House Number 83 - Part 1

Earlier I blogged about this house I bought in USJ, Subang Jaya as part of my investment focus in properties along the LRT/MRT Extension - Episode1 and Episode2. So, here it is.... a 20feet x 60feet double storey link house in USJ13.

At the time I went to view it, there were several houses in the same area up for sale. Some of these owners were just cashing in on the LRT extension announcement which sent the property prices here up 30%-50%. I also believe, some owners just wanted to get out of the congestion that the nearby LRT station will pose. 

Anyway, the price ranged up to RM480k at that time but I settled for this one, the most run down of them all. I reckon that being almost 20 years old, there are many things need changing in the house - plumbing, roofing and electric cables mainly. So, the best deal would be to negotiate a really run down house, infested with termites and leaking from all angles. That way, I can use the money saved to pay for an almost new house.... that's when the fun starts... when the renovations begin...

I regret that I did not manage to snap original pictures earlier. But when I got to it, we have already smashed the back walls to extend the house by a further 5 feet.

It is to make a helluva lot of difference as can be seen in the pictures below. The room downstairs, hardly big enough to be a bedroom has just got it's walls smashed. As you can see below, the lines where walls used to be and we were going to extend the room sideways as well as back.

Below was the front part. I really disliked the bay windows that came with the house. Despite an advice from a good friend to leave them alone, I decided to smash the front as well and extended it as far as I can go - 5 feet - Council rules dictate that the distance between the front wall of the house and the gate must not be less than 20 feet...

Upstairs' master-bedroom as well... 

The picture below is where we have removed the ceiling tiles to reveal the front car park roof where we will build an RC floor to accommodate an elongated front section... 

The front extension however, only affected half of the house where the bay window was as the other half was maintained. However, we built a balcony off the roof of the other half... Here again, the ceiling was removed to reveal the roof where we would build an RC floor.

After the RC floor was constructed, it looked like these pictures below:

The upstairs 2 bedrooms at the back were also really tiny. They both share a bathroom.

Later, we were to smash the wall at the back of the rooms and extended it so each bedroom would have their own bathrooms...

The master bedroom's bathroom was spared but the tiles really had to go...

Now, back to the front of the house... in the picture below, the roofs where the balcony would be built and the part to be extended have already been removed. Compare with the original un-touched house on the right....

After the walls were smashed, the extension began...

And the end result gave the house an entirely fresh new facade...

In Episode 2, we'll look at how the house looks like after the transformation... stay-tuned

Property market set to pick up pace, says report

http://www.themalaysianinsider.com/business/article/property-market-set-to-pick-up-pace-says-report/

MAY 11, 2013

Consultants told Singapore’s Straits Times that they see good prospects for property in the Klang Valley. — file picKUALA LUMPUR, May 11 — Consultants have expressed confidence that Malaysia’s Economic Transformation Programme (ETP) will continue post-Election 2013, Singapore’s Straits Times reported today. 

The programme is expected to inject US$440 billion (RM1.31 trillion) into sectors such as oil and gas, tourism, financial services and urban infrastructure.

The property market will also pick up again, analysts told the broadsheet.

“Now that the election is out of the way, the property market appears to be re-energised and we are confident of seeing substantial gains over the next three years in both Peninsular and East Malaysia,” Christopher Boyd, executive chairman of CB Richard Ellis, was quoted as saying.

He cautioned, however, that there would likely be a parallel increase in supply from developers who had held back new releases before Election 2013.

“From the third quarter onwards, we anticipate that continued high liquidity, additional public expenditure on infrastructure and renewed confidence in the future will all combine to bring residential property values to new highs,” he told The Straits Times.

While the newspaper reported that many Singaporean investors have been keen on Iskandar, the analysts it spoke to warned that the development in Johor is an untested market.

Consultants see good prospects for property in the Klang Valley — bolstered by the fact Malaysia is said to have the second-lowest property prices in Southeast Asia on a per square foot basis.

Brian Koh, the head of research and consultancy at DTZ Malaysia, told Straits Times that he expects Malaysian property prices to rise by 5 per cent to 10 per cent a year over the next few years, with the steepest increases in the Klang Valley market.

Comments Accidentally Deleted

Hi Everyone,
I am sorry I accidentally deleted about 50 of the latest comments in my blog. Yesterday I was under attack by a spammer who posted hundreds of advertisments in my comments section. The adverts kept on appearing despite me putting them in the Spam Box.

Unfortunately, in my haste, I accidentally deleted some valuable comments. I really appreciate your valuable comments. So, please continue to do so. Thank you.

SL

The Problem With UMLand's Seri Bukit Ceylon

Earlier I wrote about some issues in Seri Bukit Ceylon, at one time, the star of the Bukit Ceylon expat enclave. It wasn't until I attended the AGM on the 20th of March recently I learnt more about the depth of the problem.

To prevent myself from being sued, I will just present as much facts as I can as what I am about to write implicates certain individuals, the former building manager, Henry Butcher and also the developer, UM Residences, a subsidiary of UMLand.

As we all know, Seri Bukit Ceylon was built by UMLand in a JV with Singapore's Capital Land. I actually attended the 1st AGM by the Joint Management Body (JMB). I was really impressed by that meeting and the positive gestures given by UMLand, at that time helmed by CEO Andrew Wong. When he handed over the management of the building to the JMB, he very generously wrote off the deficits from the accounts so the JMB can start at par and also provided the JMB an office at a nominal rent of RM1.

This office is to become one of the center of dispute between UMLand today and the management body. Much has changed...

UMLand or their subsidiary UM Residences actually owns the office, and other properties in the building which includes the former Somerset's lobby, an empty hall on the 4th floor facilities deck, a shop currently tenanted by a popular restaurant, Neroteca and they used to own a small but prominent shop on the ground floor which has since been sold. 

Let me talk about the shop 1st of all, as I used to have an interest in it. This shop is located at the front of the building and it was initially occupied by Kiosk. When Kiosk went belly up, the shop became vacant and I immediately approached UM Residences for an opportunity to rent it as I was then interested to run a little juice bar. I understood then the rent was only RM1,200/month. However, I was told I will not be able to rent it because the city council (DBKL) will never allow plumbing to be installed in that shop. So, I dropped the idea and the shop was eventually taken up by Neroteca as an annex. I was upset later to find out that Neroteca was allowed to build plumbing to supply water to a sink in the shop.

After a couple of years, Neroteca gave up the shop and it became vacant again. That time, I again approached UM Residences (UMR). I was told the developer might be interested to sell the shop. When I enquired for more details, the UMR manager said I should make an offer and write in. So, I did write in my proposal to rent the shop at RM1,800/month, to turn the shop into a trendy juice bar in a joint venture with one of the largest retail outlet in Malaysia. I thought by this offer, UMR would be interested as the business will add value to Seri Bukit Ceylon, at that time one of their flagship development. But to my dismay, UMR was not interested in this at all... 

At that same time, I also approached UMR to make an offer to purchase the shop through an agent. Later I was told, the shop has been rented to a sundry shop operator who is doing this....

I think immediately, the value of Seri Bukit Ceylon, or at least the perception that it is a high end condo dropped several notches. Recently, I found out that the estate agent whom I engaged to negotiate with UMR apparently bought the shop and rented it to this sundry shop operator for RM2,000/month.

A lot of other things are happening. As we know Somerset are now just operating their 48 units remotely. Well, UMR who owns the lobby sold it - yes, they sold the lobby! And the new owner of the lobby, we don't know who, has already begun to renovate it.

This now suddenly reminds me of a case recently in Petaling Jaya where the apartment's car park was sold off leaving the apartment dwellers nowhere to park their cars.

UMR is really on a selling spree... because now they have given the Seri Bukit Ceylon management body till end of April (today) to vacate the office as they want to sell it too. On paper, I think UMR, since they own that office and are renting it to the management body at a nominal RM1 have all the rights to sell the office. However, morally I think this is wrong... UMR have the obligation to provide the management body a suitable space to operate as an office. The space they have now offered to provide is a small, dark store room at the back of the building.

This is what UMR call a suitable office for the management body! This is, in UMLand's opinion, suitable for a high-end serviced apartment... I am utterly dismayed and awed by their class!

Then Henry Butcher left. This got all the owners concerned. But there are a lot going on which nobody knows what is really going on as there are 2 sides of the story. From what I know, this is the 1st building management AGM I attended where the audited accounts was not tabled. Apparently the accounts till today has not been properly audited. I approached the Management Body's Treasurer about this. He explaint that the reason was because Henry Butcher has not been able to explain and account for all the figures to his satisfaction. To be fair to Henry, I asked why was this not explaint to the owners during the AGM? At least the un-audited accounts could have been presented and all the disputed figures highlighted to the attention of all the owners. 

There are also a lot discussed about the role of Henry Butcher, as a professional building management company but I will not write here as I have not been able to verify them. 

With all these troubles, some owners actually approached me and asked me is this the time to sell and cash out from Seri Bukit Ceylon? My answer is pretty simple... NO... especially after what I have highlighted in this blog. Haha... 

But honestly speaking... I say NO, don't sell because Seri Bukit Ceylon is still an attractive building to tenants and owners' alike. There are a lot of potentials ahead especially after the completion of the MRT  and One Ceylon just minutes walk away. Menara PMI next door has also been sold and the new owner is expected to make the place into a nice office building. Plus where else can you find such a location at this price? I say there are no perfect properties. The density of Seri Bukit Ceylon is still small enough for the group of owners to do something and get the building in shape again. And this is exactly what we have done in the AGM. The market value for a 1br unit here is about RM600k today. Where else in Bukit Bintang can you buy a 640sf 1br unit for this price? All the new launches are smaller in size and priced no less than RM900k so what are we afraid of? No new competitor can come down to the rent level of Seri Bukit Ceylon today and no existing competitor in the vicinity can also go up to the same standard and size of this property. 

So, let's just keep it for now. We are after all, long term investors :)   

Rescuing Seri Bukit Ceylon

Seri Bukit Ceylon was once a success story in Kuala Lumpur when it was completed almost 10 years ago.  The Ascott group own 48 out of the total 200+ units and they run the whole block as their Somerset brand with 96 units inventory. The occupancy since then was fantastic as I tried to book apartments for my friends in the past, they used to be running at almost full capacity.

Ascott still owns the 48 units in Seri Bukit Ceylon Residences and they are now run as corporate leasing units. There were a further 22 units in Seri Bukit Ceylon leased back from individual owners which were operated as corporate leasing from year 2006 till management contract ends 31 May 2011. The units since then were returned to owners and subsequently, we saw rentals affected and many have to drop their rent by more than 10% in order to secure tenants.

I was fortunate back then as I had a long term tenant occupying my unit. However, I am not so lucky this time as my unit was recently vacated. The rentals board set up downstairs by the management is now plastered with vacancies. 

I turned to vacation booking websites such as airbnb and ibilik. With these, I managed to secure sporadic short term bookings from 2 nights all the way up to 3 months from January till September and I expect more to come in. On average, with an occupancy rate of just 20%, I am getting about RM2,500/month gross for my 1 bed-room unit, a far cry from the RM3,500/month I used to earn. And this is very tiring, having to check-in and check-out guests, do maintenance, cleaning and changing the bed sheets. However, it is extremely rewarding and has good potentials too. 

1st of all, I see potentials because as I book more guests in these websites, I get more reviews (all of them good) and I get even more bookings. I expect my average earning to exceed RM3,000 and may even get higher than RM4,000/month towards the end of this year. However, the biggest problem is the overlapping dates which means I have to reject bookings i.e. sometimes, I have already received a booking for a 1 week stay. Then later someone else wants to come in and book a 1 month stay resulting in me having to reject it because it overlaps the 1 week booking by 1 day. If I have more than 1 unit to play with, it will be possible to accept more bookings. 

Secondly, it's very rewarding because so far I have met so many nice travelers from all over the world. We have become friends and some made it into my facebook so we can keep in touch.

The Mews By E&O

The Mews is located at Jalan Yap Kwan Seng, behind the Stadium Negara steamboat restaurant. This restaurant is one of those old businesses. Once located at the iconic stadium, it has since relocated here. The food unfortunately has gone downhill too with the commercialization. 

The Mews address is not quite KLCC but close enough. My concern about this location is Jalan Yap Kwan Seng itself, which gets clogged up every weekday and weekends alike due to the crowd going to party at a not-so-straight club in the area. 

But then again, which part of KL is not jam during peak hours? However, the experience of driving almost 2 hours from Bukit Bintang to have dinner at the Stadium Restaurant one rainy night is still haunting me...

E&O is building 2 blocks of 38-storeys, with over 250 units ranging from 1-bedroom to 3-bedrooms apartments. There is no showroom to look at now but the scale model available at the E&O sales office seems to suggest that the set up and landscape will be similar to their flagship St Mary Residences, and with a bit of retro tinge. One wonders if in 3 years time, this concept will still be in fashion.

The 2 towers are arranged in 2 V-shapes forming a W, strangely... (unless I have my orientation wrong), they face away from the favourite KLCC Twin Towers view.

The 1-bedroom units appear to be quite hot, despite the over RM1.2million price tag. They are selling very fast. In fact, the best units are the corner type-A as compared to the intermediate type-A1. Of course, pay more for the type A. 

Unlike St Mary's, E&O has not announced that there will be any hospitality partner occupying part of the building. Perhaps there are no plans for this, and the Mews will purely be residential. Therefore, in my opinion, since 70% of the units are 1-bedroom and 2-bedroom apartments, this might make it a bit challenging to find tenants willing to pay the premium RM5psf rental in order to make this investment interesting.

So, it makes me wonder if the larger units are actually more viable here for own-stay or for rich people to keep as their play houses. E&O is partnering a well-established Japanese Developer, Mitsui to develop this project and it is understood that there has been a lot of interests from Japanese buyers.

Unfortunately, there is a massive glut of larger unit condominiums in the KLCC area resulting in price dumping for rentals. But this only affects the less popular projects like Glomac's Suria Stonor. Well executed projects such as Binjai-on-the-Park and Park Seven still commands good occupancy and rentals. So it is essential, for The Mews to be successful, it has to be done up to the standards of the other iconic projects such as the 2 mentioned, St Mary's Residences and the Troika. 

E&O is also cleverly marketing The Mews overseas before a proper launch in Malaysia to attract foreign buy-ins. With a large and strong foreign investment, it is likely most buyers will have the holding power to ward of any price dumps.  And holding-power is the all important word - since this is a commercial plot of land, the utility and city-hall rates are going to be an absolute killer, coupled with the hefty maintenance fee of RM0.60psf making even the smallest 1-bedroom unit costing over RM600 to keep. 

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.

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.

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.

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.

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.

Property buyers seen shifting to affordability in 2013

By Kamarul Azhar of theedgeproperty.com

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.

http://www.theedgeproperty.com/news-a-views/10832-property-buyers-seen-shifting-to-affordability-in-2013.html

Branded luxury homes trend emerges in KL

By Lam Jian Wyn of theedgeproperty.com

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.

http://www.theedgeproperty.com/news-a-views/10891-branded-luxury-homes-trend-emerges-in-kl.html

Ready For Orders : Meridian 101 Degrees

Earlier I posted some concerns about Meridian 101 Degrees. After seeing the booking form, I realized the developer has not yet received the Development Order (DO) from the authorities. Nevertheless, they have started to take orders. Apparently, a Japanese investor has blocked booked 100 units. So, now only 59 units are left for sale. We have 1st pick and it will be 1st come 1st served.

We now have a block of 20 buyers. However, the developer is reluctant to negotiate with us until they have seen this block committed with booking cheques. The cheques shall be issued in the name of their solicitor, "Messrs FL FOO  & Co" as Stakeholder. The selling price is now RM1,410psf with no early bird discount. Here is the deal:

1. We might be able to negotiate some percentage of discount from the developer once we have this block committed with cheques. However, the amount may not be huge, possibly around RM2k - RM5k. No promises

2. We will have 1st pick - only 19th, 22nd and 23rd floors open to us for picking

3. All units and all floors are the same price. However, for KLCC view, you must buy a car park! You can own the car park for 10 years only

Please also note that the developer is a new company, Meridian 101 Degrees Sdn Bhd with unknown track records. They have set up an office at Plaza 138, Jalan Ampang and it is really a very small set up. So, you need to take note that there are risks!

More Details of The Dang Wangi Project - The Meridian 101 Degrees

This Dang Wangi project we talked about earlier is the Meridian 101 Degrees KL. The website provides MOST of the details that you need to know about EXCEPT who is the actual developer. This is shrouded in mystery, similar to the Bangsar Trade Center launched a couple of years ago. Therefore, we should thread with slight caution.

Same as the Bangsar Trade Center, the Meridian 101 Degrees is linked to Best Western Hotel who will be providing a fantastic 10 year Guaranteed Rental Return:

Year 1 - 7: 6%
Year 8 - 10: 7%

But unlike the Bangsar Trade Center, the density of this project is relatively low - only 156 units of 400sf and 480sf rooms. They are essentially hotel rooms here because there is no kitchen, just bathroom, toilet and sleeping area.

The whole building is half car parks and half hotel rooms with the facilities at the roof top. The lower floors are retail but I think they will struggle to find any meaningful tenants in this part of town, especially with such low density and neighbourhood.

Each floor will just have 13 units served by 3 lifts.



The misinformation I received earlier is regarding the price. I was told the price range is between RM400k and RM500k. However, at a early bird price of RM1400sf, they are really between RM560k and RM680k. Well, it doesn't really matter since you are not paying anything for 10 years. At a GRR of 6% to 7%, that should well cover your interests payments as well as the RM0.50psf maintenance fees every month. The price is also apparently flat across all floors and units, no matter if you are facing KLCC or the other side which is Jalan Tuanku Abdul Rahman or SOGO. Car park is not provided. You may however, purchase a 10-year use of the car park for RM50,000!! I think this is not necessary....

For anyone who is still in doubt about the location, pay a visit to Yut Kee and behind the restaurant, look out for a row of abandoned shops with this distinctive window facade...

   

the actual buildings are these below...

But rather suspiciously, the development sign board erected here is for something else.

So I would say the developer integrity is really a big concern, especially since it is a new unknown and secretive entity.

Upcoming Project in Dang Wangi

How many of us actually know Yut Kee Restaurant along Jalan Dang Wangi? This is one of the very few old style and original coffee shop (KOPITIAM) still left in Kuala Lumpur. For a good taste of Hainanese fare, this is the place to go, even if it means queueing close to an hour during peak hours.

A few months ago, I have read in the news that Yut Kee is moving. But fortunately, they are not moving far. You can read more here in this link.

Yut Kee's location is actually really good. It's close to many office buildings and within 5 minutes off the Dang Wangi LRT station. The happening drinking and party hole, the Heritage Row is also steps away.

Those of us who frequently go to Yut Kee might notice that there is a row of dilapidated shop houses behind the restaurant. A developer has purchased this lot and there is a plan submitted to develop a serviced apartment. With such location, they are going to launch at no less than RM1000psf but the units will be smaller, around 400sf - therefore, average selling price will be about RM400k to RM500k.

If this is not exciting enough, I have heard that there will be DIBS packages thrown in plus a 10-year Guaranteed Rental Return!! No more details are available unfortunately.

There are few drawbacks... Besides the official secrecy about the whole project, Jalan Dang Wangi as well as the off-shoot, Jalan Kamunting are both one-way street. So the apartment can only be accessed by car one-way from Jalan Raja Abdullah. This is going to be a pain. Also, this is not yet a nice part of town. Not quite high class touristy place and at night there are many undesirables such as drug addicts hanging around. However, this will hopefully change with the development but as we can see with Capsquare adjacent to this plot is not particularly flying successfully....

Nevertheless, at the "affordable" price tag and nothing to pay for 10 years, you bet I am queueing up. Apparently, an investor has already blocked 100 units and I am wondering if we will be able to raise sufficient volume to negotiate a deal as well. If you are as crazy as me, get in touch at sinleongng@yahoo.com

The Manhattan at Jalan Raja Chulan

This is UEL, a Singaporean developer's 1st project in Malaysia. UEL being a reputable company back in Singapore will hopefully do it Right First Time to stamp their mark here. They have already got it right with the location. You can never beat this one. In the CBD fronting Jalan Raja Chulan with access from 2-way traffic. This is one up from St Mary Residences or direct competitor The Tribeca in Jalan Imbi which can only be accessed from a one-way lane/road or Idaman Residence or KLCC Parkview which are located inside some unknown small lane.

Having lived in St Mary, I can tell you how terrible it is when you only have a one-way access. I am not saying that it gets jammed or clogged up. Everywhere else, including in the suburbs get traffic jam during peak hours. But it's the non-peak slow moving traffic which gets at you when you need to make that frustrating long crawl around the block just to get home.

It has been over a year since I mentioned in this blog about an up-coming project on this plot of land. If I can recall, the land was sold at around RM150million in 2010. This is hearsay. But the figure seems about right for the location and size. It's really a very tiny plot, flanked by Wisma MPL, a Grade C office complex and a bigger car park which is awaiting development. At the back of it is a Chinese temple and Menara MPI.

I had a little scare a couple of months ago when there was news that the MUI group is selling Menara MPI to Mayland. That would have meant the building would be torn down and rebuilt completely blocking the KLCC views from my apartment in Seri Bukit Ceylon. But apparently, the plans was thrown out by DBKL... so, safe for now....

Surprisingly for such a location, despite the small plot of land, UEL has only packed in 139 units of mostly 2 bed-room units in the Manhattan. The 1-bedroom units are in the minority and the top floor consists of 900+sf duplexes. With a going price averaging RM1.4million per unit, the total development value assuming all units are sold out is just under RM200million. So, you may call it magnanimous or simply not greedy, UEL may just be trying to do it Right and Nice the 1st time. Or perhaps, DBKL was not allowing the project to be too dense... Anyway, every unit comes with a car-park and in fact, the bigger units, gets 2 car parks each. Not bad and certainly a good lesson for all those money-minded Chinaman developers in Malaysia who are stingy with car parks...

The pricing obviously reflects the low density. The cheapest units are just under a million. The best buy is the 588sf 1-bedroom corner units which has a really lovely layout and there were less than 10 of them. Needless to say, they were sold out, despite the RM200+psf premium i.e. RM900k and up. The deal is, early birds gets 8% discount and a further 5% rebate from the SPA price. All units are fully-furnished and if you buy a unit up to the 19th floor, you get a 5% guaranteed rental return over 2 years, which essentially is there to allow the developer to charge you more for the lower floors.

Picture Above: The 588sf 1-bedroom corner unit

Anyway, at this 5% rental return, that's implying that you are renting it out for RM3700per month. That's quite the going rate for 1-bedroom apartments in the CBD but not easy in the sluggish over-supply market these days. Even Singapore's Ascott has vacated their 110-unit inventory at Seri Bukit Ceylon. With the low density at the Manhattan, there will be hardly any internal competition but the challenge will be going against the more modern and established apartments in the CBD who have owners going-in at much lower investment such as SixCeylon, Verticas Residency, Fairlane Residence, One Ceylon, One Residency and Suasana Ceylon. That's where the Manhattan's location is so so very important. And that's why I think, the cheapest 1-bedroom units in terms of per square feet, the 603sf Type B2 are not going to make it. They are elongated intermediate units with the bedroom taking all the  windows leaving the living room and kitchens in the dark. No tenants in their right mind is going to sign a 1 year tenancy agreement to rent these for RM3700/month!

Pictured left: The 603sf Type B2

With the 588sf corner units sold out, the other 1-bedroom units worth considering is the Type B3. However, the cheapest unit is RM1.2million - after discount...

To me, if I am spending close to a million, I can never justify buying a 1-bedroom condo. For just about 15% more, I can get a 2-bedroom unit and most expat tenants tend to have a little more budget for 2-bedroom units. As a bench-mark, a 2-bedroom apartment at Seri Bukit Ceylon can fetch RM5000 - RM6000/month. Over at St Mary's, they start from RM8000/month (although an agent sent me an sms saying he has a client with a RM6500 budget and I wonder who would be that desperate...)

The 2-bedroom apartments at the Manhattan have quite nice layouts since most of them are corner units.  My only complain is the bedrooms being too cramped - especially the master-bedroom. There are mainly 4 variants about 1000sf with slightly different sizes due to the balcony being either an indoor-Lanai, a large balcony, a small balcony or no balcony altogether. The design with the Lanai is the most rediculously wasted space as there is a large post in the middle of it. I am rather surprised that the developer has chosen this design to be represented in their show room. Also, taking a close look at showroom, one can't help but notice that the quality of the furnishings especially the wardrobes are extremely poor. Now most showrooms you see in Malaysia, usually you don't quite get what you see - the delivered furnitures are normally low quality. So, if UEL is using low quality furnitures in their showroom, either they are being painfully honest or you might be getting something really terrible at the end.

The 2bedroom unit layout

With 7 floors of car parks, the 2-floor facilities deck lies on the 8th and 9th floor. The swimming pool is rather nice, designed like it's hanging over the 8th floor. The gym however, looks like it's going to be very small. E&O has made this big mistake with putting a small and ill-equipped gym in St Mary's. This has turned away many potential tenants, including all the British expats from my company. Most expats are very health conscious these days and they want a good gym to work out at when they're home.

Surprisingly, the maintenance fee is only RM0.40psf. I am not sure if this is sustainable for such a low density apartment. With 139 units, they're looking at a collection of about RM50k per month. I think this will hardly cover electricity costs and security, 2 of the main costs of running an apartment. It's freehold, but commercial-titled. So, the overall costs of maintenance may be higher than you think.