10 Most Expensive Condominium Development in Kuala Lumpur

^{Kuala Lumpur Skyline [photo credits to Christopher Chan on flickr]}

The Star (Malaysia) recently published an article titled Kuala Lumpur’s 10 most expensive condos. The article revealed a list of Kuala Lumpur’s 10 most luxurious high end Condos going for a minimum of RM1000 sq/ft (£142 or US$287 sq/ft). The list however excluded the yet-to-be launched Four Seasons and Binjai developments. 

We are going to shed more light on each of the 10 most expensive condo developments in Kuala Lumpur.
1. One KL
2. The Troika
3. K Residence
4. The Meritz
5. Marc Residence
6. The Avare
7. Park Seven
8. Pavilion Residence
9. Idaman Residence
10. Ampersand @ Kia Peng

1. One KL

At No. 1 is One KL with a tagline “94 apartments, 95 swimming pools”. It is a reasonably sized residential triangular tower with a minimalist architectural appeal.

Its interior conveys an aura of stylish simplicity with the economical use of living space through the brilliant use of split levels. The private swimming pools that go with each apartment can be somewhat severe at first glance, but we have to say are still very impressive on overall impression.

According to the SCDA website completion is due next year but latest information is that this will not actually be achieved until early 2009.

Developer	One KLCC Sdn Bhd (Waterfront Incubator)
Architects	SCDA Architects Pte Ltd
Location	Jalan, Pinang Opposite Mandarin Oriental Hotel
Number of Storeys	35 storeys
Completion Date	February 2009
Units	94 apartments
Unit Size (sq ft)	3,625 sq ft
Average price per sq feet at launch	RM 1200 (US$345/£175)
Average price per sq feet now	RM 2000 (US$575/£288)

^{One KL}

2. The Troika

The larger and taller Troika has a good location close to the KLCC Park and the Petronas twin towers. Apart from one of the three towers being the tallest residential development in Kuala Lumpur, other unique features include the irregular shape and the sky lobby at level 24 which links the three component structures with pedestrian bridges (nb. there will be two bridges linking the three towers forming a letter ‘c’) . There is a sizable landscaped courtyard area in the middle of the development and the three residential towers are joined together at lower levels by shops and offices. Above these at level 4 are communal recreational facilities.

The interiors will be modern with good design, clean lines and subtle colours. The building has been described as ‘twisting’ in shape (“the result of detailed analysis that identified the best possible views at every level”) but this is not apparent from the artist impressions on the Troika website. Residents on two sides really will benefit from the proximity of the KLCC Park with a bird’s eye view of the KLCC Mosque.

^{The Troika}

Website	http://www.troika.com.my/
Developer	Bandar Raya Developments Bhd (BRDB)
Architects	Fosters and Partners
Location	Jalan Ampang
Number of Storeys	3 towers – 38, 44 and 55 storeys respectively
Completion Date	2009
Apartments	164 luxury apartments, 8 penthouses and 57 SOHOs (small office/home office)
Unit size (sq ft)	2045 – 9043 sq ft
Average price per sq feet at launch	RM 920 (US$264/£133)
Average price per sq feet now	RM 1800 (US$520/£260)

^{The Troika}

3. K Residence

K Residence is the first of two of the ten developments to be linked with a shopping mall development (leaving aside the shops at Troika). Avenue K, the retail component of the development opened in 2006 and take up of retail units has been successful (FT 12^th November 2005). From the panoramic photo on the Avenue K/K Residence website the development appears to be towards the edge of the KLCC but close to the Petronas twin towers, to which it is linked by a pedestrian subway (underpass). The website description puts K Residence on leafier Jalan Ampang.

Although the external appearance seems slightly heavy compared to the Troika, the interiors look very attractive indeed. In fact the development is nearly as high as the highest of the Troika towers at 50 storeys. There are two residential towers in the development. The floor plans incorporate accommodation for a maid. The lay out of residential units can be extensively customized. The emphasis is on quality in ensuring the standard of utilities, paying attention to features such as the water pressure.

^{K Residence}

Website	http://www.kresidence.com.my/
Developer	KL Landmark Sdn Bhd
Architects	dcmstudios
Location	Jalan Ampang
Number of Storeys	50
Completion Date	2009
Units	180 units – 2, 3, or 4 bedrooms, as well as duplex, triplex, and penthouse units
Unit Size (sq ft)	1446 – 7342 sq ft
Average price per sq feet at launch	RM 1000 (US$287/£144)
Average price per sq feet now	RM 1600 (US$460/£230)

^{K Residence}

^{Avenue K}

4. The Meritz

Like K Residence The Meritz is also on Jalan Ampang and in close proximity to the Petronas twin towers and the Suria KLCC shopping complex (3 minutes walk to both). As with K Residence there is easy access to a light rail transit station. The development does not offer views of the KLCC area owing to an intervening office development.

The external appearance is somewhat box-like and the development is considerably smaller than K Residence. Curiously, photographs of the part-completed construction covered in green mesh from last December look more attractive than the artist’s impressions. Not all rooms seem to have natural lighting and this development does not offer the spaciousness of others.

^{The Meritz}

Developer	DNP Tanahniaga Sdn. Bhd. (subsidiary of DNP Holdings Bhd.)
Architects	Atelier Jean Nouvel
Location	Jalan Ampang
Number of Storeys	31
Completion Date	April 2008
Units	110 units (with 4 duplex penthouse)
Average price per sq feet at launch	RM 1000 (US$287/£144)
Average price per sq feet now	RM 1300 (US$373/£188)

5. Marc Residence

The Marc Service Residence has a two-acre site for its two towers and is by some margin the largest of the 10 developments. The artist’s model shows an attractive planting of trees around the first tower, presumably the slightly larger site allows for this feature. The design is fairly conventional but nevertheless elegant with a roof garden appearance(with pool) to the top of the more extensive lower floors. At street level the building features an impressive columned portico.

Although apartments have been sold individually, the developers also have plans to make part of it into serviced apartments (as the name suggests), if not an apartment hotel, so housekeeping services will be available. Given the attractiveness of the scheme, its size and the fact that completion was due this month, it is slightly surprising that Beverly Tower Development have not made more information available in terms of floor plans and ‘e-representations’ of the interiors. However, the fact that gas piping will all be made of copper suggests quality build.

Amenities include: business centre, cafeteria, club house, covered parking, gymnasium, jogging track, playground, sauna, squash court, swimming pool, wading pool and tennis court.

^{Marc Residence}

Developer	Beverly Tower Development S/B
Location	Jalan Ampang
Number of Storeys	35 Storeys (2 Towers)
Completion Date	August 2007
Units	607
Unit Size (sq ft)	600 – 2800 sq ft
Average price per sq feet at launch	RM 750 (US$215/£108)
Average price per sq feet now	RM 1200 (US$345/£173)

^{Marc Residence}

6. The Avare

The Avare is in some ways the most stylish and streamlined construction of all 10, with its design inspired by a butterfly on the wing. The architect is David John Clarke. Like Marc Service Residence the site (just over an acre) allows an attractive planting of trees around it.

Occupiers of the Avare will enjoy panoramic views of the Petronas Towers and the Royal Selangor Golf Club and the KLCC Park is also close by.

There are two large apartments to each level, each with four bedrooms, all or which will enjoy en suite bathrooms. Looking at the lay-out the only defect would seem to be rather a lot of corridor with no natural light. The website gives the impression that all the units are standard but there seems to be substantial variation in price from 3.8m ringgits to 10m (New Straits Times 12th April 2007). Does this mean that those purchasing on levels 16, 40 and 41 buy an entire floor?

^{The Avare}

Website	http://www.avare.com.my/
Developer	Magna Prima Bhd
Architects	David John Clarke
Location	Jln Kuda
Number of Storeys	41 Storey
Completion Date	November 2008
Units	78
Unit Size (sq ft)	3,800 sq ft
Average price per sq feet at launch	RM 1000 (US$287/£144)
Average price per sq feet now	RM 1200 (US$345/£173)

^{Location of the Avare}

7. Park Seven

Park Seven is not quite high rise, being a seven tower development with each reaching to 20 storeys. The site is only 1.6 acres so these blocks will be quite close together. The design is clean and simple and aims to give 270 degree views to most residents. Those on the Persiaran side of the development will have views of KLCC Park and the Petronas towers.

There is only one unit per floor per building so the layout ensures plenty of privacy. The interior design looks clean and impressive. The variety of choice in layout and size is noticeable.

The first level is described as a ‘recreation deck’ including the following: multi-purpose function rooms (presumably for hire), lap pool, heated pool, gardens with water features, gym, yoga/pilates studio, toddler’s room and children’s play area.

^{Park Seven}

Website	SDP Properties – Park Seven
Developer	SDP Properties Sdn Bhd
Architects	Heerim Architects and Planners
Location	Persiaran KLCC
Number of Storeys	20 Storey (7 Towers)
Completion Date	Q1 2008
Units	105
Unit Size (sq ft)	2,500 – 7,000 sq ft
Average price per sq feet at launch	RM 750 (US$215/£109)
Average price per sq feet now	RM 1000 (US$287/£144)

^{Park Seven}

^{Location of Park Seven}

8. Pavilion Residence

Pavilion Residence is another tall development and, after Marc Service Residence, the largest of our 10 with 368 apartments. It is the second development to have a retail element (and offices and a hotel in addition) and in all the development covers 12 acres.

The residential component comprises two towers which look a little like the Meritz (no curves) though much higher while the interiors are somewhat reminiscent of K Residence, scoring well for warmer colours and human proportions.

^{Pavilion Residence}

Website	http://www.pavilionresidences.com/
Developer	KL Pavilion Sdn Bhd
Location	Bukit Bintang
Number of Storeys	43 & 50 2 Towers
Completion Date	2008
Units	368
Unit Size (sq ft)	1234 – 7174 sq ft
Average price per sq feet at launch	RM 900 (US$258/£130)
Average price per sq feet now	RM 1000 (US$287/£144)

^{Pavilion Residence}

^{Pavilion Residence}

9. Idaman Residence

Idaman Residence is another large-ish but the size of individual units is considerably less than any of the other developments. This may work to its advantage in that it is very central but appealing to a different market from developments with larger units, who it is reasonable to expect, will be fierce competition with one another. The development is targeted at professionals between the ages of 24 and 45. along with the other nine developments it shares the easy access to work and facilities in KLCC.

Idaman has been planned to be environmentally friendly with natural ventilation in common parts and even natural ventilation features in the units themselves (though one supposes air conditioning is available also.)

Above the car parking levels there are four garden units (including larger balconies) and the penthouses on the top level include roof gardens.

^{Idaman Residence}

Website	Idaman residence website
Developer	TA Properties Sdn Bhd
Architects	T.R. Hamzah & Yeang Sdn Bhd
Location	Jalan P Ramlee
Number of Storeys	33 Storeys
Completion Date	October 2008
Units	248 units
Unit Size (sq ft)	800 – 1900 sq ft
Average price per sq feet at launch	RM 700 (US$200/£100)
Average price per sq feet now	RM 950 (US$272/£137)

^{Idaman Residence (night view)}

^{Idaman Residence}

10. Ampersand @ Kia Peng

Ampersand@Kia Peng has no claims to be high rise at all although situated half way between the KLCC Park and the Royal Selangor Gofl Club it is still very central. The development includes three blocks ranging from seven to 12 storeys. Presumably partly because the panoramic views of some of the other developments are not available, the prices for Ampersand are more reasonable than those of some competing developments. The development takes up just over two acres.

The interiors look modern, well-proportioned and simple. There is a swimming pool at ground level and enough space for a small amount of landscaping. The neighbourhood has a leafy appearance but no one will be very far away from the street.

^{Ampersand@Kia Peng}

Website	http://www.ampersand.com.my/
Developer	IJM Properties Sdn Bhd.
Location	Jalan Kia Peng
Number of Storeys	9 Storeys (4 Blocks)
Units	71
Unit Size (sq ft)	2,613 – 5,852 sq ft
Average price per sq feet at launch	RM 860 (US$247/£124)
Average price per sq feet now	RM 900 (US$258/£130)

Billion Ringgit of Malaysia Visionary Projects

Malaysia Visionary Projects - Plan for 2011 and onward (15 years)

1. Implementation of Kuala Lumpur Mass Rapid Transit System and Underground Commercial Precinct
- Jointly proposed by Gamuda-MMC Corp Consortium in January 2010.
- Consist of Red..., Green and Circle/Loop Line.
- Total length of 141km, with Red and Green Line converging in KL International Financial District.
- An estimated total development cost of RM45 billion.
- Underground commercial precinct to be developed at a cost of RM2 billion.
- Status: To commence in 2011.

2. Kuala Lumpur International Financial District
- 34ha on what was formerly known as Dataran Perdana, Jalan Davis off Jalan Pudu.
- Dubbed "the world's newest financial district", the development included the redevelopment of Pasarakyat in Imbi area into a proposed transit hub.
- To be undertaken jointly by 1MDB and Abu Dhabi's Mubadala.
- An estimated GDV of RM26 billion.
- Status: To commence in 2011.

3. Redevelopment of Kampung Baru
- 152ha of land near KLCC potentially open for redevelopment.
- Permodalan Nasional Bhd (PNB) will conduct study for redevelopment plans.
- An estimated GDV of RM20 billion.

4. City of Malaysia, Redevelopment of Royal Malaysian Air Force Base
- 162ha of airport and army ground in Sungei Besi, south of KL city centre.
- Expected to be Malaysia's first carbon-neutral city with plans for a commercial hub complete with a heliport.
- Expected to be undertaken jointly by 1MDB and the Armed Forces Fund Board (LTAT).
- Potential investors include Qatar Investment Authority and Abu Dhabi's Mubadala.
- An estimated GDV of RM15 billion.

5. Naza KL Metropolis Development
- 25ha of land off Jalan Duta, within Menara Matrade and next to Sri Hartamas suburb.
- Site of the future MATRADE Centre, that will be Malaysia's largest meetings, convention and exhibition centre.
- To be undertaken by NAZA Group.
- An estimated GDV of RM15 billion.
- Status: To commence in 2011.

6. Tamansari Riverside Garden City
- 22ha regeneration of the former Pekeliling Flats, off Jalan Tun Razak and Jalan Pahang and between Putra World Trade Centre and KL General Hospital.
- Site of future 60-storey revolving skyscraper, first of its kind in Asia Pacific.
- To be undertaken by Malaysian, Thai and Australian consortium.
- An estimated GDV of RM12 billion.

7. Kuala Lumpur Sentral
- 29ha of land located between Jalan Travers and Jalan Tun Sambanthan.
- Completed Sentral Station, Malaysia's largest transit hub designed by world-renowned Dr Kisho Kurokawa.
- In 2006, KL Sentral became first MSC Malaysia Cybercentre.
- Undertaken by Malaysian Resources Corporation Bhd (MRCB).
- An estimated GDV of RM11.7 billion.
- Status: In-Progress for remaining parcels with completion in 2016.

8. Sungai Buloh RRI Development
- Privatisation of land owned by Rubber Research Institute of Malaysia (RRIM).
- 1,370ha of land in Sungai Buloh-Shah Alam corridor potentially open for development.
- Development to be led by 1MDB and the Employees Provident Fund.
- An estimated GDV of more than RM10 billion over 15 years.

9. Jalan Cochrane-Jalan Peel Developments
- Government land near Cochrane school, Cheras area.
- Expected to be undertaken jointly by MRCB, 1MDB and the Employees Provident Fund.
- An estimated GDV of RM10 billion.
- Status: To commence in 2011.

10. Kuala Lumpur Eco City
- 9.7ha of land on the former Kampung Haji Abdullah Hukum, neighbouring Mid Valley City.
- Integrated signature offices, residences and retail. The tallest building will have 54 storeys.
- To be undertaken jointly by S P Setia Group and KL City Council (DBKL).
- An estimated GDV of RM6 billion.
- Status: To commence in 2011.

11. Warisan Merdeka (Heritage of Independence)
- 7.7ha of land surrounding Stadium Merdeka (Independence Stadium) and Stadium Negara, off Jalan Maharajalela.
- Site of the proposed 100-storey "green-rated" skyscraper, that will be Malaysia's tallest building.
- Development plans may include the preservation of heritage site Stadium Merdeka.
- To be undertaken by Permodalan Nasional Bhd (PNB).
- An estimated GDV of RM5 billion.
- Status: To commence in 2011.

12. Bukit Bintang City Centre
- 8.6ha on what is today known as the 115-year old Pudu Prison.
- Redevelopment plans include offices, hotels, apartments, a transit centre and recreational centres.
- To be undertaken by UDA Holdings Bhd.
- An estimated GDV of RM5 billion.
- Status: To commence in 2011.

13. Setia City
- 96ha in Bandar Setia Alam, Shah Alam.
- A freehold development aimed to be the first green integrated commercial development comprising Setia City Mall, hotels, apartments, corporate offices and a convention centre.
- To be undertaken by S P Setia Group.
- An estimated GDV of RM5 billion.
- Status: In-Progress

14. Platinum Park KLCC
- 3.7ha on Jalan Binjai, adjacent to Kuala Lumpur City Centre (KLCC).
- Iconic landmarks are Felda Tower, NAZA Tower, Platinum Park Residences, Platinum Park Suites and a private landscaped park.
- Undertaken by NAZA Group.
- An estimated GDV of RM4.1 billion.
- Status: In-Progress

15. Bangsar South City
- 24ha of land located off Federal Highway, in Kerinchi/Pantai Dalam suburb.
- In 2010, Bangsar South became a MSC Malaysia Cybercentre.
- Undertaken by UOA Group.
- An estimated GDV of RM4 billion.
- Status: In-Progress

16. Damansara Avenue
- 19ha of land located off LDP Highway, adjacent to the neighbourhood of Bandar Sri Damansara, Sunway SPK Damansara and Desa ParkCity.
- Development is exected to take up to 10 years with up to 18 low-, mid- and high-rise blocks.
- Undertaken by TA Global Bhd.
- An estimated GDV of RM3.8 billion.
- Status: In-Progress

17. MPHB's Golden Triangle Development
- To complement the development of Kuala Lumpur International Financial District in Dataran Perdana.
- An iconic mixed development including a large shopping mall, 50-storey luxury condominiums, hotels and offices at the junction of Jalan Sultan Ismail and Jalan Imbi.
- To be undertaken by Multi-Purpose Group.
- An estimated GDV of RM3 billion.
- Status: To commence in 2011.

18. PJ Sentral Garden City
- 4.8ha of government land in Section 52, commonly known as "State" of Petaling Jaya.
- To be undertaken jointly by Gapurna Group and Selangor Development Corporation (PKNS).
- An estimated GDV of RM3 billion.
- Status: To commence in 2011.

19. Kuala Lumpur Media City
- Redevelopment of government land surrounding Angkasapuri (headquarters of Radio Television Malaysia), Kerinchi/Pantai Dalam suburb.
- An estimated GDV of RM2 billion.

20. One Jalil (Jalil Green City)
- 24ha land in Bandar Bukit Jalil township to be developed into a town centre.
- To be undertaken by Ho Hup Construction Group.
- An estimated GDV of RM2 billion.

21. Sunway VeloCity
- 10.1ha land adjacent to Jalan Peel and Jalan Cheras.
- Undertaken by Sunway City Bhd.
- An estimated GDV of RM1.5 billion.
- Status: In-Progress

22. Datum Jelatek
- 2.4ha on the former Flat Columbia site next to Jelatek LRT station, Jalan Jelatek in Taman Keramat suburb.
- Redevelopment plans include four 45-storey towers and a shopping mall.
- Undertaken by Selangor Development Corporation (PKNS).
- An estimated GDV of RM1.2 billion.

23. Bukit Jelutong Commercial Centre
- 72.8ha of land earmarked for a world-class sustainable development in Bukit Jelutong, Shah Alam.
- To be undertaken jointly by Sime Darby and Sunrise Bhd.
- An estimated GDV of RM1 billion.
- Status: To commence in 2011.

Oh yes, starting 4th November 2010, Bank Negara has announced all Residential property loans for the 3rd property onwards margin of finance of 70% effective immediately. This ruling will affect more for the medium and lower end property investors and less for the higher end residential property investors because the high end investors has more money. Good news to 1st time genuine home-buyer...time to pickup!  Tips to invest!

Check out the latest link..
http://www.btimes.com.my/Current_News/BTIMES/articles/morts/Article/index_html

http://www.theedgeproperty.com/news-a-views/5351-banks-imposition-of-maximum-loan-to-value-ltv-ratio-timely-pre-emptive.html

 

Reasons to focus on Real Estate Investment

More Reasons to Shift to Real Estate

Milan Doshi compares portfolio investments with real estate returns and gives convincing reasons why you should shift your investment to real estate

In my previous article on “Boring and Slow versus Exciting and Uncertain Returns” (if you have not read it, click http://www.iproperty.com.my/news/2410/Boring-and-Slow-versus-Exciting-and-Uncertain-Returns), my conclusion was that Boring and Slow Returns (in real estate) is anytime better than Exciting and Uncertain Returns (in other portfolio investments) … over the long term that is! See Chart 1 below taken from the previous article.

Chart 1

For portfolio investments, you need compounded returns of between 12-14% every year for the next 20 years in order to match the returns from the Net Worth Divergence effect in property investments. What is even more surprising is that over a 20- year time frame, real estate outperforms in the first 18 years and only loses out in the last 2 years! 18 out of 20 years means that 90% of the time, property comes out ahead.

Property: Less Work

When I shared this with some friends who are active stock and futures traders, they too were quite surprised. While their short term trading goal was to make 10-20% per trade or per month, after adding up their profitable and losing months, the returns on their capital averages around 15-20% per annum in a normal year. For exceptional years, the difference could be more than +/- 30%! These are traders who spend a minimum of 6 hours per day Mondays to Fridays trading and/or watching the markets.

On the other hand, a real estate investor only needs to invest approximately 50 to 100 hours upfront to find a good property, get it financed and tenanted. Thereafter, the property continues working for him for life. Even after the buyer passes away many years later, the property still continues working for his beneficiaries. Only a little time and effort is needed every few years whenever there is a change of tenants. In this regard, real estate definitely makes more sense compared to trading as a lot less time and effort is required to achieve more or less the same sort of returns in normal years. The other advantage is that there are no wild swings in the returns even during exceptional years.

Being inquisitive, I didn’t stop here. I asked a few of my good friends in the financial industry to give me names of investments which had given compounded returns of around 12-14% pa in the last 20 years.

According to my friend in Public Mutual, their best performing fund is the Public Savings Fund. See Chart 2 below taken from their website at:
http://www.publicmutual.com.my/application/fund/performance.aspx

Chart 2

Another fund of theirs which has consistently been the No. 1 fund in its category since its launch is the Public Smallcap Fund. See Chart 3 below

Chart 3

I tried computing the annualized compounded return of both these funds but it was a futile effort as both these charts only show the Gross Returns (i.e. dividends have been added in) whereas all upfront costs and annual fees have been excluded.

For the stock market, the obvious answer from most Remisiers was Public Bank. See Chart 4 below which shows the price of Public Bank from 1987 to 2009. The drawback of this chart is that it only shows the stock price performance. The quantity of shares that have increased over the years thanks to the bonus issues and dividends paid out every year are excluded.

Chart 4 of Public Bank Bhd

Volatile Shares

Hopefully some academician reading this article may take the initiative to do an “apple to apple” comparison as well as compute the compounded returns over the long term. The best I can do is to make a “pictorial” comparison using the 4 charts. The following conclusions emerge:

1. Up to 1992, portfolio investments were growing steadily with little volatility, very much like real estate. Buy and hold strategies in either mutual funds or blue chip stocks worked. It made sense to diversify and split your investment capital into both real estate and portfolio investments.

2. After the stock market Super Bull Run in 1993, the entire dynamics of portfolio investments changed. A lot of people saw the stock market as their ticket to make quick money. The money was not in the slower blue chips or buy and hold strategies, but to trade in speculative second liners based on rumours. While quick money could be made, there were also a lot of occasions that money was lost even quicker. The stock market became a casino for many people. Many people even lost their shirts on their back and more!

3. In the last 10 years thanks to the internet and globalization, the volatility of portfolio investments has increased tremendously. We have experienced and will continue to see a lot of steep “mountains and valleys” in terms of price volatility. If 100% of your capital is invested into paper assets, your Net Worth will also experience many steep “mountains and valleys”. Hence it’s advisable to shift more of your capital into real estate.

My suggestion is to allocate at least 70% or more of your investment capital into real estate to shield your Net Worth from the price volatility of portfolio investments. As long as you buy completed properties in good locations that are easy to rent out with rental enough to pay the monthly installments, the risks of real estate investment are pretty low.

4. The higher price volatility of portfolio investments in recent years also indirectly affects the property market. In globalized cities such as Hong Kong and Singapore, their real estate prices have also have experienced a lot of steep “mountains and valleys”. This is mainly due to their limited land supply and high demand from foreigners due to their foreign investor friendly government policies. Hence the timing of your entry and exit points in the real estate in these two cities is extremely important.

In this regard, we are much luckier in Malaysia and the Klang Valley in particular. Unlike Hong Kong and Singapore, we still have ample land supply and lower demand from foreign investors. Hence our real estate prices have only experienced gentle “hills and valleys”. This makes our real estate market a lot less riskier to invest in.

I hope this article gives you even more reasons to shift more of your investment capital into real estate in light of the increased volatility in portfolio investments in recent years.

Malaysia Property Bubbles Start

Malaysian Insider:  

Prices of residential property have surged by as much as 35 per cent in the past year despite a growing overhang in supply, far outpacing income growth and giving rise to concerns that the market is becoming unsustainable. 

Figures provided by the National Property Information Centre (Napic) show that average prices for homes in Malaysia rose a whopping 19 per cent to RM273,000 in the first half of this year, from RM220,000 in the same period last year. For Kuala Lumpur, the increase has been even more dramatic, rising an eye-watering 35 per cent to more than RM700,000 in the first half of the year, up from RM523,000 last year.

The market, however, may be starting to lose its appetite for properties due to the high prices.

Napic’s Property Overhang reports show that unsold properties in Malaysia rose to 22.6 per cent of new launches in the second quarter of this year, from 19.5 per cent in the fourth quarter of last year. For Kuala Lumpur, unsold properties rose to 16.1 per cent from 15.8 per cent, while for Selangor it rose to 14.6 per cent from 12.4 per cent.

Checks on developments completed this year also show that vacancy rates remain at 50 per cent or higher.

The Edge business weekly reported recently that the government is mulling capping mortgages to 80 per cent of value in a bid to keep the market from overheating although MCA has come out strongly against the move. This comes as Singapore introduced a series of measures to reign in investors and speculators, such as a 70 per cent mortgage cap for buyers with more than one property and launching 36,000 public housing units this year and next.

While Napic does not have a housing affordability index, a rough calculation shows that the average price of RM273,000 is about 5.6 times that of an average annual household income of RM48,000. The average price of a KL home is now a steep 13 times that of the average urban household income of RM54,000 and a possible sign that the market is headed for a bubble.

The sharp increase in prices is said to be at least partly due to speculative demand as investors snap up multiple properties in the hope that prices will keep on spiraling upward — despite low occupancy rates that could affect rental yields.

Some real estate agents and developers have privately expressed worries that the market is already too speculative and the price escalation is not sustainable.

“I am all for sustainable price growth but the current market is too speculative,” one developer told The Malaysian Insider. “Most of the units are taken up by employees of the developer hoping to sell for a profit when the development is completed.”

Many developments completed in the past year such as Ameera in SS2 Petaling Jaya, Cova Suites in Kota Damansara and Challis Damansara in Sunway Damansara are experiencing only about 30-50 per cent occupancy rates, according to real estate agents. A check on new high-end condo Zehn in Pantai where sellers are asking for RM2.2 million per unit revealed the building to be almost completely dark at night.

Rental yields are starting to slide given that supply far outstrips demand.

A typical unit at Ameera is on the market for RM750,000. Given a 90 per cent margin of financing (MOF) over a 20 year tenure, the monthly loan repayment for a unit there works out to be about RM4,855. Rental rates at Ameera, however, are only about RM3,000 for a partly furnished unit. 

A stand-off could be developing where buyers are now balking even as sellers are trying to hold out for higher prices.

Housing and local government minister Datuk Chor Chee Heung said that the high savings rate in Malaysia meant that there appears to be no shortage of takers despite the prices. He added that there will be a limit although he was unclear as to how far prices will continue to rise.

“We have to continuously tell developers not to push the boundaries,” he said when contacted by The Malaysian Insider. “There is bound to be a maximum.”

Chor said that the government is building some 76,000 low cost units that cost about RM42,000 each in the next three years, but it is unable to tell private developers how much to build to boost supply of middle class housing in the market.

Real Estate and Housing Developers Association (Rehda) president Datuk Michael Yam said that the issue of rising property prices was partly due to an imbalance of supply and demand as more migrants move to land scarce Kuala Lumpur as well as higher cost of raw materials.

“Even if 50,000 new housing units are needed in KL, that is still a huge number to build,” he said at a recent Rehda media briefing.

One developer, however, privately expressed concern that the market had become too speculative and the dramatic increase in housing prices may become unsustainable. 

Property speculation remains rife despite a supply overhang

“I am all for sustainable price growth but the current market is too speculative,” one developer told The Malaysian Insider. “Most of the units are taken up by employees of the developer hoping to sell for a profit when the development is completed.” 

There are signs that the government is concerned that a real estate bubble is forming as investors pour money into property in the hope that prices will keep spiralling upwards.

The Edge business weekly had reported over the weekend that the government is exploring the possibility of increasing mortgage caps to 80 per cent of loan-to-value ratio in a bid to keep the market from overheating. This comes as Singapore introduced a series of measures yesterday to reign in investors and speculators, such as a 70 per cent mortgage cap for investors with more than one property and launching 36,000 public housing units this year and next.

Such a move, however, may only serve to hurt first-time homebuyers who will have to struggle to come up with the down payment whereas richer investors are unlikely to face such difficulties.

My Views: Yes, the property prices in KL and Penang are frothy, well, not just frothy but very frothy. The ones still bullish are usually those who still have one or two properties in their hands, looking to offload.

Almost every single valuation matrix would put property prices in KL and Penang in the overvalued category. The basis for housing - live in ownership or rental. For live in ownership, its affordability ratio. For rental, its effective yield relative to prevailing interest rates. On both accounts, affordability is out of reach and rental yields are falling rapidly.

Usually those still bullish will cite factors out of these two basis ~ most popular being foreign buying, followed by relative valuations compared to similar properties in other Asian cities.

Foreign buying, is basically speculation when they cannot even rent it out for a 2% rental yield. Foreign buying for capital appreciation is hocus pocus because locals will not take the foreign investors out ~ you bought at RM1,500psf, it will not be a local to buy from you at RM2,000psf. What you need is another more deluded foreign investor to pay you RM2,000psf.

Foreign buyers are mostly leaving finished units and houses empty. Don't believe me, go check out houses and apartments costing more than RM2m and RM1m respectively. If you can get 50% occupancy, call me and tell me where!!!

Relative valuations argument is even stupider, if you are a qualified accountant in Malaysia, after working 5 years you may get RM8,000 a month ... does that mean you will get RM8,000 a month in HK, Singapore?? Of course not, you may get HK$35,000 and S$7,500 a month. So, how does the relative property valuations argument stand up??? Properties, like any asset is just a reflection of the earning capacity of their residents .... unless you tell me that the bulk of Malaysian properties are taken up and lived in by foreigners!!??

But property bubbles do not get pricked so easily. When low interest rates is prevailing and other sectors of the economy are so weak, central banks cannot just raise rates to dampen property speculation as the broader economy will get hurt.

As unpopular as it may sounds, the measures will have to be property sector specific. I will support the following: anyone buying their second, third , etc properties should only be allowed a maximum of 70% loan from any financial institutions.

Property - Setia Eco City

Introduction of Setia Eco City, Kuala Lumpur

SP Setia in JV with DBKL on mega project near Mid Valley
by Siow Chen Ming, 27 Mar 2008 4:21 PM
THEEDGEDAILY

KUALA LUMPUR: SP Setia Bhd is set to finalise a joint venture (JV) agreement with Dewan Bandaraya Kuala Lumpur (DBKL) to develop high-rise residential cum commercial project on a 20-acre (8.1ha) plot located opposite the Mid Valley City.

Speaking to reporters at Invest Malaysia 2008 yesterday, SP Setia’s managing director Tan Sri Liew Kee Sin said the company secured an approval from the Economic Planning Unit (EPU) seven years ago for the project.

Although it had subsequently signed a memorandum of understanding (MoU) a few years ago with the DBKL, a privatisation agreement is still pending.

“We expect to finalise a deal with DBKL soon and launch the project next year,” said Liew. However, he declined to reveal the value of the project.

Squatters residing on the land were relocated to nearby apartments recently, indicating that the project is making progress.

The JV between SP Setia and DBKL will be similar to previous deals such as the one between IGB Group Bhd and DBKL for the now completed Mid Valley City project. Under such deals, DBKL would provide land while developers such as SP Setia or IGB carry out the development work and invest in the infrastructure.

Heading the country’s largest property developer, Liew said he was positive on the recent changes taking place in the country’s political landscape.

“I think the changes are good for the country, even though some of my friends have lost (in the election). It is good to have competition (in the political landscape) and because things will get better,” said Liew.

For instance, in Penang where SP Setia has major on-going property projects, he felt there should not be any problems as the new Chief Minister Lim Guan Eng has called for more openness and transparency, which has always been the group’s practice.

Having gone through the 1998 financial crisis, Liew was also unfazed about a potential slow down in the domestic economic growth that may affect property sales.

He said the group’s exposure in the property sector was well spread out, covering different regions with different products for several market segments. With certain adjustments of the project’s portfolio, the group can capture the market segments where demand is still strong.

Also, SP Setia’s property development projects in Vietnam was picking up steam and this would reduce the group’s dependence on the Malaysian market.

“Our target is that by 2012, contribution in terms of turnover and earnings from our overseas projects will be higher than Malaysia,” said Liew.

SP Setia is on track to meet sales target of RM1.8 billion for the current financial year ending Oct 31, 2008. This figure is within reach as sales have already reached RM646 million for the first four months of FY2008 compared to RM290 million in the same period last year.

SP Setia planned to launch five projects in FY2008 with total gross development value (GDV) of RM5 billion. The group has a remaining landbank of 4,783 acres (including in Vietnam) which are sufficient for its volume of development works over the next 10-12 years, with estimated total GDV of about RM30 billion.

World's Richest Government

Introduction World's Richest Government

We know the world's richest man is Carlos Slim Helu of Mexico, followed by Bill Gates and Warren Buffet of USA .

How about governments?

Which countries’ government is the richest (having most money that is, in US$)

If you are expecting North American and European nations, you might be disappointed.

While the countries look rich, wealthy European nations can't withstand a prolonged major financial crisis, just like Greece .

The USA might have the biggest economy, but the American government is not at all rich; in fact, it can't even take out $150bn if asked to now without resorting to borrowing.

To date the US government has borrowed $14 trillion!

The UK , likewise, while the country/people are rich, the government isn't.

The UK government’s debt stands at $9 trillion now.

World’s Richest Government

Richest governments after 2008-2009 financial crisis:

1. China

National reserves: $2,454,300,000,000

2. Japan

National reserves: $1,019,000,000,000

3. Russia

National reserves: $458,020,000,000

4. Saudi Arabia

National reserves: $395,467,000,000

5. Taiwan

National reserves: $362,380,000,000

6. India

National reserves: $279,422,000,000

7. South Korea

National reserves: $274,220,000,000

8. Switzerland

National reserves: $262,000,000,000

9. Hong Kong , China

National reserves: $256,000,000,000

10. Brazil

National reserves: $255,000,000,000

Here are the rest, in million US $:

11 Singapore / 203,436

12 Germany / 189,100

13 Thailand / 150,000

14 Algeria / 149,000

15 France / 140,848

16 Italy / 133,104

17 United States / 124,176

18 Mexico / 100,096

19 Iran / 96,560

20 Malaysia / 96,100

21 Poland / 85,232

22 Libya / 79,000

23 Denmark / 76,315

24 Turkey / 71,859

25 Indonesia / 69,730

26 United Kingdom / 69,091

27 Israel / 62,490

28 Canada / 57,392

29 Norway / 49,223

30 Iraq / 48,779

31 Argentina / 48,778

32 Philippines / 47,650

33 Sweden / 46,631

34 United Arab Emirates / 45,000

35 Hungary / 44,591

36 Romania / 44,056

37 Nigeria / 40,480

38 Czech Republic / 40,151

39 Australia / 39,454

40 Lebanon / 38,600

41 Netherlands / 38,372

42 South Africa / 38,283

43 Peru / 37,108

44 Egypt / 35,223

45 Venezuela / 31,925

46 Ukraine / 28,837

47 Spain / 28,195

48 Colombia / 25,141

49 Chile / 24,921

50 Belgium / 24,130

51 Brunei / 22,000

52 Morocco / 21,873

53 Vietnam / 17,500

54 Macau / 18,730

55 Kazakhstan / 27,549

56 Kuwait / 19,420

57 Angola / 19,400

58 Austria / 18,079

59 Serbia / 17,357

60 Pakistan / 16,770

61 New Zealand / 16,570

62 Bulgaria / 16,497

63 Ireland / 16,229

63 Portugal / 16,254

64 Croatia / 13,720

65 Jordan / 12,180

66 Finland / 11,085

67 Bangladesh / 10,550

68 Botswana / 10,000

69 Tunisia / 9,709

70 Azerbaijan / 9,316

71 Bolivia / 8,585

72 Trinidad and Tobago / 8,100

73 Yemen / 7,400

74 Uruguay / 8,104

75 Oman / 7,004

76 Latvia / 6,820

77 Lithuania / 6,438

78 Qatar / 6,368

79 Cyprus / 6,176

80 Belarus / 6,074

81 Syria / 6,039

82 Uzbekistan / 5,600

83 Luxembourg / 5,337

84 Guatemala / 5,496

85 Greece / 5,207

86 Bosnia and Herzegovina / 5,151

87 Cuba / 4,247

88 Costa Rica / 4,113

89 Equatorial Guinea / 3,928

90 Ecuador / 3,913

91 Iceland / 3,823

92 Paraguay / 3,731

93 Turkmenistan / 3,644

94 Estonia / 3,583

95 Malta / 3,522

96 Myanmar / 3,500

97 Bahrain / 3,474

98 Kenya / 3,260

99 Ghana / 2,837

100 El Salvador / 2,845

101 Sri Lanka / 2,600

102 Cambodia / 2,522

103 Côte d'Ivoire / 2,500

104 Tanzania / 2,441

105 Cameroon / 2,341

106 Macedonia / 2,243

107 Dominican Republic / 2,223

108 Papua New Guinea / 2,193

109 Honduras / 2,083

110 Armenia / 1,848

111 Slovakia / 1,809

112 Mauritius / 1,772

113 Albania / 1,615

114 Kyrgyzstan / 1,559

115 Jamaica / 1,490

116 Mozambique / 1,470

117 Gabon / 1,459

118 Senegal / 1,350

119 Georgia / 1,300

120 Panama / 1,260

121 Sudan / 1,245

122 Zimbabwe / 1,222

123 Slovenia / 1,105

124 Moldova / 1,102

125 Zambia / 1,100

126 Nicaragua / 1,496

127 Mongolia / 1,000

128 Chad / 997

129 Burkina Faso / 897

130 Lesotho / 889

131 Ethiopia / 840

132 Benin / 825

133 Namibia / 750

134 Madagascar / 745

135 Barbados / 620

136 Laos / 514

137 Rwanda / 511

138 Swaziland / 395

139 Togo / 363

140 Cape Verde / 344

141 Tajikistan / 301

142 Guyana / 292

143 Haiti / 221

144 Belize / 150

145 Vanuatu / 149

146 Malawi / 140

147 Gambia / 120

148 Guinea / 119

149 Burundi / 118

150 Seychelles / 118

151 Samoa / 70

152 Tonga / 55

153 Liberia / 49

154 Congo / 36

155 São Tomé and Príncipe / 36

156 Eritrea / 22

Big national reserves doesn't guarantee prosperity however, for instance, the yearly expenses for China 's government is $1.11 trillion, their government must always think of economic growth and making more money.

China’s gov't overspent $110bn last year, much on it towards modernizing their military, if it goes on like this their reserves can only last for 22 yrs.

The Malaysian gov't overspent $13bn last year, if it goes on like this their reserves can only last for 7 yrs.

The Singaporean government overspent $3bn last year, much of it rescuing their banks from financial crisis, if it goes on like this their reserves can last 68 yrs.

The Swiss gov't overspent $1bn last year, if it goes on like this their reserves can last 262 yrs.

A country normally can borrow up to 100% its GDP, a very strong industrial country or very financial stable nation can borrow up to perhaps 200% its GDP, debts over 250% GDP the country is bankrupted.

Greece 's Debts Is 113.40% GDP, In Danger As It Is Not Considered A Strong Industrial Or Financial Country.

Iceland Is 107.60%, Also In Crisis As It Is Not So Strong Industrial Or Financially.

Singapore Debts Is 113.10%, Not In Hot Water Due To Its Global Financial Hub Status, And Also Its Financial Strength. It's Only Dangerous For Singapore When It Reaches 200%

Japan Debts Is 189.30%, Still Under Radar As A Powerful Industrial Nation. It Needs To Panic Only At Around 200%

US Has The World Largest Debts, But It Is Only 62% Its GDP, It Is Not In Any Immediate Danger Of Bankruptcy.

Zimbabwe Debts Is 282.60% GDP, It Is A Bankrupted Nation.

Malaysia Debts Is Currently At 53.70% GDP.

Hong Kong And Taiwan Is Doing Pretty Good With Debts At 32-37% GDP

South Korea Is Even Better With Debts At 23.5% GDP

China Is Very Stable With Debts At 16.90% GDP

Russia Is Like A Big Mountain With Debts Only At 6.30% GDP

There Are Only 5 Countries With No Debt (I.E. 0%) –

Brunei, Liechtenstein , Palau , Nieu, And Macau Of China