Selection the right property location for investment. New township ! Case Study.

Dear all,

If you are familiar with Kuantan, especially  in the new township, bandar indera mahkota, most of house price are in the range of RM300,000 to RM 600,000. The property  price has double since 2010. And all these are are leasehold.

Bungalow land area in 2005 at Bukit Istana was only RM 16 psf , now the latest I heard, it was selling at RM 45 psf. 

These are my analysis why property price in this area keep on to appreciate at a faster rate:

1. The new completion of KMC (Kuantan medical center ).  

It located in 10 acre of land. One of the biggest private hospital in Kuantan. Fully owned by TDM, it is expected to start in full operation somewhere in October 2013.

2. McDonald.

Yes, you are right. The new completion of McD in 2011 has attracted more and more traffic to the area. As I mentioned in my puncak alam post, McD are very good in property investment.

3. New intelligent township, KotaSas. 

The new township will cater additional 50,000 residences and has it own commercial center. 

4. New Integrated Kuantan Terminal Sentral. ( Terminal Sentral Kuantan )

The new bus terminal situated right beside the dual lane carriage, is very strategic and move human traffic from the busy Kuantan Town to Bandar Indera Mahkota.

For long distance traveller, the new bus terminal is definitely much better than the existing ones.

5. The new integrated RapidKuantan bus.

This is excellent masterplan by the government. When RapidKuantan started  their operation in Dec 2012, the bus network has good coverage from Teluk Cempedak until Gambang Water Park. 

I have actually doubt whether this new bus system can actually work similar model to RapidKL. Well, after 5 months of free bus service, it seems that more Kuantan people are beginning to accept the change.

I only heard complaint from the taxi drivers!

It has added additional convenience to the residence in Bandar indera Mahkota.

6. The new Tunas Manja Boutique Hotel

Located at the heart of Bandar Indera Mahkota, once an empty place, the hotel draw many tourist to stay in the area. The Hotel room is much more affordable compare to Hyatt or Zenith Hotel.

Not just that, shoplot in that area also flourish as more and more human traffic are available.

7. New UIA campus for medicine and hospital. 

It is one of the biggest UIA campus outside kuala lumpur. It mainly set up to cater for medicine and pharmacy stream.

8. Sultan Ahmad Shah Mosque

One of the biggest mosque build by UIA. 

Jammed pack on every Friday!

9. Mature township of Bukit Istana, Alam Perdana and Astana Permai.

10. New golf course called Mahkota Golf Club construction in progress. Expected to open in 2014.

11. Last but not least, integrated government building such as Imigresen complex, kwsp, jabatan pendaftaran negara, and Bomba definitely will draw additional population here.

In conclusion, a well amenities, facilities and neighborhood with mature population will definitely make your investment worth to wait. You cannot go wrong with it.

My advice is that, you take a look at any mature town and define your success criteria for your investment.

My case study on Bandar Indera Mahkota is definitely worth to consider. 

When I bought my property here in 2010,  all these additional facilities were not known. 

However, one thing for sure, the area has excellent accessibility which in the end, turn out to be a good investment. This is one of the most important criteria in my location selection. I'll share with you more criteria in my ebook later on.

Do you have any other criteria? Pls share with me!

DIBS Scheme... Good for Investor... Bank Negara is involved!

Yes... It's official! I know some of us did not agree with me, but I'm a true believer that somebody has to pay if there is too good to be true kinda scheme.

It is always being my argument that, buying property without any money down is a speculation market.

Why?

1. You can buy 4-5 unit of property with no money down. Interesting, but in the end; it will screw the market true value. 

I have seen during my recent purchase, one lady came to the registration counter , stand beside me and bought 5-6 unit in one row.  I know it's a good buy, but what is the intent of buying 5-6 units at the same time? Purely speculation. With DIBS, you can actually make easy money  within 2 weeks.. I'll share later on how u can do this..

2. Because of the higher price, more people are not able to afford owing their own house. Some of them have to take 2nd generation loan. It will definitely burden the who has actually started to work.

3. I get less value from my investment. Compare RM500k with DIBS and Rm400k without DIBS, my yield would be higher if I buy property without DIBS as I pay less. 

" Less is More! "

Below are the extract from the star newspaper yesterday. Let me know what do you think?

Bank Negara is studying the risks arising from DIBS with a view of potentially imposing curbs on it

Posted on June 25, 2013 - Featured, Property News.

By GURMEET KAUR
gurmeet@thestar.com.my

PETALING JAYA: Bank Negara is studying the risks arising from the developer interest-bearing scheme (DIBS) with a view of potentially imposing curbs on it, sources said.

Although it is unclear if or when such curbs would be put in place, Hong Leong Investment Bank (HLIB) said that it may be “later this week”, adding that such a move would be a negative for future sales in the primary property market.

Other industry players think that the measures might be introduced in the second half of the year.

DIBS has become a popular easy financing package offered by property developers in joint-promotion activities with banks in recent years.

Under the scheme, buyers need not fork out much initial downpayment to buy properties, as the developer supposedly absorbs the initial interest. This is until the buyer takes possession of the property.

A high number of buyers enter this scheme with the intention of flipping the property when they gain possession of it, making a profit without having to come up with much capital in the process. Such a scenario fuels speculation.

“Typically, under the scheme, buyers only foot between 5% and 10% of the house price upon signing the sale and purchase (S&P) agreement and only begin payment when the project is completed,” a property consultant told StarBiz.

“There are caveats to this scheme, as buyers commit to a financial obligation upon the signing of the S&P and the interest cost has actually been already passed on to buyers via the higher selling prices.”

DIBS is mainly offered to the high-rise residential segment. Some property consultants have opined that the presence of DIBS in the market has caused prices to be set on an artificially higher trajectory.

Notably, the Singapore government banned DIBS in 2009.

“While the exact measures are yet to be revealed, we believe the curbs would impact this easy financing scheme,” HLIB said in a note yesterday.

According to analysts, most of the sales in the recent property bull cycle were tied to the attractive DIBS scheme at the expense of the secondary property market which has remained sluggish. And given the persistent rise in household debt, the Government is mulling over measures to limit it.

“In the recent past, Bank Negara has been compiling information on the scheme and studying its impact on the sector,” a source said.

Bank Negara had yet to respond to StarBiz’s queries as at press time.

“The difference between the non-DIBS and DIBS pricing can range from as low as 5% to as high as 30% if other incentives like early-bird discounts, stamp duty waivers and cash payments are taken into account,” said Elvin Fernandez, managing director of Khong & Jaafar group of companies.

He advocates regulators to compel developers to be transparent on the various incentives, as it may be difficult to do away with DIBS packages.

“Developers should inform buyers and bankers of the actual value of the discounts they are getting so that house buyers know the true value of the house they are buying,” he said.

UOB Kay Hian Research noted that new launches in selective high-rise projects in the suburbs of the Klang Valley were transacted at over RM1,000 per sq ft (psf) vis-a-vis RM450 psf two years ago.

“Household debt has risen to 80.5% of nominal gross domestic product as at end-December 2012, up from 60.4% as at end-2008.

“We also note that outstanding banking sector loans in the household sector has risen 3.6% year-to-date as at end-April to RM638.5bil from RM616.5bil as at December 2012. As the rise in consumer credit is partly linked to housing, curbs may be introduced to dampen speculation,” UOB Kay Hian said in a report yesterday.

On the financial impact of curbing DIBS on property companies, HLIB said that it would be “negative for future sales in the primary market but the extent of damage varies with the degree of exposure to the high-rise segment for each individual developer”.

UOB Kay Hian reckons that if DIBS or similar schemes were to be tightened, it could “significantly dampen new property launches as speculators will be filtered out”.

The company also does not rule out the possibility of a further upward revision in real properties gains tax (RPGT) to dampen speculation.

In Budget 2013, the Government had raised the RPGT for the second time since 2011, stipulating a 10% to 15% tax for the disposal of properties within two years of purchase, and 5% to 10% for the disposal of properties within three to five years. However, properties sold five years after purchase are exempted from the RPGT.

My first book.. Azizi Ali... How to become a property millionaire!

Salam, 

When I bought my first apartment, I thought I was smart enough and clever. The apartment was very nice, located smack in busy ampang town, more than 1000 units of apartments, shoplot, swimming pool, high security, etc.. Boom, without further study and investigation I bought it!

As a first time buyer, I am eligible to withdraw my hard work of EPF saving for the first 10% downpayment and I thought I could sleep away and start counting on how much I could make once completed.

Until I found this book by the famous Azizi Ali. It cost me RM60 and normally, I never buy any book above RM 30. It was expensive back then, I did not like to spend my money on this book plus, who the hell is Azizi Ali...

However, It turn out to be my favorite book. I've read it over and over until I fully understood what property investment is all about. 

I realize that one thing that I did not consider when i purchase my apartment:

1) the developer track record and reputation. Yes, you guess it right, it was TALAM COOPERATION SDN BHD.

 The company was involved in all

sort of problem from cash flow to completion the housing on time. My apartment was suppose to complete in 36 months from S&P signing. 

It never came through. The company went bankrupt and had to be liquidated and manage by third party.

Until now after more than 10 years, I have never seen the key.

2) The apartment did not fall under HDA or they call it Housing Development Act.I have no power to bring TALAM to court to settle the LAD and also there's nothing else buyer can do but wait. Many buyers were angry and complaint but again, we will never win. Even Housing Minister did not have the power to pressure the developer.

Some of the buyer took the initiative to demonstrate but fails. Last time I heard, few buyer already passed away and never had to chance to see the completed apartment.

And all these knowledge recites in 'How to become a property millionaire' book by Azizi Ali. If only I could turn back the time and got this book much earlier.

My advice to all of you, invest some money buying books and attending seminar to learn from the best!

Moving forward, I learned from many other property expert and hit my first one million ringgit mark by 35 years old.. And that is from capital gain alone! 

My wife was very busy last weekend to do some house decoration and housekeeping. Rearranging the cabinet, books, etc. This is where I found my first property book under these pile of books and bring back the old memories.

Thanks Azizi for your sharing and right now, I am sharing my experience to the whole world so that everyone as ordinary as me can be extraordinary person.

Investment in knowledge is one thing that I will alway treasure  and no one can take away from you. If you apply it right, believe it or not,  more than 90% chances that you'll be become a millionaire one day!

Happy reading!

Why invest in property?

Salam,

Today, I had the chance to drop my wife to her favorite spa, HERBALINE. Very nice place and relaxing environment. The staffs were very nice and kind.

While I was there, I was offer to do my own spa... FISH Spa! .. My very first time.. It was fun.. Got to do it again. Since the fish were very eager to nimble my feet, I have a few thought on why we all should start to invest in property..

1. Good hedging against inflation

Property has been proven a good hedging against inflation which is currently higher than 3-4% inflation rate per year 

2. Slow but surer become RICH

Property is something very boring, slow but on thing for sure.. Over time, if you invest in the right place, you will be higher chance to become rich. Look at Donald trump, he build his empire with property.

Since I started my investment 10 years ago, I have seen my properties have double and triple its value from my initial investment. These property going the odd even during economic crisis in 2003 and 2008. 

3. Excellent leverage - pay less than 20%, you own 100%.

This is the only investment vehicle that you pay RM10,000, you can own RM100,000. Bank are willing to lend their money to you as long you have a good track record.

4. You work only once, your property work for you forever..

With holding your property for a period of time, your property will appreciate in it's value. Not only it appreciate, if you rented you property, you will get positive cash flow and your tenant pays for all the loan from the bank.

This is the best leverage where your tenants are working hard for you to pay the bank. Interesting huh?

5. Growing with corporate ladder vs Growing with property investment.

I am sure that most of us work for somebody to meet our days end. It is not wrong but the higher you go up on corporate ladder, you have less time with your loves ones, yourself and under stress at all time to met stakeholder expectation.

Take an example, our Prime Minister, Najib Razak. If you see his schedule and his involvement to lead the our country, he isis very busy including weekend! I still remember someone say to me that Dr Mahathir Mohamed only sleep about 4 hours per day.. Do you want to be in that position? 

It is different with property. It gets easier each day with property. You still get your money when you sleep which I call, passive income!

Tenants work for you, your property work for you, and your bank work for you!  What does this all mean? It mean that you have more time for yourself and able to do what you love!

Bandar Puncak Alam ... Latest Hotspot Township in Shah Alam...

SHAH ALAM - Pemaju hartanah, Worldwide Holdings Bhd berhasrat menyiapkan tujuh fasa projek Puncak Bestarinya, yang berkeluasan 50.2 hektar menjelang tahun 2017.
    
Projek itu dengan nilai pembangunan kasar RM320 juta, terdiri daripada enam hektar tasik, banglo, rumah separuh berkembar, rumah ters dan hartanah komersil.
    
Pemangku Ketua Pegawai Eksekutif Ahmad Azman Azizul Rahman berkata kumpulan mahu mewujudkan satu perbandaran baharu di Puncak Alam dan menyediakan lebih banyak rumah mampu milik untuk rakyat.
    
Beliau berkata fasa pertama projek yang terdiri daripada 25 unit pejabat komersil dan 136 unit unit rumah teres dua tingkat telah dijual selepas dilancarkan tahun lepas.
    
"Kami telah menerima sambutan yang menggalakkan semasa pelancaran fasa pertama. Kami yakin yang jualan untuk fasa kedua dan seterusnya akan sebaik seperti yang sebelumnya," kata beliau kepada pemberita selepas melancarkan fasa kedua projek di majlis Karnival Keluarga Puncak Bestari di sini.
    
Worldwide Holdings ialah syarikat pegangan dengan portfolio empat perniagaan teras: pembangunan hartanah dan pengurusan; perkhidmatan pengurusan persekitaran; pegangan pelaburan dan pembuatan peranti perubatan.
    
Sementara itu, Ahmad Azman berkata fasa kedua projek pula terdiri daripada 23 unit pejabat komersil, 48 unit rumah separuh berkembar dan 40 unit banglo.
    
"Kesemua pejabat komersil telahpun dijual dan kira-kira 20 peratus daripada kediaman separa berkembar dan banglo telah dijual," kata beliau.
    
Pejabat komersil berharga dari RM676,699, kediaman separuh berkembar ialah dari RM685,306 dan banglo dari RM820,156.
    
Beliau berkata yang kumpulan merancang untuk melancarkan fasa ketiga projek pada awal 2014, yang terdiri daripada 280 unit rumah teres.   
    
"Tesco, peruncit ketiga terbesar dunia, juga telah bersetuju untuk membina gedung mereka di Puncak Bestari dan projek itu sedang dilaksanakan.
    
"Dengan adanya Tesco, kami yakin yang projek Puncak Bestari ini mampu menarik lebih ramai pembeli ataupun pelabur," kata beliau.
    
Perbandaran baharu Puncak Bestari boleh diakses melalui Koridor Guthrie, Lebuh raya Latar, Jalan Batu Arang, Jalan Sungai Buloh dan Jalan Meru.
    
Ia terletak 20 km dari pusat bandar Shah Alam, 13km dari Bukit Jelutong dan hanya 3km away dari Universiti Teknologi MARA (UiTM), Puncak Alam. - Bernama

My Analysis:

If you had the chance to drive through Jalan Meru - Batu Arang, it is a busy road one thing for sure. Once a quiet town, now, you can see a lot new housing and township being developed.

This is very interesting.. 5 years ago, no one wants this place. It's like a ghost town... If you see what I see today.. It is a totally different scenario.. Why it happen?

1. Completion of uitm puncak alam. The most awaited campus which can cater 40,000 students.

2. Mc Donald outlet opening at the entrance of puncak Alam. Pack and full especially during weekend

3. 3rd biggest hypermarket chain, TESCO opening up their superstore at puncak bestari. One of the rule for any hypermarket to open at new area, they must conduct sustainability study and minimum population is 50,000. 

4. Completion of LATAR highway which connect puncak Alam to KL in less than 30 min

5. Other township being developed nearby such as bandar bestari,glomac saujana, Sri Pristana, Desa Coalfield, and at least another 5-6 new township being developed. 

6. Price of terrace houses has double since 2008. In 2008, you can get it about RM 150000, now, the latest launch by puncak bestari in 2010, the terrace house price was RM 350000. In May 2013, the new semi D at puncak bestari has now reached RM 650,000. Banglo house are now selling at RM 850000.

7. New mosque being constructed in the the township. This is to cater the larger Malay population around the area. Looking at the size, it is easily to cater 25,000 puncak alam residences.

8. Super hospital by uITM is on the way. This is as good as medical tourism as Price Court, etc.

9. Affordability. Price in KL and Klang Valley nowadays are crazy.. Terrace house is about RM 750000. With rising cost and house price, more and more people turn to further out from KL as it is still affordable and they still can enjoy and quiet place, nice scenery, and still have the connectivity and assessiblity to travel.

10. I was trying to reason out why McDonald , TESCO and Econsave would dare enough to invest at puncak Alam. 

One thing in common, they are property investor that has certain criteria before they would put down their money which is population and 'vacuum' created by the increase population at puncak Alam. With more and more people start to move in to puncak alam, these would create a vacuum for commercial properties.

 People still need to do their goceries, banks, kopitiam, hardware, etc. For those that would like to conduct their business here, I strongly recommend to take a look at this location... 2 storey shoplot in 2008 was only at RM450000,... Now... RM750000...and sold out in one day! Most of the commercial shoplot in KL nowadays are around RM 2.2 million... So, what would happen in the 5 years? 

I would not be suprise in the next 10 years, puncak Alam will be as good as Bukit Jelutong, Setia Alam, and other mature township since a strong and reputable developer such as IJM and Worldwide are expert in developing a new hotspot township.

Definitely a GOOD buy!

Mature neighborhood or new township?

Salam,

Well, when comes to decision where to invest next, there are only 2 choices. Buy straight in the middle of the town complete with established amenities or out of nowhere where new township is being developed.

My analysis:

1) For positive cashflow from rental, go ahead and buy in a established neighbourhood. Why?

People renting because they need home and value for their money. With school nearby, workplace, banks, petrol station,etc.. It is more sensible to rent in such places without having to travel far.

The demand is guaranteed so, you'll get your cashflow.

2) To maximize your capital appreciation, go for new reputable township...why? 

These days, price of houses in kl center is well beyond rm1000 psf. A normal

Human being with normal work, could not afford to buy those kind houses.

Last week, when I spoke to one of real estate agent, the trend in kl is now moving away to the fringe of kl border. Rawang, puncak Alam, bangsar south, etc. 

You can still get houses about rm250 psf and freehold land! With new highway network such as LATAR, etc, travelling time is now shorter.

However, here's the catch... You need to make proper assessment of the location. Normally it takes 10-15 years for these new town to mature...

Remember what happen to the famous Bukit Beruntung! ... Think again...

The Hubs.. SS2... petaling jaya .. Case study

Last week, a new office SOVO was launched by Selangor Dredging Berhad called the hubs ss2 , pj. It was located in a very mature residential area of SS2. 

44 stories high, 6 block of retails, private garden, etc. The smaller size is about 517 sqf and it start with 900-1000 psf. 

This is purely office use. Behind the hubs was Ameera Condominium, very nice.

This is my analysis of the property:

Pros:

1) established developer

2) located in mature neighborhood 

3) easy access via sprint highway

4) Launched at market price and 8% rebate plus DIBS for 4 years.

Cons:

1) Very secluded area. No visibility. You have to go the residential houses to go to the hubs

2) Small access road of jalan harapan

3) Far public transportation, ie MRT

For smart investor, the most critical question is, who would rent the office in such location?

My feeling, this is a risk investment mainly due to visibility and lack of complimentary activity around it to draw the crowd.

With the current price of 1000 psf, is there any potential capital growth?

DIBS scheme... Advantage or disadvantage ..

Salam,

Lately, there are many offer from the developer on DIBS...mean, once you sign on the dotted line, u do not need to pay a single interest payment until you get the vacant possession key.

Interesting huh?

Let' think of it.. Who will bear the interest? Not the bank, not the developer, it YoU!... The name of developer interest bearing scheme, for me, it is just a marketing tool.. Someone need to bear the interest... 

Similar system that currently accepted by all of us the 24 month interest free.. Same concept..all the cost divided by 24 month.. So we thought it's interest free.. And feel good factor.. 

Recently, I had the chance to review the I-SOVO at icon city near PJ.. A very massive project which started back in 2011 and it offer DIBS scheme for 4 years.. As the today, the cost is about RM900 psf and for a small size of 745 sqf, a whooping RM760,000... 

My analysis.. No doubt the area a hotspot and in a very strategic location, imagine the amount interest that accumulate within that 4 years.. I have no idea what was the basis, but say 25% of the cost is due to the interest.. Assuming 5% per year and additional 5% of the VP is delay

That would work out as RM190000 alone just for the interest.. If you minus the original price.. The actual price you have to pay is only RM570000... That is a lot of different when making the right investment choice...

I had come across the some study mentioning DIBS cater for at least 5% to 20% of the total property cost... So, next time you want to buy a house with DIBS, evaluate properly..

What worries me is that, with the current price build in, we are actually paying future value... And screw the overall market price...

Do you think our grandchild will able to survive?

soho and sofo...And SOVO?..

You have landed at one of the best information sharing blog with regard to property investment and any new property strategy.

To start off, when I flipped through the star newspaper, there was one advertisement on I-soho at I-city. Anybody came across that?

Well, to make it short, these kind of new office hybrid, it sell like hot cakes. Every time I call up the developers, SOLD out!

Interesting... What kind of people would want to work in a very small office environment? Would u?