another Perspective from a Malaysian Developer

[Deleted member 80916]

...from Last Saturday's Property Forum in JB,..

https://youtu.be/Lodgx3QvNpc

Whatdaya Think ?

 

[cybermad]

gotta listen with pinch of salt also cos he's developing at Austin area..far from HSR or RTS...

 

[jasonjst]

So what is his main point ? Hope I get him right.
1) Those who brought early at above 950psf can eat grass liao.
2) At current market of 700psf , developer cannot make much money . They rather sell their land instead.
3) In conclusion , can still buy if prices are below say 6XX . At some point in time there will be a short supply due to gov n bank curb since 2015 . Not many service apartment were granted approval . Even big time developer from KL not interested or don't dare to built anymore .
By the way price is referring to Medini

 

[Manhattan]

True that 700psf is about the break even price for medium quality condo plus small profit for developer, any lower they might as well forget it and shake leg. Why do so much work but earn nothing?
If at these prices still nobody buy, then the entire property market will die down, nobody will build and nobody will buy..I.e. back to lay back kampong days.

 

[rotikok]

True that 700psf is about the break even price for medium quality condo plus small profit for developer, any lower they might as well forget it and shake leg. Why do so much work but earn nothing?
If at these prices still nobody buy, then the entire property market will die down, nobody will build and nobody will buy..I.e. back to lay back kampong days.

But i do feel 700 psf still quite high price. Like R&F the cost they bought the land is Rm1000 psf, others condo land, at most rm300 psf, many around rm 200. Including build facilities etc, breakeven shud b much lower, i believe many break even not even Rm500 psf per unit and the more you build the lower the cost. Just gut feeling.

 

[cow138]

China developers playing a different ball game.

 

[mpan12]

Very good frank discussion. Not like the "all is a bed of roses" talk we often hear in Iskandar seminars.

So you can see even Khalil is wavering now. He often supported the fact that because of HSR, Iskandar will boom. Now under pressure from this Developer, he admitted he had assumed Iskandar will progress based on Singapore's way of working! But his Malaysian friends told him not to be so gullible. There you have it! The truth!

I'm not sure 100% what the Developer and other speakers' real thoughts are, but they did drop some hints, correct me if I'm wrong:

1. HSR is bullshit. Don't keep using HSR and MRT as reasons why the place (Medini) will do well. All talk, no action, is useless. HSR could be ready only in 2036!

2. Investing in Medini is risky. This part wasn't mentioned explicitly but the overall message seems to be that. The lady in the panel did add, some people like High risks, high returns. So they go in.

3. Developers have already incorporated all the future development in their pricing when they sell. By that, I assume prices of condos in Medini will not go up much in the next many years.

4. Those who have bought Medini condos at RM800-900+psf, GOOD LUCK! In other words, the speaker is saying, you have bought an overpriced property and will be hard to off load. Worse if you have no rental for the next 5 years.

5. Medini is leasehold, 99 or 129 years. Banks are now careful about this fact when lending money.

6. The banks' balance sheets are now lopsided: 30-40% (high) of Iskandar Malaysia (IM) loans are to foreigners. The banks are feeling uneasy and afraid now. So they will reject many loans and they are much stricter in loaning. For some parts of IM, there are huge areas for development. Banks don't even want to finance developers any more.

7. Some developers don't dare to build high rise now due to the oversupply issue.

8. There is still chance to invest due to the Johor state government stopping the supply of high-rise. But must be careful -- do your due diligence.

I find this part a bit of a contradiction from their previous statements. If there is an oversupply, and many of Medini condos are overpriced, how can there be a chance to invest?

Personally, I wonder if RM750psf as they mentioned is a good breakeven price. In 2012 or so, 1 Medini condo was sold at RM400psf I think. Then Medini Signature which came shortly after was sold at RM500psf.

It was in 2013 onwards when foreigners went berserk and rushed in that developers started charging RM750psf all the way to RM1000psf?! So how can their breakeven be RM750psf when they had sold earlier ones at RM400-500psf only? Unless the land price suddenly also increased by a lot. Then I'd say it's way overpriced.

I wonder how those buyers will sell these condos off next time. Moreover, they are leasehold, not freehold. Seems like these are the "toys" for foreigners to play with. Normal Malaysians will buy condos in the more affordable range like RM200-300psf?

 

[Investor888]

The property market in Iskandar is somewhat similar to the Singapore commercial market now. There are no new sales of land for the past 1-2 years plus in Singapore for commercial purposes. There is still over supply of commercial units. Many remain unsold. The govt here is waiting for the market to absorb them first before rolling up new sales.

Iskandar is doing the same thing right now. Hardly any new launches the last I check. Its a good move really

 

[rotikok]

Very good frank discussion. Not like the "all is a bed of roses" talk we often hear in Iskandar seminars.

So you can see even Khalil is wavering now. He often supported the fact that because of HSR, Iskandar will boom. Now under pressure from this Developer, he admitted he had assumed Iskandar will progress based on Singapore's way of working! But his Malaysian friends told him not to be so gullible. There you have it! The truth!

I'm not sure 100% what the Developer and other speakers' real thoughts are, but they did drop some hints, correct me if I'm wrong:

1. HSR is bullshit. Don't keep using HSR and MRT as reasons why the place (Medini) will do well. All talk, no action, is useless. HSR could be ready only in 2036!

2. Investing in Medini is risky. This part wasn't mentioned explicitly but the overall message seems to be that. The lady in the panel did add, some people like High risks, high returns. So they go in.

3. Developers have already incorporated all the future development in their pricing when they sell. By that, I assume prices of condos in Medini will not go up much in the next many years.

4. Those who have bought Medini condos at RM800-900+psf, GOOD LUCK! In other words, the speaker is saying, you have bought an overpriced property and will be hard to off load. Worse if you have no rental for the next 5 years.

5. Medini is leasehold, 99 or 129 years. Banks are now careful about this fact when lending money.

6. The banks' balance sheets are now lopsided: 30-40% (high) of Iskandar Malaysia (IM) loans are to foreigners. The banks are feeling uneasy and afraid now. So they will reject many loans and they are much stricter in loaning. For some parts of IM, there are huge areas for development. Banks don't even want to finance developers any more.

7. Some developers don't dare to build high rise now due to the oversupply issue.

8. There is still chance to invest due to the Johor state government stopping the supply of high-rise. But must be careful -- do your due diligence.

I find this part a bit of a contradiction from their previous statements. If there is an oversupply, and many of Medini condos are overpriced, how can there be a chance to invest?

Personally, I wonder if RM750psf as they mentioned is a good breakeven price. In 2012 or so, 1 Medini condo was sold at RM400psf I think. Then Medini Signature which came shortly after was sold at RM500psf.

It was in 2013 onwards when foreigners went berserk and rushed in that developers started charging RM750psf all the way to RM1000psf?! So how can their breakeven be RM750psf when they had sold earlier ones at RM400-500psf only? Unless the land price suddenly also increased by a lot. Then I'd say it's way overpriced.

I wonder how those buyers will sell these condos off next time. Moreover, they are leasehold, not freehold. Seems like these are the "toys" for foreigners to play with. Normal Malaysians will buy condos in the more affordable range like RM200-300psf?

Price dynamic, many of those high priced condo remain unchallenged in secondary market. SO they are saying, wait until they are on the market, you can take your time shopping around. Certainly timing is everything, if HSR coming by year 2036, then you can wait until 2025 or even 2030 only think about commit. But who knows, it comes by 2026? Or china make it, 2023?

Myself do not believe malaysian gov bullshit, last time they say legoland, coastal highway...all bullshit. But tricky bit is, when only myself believe it is bullshit, it always turn out to be really bullshit. But when everyone start to believe it is bullshit, it always do not turn out as bullshit...maybe the authority will start to feel the pressure public do not trust them and they are doing something. This is malaysia.

But the developer has the right attitude, always prepare the worst, thing might not be happen afterall, federal and state gov both have bad record on delivering promises, and they knew it well.

They (the developer) do not say 700psf is the breakeven price, but is the average to many foreign buyers who get in, will give strong support as many will not want to sell at loss. '700psf is cheap and developers barely survive at this price level' definitely is very singaporean way of thinking and using too much singaporean senses on ppty. Land for condo development price in danga bay area is around Rm 300-500, country garden land price is higher bcoz it is sea filled land, same with forest city. Many projects are not launching bcoz hard to get approval and there is no demands, secondly, they do not want to destroy the market, making feud with others developers. But inner lands, places for locals, you can find 200psf or higher end 500 psf condo. Those developers are making reasonable profit unlike those project selling to foreigners, extravagant profit.

Just heard from unverified source, the piece of land opposite danga city mall, the developer want to sell it off at 350 -400psf, seeking for keen buyer.

 

[mpan12]

Price dynamic, many of those high priced condo remain unchallenged in secondary market. SO they are saying, wait until they are on the market, you can take your time shopping around. Certainly timing is everything, if HSR coming by year 2036, then you can wait until 2025 or even 2030 only think about commit. But who knows, it comes by 2026? Or china make it, 2023?

Myself do not believe malaysian gov bullshit, last time they say legoland, coastal highway...all bullshit. But tricky bit is, when only myself believe it is bullshit, it always turn out to be really bullshit. But when everyone start to believe it is bullshit, it always do not turn out as bullshit...maybe the authority will start to feel the pressure public do not trust them and they are doing something. This is malaysia.

I thought Legoland and coastal highway are not bullshit? They are there already. But for Legoland, if you look at the aerial view, its surrounding is still quite "raw" and like uncompleted construction. Not what you'd expect of an international tourist resort park.

Iskandar is definitely progressing. But at its own slow pace. What I think the picture is right now, is that one should not expect any returns to be so immediate like in the good old days.

The risks are there. Can one take it? Can one still survive after plonking down the money for the property? If one has S$300k in the bank, and use S$250k to buy say an Iskandar condo, I'd say that's risking it. But if one has S$1million plus other assets to back himself up, then giving away S$250k is still a possible bet to try and see if the investment turns out ok next time. Even if it doesn't, he won't be in financial trouble. For the one who only has $300k to begin with, the risks are higher should things turn south.

Even Singapore is long past that rosy stage. People are still buying Singapore properties. To me, it's no longer attractive due to the inflated pricing and based on the present day economics + oversupply, the financial return is a big question mark. One could become a slave to the property by constantly paying mortgage for decades. As an investor, the property should work for you instead.

 

[rotikok]

I thought Legoland and coastal highway are not bullshit? They are there already. But for Legoland, if you look at the aerial view, its surrounding is still quite "raw" and like uncompleted construction. Not what you'd expect of an international tourist resort park.

Iskandar is definitely progressing. But at its own slow pace. What I think the picture is right now, is that one should not expect any returns to be so immediate like in the good old days.

The risks are there. Can one take it? Can one still survive after plonking down the money for the property? If one has S$300k in the bank, and use S$250k to buy say an Iskandar condo, I'd say that's risking it. But if one has S$1million plus other assets to back himself up, then giving away S$250k is still a possible bet to try and see if the investment turns out ok next time. Even if it doesn't, he won't be in financial trouble. For the one who only has $300k to begin with, the risks are higher should things turn south.

Even Singapore is long past that rosy stage. People are still buying Singapore properties. To me, it's no longer attractive due to the inflated pricing and based on the present day economics + oversupply, the financial return is a big question mark. One could become a slave to the property by constantly paying mortgage for decades. As an investor, the property should work for you instead.

Yup, legoland and coastal highway in the end do not turn out as bullshit. But you need to have the right attitude to begin with. Back in 2007 when it first launch, everyone were sceptical what they can do, then a year later those arab, UAE, emirate sovereign fund all pull out, then GFC etc, Iskandar is bleak, no hope, Horizon Hill etc all selling terrace at RM500K. You tell me about Legoland or build a new highway, I will think like many others, you try to bullshit me right? When nobody believe, they will do something; when everyone believe, they will not do anything. HSR and RTS will commence when everyone give up hope that it will come true. Now even pre-land acquisition paper work still havent done (albeit my intel told me is around the corner), ground breaking certainly safely say is 1 and half year away minimum. So i believe, when everyone started to feel they are bullshitting, they will surprise everyone to deliver.

Want to add on, if the ppty that you bought, stand too big a percentage to your overall asset value, make sure it is basic necessity or local medium class affordable type of ppty. Give you an example, no need to look far la, let say im doing business, beside my main residence, im able to buy in sentosa cove but the purchase will stand 90% of my overall net worth, will i commit? nope. Too risky. Alternatively if i really want to buy I want to make sure price is low enough and it only stand at 60-70% of my net worth for a luxury ppty. Poor guy without much excess money, 90% commitment can only be your prime ppty or for investment, ppty that belongs to ordinary folks. Many singaporean bought ppty in iskandar belongs to luxury ppty, and when come to luxury ppty, you cant expect rental yield to play a big part. Same thing, buying sentosa cove you cant expect rental yield to play a big part, those tycoon who bought it just buy and keep, occasionally come from other big city stay a day or two then private jet go back home. Luxury ppty a lot of time, unlike ordianary folk ppty, the value do not rely and derive from rental yield. I say buy iskandar when the price is low enough, until no much space the price can drop, while waiting market to change bullish again, maybe 5 years later... if you risk toooo big % of your net worth, how can you even tahan for those uncertainty worse time before you see the sunrise?

Anyway, this is my own set of value la, diff ppl can come with their own comfortable value.

 

[Frodo]

I thought Legoland and coastal highway are not bullshit? They are there already. But for Legoland, if you look at the aerial view, its surrounding is still quite "raw" and like uncompleted construction. Not what you'd expect of an international tourist resort park.

Iskandar is definitely progressing. But at its own slow pace. What I think the picture is right now, is that one should not expect any returns to be so immediate like in the good old days.

The risks are there. Can one take it? Can one still survive after plonking down the money for the property? If one has S$300k in the bank, and use S$250k to buy say an Iskandar condo, I'd say that's risking it. But if one has S$1million plus other assets to back himself up, then giving away S$250k is still a possible bet to try and see if the investment turns out ok next time. Even if it doesn't, he won't be in financial trouble. For the one who only has $300k to begin with, the risks are higher should things turn south.

Even Singapore is long past that rosy stage. People are still buying Singapore properties. To me, it's no longer attractive due to the inflated pricing and based on the present day economics + oversupply, the financial return is a big question mark. One could become a slave to the property by constantly paying mortgage for decades. As an investor, the property should work for you instead.

If I have $300K in my bank, that would not be enough to buy a 3 bedroom condo in SG which is $1.4m. The monthly payment would be enough to make me sweat blood. Rather, I would buy a nice location fully furnished JB condo at around RM600K-RM700K which I like very much, take up a bank loan at 80% and put all my money into the housing account to eliminate all interest on the loan. Then look forward to enjoying it for own use when it is completed.

 

[xebay11]

If I have $300K in my bank, that would not be enough to buy a 3 bedroom condo in SG which is $1.4m. The monthly payment would be enough to make me sweat blood. Rather, I would buy a nice location fully furnished JB condo at around RM600K-RM700K which I like very much, take up a bank loan at 80% and put all my money into the housing account to eliminate all interest on the loan. Then look forward to enjoying it for own use when it is completed.

You would be better off renting a nice seaview condo at RM2k a month and enjoy the rest of your money. When you get really old, Johor may be unsuitable, medical facilities is questionable.

 

[Tekkun]

You would be better off renting a nice seaview condo at RM2k a month and enjoy the rest of your money. When you get really old, Johor may be unsuitable, medical facilities is questionable.

10 years stying in JB would cost RM 240k. Translated to S$80k nia.
Then when you are already old, want to move back to Spore..which condo or HDB to live in?

 

[eatshitndie]

10 years stying in JB would cost RM 240k. Translated to S$80k nia.
Then when you are already old, want to move back to Spore..which condo or HDB to live in?

when one reaches old age and knows body is giving up, i advocate going on a 69-day world cruise in an ultra-luxury suite with private balcony and jumping into the sea alone at night before arriving at the last destination. best way to kick the proverbial bucket and save everyone some headaches.

 

[Tekkun]

when one reaches old age and knows body is giving up, i advocate going on a 69-day world cruise in an ultra-luxury suite with private balcony and jumping into the sea alone at night before arriving at the last destination. best way to kick the proverbial bucket and save everyone some headaches.

Something we all want to avoid but this is life.
When one is old, chances are osteoprosis sets in and old people are bed ridden. Or have Dementia / Alzheimer.
Where is the cheaper place to be a living dead? How much does it cost to have a old folks nurse who would bathe and change diapers for you?
Sometimes have all the money but where can you find a 5 star old folks home?

 

[Frodo]

You would be better off renting a nice seaview condo at RM2k a month and enjoy the rest of your money. When you get really old, Johor may be unsuitable, medical facilities is questionable.

Well, I would pay $800 a month if I buy a JB condo and at the end of the day I own it and can get something back when I sell it. Rental maybe I pay monhly $600-$700 but it is money down the drain. When I old, then decide when that time comes. I dont need top notch medical suites, just adequte medical care.

 

[Frodo]

when one reaches old age and knows body is giving up, i advocate going on a 69-day world cruise in an ultra-luxury suite with private balcony and jumping into the sea alone at night before arriving at the last destination. best way to kick the proverbial bucket and save everyone some headaches.

Such a cruise may cost more than a JB condo! LOL!

 

[sgcount]

Maybe many of the Johor properties will slowly become old folks home. Many Singaporeans say want to retire there mah....

 

[Tekkun]

Maybe many of the Johor properties will slowly become old folks home. Many Singaporeans say want to retire there mah....

If no buy now, how to buy when you are old for retirement?