Have been reading many posts regarding the depreciation value for properties around KLCC area. I am a investor from Singapore and am interested in investing myHabitat at KLCC area and would like to ask for some advices form the veteran investors as well as agents or anyone who is familiar with the property market in KL. Since we are now saying that the market is not doing well so isn't it the best time for us to purchase some potential properties so that we can yield a higher return in the future?
What will be the reasonable price psf to purchase for myHabitat as it was at RM511 psf when it was first launched and it is now around $800-$1100 psf ?
Is there any potential for myHabitat to go up any further in the next 5 years?
Will it be a better option to invest in Bintang Residence opposite Pavillion or myHabitat? I personally think it will be wiser to invest in myHabitit but would still love to hear from other veteran investors in regards to this.
Posted by Elaine12 on 04-May 2012
Myhabitat is good in quality but the location is still a distance from KLCC. I would rather buy Parkview, which is near and spend some money to improve the quality of the apartment itself.
For capital appreciation, landed in KL is still a better bet, especially gated and guarded. I would prefer Desa Parkcity in this case.
Posted by alwinleader on 04-May 2012
As long as the condo is well managed, it is still a good buy if you can get good returns in rental around KLCC.
But the rule of the game is "which is what" or "chicken and eggs" question.
Condo usually get higher rental investment whereas landed properties in KL gets capital appreciation returns. But condo rental seems to be more fickle with the state of economy comparing with landed properties especially with the expatriates working here.
For landed properties, there are numerous gated and guarded enclaves to consider - From Tumberry ( which is the highest end of leasehold ) to freehold in selected places like Sierramas, Valencia and Desa Parkcity which is within driving minutes to KLCC.
Posted by crj on 05-May 2012
Frankly although I am a fan of KLCC and I think it is the best place in KL to put your money it is ALSO true that yields suck and it takes too long to find tenants.A TRULY realistic yield analysis including deductions for quit rent,maintenance,assessment,initial rental commission (1 month),vacant period while you try to find a tenant(3 months??...if big unit could be 6 month or longer)plus allowance for broken air con,maintenance etc is going to give you an awful yield.2 to 3 % MAYBE and still dropping...Agents will not agree with my comments but they are commission salesman and frankly don't care much about YOUR money.It is YOUR money so think wisely!
Hey I love Malaysia BUT rental yield is pathetic,oversupply is huge around KLCC and the secondary market is dead.In a post bubble period CASH FLOW matters but everyone seems to forget that as they think the capital gain will return which I question.My Singaporean friend gave up on KLCC and bought again in Singapore because he said no vacant tenancy issues like in KLCC.I just CANNOT see how yield can improve.Just look at the new blocks just done or nearly done like Hampshire place(Tan and Tan),St Mary(E and O)and Vipod all offering even more supply and more yield suppression and ALL better location than My Habitat.My friend rents one at MH but is moving as too far he said in his specific case.Maybe look at Hamp Place(new) as closer to KLCC and good developer and maybe cheaper than your My Hab.I have never seen inside a unit but just an idea for you to investigate.Also Panorama is another new one near Hamp Place.
As for the property choices you mention.Well my view is Pavilion is fully priced(But Singaporeans buy it it seems) already and My Hab is a bit far IMO.Parkview as one person suggested to you is really a dump on top of girlie bars but it is close to Twin Towers and I guess lots of people who frequent the bars would like a unit there.Just saying it how I see it!Good luck Brian BUT my main suggestion is make sure you do your OWN analysis of yield and remember VACANT period is a MAJOR issue here.It destroys a honest yield analysis.You CANNOT allow for 95 to 100% occupancy.In Singapore I think my friend said his 4 properties over 3 years were vacant max 2 weeks before getting a tenant.My experience abroad is also good.A house we have abroad has been vacant about 3 weeks total in 8 years with 4 tenants!THOSE numbers you will NEVER find in KLCC...so be warned Mr.Singaporean this is a treacherous market place for the misinformed!Use your calculator wisely.Good luck in your search.Furthermore loans from local banks for foreigners are much harder to get since Jan 1 2012 Bank Negara changes and that also is a negative for a market relying partly on foreign purchases to prop the market up.
Posted by alwinleader on 05-May 2012
In most cases where if everything is taken into account,it is not financial feasible to rent out the PROPERTIES for rental yields. Properties in Asia usually are bought for capital appreciation. Maintainance fees as from management fees to sinking funds, quit to assessement, wear and tear. But the most frightening nightmare is How long the condo is let VACANT!
Not just in KLCC, but there is over supply in Mont Kiara to Sri Hartamas with new kids of block tower sprouting out like beansprouts. The condos here would be " now you see it, Then you dont " when others were being built eclipisng the skylines views of earlier blocks.There are even cases where rentals are not being paid and furnishing were taken away by tenants! Howzat for daylights nightmares?
As a double agent, I fully agree it may not be financial viable to look at rental yields. My clients sometimes are surprised why sometimes I present some negative views in additional to the positive factors why the properties needs further considerationsbefore deciding to buy it. It is an issues of crediblity vs commmision. But I know having professional trust earned, the incentives would be higher in the capital appreciation just like the real estate.
While I agree with you in current housing situation in USA where you could get as high as 20% rental yields in selected location. But then again the capital appreciation is in the red as economics problems persisted. And the commission rate for the agents can be as high as 6% in the sates with the properties insurance that needed to be bought. And the upkeep of furnishings has to be immaculate condition for the tenants.
Singaporeans are the bulk investors in KL properties especially the condo sector. I wonder why? And when I asked them , most of them are not buying for rental yeilds but for capital appreciation with thier investment.
Therefore, it depends on individuals profolio and thier financial ability. Ironic but true, the real winners would be the bankers. EVen the sub prime fiasco would not sink them as eventually thet would be bailed out by the government.
Posted by Elaine12 on 05-May 2012
I read a report that Parkview has the highest rental yield in KLCC at 8%. With the rising prices and decreasing rental, I supposed that is now about 5%. To achieve that, the apartment has to be fully furnished. If the owner is more realistic about the market rate, it can be rented out quite quickly. Surprisingly, I find the rental gated and guarded landed houses doing quite well due to limited supply.
Realistically, only new ones (less than 5 yrs) are tenanted faster and at very high price. Once it is older, of course the rental will drop quite substantially.
Posted by crj on 06-May 2012
Alwin's post talks about capital appreciation as the bigger reason to buy property.What I want to know is what is the driver today for capital appreciation?Particularly around KLCC which is this thread, I do not know a single driver.Yes I do NOT know a SINGLE driver.Can someone please tell me what are the drivers for a KLCC capital gain.
Lets discuss some reasons to buy property.
1.Yield.No driver here.Presently It is low and keeps dropping as supply keeps coming and I fail to see this as a driver of total return.I just put some money with a deal offered by Standard Chartered for an FD which gives 4% return for doing nothing BUT watching for attractive deals in the newspaper.I cannot see 4% yield around KLCC if I do a truthful analysis.I am talking NETT yield.NETT yield is the ONLY thing that matters.EVERY expenditure in a year will effect yield.Yep..calling the agent and the phone cost ,fixing the pipes,repairing the oven and all those other little things REDUCE yield.Of course vacant periods,agents commission ,maintenance,assessment,accountant etc all reduces yield.Talk of 8% up is nonsense around KLCC.Gross does NOT MEAN NET yield.Lets also remember presently for a Malaysian resident FD income is NOT taxable BUT RENTAL income is TAXABLE.So I do nothing and presently get 4% on an FD.Sure it is lousy but hey I can't see a realistic 4% in KLCC and I think I still will get a CAPITAL LOSS on KLCC in the next x years.My friend messes around all year with his properties,trying to find tenants etc and gets much less than me !
2.Capital Gain...I don't see this as a driver around KLCC except in a few special one off cases.At best I can make an argument that the market is FLAT but I do NOT believe there are capital gains of any real magnitude.The blocks that interest me are ALL flat or down.I lie they are down.Frankly I would say down ,as the number of units offered at so called bargain prices are increasing in a single block.Before I would see say 1 or 2 units at a cheaper price, whereas now I would see 5 or so at the so called fire sale price.So NOW the fire sale price is starting to look like the NORMAL price to me.For sure most of the units are offered at 20 to 50% more, but they are nothing more than owners(dreamers) still living in 2005/7.Get real,wake up and pull out a calculator that works!
3.Leverage and financial trickery.Yep sad but true.The reality of property is that it ISN'T just supply/demand BUT is the issue of HIGH LVR (loan value ratios ) and free money that drive property prices.People thought they were smart choosing X Block in 2005 because X block went up.The reality was that X Block went up because they were throwing money at people to buy property with essentially nothing down,high LVR worldwide, or inflated S and P agreements in order to get bigger loans.Today it is far harder to do.Today cash flow matters but people still don't get it.Today people are far more likely to have 'skin in the game',unlike earlier periods and so the free money driver isn't here.A reduction in LVR and the Bank Negara situation is making loans more difficult and lower LVR means less speculative money and less ability to drive appreciation.
4.No MORE LAND.....stop it please!I heard this in Japan for a decade but of course it wasn't the issue of no more land, it was the issue of cash flow and reduction in financial leverage that killed that market in 1990.One could argue that TOKYO had no more land in 1990 with 30 million people living there in a small area, but prices still fell 50 to 80% in the next 2 decades!
5.Political stability matters and the recent events in KL are problematic.They are not bullish property events and the truth of those events needs to be thoughtfully considered.For sure recent events are not driving price north.
6.SUPPLY ...they just keep building.I have NO idea who they expect to take up these properties as the final occupant.Sure you can go to Korea and sell a block through a slick marketing campaign to a bunch of locals who cannot find KLCC on a map BUT I want to see an appreciating secondary market that is healthy and vibrant and that unfortunately my friends doesn't exist today.
LONG term you will be ok is another argument.Long term you will be ok if you have genuine supply/demand dynamics working but my problem is that we are still coming down from a bubble so it will take a long time for that to correct itself.The US is really very interesting because with 20% plus yields you are getting back a BIG chunk of your investment every year.Chances are that in 6 or 7 years your property may own you NOTHING.Yep all your capital is back and chances are the decline is over and prices are rising again in 5 years.CASH FLOW matters.I do NOT believe that there is a large decline ahead in US property.Sure it may drop but you are paid YIELD to compensate.All I can say is if anyone will give me ANY KLCC property with a 20% return likely for the next few years(like the US) then I will buy it off him.I don't care if the capital price goes down another 10 % every year for a few years if I am picking up 20% on the upside in yield.I personally am not bullish on America in general BUT I acknowledge YIELD and CASH flow matter .You show me 20% in relatively stable environment and I am a buyer.
So to all the smart guys and girls out there please tell me ALL the drivers for KLCC property appreciation in the next few years.I just don't know any and I like KLCC!I think KLCC is the only place I want to buy in Malaysia but I still don't know a single driver.(Please do NOT say KL is cheaper than Hong Kong because it just means nothing.KL is KL and TOKYO is TOKYO.)I look forward to your long list of drivers and insight.
Posted by alwinleader on 06-May 2012
Malaysia has been listed as one of the 18 best places for Americans to retire overseas, based on the criteria of affordability and quality of life, for senior citizens. money.usnews.com/money/blogs/On-Retirement/2012/03/19/the-18-best-places-to-retire-overseas
Malaysia also been named as top 3 cities to invest after London & New York while the very update news from CNBC where world investors looks for credible financial news and direction said KL is the top 10 places for properties investment.
So what drives the properties nuts? Heck, I am not a smart alec or properties guru but rely on analysis done by reputable sites which commands degree of respect.
It is wishy washy thinking that you can get good and reliable analysis here by the forumers without credential or background.
Agree with crj, to certain extent.
Agree that in KL / KV generally that with relatively high bank interest and property price at the high end, the NETT yield is only getting low or negative, taking into account bank rate, maintenance fee, agent fee, lawyer fee,tax etc etc.
Agree that with such a rapid price rise within short 2-3 years, it is unsustainable and it is getting non-advice-to-buy stage. The notion that KL property price is still comparatively low compared to other cities is not reflecting truth in entirety as we have to look at how fast the price has risen since last 2-3 years...too rapid rise.
Finally, KL / KV land get scarcer by day? come on, this is M'sia not S'pore or HK...I can only agree on some pocket of land and even so, with the pricing nowadays, it is either fully priced or over-priced even after 2 years till 2014 simply because it has risen too rapid, too fast, it actually rise in 'advance' till 2014 pricing...just need to do some simple analysis based on nett yield...
Well, different investors / buyers / sellers / agents / experts view differently...I am only a too-free-article-reader...
Most things from shares equities to gold commodities, beaauty products to gourmet food are based on preception and subjective.
If we were to compare with properties in Australia to America, how could downunder commands the properites prices which may be beyond reach or cost to rent one either for living or business? The properties prices in Sydney, for instance is going up and up ver since the Japanese boom town charlie era. Now, it is the mainlander Chinese who is the driving force not just in Sydney but to far down under in Auckland city in New Zealand!
Sensibility should be where the economy or money is from Singapore to Kuala Lumpur, Hong Kong to Shanghai, Seoul, to Tokyo, USA to UK where trading and economic dynamic factors should be accounted for.
Those who studied are in the stock market would knows that the way the market prices move up or down is determined by the drive of market players on preception - even rumours - rather than the set of rules from dividend yields, price earning ratio or index analysis.
Irrational behavior is the rule of the engagement where it goes bears or bull rather than fundamentals from Harvard or from the economics text books.
Back to thread of whether KLCC or KL city is a good investment - It depends on what you think and others who are buying or selling. !
Somebody think MCD is junk food as but let the record showed that it is the largest company in the whole wide world selling value family meals. To many others - Nasi Lemak or Curry Laska is healthier and tastier.
I don't think KL is in the same league as HK, S'pore, NY, London...incomparable comparison.
I don't think KL has enough expat, high income expat / foreigners to sustain / support high end properties in places like KLCC / MK.
I don't think KLCC at current price is still attractive.
I don't remember if KLCC is MCD or nasi lemak...it is probably salad?
From what I understand, KL high end, especially those in KLCC / MK, the chance to be vacant for more than one month in a year is much higher, than places like S'pore?
As I said in my posting, it is based on preception. You kenot compare apples with oranges. And that is no way there is distinct similarity of any cities in the world. How could you compare KL with Singapore? In other words, can you compared Singapore with even Hong Kong?
So, which one taste better? Roti Canai, MCD burgers or Salad? Depending who you ask and who cook it as well.
From a double 00 Agent of selling properties and cooking out stories as a ***** Chef.
Posted by crj on 07-May 2012
A quick reply to Alwin's post on KLCC property drivers.
Firstly my comments really are just looking at simple potential market drivers around .Yield,supply/demand,LVR etc...NO ONE has to be a genius or a guru to note these relevant points.My argument was that the state of things was such that all of the TYPICAL drivers were absent or were in a state of deterioration like yield,over supply,decreasing LVR etc that would make it difficult to see cap gain etc.(This is a KLCC thread).If you disagree with my comments then please state which one with some kind of back up of numbers.Is yield great.?Is condo supply DECREASING?Is the political situation getting more stable or less stable?No need to be a guru ..any normal guy or girl with a calculator and basic knowledge can see these things if one opens their eyes.But at night time you will need a torch to show yourself around some of those empty KLCC ghost town blocks
Alwin replies quoting IP Global it seems to me.They are a 2005 property advisory company founded in 2005 in Hong Kong.Hmmmmmmm!Best we move on from taking their advice too seriously.
Alwin states for American retirees Malaysia is top 18 as a driver.Lets discuss this point.Lets remember that most Americans DON'T even have a passport.Of the 310 odd million citizens only 30% have passports!These people stay home.They like America and clearly don't move alot.Maybe they should but they don't.They are not like Europeans etc who really move around a lot.Americans just are not going to drive the local retiree market.Lets talk facts on retirees for Malaysia.MM2H program is a genuine retiree program.Americans do NOT even make the top 10 list of citizens of a country coming to Malaysia for MM2H in the period 2002 -2011 and that is according to your own govt website!Just facts guys.
CNBC...I gave up listening to them when they couldn't see a property bubble in the US and didn't see a Nasdaq stock market crash coming earlier this century.They are cheer leaders for the financial fund industry.I just can't take them and Bloomberg and their predominantly sub 30 year old,mini skirt wearing presenters seriously anymore.Rick Santelli, the bond guy at CNBC and Art Cashin the old UBS floor trader is the only reason I personally turn on the show to watch.
Retirees..again Alwin actually refers to some blog.The Best credited Retirement Index I know of is done by' International Living' and their International Global Retirement Index for 2012 shows Ecuador,Panama and Mexico as 1,2 and 3 .If you are looking for a cheap retirement place then I think this Index is very good.But the point is that once places get expensive(like property INCREASES) they really get thrown out of the list!
'Irrational exuberance' as Greenspan (who was maybe the worst central banker in modern history) called it, is a fair comment I think as a driver.Animal spirits lead the way...FEAR and GREED...definitely I agree with this as a potential driver...well I think it is the only driver of potential cap appreciation today around KLCC or so many markets worldwide and of course it is an' irrational driver' because fundamentally things seems to suck around KLCC now.BUT here is my problem.I completely agree that animal spirits can take over and drive the market higher as they did in Tokyo in the 80's or the Nasdaq bubble in the late 90's BUT again LEVERAGE kicked in with LVR(loan value ratio) going through the roof.This is definitely also the case In Australia...LVR MATTERS....and here is my problem.Animal spirits need leverage and a high LVR to really kick into gear but the financial markets are in retreat.They simply are NOT giving money away today as they did earlier in this century.I guess I am questioning whether irrational behaviour will be given a chance to take over.Bank Negara is already trying to pull in the reigns!...and that is your own central bank.If in desperation banks start offering LVR of 95% again then maybe animal sprits can take over.
But to anyone who thinks I am too negative I should say you keep forgetting that I like KLCC.I think KLCC is the only place to invest in Malaysia..BUT I cannot see the driver here.Yes I like it BUT my calculator and analysis does not give me confidence in a CAPITAL GAIN.So if I cannot see a capital gain then I need CASH FLOW.I NEED Yield!!!!...and I don't see one and I don't see it getting better.Supply keeps coming on and I don't see growth in KLCC to absorb the vacant units and drive yield higher.Sure maybe a few people will be lucky getting a Exxon Mobil tenant but for the most part I can't see improvement.
So my driver list remains a pretty short list...Hope maybe!
Posted by Elaine12 on 07-May 2012
I have investment in both Spore and KLCC.
I would say that the rental yield in Spore is lower than KLCC at about 3% but the bank interest in Spore is only 2% while in KL, it is 4%. With increasing prices, the yields are dropping in both places.
Yes, vacancy in Spore is shorter due to higher demand but it also depends on the owner's asking price and furnishing. Nice units will always be tenanted faster and higher.
Tenant's profile - In Spore, its mostly professional expats, esp Indians while in KLCC, its mostly students, esp Iranians. Most students find Spore too expensive to stay. So those who are still in Spore are from very rich families. Still different areas have diff tenant profile.
I was looking at Condo in Bandar Sri Damansara, Desa Park City and Mont Kiara. Each having different views and perspective.