high-end, high-rise residential properties. At the higher-end of the mix are Solaris Dutamas, Royal Regent, Hartamas Regency, Hartamas Regency 2, Anggun Puri and Changkat View (see Chart 2). Based on average price psf in 3Q2014, their prices range from RM490 to RM902 psf, according to data collated by theedgeproperty.com. The least-expensive mid-end condominiums include Antah Tower, Menara Duta 1, Menara Duta 2, Duta Ria and Prima Duta, aptly priced from RM314 to RM359 psf.
    Part of the attraction of Dutamas is its strategic location. With a network of connecting highways such as NKVE, as NKVE, Duke, Sprint and Penchala Link, Dutamas is virtually at the doorstep of Kuala Lumpur city Centre and Petaling Jaya.
    Its amenities are many. Besides the government offices and the mall, there are several schools nearby, including SMK Kiaramas, Sekolah Kebangsaan Kiaramas, and three international schools — Mont Kiara International, Garden International School and Kuala Lumpur French School. Indeed, Dutamas also benefits from the amenities and conveniences of its upmarket neighbour Mont’Kiara.
    The prices of landed and non-landed homes in Dutamas have steadily increased over the years. Nonetheless, the number of transactions declined slightly recently due to the prevailing overall property market slowdown in the country.
    Data from the theedgeproperty.com shows the total number of transactions of non-landed residences in the 12 months to 3Q2014 fell 23% to 328 units from 426 units previously. However, the average price psf of such residences remained stable at RM494 psf, up a marginal 0.2% from previously (see Chart 1).
    Prices moderated after strongly appreciating in preceding years. Average price psf was up 16% in 3Q2013, from RM425 psf previously.
    As with the decline in transactions, the price trend in Dutamas is a result of the overall property market slowdown, says managing director of Landserve Sdn Bhd, Chen King Hoaw. “Due to the cooling measures introduced by the government in 2013, the oil price fall, the depreciating ringgit and the introduction of the Goods and Services Tax, property prices in general have been moderating.”
    He expects transactions to remain subdued for some time but says Dutamas has an overall appeal and potential to become a prime residential address in Kuala Lumpur.

    Strong mid-market segment While Dutamas offers a number of high-end, high rise residences, notably the recent Solaris Dutamas serviced residences, the mid-end market is the stronger residential segment in the area.
    Analysis by theedgeproperty.com for the 12 months leading to 3Q2014 shows that the market in Dutamas has plenty of options in the mid-market segment of non-landed residential properties. The most popular are those in the RM500,001-RM600,000 price range, accounting for 30.2% of market share during the period. The RM400,001-RM500,000 range is the second-largest by market share, at 22%.
    Real Estate Finders (MY) Sdn Bhd team manager Raphael Wong, who is familiar with the property market in Dutamas, says the area is attractive to first-time homebuyers.
    “In my experience, most buyers in Dutamas are first-time homebuyers, young family types, with a budget of between RM400,000 and RM700,000.”
    Wong believes homebuyers in Dutamas are mostly owner-occupiers. “The boundaries of Dutamas extend to the borders of Segambut. If you take into account properties such as Changkat View [and] Prima Duta along Jalan Dutamas Raya in the deeper part of Segambut, a majority of the buyers are owner-occupiers.
    However, some developments on Jalan Dutamas 1, such as Solaris Dutamas, have a 50% tenancy rate. This is because they are much closer to Mont’Kiara, which evidently offers higher rental returns. “Publika is also a key factor in this trend, with its integrated offices and retailers drawing more investors and tenants from neighbouring areas,” says Wong.
    Despite the poor overall market sentiment, non-landed residential property values and rental yields in Dutamas have remained steady overall.
    Kiara Realty principal Lee Meng Tuck notes that Dutamas offers consistent yields of between 4% and 6%. “The average ROI (return on investment) for condominiums in Dutamas is around 4.3%, while those for the retail and office segments are 5.7% and 4.4%, respectively.”

    Positive outlook Still, the future remains a positive one for Dutamas. With a strong mid-market segment and more upcoming developments in the area, real estate experts believe it has the right components to contribute to the value appreciation and steady yields of properties in the area.
    “The future outlook is positive for Dutamas. Its proximity to the Ministry of International Trade and Industry, Matrade and the Kuala Lumpur Courts Complex has attracted many local and foreign companies, including legal firms, to open offices here,” says Chen.
    Research by theedgeproperty.com indicates that transaction activity is expected to pick up with the recent completion of Icon Residence by Mah Sing Group Bhd and new launches such as Concerto Kiara by BCB Berhad and Verdana by BRDB Developments Sdn Bhd on Jalan Dutamas Raya.
    “Another prominent launch is Arte Mont Kiara by Nusmetro Group, near Solaris Dutamas. It is the first residential development in KL Metropolis,” says Chen.
    Unveiled in October, 2011, KL Metropolis is a commercial business district by Naza TTDI Sdn Bhd with a gross development value of RM15 billion. It is a three-phase integrated development on 75.5 acres of prime land in Dutamas that will consist of 22 condominium towers, five hotels, two regional retail centres and a landmark tower. The Matrade centre is the first building to be redeveloped under the KL Metropolis master plan. The business district is expected to be completed in 2025.
    Lee agrees that the addition of more mixed-use developments in Dutamas will likely see overall property values continue to rise, adding that it is already a self-sufficient township with steady demand.
    However, Chen warns of a high possibility of an oversupply of high-end, high-rise residences in Dutamas.
    In any case, projects with mass rapid transit (MRT) and light rail transit (LRT) stations in the vicinity, or with MRT and LRT access, are expected to remain in demand.
    “There will be a price correction for large and less popular units, so price movements are expected to be mixed,” says Chen. A proposed MRT station at KL Metropolis is said to be part of the future MRT Line 3. However, its date of completion is not expected to be sooner than 2022, he adds.
    “If the KL Metropolis, the redevelopment of government [complexes] and the added MRT and LRT connectivity are realised, these would be some of the key drivers that should boost the prices and values of properties in here,” says Chen.


    How to Effectively Deal with an Agent when Buying Real Estate?

    No matter how knowledgeable and familiar you are about the ins and outs of the real estate industry, it is still best to hire a professional buyer’s agent when buying a property. It helps that you are well educated about the market.
    But the assistance of the professional is still very much helpful and advantageous. This way, you could find and buy an ideal property in no time and within reasonable costs without altering or reducing the time you have to spend for your job, business, or family.
    There are basic protocols that set the professional relationship between the buyer and the agent. It would be helpful if that relationship is kept harmonious, productive, professional, and smooth. Hiring a property buying agent could be a real challenge especially because any buyer would certainly prefer to tap only the best. Experts always recommend picking and hiring just one agent. The professional should be reliable, trustworthy, and committed.
    When hiring an agent, be sure to get a shortlist out of a long list of candidates. Find agents online or get referral from your friends, colleagues, or relatives. Do not hesitate to conduct a job interview so you could determine the best candidate for your purpose. Always consider experience, training, credibility, and reliability. Here are several other tips when dealing with your real estate agent.
    Draft and sign a contract before proceeding with any transaction. This document would set and strengthen commitment on both parties. Put in writing your expectations on performance, contract duration, commission rate, and mode of payment. It is best if you could talk with your agent regarding most or all of the provisions to be detailed in the contract to ensure a smoother flow.
    Try not to call, email, or deal with other buyers’ agents. Doing so would not just help you avoid any strain in your relationship with your property buying agent. You could also spare yourself from any possible confusion. Other agents may have different strategies, which could weaken the one you are currently working on with your agent. At the same time, some agents may just be deceiving you because they may be working at the same time with certain sellers.
    Discuss with your agent your requirements and preferences before going to any open house. It is best if he/she is well-oriented about your likes and dislikes so he/she could pick out the best available property. Go to open houses with your agent. Let him/her represent you especially when dealing with the seller.
    Lastly, have respect for your agent. The professional is not usually paid any salary because he/she could only earn through commission. Thus, you have to recognize the importance of his time. When you set any appointment with your agent, make sure you show up or at least come on time. For sure, you also prefer your agent to come on time whenever you have a meeting.
    Now could be the best time to buy a property. Before scouting the market, be sure to do your homework. Choose a good agent, set an open communication with him/her, and take your time to find and purchase the best that the real estate market offers.
    Taken from Reading Place, read more on  How to Effectively Deal with an Agent when Buying Real Estate?
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    8 Things That Can Devalue Your Home

    With the property prices going upward for the past few years in Malaysia, many property owners would have celebrated the spike in value for their properties. However, not every property or location enjoy this appreciation, some still plunged in value, too!
    Here are some of the factors that may have caused the depreciation of the unfortunate few properties:
    1. Disaster-prone location - properties located in disaster-prone, i.e. Bukit Antarabangsa, would have suffered a drop in their property prices as the value suffer and banks may be sceptical to give out home loan for properties in these areas.
    2. Unexpected developments - examples such as high-voltage power lines or a sewage treatment plant, dumping or landfill site being built in close proximity can adversely affect your property prices. For properties known for the great view, a new development start coming up right in front of your unit, obscuring your view of KLCC, will also impact the price of your condo. The recent MRT project in the Klang Valley will surely affect certain properties to suffer in value as a result.
    3. Bad neighbourhood - are the houses around yours well-maintained? Do you see poorly drawn graffiti and vandalism around? How about the people staying nearby (can you imagine inviting them for a cup of tea)? The types of shops nearby (are they mostly betting shops, pawn shops, or dodgy pubs?) and the frequent presence of police (high crime rates) can tell you a lot about a particular neighbourhood.
    4. Foreclosure rate in the area - foreclosures are usually a norm in bad communities, posing risks to your property appraisals as it is the normal practice of benchmarking prices of similar housing units to determine another, property appraisers might compare yours to those poorly maintained, devalued foreclosed ones; it will be an eyesore, just to see so many abandoned houses around yours.
    5. Bad history - if a property has experienced a death or a murder before or if it has housed criminals and/or drug users before, this can really damage the value of the property, even though the property may be located in a prime area.
    6. Traffic and parking issues - properties (residential and commercial) that do not have adequate parking spaces may face some serious backlash. If the township planners suddenly decide to adjust the flow of traffic with the construction of an underpass or a flyover near your home to ease traffic, then your property price may be going for a dive; in addition all the noise and dust that these construction works may produce will bring your house’s value down further. For condominiums, apartments or flats, inadequate parking bays will only result in traffic congestion outside the compound as most residents would have to park their cars by the roadside, sometimes illegally resulted in getting tickets, thus will cause a drop in the demand for your property.
    7. State of the property - it is hard to give high estimation for properties that have aged and been neglected so much that they are already in a state of dilapidation, i.e. house is filled with cracks on the walls, leaky rooftops, clogged pipes, mouldy floors, and looks like it is going to collapse in any moment; even in the best location, the buyer will have to ensure they have the cash to spruce it up after buying it, which many may not be able to afford. It's important to put effort to upkeep your property from time to time such as do necessary refurbishments or even a complete overhaul your house to ensure that it still has the appeal even though it may have aged considerably. For condominiums and apartments, always ensure the management is using the maintenance and sinking funds accordingly to upkeep the compound of the property.
    8. Taboos - examples, houses numbered four are usually shunned in typical Chinese taboo, due to the fact that four rhymes similarly to death in most of the Chinese dialects; number 13 is also largely avoided because it is believed to be unlucky. Many countries, including Malaysia, often have the 13th floor in high rise buildings omitted and replaced with other designations. If your house happens to be associated with such numerical values, perhaps approaching your town council to request for a different designation may help. Other types of properties that are usually believed to be linked with bad fortune in Malaysia are those that face “T” junctions, below road levels and sloping steeply (access road sloping towards the main road) downwards.


    Primary, Secondary Or Auctioned Properties: Which Is Worth Buying?

    Brand new and shiny? What you see, you get— a better idea? Or More luck than due diligence?


    Property Financing: Are The Banks Still Lending?

    There are three important things that a loan borrower needs to know before applying for a loan:
    1. Make sure you are not in the Credit Tip-Off System (CTOS) - Managed by a private company, banks use this system to check credit worthiness of their clients. If a person is being sued for bankruptcy or if he/she is a guarantor, his or her name will appear in CTOS. CTOS status can be checked online by providing the required personal particulars.
    2. Central Credit Reference Information System (CCRIS) - Managed by BNM. It provides credit data from various financial institutions. The system will show your complete credit history; from how many loans you have and their amounts, credit cards, loan applications and also rejections, to all your repayment records for the last 12 months. A loan borrower is recommended to check their CCRIS report to ensure it’s clean before applying for a loan.
    3. Debts Service Ratio (DSR) - Every person who is earning an income and has a debt will have a Debt Service Ratio (DSR). Banks uses this as a yardstick to determine credit approval for loan borrowers. Know yours first before going to the banks that have higher debt service approval and apply for a loan, your chances will be much better.


    6 property factors that may result in your home loan being rejected

    Owning your first home is a great achievement, as the prices of property exceed the income of the people. Most people start to think about buying their first home when they get married, to accommodate their growing family. Obtaining a home loan can be easy if you know what to do, and how to prepare for it. However there are various factors that can result in a home loan being rejected. Besides bad credit score due to defaulted or late payments from other credit facilities, to low debt service ratio (DSR),the following factors would also result in loan get rejected:
    1. Type of lands - leasehold (with less than 60 years left) and Malay reserved land may be difficult to secure financing from certain banks as these lands are considered high risk for banks as they are difficult to resell in an auction, due to its restrictions.
    2. Price of properties - most banks are skeptical about giving out loans for properties below RM100,000 as the risk of defaulting is generally higher and thus banks would rather not take the risk for the minimal interest earned.
    3. Developer of the properties - if your housing loan is rejected by the banks due to this reason, you can treat it as a blessing in disguise. Most banks will do a Credit Tip-Off System (CTOS) check on the developer or seller to make sure the company or individual is not under bankruptcy and you may not be able to complete the house purchase transaction if the result is not a favourable one.
    4. Location - as everyone is adamant in buying a Klang Valley property, but not all properties in the Klang Valley are good for investment. Bank might reject the loan due to various reasons such as history of natural disaster, low marketability, occupancy, and increasing cases of auctions.
    5. Maintenance and upkeep - most banks are not willing to approve home loan for old properties (more than 10 years) especially if it is badly managed and maintained. Besides new buyer must check its surrounding area such as the properties located too near high-tension cables or have bad parking access.
    6. Title - the status of the property title is important as it may be the reason why your home loan did not go through. If a property does not have an individual or a strata title after 10 years, most banks may not want to finance the property.


    M'sian property market falls 10.9% in volume, rises 6.7% in value

    Highlights:
    1. The Malaysian property market saw a decline of 10.9% in volume for the year 2013, with 381,130 transactions done compared to 427,520 in 2012.
    2. However, it saw a 6.7% increase in value, with RM152.37bil done for 2013 compared to RM142.84bil a year ago, according to the Property Market Report.


    Malaysians are the majority buyers of Four Seasons Place KL

    Highlights:
    1. Malaysians are the majority buyers of Four Seasons Place Kuala Lumpur, which transacted at RM3,000 per square feet.
    2. The 65-storey Four Seasons Place can house 231-room Four Seasons hotel and its 242 units of private residences atop a 300,000 sq ft upscale retail mall.
    3. Comprising 232 typical units (1,098 sq ft to 3,843 sq ft), eight duplex (6,512 sq ft to 7,039 sq ft) and two penthouses (11,984 sq ft), the residences can take up 42 floors.
    4. The residences can provide the ultimate in prestige and exclusivity for owners with a rooftop sky lounge, private dining pavilions and a swimming pool 330m above ground level.
    5. Four Seasons Place is going to be Malaysia's second tallest building after the Petronas Twin Towers.


    Budget 2014: Impact on the Property Market

    Highlights:
    1. Doubling the RPGT, from 15% for two years to a whopping 30% for a period of three years which will affect property 'flippers' the most.
    2. The Sales & Service Tax (SST), come 15th April 2015, will be replaced by the 6% GST.
    3. The Banning of DIBS will affect property flippers and developers the most.
    4. The threshold for foreign purchasers, as tabled in the 2014 budget, will be increased from RM500, 000 to RM1 million. However this increase will have a minimal effect as most purchases by foreigners go beyond the RM1 million mark.
    5. The government will be allocating RM578 million to build 223,000 affordable homes. RM82 million has also been allocated to refurbish 20 abandoned projects involving 8, 197 houses.


    Budget 2014 Shared

    Budget 2014 outlined five main thrusts:
    1. Invigorating Economic Activity
    2. Strengthening Fiscal Management
    3. Inculcating Excellence in Human Capital
    4. Intensifying Urban and Rural Development
    5. Ensuring Well-Being of the Rakyat
    Highlights:
    1. Civil Service: Pensioner will receive RM250 & half month bonus or minimum RM500 to be paid to civil servants early Jan 2014.
    2. Cash handouts: Government will allocate 4.6 billion ringgit which is expected to benefit 7.9 million recipients.
    3. Tax relief: Government proposes a special tax relief of 2,000 ringgit be given to tax payers with a monthly income up to 8,000 ringgit received in 2013.
    4. Goods & Sales Tax: To replace current Government Service Tax from 1 April 2015 with a rate of 6%, with exemption for basic food items, transportation services, highway tolls, water and first 200 units of electricity for domestic users per month & real estate transactions.
    5. Corporate tax: Corporate tax and income tax for small and medium enterprise will be reduced by 1%.
    6. Income Tax: Personal income tax rates be reduced by 1 to 3 percentage points for all tax payers, with chargeable income subject to the maximum rate will be increased from exceeding RM100,000 to exceeding RM400,000 & maximum tax rate will be reduced to 24%.
    7. Subsidies: To be gradually restructured, a portion of savings from restructuring to be distributed in the form of direct cash assistance with the other half to finance development projects.
    8. Improve budget management: Committed to reducing the fiscal deficit gradually& to ensure federal debt level will remain low and not exceed 55 percent of GDP.


    COVER STORY: Reviving Rawang

    Renaissance: Improved accessibility, increasing economic activities and population growth have raised the profile of Rawang, putting it on the radar of property investors
    Highlights:
    1. Ahyat Ishak, CEO and Founder of Greater Synergy Group mentions the KPJ (Kumpulan Perubatan (Johor) Sdn Bhd) is acquiring Rawang Specialist Hospital Sdn Bhd (RSHSB) for RM50.6 million and KPJ had done due diligence on Rawang before making such a huge investment that concluded the area has the potential and will face a population boom. Moreover businesses are setting up shop there and property developers are buying more land in Rawang which are definitely positive signs. Rawang is quickly becoming a cool name among home buyers, just like Subang or Puchong.
    2. See Kok Loong, Director of Metro Homes Sdn Bhd agrees that it is a good choice for buyers shopping around for landed homes especially terrace houses as land prices have reached a point that it is now quite difficult to build landed homes in popular suburban areas like Cheras or Petaling Jaya. Many industries are also moving out to the northern fringes of the Klang Valley such as Rawang. Another big boost to Rawang’s property market is the new MRT which is slated for completion in 2017 - Rawang would then be only 10-15km away from the new MRT station.
    3. Mah Sing Group Berhad’s Group Managing Director cum Group Chief Executive, Tan Sri Datuk Sri Leong Hoy Kum is similarly upbeat on Rawang’s property market and His positive outlook on Rawang is backed up by statistics. In NAPIC’s (National Property Information Centre) transaction statistics, Rawang, which is located in the district of Gombak, has the fourth highest value of transactions out of nine districts in the state of Selangor just right behind the districts of Petaling, Klang and Hulu Langat, and the year-on-year growth of 2-2 ½ storey terraces and 2-2 ½ storey semi-dees in Q3 FY2011 and Q3 FY2012 for the district of Gombak stood at 9.67 per cent and 11.14 per cent respectively, which outstripped Klang, which had a nearly flat growth rate.
    4. Leong adds that rail access by KTM Kommuter into Rawang’s main station and an extended line meant trains would arrive at more regular intervals, allowing easy access to other major hubs in the Klang Valley. The upgrading of rail access to Rawang has enhanced its reputation as a serious contender of affordable townships to the house-buying public. The arrival of Aeon-Jusco in Rawang has ignited the social (and retail) scene in Rawang and the commercial and retail property market in Rawang is set to appreciate as the residential markets reach maturity.
    5. The Guocoland MD, Tan Lee Koon says that Rawang caters to a diversified group of homebuyers and investors, ranging from the working class to professionals and businessmen from outside Rawang, including many living in PJ, Subang, Shah Alam and even Damansara. Rawang has emerged as one of the preferred choices for landed properties among many upgraders, moving from terraced to semi-dees or bungalows and many who had bought Guocoland properties (Ebony link homes, Amberley semi-dees) in the last two to three years are now enjoying capital appreciation of over 50 per cent.


    Reawakening ‘sleepy’ towns

    ALIVE!: It’s not all that hard to revive deserted or dying townships in Malaysia as proven by several successful examples
    Highlights:
    1. Rawang has turned itself around from being a virtual ghost town to being one of the brightest stars in the local property market.
    2. Suburban areas such as Petaling Jaya and Cheras, have land prices reached a point where it is quite difficult to build mass landed homes and that is one of the main reasons for the revitalisation of previously isolated developments such as Rawang and Semenyih.
    3. Rawang is also not far from Kuala Lumpur, it is only around 30km to KLCC, new highways such as Guthrie Corridor and North South Highway have improved Rawang’s connectivity and spurred its growth.


    Outlook positive, time to act


    OPTIMISTIC: After GE, the outlook for the local property market remains upbeat, say several industry experts
    Highlights:
    1. According to See Kok Loong, Director of Metro Homes, more property projects would be launched now to catch up on the slow sales and launch delays partly due to election uncertainty and he personally thinks that the market should be good and the outlook is positive because the mega projects would still go on.
    2. Dr Daniele Gambero, CEO and co-founder of strategic marketing consultancy firm REI Group of Companies says that continuity is key and the government should develop smart partnerships with private developers to satisfy the needs of the poor for the development below RM300,000.
    3. Gambero adds that Malaysia will need to speed up its infrastructure developments as this will also have a direct impact on housing issues and it doesn’t make sense to build affordable housing in the middle of nowhere without any essential infrastructure like roads and transportation.
    4. LL Koong, Managing Director of Reanda LLKG International Chartered Accountants says that he is optimistic about the future of the property market post GE13 as it is closely related to the overall economy, which has been very stable.
    5. Koong also admits that the proposed Tun Razak Exchange(TRX) would be good for the country because most other major capitals in the region have international financial centres. TRX is estimated to attract 250 international companies and create 40,000 jobs. Apart from the jobs creation, another vital aspect of such a financial centre would be to facilitate knowledge transfer and upgrade Malaysian skills and mindsets. We urgently need to improve the standards of services in Malaysia instead of too reliant on a manufacturing base that is highly dependent on cheap labour.
    6. Koong also says HSR (High Speed Rail) from KL to Singapore (with estimated traveling time between the 2 cities is about 90 minutes) is very timely and would stimulate economic growth for both countries. There will be more bilateral businesses as people from KL could travel to the Iskandar region in Johor and Singapore without much hassle.


    FOCUS: RM5,000 per sq ft for a KLCC penthouse?

    SKYROCKETING PRICES: Prices of high-end condos in the KLCC area continues to scale new heights. Could it breach the RM5,000 per sq ft mark?
    Highlights:
    1. The high-end luxury condos or super penthouses has continued to defy market expectations with prices hitting the roof despite the slow down in property market with news last week that two units of 11,900 sq ft penthouses at Four Seasons Place in the KLCC (Kuala Lumpur City Centre) area were being booked at a new record price of RM37 million per unit or RM3,026 per sq ft surpassing the sale of Binjai On The Park at RM2,900 per sq ft.
    2. According to Gavin Tee, Founder and President of SwhengTee International Real Estate Investors Club, Greater KL is set to become an international property hotspot by 2015 and prices of luxury condos in Kuala Lumpur might hit RM5,000 per sq ft by 2016 but it could reach that price level much earlier, or even go beyond that if the property market really takes off.
    3. Tee remains optimistic of the coming general election and its potential impact on the property market by stating despite the slow down in property market recently, prices of exclusive projects such as the Four Seasons Place are still picking up and infrastructural projects such as the MRT (Mass Rapid Transit) are already being executed while blueprints for big projects such as the TRX (Tun Razak Exchange) are in the pipeline. Many major foreign investors are waiting to come in by the end of the year while waiting for the new government to settle in with their new teams, cabinets and policies.
    4. Tee explains the rental rates of some high-end serviced apartments or hotels in major tourist attractions like Pangkor Island or Cameron Highlands have increased a lot in the past few years and are continuing to rise, rental could go up to RM1,000 per night, or even higher during peak season which offers 6 per cent rental yield.
    5. See Kok Loong, Director of Metro Homes Sdn Bhd agrees with some of Tee’s assessment of the high-end condominium market, adds that inflation and the proposed High-Speed Rail (HSR) link between Kuala Lumpur and Singapore are also factors driving the price of these luxury condos.
    6. See says that prices of luxury condos, as shown in last week’s Four Seasons Place transaction, would highly likely continue to rise although he is less certain than Tee as to whether it might reach the RM5,000 per sq ft mark but the price would probably hover around RM3,000 to RM4,000 per sq ft, mainly due to the rising construction costs and shortage of land at prime locations.
    7. See does not see the bubble bursting on the prices of these luxury condos any time soon because they are premium, branded products and are usually sold to high net-worth clients with long-term holding power and we should be attracting more investors and property buyers from places like Hong Kong and Singapore.


    The ever-rising house prices

    Highlights:
    1. Malaysia is experiencing one of the lowest interest-rate regime ever, and the status quo is expected to remain until there is more clarity on the national and international front.
    2. As a result of a slow global economy, Bank Negara said last November that it would maintain the overnight policy rate (OPR) at 3% to sustain the resilient domestic demand.
    3. While cost of funding is perceived to be low, house prices remain unaffordably and high with each subsequent developer's launch.
    4. The fact that affordable housing is now priced from RM400,000 onwards is an indication that something needs to be done soon.
    5. The days when a first-time house buyer is able to buy a unit below RM200,000 in the Klang Valley is fast diminishing because developers are building for those who can afford to pay.
    6. Malaysia household income debt ratio is relatively high with 55% of the households are burdened with a third of their household income going towards the payment of their property and car loans.
    7. The number of potential buyers who walked away has doubled the past one year because they are unable to get the amount of loan they need to go ahead with the purchase.
    8. In January, 2012, banks began processing loan applications based on net income after income tax, Socso and other loan commitments.
    9. This has resulted in buyers jointly making a purchase; sometimes with a younger person in order to leverage on the younger person's earning capabilities.


    The need for balance

    Highlights:
    1. When you buy from the developer, you are given incentives in the form of interest bearing schemes, payment of stamp duty, guaranteed rentals and other things.
    2. This has resulted in the hike in sales in primary market from 20% 10 years ago towards the 30% mark.
    3. When every or nearly every developer sell with these incentives, there is a need for monitoring because these can unbalance the market and could have long-term effects.
    4. These incentives also distort pricing because you will never know what is the real selling price as not many know how to deduct all these to get to the real price.
    5. Loans are also given based on the wrong price and this affects the banking sector and loan security is affected.
    6. It is not a reasonable thing to ask for prices to go back to before the hike but pricing must adjust to household income and not the other way around.


    Income Tax or Real Property Gains Tax?

    BADGES OF TRADE: Due to the huge gap in tax rates, it’s worth knowing whether the sale of your property falls under a trading activity subject to income tax or is merely a disposal of an investment property
    So you’ve just sold your third property for the year, enjoying decent profits and your lawyers helped you to file the disposal of the property with the Inland Revenue Board (IRB) as Real Property Gains Tax (“RPGT”). You paid the tax at a mere 5 per cent RPGT rate, happy with yourself for the (still) sizable bundle of cash that you’ve made. Case closed. WRONG.
    Unfortunately, unknown to many, there are two laws that govern the taxation of property transactions in Malaysia. They are:
    • Income Tax Act 1967 (“ITA”); and
    • Real Property Gains Tax Act 1976 (“RPGTA”)
    In practice, the IRB first considers if the gain from the disposal of a property is subject to Income Tax. Under the ITA, the onus is on the taxpayer to show, by producing evidence when required to do so, that the gain was not income and instead capital in nature, therefore only subject to RPGT.
    The gain will be viewed as income if the transaction is a trade transaction (e.g. holding of properties as stocks for the intention of resale) or an adventure or concern in the nature of trade. If the gain is viewed as income by the IRB, then Income Tax will apply and if you’re a company, you will be taxed at corporate rates of 20 per cent or 25 per cent, or for individuals, at the individual’s income tax rate, graduating from 0% to 26%. Ouch.
    Confused?
    Taken from aboutpropertyinvestment.com, read more on Income Tax or Real Property Gains Tax?
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    Rogue banks prompted new housing loan templates, suggests HBA

    “There have been a lot of instances of rogue foreign bankers with hidden clauses victimising local house buyers,” said National Housebuyers’ Association (HBA) secretary-general Chang Kim Loong when asked to comment on new standardised documents adopted by banks for housing loan agreements with effect from Jan 1.
    “That must have been what prompted the government to standardise loan agreements. I’ve heard cases of where certain banks very aggressively charge a minimum penalty of, say, RM50, if you’ve defaulted just one day over your due payment date, instead of a pro-rata charge. There are also cases where some banks are very quick in terminating accounts and levying legal fees when the purchaser is late by just one or two months.”


    Buying Malaysian Properties: A Hassle-Free Process

    For foreigners intending to buy a home, Malaysia remains one of the most friendly and hassle-free nations in the region when it comes to acquiring properties
    Highlights:
    1. Foreigners can buy any type of properties, both residential and commercial in own names, or under a company which is priced above RM500,000. (Budget 2013 announced the price will be revised to RM1,000,000).
    2. The state authority’s consent could be obtained before a property can be transferred and this usually takes six weeks to six months (in Kuala Lumpur, this typically takes one to two months).
    3. If the foreign buyer is not residing in Malaysia, he or she can sign the sale and purchase agreement at the Malaysian High Commission in their country of residence.
    4. Malaysian banks and foreign banks in Malaysia will typically finance up to 70% or 80% of the property price.
    Summary:
    What makes Malaysia a great place for foreigners to set up their second home or find a property to invest:
    1. Direct ownership
    2. Able to own freehold property
    3. Established commonwealth legal system
    4. Constitutional property ownership right
    5. Established banking system to fund foreign acquisition
    6. Workable purchase procedures
    7. Statutory protection for homebuyer


    Malaysia is 9th hottest property market in the world

    Highlights:
    1. Malaysia's five-year price growth was recorded to be 28.5 percent and is anticipated to be propelled further should the government follow through with recently announced deliberations to increase the property price threshold for foreign investors.
    2. Prime property in Kuala Lumpur (KL) marked approximately US$500 (RM1,515) psf last year while the total supply of apartments in the capital by the end Q4-2011 was 29,364.
    3. Malaysia's economic stability amidst financial crises in Europe and the United States attracts property investors across Asia-Pacific seeking to diversify their portfolios.


    Property market in ‘autumn phase’

    Highlights:
    1. The recent Malaysian property upturn is also due to the entry of the new, young working buyers who were born from 1979-1985
    2. Property yields give a good indication of the properties’ real values
    3. The construction cost of newer property increase in accord with the higher land acquisition, building materials and labour cost and the developer has to increase the price to stay profitable.
    4. Older properties built over 10 years (with cheaper land and construction costs) give better rental yield and potential capital gain as they are selling substantially lower than newer property, investors should consider undervalued older properties nearby overvalued new property developments.


    The Klang Valley Integrated Rail System

    Highlights:
    1. Mass Rail Transit (MRT) aims to address poorly integrated network
    2. The 3-line system spanning 150km is supplementing the existing rail network
    3. MRT integrates the city’s current rapid transit system and also service high-density areas in the city that previously had no rail transport access
    4. The real estate market be greatly influenced by the MRT project
    5. The properties close to the intended sites of the MRT stations will increase in the value


    How to be debt free?

    Highlights:
    1. Evaluate your financial position by tabling out all your loans and interest rates
    2. Work towards cancelling debts with the highest interest rates
    3. Cultivate good spending habit - use debit card instead of credit card
    4. Avoid buying on impulse
    5. Never agree to act as a guarantor
    "If you do not have a financial plan will eventually be heading for disaster."
    “If you have no plan, than you are directionless. If you don't have a plan of your own, consult an expert, such as a financial planner.”


    Cooling measures are timely but could be more targeted

    Highlights:
    1. RPGT - Real Property Gain Tax is targeted at speculators
    2. 70% loan to value cap for third property
    3. Mortgage loan eligibility based on net income


    4 key factors that drive the real estate market

    Highlights:
    1. Demographics - data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth
    2. Interest rates - a major impact on the real estate markets
    3. The economy - the overall health of the economy, measured by economic indicators such as the GDP, employment data, manufacturing activity, the prices of goods, etc.
    4. Government policies / subsidies - legislation such as tax credits, deductions and subsidies, is also another factor that can have a sizable impact on property demand and prices.


    Home or hou$e

    The importance of research is rising as more Malaysians look at property as an investment alternative
    This article is targeting property investors.
    Highlights:
    1. The property market is highly volatile and thrives on speculation and it is important to know when and where to invest the money.
    2. Most Malaysians invest their money in property based on speculation which is most likely not having a positive cash flow.
    3. Investment in oneself is the first step to property investment
    Taken from The Star Online, read more on Home or hou$e
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