Wednesday, January 27, 2010

Termites Eating My Investments

2 months after moving into the Pangsapuri Subang Jaya ground floor unit, my tenant informed me that the brand new wood skirting in 2 bedrooms and half a brand new wardrobe has been destroyed by termites along with a box full of books. I rushed over to see and nothing could be more heart breaking to see the destruction.
When I bought this unit, I noticed from the floor markings that the previous owner had done termites treatment before. My mistake is, I should have followed up but it's not too late yet as the damage is not that big financially but it's still heart breaking to see brand new furniture and fittings being destroyed. It sort of left a scar in the property.
I immediately went off to look for pest control companies. They seem to all recommend a baiting system. The termites will eat the bait and take the bait home for their colony. When the queen takes the bait, she will die and the entire colony will end. This method is different from what pest control companies used previously which is drilling some insecticide into the floor at regular spacings. The previous method of course is not very effective and not much cheaper at that because termites can still find gaps in the floor or they can even climb in via the ceiling or walls. The drilling method is also not possible for units higher up. I've heard of apartments on the 23rd or 30th floor being attacked by termites who climb up via the building riser. The riser is a tunnel connecting the floors vertically for cables or pipes to run. Sometimes the pipes leak, making the riser wet and most conducive for termites.
Anyway, all the pest control companies recommended the baiting system, which I am convinced is the best method. However, it seems unfair that I will be solely paying for them to destroy termites colonies which also affect my neighbours. So, in effect they are getting a free ride from me. The pest control companies quotes came in a range from RM1000 to RM3000. This comes with a year's warranty. They will visit my property bi-monthly to check and they have this tool which can scan through the walls and floors for termites for early detection.
The baiting system is actually cheap to implement. In fact, I found on the internet that you can buy a box of this bait and do it yourself - for less than RM50. The thousands that we pay is for the regular visits and early detection. I am all convinced except that we have to pay in advanced. This means, if for some reason the company fail to turn up, you can't really do much but the spend the tiring effort of chasing them. In fact, after the termites are gone, one might even forget. The company may also wrap up, move shop and set up a new one somewhere else.
So, in the end, I went to my community forum to find out what everyone else been doing. I was recommended this contractor who also does the baiting system but only charging RM200. There is a 1 year warranty but it's up to me to notify him. Well, it's a risk I am willing to take this risk. Meanwhile I have notified all my tenants to look out for termites. Maybe when we notice, the damage is already done and perhaps thousands of Ringgit worth of furniture would be destroyed. But I still am willing to take the risk compared with potential blood vomitting effort to chase suppliers.
Within a week of setting up the bait, the termites are gone. The contents of the bait box totally gone which means they have taken the bait. Earlier there was some panic as there were suddenly termites running everywhere. We thought more termites had turned up but they were actually those from the same colony went berserk after taking the poisonous bait.

Saturday, January 23, 2010

Property Auction

I've always wondered about property auctions. We always see these signboards everywhere annoucing auction properties, the reserve prices and agents' contacts. Sometimes the prices seem very attractive but I never really took them seriously. Once I saw a signboard announcing a 2 bedroom unit in Mutiara Villa going to be auctioned for RM240k. I called the agent and he was really rude. He said if I am not going to bid RM300k, I should not even bother. So, that incident has given me a very bad impression of auction agents. So, I never took any auction announcements seriously enough to do anything until today.
So today there was an auction involving a MyPlace Apartment ground floor unit in Subang Jaya SS15/8 with a reserve price of RM220k. This apartment is located directly opposite the Inti College Subang Jaya campus and beside Asia Cafe. That really got me off my arse...
I learnt about this auction from the classifieds. 1st of all, it is unusual to find a seller in either MyPlace Apartment. This apartment is wildly popular with students. 2ndly, the reserve price is so low, the last transacted price was RM295k. And of course, being wildly popular with tenants and so easy to sell, one might wonder how it ended up in auction in the 1st place. So, we are going to learn something today...
The whole process started from calling the auction agent, Michelle. She faxed me a form to register my name and details and did a very good job to remind me about the event. 2 days before today, she sent me an sms to remind me to prepare a bank draft in the name of "EON Bank Bhd" for 10% of the reserve price. Good thing she did because the auction is on a Saturday, registration at 10am. So, the thought of getting a gold mine in a cheap sale really got me off to queue in a bank for a bankers cheque. In this age of internet banking, I wonder why is it necessary to even go to banks anymore.
Michelle is really quite professional and she even sms me last night to remind me to turn up and this morning, another sms to make sure I arrive before the registration closes at 10am. So, I arrived at 9.45am to see this huge crowd at the auction center. There were about 100 people and there was free breakfast. Michelle found me and she took my I.C. and bank draft for the registration. Then, she came back with a paddle with my number and piece of paper that confirms my registration and the details of the property I wish to bid for.
At 10.30a.m., we were ushered into the auction room. It was packed and many people had to stand. The auctioner came forward and started to brief us the procedures and also the terms and conditions of purchasing an auction property. The gist is, the property will come as it is with any encumberances and liabilities with the exception of the maintenance fees and council rates which the Auction Bank will undertake up to the date of the auction.
If there are unsettled sewage, water or electricity bills, the buyer have to settle them.
If you are successful in the auction, the bank draft would be accepted as the deposit and then you have 4 months to go off and get the balance.
If you fail to come back with the balance within that time OR if for some wonderful reason the transaction fails due to the property being not able to transfer to your name, you lose that deposit.
Lots of Ifs, but what if?
One has to be reminded for example that in the case of low cost flats or bumi-lots, one has to be qualified to purchase either. So, if one bids for these properties and later found that for some reason, one is not a bumiputera... one loses the deposit... so beware and make sure any searches or checks are done before bidding.
Then, the auction took off.... there were about a hundred properties put up for auction today but less than half actually attracted bidders. Most properties only had 2 to 3 bidders. In cases only 1 bidder registered, the property was sold at the reserve price. Then at almost the end of the auction came 2 hot properties, a Sunway Court 3 bedroom unit in Sunway PJS7 (which is very close to the new Taylors College Lakeside campus) and the MyPlace Apartment which I came for.
The Sunway Court auction attracted 32 bidders with a reserve price of RM130k. The bidding started with someone at the back shouting "RM170k"! And then subsequently, the bid raised by RM2k at every raise of hand. Then, the same guy shouted "RM190k" and it went on again until it passed RM200k, he gave up. The bid closed at RM202k.
Then came the MyPlace Apartment unit. There were 42 registered bidders. The Auctioner announced that each raise of hand will be a jump of RM5k starting from RM220k, the reserve price. The bid went off very fast..and in less than 2 minutes, we already passed RM280k. I gave up at this point because I thought firstly the bank valuation will be around this value and secondly, it would not have made a good investment for anything higher... considering the unit is old and the costs of renovations, not yet include all the liabilities. Finally, the bid closed at RM335k and I am very sorry for the person who won it.
But if everyone is sensible, where would it have stopped? I am sure more than 1 person would agree to pay RM280k. In a property transaction, this would mean the 1st person to lay down the deposit. But in an auction, the price keeps going up until everyone else gives up. I seem to observe that the size of the crowd did influence some emotions. Initially I told myself I would stop at RM270k but in the frenzy, I raised my paddle at RM280k. I was pretty sure the last bid was RM305k but since everything went so fast, I didn't realize the paddles went up 6 more times and closed at RM335k... I am sure the guy who won it probably woke up after that with cold sweat!
It is a game of psychology. The auctioners deliberately put the 2 most popular properties at the end so that the big crowd stayed in the room till the end. This helped to pump up the auction for the earlier properties. As a result too, with the huge crowd, the 2 hot properties went up beyond expectations and closed at a record price, much better than if they had performed in an open market.
Well, lessons learnt... next time, stay in bed on a Saturday morning!

Saturday, January 9, 2010

Penang Island's Seri Tanjung Pinang

Considering the state of the economy, Penang properties are going through some sort of boom the past couple of years. There has been a lot of effort to attract wealthy foreigners to adopt Penang as part of the Malaysia 2nd Home initiative. Apparently, celebrities like Lau Tak Wah and Simon Yum have bought properties in Penang. Luxurious condominiums and beach front bungalows have been mushrooming but that's not the only market that is doing well.

Middle class terraced homes and mid-range down to to even low-cost apartments are selling well especially those in good locations near or in Georgetown or closer to the industrial belt in Bayan Lepas and Bukit Jambul. And in fact the middle class have somewhat moved a few notches up. 2 years ago, it would be impossible to think that a terraced house in Penang can sell at RM700k. So when E&O launched their 1st phase of terraced houses in the reclaimed piece of land in Tanjung Tokong called Seri Tanjung Pinang, sales was initially slow. Then when Penangites started to accept the concept, the sales shot up and today, these houses are available in the sub-sale market hovering around RM1 million.

A few months back when E&O launched the same terraced homes closer to the sea at minimum RM1.1million, they were snapped up within 3 hours. These units are now under construction and it seems from the pics below, despite the million price tag, they are using low quality cheap cement bricks.

Now, E&O is trying their luck to set another benchmark. The condo market. Never in the history of Penang, even with the super luxurious condos along Jalan Gurney and Tanjung Bungah has anyone tried to peddle condominiums at RM800k to RM900k for a studio or 1 bedroom unit and almost RM1million for slightly larger 2 bedroom units. They have even thrown in a 10:90 financing scheme but take up has somewhat been rather cautious. I suspect like most other E&O projects, the initial rush in bookings are actually from their own directors and staffs who are offered to profit from the project through an attractive discount (20% for St Mary's, I wonder if it's the same here).

So for this seafront Quayside resort condominium, I do not know what is the actual take up from actual buyers and investors (who are not E&O staff). Official launch is this end of January 2010.

When I visited the showroom at the Seri Tanjung Pinang site, I was attracted by the design of the corner 1+1 bedroom unit. It has a very nice view of the coast of Tanjung Bungah. But strangely most buyers have opted for the inside corner facing the other block and also some side view of Penang city and Gurney Drive. This corner seems to be almost sold out.

The nearest competitor to Quayside is probably the Infinity (picture below), now almost completed at Tanjung Bungah. Apparently there are still units available but I did not have enough time to visit the showroom. Unlike Quayside, the Infinity actually offers a beach front. However, the location is towards the end of Tanjung Bungah, it's close proximity to a mosque and the dirty condition of the beach and water may be pulling its value down. Nevertheless, prices start from RM1million but the units have bigger layouts compared to Quayside.

Seri Tanjung Pinang is marketed as the next location to be in Penang after Tanjung Bungah, Batu Feringgi, Gurney Drive and Bukit Jambul's expatriates enclave.

The concept is certainly attractive, gated communities with club house and marina facilities (pic above), an international school and a Tesco will be built on this piece of land beside the Quayside (picture below).

The entire plot of land that Seri Tanjung Pinang is sitting on is actually reclaimed land (picture below). Many Penangites and environmentalists are unforgiving, blaming the reclamation on the heavy silting of the sea off Gurney Drive and the stronger than usual currents off the North-Eastern Penang Coast. The reclamation will however not stop there. There is a grand plan which when it takes off will see new islands hosting luxurious residential and office buildings complete with a golf course taking shape off the coast of Seri Tanjung Pinang. Current Purchasers may be well assured that any future tsunami coming their direction will be fended off by these islands but hopefully the islands themselves do not turn out to be an environmental catastrophe for Penang.

The planned Penang Outer Ring Road (PORR) which is currently shelved, if materialized will take commuters right to the entrance of Seri Tanjung Pinang. Along the way, the PORR will pass the door steps of the luxurious condos along Gurney Drive, turning an idylic seafront into a raging expressway. The seafront of Gurney Drive will be no longer. The land will be reclaimed and turned into a park, until the next development takes place with more condos and buildings, effectively killing off Gurney Drive as competitor to Seri Tanjung Pinang.

Perhaps another big disappointment of Seri Tanjung Pinang is the vicinity. Much like Sierramas in Sungai Buloh where everything is nice and spanky inside but once you go outside, the scenery is chaotic, dusty and dirty. Opposite the entrance of Seri Tanjung Pinang is the old Malay Kampung which is currently in a state of controversy, being played into the hands of politics. The unfriendly Federal ruling party in the Federal government is scheming a plan to raze down the Kampung for development by their crony company UDA. Like the mainly Indian Kampung Buah Pala village earlier, this is expected to create animosity against the State government and racial tension in Penang as part of ther Federal government's effort to undermine their opposition.

(*Penang is ruled by the Federal Opposition party)

(To be continued - updated after results of Quayside launch this weekend)