Friday, March 29, 2013

What's Happening With The Dorsett Place Waterfront?

I posted extensively about this project here, here and the latest was here. Many of us are vested in this project including myself. So, I'll just update everyone about what I know.

Firstly, what everybody knows, there is a court case between the local council MPSJ and the developer, Mayland. The verdict is still unknown but both sides claim to have a strong case, naturally....

But let us look at the scenarios:

1. If MPSJ wins the case, then Mayland will either have to close the project and refund all buyers or proceed and re-market with a revised plan. The latter is good for existing buyers as it means Mayland have to provide sufficient car parks and reduce the density. However, this will greatly impact the developer's margins so it's unlikely to happen.

2. Even if Mayland wins the case, MPSJ and the state government still has some say about the local by-laws. At the least this will affect the project delivery time schedule. Buyers and Mayland will both suffer - buyers will have to bear interests from the 5th year onwards and with MPSJ very likely to appeal the case, this will definitely drag the project beyond the 5th or even 6th year.

So, as you can see from both scenarios above, the project is as good as dud. Mayland is actually allowing buyers to withdraw and they are providing a full refund of the RM5,000 booking fee. Unfortunately for some buyers, they have gone on and signed loan agreements with financiers, hence they have paid legal fees as well as stamp duties which amounts to about 1% of the purchase price. This cost, sad to say will be the buyers' loss.

As soon as I smelt trouble, I held back on my loan agreement with Hong Leong bank. In fact the loan agent was very aggressive in trying to get me to sign. I am glad I didn't.

Thursday, March 28, 2013

Questions For Me....

Each day I receive at least 2-3 questions about Properties. Thank you very much for reading my blog. However, I have no time to respond to every question, especially when 90% of the questions are almost the same. So, please post your questions to my blog, under the most relevant topic and I can respond there so we can all share. Also, perhaps other readers can also help answer them. 

Some readers ask me to help or recommend properties to invest in. From time to time, I do make recommendations. However, you will have to bear in mind that if the property is super duper good, I would have bought it myself. Unless of course I cannot afford it or happen not to be in good cash flow at that moment. Yes, I do share some good buys but I also do need to protect the independence of this blog. 

UPDATE: Interestingly after I posted this blog, I received a few more questions via email. From now onwards, private messages to my email will not be entertained. Please post all your questions in this blog. Thank you.

Friday, March 22, 2013

Black-listed Developers

The Ministry of Housing in Malaysia actually compiles a list of black-listed developers.

As of February 2013, there are 278 of them. However, I wonder if any of them actually care if they are black-listed at all.

278 black-listed developers seems like Malaysia has a very high number of developers. Even if we say 10% of the developers are in the black-listed, which is far-fetched, we are talking about over 2700 developers in Malaysia. But it is not really so...

Developers tend to create a unique company for each of their project. This is so that if the project fails, the liabilities are only limited to that company, leaving the parent company un-touched. This might be a reason why developers don't seem to care if they make it into this notorious list at all.

However, buyers like us should care and for every project, we should 1st of all trace who is the parent company of the project developer and then try to find out if any of their other subsidiaries are black-listed.

Thursday, March 21, 2013

Dorsett Residences at Jalan Imbi

After the spectacular flop of Regalia, if anyone still have any appetite for Mayland projects may consider Dorsett Residences.

It is going to be launched later this year with an as spectacular price tag of RM1,500psf. Location is beside the Dorsett Regency hotel at Jalan Imbi and directly opposite the Low Yat's Tribeca.

The project boasts of a sky-gym/lounge and elevator operated car park similar to Spritzer's Vida Soho in Bukit Ceylon.

Most of the unit's orientation is facing KLCC and the Pavilion mall. They are one-bedroom units with layout suspiciously similar to Mayland's another spectacular cock-up, the Dorsett Place Waterfront, which is currently involved in a legal wrangle with the local council. Again, my misgivings of this type of studio layout is the lack of natural daylight in the kitchen and living room area. 

Corner units are 2 bedroom which is priced out of affordability. However, with saving grace, there is a Type F unit which is a small 1-bedroom corner. It has a very nice layout with windows in the bedroom, bathroom and living area. The size is also the smallest which means it will be cheap and fast to sell out. So, watch out for these.

Retro Tiong Bharu in Singapore

Tiong Bharu in Singapore impressed me as a pleasant place with a nice retro charm. This place has chic cafes, book stores and antique shops mixed with some old brand chinese kopitiams, seemingly detached from the rest of busy fast paced Singapore. While every investor and his dog comes to Singapore looking for slick modern condos in CBD areas like Marina Bay, Orchard, Tanjung Pagar and the Raffles/City Hall area, I'd more than settle for these 1960s charming walk up apartments in Tiong Bharu.

We have similar places in KL as well, namely Changkat Bukit Bintang and parts of Tiong Nam, Imbi and Brickfields. If there are efforts to maintain the area, we'd reach the status of Tiong Bharu as a new expat enclave.

Thursday, March 7, 2013

KL Gateway at Bangsar South

The 2 blocks of low cost flats at the entrance into Bangsar South is a stark reminder that this used to be a slum area. Indeed, Bangsar South is a remake of Kampung Pantai Dalam, a dense squatter colony of zinc attap houses. Most of them have been relocated and the village razed. From the ashes, rise Bangsar South, borrowing the name of an affluent neighbour.

Developer UOA was the first to go in. Their "the Horizon" office complex was initially quiet and now MNCs and techie companies are streaming in to benefit from the MSC status address. Bangsar South has become a very hot address for companies not willing to pay KL CBD rates but want a strategic location nonetheless. While UOA is still building and investors are still snapping up their products, plots of this place are being snapped up for development by other developers. Particularly on the edge of the Federal Highway from the Universiti LRT station to Angkasapuri.

Developer SuezCap, a little known niche player who does relatively small projects, once or twice a year has got in my opinion the best piece at the corner of the Bangsar South entrance from the Federal Highway. They are building KL Gateway, a mixed project which includes a shopping mall, 2 office complexes and 3 blocks of serviced apartments, one of which has just been launched.

This block of 400 odd apartments consists of studios, 1+1 bedroom, 2 bedroom and 3 bedroom units, with an aggressive price of just over RM600psf up to about RM900psf for the small 500sf studios. The best-selling units are those small ones ranging from 500sf to 760sf facing east and the central piazza. They're almost gone with just a handful of units with the number 4 or 3A in the address left. However, I am not particularly fond of the layout because the narrow configuration means the bedroom takes up all the window, with a wall in the middle for the room privacy, completely blocks out natural light from the living/dining and kitchen area.

pic above: The 1+1 br units facing the central piazza 

pic above: the corner 2br units facing the central piazza, nice but pricey psf

pic above: speculators unit, the smallest 1br facing central piazza

The West facing units consist of bigger 970sf to 1100sf 2 or 3-bedroom apartments. Although they are less popular, the pricing starting from just over RM600k for an intermediate 970sf 2-bedroom unit is very interesting. At this price point, a 950sf unit is just under RM100k more than the 1+1 bedroom facing east which is 200sf smaller! Expect the 2-bedroom units, being the minority in the complex to fetch relatively better rental. However, the smallest units, those 500+sf ones would be easier to flip.

pics above: typical floor layout and the 2br type E, the cheapest 2br units

pic above: the type D, 2br corner units facing PJ

The sales chart below is kinda out-dated. As of 21st of March, they were all sold out.

Sunday, March 3, 2013

Property buyers seen shifting to affordability in 2013

By Kamarul Azhar of
Thursday, 13 December 2012 13:38

PETALING JAYA (Dec 13): The trend of property buying in the country will shift towards affordability in 2013, which will see buyers gravitating towards products with lower absolute pricing, according to Hong Leong Investment Bank analyst Sean Lim.

He said property developers should respond to the shift in preference, by cutting back on the scale of property launches, reduce absolute selling price by selling smaller units and transit from selling high rise to landed units.

"Going into 2013, we expect the challenges to intensify as both property developers and buyers undergo a transition phase, with buyer preference undergoing a dramatic shift towards affordability," said Lim.

He added launches and sales is expected to moderate in 2013 compared with 2012, dismissing talk that the property market will see a hard landing next year.

"We still do not believe that a hard landing scenario is likely to transpire in 2013. Asset quality for loans continued to improve with NPL (non-performing loans) ratio at all-time low of 1.9% for residential property loans," said Lim.

However, a major risk of rising NPL ratios among banks due to Malaysians losing holding power of their properties still lingers, according to Lim.

Property developers also face the risk of margin erosion in 2013 if material prices spike or pressure from lower selling price of properties, slow down in sales or cut back in launches.

Major catalysts for the industry in 2013 include the RM46 billion worth of investments announced to be implemented in Iskandar Malaysia starting next year, and also the completion of the second Penang bridge.

"The RM46 billion of developments announced in last week's WIEF (World Islamic Economic Forum) should help sustain interest for UEM Land Holdings Bhd.

"Penang mainland is also set to benefit from the opening of Penang Second Bridge in Sept 2013. Within our coverage, Mah Sing looks set to be the biggest beneficiary, as its Southbay City integrated development has balance GDV of RM2.1 billion," he said.

As the responsible financing guideline started to take effect on property transactions, the operating environment of the property sector is expected to get more competitive next year.

Some property analysts are of the opinion that property developers with strong branding and big land bank are the ones who can remain positive above the rest.

Among the property developers with large land bank and strong brand in Malaysia include Sime Darby Bhd, UEM Land Holdings Bhd, IJM Land Bhd, S P Setia Bhd and WCT Bhd.

S P Setia targets an ambitious FY2013 property sales of RM5.5 billion, after managed to surpass its target RM4 billion of sales this year. The group's achieved record new property sales of RM4.2 billion in FY2012, an increase of 28.6% year-on-year.

However, other differs saying that gearing level and valuations are more important for property developers next year, citing the lower expected growth rate.

Meanwhile, Affin Investment Bank's analyst Isaac Chow, whose property stock top pick include UOA Development Bhd and KLCC Property Holdings Bhd, said it is more important for investors to choose property stocks with appealing valuation and strong brand equity.

In a report on UOA Development, Chow stated that the group remains Affin IB's top pick among the property development stocks because of its undemanding valuation, high dividend yield, strong cash position, strong track record and management experience.

"UOA Development remains our top pick for exposure to the property sector and we continue to like the company for its undemanding valuation at 6.5 times CY13 core EPS, 1.1 times NTA and high dividend yield of over 5%,

"Strong cash position of RM274.7 million, strong branding, strong execution track record, and experienced management team who are highly adaptable to changes in market dynamic," stated Chow.

Affin IB has a target price of RM2.40 on UOA Development, based on 25% discount on its revalued net asset value (RNAV) of RM3.17.

UOA Development share stood at RM1.70 per share as at 11.48 am this morning, up 1 sen or 0.59% from yesterday's (Wednesday) close of RM1.69.

Branded luxury homes trend emerges in KL

By Lam Jian Wyn of
Friday, 04 January 2013 10:51

KUALA LUMPUR: More developers are partnering international luxury hospitality and lifestyle brands to give their new upmarket condo and serviced apartments in Kuala Lumpur city an edge, according to Knight Frank Malaysia.

“Hotel-like services such as concierge, security and room service provided by a luxury brand will help maximise the value of a development,” said the real estate consultancy in its second half (2H) 2012 Real Estate Highlights report covering Kuala Lumpur, Penang and Johor Baru.

One such noteworthy product is the Banyan Tree Signatures Kuala Lumpur in Jalan Conlay, where all 441 units were sold at an average price of RM2,000 psf.

Ritz-Carlton will be managing its first residences built by Berjaya Land Bhd in Jalan Sultan Ismail. Other brands making their debut here are Four Seasons, Harrods Hotel & Residences and W Hotel & Residences.

The 150-room and 353-unit W Hotel & Residences will come up on a 1.28-acre site in Jalan Ampang and has an indicative pricing of RM2,000 psf, with a launch date sometime in the first quarter (1Q) of 2013.

The hotel will be managed by Starwood Hotels & Resorts Worldwide Inc while the residences will be run by its developer Dijaya Corp Bhd.

Ireka Corp Bhd has also unveiled its RuMa Hotel & Residences in Jalan Kia Peng, which will feature a 263-room boutique hotel and 200 serviced residences, with the latter offering sizes ranging from 915 to 1,819 sq ft and priced from RM2,000 psf.
Introducing more luxurious and comprehensive services is just one of the ways developers add value to entice buyers in a slow market weighed down by large existing stock and low occupational demand for high-end condos/apartments, said the consultancy in the report.

Meanwhile, luxury apartment developments that are both completed and awaiting their Certificate of Completion and Compliance are St Mary Residences, Binjai 8, Verticas Residensi, towers 1A and 1B of Setia Sky Residences in KL City, Amarin Wickham in Ampang and Kiaramas Danai (Block A) in Mont’Kiara, bringing cumulative stock of high-end apartments in 1Q to 31,851 units.

A further 4,917 units of luxury high-rise homes will be added to existing supply in Kuala Lumpur city and Mont’Kiara this year including Crest @ Jalan Sultan Ismail, The Quadro Residence, Vipod Residences and 6 Capsquare in KL City, 9 Madge, Sastra U-Thant, phase one of One Kiara, 28 Mont’ Kiara, and block B of Kiaramas Danai.

During 2H2012 of last year, the rental market continued to face downward pressure with a slight decline in rents in selected locations. The high-end condo market at KLCC and Mont’Kiara saw a slight drop in asking prices

On the other end of the spectrum, the report noted that on the primary market, developers and buyers are moving towards the fringes of the city due to better access, thanks to the upcoming mass rapid transit line and other infrastructure projects, as well as the relatively more affordable prices.

Besides formulating better deals towards lower entry cost for buyers, developers are also coming up with smaller homes to meet the needs of first-time buyers who are sensitive to pricing, said the report.

In Penang, the Knight Frank report said the outlook for the luxury condo market is one of increasing caution as prices are high and the residential rental market appears to be weakening. “Although capital values are holding, a period of consolidation is likely to follow,” said the report.

Prices of older condos within the prime parts of Tanjung Bungah and Pulau Tikus have risen to RM650 psf from RM430 psf, while newer completed developments are priced at RM500 psf to RM800 psf.

Asking rents for older condos range from RM5,000 to RM8,500 per month, while rents for fully furnished new condos dropped from RM8,000 to RM13,000 previously to RM7,000 to RM12,000.

Some notable luxury condominium projects unveiled in 2H2012 include Eastern & Oriental Bhd’s Tower 1H of Andaman Quayside and The Landmark Penang in Tanjung Tokong that is jointly developed by Katana Developments and BSG Property. Andaman Quayside’s Tower 1H was launched in 3Q2012, achieving 40% sales so far with unit sizes ranging from 914 to 2,755 sq ft and prices from RM1,500 to RM1,700 psf. In comparison, earlier phases saw take-ups from 70% to 90%.
Meanwhile, The Landmark Penang achieved a 50% take-up prior to launching, with sizes from 2,622 to 7,266 sq ft and prices at about RM1,055 psf.

Over in Johor, the outlook for the luxury condo/serviced apartment market will be supported by the growth of Iskandar Malaysia while developers there anticipate a rising trend towards high-rise living from the younger generation and from Singaporeans.