BNM's 2010 Report on Malaysian Residential Property Market

http://biz.thestar.com.my/news/story.asp?file=/2011/3/24/business/8329275&sec=business

Stress Test for LOAN

In Bank Negara (BNM) Report 2010, it was announced that starting from the 3rd quarter of 2011, "new guidelines" will be implemented by all financial institutions to "stress test" loan applicants.  According to BNM's governor Tan Sri Dr. Zeti Akhtar Aziz, these guidelines are meant to ensure that those, who "cannot afford" to take loan, to "enter into debt".

From the newspaper, it seems that the measure is well-intentioned.  But its implementation will definitely affect the number of loans approved after its implementation.  Readers may read from the following link the news regarding this guideline.

http://biz.thestar.com.my/news/story.asp?file=/2011/3/24/business/8337522&sec=business

DANG WANGI LRT STATION

In a special report in the EDGE Weekly dated 14th March 2011, it was reported the Syarikat Prasarana Negara Bhd aimed to strike a "big quick win" by re-making the area of Dang Wangi LRT Station. (Page 14)

If Syarikat Prasaran Negara Bhd, who owns and operates the RapidKL, the STAR & PUTRA lines of LRT in KL, were to have their wish realised, then there could well be a high-rise serviced condo on top of the Dang Wangi LRT station.  If that is the case, then the Heritage Area & Cap Square will immensely benefit from it and it’s very likely that rental rates in that area (Jalan Raja Abdullah, Jalan Yap Ah Shak & Jalan Doraisamy) will go up.  Especially Shereton Tower, the Heritage House, the Heritage Row, the Heritage Place, Wisma & Menara RKT.  Of course, the immediate beneficiaries will still be Sunway Tower & Menara Safuan.

“Shops & Shop-Offices” in Desa Sri Hartamas, Kuala Lumpur

What are shop-lots and shop-offices?  Usually, they are commercial buildings of between 2 to 4 stories, where ground floors (generally referred to as “shop-lots”) are used as retail lots, such as boutiques, restaurants, banks, clinics and etc.  Floors above ground are normally offices (generally referred to as: “shop-offices”).

Shops and shop-offices are critical to the success of a particular mixed-developed area because they provide “amenities” which residents (either residential or commercial) around the neighbourhood “need”.  Grocery, convenience shops, coffee-shops & cafés, clinics, banks and others are provided for via shop-lots, and in some instances, upper floors as well (Examples: Bangsar & Hartamas).  In successful residential (sometimes cum commercial) neighbourhood, people converge in this commercial enclave day-in day-out.  Typical examples come to mind are: SS2, Damansara Uptown, Desa Sri Hartamas, Bangsar to name a few.  In all these areas, the “shops & shop-offices” area is always busy from morning to night, either weekday or weekend (though there are some slight differences between areas such SS2 & Uptown).

Hence, I would say that such area is the “Locational Centre of Gravity” of a “suburb”.  Locational Centre of Gravity” (LCG) is defined as a “spot or a place where human activities and accessibility are easy and supreme.  Like in the middle of everything” (Chin Soon’s Real Estate Mantra: LOCATION, TIMING AND BRANDING, page29).  Hence, the LCG of Desa Sri Hartamas will be the commercial centre where the shops are: the square “sandwiched” between Jalan 19/70A, Jalan 22/70A and Jalan 23/70A.  Here, all activities gravitate towards this area.

The next critical factor ensuring the success of those shops and shop-offices is what is commonly referred to as:  the “tenant-mix”.  In Desa Sri Hartamas (DSH), the tenant-mix is “good” i.e. they have “variety” of different retails, ranging from salons, spas,  eateries, restaurants, cafes, medical, banking, tuition centres and etc.  In a way, good tenant-mix provides the needed amenities.  This, in turn, ensures the area is well-patronised.  And as a corollary therefore, this type of real estate commands a premium price.

We take the example of Desa Sri Hartamas (DSH).  The surrounding residential area stretches from Mont’ Kiara (& Segambut Dalam), Sri Hartamas, Damansara Heights & Medan Damansara and they boast a sizable “quality” population, as these areas are considered “high-end” residential enclaves.  The LCG of this section will be the commercial area of DSH comprising Jalan 23/70A to Jalan 31/70A.  A total of more than 133 units of 4-storey shop-office lots, which will in turn give you more than 500 units of shops & shop-offices, with approximately 90% occupancy.  The tenant-mix is good – restaurants (local & Oriental, Western, Japanese, Korean & Middle-Eastern), boutiques, clinics, car wash, and other amenities such as laundry, banks and etc.  This area is packed with people most of the time.  And despite it’s being termed as “mature” area, investors and property-owners continue to invest in, either for own-use or for investment.

The 2^nd factor determining its LCG status is – accessibility (Chin Soon’s Real Estate Mantra: LOCATION, TIMING AND BRANDING, page39).  In DSH, it’s easily accessible practically from anywhere within KL & PJ.  It’s connected via Lebuhraya Sprint, Penchala Link & Jalan DUTA.  From KL North, one can take DUKE which is connected to Jalan DUTA which straight hits DSH.  From KL South, take Jalan DUTA straight.  From PJ, one can either take Sprint, the LDP connecting to Penchala Link or Federal Highway connecting Kerinchi Link which will hit Sprint within minutes.

Recent transactions (from Dec 2008 to Dec 2010) in DSH suggest an increase of 10% in value of its intermediate unit – from RM3Mil to RM3.3Mil, whereas end-lot units are transacted at above RM5.5Mil, despite its “mature" status.  This is proof of investor-confidence in the area.


For more information on Desa Sri Hartamas commercial real estates, you can email me at: kh_yklim@yahoo.com & visit my iagent website at: http://limyk.iagent.my/ for specific listing.  I will from time to time, feature some DSH listings in this blog.  Stay-tuned.  I welcome any constructive and critical comments on the contents of this blog.

My First Home Scheme

The Prime Minister launched the "My First Home Scheme" on 8th March 2011.  This scheme enables young adults with monthly salary of RM3,000 and below to buy their "first" home worth between RM100,000 to RM220,000 with "100%" financing.

How does it work?  According to reported news, the government sets up a mortgage corporation, called Cagamas Berhad, which will pay for those qualified applicants the initial 10% downpayment upon signing the Sales & Purchase Agreements.  So far, the following "requirements" need to be fulfilled to qualify for this scheme:

1.  The applicant must be a Malaysian;

2.  Age: 35 or below;

3.  Monthly Salary:  RM3,000 or below;

4.  The purchase price must be between RM100,000 to RM220,000.

5.  Monthly repayment sum must NOT be more than one third (1/3) of the applicant's salary.

I tried to contact some banks for further information.  So far, no news beyond what was announced.  Bank officials asked for some time to inform us of any new development as far as procedures are concerned.