It's global, the slow down

Just got back from a trip to London. While I was there, news about Caroline Flint, the UK housing minister with shocking notes revealing the downturn in the property market made the front pages... (http://www.guardian.co.uk/money/2008/may/18/property.housingmarket) You got to respect the British journalists. The poor minister was going to meet British PM Gordon Brown and the journalists photographed her handwritten notes from afar.

During the stopover in Bangkok however, news reported that property developers were preparing for up to 5% price hike to cover for increase in material costs (http://www.nationmultimedia.com/search/page.news.php?clid=6&id=30073374). As I am familiar with the real estate market in Thailand, I can tell you that it is not so hot at the moment. While the rental market remains steady, subsale has slowed down tremendously. Prime units on sale since September last year is still in the market looking for that elusive buyer.

My opinion is, no matter how much property has appreciated, the appreciation means nothing if there are no buyers. Few months ago, I was dismissed as a doom-sayer. Today I have the satisfaction of being witness to high premium units such as Meritz, Hampshire, Stonor etc. entering the market after apparently appreciated to almost RM2000psf, many speculators are sweating as they struggle to flip their units.... mortgage interests payments are starting to kick in. While some may argue that most of these buyers are foreign cash, still a sizeable chunk are local speculators with little fundamentals to back them up. Get ready for a cheap sale...

Kampung Warisan, Jalan Jelatek, Setiawangsa

Kampung Warisan is probably one of its' kind in Kuala Lumpur. It's a condominium in a resort-like environment and extremely low density - only 275 units within 15 acres. Some people have argued with me before that there are other similar greenery themed condos such as Riana Green at Tropicana and Bukit Gita Bayu but hello... these are in Selangor, not KL. The fact is Kampung Warisan is located 6km from KLCC and it is also located right in front of Setiawangsa LRT station which is 6 stations or 15 minutes away from KLCC - Setiawangsa, Jelatek, Datuk Keramat, Damai, Ampang Park and whoops bang.... KLCC!

Here are some pics of this lovely place. Starting with the fish pond.

Free form Swimming pool

Block Nipah from the visitors car park. One thing I really love about this place... there are ample car parks. You won't find residents parking illegally outside the condo in the evenings... something which we are beginning to see happen at Seri Maya next door.

This is my unit. A one bedroom 755sf. There are only 24 such units in Kampung Warisan.

The restaurant.... my opinion? the food here sucks and expensive. Better take the LRT to Sri Rampai and eat at Jusco.

The thick foliage off my balcony...

More greenery off my balcony... I swear I saw a squirrel!

This is the said balcony...

Back to the pool. This block consists of the most desired units, all 3 and 4 bedroom units facing the swimming pool.

Now for the interior... since this place is so "kampung", I decided to go Kampung with the interior. I think the cream wall goes very well with the white ceiling skirting and lots of wood. If you like modern furniture, this is not the place. One of the neighbours had modern ikea furniture with vertical blinds for the windows.

As you walk in through the main door, there is this teak wood cabinet on your left. I would use it as a shoe rack but I think not many people have as many shoes as I do.

Over across the hall, I hung a matching mirror window. I made a mahjong cum dining table with teakwood legs and Iranian Perlatino marble. Later you will see a matching marble top on the dresser and work table. You may comment that this marble top matches the floor and I frankly only just realized this - the floor is also from Iranian Perlatino! So, in hindsight, I might like to use a darker tone marble such as Dark Emperador....

This "ancient" work table was just being neglected at a corner of my house until I decided to put a marble top on and revarnish it.

I never liked nyatoh wood. And still don't. Unfortunately, the huge built-in wardrobe cum dresser is made of nyatoh wood. So, save from tearing it off and spending a bomb on a new wardrobe, I revarnished it and put a piece of marble top on the dresser. Hopefully, the marble (...and I love marble) will distract people from the nyatoh wardrobe. Another piece of marble to the rescue... "Oh my God! Nyat...oh what a lovely piece of marble on the dresser..."

The kitchen... in my opinion is a bit old fashion and dark looking... I like a bright modern kitchen but what's the only way to save the kampung feeling? maybe if I added in some modern appliances?
The bedroom used to be painted green... sort of turquoisy, bluey green.... So I "creamed" it... and I think it matches the teakwood ming style bed and of course the lovely piece of marble on the dresser...

Before anyone start accusing me of doing some marketing for Kampung Warisan and it's developer, Eastern and Oriental, I would like to add some negative points:

1. Termites - some of the common areas badly infected and the management don't seem to be doing anything about it as it has been there since November last year when I first noticed it

2. Traffic Jam - The Jalan Jelatek/Ampang access to Kampung Warisan can be very slow during peak hours. The LRT is jam pack like sardines as well. The trick is to get on the train to the opposite direction till you reach the last station and change the train. This might add hours to your travel

3. Mosquitoes and other creepy insects - oh my god, plenty of it!

4. It's almost 10 years old - stuffs are falling apart. Being a 2nd hand buyer, you also need to pay people to rip old built-ins apart and cart furnitures/fittings away

Subang Jaya SS15?

How's SS15 for an investment? Watch this space for comments and pics - coming soon!

I've been busy....

I took possession of my new pride and joy last Friday morning. In the afternoon, my first potential tenant came to view it. Later that afternoon, before the next viewing had a chance, he confirmed and deposit paid within 24 hours. I then have less than 3 days to get an old beaten up one bedroom apartment into a habitable abode. Imagine, the tenant saw an unfurnished apartment, where everything from the aircon, to the kitchen hood are not working. And the previous tenant left cooking stains all over the kitchen walls and cabinets. How did this place sell? Mind you, I'm fetching double digit returns!

Nobody I know has any hate for Kampung Warisan. Everyone talks about the charming gardens and the greenery, the swimming pool, fish pond..... With only 275 units sitting in 15 acres of "forest", it is one of the lowest density development within a striking distance of KLCC.

In my opinion, Kampung Warisan is closer proximity to KLCC compared to Ampang Hilir. The reason is, the short crawl from Ampang Hilir to the Jalan Ampang/Tun Razak junction can take a looooong time. The only public transport you are going to get are buses or taxis. They would get stuck in this crawl. From Kampung Warisan, you can cross the road and jump into the LRT which will whizz you into KLCC in less than 15 minutes, including waiting time.

The only problem is, walking from your apartment through the thick vegetation, fauna and flora of Kampung Warisan to the main gate may be distracting and may take up most of the travel time...

The new Tun Razak

Goldhill Gardens just VP-ed. Asking price is RM850psf - RM900psf but agents tell me the going is a bit slow... Goldhill has the potential to be blocked of it's view of KLCC when the car parks and bungalows around it are developed. But that's not the reason why it's moving slowly. I say it's the economy.

Just a few steps from Goldhill, 231TR seems to be moving along quite well. I've never seen a project so divisive. In some forums of discussions, 231TR is the project everyone loves to hate and in some forums, people love it so much as to get so emotional defending it. I'll reserve my comments for now... but please don't reserve yours

The P Ramlee area

A few years back, I missed some opportunities to purchase a 3 bedroom unit in Crown Regency. Back then, it only cost about RM450psf i.e. RM675,000 for a unit circa 1500sf. Now the same unit is selling above RM1.2 million. How many units actually get transacted at that price? Especially the rental yield is so low. At RM6500per month i.e. 6.5% returns (I know some of you saying, wow! so good > 6%!).



picture above: Crown Regency

But apparently, Crown Regency is hot cake in the rental market because of it's old age, it's still possible to rent a 3 bedroom unit for less than 8k a month. Loads of people in neighbouring Parkview and Marc Residence complain about the noise from the P Ramlee entertainment zone featuring Thai Club, Run Jungle, Beach Club etc until 3am in the morning all weekends. How true is this? Anyone can comment?

A quick check with estate agents and Star classifieds reveals many units available for rent in Marc and Parkview. But it seems UBN apartment, further from the noise is full house!

Has the KL prime property market slowed down?

Several estate agents I had a chat with recently revealed that the property market has indeed slowed down. Most units transacted in the subsale market were apparently done more than 10% below "market rate". How do we determine what is the actual market rate? Take Marc Residence for example. It was launched at around RM600psf and in the height of the speculative market reached RM1500psf. A few estate agents handling Marc has told me that nobody has been able to sell at this "market rate" in these past few months. There are in fact some buyers out there but they are investors looking for cheap sale.

The tenancy market has of course followed this trend. Despite their prime locations, Marc and almost neighbour, Parkview has many vacant units. Aside from realtors' feedbacks, my measurement technique is normally taken at night between 9pm to 10pm with a glance up the building to see how many units have their lights on. If less than 50%, it's not very encouraging. This is certainly true at the moment. Another test would be the classifieds section. The most active one being the Star classifieds (http://classifieds.thestar.com.my/). We've been seeing a long list of Parkviews and Marc Residences in the listings. True enough that these 2 properties have always attracted a very long list in the classifieds. Previously because it was lucrative. Agents told me they were selling like hotcakes and sometimes 5 or 6 agencies' posting represent a single owner. However, one can't help but notice that lately the same listing been there weeks on end without any buyers.

One agent revealed that his one week posting in the classifieds for Seri Bukit Ceylon only attracted 2 calls. Both from co-agents who represent buyers on the lookout for a cheap sale.

Now for the great economic debate. Are we or are we not in recession? Is this 1997? Recession or no recession, my experience is that this is indeed a very difficult period for us property investors. Difficult because, with the ever dwindling pool of buyers, it takes us longer to sell and we are facing more competition, hence lower premium. Without contradicting myself earlier, it is also more difficult for us to buy because interest rates are still low, most owners are still holding on to their high premium. So while some transacted units saw huge discounts, in fact not many units are beign transacted at the moment. I hold the personal opinion that it is a bad idea to hold cash at the moment with inflation on the rise and interest rates so low. So what to do with the cash? And to buy in to any prime property at a bargain is difficult at this stage for the reason mentioned.

Bukit Ceylon

My first focus will be on Bukit Ceylon. Partly because I live here and partly also because I made my 1st investment here 10 years ago. In my opinion, there has been too much hype on the 1km radius of KLCC. Bukit Ceylon is not KLCC, in fact it is just outside the 1km radius ring. It is a hidden jewel and for this reason, many investors here still talk about 10% returns on rental yield. But I don't think this is for long... Until recently (I am talking 2007), one can get prime 5-star property in Bukit Ceylon for just over RM600psf. Now it is hitting almost RM900psf and there is talk that the to be launched project by Wing Tai Asia along Jalan Ceylon will be peddled for nothing less than RM1000psf. Why this sudden surge? What makes Bukit Ceylon so attractive?

I'll post my opinions later but would also appreciate to hear what all of you say.

Before we go any further, I would like to introduce more of Bukit Ceylon. Referring to the google map above (click on the map to get a larger view), Bukit Ceylon is actually a hill bordered by Jalan Bukit Bintang, Jalan Raja Chulan, Jalan Sultan Ismail and Jalan Pudu. It fringes on the glamourous and prestigious (Sultan Ismail/Bukit Bintang/Raja Chulan) and the notorious (Pudu). Within this enclave, you will find a very very diverse demographic from the rich and famous (the Sultan of Pahang has his palace here), the expatriates right down to the immigrant workers. There are premium condominiums, 5 star hotels and also ghetto-style walk-up flats. Even tenants in the same condominium can consist of senior executives of MNCs, right down to the tens of restaurant workers cramming into a single bedroom unit. I have personally seen this.
When investing in Bukit Ceylon, one has to be very selective. Not all the properties, even the supposedly high-end ones are in demand. Most long term investors, including myself would prefer freehold rather than leasehold properties. The leasehold ones here probably have less than 70 years of lease left in them... (well in the range of one's lifespan if starting young). City Gardens, Angkasa Impian 1 and Angkasa Impian 2 are the only 3 blocks that are leasehold.

City Gardens would probably serve well for own stay as it is located right on the quiet part of the hill and the low density spread. However, a fatal case where a lady fell from the only highrise block in the complex has not been very good publicity for the place. There is even word that she was thrown off her balcony by her estranged husband... just a rumour...

picture above: City Gardens

The 2 Angkasa Impians would probably do well for investors still hunting for that elusive double digit returns, if one doesn't mind the leasehold ownership. A one-bedroom unit here can fetch a minimum RM2000 rental and as high as RM3500/month. Generally for buyers, it costs 30% - 40% less than the neighbouring freehold properties. But there is an exception. Angkasa's immediate neighbour is freehold Mutiara Villa. It is still possible to get a smallish unit here for less than RM250,000 and earn almost RM2000/month rental despite the so-so quality of maintenance. There is much demand here and very difficult to find a seller. But some units perform better than others. Much depends on the unit's view, layout etc... with those facing KLCC and Menara KL (Telecom Tower) doing better. The reason for Mutiara Villa's success and hence lack of sellers is the fact that there are few condos now in this prime area at such relatively low rentals. In fact everything else in this area, we are talking about RM3k and up.

Right in the center of it all are the 2 competitors, Menara Bukit Ceylon and Seri Raja Chulan. Both offers 3 bedroom units with minimum size circa 1500sf and literally at the doorsteps of expats drinking holes and feeding ground of Changkat Bukit Bintang. The 2 buildings are surprisingly well maintained despite their age. The minimum rental here is at an affordable RM3500/month and can even fetch RM5000/month for those well done up ones. Asking and transacted prices are no less than RM600k and I heard of one transacted at RM750k recently. Seri Raja Chulan is lower density with only 4 units per floor while Menara Bukit Ceylon has 6 units per floor. Menara Bukit Ceylon is better positioned and those selling at a premium are facing KLCC and Menara KL. Avoid those facing Menara Bolton as there are plans to demolish the building and you'll be facing a construction site soon. For Seri Raja Chulan, avoid the units facing the walls of neighbouring Somerset Seri Bukit Ceylon and Downtown condomonium as you will hardly get any natural sunlight. Being built in the 80s also mean that they have very low ceiling despite their large sizes which makes one feel claustrophobic. I could literally touch the ceiling if standing on tip toe. Despite that, you will hardly find any sellers. And hardly anyone advertises for rent too as it goes by word of mouth and gone within days.

For those with a much lower budget, yearning for a low density freehold property in this location can either go for Mutiara Villa or Downtown condo. The latter is situated right beside Seri Raja Chulan but it does not compete. In fact, unlike Mutiara Villa, Downtown condo is in a slippery slope to failure. 2 sides of it's wall is litterally face to face with other buildings while the third which is currently facing a parking lot will see a huge construction. The maintenance is also very bad, I think a little worse than Mutiara Villa. It's facilties are no longer functionable except for the very tub they call a swimming pool.

At the top of the pecking order is Seri Bukit Ceylon. For a small development, it certainly multi-functions. The ground floor to the 3rd floor is commercial but some owners of the duplex offices have converted their units into chic lofts for residential use. 4th floor have some really good facilities, albeit a small-ish swimming pool but very under-utilized... which is good. 5th to 11th floor houses the 4-star serviced apartments owned by Somerset, a Singaporean hospitality group which also runs Ascott and Citadel brands throughout the world. The rest of the building consists of 4 exclusive duplex units sorrounding a roof top garden on the 23rd floor and 132 privately owned units of 2 bedrooms and 1 bedroom units. Some of the private owners furnish and let out their units to Somerset for a guaranteed return. Since it's launch in 2002, private owners have enjoyed a 110% capital appreciation and these first time buyers are getting almost 20% in rental yield. Even sub-sale buyers today can still enjoy double digit rental returns with 2-bedroom units most in demand and I know of at least one unit fetching RM8000 rental per month. Seri Bukit Ceylon is expected to maintain it's pole position until the completion of One Residency later this year 2008. The developer of Seri Bukit Ceylon, UMLand also owns the plot opposite and promises a project to rival all in the future.

picture above: Seri Bukit Ceylon

Besides Seri Bukit Ceylon, the other commercial titled residential property in Bukit Ceylon is Bidara 38. Unfortunately for Bidara, it has never really taken off. Partly due to it's unfortunate location which is facing the aircond compressors of Istana Hotel. Bidara also suffers from poor workmanship, bad layout designs and bad feng shui. It also comes with no parking - on top of the expensive maintenance fee, one has to pay RM150/month for a parking lot. However, the most desirable units here in my opinion are the 2 corners - one just above the swimming pool and the other corner facing KLCC. Go for the high floors or else the smell of the rubbish dump below and the noise from Istana's massive air conds may get to you.

picture above: Bidara 38 suffers from parking problem

Lastly, deserves mention is Menara Antara. Probably the highest condo in the city center. It is located almost at the top of Bukit Ceylon. Unfortunately, there is little I can write about this property as there has been no opportunity for me to view it from the inside due to hardly any sellers. The last 2 opportunities, the units were hardly in the market for 2 weeks before being snapped up. If one is willing to pay RM380k for a 1 bedroom unit which gives you only RM2000/month must speak some wonders about this place. I am very curious and would appreciate any readers' comments about it.

This is just the beginning

Welcome to my blog. There are at least a hundred blogs and websites about real estates in Malaysia, but few are truly independent that provides unbiased opinion and feedback on the available choices of investments in Malaysia. I would like to present such platform. Although my views may sometimes seem biased due to my vested interests in the form of ownership in certain projects, please feel free to provide a counter opinion. To be fair, I will certainly highlight if I have any vested interests in my blog entries but I will endeavour to present only facts and truths.

I have a day job which is not property related. I am a wage earning employee. Yet, for the past ten years or more, I have been dwelving in real estates. Real estate to me is not just an investment, it is also a passion. I hope you join me to explore and review the many interesting projects and have fun along the way.

Please feel free to post your comments, whether they are in agreement with my views or against. I welcome all types of comments and opinions, but please do not write anything seditious, racist or rude.