Tips on investing overseas

ONE can consider investing in overseas properties instead of relying on mutual funds or fixed deposits.

“In Malaysia, inflation is high and rental yield is low. Affordability is also at an all-time low with the ringgit falling and oversupply of local properties.

“Overseas investment of properties such as in Australia and UK can be a better choice,” said MIG Network Sdn Bhd chief executive officer Datuk Brian Wee in his talk ‘Is Overseas Property a Better Choice to Invest In With Falling Ringgit and Oversupply of Local Property?’ at the recent Star Property Fair 2015.

“Make sure you get positive rental yield to at least cover repayment.

“Do not settle for anything lower than 6%,” he said.

Feng shui master David Koh from the Malaysian Institute of Geomancy Sciences, in his talk ‘External Environology (feng shui)’, said the thinking brain is influenced by an unseen vibrating energy in the space where one works and lives, which in turn influences the thinking brain to think and decide.

“The clue is to work on how to get the right energy to suit oneself through environology,” he said.

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Strong demand for Acacia homes at Serene Heights Bangi

Prospective purchasers inspecting the overall Serene Heights Bangi township development’s scale model

UEM Sunrise Berhad  unveiled 274 double-storey terrace homes for the Serene Heights Bangi development. This marks the developer’s second venture in the state of Selangor in addition to its joint venture project in Bukit Jelutong, Shah Alam. The double-storey terrace homes worth RM180.7 million in GDV received a highly encouraging response during its sales launch on June 27 and 28 at the Serene Heights Bangi Sales Gallery.

The double-storey terrace homes introduced during the launch will be situated in two individual precincts; where a total of 121 units will be in Acaciawhile the remaining 153 units will be in Begonia.

Acacia homes’ lot sizes are 22’ x 70’ each, and priced from RM550,800 for intermediate units (2,143 sq ft), from RM645,800 for end lot units (2,221 sq ft) and from RM919,800 for corner lot units (2,837 sq ft). All units were all snapped up during the two-day launch.

There are still units available in the Begonia precinct. Purchasers have an option of 22’ x 70’ lot size, priced from RM636,800 onwards for intermediate units (2,204 sq ft) and from RM739,800 onwards for end/corner lot units (1,803 sq ft – 2,821 sq ft); or 22’x75’ lots that are priced from RM677,800 onwards for intermediate units (2,347 sq ft) and from RM781,800 onwards for end/corner lot units (2,380 sq ft – 2,756 sq ft).

There are still units available in the Begonia precinct. Prices start from RM636,800.

Both Acacia and Begonia precincts are part of the overall 448-acre Serene Heights Bangi development with a GDV of RM3.2 billion and is expected to take approximately 10 years to complete. Serene Heights Bangi is nature-inspired environment and it is located 38km south of Kuala Lumpur.

The township can be accessed via three highways, from North-South Highway (PLUS) by exiting the Bangi or Putra Mahkota interchanges; Kajang-Seremban Highway (LEKAS) at Semenyih interchange; or via the Silk Highway at Kajang interchange via Jalan Reko

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Garment maker Yong banks on property, plans projects worth RM7bil

Ng: ‘We are confident of making profits in the current financial year ending June 30, 2016 after being in the red for many years.’

PETALING JAYA: Garment manufacturer Yong Tai Bhd is growing its presence in the property development market despite the current soft market.

It has entered into memorandum of understandings (MoUs) with five vendors to launch property projects with a combined gross development value (GDV) of RM7bil over the next eight years. The proposed projects are in Malacca, the Klang Valley and Johor.

Yong Tai, which ventured into property development last year, is banking on property development to turn around its loss-making garment business.

The group, which has a market capitalisation of RM74.6mil, intended to acquire more land.

“There are still some documentations and due diligence that must be done and this will buy us some time. We believe the market will rebound,” executive director Ng Jet Heong told StarBiz in an e-mail.

Yong Tai has been making losses since 2008. Its loss-making garment subsidiaries Golden Vertex Sdn Bhd and The Image Outlet Sdn Bhd have been affected by stiff competition from China and Vietnam.

On June 30, Yong Tai announced that it was selling its interest in the two subsidiaries to Extreme Riches Sdn Bhd for RM2. It is expected to record a paper gain of RM6.77mil from the sale.

“We are confident of making profits in the current financial year ending June 30, 2016 after being in the red for many years,” said Ng, adding that it could now focus on  property development.

Asked if the company intended to shut down its garment business, Ng said it was reducing its operating and administrative costs in the textile and garment businesses since its other retail subsidiaries were still making reasonable profits.

Yong Tai had signed a deal with Malacca-based PTS Properties Sdn Bhd to build a 29-storey luxury condominium hotel known as The Pines in that state last year.

The group is also the project manager of the mixed development project dubbed The Apple and Courtyard by Marriott, a 32-storey service apartment and 16-storey four-star hotel in Malacca. For the nine months ended March 31, the company’s net profit stood at RM1.1mil compared with a loss of RM1.9mil a year ago. Revenue for the period nearly double to RM86mil.

Yong Tai had signed agreements with PTS Impression Sdn Bhd, Yuten Development Sdn Bhd, Terrawest Resources Sdn Bhd, Land and Build Sdn Bhd and Admiral City.

Of the potential projects, the company said the Malacca development jobs could contribute GDV worth RM6.3bil, while those in the Klang Valley and Johor Baru may contribute RM341mil and RM363mil respectively.

Ng said the five potential projects with a landbank size of over 110 acres were expected to contribute to Yong Tai’s bottom-line in the long run.

The group will generate recurring income once the The Apple project and “Impression Melaka”, which will host cultural shows are ready in 2017.

The funding for the proposed acquisitions will come from RM63.32mil raised through a rights issue and special issue of shares in June.

Of the RM63.32mil, RM35mil is proposed to be pumped in to partially finance its mixed development project, The Apple and Courtyard by Marriott in Malacca and RM16.32mil to be set aside for future property projects.

Ng said the group had plans to grow its property development business, aiming for 80:20 contribution to its bottom line compared with 60:40 currently. Yong Tai’s share price was at its highest on July 31, at 78 sen.

“The property market could be quiet for some time now. Some developers have even delayed their property launches due to the soft market,” a property valuer said, adding that the majority have adopted the “wait-and-see” approach.

Meanwhile, a report by rating agency Moody’s Investors Service said it expected demand for residential property in Malaysia to slow further this year, crimped by the property cooling measures imposed in 2013 and the weaker sentiment.

It said developers focused on residential projects in Johor, Kuala Lumpur, Selangor and Penang would face challenges in achieving their sales targets. Moody’s pointed out that despite the banking system being well positioned to deal with a soft landing in property prices, delinquencies on mortgages and construction-related loans were likely to increase, albeit from low levels.

“Malaysian banks have robust capital buffers and healthy pre-provision profitability. That said, we consider mortgages with high loan-to-value ratios and loans to over leveraged households and developers to be at risk of payment slippage,” said Moody’s.

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Swanky new 20-storey HQ

Menara Naza TTD I (with white canopies) is a 20-storey office tower with a gross floor area of 306,000 sq ft and 250 parking bays. Facilities include a gym, swimming pool and cafe.

Naza TTDI Group’s relocation to its new head office building Menara Naza TTDI in Section 13, Shah Alam marks the company’s progress and expansion over the past 42 years.

Naza TTDI deputy executive chairman and group managing director SM Faliq SM Nasimuddin said this at the ceremony to officiate the new office building.

“We started by developing townships and eventually progressed to larger-scale developments such as KL Metropolis, Platinum Park and the recent TTDI Gateway in Shah Alam.”

The group has relocated from its previous office premises, also in Section 13, Shah Alam where it operated for more than 20 years.

Azmin performing the launch by placing his palm on the launch plate. Looking on is SM Faliq. Photos: IZZRAFIQ ALIAS

Selangor Mentri Besar Azmin Ali, who attended the ceremony, said the Selangor government was pro-business and encouraged smart partnerships with the state government.

“I urge Naza TTDI to take on the role and responsibility to fund training programmes to equip youths with technical and professional skills so that Selangor can have highly-skilled manpower to fulfil the needs of the technology industry,” he said.

The company expects to build a 204-unit low-cost apartment early September and its second phase of affordable houses in Kajang during the first quarter of next year as part of the Rumah Selangorku affordable housing programme.

Naza TTDI is currently developing three key projects in Selangor, namely the 81.17ha township of TTDI Alam Impian, the 45.7ha township of TTDI Grove Kajang and the 15.38ha RM2.5bil TTDI Gateway, its new business lifestyle hub in Shah Alam.

Menara Naza TTDI is a 20-storey office tower with a gross floor area of 306,000 sq ft and 250 parking bays.

Facilities include a gym, swimming pool and cafe.

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Reigning over uneven terrain

A unique three-storey bungalow sits at 6 Jalan Girdle, and its design was masterfully constructed to work with nature.

The shape and form of the building adjust and conform to the natural contours of the land, which descends between 8m and 10m from the road’s level.

EXCLUSIVE addresses are prized assets and the Boustead Group has one that is located in an affluent part of Kuala Lumpur. The property is simply known as 6 Jalan Girdle, but there’s certainly nothing simple or typical about how the uneven landscape is now host to a structure that unites creativity with practicality.

Choo Gim Wah (CGW) Architect was tasked to redevelop this piece of land to feature a bungalow that reflects the needs of a contemporary household. The land descends between 8m (26.24ft) and 10m (32.80ft) from the road’s level. Immediately, this posed as a challenge, and as in the line that is often uttered by Barney Stinson (from the TV series How I Met Your Mother), it was a “challenge accepted” by the architect.

The elegance of the dining area and dry kitchen is created through a clean-cut linear ‘Manhattan’ style counter top and a generous ceiling height of approximately 5m (16ft).

The design process began with the idea of having a building that engages with its existing terrain, slope and level. CGW saw this as the perfect platform to showcase their expertise in spatial programming.

Choo Gim Wah explains, “6 Jalan Girdle is a structure that emerges from the land. Its intention is not to compete with the land, but to complement it. With that in mind, the main challenge during the design stages naturally became the shape and slope of the site. The goal was to harmoniously integrate this three-storey building into the terrain, complementing its beautiful and natural surroundings.”

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Thus, the bungalow was built to sit snugly within the “basin” of the terrain. The ground floor is the “public” space, with living and dining areas for all to congregate, while “private” spaces such as the family room and most bedrooms are located on the level beneath it.

The lowest floor features the infinity pool, pool deck, terrace and two very private guest rooms. The large covered terrace opens up to the pool deck and infinity pool, with no barriers separating these areas. CGW Architect’s decorative scheme embraces tropical greens, while composing an arrangement that blurs the boundary between interior and exterior. It is truly a harmonious setting that is both inspiring and restful.

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  One of the private bedrooms. There are 6 bedrooms in total.

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6 Jalan Girdle • Three-storey bungalow – ground floor, lower ground floor and second lower ground floor • Gross floor area (GFA): 8,000 sq ft • 6 bedrooms, 1 maid’s room and 1 guardhouse.

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SOHOs and serviced apartments – Commercial or residential titles?

Are SOHOs and serviced apartments under commercial or residential titles? Can residential properties be used for commercial purposes? Christopher Chan finds out.

SOHOs and serviced apartments built on commercial title – what are they actually?

Under the National Land Code 1965 (Act 56), land is categorised into one of the following uses: “Agriculture”, “Building”, or “Industrial”. Under the “Building” category, there is an express condition in the title (known as “Syarat Nyata” in Bahasa Malaysia) that states whether the land is to be used for residential or commercial use.

As an example, you can see the title below of a land in the District of Gombak with a “Building” category for residential use. This is also a Malay Reserve Land.

Let’s have a look at the express conditions in the master title for Scott Garden’s SOHOs in Old Klang Road and Marc Residence (Serviced Apartments) in KLCC.

Master title with ‘Syarat Nyata’ for Marc Residence (Serviced Apartments) in KLCC.

The express condition in the master title for Scott Garden’s SOHOs states that “Tanah ini hendaklah digunakan untuk bangunan perdagangan bagi tujuan kedai pejabat dan pangsapuri servis sahaja“. For Marc Residence, it is stated as “Tanah ini hendaklah digunakan untuk bangunan perdagangan bertingkat bagi tujuan pangsapuri servis sahaja“.

The individual strata titles for units of both of these developments have yet to be issued and that is why we are looking at the master titles at the moment.

Therefore, we refer to these developments as being on a commercial title as it is stated as “untuk bangunan perdagangan”. Therefore, on the same reasoning, the quit rent, assessment and utilities are usually charged based on commercial rate by the authorities.

For a stratified development, the master title (encompassing one piece of large title for the whole development to be developed by the developer) is deemed as the “Parent title” while the individual strata title (issued to the individual purchasers) can be deemed as the “children title”. Just like a human being where we inherit the DNA structure from our parents, the conditions in the master title would naturally be the same conditions as stated in the individual strata titles.

The Housing Development (Control and Licensing Act) Act 1966 (Act 118) and Regulations was amended in 2007 to widen the definition of “housing accommodation” to include SOHOs and other similar developments. The new definition is as follows: “Housing Accommodation” is defined under Part 1 sub-section 3 of Act 118 on “Interpretation” to include any building, tenement or messuage which is wholly or principally constructed, adapted or intended for human inhabitation or partly for human inhabitation and partly for business premises and such type of accommodation as may be prescribed by the Minister from time to time to be a housing accommodation pursuant to section 3A.

Under the above definition, SOHOs and the likes, would fall under the definition of a housing accommodation and therefore they are subject to Act 118.

Can residential properties be used for commercial purposes?It is interesting to note that the Petaling Jaya City Council (MBPJ) has, for some time now, allowed residential homes to be turned into commercial use as provided for in the Petaling Jaya Local Plans 1 & 2.

I paid a visit to MBPJ on June 30 to seek clarification on this matter. Interestingly, my findings are as follows:

> The MBPJ allows certain residential areas to be turned into “limited commercial use” as provided for in their local plans. This is allowed for certain areas in Petaling Jaya such as Jalan SS2/24 (partial), Jalan Universiti (partial), Jalan Utara (partial), Jalan Kemajuan, Jalan Gasing and Jalan Penchala (partial), among others.

> Limited commercial use means that the council allows for certain types of commercial activities such as art galleries, showrooms (excluding cars), agencies (including tourism, advertising and real estate agencies) and Care Homes for the elderly, among others. One may obtain a booklet from the council titled, “Garis Panduan Bagi Membuat Perubahan Matan Perdagangan Dan Perniagaan Di Majlis Bandaraya Petaling Jaya” dated July 14, 2007 for more details on this.

It is interesting to note that quite a number of these properties have not been formally converted to commercial use as such. They have merely been given an approval by the council to be used for the above mentioned purposes, subject to an annual payment of RM2,000 to the council. One would need to continue to renew this on a yearly basis. The title of these properties remains residential as stated in the express condition.

Beginning next year, MBPJ will cease to allow the yearly annual payment of RM2,000. This means that the owners should then proceed to convert their land from residential into commercial use.

The owner would have to apply under section 124 – “Variation of Conditions, Restrictions & Categories” of the National Land Code 1965 for approval. For this, one would need to apply at the Petaling Land and District Office.

>> Christopher Chan is a registered estate agent and an associate director with Hartamas Real Estate (Malaysia) Sdn Bhd.

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4 basic points first-time property investors should know

StarProperty.my and Propwall.my held a forum for first-time home buyers at Tropicana Metropark Property Gallery recently. One of the speakers was Alexander Woo, and he presented “Important must-know basics of property investment”.

Woo speaking on the topic ‘Important mustknow basics of property investment’ at last Saturday’s forum.

Buying a property is not as simple or as easy as ABC’s. In order to be successful in property investment, you should do plenty of research to get substantial amount of information and also find a sensible investment strategy to adopt.

Woo touched on four basic points that first-time investors should know to understand the way around property investment.

1. Why invest in real estate?Investing in real estate is beneficial compared to many other investments because it is a way to hedge against inflation. Property investment is considered as one of the best ways to grow wealth and leverage to purchase more property.

“If you compare between buying, holding and selling your real estate, you make money when you hold the real estate.

“This can happen in two ways, through capital appreciation and rental income. Capital appreciation ensure increase in property value over time, whereas monthly rental can help with the mortgage and side income,” Woo explained.

2. Get updates on current issuesSome might not be aware of this, but certain current issues that are happening in the country can affect a property’s market value. Depending on the issue, it can either increase or decrease the property’s value.

According to Woo, the current issues that property investors should be on the lookout for are political stability, real estate bubble (also known as property bubble or housing bubble), depreciation of the ringgit (RM), bank rules on mortgage loan, government curbs and also the implementation of Goods and Services Tax (GST).

Another thing to note are the features that should be considered before purchasing a property, such as affordability, infrastructure, distance, security, maturity, as well as the return on investment (ROI) and future growth.

3. Be aware of pitfalls as an investorWitnessing a high return on property investment could make one eager to buy without careful planning, research and preparation.

Woo shared five pitfalls and mistakes that some investors have made which are:

• blindly following trends just because you see friends and relative buying property
• not paying attention to the absolute price versus psf value
• imposing own value on property
• buying during bad times or without a good deal
• buying even though the property is not within budget

4. Think like a savvy investorInvesting in property is not just about money-making, but also about having the right mentality to make savvy investment decisions.

Bear in mind that property investment is not a decision to be made on impulse. When it comes to making profit like savvy investors, make sure that you are familiar with the “Triple F” concept: Finder, Financer and Funder. Having all these three could increase the probability of you securing a good property deal.

One of the most important things in property investment is to know the necessities in order to build a solid investment strategy. Woo shared that even after three unsuccessful attempts at purchasing property, he never gave up. He continued with his investment plan and managed to purchase his very first property at age 20.

“It is important to learn and understand the game of investing in property, and to maintain objectivity. You also have to make sure that the property that you buy is always below market value,” Woo said.

About Alexander WooAlexander Woo is currently the chief executive officer of VIVO Capital Sdn Bhd, director of IQI risk management Sdn Bhd and vice president of financial education for IQI holdings.

He majored in Psychology, but has always had a keen interest in business. He started doing property investment as a part-time job when he realised that he was making more profit than earning a monthly salary.

Inspired by his late father, who has a successful business at a young age, Woo tendered his resignation at the age of 27 to make property investment as a full-time job.

He said that he is lucky to have an aunt who is a Real Estate Negotiator because she has been guiding and helping him in making the right investment decisions.

Property wise, he prefers to invest in high-rise developments because it usually cost lower than landed property, and also because it makes quite good rental income.

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