Wednesday, July 30, 2014

Recently Completed - One Ceylon

The odd half apartment, half car park opposite Seri Bukit Ceylon is now completed and handed over to owners. A never been heard before hotel group called Invito has also started operations of the Guaranteed Rental Returns (GRR) units. Their starting rate at RM238/night suggest they are competing  for the 4-star hotel market.

However, upon closer inspection, the quality of the delivery is hardly anywhere near 4-stars at all. One Ceylon is dominated by 400+sf studio units, fully furnished by the developer. The furnishings unfortunately looks like they came out of a cheap closing down sale.

Built-in wardrobes for example, are made from cheap and thin materials with poor quality sliding rails. I don't think these will last 5 years... and the choice of white colour will compound towards the wear and tear.

The kitchen is also built from the same material.

Being a studio unit, the bathrooms are really small and windowless. The walls are just covered with ordinary tiles and the little bit of Iranian marble for the counter top provides that little class it desires.

The fridge is small as well so the apartment may not come suited for long term stay, especially with the open-style kitchen.

Facilities deck is on the 9th floor, on top of 8 floors of car parks. It has a rather impressive infinity pool and jacuzzi with a killer view.

With every unit supplied with a washer and dryer, I wonder what use is the laundrette on the 9th floor for?

Although the gym has a nice commanding view of the city and swimming pool, it is rather ill equipped. I still like the gym at old Seri Bukit Ceylon which also has a sauna. Something One Ceylon lacks...

Owners are trying to rent out their studio units from RM2,500/month. This is in direct competition with all other 1-br or studio units in this area, mostly in Seri Bukit Ceylon. As we speak, many owners at the older Seri Bukit Ceylon are struggling to maintain their rent from a high of RM4,000/month at its heydays and dropped to below RM3,000/month today. There are many vacant units. But compared with One Ceylon, Seri Bukit Ceylon has a much better layout and size is over 200sf bigger.

The pricing is however quite disproportionate. I understand that while early buyers got their studio units at just over RM500k per piece, later buyers paid over RM700k.

Friday, July 11, 2014

Will the New Interest Rates Impact You?

‘New OPR will have little impact’

PETALING JAYA: An increase of 0.25% in the overnight policy rate (OPR) will not have a significant impact on borrowers for low-cost and affordable housing priced between RM45,000 and RM450,000, according to a senior executive of a real estate agency.
VPC Realtors (KL) Sdn Bhd director James Wong said there would only be an estimated marginal increase of RM5 to RM53 per month in loan repayment compared to the previous interest rate for a 30-year tenure with a 20:80 margin (see chart).
“As for high-end residential properties, most buyers are either cash buyers or they buy with a minimum loan margin. Hence, an increase of 0.25% per annum will be insignificant,” he added.
Bank Negara has raised the benchmark overnight policy rate by 0.25% to 3.25%, the first rate hike since June 2011.
Mortgage rates are based on the base lending rate (BLR) which in turn is correlated to the central bank’s OPR.

Wong felt that speculators would be hit the most.
“If they are unable to service the loan, they will be forced to sell. But it will not be as easy as before due to the real property gains tax,” he said.
Wong did not expect rental rates to be impacted by the increase in interest rate as the rental market was primarily determined by demand and supply.
Property consultants expect fewer transactions as mortgage rates will rise in tandem with the interest rate.
Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector president Siders Sittampalam said: “With the interest rate hike, we expect a gradual fall in volume.”
That said, property prices will still be driven by demand and supply.

Thursday, July 10, 2014

Malaysia's National Bank Raises Interest Rates

Bank Negara raises rates, first in 3 years, to contain debt, inflation Published: 10 July 2014

Malaysia's central bank raised its key interest rate for the first time in more than three years today, as widely expected, to help temper inflation and rising consumer debt. Strong domestic consumption has helped underpin growth in the Southeast Asian economy, but rising household debt levels are posing an increasing risk when global interest rates rise. Bank Negara Malaysia (BNM) hiked its overnight policy rate by 25 basis points to 3.25%, after keeping it steady since mid-2011. It had hinted of a monetary policy tightening to counter the "build-up of financial imbalances" at its last meeting in May.

              On Thursday, it said that the "normalisation" of monetary policy was needed to ward off risks of financial and economic imbalances that undermine growth. It said that its new stance remained supportive of the economy, which it saw showing continued strength in exports and private sector activity. "Going forward, the overall growth momentum is expected to be sustained," it said in its statement accompanying the decision. The economy grew at a robust pace of 6.2 percent in the first quarter from a year earlier. The majority of economists polled by Reuters had anticipated a 25-basis-point hike as economic conditions at home and abroad improve and inflation stays high. Many analysts expect interest rates to rise one more time before the end of the year due to inflationary pressure and robust growth. Industrial output grew at its fastest pace in three months in May, data released earlier on Thursday showed. "We expect another hike in September because the momentum is still there," said Wellian Wiranto, an economist at OCBC Bank in Singapore. "Even after the hike, there's a risk that inflation will pick up." Economists had expected the rate hike following strong growth and the continued increase in housing loan approvals. Property loans form more than half of the country's household debt, which is now at a lofty 86.8% of GDP. Malaysia's household debt has risen more than 25 percentage points in just six years, as domestic consumption grew on loose credit.

"Many are treating the property market as the new deposit box that pays higher returns than what banks are offering," DBS said in a recent research note. Inflation rose to 3.2% in May in contrast to 1.8% in June 2013, before the government imposed higher electricity tariffs, reducing fuel subsidies and eliminating the sugar subsidy. "Demand driven inflation remains contained," the central bank added. Inflation is expected to remain elevated with a possible fuel price increase later this year and the implementation of a goods and services tax in April 2015. "The bigger question from the market is what BNM does next," said Euben Paracuelles, an economist at Nomura in Singapore. "There are clues from the policy statement, they've left the door open for more rate hikes this year. Their assessment in growth is pretty upbeat, but there is still the risk of financial imbalances." The ringgit, up around 2.15% against the dollar since the central bank signalled tighter policy on May 8, turned weaker on Thursday as investors cut bullish positions. Other regional central banks are also keeping watch over inflation due to strong domestic demand. The Philippines is expected to raise interest rates at the end of July after more than six months of rising inflation. Indonesia held its key rates steady on Thursday while Thailand kept its interest rate steady last month as its military government tries to get the economy back on track. – Reuters, July 10, 2014. - See more at: