Cyberjaya

Which condo - luxury or not - in Cyberjaya which is not just another student dorm?

How many expats will want themselves of their family to live beside a dorm?

Settling My Home Loan

I just wanted to find out what are the costs I have to pay the bank to settle my loan early. They cannot tell me this information at the counter and their loan officer on the phone tries his best to twist and turn the information.

All I need to know is, how much is the balance of my loan and what are the bank charges? They want me to pay RM50 to get this information in a so-called redemption statement. I don't do this often but as I remembered when I settled some of my previous loans there were legal fees and other redemption fees etc etc... lots of hidden charges.

OCBC Bank is one such bank and I am so unfortunate I have 2 housing loans here. Their service up to date has been excellent. The personal bankers are pretty, smiles all the time, very polite and so lovely. But the minute you say you want to settle your loan everything changes. I asked her this simple question, can you please tell me ROUGHLY how much I need to pay to settle... she goes wishy washy and when pressed, she quoted an amount from her screen which was my outstanding balance.... and then she blurted out, this is just rough figure.. you need to pay RM50 to see all the hidden charges in the redemption statement...!!!!

Rehda: GST will push up home prices by 2.6%

Tuesday, 21 October 2014

By: ISABELLE LAI

PETALING JAYA: Home prices will rise by about 2.6% once the goods and services tax (GST) comes into play, said the Real Estate and Housing Developers’ Association Malaysia (Rehda).

The chairman of the association’s task force on accounting and taxation, Datuk Ng Seing Liong, said that the calculation was based on its consultations with industry experts and member developers.

Rehda’s 2.6% estimate differs from that of the Customs Department, which expects the GST to have an impact of between 0.5% and 2% on house prices, assuming there’s no change in supply and demand conditions.

Ng said the association was in full support of the GST and concurred with Customs GST director Datuk Subromaniam Tholasy, who had said that land did not incur the 6% GST rate.

However, he said land was by no means the largest cost component in property development.

“As our calculation clearly spells out, the construction cost, which constitutes 46% of the total development, is not only the largest component but also the component which will attract the GST of 6%,” he said in a letter to StarBiz.

He said the GST on this component would inevitably lead to an increase in house prices.

Appending calculations for a housing unit originally priced at RM400,000, Ng said the price post-GST would be around RM410,560.

Under the 46% construction component, costs were broken down into non-service taxable and service taxable segments, representing 44%, or RM176,000, and 2%, or RM8,000, respectively.

Under the non-service taxable segment comes items such as cement/concrete, steel, bricks and sand, while the service taxable segment includes tiles and fittings/sanitary. Under the existing sales and service tax, no tax is imposed on the non-service taxable category, while the service taxable category has a tax of up to 10% imposed on it.

Post-GST, Rehda’s calculations showed that the non-service taxable cost had gone up to RM186,560, while the service taxable cost remained at RM8,000.

It maintained the same cost estimates for other items, including land (15% or RM60,000), infrastructure and pre-development works (10% or RM40,000), professional fees and marketing costs (6% or RM24,000), finance costs (6% or RM24,000) and profit (17% or RM68,000).

Ng said Rehda also disagreed with Subromaniam, who had said that developers could easily absorb cost increases as their margins were around 30%.

He said it was currently impossible for developers to earn up to a 30% profit, as most development costs were on the rise, along with various capital contributions and charges imposed on developers.

“On average, as tabulated in the calculation, developers, most of which are public-listed companies, are only making around 17% at best,” he said.

However, Ng said it was still too early to determine the actual house price increases post-GST, as Rehda was still in discussions with the Government and there appeared to be many more issues to be ironed out.

Too Much Excitement over Iskandar

Earlier I voiced my reservations about investing in Iskandar real estate. The recent spat with Singapore over the Causeway toll and the VEP charges seems to reinforce this. The Johore state government is way too unpredictable to offer any stability and assurance to investors.

Today, the Malaysian Insider also reported an oversupply - http://www.themalaysianinsider.com/malaysia/article/iskandar-needs-economic-activities-to-avert-housing-glut-says-portal

“There seems to be a demand and supply mismatch… It takes such a short time to introduce all this supply, but the population is not there yet. Looking at the pricing, the units are not geared towards the local market, they are geared towards the overseas market. Maybe developers are very optimistic about the prospects of Iskandar, but there may be too much supply too soon,” todayonline quoted Khalil Adis, the founder of property firm Khalil Adis Consultancy - See more at: http://www.themalaysianinsider.com/malaysia/article/iskandar-needs-economic-activities-to-avert-housing-glut-says-portal#sthash.kHloAzZo.dpuf

Good Quality Affordable Homes

Nowadays, it is hard to find any property in an acceptable location which is below RM500k. It is even harder to find anything below RM300k. By acceptable location, I mean places like PJ, Setapak, Cheras... not Semenyih, Sungai Besar etc... But I'm sure even those far-flung outskirts of the Klang Valley will soon see prices unimaginable by today's standards. Look at Klang and Kajang. They are not near at all to KL city but property prices there are almost as high as PJ and Subang Jaya.

And another thing you see these days, most property launches are either very high density or if not, they are very "luxurious". The fact is, most people's income have not really gone up but property prices have increased out of reach. So, every time you see there is a government effort to build affordable homes, they turn out to be these huge highly densed construction such as PR1MA and those low cost housing projects. Many of these, like what you see in the PPR (Projek Perumahan Rakyat) so-called people's housing turn out to be huge slums with all sorts of social issues.

So, I am taking upon myself to develop small low density and quality housing - to prove that it can be done. We are talking about 2-3 bedroom units at prices below RM300k, or RM400k at better locations. There will be studio apartments for the young guys and girls who are just taking out their 1st pay-cheque. Starting pay is around RM2000/month these days, so what can they afford? Definitely RM160k and below... watch this space!

Density will be from 10 units up to 80 units per project. They are not going to be too small either. The 2/3 bedroom units will be no less than 800sf and the studios are 500sf and up. Nothing fancy. No swimming pool, no gym, no sauna... no gimmick. Just basic, no frills quality homes with car parks and security.

How are we going to make it?

The answer lies in our local councils and city hall. It's up to them to approve such projects and also decide on the plot ratio and density allowed. What we have seen is a lot of approvals for luxury bungalow, semi-D and gated community developments. This does not go towards solving the nation's housing problem but the issue usually is the objections from the local community. Nobody will like it if a medium cost apartment project suddenly comes up in their posh Bangsar or Damansara Heights. There has been some precedents however...

I take a lot of inspiration by looking at neighbouring Thailand and also our own Penang Island, looking around the Pulau Tikus and Gurney area. Here, there are many small apartments built on formerly bungalow lands. There are a few in KL as well, such as One Mesraria in OUG, Old Klang Road which has only 20 units 1,300sf apartments. Just over a year ago, you can get a 3-bedroom unit here for around RM350k. Today, the price tag is RM580k. If you can find a seller, that is.

I am going to start by introducing you to a small project of studio apartments. This will be at Sentul, about 2km from the Sentul LRT station... so the location is not really that bad. The land is freehold and it is only 4000sf. Normally, the council will require you to have a 10ft barrier from the border of the land up to the built-up area. For a 4000sf piece, it means you will lose almost 1600sf, so your built up will end being just 2,400sf. But the interesting part of this land is, you can build from border to border, so it's possible to use up almost the entire 4,000sf. The next thing is the approval from city hall. The most they will allow is a plot ratio of 1 to 5. Take away 1,000sf for common areas and infrastructure such as lifts, lobby and stair case, a plot ratio of 1:5 means you can have 3,000sf x 5 = 15,000sf.

Therefore, if we are going to offer 600sf studio apartments, that means we can build 25 units. But building 25 apartments means providing at least 25 car parks.... that will make the building too tall or if we are doing basement car parks, it will be too expensive. So, to cut the story short, we are just having 12 studio apartments and 1 special 2 bedroom unit.

This is how the maths work out...

Cost of land RM560,000
Cost of construction RM1,000,000
Miscellanous and statutory costs RM80,000

Total cost RM1,640,000

Total sellable square feet... 12 x 600sf and 1 x 1,200sf = 8,400sf

Cost per sf... RM196

The cost for 600sf studio is RM117,600 each

The cost of 1,200sf 2-bedroom unit is RM235,200

So, if we are selling the studios at RM160k each and the 2-bedroom unit at RM350k, we are looking at a gross yield of 38%

It may sound too simplistic to some of you but may I remind you in this case we are only building 13 units in less than 4,000sf of land. When we look at other examples later, it becomes even more interesting...

For Sale - 1br Unit at Seri Bukit Ceylon

A friend has put up this unit for sale. It is a 1-bedroom serviced apartment, on a mid floor - 14th floor to be exact with an unblocked view of the KLCC Twin Towers.

His asking price is RM670,000 full-furnished as is. Comes with 1-car park.

Please contact me for viewing sinleongng@yahoo.com

Endah Villa - For Sale as a Good Home

If you are looking for a HOME, a nice place to raise a family, do consider this lovely little apartment. It is a 3-bedroom and 2 bathroom corner unit with a nice balcony over-looking the Bukit Jalil sports complex. You will never miss out on any concerts anymore...

Location is in Sri Petaling, approximately 1.2km from the Bukit Jalil LRT station. It is also accessible via the MRRII, the KESAS Highway and the North-South Expressway.  



Endah Villa calls itself a condo. To be brutally honest, it has been badly managed, with facilities falling apart, it's far from being a condominium. The pricing reflects this. However, in the past couple of months, a new management has taken over and they are starting to put things in order. A tender has been issued and will be awarded soon to paint all the 8 blocks in this complex.

The buildings are close to 20 years old now. Being leasedhold, this is not an encouraging fact. As with many leasedhold properties, especially a mismanaged one, the price hasn't increased much and therefore, I say this is a great place to start a home because the purchase price is inexpensive.

A home it is... as you can see from the picture above, Endah Villa is probably one of the few apartments in Kuala Lumpur with such generous grounds. You do not feel like you are cooped up in a dense community. It's a great place to raise kids, as you can see them having lots of space to run around and grow. There is also a lively community hall with badminton and squash enthusiasts converging every evening.

You are also not far from amenities. Conveniently, there is a hypermarket literally across the road and banks and other public utilities not far away.

This is a rare corner unit, with a nice number for an address with liberal dashes of 8's, which is auspicious for the Chinese community. The unit is very bright and windy.

The bedrooms, dining as well as the kitchen windows open out to a great view, with fresh air flow unlike those intermediate units facing an air-well. 

This unit was put up for sale over a year ago and was successfully sold within days. Unfortunately, the paper work was not proper. Therefore, the buyer withdrew and we had to go through processes with the developer and lawyers. Finally, the matter has been settled and a strata title is now being issued. During the whole process, the unit was rented out to a young family.

I know many punters are going to ask me how much is the rent as they want to buy it for investments. Although rental here can go as high as RM2,000/month and some fully-furnished units fetch RM2,200/month, I discourage the notion that this is an investment. The opportunity to purchase this should go to a young family who wants a great place for to raise their kids and live. My sister lived here with her husband and after they migrated overseas, it was rented out to a foreign family with 2 children. Their 2 children were in elementary school when they lived there up till the elder daughter graduated from medical school. The family subsequently moved to Canada.

The current tenant is a dentistry professor at nearby IMU. He and his wife moved in a year ago with their young son and recently they have just given birth to a baby girl. This is the story of this place called HOME :)  



Contact me for viewing... sinleongng@yahoo.com

Expat Clause

Lately I increasingly find that expat tenants are asking for an exit clause in the name of "Expat Clause" which states that should they be transferred to another country, lose their work permit or for whatever valid personal reasons that they cannot continue with the tenancy, they would like to be freed from the tenancy without penalty and have their deposits refunded in full.

This is obviously a risk we landlords have to take, not from the loss of the rental, as we can find new tenants but rather from the disproportionate commission paid to the estate agency. I have asked every agency and none of them were prepared to refund even part of the commission if the tenant executes the Expat Clause.

So, it is important when drafting the agreement, to insist that the Expat Clause can only be exercised in the second year of the tenancy and requires proof of the change in circumstances as well as sufficient notice (usually 2-3 months) to terminate the tenancy.

Some tenants insist that the Expat Clause can be exercised even within the 1st year as they may have only a conditional work permit of less than a year or they are on a shorter than 1 year assignment in this country which may or may not be extended. In my experience, if the tenant insist on this then it is most likely you are facing a shorter than 1 year term. So, you should not pay the agency a full commission.

Unfortunately, in this market glut, some desperate landlords are willing to accept whatever terms just to secure a tenant. While it must be accepted that foreigners have circumstances that they may have to leave the country earlier, if it is less than a full 1 year tenure, they should pay a slightly higher premium for the shorter term contract.

I propose that this premium should be spelled out in the contract and deducted from the deposit rather than raising the rental amount because agencies tend to receive their commission based on 1 month rent. For example, the clause should read something like this:

If the Tenant terminates this Tenancy for whatever reasons, the following percentage shall be deducted from the Deposit:

After fulfilling more than 12 months term: 0%
After fulfilling more than 10 months but less than 12 months term: 20%
After fulfilling more than 8 months but less than 10 months term: 40%
After fulfilling more than 6 months but less than 8 months term: 60%
Fulfilled less than 6 months term: 100%

What say you?

Block Purchase

With everything nowadays hitting RM1million per transaction, even those tiny little studio units, I am wondering if anyone is interested to buy a small block of about 50 condominiums in the heart of Bukit Bintang. The block consists of 30% 1000sf 2-bedroom units and 70% 650sf 1-bedroom units. The 1-bedroom units work out to be around RM650k each, fully furnished which is a price one cannot find in the city center anymore.

Moreover, the building is freehold and fully tenanted en-bloc to a MNC for a 5-year contract beginning this year. The yield works out to just about 4% per annum on average, with yearly rental increments built into the contract over the 5 years.

Each unit has its own individual title, so it is possible to sell each of them separately or en-bloc in the future.

If interested, get in touch la... sinleongng@yahoo.com

Homes for Living, Not for Profits

This image from a video footage taken off malaysiakini says it all. This is what happens when investors start to dabble in people's housing. I have known some people who has bought entire rows or floors off low or middle cost flats and then sells or rents it off with a decent yield. This is not only unethical, it puts us property investors all in a bad light. The problem is then, the government who knows nothing about properties start to impose all sorts of blanket rulings to curb speculations affecting even those high end properties that we invest in. 

So, invest ethically so that we can continue investing...

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.

Will the New Interest Rates Impact You?

‘New OPR will have little impact’

Posted on July 11, 2014

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.

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: http://www.themalaysianinsider.com/business/article/bank-negara-raises-key-rate-for-first-time-in-3-years#sthash.BlrREYmb.dpuf

Iskandar Johor

There has been rather a lot of excitement surrounding the Iskandar region in South Johor bordering Singapore in the last few years.  Many Singaporeans were very excited at the prospect of owning landed properties so close to their country. I have friends who have made investments and made a lot of money as the property prices there shot through the roof.

People asked me what I think of Iskandar. I say, very good... people made money. Properties prices appreciated over 100% the last 3 years and some people are looking at something like 15% rental yield. There is apparently more room for appreciation as the federal government keeps announcing incentives for investors in the Iskandar region. There is even talk of the Singapore MRT extending into Iskandar and Iskandar will be like Shenzen to Hong Kong or Zhuhai to Macau.

The more they give, the more concerns I have. I am not talking about the tax breaks and incentives. Those are good and in the right direction to pull people in to settle here. But Malaysia is an apartheid of sorts. Doing business here means one has to give (literally give...) shares (about 30% to 50% depending on the type of business license) to local Bumiputeras (children of the soil - meaning Malay Muslims and  other natives, but usually it just means UMNO Malays). This requirement is being relaxed in Iskandar. There is also land ownership for foreigners being relaxed allowing foreigners to freely buy and develop land in Iskandar.

Now, this is where it is going to be a problem. First of all, in the short term, land prices are at sky high. This prompted many land owners, mostly Bumiputeras and the Royal family included to sell their land. Foreign developers now come in to build tens of thousands, if not hundreds of thousands of homes and offices in a yet to be tested area. If Iskandar is to flop, this will turn out to be a mother of all gluts!

In the longer term, if Bumiputera equity in this region is to drop too drastically, insecure locals might push the government to tighten regulations and take back incentives offered to foreigners. As much as the federal government is pushing for the success of the Iskandar region, land matters still falls under the erratic state government. The latest fiasco is the passing of a bill to give sweeping powers to the state's Sultan over land matters although many of the clauses have been watered down to appease the public over the uproar. But this is a step towards protecting their interests over the interest of new migrants and investors into the state. Another example of what the state can do is the sudden change in weekend days from the usual Saturday/Sunday to a Friday/Saturday in line with some Muslim countries.

So, there you go... while investors are falling over themselves to put money in Iskandar, I still feel the world is big enough where one's hard earned cash can go to... :)

Sultan of Johor’s RM4.5 bil backlash

by Khairul Khalid, Kinibiz

ISSUES  |  JUNE 10, 2014 11:00 PM

Has Sultan Ibrahim of Johor’s succession of big money deals over the last six months caused the tide of public opinion to turn against Johor’s royal palace? KiniBiz examines the roots of the public backlash in a three-part series.

________________________________________________________________________

A quiet storm has been growing over the Sultan Ibrahim Ismail’s   increased commercial dealings and business interests.

It looks to have come to a head with strong public and political opposition to Johor’s new Housing and Real Property Board Bill that was initiated to give the Sultan of Johor sweeping executive powers in the property industry. KiniBiz will examine that issue further tomorrow.

Many observers cite the Sultan’s sale of 116-acres of prime land in Johor Bahru last December to China developers Guangzhou R&F last year as a major turning point.

The deal pocketed the Sultan RM4.5 billion. Although scant details have been released, unconfirmed sources told KiniBiz that much of it is prime land in the Johor Bahru (JB) city  centre and seafront designated as development zones in the Iskandar region.

Sources also told KiniBiz that the land was alienated to the Sultan of Johor by the state government for a lot less than the sale price. KiniBiz has not been able to verify this independently.

It is not known whether the Sultan has any stake in the mixed developments to be undertaken on this land bank.

The China angle

The special economic zone of Iskandar has been buzzing with big Chinese mainland developers such as Country Garden constructing projects on a massive scale that has dwarfed other local developments.

The Sultan’s RM4.5 billion land sale to China developers clearly ruffled some feathers, not least among local developers who are worried that the local market could be swamped with units made by China developers and cause a property glut.

Ironically, only last July Iskandar Investment Bhd or IIB announced that it was limiting the sale of land in Iskandar through a “controlled release” strategy.

The move was deemed necessary because Iskandar “is still a relatively small and fragile region” and to “allow investors to make money”, said IIB president and CEO Syed Mohamed Ibrahim then.

There were also concerns that selling prime state land to China was a politically insensitive move. Nevertheless, there was little vocal opposition at the time when the RM4.5 billion land sale was announced, although there were grumblings on the ground.

Fear factor

The Sultan of Johor is often treated with a mixture of respect, awe and even fear especially among Johorians. Open criticism of the Sultan is seen as social taboo. Local professionals and businessmen keep their lips pursed for fear of repercussions.

“Yes, there definitely is a fear factor,” said a local Johor businessman who did not want to be named.

Things could slowly be changing with the furore over the housing bill.

“With all due respect, he (the Sultan) shouldn’t be involved in business. This is the first Sultan known to Malaysians to sell land to China. And it is prime city land. It is unprecedented. Even the previous late Sultan Iskandar (Sultan Ibrahim’s father whom the  Iskandar region was named after) did not engage in such public business dealings,” said a practicing lawyer in Johor who spoke on condition of anonymity.

In theory, the RM4.5 billion land sale to Guangzhou R&F alone could place Sultan Ibrahim among the richest men in Malaysia.

Vincent Tan

Business dealings

Based on the latest Forbes Malaysia’s 50 richest list, the Sultan of Johor would rank just behind Vincent Tan (a businessman that the Sultan has been closely linked to) who is at number 10 on the list with an estimated net worth of just over RM5 billion (US$ 1.6 billion).

The Sultan could have slipped quietly into the background after the mammoth land sale, but subsequently he made several other eye-catching moves in the corporate world. He has been acquiring shares in other existing businesses in deals worth more than RM600 million.

After the RM4.5 billion land sale, the Sultan of Johor bought a 15% stake in MOL AccessPortal (MOL) for RM396 million and 20% stake in Berjaya Times Square Sdn Bhd (BTS) for RM250 million.

Interestingly, both companies that the Sultan of Johor bought stakes in are linked to Batu Pahat-born Tan who is chairman of Berjaya Group and owner of Cardiff City football club.

Most recently, the Sultan of Johor made waves again, this time in the energy sector.

A consortium of SIPP (SIPP) Energy Sdn Bhd, YTL Power International Bhd and Tenaga Nasional Bhd (TNB) was conditionally awarded the development of Project 4A, a new 1,000 megawatt (MW)–1,400MW combined cycle plant in Johor.

The project is reported worth approximately RM6 billion, according to a CIMB report.

The Sultan of Johor owns a 51% stake in SIPP with the balance shareholding split between two company directors — Daing A Malek Daing A Rahman (24.5%) and Anuar Ahmed (24.5%).

With such high-profile business acquisitions, many have questioned whether it is appropriate for a sitting ruler to be so conspicuously involved in the business world.

Legal implications

“The constitution says that they (the royals) should be ceremonial bodies and above politics. They get a lot of remuneration and grants from the state government. These are all from public funds. They don’t need to be in business. It is also not right for a Sultan to be in competition with the rakyat for businesses. How can they compete? It is the Malay “adat” not to go against the Sultan, ” said the Johor lawyer to KiniBiz.

The lawyer is also concerned that the Sultan’s various business dealings could expose himself to potential lawsuits.

“If the Sultan is involved in companies and business entities, he is liable to be sued in court if anything goes wrong. That could tarnish the royal family’s image and bring the country into disrepute,” said the lawyer.

This is not the first time that the Sultan of Johor has been linked with prominent local businessmen. Previously, he was heavily linked with Lim Kang Hoo, majority stakeholder of Ekovest and Iskandar Waterfront Holdings (IWH).

Lim Kang Hoo

Property tycoon Lim is ranked number 19 in the latest Forbes Malaysia’s 50 richest list with an estimated net worth of over RM3 billion (US$ 975 million).

During the 1997 financial crisis, Lim took over RM200 million debts of state investment agency Kumpulan Prasarana Johor (KPRJ) in return for land reclamation rights. With the value of land skyrocketing in Iskandar in recent years, so has Lim’s fortunes.

IWH is a public-private partnership between the state of Johor and Lim, with KPRJ having a 40% stake. Lim holds the balance 60% through his vehicle Credence Resources Sdn Bhd (CRSB). Lim is also executive chairman of public-listed property company Tebrau Teguh.

Lim owns vast tracts of land in JB’s waterfront especially in Danga Bay. Last April, Shanghai-based developer Greenland Group paid RM600 million to IWH for 13 acres of land in Danga Bay. IWH and Greenland will be in a joint venture (JV) for a mixed development worth a gross development value (GDV) of RM2.2 billion.

Previously, IWH sold 58 acres of land to Country Garden for RM900 million to develop its Danga Bay project that includes 9,000 units of high-end condominiums units and commercial development with a RM18 billion GDV.

IWH is also planning an initial public offering (IPO) later this year that could be worth up to $300 million (RM960 million).

Sultan of Johor confirmed that billionaire Lim is his business partner in a 2012 interview with a few local bloggers, including Ahirudin Attan (or Rocky as he is more popularly known as).

During the interview, the Sultan also angrily dismissed allegations that he is a “30% man” based on rumours that he was asking for a cut of major business dealings in the state. The Sultan explained that the “30% is for the state”, according to the 2012 interview.

Chinese companies have been investing huge sums of money and contributing to Iskandar’s growth substantially.

Feeding China’s love for property, land

Major Chinese developers in Iskandar include Country Garden, Guangzhou R&F, Agile Property Holdings and Greenland Group that have invested a combined US$6 billion (RM20 billion).

In 2013, Chinese institutional and retail investors poured US$1.9 billion (RM6 billion) into Malaysia properties.

However, there has also been growing unease with the increasing Chinese ownership and presence in vast tracts of waterfront land in JB.

“Technically, it could compromise the security of the nation and is not in the best national interest. The Chinese have bought land all along Danga Bay up to Tanjong Pelepas. They are developing all sorts of projects without any restrictions such as the bumiputera quota that are imposed on local developers,” said the Johor lawyer.

The cocktail of big business, land, politics, royalty and foreign ownership could be a political time bomb for Johor. Both sides of the political divide are already up in arms over the Sultan of Johor’s potential involvement in state administration via the Housing and Real Property Board Bill.

Major developments and investments in the southern state such as Iskandar and Pengerang could be placed in delicate positions in light of these recent developments in Johor
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GST Will Cause Increase In Property Prices

Developer predicts increase in property sales/prices and building costs, 10 June 2014


A major property developer (Mah Sing Group Bhd with remaining gross development value (GDV) and unbilled sales totalling RM33.9b) expects a rush for properties in the second half of 2013 in anticipation of the implementation of the Goods and Services Tax (GST) in 2015 and inflationary fears.

The group’s Executive Director for corporate and investment, Datuk Steven Ng Poh Seng said people buy properties as a home and as a hedge against inflation and sees a further push because of the GST. Accordingly, he expects property prices to increase in 2015 (on the implementation of the GST) by 4% (residential) and 6% (commercial) due to higher construction costs.

Overall, Ng expects house prices to increase by between 5% and 10% in 2014 and 2015 (house prices rose by 11.6% and 11.8% in 2013 and 2012 respectively). He attributes this partially due to increases in building material costs which went up by 3% in 2013 while in 2014 they have increased by 1% because of higher electricity and natural gas tariffs which ultimately get passed on to buyers.

Source: New Straits Times/The Star Online, 10 June 2014