ASIA FOCUS: Why Australian investors should consider Malaysian real estate

Posted on August 25, 2011 by Admin


Petronas Twin Towers, Kuala Lumpur

Petronas Twin Towers, Kuala Lumpur

In my previous post, I highlighted some real estate opportunities in the growing economies of Asia. In this article, I zoom into one country within ASEAN where strong economic performance since the Asian financial crisis in 1997 has translated into strong growth in its job markets and real estate values and its emergence from the global financial crisis relatively unscathed.

Malaysia, with all its natural resources, relatively efficient and language-friendly workforce, stable government, healthy foreign investments and good standing within the ASEAN and international community, has somewhat lagged behind neighbouring Singapore in terms of economic growth and prosperity. However, this country has its own unique investment propositions that other developed nations may be lacking.

This article examines some key issues and why Australian property investors may consider investing in Malaysia.

What are the benefits of investing in Malaysia? – The Malaysian story

Over the last fifteen years, Malaysia’s economy grew by an average of approximately 6.4% per annum. It is the third largest economy in ASEAN behind Indonesia and Thailand and the twenty ninth largest in the world. The late 1980s saw significant foreign investments into the country where its industrial sector experienced significant growth into the mid 1990s.

Malaysia has significant natural and agricultural resources and is one of the largest oil palm producers in the world.

Harvesting oil palm (Photo courtesy: RSPO)

Harvesting oil palm (Photo courtesy: RSPO)

It also has a very strong and vibrant oil and gas industry. In recent years, Malaysia has developed significant capabilities in knowledge-based  services and manufacturing of high-value technological goods such as semi-conductors, IT and telecommunications equipment which have contributed to its growth in GDP and productivity.

During this time, Kuala Lumpur was also bestowed with the Petronas Twin Towers which has since become an iconic symbol for the Malaysian capital. History will show that it is powerful to invest in what is now a new term called “dramatic architecture”. Symbolically, it defines a destination, lends credence and puts it on the world map.

Singapore has yet again proven this to be true with the Marina Bay Sands. This S$8 billion integrated casino resort and hotel investment has been so successful, its financial commitments have been recouped in less than a couple of years. But the implications of success goes beyond financial terms.

ASEAN Country GDP $USmil GDP per capita US$
Indonesia 511,765 3,980
Thailand 273,313 8,478
Malaysia 221,606 15,384
Singapore 181,939 51,226
Philippines 166,909 3,515
Vietnam 89,829 2,793
Myanmar 26205 1,156
Brunei 14,553 50,198
Cambodia 11,250 2,082
Laos 5,374 2,127

Source: International Monetary Fund at at October 2009

So what are the pros and cons? Lets take a closer look as each pertinent element.

Investment climate and first home ownership

The dream of owing a home in Australia since the withdrawal of the First Home Owners Grant and the recent property boom is almost non-existent for first home buyers who are  choosing to live within a radius of 10km of Sydney, Melbourne, Brisbane and Perth. The entry costs of a first home in Australia is now beyond many first home buyers because our markets have moved beyond the growth in wages. With the impending carbon tax, mining tax, increase in energy, petrol and food prices, many investors are spooked about where the economy is headed. This is not helped by Australia’s current two-speed economy where BHP Billiton has just reported a $23.5 billion net profit while the retail, manufacturing, export, tourism and education are experiencing one of its toughest years on record.

Gallery at U-Thant: High-end luxury condominiums in the heart of Kuala Lumpur

Gallery at U-Thant: High-end luxury condominiums in the heart of Kuala Lumpur

Malaysia has similarly experienced a real estate boom albeit this boom has been experienced predominantly around parts of its capital city. Generally, wages growth in Malaysia has also not kept pace with its economic growth and inflation. As a result, first home buyers in Malaysia are doing it tough just like our own. An average terrace or town house in and around Kuala Lumpur now cost upwards of around RM1,000,000 (approximately A$320,000).

Luxury condominiums in the heart of Kuala Lumpur

Luxury condominiums in the heart of Kuala Lumpur

Malaysian property prices

Unlike Singapore and Hong Kong where scarcity of land and demand has driven private property prices to levels unaffordable even by a majority of their locals, Malaysian property prices are still relatively affordable.

The average Singaporean wage earner will generally be limited to purchasing Housing Development Board (HDB) flats which are essentially government housing because private property is well beyond their means. On the other hand, their Malaysian counterparts are able to afford private landed properties because prices are at affordable levels to middle class Malaysians.

Malaysians and expatriates are also enjoying the “best of both worlds” of inexpensive cost of living, idyllic lifestyle of cheap domestic help and chauffeur services whilst being able to take advantage of the close proximity of Singapore’s local attractions and amenities such as dining, shopping and quality healthcare. Singapore is approximately a 5-hour drive from Kuala Lumpur.

Real estate growth history

Selected areas in and around the capital cities of Kuala Lumpur, Penang, Johor Bahru, Kuching and Ipoh have experienced good growth in recent years. This has been due to the growth in population in recent years. Malaysia and Australia used to share similar population numbers of about 18 million. While fertility rates in Australia has been declining until recent years with the incentive of the baby bonus, Malaysia’s population has grown to approximately 28 million compared to 22 million for Australia.

Many locals in Kuala Lumpur favour inner city living although large housing estates have opened up in Kepong, Puchong, Serdang, Salak South, Taman Tun Dr Ismail, Kota Damansara and Cheras. These developments have spread the population over wider areas of the Klang Valley where Kuala Lumpur is located and has resulted in numerous highways and new ring roads being constructed to cater for this growth in transportation demand.

As a result, real estate in prime locations have significantly appreciated in value which is not dissimilar to the growth in  and around Australian capital cities.

Lifestyle, cost of living and retirement

Royal Selangor Golf Club, Kuala Lumpur

Royal Selangor Golf Club, Kuala Lumpur

The capital city of Kuala Lumpur is a melting pot of the Chinese, Malay and Indian cultures. It is highly developed in terms of infrastructure, public amenities and telecommunication facilities. Internet wi-fi is more readily available in public places such as the Kuala Lumpur International Airport, hotels, cafes and restaurants than in Sydney or Melbourne.

Bukit Bintang shopping precinct, Kuala Lumpur

Bukit Bintang shopping precinct, Kuala Lumpur

The cost of a meal consisting local Malaysian fare in Kuala Lumpur is anywhere between A$1 in hawker stalls up to approximately A$5 in cafes and restaurants. Mid-tier and fine dining restaurants are also widely available in large shopping malls and international hotels.

Middle class Malaysians and expatriates enjoy an idyllic lifestyle of strong public amenities and a range of social and entertainment options.

Many locals and expatriates have full-time domestic help to assist with all the household chores. A domestic maid or nanny for childcare costs approximately RM500 per month (approximately A$160 per month). A full-time chauffeur from 8.00am  – 6.00pm Mondays to Fridays (who is also responsible for keeping the vehicle clean and tidy) costs approximately RM1,000 per month (A$320 per month).

As a consequence of these factors, the cost of retirement in Malaysia is relatively inexpensive due to cheaper housing and cost of living. In contrast, a recent article by CNN found Sydney and Melbourne to be among the top 20 most expensive cities to live in the world.

Unspoilt and calm waters, Penang beach

Unspoilt and calm waters, Penang beach

Owing a brand new 3-bedroom apartment outright and free of mortgage with all the modern facilities for less than A$300,000 in idyllic beachside locations with public amenities and relatively low cost of living becomes a very real option for those who are unable to do so in their home country.

Political stability

Just like any government today, the Malaysian government is not free from its criticisms. Most notably, its handling, dismissal and subsequent jailing of its former Deputy Prime Minister and now Opposition proponent Anwar Ibrahim was widely critisized as being unjust and a violation of human rights by the international community.

Malaysia practices positive discrimination for its bumiputra and indigenous Malays and hence, its government machinery is widely seen by the minority locals and the international community as flawed because of the absence of a system of meritocracy.

Under its former prime minister Tun Mahathir Mohamad who held the post for 22 years from 1981 to 2003, Malaysia experienced considerable economic progress although is it widely argued that a lot more could have also been achieved should Malaysia had adopted a pure democratic society. Under Mahathir’s “guided democracy”, wealth was widely redistributed from the majority of business capitalisation held by the minority Chinese to the majority Malay population through various government-sactioned laws and regulations. It was the government and its ruling party, Barisan Nasional’s so-called “stabilizing” factor to avoid “unhealthy” undercurrents where a minority sector was holding onto the majority of the nation’s wealth. Nevertheless, Malaysia has progressed economically over the last fifteen years albeit less impressive compared to its former state of Singapore. Like Australia, it has also emerged from the global financial crisis relatively unscathed.

It is widely accepted that it will be difficult for Malaysia’s economic progress to rival that of  its neighbouring Singapore but on the other hand, Malaysia’s standard of living is also considerably higher than most of its ASEAN counterparts.

Malaysia My Second Home (MM2H) program

John Jones, a retired firefighter, and his wife Samantha who have moved to Malaysia under the Malaysia My Second Home programme. MM2H has so far attracted about 12,000 participants (Photo courtesy: The Star newspapers)

John Jones, a retired firefighter, and his wife Samantha who have moved to Malaysia under the Malaysia My Second Home programme. MM2H has so far attracted about 12,000 participants (Photo courtesy: The Star newspapers)

One of the key incentives that foreign investors can take full advantage of is the Malaysia My Second Home (MM2H) program. It is a government incentive administered through the Ministry of Tourism where the Malaysian government is actively encouraging eligible foreigners, expatriates and foreign investors to work, live and retire in Malaysia.

Some incentives include ease of opening bank accounts, repatriation of funds to and from Malaysia, tax free car repatriation, discounts for golf memberships and the eligibility to live indefinitely in Malaysia subject to certain criteria.

As the cost of living and retirement soars in Australia, I believe good Malaysian real estate presents very real opportunities for Australians who cannot afford to retire in Australia. Indeed, the paradox of Singapore having the highest number of millionaires per capita in the world is that many of its citizens are unable to retire simply because of the escalating cost of housing and the high cost of owing a private motor vehicle.

Finance, legal and tax

The ease of obtaining finance for buying real estate in Malaysia vary depending on ownership status. Foreigners with a work permit are generally allowed to borrow up to 85% while foreigners who are eligible under the Malaysia My Second Home (MM2H) program can borrow up to 80% to buy propertues with a minimum value of RM500,000 (approximately A$160,000).

There is generally no legal or government restrictions for foreign ownership of private property.

Real property gains tax of 5% is payable on disposal of private property held for less than five years as per the Malaysian budget 2010 announcement. Private property held and disposed after five years are exempt from RPGT. This imposition is favourable compared to Australia’s RPGT regime.

Stamp duties rates are as follows:

First RM100,000                                1%
RM100,001 -  RM500,000               2%
RM500,001 – RM2,000,000            3%
Above RM2,000,000                          4%

Stamp duty for home loan agreements is 0.5% for any amount of loan taken.

Conclusion – should Australian investors consider Malaysian real estate?

The question of whether to invest is obviously more easily answered if we are purchasing a first home to live in where the risks are significantly reduced. It is near impossible to spot the lowest point of entry into a property market because of so many factors. Personally, the best time is when opportunities present themselves when we are in the market to invest. Such opportunities are usually brought about by a combination of economic cycles, market inefficiencies, market knowledge and experience.

As a property investor myself, I would naturally be very cautious investing in a market which I have little knowledge about.

There are numerous factors which weigh against a foreign investor and this includes a lack of understanding and local knowledge of the Malaysian real estate market. This can significantly increase the risks which include purchasing a property in the wrong location and from poor quality developers. However, these risks can be mitigated through collaboration with parties who have knowledge of the local market and a strong network of financiers, brokers and reputable developers with quality and track record.

My own property investment experience in Malaysia

Having spent my formative years in Kuala Lumpur and having been a senior executive with one of Malaysia’s largest most successful conglomerates for many years, I have the benefit of local knowledge and networking. I believe this is the single most important factor in minimising risk and making mistakes in real estate investments. The English language is widely spoken throughout the country which makes it easy for foreigners and tourists alike to do business in Malaysia.

Most importantly, having lived and invested in real estate in both countries, I am able to draw parallels and decipher the pros and cons about real estate investment in Australia and Malaysia.

Favourable factors that give Australian investors a distinct advantage:

  • Current favourable exchange rate of A$1 to 3.2 Malaysian ringgit is at its highest in almost twenty years. The Australian dollar was buying as low as 1.75 Malaysian ringgit in May 1993.
  • Australian real estate values are at all time highs. Refinancing equity to invest in a growing market coupled with the added advantage of the strong Australian dollar makes overseas real estate extremely affordable.
  • Relatively lower entry and transaction costs into the Malaysian real estate market. Deposit rates for off-the-plan properties are usually 10% of the total sale price. For a typical Malaysian investment property worth the equivalent of A$300,000, the deposit to be paid based on current exchange rate is merely A$30,000.
  • Relatively easy process to obtain financing for foreign investors who are eligible to purchase private property. We can arrange finance through local Malaysian banks at competitive interest rates of between 5 – 6% per annum.
  • After sales and property management services. Our team of real estate agents and property managers will ensure efficient procurement of quality tenants and maintenance of your investment properties.
  • No exit restrictions and capital gains tax is minimal at 5%. Private properties held for more than five years are not subject to capital gains tax.
  • Relatively inexpensive retirement option under the MM2H whilst taking advantage of Malaysia’s idyllic lifestyle around beach locations such as Penang, Port Dickson and Kuala Lumpur.
  • Close proximity to Australia and the financial centres of Singapore and Hong Kong. Malaysia is also central to the growing economies and tourist hotspots of Thailand and Vietnam.

Who should consider investing in Malaysian real estate?

  • Investors and high net worth individuals who are looking to diversify their investment portfolios.
  • Investors who are within retirement age and are not able to retire on existing funds and are looking for a lower cost alternative without compromising living standards.
  • Investors with high levels of  savings and disposable income.
  • Investors who are planning retirement within the next five years.
  • Expatriates who are working in Malaysia.

wealthruproperty’s customised, one-stop solution and services:

  • We assist you in navigating the process of sourcing and shortlisting quality real estate by reputable developers who have a proven track record of many decades in Malaysia.
  • We assist you by arranging competitive financing and co-ordinate conveyancing and legal services to execute contracts and loan agreements.
  • We assist you by finding a tenant and establish on-going property management services for your property.

Investors and interested parties are invited contact Albert Wong on +61 413 660909 for more information and details.

Albert has an extensive network of real estate professionals, property developers, bankers, insurers, legal advisors, accountants and tax experts in Malaysia. He and his team of real estate professionals both in Australian and Malaysia provide an integrated approach to assisting property investors seek out choice investment properties with strong capital growth as an over-riding objective.

Read some of our clients’ testimonials here.

Albert Wong CPA is Head of Commercial & Research for wealthruproperty in Sydney, Australia.  All his views and opinions expressed above are personal in nature and do not constitute investment, financial or legal advice.

Posted in Investment Strategies, News & Statistics, Wealth Creation Strategies | Tagged , , , , , , | 1 Comment

ASIA FOCUS – Real estate opportunities in the growing economies of Asia

Posted on July 14, 2011 by Admin
Marina Bay Sands, Singapore

Marina Bay Sands, Singapore

As the economies of Europe and the US remain in the doldrums, Asia is providing the impetus for global growth where some of its economies are powering ahead.

From a recent trip to Singapore and Malaysia, and notwithstanding reports from financial institutions, analysts  and experts, my own personal observation is that consumer sentiment is confident albeit cautious, government spending is strong where the focus is on providing better infrastructure to lay foundations for sustained growth whilst retail and commercial activities are vibrant.

Construction of new public parks and amenities on reclaimed land, Singapore

Construction of new public parks and amenities on reclaimed land, Singapore

Some key Asian growth indicators:

1. Performance of Asian Real Estate Investment Trusts (REITs)

Asian REITs have outperformed global REITs by up to three times in the past five years. Mr Ng Cheze How, AmInvestment Bank’s director of retail funds says that Malaysian REITs provided an average return of 7 – 8% compared to the average of 6.3% returns from Asia-pacific property trusts. Malaysian indices give out 3.5% in dividends,” Ng said, adding that each business cycle averaged between seven and eight years and that Malaysia is in the third year of recovery.

More investors are gradually using real estate as a hedge against inflation. Rising costs of living across developing nations in Asia and Australia means that inflation is Deposit rates are generally low and and interest earned are subject to tax. Coupled with inflation rates of between 3 – 4% each year, keeping money in the bank may be prudent but inflation may eventually erode savings.

2.  Singapore’s costs of living overtake Hong Kong for first time

Singapore has overtaken Hong Kong as a more expensive city for expatriates for the first time, driven by a stronger currency and higher rents, according to Mercer’s Worldwide Cost of Living Survey.

Singapore’s GDP growth for 2010 was 14.5%, the highest in the world and now, the island nation is ranked the eighth most expensive city in the world, rising from eleventh spot last year due to a susbtantial increase in housing costs. The record GDP growth last year also helped Singapore become the world’s highest proportion of millionaire households at 15.5% of the population, according to a Boston Consulting Group report in May 2011.

Axis REIT Managers Bhd chief executive office Mr Stewart Labrooy said that real estate prices in Malaysia are relatively inexpensive compared to its regional neighbours such as Singapore. Although both countries have seen solid growth in real estate values over the last few years, Malaysia is still relatively attractive given its stable economy, abundance of natural resources and its strategic location within Asia’s financial powerhouses of Hong Kong and Singapore.

Watching Singapore's skyline from a 150-metre infinity pool on top of Marina Bay Sands

Watching Singapore's skyline from a 150-metre infinity pool on top of Marina Bay Sands

Inflation was 4.5% in May 2011 as food and transportation costs increased. The island nation uses the exchange rate as its main tool to manage inflation and has allowed its currency to appreciate to a record in an attempt to contain price increases.  The Singapore dollar has risen by 13% in the past year against the US dollar, matching the South Korean won as the two best performing currencies among the 10 most actively traded currencies in Asia excluding Japan. Singapore’s economic expansion has pushed the unemployment rate to a 3-year low and economists including Irvin Seah from DBS Group Holdings Ltd said rising labour costs were contributing to the risk of higher inflation. Singapore’s real estate prices climbed for eight straight quarters to a record high, prompting the government to introduce new measures to curb speculative buying.

Local and guests enjoying the pool at Marina Bay Sands, Singapore

Local and guests enjoying the pool at Marina Bay Sands, Singapore

3. China’s economic growth engine

China’s economy grew by 9.5% in the second quarter, slightly lower than the first quarter but still showing no signs of any slow down despite housing curbs and five successive interest rate hikes since October 2010. The efforts of the Chinese government in putting on the brakes on its economy may have a dampening effect on Hong Kong, although its dollar being pegged to the weak US dollar had little effect on the city’s ranking against Singapore above.

4. India’s emerging economy

India’s real estate prices have also been growing steadily over the last few years although there is a word about a property bubble brewing for real estate prices in Mumbai where prices could fall by up to 35%. The reason for this is a large number of developers who have bought land at higher prices  need to correct prices and the recent residential sales of 65% and 35% apartments in Mumbai and Delhi respectively being sold to speculators according to Jones Lang La Salle.

However, its economy is still powering ahead at 7.8% for the first quarter of 2011 and is expected to grow strongly into the future. Foreign direct investments stood at US$32 bilion and India is experiencing a growing middle class, strong urbanisation and government spending where US$46 billion has been allocated for infrastructure upgrades. It has a solid banking and financial system and its demographics shows a very young country where 51% of the population is below 25 years old.

So what does this all mean for the Australian investor?

It is clear that recent gains on the Australian dollar has made it extremely difficult for businesses in the tourism, education, manufacturing and retail industries where the relatively expensive dollar has been curbing international visits, foreign investments and real estate growth. As I write this article, major retailers David Jones and Myers have reported sharp decline in profits.

Real estate agents have reported a marked slow-down in foreign investors. The official 2-speed Australian economy is well and truly underway and as long as China continues to demand raw materials, our resources sector and associated industries such as transport and logistics will continue to be strong.

No doubt our real estate prices have seen very solid growth in the last 24 months and are now taking a breather. It is generally a buyer’s market in Australia and a good time to review portfolios. Manufacturing your own equity through upgrades, improvement and construction are a strategic moves in the current flat markets.

Australia needs to improve its competitiveness

To remain competitive and attractive for foreign investments due to the strong dollar, Australia needs to focus on its key drivers of growth. No longer can we rely on real estate predicated on the natural beauty of harbour and river settings because prices are now beyond the reach of international investors and growth will slow. Local investors have squirrel away A$80 billion in the last financial year due to uncertainty around the world.

From a tourism point of view, there are so many attractions around South East Asia that can rival the Sydney Opera House and its band of attractions around Australia that are far more cost competitive due to the location of these attractions in cities with a high density population and spending-power. The international airports in Shanghai, Beijing, Hong Kong, Kuala Lumpur and Singapore are miles ahead of Sydney and Melbourne airports in terms of efficiency, customer-focused conveniences such as high-technology wifi, telecommunications, banking and forex, shopping and hospitality.

Space and abundance: Kuala Lumpur International Airport (KLIA)

Space and abundance: Kuala Lumpur International Airport (KLIA)

Overseas opportunities

In addition to strong infrastructure growth,  real estate investment opportunities are looking ever so attractive in these new Asian markets due to the strong Australian dollar. These investment opportunities include:

  • Investment in strategic locations in Malaysia for the dual purpose of investment and retirement where the standard of living is relatively high whilst the cost of living is low. Modern and highly developed infrastructure such as international schools and hotels, hospitals, transportation systems and English being widely used throughout the country make it easy for English-speaking foreigners to relocate to Malaysia.  An idyllic lifestyle such as beaches set around tropical real estate with access to high-quality broadband, health care, relatively cheap international and local cuisine, domestic assistance such as maids and chauffeurs make this a very real and attractive proposition.
Gallery at U-Thant: High-end luxury condominiums in the heart of Kuala Lumpur

Gallery at U-Thant: High-end luxury condominiums in the heart of Kuala Lumpur

  • Malaysia My Second Home program where strong incentives are given by the Malaysian government to foreigners who choose to make Malaysia their home. This program is now attracting a significant number of foreigners from the UK, China, Japan and South Korea who are relocating their families to Malaysia (Stay tuned for more about the incentives, tax concessions, real estate opportunities on this program in my next post).
Kuala Lumpur International Airport (KLIA)

Kuala Lumpur International Airport (KLIA)

  • Indian real estate in top cities such as New Delhi, Mumbai, Chenai, Kolkata, Hyderabad, Pune, Gurgaon and others.
  • Private apartments in Singapore where scarcity of land is pushing up property prices.

Look out for my next few posts to give you more information about these overseas investment opportunities which are set to rival Australian investment and retirement options due to the changes around the Asia Pacific region.

Panoramic view of beaches along Batu Ferringhi, Penang

Panoramic view of beaches along Batu Ferringhi, Penang

Australia needs to be very serious to remain competitive and relevant to rival the business and investment opportunities that is being presented to the world by cities such as Shanghai, Beijing,  Hong Kong and Singapore.

Readers, property investors and interested parties are invited to call Albert Wong on +61 413 660909 to discuss real estate investment opportunities to take advantage of our strong Australian dollar.

Related posts:

Disclaimer: Views, opinions and comments expressed in this article are general in nature and do not constitute investment, legal or financial advice. Readers are advised to seek their own professional advice as and when required.

Posted in Investment Strategies, News & Statistics | Tagged , , , , , | 2 Comments

Property Update – June 2011

Posted on June 13, 2011 by Admin
Darling harbour, Sydney
Darling harbour, Sydney


In my last update in December 2010, we observed a year of robust growth in 2010 although much of the surge in property prices happened in the first half of the year. The successive interest rate rises eventually took hold of the surging market in the second half of 2010 and we predicted that 2011 will be a year of consolidation. That is, a year where prices will stabilise as the market takes a breather from the boom.

It may be a opportune time to now examine the state of the property markets as we hit the half way mark in 2011.

Key Observations

Some key observations during the first half of 2011 include the following:

  • Fragmented markets and the two-speed economy in Australia

There has been a marked slow down in the property markets across Australia which has been widely expected. The boom which started in late 2009 was predicated on very low interest rates and pent up demand from earlier periods. What is worth noting is that, in general, property markets in Australia are currently flat and  further pressures on households will dampen prorperty prices.

It is also official that Australia is in a two-speed economy where the mining and resources sectors have been powering ahead whilst manufacturing, retail, education and tourism industries are experiencing very difficult times from a combination of the strength of the Australian dollar, consumer sentiment whereby people are more cautious and have curtailed spending to a large extent.

Mounting debts of $440 million - Colorado Group

Mounting debts - Colorado Group plans to close 140 loss-making stores nationwide (Source: The Daily Telegraph)


As I write this article, the retail chain, Colorado Group which owns iconic Australian brands including Mathers, Williams & Shoeman, Jag, Diana Ferrari and Colorado is riddled with a $440 million debt and its future is hanging on the balance. Receivers Ferrier Hodgson is expected to close 140 loss-making stores across the country and shed more than 1,000 jobs.

The evidence is mounting that consumers are cautious and sentiments remain fragile because people are still uncertain about the future of the world economy. The spending culture of Australians has been reversed where it is reported that Australian households have saved some $80 billion dollars over the last 18 months.

  • Strength of the Australian dollar

The Australian dollar has seen a jump of 25% in the last 15 months and is currently trading at around US1.06. The dollar traded to as high as US$1.10 in recent months. As a consequence, real estate agents have also reported a significant slow down in foreign investor interests due to the high exchange rate.

During the second half of 2009 where the recent boom began, foreign investor interests were at its highest where anecdotal evidence showed cashed up overseas investors, especially those from China were snapping up Australian properties when cash rates were at a 49-year low of 3%.

Although this level of investment has dwindled in recent months, prices have already surged and first home buyers are still finding great difficulty getting into the market. In general, investors are more selective whilst developers are having issues securing finance and this is sustaining price levels in certain areas.

  • Accelerating costs of living

Over the last 18 months,  food and petrol prices have increased in general which was due in part to the Queensland floods. GIO has increased premiums for most segments of its general insurance to recoup claims and losses from the natural disasters. The debate on the carbon tax, mining tax and impending increase in electricity prices and council rates are also making households think twice about getting into the property market.

Rising costs of living have been keeping many would be buyers out of the market. The difficulty of getting into the property market is generally sustaining rental markets across Australia. Most states have very low vacancy rates of around 1% although it should be remembered that markets are fragmented. Popular suburbs are always in demand while less popular areas are experiencing vacancy rates as high as 10%. This augurs well for investors although it is also not an ideal situation where renters are always under pressure from rent increases.

  • Strength of the Chinese economy

The Chinese economy has performed well and the government is concerned about its property markets which have seen a tremendous boom over the last 24 months. Measures are being taken to contain property price growth as well as inflation which some analysts are tipping to accelerate to more than 6%, bringing the full-year CPI to around 5%. The impact for Australia is obvious in the event of a slow down in the Chinese economy. However, there is little signs that a slow down is imminent as the Chinese government is generally looking to gently apply the brakes on the economy. Investors would be prudent to factor the potential of this issue happening in their investment strategy.

When and where to buy?

The million dollar question is still be asked as always. Hindsight is always easy and the best time to buy was obviously in early to mid 2009. My research at the time pointed to strong fundamentals in the Australian economy but what put investors off was the looming GFC and an uncertain future.

However, interest rates were at record lows and investors would have done extremely well had they invested in suburbs and properties with good credentials, that is areas where there is a solid growth history that is in demand from both owner-occupiers and tenants alike, strong public transport and amenities such as shopping centres, parks, beaches and other local attractions. Buying off-the-plan then was a good strategy provided the developments are in strategic locations and have strong developer credentials.

It is a generally a buyers’ market at the moment because prices are generally flat and some suburbs have retreated from its highs. But it should be remembered that prices have boomed in the last 24 months. First home buyers can drive a harder bargain for certain strategic locations where stocks have increased because it is now taking a longer time to sell a property.

Special reports

I would still caution investors about areas which have been touted as boom areas such as mining towns. I have received numerous emails over the last 6 months and a marked increased in the demand for the special reports in towns like Gladstone in Queensland and Orange in New South Wales. I have carefully reviewed these reports and the long term fundamentals of investing in these areas have generally remained unchanged. That is, one needs to do the hard yards by researching strong growth history and fundamentals for suburbs within these areas, choose the right location, then the right type of property and finally the right price. However, the short term risk profile is a little different because markets have softened and the future of the world economy is still uncertain.

In general, I would avoid house and land packages and off-the-plan projects because the boom is over and it is a lot more risky when the future is uncertain unless one is looking to be an owner-occupier and is taking a much longer term view.

I believe investment strategies in light of all the above have not changed from what I found in December 2010. These strategies include:

  • Exercise prudence and reduce risk by reducing debt and leverage and value-add to property portfolios, if at all possible. Renovating your properties, subdividing and developing are great ways to “manufacture” equity and grow your portfolio during flat markets.
  • Research and target emerging suburbs with good credentials. As markets are flat, it is crucial for investors to take a longer term view rather than looking for short term gains and buying properties off-the-plan. Real estate in popular areas around the CBDs with good public transport and amenities will continue to hold its value in the long term. These properties are also popular with tenants.
  • Consider alternative markets overseas. Due to the strength of the Australian dollar, many Australian are taking advantage by going overseas for holidays and considering investing in overseas markets. This option is strategic provided research and due diligence is carried out and the relevant laws and regulations of those foreign countries are understood and its implications factors into the equation.

Related posts:

Disclaimer: Views, opinions and comments expressed in this article are general in nature and do not constitute investment, legal or financial advice. Readers are advised to seek their own professional advice as and when required.


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35/2 Coulson street, Erskineville

Posted on May 20, 2011 by Admin
FOR SALE: Unit 35, 2 Coulson street Erskineville

FOR SALE: Unit 35, 2 Coulson street Erskineville

2 bedroom 2 bathroom 1 car space

Asking price: $649,000

Size: 95sqm internal, 115sqm total

Strata levies: $995 per quarter

Erskineville is known for its vibrancy in terms of an alternative lifestyle among Sydney’s hip and Bohemian. This suburb is a mere 4.5km from Sydney CBD and 2km from the University of Sydney.

Features:

  • Split unit reverse cycle air-conditioning
  • European and gas kitchen appliances
  • Internal laundry
  • Study alcove
  • Built-up wardrobes
  • Master bedroom with ensuite

Facilities:

  • Underground secure car space with swipe card system
  • 3 sqm separate storage facility in basement

Conveniences:

  • 5-minute walk to Sydney Park and St Peters train station – 3 stops to Central station (10-minute train ride)
  • 10-minute drive to Broadway Shopping Centre, Sydney CBD, Chinatown, University of Sydney, Newtown cafe and restaurant precinct

Agent: De Sousa Real Estate (02) 9519 7500

FOR SALE: Unit 35, 2 Coulson street Erskineville

FOR SALE: Unit 35, 2 Coulson street Erskineville

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14 Kelsey road, Noraville

Posted on April 4, 2011 by Admin

14 Kelsey road, Noraville

FOR SALE: 14 Kelsey road, Noraville

3 bedroom 1 bathroom 1 car space

Price guide: $330,000 – $380,000

Located in the heart of the Magenta peninsula on the north coast of New South Wales, this property is within close proximity to Tuggerah Lake and the Tasman sea to its west and east respectively. The property is immaculately renovated and consists of three bedrooms all fitted with double robes, brand new bathroom, kitchen with granite benches / splashback and stainless steel appliances. It has an open plan living and dining area, stylish light fittings polished timber floorboards, study alcove and single garage with a 4 metre side access to allow parking for a caravan or boat.

Agent: Damian Montgomery of LJ Hooker Toukley, mobile 0414 856932

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Sydney inner west – strongest property market or parking nightmare?

Posted on March 31, 2011 by Admin

Auction clearance rates

Sydney’s inner west was recently dubbed by Dr Andrew Wilson from Australian Property Monitors as the hottest property market around metropolitan Sydney, a distinction based purely on auction clearance rates (see article below).

Although auction clearance rates is one of so many indicators of the strength of a property market, it should be remembered that auctions only account for a mere 12% of property sales in Australia. Therefore, to claim the inner west being the strongest market based purely on auction rates is somewhat misleading. Granted, its location of being so close to the CBD and attractions around Sydney makes certain suburbs in the inner west as popular as ever, especially among some of the young professionals and those seeking the hip and eclectic Sydney lifestyle.

The downside to inner west living is the level of human and car traffic where this locale is one of the most densely populated areas in the whole of Australia. You don’t even need to wait for peak hours to drive through King street along Newtown to understand that traffic congestion can drive people to avoid certain inner west areas like a plague. In addition, many properties around the inner west in suburbs such as Newtown, Erskineville, Surry Hills and Chippendale don’t have private car space or off street parking. Great lifestyle when you come home from a hard day’s work and having to circle your neighbourhood for half an hour only to find the nearest parking spot 100 metres away from your property. Better still, try carrying your six bags of groceries through 100 metres in the rain.

Some two-way streets in the inner west are so narrow that only one vehicle can drive through when cars are parked to the brim on either side of the road. Find an open driveway failing which you may have to reverse all the way back to where you came from depending on how you decide who has the right of way. Better still, try locating inconsiderate parkers who decided to dump their vehicle across your driveway (despite clear “no parking – day or night” signage on your gate as well as clear demarcation on your driveway) when you are late for an appointment.

To me, investing in the inner west in Sydney cannot be compromised with the absence of a car space as so many developers are increasingly building apartments that come without private parking. There may be an element of councils eager to keep millions of dollars raised from parking metres and fines each year and hence restricting the allotment of car spaces for new developments.

Private car spaces in the inner west are becoming so valuable that on-site parking for houses in Newtown, Erskineville and Marrickville can add between $70,000 to $120,000 to the value of a property. The inner west may offer a certain lifestyle to some but it certainly comes with a cost. As Sydney becomes even more congested in the near future, properties in the inner west which offer private and off street parking will become even more scarce and investors would be wise to tick this item on the investment checklist.

Related articles:

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How to choose and install a reverse cycle air-conditioning system for apartments?

Posted on March 27, 2011 by Admin

Wall mounted Mitsubishi reverse cycle air-conditioner

Wall mounted Mitsubishi reverse cycle air-conditioner

Most older style apartments and units in Australia were built without air-conditioning or heating. New apartments coming onto the market these days are generally fitted with reverse cycle air-conditioning which are either ducted (built into the apartment) or split unit system where each room has individually fitted wall-mounted units with an external compressor unit.

Some newer apartments have also been wired for reverse cycle air-conditioning by the developer should owners choose to install these systems subject to approval of the Owners’ Corporation. In these cases, the developer and Owners’ Corporation will specify the specific model of the split unit system that owners can install to ensure the system is compatible with internal wiring and noise level requirements.

Depending on the size of the room or living areas, split unit systems are very efficient as they can either heat or cool a space of up to 60 – 70 sqm. These systems also generally use less electricity because unlike ducted systems, occupants have the option of only using the split units for certain areas as opposed to ducted systems where the entire apartment or townhouse will be heated or cooled when the system is turned on.

Mitsubishi reverse cycle air-conditioning

Mitsubishi reverse cycle air-conditioning

I have found that although Mitsubishi and Daikin air-conditioners are slightly more expensive than other brands in the market,  the 5 kilowatt cooling and 5.8 kilowatt heating specifications are by far very effective for cooling or heating an area of up to about 70 sqm or more depending on the layout plan and positioning of the split unit. Bedrooms with smaller areas may only require models with a smaller heating / cooling capacity. Another great feature of these units is they are extremely silent and remote controls have a good working range around the entire room. Many developers and Owners’ Corporation also require these models to be fitted as the outdoor compressor units comply to noise level requirements.

Caution should be exercise in choosing the positioning of the outdoor compressor units as warm air being expelled from the unit may interfere with usability of the areas of the balcony or courtyard immediately next to the unit. Specially designed vents to redirect the warm air may be a solution to this issue if required.

Split level and maisonette style apartments should take into consideration whether the internal unit be install on the higher or lower levels depending on preference of heating and cooling during the winter and summer periods. Portable floor fans are extremely effective in redirecting hot air to lower levels and cool air to higher levels of split level apartments and town house by using the back of the fan as a suction device.

Portable floor fan

Portable floor fan

Prices may vary depending on capacity but generally range between $900 – $2,000 for both internal and external units. Installation will cost between $500 – $600 and it is important to choose a reputable installer. Not damaging walls and carpets is part of an experienced installer’s skill in addition to providing advice on the most effective position to install both the internal and external units.

I have also found Bing Lee to provide among the most competitive quotes for reverse cycle air-conditioning. They also have a list of installers but one needs to ascertain the installers are reputable as they are merely third party independent contractors.

External Mitsubishi compressor unit with specially fitted vents to redirect hot air

External Mitsubishi compressor unit with specially fitted vents to redirect hot air

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18 Cove Avenue, Manly

Posted on March 27, 2011 by Admin

18 Cove Avenue Manly 9

FOR SALE: 18 Cove Avenue Manly

4 bedroom 2 bathroom 1 car space

Price guide: $ 4 million +

Nestled along the water’s edge with a 30m wide frontage, this property has a commanding and unsurpassed view over Manly Cove. It is conveniently located in the prestige area on Manly’s Eastern Hill with easy walking distance to Little Manly Reserve, Manly wharf ferries and beaches.

The property occupies a 752 sqm level water frontage with a secluded street presence. Accommodation includesa palatial master bedroom with 180 degree water views. Two other double bedrooms have deep water front views and a third bedroom and a study includes original bathroom and separate shower recess and toilet. The living areas have French doors which open directly onto the sandstone water front terrace, pool and level lawns.

This property is up for auction onsite at 2.15pm on 16 April 2011.

Agent: Kingsley Looker of Cunninghans Property, mobile 0411 225 556

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Where to find competitive home and content insurance

Posted on March 27, 2011 by Admin

GIO’s fire and home content insurance premiums recently soared by up to 35%. I was told by a broker that GIO, being owned by Suncorp, was trying to recoup losses it suffered from claims payout as a result of the recent floods in Queensland.

I did some research and found that Real Insurance had some of the most competitive quotes for fire and home content insurance which rendered my renewal notices from GIO to be ridiculously expensive. One can choose from different excess amounts to suit the premiums to be paid and policies have a 30-day cooling off period from inception provided no claims are made during this period. I found the service of staff to be knowledgeable and helpful and the renewals of my policies have saved hundreds of dollars from the switch to Real Insurance.

Contact real insurance to find out if your current premiums are competitive.

Real Insurance

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Guidelines to obtaining approval for Development Application (DA) or Planning Permit (PP)

Posted on March 16, 2011 by Admin

Application for planning permit - the process

In New South Wales and Victoria, the application to subdivide, renovate or develop property is called a Development Application (DA) and Planning Permit (PP) respectively.  The chances for obtaining an approval for a DA from the local council can be improved by following a few guidelines which are designed to facilitate transparent communication between the applicant and the council.

1. Find a good project manager / consultant

A consultant who is knowledgeable and well-versed with local planning laws and building codes will be able to provide critical advice on the feasibility of a proposed development. It is ideal to choose a consultant with a good track record for project managing similar developments within the suburb and one who has previously dealt with the local municipality / council for the suburb. This will ensure familiarity with local council guidelines which may vary from one council to another. More importantly, the consultant may have previously dealt with planning officers within the council and understand critical requirements of council to maximise the chances of any potential DA to be approved.

2. Comply to building and construction codes

A consultant who is well-versed with local building and construction codes will also be able to provide advice and design initial drawings and building plans which will comply to these codes. This important step will ensure there are no potential constraints or issues which are against planning laws that will hinder or delay the application process.

3. Arrange for a pre-application meeting with council

It is important to arrange for a pre-application meeting with council to establish and develop a relationship with the relevant planning officer who will be assigned to the application. It is not unusual to have more than one or two pre-application meetings whilst the design and building plans are being drawn to obtain feedback to fine-tune the drawings to ensure they satisfy all council requirements. This step can also be seen from council’s point of view that the applicant wishes to have a consultative approach and co-operate with council to ensure all requirements are met. Some councils have daily planning meetings where applicants can make appointment to discuss their proposed plans with council. This is a good approach to take before making key decisions that require financial and time commitments on the project.

4. Develop cordial relations with surrounding neighbours

If council is satisfied that all requirements to building and construction codes are complied with, the council will advise the application is then ready to be advertised where a signage is required to be erected on the proposed site to inform the neighbours of the proposed development. The council will usually also arrange for letters to be sent to neighbours within the vicinity of the proposed development to advise them of the same. Sometimes, neighbours can be concerned about how the proposed development will affect their property and will raise their concerns and objections during the advertisement period which is usually for a period of 14 days. Therefore, it is also important to engage and develop good relationships with neighbours as a basis to alleviate their concerns and assure them of a positive outcome from the development.

5. Follow-up process with council

Follow-up activity with council is important to ensure the application process is on track and within stipulated time-frames. Any objections from neighbours should also be analysed to see if such objections relate to any contravention of planning laws which may delay or halt the application process. If the objections do not relate to a breach of planning laws, then the project manager / consultant should try to obtain feedback from council on the likelihood of approval.

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1038/2 Marquet street, Rhodes, New South Wales

Posted on March 12, 2011 by Admin

Unit 1038, 2 Marquet street, Rhodes, New South Wales 1

Unit 1038, 2 Marquet street, Rhodes, New South Wales

2 bedroom 2 bathroom, 1 car space

Mortgagee in possession

This property is part of the Sienna By the Bay resort-style apartments in Rhodes which was developed by Meriton. Living space including balcony is approximately 124 sqm. This near new apartment has modern conveniences such as reverse cycle split-unit air-conditioners, gas kitchen with European appliances internet and cable TV connections in the study. Other features include:

  • 24-hour security and on-site building manager to attend to maintenance and service for occupants
  • secured car space with separate 3 sqm storage cage facility
  • Strong maintenance and service level by Meriton ensure immaculately kept gardens, gymnasium, pool, sauna and spa for residents
  • 3 minute walk to water foreshores of Homebush Bay
  • 3 minute walk to Rhodes train station which is 6 stops to Central station in the heart of Sydney CBD
  • 5 minute walk to the conveniences of childcare, banks, post office supermarket and shops at Rhodes Shopping Centre
  • Located within the Rhodes Business Park precinct which now includes multinationals such as Hewlett Packard, National Australia Bank, Nestle, Australand, Unisys, Alcatel Lucent and Lion Nathan which would provide strong tenant proposition for investors.
  • Public amenities and local attractions which include water foreshore parks like McLiwaine Park, King George V Park, Bicentennial Park, Kokoda Track Memorial Walkway along Brays Bay Reserve, Sydney Olympic Park facilities and Concord Repatriation General Hospital.

Council rates: $225 per quarter, Water rates: $130 per quarter, Strata levies: $1,217 per quarter

Agent: Mr Tee Jay Seo of Rhodes Realty. Mobile 0423 106 540

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1048/2 Marquet street, Rhodes, New South Wales

Posted on March 12, 2011 by Admin

Unit 1048, 2 Marquet street, Rhodes, New South Wales 1

Unit 1048, 2 Marquet street, Rhodes, New South Wales

2 bedroom, 2 bathroom, 1 car space

Asking price: $679,000

This property is part of the Sienna By the Bay resort-style apartments in Rhodes which was developed by Meriton. Living space including balcony is approximately 110 sqm. This near new apartment has modern conveniences such as reverse cycle split-unit air-conditioners, gas kitchen with European appliances internet and cable TV connections in the study. Other features include:

  • 24-hour security and on-site building manager to attend to maintenance and service for occupants
  • secured car space with separate 3 sqm storage cage facility
  • Strong maintenance and service level by Meriton ensure immaculately kept gardens, gymnasium, pool, sauna and spa for residents
  • 3 minute walk to water foreshores of Homebush Bay
  • 3 minute walk to Rhodes train station which is 6 stops to Central station in the heart of Sydney CBD
  • 5 minute walk to the conveniences of childcare, banks, post office supermarket and shops at Rhodes Shopping Centre
  • Located within the Rhodes Business Park precinct which now includes multinationals such as Hewlett Packard, National Australia Bank, Nestle, Australand, Unisys, Alcatel Lucent and Lion Nathan which would provide strong tenant proposition for investors.
  • Public amenities and local attractions which include water foreshore parks like McLiwaine Park, King George V Park, Bicentennial Park, Kokoda Track Memorial Walkway along Brays Bay Reserve, Sydney Olympic Park facilities and Concord Repatriation General Hospital.

Council rates: $216 per quarter, Water rates: $126 per quarter, Strata levies: $902 per quarter

Agent: Mr Tee Jay Seo of Rhodes Realty. Mobile 0423 106 540

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Zenix, Erskineville ~ epitome of Sydney’s inner west city lifestyle

Posted on February 28, 2011 by Admin

Zenix Tower, Erskineville

Zenix Tower, Erskineville

The Zenix in Erskineville is the flagship development of integrated property developer, Metroland. It consists of 100 one-bedroom apartments, 121 two-bedroom apartments and 3 three-bedroom apartments spread over a 11,531 sqm opposite the Sydney Park. This project was completed in 2003 at a cost of $80 million.

This development is located in a strategic pocket of Erskineville as it is a mere 150m to the St Peters train station which is only three stops from Central Station in the heart of Sydney’s CBD. Zenix is also within walking distance to the recreational facilities of Sydney Park, the cafes, restarants and shopping strip of King street in Newtown. It is also a 10-minute drive to Sydney University, Sydney airport, Broadway Shopping Centre and Chinatown.

Local residents enjoy this area for its eclectic, bohemian and trendy lifestyle which is synonamous with Sydney’s inner west.  Young professionals and the lifestyle conscious are attracted to this area because of its close proximity to Sydney’s CBD and the array of local amenities such as schools, hospitals, restaurants and shopping.

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Zenix – apartment 701 / 221–229 Sydney Park Road, Erskineville

Posted on February 26, 2011 by Admin

Zenix 701, 221 - 229 Sydney Park Road, Erskineville 7

Zenix Apartment 701 / 221 - 229 Sydney Park Road, Erskineville

2 bedroom, 2 bathroom, 1 car space

THIS APARTMENT HAS BEEN SOLD for $746,000 on 18 February 2011

Contact Matthew Stevens 0416 080 138 or Tannya Stevens 0411 748 800 of Property Alliance for more information.

This large 147sqm apartment is located in the Zenix development and is in a convenient and strategic pocket of Erskineville. The Zenix development is the flagship development of Metroland, an integrated property development company in Australia.

Why I like this apartment:

  • The location is the most strategic aspect of this property, where it is within 150 metres from the St Peters train station which is merely 3 stops to Central station in the heart of Sydney CBD and 6 direct stops to iconic Sydney harbour attractions at Circular Quay, Sydney Opera House and the Botanic Gardens. It is also within walking distance to recreational facilities and walking trails of Sydney Park, the cafe, restaurants and shops in Kings street in Newtown, the Erskineville cafes and village, a 10 minute drive to the airport, Sydney University. It is a mere 4.5 km from Sydney CBD.
  • The highly favoured north-east aspect of the apartment provides ample natural light to the entertainment and living areas as well as both bedrooms.
  • The size of the apartment being 147sqm sets it apart from other 2 bedroom apartments in the market.
  • The intelligent floorplan and design makes good use of internal space whilst maximising space for the outdoor entertainment areas.

  • The internal living areas seamlessly flow out to the north-east aspect of the entertainment areas which have been refurbished to include heaters, block out wind shields, barbeque, sun-drenched casual seating areas which have panoramic views of Sydney CBD.
  • Timber floor boards in both internal living and outdoor entertainment areas.
  • Modern conveniences such as gas kitchen, reverse cycle air-conditioning, double drawer dishwasher and modern tapware.
  • The apartment also overlooks the landscaped gardens, swimming pool and tennis court within the Zenix development.
  • It has a dedicated study alcove which comes with internet cable and phone connection which is essential in apartment living today.
  • The open plan kitchen integrates with the dining and living areas to create a sense of space.
  • Both bedrooms have built in wardrobes and walk-out balconies which lend the bedrooms a sense of greater feel of space.

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7 Black Forest road, Werribee, Victoria

Posted on February 24, 2011 by Admin

7 Black Forest road, Werribee

FOR SALE: 7 Black Forest road, Werribee, Victoria

Vacant land: 1001 sqm

Location: Corner of Black Forest road and Walls road, Werribee

Asking price: $259,000

Agent: Mr Haydon Lanyon, Elders Real Estate, Werribee. Mobile: 0407 068 729

This block of level and near rectangular land has double street frontage and is located at the corner of two main roads – Black Forest road and Walls road. It is within walking distance to the Werribee Racecourse and is approximately 3km from the Werribee train station.

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Australian housing bubble and ceteris paribus – who to believe?

Posted on February 22, 2011 by Admin

Housing bubble Australia

Housing bubble in Australia - should we be concerned?

At any one time, there are so many conflicting articles and messages in the media about whether there is an impending housing bubble in the Australian property markets that many investors and home owners just scratch their heads and wonder who’s advice to follow.

Whether it’s property developers, bankers, real estate agents, so-called “property experts” and the whole gamut of financial and market analysts, each of these parties have their own perspectives and vested interests in how the property markets perform and their advice can sometimes be skewed accordingly. The housing bubble in Australia is predicated upon strong upward trend in home prices despite so many rate rises over the last 20 months. On the other hand, there are some who steadfastly hold that house prices are in no way overvalued. Either way, there are conflicting sets of data to prove both scenarios.

For the bullish investors, the current shortage of housing stock in the Australian markets have always been seen as a guarantee for ever-increasing property prices. However, this can be a very dangerous assumption. In my undergraduate economics class, we were told that if supply decreased then, theoretically, prices will increase. The key assumption here is ceteris paribus, that is ‘all other things being equal’. Moving from lecture hall into the real world, we soon find out that in reality, there is a multitude of factors which are constantly changing.

Housing bubble Australia 2

Factors such as demand, personal tastes, housing trends, government policy, significant world events and natural disasters cannot be easily factored into an economic equation to provide an accurate account of property markets. Sadly, and in most cases, it is this ceteris paribus assumption that is conveniently ignored by punters, property spruikers and those who more often than not take an aggressive stance about our markets although their view may be accurate at certain points in the property cycle. This simplistic view that a shortage in supply will spur on price increases can, in some cases, brew the so-called housing bubble as already evidenced in some countries.

As I write this article, we are in the midst of a two-speed economy where the resources and mining sectors are powering ahead whilst the retail, manufacturing, tourism and education sectors are sputtering. The recent announcement that Top Ryde City Shopping Centre in Ryde has been placed in receivership due to debts of $700 million should serve as sober reminder that not all is well in Australia’s so-called “solid economy”. Consumer sentiment and retail results last Christmas show that people are still wary and uncertain about what 2011 will hold for the property markets.

Ill-informed anaylsis is nothing new, but at its worst, it is not only wrong but is also misleading, and can even lead to wars being fought among countries which would surely burst any bubble, property market or otherwise. Next time you hear or read any forecast, analysis or commentary about our property markets, it might help to put into perspective who is the presenter to ascertain any vested interest and if the ceteris paribus assumption has been considered if at all.

Related articles:

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Aussie $ power – Where to invest with the rise of the Australian dollar

Posted on February 18, 2011 by Admin

Balinese villa, Canggu, Bali

Balinese villa, Canggu, Bali

In one of my previous articles entitled 2011 – Investment strategies for a year of consolidation, I suggested that property investors should also consider investing beyond our shores to capitalise due to the recent strength of the Australian dollar (currently trading at US1.0113).

Through my research, I have found that Thailand, Malaysia, Singapore and Indonesia offer some good bargains where yields are considerably higher than in Australia because real estate prices are “relatively cheaper” in these countries.  The immediate concerns for most investors would be:

  • How do I decide on the location?
  • How do I find a good property manager?
  • What are the tax and ownership implications / restrictions if any for these countries?
  • How do I get financing?
  • How do I find a good real estate agent and solicitor?
  • What if I can’t find good tenants and what if the tenants trash my property?

The key is to do solid due diligence and research on locations which have good growth history, good infrastructure, public amenities, stable political environment, strong growth prospects as evidenced by its surrounding areas. Building a network of strong local contacts such as real estate agents, solicitors and conveyancers, business people and local residents will assist in the event local assistance is required.

Bali, Indonesia

Popular tourist locations such as Kuta, Nusa Dua, Seminyak, Ubud and Jimbaran have taken off in recent years. Bali has recently reported its strongest growth and highest tourist arrivals since the Bali bombings nearly a decade ago.

Bali Governor Made Mangku Pastika last month took the unprecedented step of banning new hotel development in the island’s three busiest areas, including the beach strips of Kuta and Sanur, the exclusive beachfront resort district of Nusa Dua and the rice-terraced hills around Ubud.

Areas which have yet to experience a strong take off but are popular among tourists include Tanah Lot, Canggu (10 km north of Seminyak in the south west coast and Candi Dasa in the east coast.

Alila Manggis resort, Candi Dasa, Bali

Alila Manggis resort, Candi Dasa, Bali

Prices range from A$200,000 for smaller villas up to A$1 million and above for larger and more luxurious homes in popular areas. Real estate prices in Bali are quoted in US dollars by local real estate agents.

Penang & Kuala Lumpur, Malaysia

Penang is a approximately three and a half hour’s leisurely drive north of Kuala Lumpur. The island state is known for its holiday resorts along its north eastern coastline of Batu Ferringhi and tasty local fare and bargain shopping. In recent years, there has been a proliferation of new condominiums and apartments dotted all along the Batu Ferringhi drive which overlooks the sea with uninterrupted views of the Straits of Malacca. New apartments and condominiums along this popular stretch range from A$200,000 to A$1 million and above for luxury penthouses with ocean views.

Western view from Mutiara Upper East

Western view from Mutiara Upper East

Kuala Lumpur is the capital of Malaysia and real estate prices in the city has experienced a sharp upturn over the last 2 years and some popular areas in the city such as Kota Damansara, Mount Kiara, Damansara Heights, Ampang Hilir and selected areas around the CBD have appreciated by as much as 30%.

Mutiara Upper East, Ampang Hilir

Mutiara Upper East apartments, Kuala Lumpur

Mutiara Upper East is a development located in the heart of Kuala Lumpur which enjoys a sought-after address in Ampang Hilir. The development consists of two high-rise towers with a total of about 200 luxury apartments. Each apartment in the development enjoys private lift entry directly into the apartments some of which have two separate kitchens (dry and wet kitchen), servants’ quarters and views over the Selangor Polo and Riding Club. A new freeway links this area directly into the heart of the city which is merely 4 km away. Prices for apartments in this development start from A$300,000 up to A$900,000 for penthouses with views of the city.

High-end apartments within a radius of 3km of the CBD cost A$1 million upwards with spectacular views of the Kuala Lumpur skyline.

Singapore

Marina Bay Sands, Singapore

Marina Bay Sands, Singapore



Singapore experienced the highest GDP growth in the world in 2010 where its economy grew by a whopping 14.7%. It has an efficient government machinery that encourages foreign investment whilst the government itself is also a strong investor overseas whereby it owns high growth real estate, financial assets as well as IT & telecommunication investments.

The recently completed Marina Bay Sands is a symbol of its success in attracting foreign investment, perpetuating its status as one of the busiest and most efficient seaports in the world.

Far East Organisation is by far one of the leading property developers in Singapore having developed more than 700 projects over the last 50 years. New apartments and condominiums currently on the market in Singapore include the following:

1. Adria at Novena

2. The Cascadia at Bukit Timah

3. The Tennery, Bukit Panjang

4. The Orange Grove, Stevens Road

5. Twin Peaks, Leonie Hill Road

Central and Latin America

Costa Rica beaches

Beach in Costa Rica

International Living is a publishing group which advocates the idyllic notion that one can live a healthy, low-cost and stress-free lifestyle and retire to unspoiled seaside locations, emerging cities  around the world where fewer people know about. Some interesting articles written by its writers based all over the world include the following:

Related links:

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International Living – how to retire and live comfortably on $800 per month

Posted on February 18, 2011 by Admin

Retire in Costa Rica

Idyllic setting: Retire in Costa Rica

International Living started with a newsletter thirty years ago which sparked a big idea. With an international team of editors and writers based around the world, International Living is a publishing group which advocates the idyllic notion that one can live a healthy, low-cost and stress-free lifestyle and retire to unspoiled seaside locations, emerging cities  around the world where fewer people know about.

The monthly newsletter of International Living covers topics such as retiring overseas, international real estate, investment and travel where one can subscribe to free of charge. A daily “IL Postcard” with articles written by its team of writers is emailed to 400,000 readers.

Retire to the Phillipines

Dreaming of paradise: Retire to the Phillipines

Some interesting articles which I came across include:

You look out your window, past your gardener, who is busily pruning the lemon, cherry, and fig trees … amid the splendour of gardenias, hibiscus, and hollyhocks.

The sky is clear blue. The sea is a deeper blue, sparkling with sunlight.

A gentle breeze comes drifting in from the ocean, clean and refreshing, as your maid brings you breakfast in bed.

For a moment, you think you have died and gone to heaven. But this paradise is real. And affordable. In fact, it costs only half as much to live this dream lifestyle … as it would to stay in your own home!

– Kathleen Peddicord, publisher of International Living

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Marina Bay Sands – Singapore’s world class casino resort

Posted on February 9, 2011 by Admin

Marina Bay Sands, Singapore

Dawn of a new era: Marina Bay Sands, Singapore

The opening of the Marina Bay Sands (MBS) in Singapore on 23 June 2010 heralded a new era for the island republic. The integrated resort with a 2,561-room hotel, 120,000 sqm convention centre, shopping mall and its piece de resistance - a casino with 500 gambling tables and 1,600 jackpot machines has been billed as the world’s most expensive stand-alone casino property ever built at a cost of S$8 billion. This mammoth project where the centrepiece involves casino gambling has been widely seen as a gradual liberalisation of the government’s stringent policies to uphold moral and cultural values of Singaporeans.

Marina Bay Sands, Singapore

Marina Bay Sands, Singapore

Many business and political analysts believe the arrival of MBS also signifies another important arrival – that of the Singapore nation as a whole, onto the world stage of commerce and industry where it is now the leading financial and transportation hub in South East Asia. Its economic and social achievements have eclipsed on all accounts those of its neighbouring Malaysia, within which it was a former state until its own independence on 8 August 1965. Singapore’s population of 5 million people enjoyed the highest GDP growth in the world of 14.7% in 2010.

What are the key factors which are driving this Asian powerhouse?

First and foremost, Singapore was led by its founding prime minister, now Minister Mentor Lee Kuan Yew, whose government in the early years established systems which rapidly grew its potential as a busy sea port. It then harnessed a clear vision of a developed nation with high intellectual and financial capabilities interwoven with a strong sense of nationalistic and social identity.

Unlike neighbouring countries, Singapore is a small island state. With a total area of only 700 sqm, it is smaller than the Australian Capital Territory in terms of land area. With land being in such short supply, its core competencies cannot be predicated upon industries which require high land usage. Singapore has turned this land constraint into a core strength in promoting and nurturing high-intellect and high-value industries such as electronics, petro-chemical refinery, mechanical engineering, biomedical sciences, financial services, tourism, education and more recently, casino and high-level hospitality businesses.

Today, Singapore is one of the top three most busy ports in the world and is the fourth largest foreign exchange trading centre in the world behind London, New York and Tokyo.

Orchard road, Singapore

Shopping mecca: Orchard road, Singapore

On any given day,  its main street Orchard road and its surrounding areas in the CBD is a melting pot of business executives, city workers, shoppers, locals, tourists and visitors jostling and engaging in Singapore’s national past times – shopping and eating till 11pm. Indeed, Singapore has firmly established its reputation as a food and shopping mecca in South east Asia.

Real estate in Singapore

In the early years before its independence in the 1960s, Singapore was faced with housing shortages as a result of the shortage of available land. The ruling government passed the Housing and Development Act of 1960 and subsequently established the Housing & Development Board (HDB)  which is the statutory board responsible for public housing in Singapore.

HDB flats in Singapore

HDB flats in Singapore

Over the last 40 odd years, the Singapore government has built millions of high-rise apartments and flats, otherwise known as HDB flats, to house its growing population and to alleviate the problem of housing shortage.

For the majority of Singapore’s citizens, living in HDB flats is not by choice as the price of private and landed property are relatively very expensive due to the scarcity of land and many luxury condominiums and apartments built by private developers are beyond the means of an average Singaporean wage earner.

However, HDB dwellers enjoy a host of benefits such as subsidies for living closer to parents, better incentives if one is married and other transactional concessions. These HDB flats are controlled by the government where eligibility, purchase and disposal conditions apply and the majority are leasehold for 99 years.

In general, pricing for HDBs range anywhere from S$300k for smaller units in outer areas of Singapore to $800k for larger 3 – 4 bedroom units which are closer to the city. Obviously location and the prestige of suburbs, distance to Mass Rail Transit (MRT) train stations, design and size affect pricing.

As the affluence of Singapore’s middle class grow, so do the price level of new private housing and apartments. The lucky few who had previously held on to freehold landed properties have seen the value of their land appreciate to levels comparable to some of the most expensive cities around the world. New private luxury apartments and condominiums which are being built around the choice areas close to the CBD will command a price tag of at least S$1,200 per square foot upwards (1 square metre = 10.76 square feet).

Another indication of the growing wealth of Singapore’s middle class and its buying power is the number of advertisements in Singapore’s leading daily newspapers enticing wealthy locals to invest in up and coming luxury condominiums and apartments overseas. These new luxury investments span the breath of the Asia Pacific from Bangkok, Kuala Lumpur, Melbourne, Sydney, Auckland to London, New York and luxury ski-resort homes in Nendaz, Switzerland.

Strata SE1, the tallest residential tower in central London is actively seeking wealthy investors from Singapore. High-end Malaysian projects in the heart of Kuala Lumpur City Centre (KLCC) making news in Singapore include St Mary Residences and Quayside condominiums in Penang.

Far East Organisation is by far one of the leading property developers in Singapore having developed more than 700 projects over the last 50 years. New apartments and condominiums currently on the market in Singapore include the following:

1. Adria at Novena

2. The Cascadia at Bukit Timah

3. The Tennery, Bukit Panjang

4. The Orange Grove, Stevens Road

5. Twin Peaks, Leonie Hill Road

6. Prive at Punggol

7. Austville at Kangkar

8.Vibes at Kovan

9. NV Residences in Pasir Ris

10. Loft at Nathan Road

11. Cabana, Yio Chu Kang

12. Horizon Residences

13. The Glyndebourne

14. The Vermont on Cairnhill

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Cameron Highlands – weekend escape from busy Kuala Lumpur, Malaysia

Posted on January 24, 2011 by Admin

Boh tea plantation, Cameron Highlands

Boh tea plantation, Cameron Highlands

Located approximately 200km from Kuala Lumpur in the state of Pahang, Cameron Highlands is a leisurely 3-hour drive north along the north-south highway (PLUS). A new route from the exit at Simpang Pulai has drastically reduced travelling times compared to the more windy old road which leads up to Ringlet at the lower level of the highlands. The new road is much more efficient where it leads right to the top of Cameron Highlands in the town of Brinchang, where vast tracts of tea and vegetable plantations abound. The main road then leads downhill towards Tanah Rata (literally meaning “flat land”) where most of the commercial businesses, shops and accommodation are located.

One of the most exclusive resorts in Cameron Highlands is the Cameron Highlands Resort which was the old Merlin Hotel that was refurbished by the YTL Group of Malaysia. Rates start from about RM300 up to RM700 for a high end suite. This resort boasts a new Japanese restaurant, high tea with Cameron Highland’s own Boh tea and scones, beautiful koi ponds and commanding views over the golf course.

Tea and scones, Cameron Highlands Resort

Tea and scones, Cameron Highlands Resort

The attraction of Cameron Highlands to most locals is to escape the hustle and bustle of busy city life for a weekend in cooler climate where night time Celcius temperature can be in the low teens. Other activities include golfing at the main golf course in Tanah Rata, sipping the local Boh tea and scones in one of many Tudor style English settings, bush walking, bird watching and visiting the local growers’ markets, tea and vegetable plantations.

Cameron Highlands is also famous for its local strawberries and the bountiful fresh fruit is made into strawberry vinegar, jams, dried fruit and a multitude of other products.

Fresh strawberries, Cameron Highlands

Fresh strawberries, Cameron Highlands

In Malaysia’s colonial past, the English has built many quaint cottages and rest houses in the cool highlands to escape the tropical heat. Many of these homes have been preserved and  some have been turned into beautiful caretaker holiday homes.

Ye Olde Smokehouse Inn

Ye Olde Smokehouse Inn

Financial institutions also invested and built their own holiday homes for their senior executives and staff and over the last 30 years, Cameron Highlands has evolved from having individual holiday homes dotted all over Tanah Rata to include much larger service apartments, condominiums and hotels.

The rest house of Bank Negara Malaysia (Central Bank of Malaysia) is located in the heart of Tanah Rata on high elevation and its sprawling rose gardens command scenic views that overlook the valley and golf course beneath. Senior bank executives, their families and friends would occupy the 7-room rest house during long weekends and vacations where in-house caretakers serve up a mix of local fare such as steamboat and Western cuisine for its occupants.

Beef Wellington, Ye Olde Smokehouse, Tanah Rata

Beef Wellington, Ye Olde Smokehouse, Tanah Rata

Tanah Rata is also not short of good food for holiday makers as it has a variety of restaurants serving both local and Western cuisine to cater to tourists which come from as far as the UK, Europe, North America and Australia. Foodies can be spoilt for choice from tucking into tasty local fare such as mee goreng, tandoori chicken, roti canai and chicken masala to having beef Wellington and chargrilled rib-eye steaks at Ye Olde Smokehouse Inn or the Cameron Highland Resort.

Real estate in Cameron Highlands have been appreciating gradually in recent years. New apartments which are for sale in Tanah Rata range from RM250,000 upwards although most of these new developments do not have the quality finishing of international holiday homes. Design and workmanship of newer condominiums and hotels are very average at best and may be located next to shabby old houses and farmland. Vacant land around Tanah Rata range from RM30 per square foot (1 square metre = 10.76 square feet) up to over RM100.

Tanah Rata is the location to be as most of the luxury rest houses, attractions such as bushwalks, restaurants, shops and amenities are located around the golf course. In any case, Brinchang and Ringlet is no more than a 20 minute scenic drive from Tanah Rata.

Mist over the Boh tea plantation cafe & lookout, Gunung Brinchang

Mist over the Boh tea plantation cafe & lookout, Gunung Brinchang

Caroline Russell, CEO, Boh Plantations Sdn Bhd

Caroline Russell, CEO, Boh Plantations Sdn Bhd

One of the leading businesses in Cameron Highlands is Boh Plantations which is the leading tea grower in the highlands. The company conducts guided tours of its tea factories and sells its products on location in Gunung Brinchang.

The proof of the quality of its vast array of teas is served up in its cafe which overlooks the beautiful and undulating tracts of tea plantations.

Caroline Russell has perpetuated the pioneering efforts of her grandfather John Archibald Russell who started planting tea when he acquired freehold plots of land in Brinchang in the early years of the British colonisation of the then Malaya.

Ms Russell is Chief Executive Officer of Boh Plantations, a Malaysian citizen and an ambassador of the charming highlands which hold fond memories in the hearts of locals and foreign visitors alike.

Malaysia is encouraging eligible foreign citizens from all over the world along with their spouses and children to reside and retire in Malaysia under the Malaysia, My Second Home Program.

Children feeding koi - Cameron Highland Resorts

Children feeding koi - Cameron Highland Resorts

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