Category: Property

Why The Best Investment On Earth Is Earth Itself?

Raw land is a “Hands-off” investment. In fact, land is the ‘raw material’ for just about every property development. As a budding investor, you need to know just what kind of land is needed for an upcoming project:

Is it the right size? The project may not be big enough to meet demand around the area. The individual unit size may or may not meet the demands of the demographic it is attempting to serve.

Is it the right type? Is the land fit for agricultural projects, or is it better suited for industrial ones? Are there any environmental factors that may hinder project growth? If it’s a residential project, does it connect well with surrounding facilities (public transport, hospitals, etc)?

Buying land is usually significantly cheaper while it is underdeveloped than land that has a useable structure constructed on it. It is clear that land is the raw material of any property development. Thus, the saying “the best investment on earth is earth (land)”.

Might be a good read : 4 Tips To Invest For Long Term

Land is always a scarce resource as it is non-produceable. Hence, developers are constantly on the lookout to increase their land banks.

Acquiring the right type of land (agriculture, industrial, residential, commercial, etc) and the right size (density, plot ratio, type of usage and development, individual unit size, etc) will ultimately help decide the potential value of the land.

Right Location?

Is it at the right location? The area could already be matured, which could lead to a steady interest. If it’s an upcoming developing location, there may be a spike in valuation over time.

Our strategy includes land acquisition for property development in Hong Kong (HK), probably one of the most challenging markets in the world. Population density, land scarcity, and off-the-charts growth make it an extremely complex one.

However, we have managed to gain a foothold with a strategy of land bank acquisition, i.e., acquiring small tracts of land with an eye to future development, taking into consideration the political, social, environmental and cultural realities of HK.

When we were first introduced to land acquisition opportunity in HK, we felt excited to explore more and eventually got involved due to HK properties which are ranked among the most expensive in the world. And with land scarcity, it all boils down to capitalising on demand and supply.

Below are some key indicators that will be used to decide if the stipulated land will be suitable for this strategy.

As a rule of thumb: Islands with scarce build-able land and high population density with high PPP or FDI will never go wrong.

Please keep in mind the information below is an example to help you understand details on a new level and I would like to remind you that every opportunity is different. You must always do your own research before you commit anything.

Location, Political System And Economy

With a landmass of 1,104km² and a population of over seven million people, HK is one of the most densely populated areas in the world. As of 2018, HK’s gross national income (GNI) per capita is US$67,810 Purchasing Power Parity (PPP) dollars and its gross domestic product (GDP) per capita is US$64,597 PPP, according to the World Bank.

Under the principle of “One Country, Two Systems”, HK has a different political system from mainland China. The law of HK is based on the rule of law and the independence of the judiciary where the constitutional framework is provided by the HK Basic Law.

The Lands Department in HK is practicing the British system, which is common law and familiar to us when we invest.

Hong Kong has a free market economy and it is highly dependent on international trade and finance.

Alternative To Land Acquisition

One of the alternative proposals to land acquisition is leasing the land from landowners for a certain lease period. Leasing land may also support sustainable project development since the lands need to be returned to the landowners at the end of the lease period in a condition similar to its original form without considerable environmental degradation.

When the land is leased then anybody who has to otherwise give up land or livelihood will be compensated for its growing valuation over time. In this model, the landowner lends her land to the government for a steadily-increasing rent, or through an annuity-based system.

In any case, how do we contrast this with what we are doing in Malaysia?

Despite having already established viable businesses in more than 10 countries, and being able to show healthy profits in most of them, I am still bullish about the place I call as home. I believe there are many areas where both local and foreign investors can invest their funds for very healthy returns on investment.

We tend to believe that we need a lot of money to invest, but it’s not always true. But it can be done.

You have to be able to make different kinds of investment, like investing time in doing proper research and learning about markets, that will help you make well-informed decisions and taking a calculated risk. Be consistent. Your attitude towards small things should be the same as your attitude towards big ones.

Some “good” and “bad” qualities vary from one community to another. If the investor knows the local community, they could know better which parts of the land or town are less or more desirable.

It is always smart to rent in a new community before committing to purchase a land for investment. Sometimes, renting allows the investor to become familiar with the location.

“Location, Location, Location” Makes All The Difference

“If you are avalanched by adversity, hold on. Don’t give up; rebuild. Make decisions and stick to them.”

About the Author

Max Shangkar is group CEO of Max Capital Management Holding Ltd and an expert in global project management consultancy. He is also the author of the best-selling book Investment Strategies for Global Real Estate.

He propounded the market-proven investment strategies of Property Investment Life Cycle and Business Investment Life Cycle that educated over 6,000 Global Investment Community members to invest in property projects and businesses in over 10 countries.

15/06/2022
Land Titles And How They Affect Your Property Buying Decision

While a freehold land refers to a land title in perpetuity which, in most cases, is the most preferred type of land title to own, a leasehold land means that you just have a lease from the freeholder to use the land for a number of years, which can range from 30 years to even 999 years.

In most parts of Petaling Jaya, the authorities have extended leases for another term. The extension of leases for leasehold properties is governed under section 197 of the National Land Code (Act 56 of 1965) pertaining to the applications for approval of surrender of the whole of the land, as well as the land rules of the various states (for the state of Selangor, the extension of a lease is governed by the Selangor Land Rules 2003 and Selangor Quarry Rules 2003).

Read : Housing Loan In Malaysia: What Is Debt Service Ratio (DSR) And How To Calculate DSR?

There is also another type of property built on private leases of similar tenures to that of government leasehold. This type of lease poses more challenges for buyers as the owners of the land are private parties and they do not have renewal or lease extension in the same manner as the government.

In addition, there is also the case of Malay Reserve Land (MRL) vs Bumi Lots. While it is quite common to think that both are the same, in reality, they are not. Properties developed on Malay Reserved Land can only be owned by Malays and are governed under the Malay Reservation Enactment. Malay owners are not allowed to sell the properties built on MRLs or the lands themselves to non-Malays. Businesses operated on MRLS must be owned by Malays.

Bumi Lots, meanwhile, are units of land or property which can only be purchased and owned by Bumiputeras. To some, this means a more restricted market whereby you can only resell your property to another Bumiputera. There are, however, incidences where a transfer can be made to a non-bumi, although this is subject to approval from the authority.

“Bumi Quota” is also another term commonly used when developers market new projects, and this is again not to be confused with Bumi Lots. Under the New Economic Policy (NEP), this was introduced to increase Bumiputera shares in real estate to at least 30%. However, depending on locality, this percentage differs. Bumi Quota can also be released and is subject to the fulfilment of conditions.

About the Author

Chan Ai Cheng is the General Manager of S.K Brothers Realty (M) Sdn. Bhd.

15/06/2022
Going Global With The Property Investment Life Cycle

Over a long time of observing and interviewing many established developers, high-profile bankers, ultra-high net-worth investors, successful entrepreneurs and private equity firms, I would like to share with you a market proven real estate investment strategy that I call Property Investment Life Cycle or PILC.

With the skyrocketing house prices since 2010 in Malaysia, common investors have stampeded into property investment to ride the wave of fortune. Indeed, property investment is always one of the favorite options for high net-worth individuals to preserve their wealth and is arguably the safest asset class of all.

Delving into the fundamentals of property, I noticed that PILC is very similar to the human life cycle – people are born, grow up, age, and cease living. It makes no difference when it comes to property development and the property investment cycle. By adding value to a property according to different stages of its life cycle, investors can enjoy continuous profit regardless of the market condition.

Property Investment Life Cycle

The following are the six key stages in PILC and how you can reap significant return in these stages:

1. Land Acquisition

Buying land is usually significantly less costly while it is undeveloped compared to land that has usable construction structure. To put it clearly, the land is the raw material of any property development. Thus the saying – the best investment on earth is earth. Land is always a scarce resource as it is non-produce-able.

Hence, developers are constantly on the lookout to increase their land banks. Acquiring the right type of land such as agriculture, industrial, residential, commercial, and many more with the right size of density, plot ratio, type of usage and development, individual unit size will ultimately decide the potential value of the land.

Getting a housing or any loan in Malaysia? Worth a read Housing Loan In Malaysia: What Is Debt Service Ratio (DSR) And How To Calculate DSR?

2. Development

Where property is “born” – this is the real crown jewel among the six stages as it contributes the biggest profit-making ratio within a short period in the PILC. Traditionally, developers acquire a parcel of land (or sometimes have a joint-venture with the land owner) and build multiple units on the same title.

Upon construction completion, the developers will market the end units to the public at a premium. Due to the high barrier of entry, huge capital and expertise involved, only large corporations and conglomerates are able to participate in this lucrative segment. However, by deploying the joint-development strategy a common investor can now invest together and earn like a developer as well.

3. Management

With an eye to enjoying constant property value appreciation, good property management always plays a pivotal role. Once a property is constructed, it needs both building management and tenants’ management to keep it in top-notch condition and attract quality tenants.

However, for some common investors, management is a nightmare in the journey of property investment while for an experienced investor, there are a lot of hidden gems in managing a property.

On the other hand, some special purpose property management strategies are able to reap high profit margin compared to the ordinary property investment. For example, Airbnb, co-working spaces, commercial car parks, student hostels, short stay accommodations are some proven strategies in property management.

4. Renovation

Renovation is like adding the soul into the body. It grants new functionality and enhances the appearance of a property. This strategy is one of the investors’ favourite as it can drive high profit within a short period of time.

In fact, there are many buildings in disrepair due to negligence of the owners. To shake the dust off the owner’s feet, they are willing to let go the property at a discounted price. By picking up these properties, you will attain profit by renovating the property and reselling it to the market at a better price.

5. Refurbishment

When an ageing property, especially heritage buildings in some countries, is occupied over some years, it may experience rundown, be severely damaged and may not be in liveable condition anymore. The deterioration of the abandoned building sometimes go beyond renovation works. This type of building requires a large fund for refurbishment.

Due to the reason that some property owners do not have the financial capacity to refurbish the building, these buildings can be purchased much lower than the market value. It can then be refurbished to a new design, providing new life to the historical building.

6. Redevelopment

When experiencing special events e.g. natural disasters such as an earthquake, volcanic eruption, fire, or change of market demand, the accelerated depreciation of the property value makes redevelopment a sensible decision.

Through redevelopment, existing buildings are fully or partially demolished and a new building is constructed. At this final stage of the PILC strategy, the said piece of land is given a new life to meet the local demand and thus boost the value of the property.

As mentioned in one of the famous quotes of The Art of War by Sun Tzu:

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.

In short, if you plan to invest in any country, you need to understand its background including its economy, politics, risks and other important considerations that may ease your forthcoming investing journey.

What we invest in our time defines who we are.

About the Author

Max Shangkar is group CEO of Max Capital Management Holding Ltd and an expert in global project management consultancy. He is also the author of the best-selling book Investment Strategies for Global Real Estate.

He propounded the market-proven investment strategies of Property Investment Life Cycle and Business Investment Life Cycle that educated over 6,000 Global Investment Community members to invest in property projects and businesses in over 10 countries.

27/05/2022
Embracing Creativity While Breaking Norms With Unconventional Methods

Non fungible tokens or NFTs is a debatable subject having come into existence since 2014. However, marketing agency Jumix Sdn Bhd is determined to grab the bull by the horns and turn the buzz into more than just a fad with BeUtopia – a universe where characters called BeU live in.

“We believe that this approach (NFTs) will change how brands and businesses work in the future. First, we need to get brands familiar with the concept and then offer to help them from end to end in campaign launches,” said Sanz Teoh, Chief Executive Officer and Founder of Jumix.

Introducing the firm’s project BeU, Teoh explains that Jumix’s initiative is for anyone who feels misplaced in society for the sole reason of choosing to be different, or out of the norm. The BeU are inspired by Matryoshka dolls known for their representation of a mother carrying a child inside her.

“Prints on prints, inner-wear worn as outerwear, tattoos and piercings as a sign of expression rather than representation; this is why our NFTs are unconventional looking. Our community aims to include all walks of life, including the creative people but most importantly, we want to create a safe space where everyone can embrace their strengths and weaknesses and just be themselves in BeU,” he adds.

Citing many NFT campaigns that have failed because it was seen as fad, Jumix is committed to change this perception. Renowned brands like Adidas, NIKE, Gucci and FMCG brands are starting to invest in NFTs and the interest is expected to flourish.

Acknowledging possible resistance to the new marketing approach, Teoh said: “We cannot change the adaptation rate in Malaysia but we are looking at brands who no longer believe in fax machines, mobile phones with a physical keypad and opting for things that are digital because it is more sustainable, convenient and beneficial.”

An NFT is constructed with the same type of programming as cryptocurrency but it is a digital asset that represents objects like art, videos, music, or in-game items. Each NFT bears a digital signature or a unique identifying code. They exist on a blockchain – a public ledger that records transactions.

Globally, the use of NFTs is spiking, and in 2021 it developed into a US$40 billion market. Research hub Finder released a survey indicating that the Southeast Asian (SEA) market will take the limelight in 2022 as the region’s interest is growing and has the highest adoption rates, worldwide.

The online survey consisting a polling pool of 28,000 from 20 countries ranked the Philippines first with 32% ownership, while Thailand scored second with 27% and Malaysia (24%) at third position. The rankings prove that SEA may be driving the international NFT ownership for the near future.

Calling out to brands that are willing and ready to join the evolution of marketing with NFTs, Jumix commits itself to bridging the gaps and to help propel businesses and technology into the future to reap what it has to offer.

“We will not use the word guarantee for success in a campaign, especially in the world of marketing, but we want to help our clients greatly improve their chances at success without losing out on costs, time and manpower coupled with a big amount of risks.

“Jumix has had our own humble experience at this ourselves. Our NFT journey was not easy but when you know what you are doing, have done it yourself, had good data and evaluation of it, it will help reduce risks and increase the chances for success and that’s why Jumix should be the choice for brands who want to explore NFTs,” Teoh adds.

Some 10,000 BeU collectibles will be available for sale from mid-May, and hosted on the Polygon blockchain, where collectors can mint without paying for hefty gas fee (the transaction fee on blockchain). There will be different stages to the project, each to involve and engage with the community.

“Upon selling 2,000 collectibles (20%) we will organise a donation to a charity organisation that will be decided upon by our community. Upon reaching 40%, we will create an AR filter for our users then at 60% we will launch merchandise for the owners of BeU.

“At achieving 80% sales, we will create an actual 3D life-size doll for 30 of our BeU owners and upon reaching 100%, we are looking to create a game for our community. There are many other plans that we have in the pipeline but ultimately we want the people and our clients to know that Jumix is ready to help them grow from start to finish with NFTs,” Teoh adds.

About Jumix

Jumix is a creative marketing agency, focusing on branding, web design, and digital marketing. Jumix served clients from Malaysia, Singapore, Australia, United Kingdom, Japan, Taiwan, Hong Kong, United States, New Zealand and China.

23/05/2022
Benefitting From RCEP: While Growing Their Businesses, SMEs Should Look At Avenues For Future Growth

SMEs should take advantage of the benefits and vast investment opportunities under the mega-trade agreement of the Regional Comprehensive Economic Partnership (RCEP).

This free trade agreement involves 15 countries – Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand and Vietnam. It is made up of 2.2 billion people and accounts for almost a third of global GDP.

Among Southeast Asian countries, Malaysia is expected to be the largest beneficiary of the China-backed RCEP in terms of export gains, with a projected increase of US$200 million. It is anticipated that RCEP may remove up to 90% to 93% of trade barriers, and together with lower preferential tariffs. SMEs trading in this new big, open market should gear up for more intense competition.

However, many SMEs are still not aware of RCEP, the world’s largest free trade agreement (FTA) which came into effect in Malaysia on March 18, 2022. Of the 3,000 members in the Small and Medium Enterprises Association (SAMENTA), more than 50% are aware but at different levels of understanding.

“Many may have heard about RCEP but have not understood how they can improve market access and the harmonised rules to exploit the lower tariffs. “They should seek the help of the Ministry of International Trade and Industry (MITI) to build capacity with technical support from the more developed countries like Japan, China, South Korea and Australia,’’ said SAMENTA honorary national secretary Yeoh Seng Hooi.

Other advantages of RCEP include further liberalisation of trade, removal of non-trade barriers, increased trade facilitation, improved government procurement practices, e-commerce and others.

Ernst & Young Tax Consultants Sdn Bhd Malaysia Private Client Services Leader and Partner, Bernard Yap highlighted that SMEs should be provided with information on doing business in other countries and how they can build their businesses beyond
Malaysian borders.

“This knowledge can help them avoid unwanted situations such as inadvertently misunderstanding the rules, which can negatively impact them from a business and reputational perspective,’’ said Yap.

Among them, SMEs should understand the concept of regional value content to benefit from the components or raw materials coming from RCEP countries that will fulfil the rules of origin; changes in tariff classification so that the products are considered originating products. Tariff reduction rates are different for each country; SMEs should check from the MITI website under RCEP, and study the schedule of tariff commitments for the countries they wish to export to.

Priorities To Consider

SMEs should review their existing or target markets, whether they are RCEP members, to utilise RCEP benefits. Next, they should evaluate whether the products imported or exported are listed in the RCEP agreement, are eligible for the benefits under their country of origin. SMEs should also look into their current resources to find out if they are able to meet the demand under RCEP.

To achieve economies of scale, as they are now catering to a larger market, they should review their manufacturing businesses and costs. Besides enjoying a larger sales market, the supply chain needs to be re-evaluated. New suppliers from RCEP countries and reduction in trade barriers, will potentially lead to lower production costs.

“Post-pandemic, this mega-trade deal is a key enabler for Malaysia to revitalise domestic and international business activities, especially for SMEs that utilise the RCEP,’’ said Deloitte Tax Services Sdn Bhd executive director Tan Eng Yew.

However, he noted that lack of financing may be an obstacle to be a member of RCEP. A springboard for future growth In addition, SMEs should consider strategic industrial clusters that can serve as a springboard for future growth. Acquisitions, mergers or joint-ventures may be required to build the necessary mass and knowledge for international expansion.

SMEs can take advantage of the double deduction on interest expenses or loans taken to fund mergers and acquisitions, and the stamp duty exemptions on mergers and acquisitions instruments, said Yap.

Other strategies include having an R&D department to regularly assess market positioning, product differentiation and relative cost leadership, as well as investing in productivity improvement processes and automation. Digitalisation, artificial intelligence and machine learning can help businesses get ahead of the curve.

“This will help them to strategise, build capacity and access the supply chains of developed countries within RCEP, and ultimately improve their overall performance,’’ added Yap.

Areas Of Competition For SMEs

Countries such as South Korea, Japan and China are well-equipped with the latest technologies, enabling them to offer more advanced products to consumers. SMEs in Malaysia are arguably lagging behind their market competitors in technological capability and expertise, especially in the electronics and electrical (E&E) sector.

“This ultimately boosts the overall competitiveness of SMEs in those countries compared to SMEs in Malaysia, especially in the E&E sector,’’ said Yap.

SMEs in Malaysia would also have to compete with more advanced supply chain management, with countries such as Japan, South Korea, Singapore and China maximising their supply chains within RCEP. Having said that, SMEs can leverage on their strengths and collaboration with Japan, China and Australia to service their multinational customers in the ASEAN region. Still, RCEP offers them a chance to be more competitive with the tariff reductions.

“Otherwise, we would have been disadvantaged against Thailand and Vietnam which ratified earlier,’’ said Yeoh.

Both Thailand and Vietnam had ratified the RCEP in October last year. With the opening of markets, competition will come especially in terms of product and service quality, costs and efficiency.

SMEs would need to embrace new technologies and consider investing in simple digital platforms, online training infrastructure and automation, artificial intelligence and machine learning.

The workforce also needs to be upskilled. According to the Budget 2022, the government will provide upskilling and reskilling programs to help employees embrace technology advancement and increase digital adoption.

To develop future business leaders, several agencies have been tasked to impart business and leadership skills through on-the-job training, mentoring and entrepreneurship programs.

Enhancing Competitiveness

Despite various initiatives to help SMEs enhance their competitiveness, there is still room for improvement. Currently, initiatives to help SMEs are managed by various agencies, making it a challenge to evaluate the effectiveness of these funds/grants disbursed by the public sector.

Also lacking are clear guidelines and transparency of the application process, as well as clarity to the SME community on which agency they should approach. Ideally, a dedicated one-stop center will help to make all incentives, grants and funding easily accessible to SMEs. New initiatives and opportunities will be quickly and clearly communicated, while the streamlining of the
application process and guidelines for these initiatives will ensure efficiency and ease of monitoring.

“The one-stop center should have helplines and online channels which can be used to obtain advice and information,’’ proposed Yap.

To ensure that we are on the right track, there are still lot of preparations ahead to reap the full benefits of RCEP. With a healthy partnership between the private and public sectors, the growth and success of SMEs locally and regionally will require further strategic collaboration between them.

Many areas of co-operation listed under Article 14.3 of the Schedule of Tariff Commitments are beneficial to SMEs in ASEAN countries that are on board the RCEP.

“The issue is how fast and responsive our public agencies are in working with trade associations like SAMENTA to leverage on this co-operation,’’ said Yeoh.

For example, the exchange of experiences, best practices, adoption of technology and innovation or promotion of e-commerce, are areas that can benefit SMEs. Thailand and Vietnam already enjoyed first-mover advantage with the earlier ratification, Malaysia should accelerate its pace to plug into the opportunities offered by RCEP.

13/05/2022
Investing In Property With A Holistic Perspective Using This 3-Step Process
“17 years ago, I missed the opportunity to invest in Desa Park City. 5 years ago, I missed Sunway Velocity. I regret it. I don’t want to miss the boat this time”.

“Too many new projects available now and developer offers good incentives and rewards, I don’t know which to choose.”

“I heard many unpleasant experiences from friends and family, I worry the property I invested would be abandoned or the quality is bad when I gain vacant possession.”

These are typical comments you might hear when Malaysians share their perspective on property investing. Like other developing countries, economic growth and continuous urbanisation in major cities have made real estate investing one of the more attractive investment vehicles for Malaysians to grow their wealth.

There are loads of property investing books and “property gurus” on hand to offer pointers to those looking to embark on the property investment journey, imparting their strategies and experiences in this field. Some share their seemingly unbelievable profit-making experiences through property flipping (buy-to-sell) or property management (buy-to-rent).

The outbreak of Covid-19 in 2020 put a dampener on an already sluggish real estate market, resulting in property players having to transform their business model to weather the storm. Industry players responded with various digital innovations to allow most of the transaction process to be conducted without physical interaction.

Supported by a low interest rate environment, these efforts seem to be paying off, as property demand at certain areas remained fairly stable despite the depressing health and economic backdrop.

Just like any other investment asset class, the real estate investment journey has its ups and downs. Some of us may make money from it, others should learn from the mistakes made so as not to repeat them to our own detriment.

An opportunity often arises from a threat, so it is important to be able to separate the wheat from the chaff. In order to have a higher probability of success, we will need to apply a structured approach to address these potential opportunities.

Plan-Check-Monitor

A structured opportunity management approach for investing involves a simple three-step process: Plan-Check-Monitor.

Plan refers to having a clear purpose and objective for the investment – do you know what you want to achieve and when you want to achieve that? The answer will determine your direction in investing and know what information is required to build a solid investment portfolio.

Check involves activities to survey and collect information about the respective investment to ensure it is compatible with your plan.

Monitor is about keeping track of any changes on investment and being sensitive to the important indicators that your investment returns can potentially sustain and improve, or otherwise. This also requires one to be nimble and responsive according to changing market conditions. Adopting the PCM approach will enable investors to differentiate whether it is a real opportunity, and to know how to ensure the compatibility of the opportunity to one’s current situation.

As property investing is possibly the single largest financial commitment in one’s lifetime, it can have a different impact on various aspects of our personal and family life. As such, merely asking what property to buy or where to buy is not enough.

So how we can apply the PCM model in a property purchase scenario?

You should start with questioning. What is your primary purpose for this property investment? What is your goal for this investment? The answer is crucial to determine the appropriate strategy to follow.

Say you are looking for an own stay property. You will need to identify a property that caters to your current and future family needs. Start by consolidating information about the targeted property (for example, understand the potential of the upcoming neighbourhood, the demographics, nearby amenities, etc.).

Then identify and assess the saleable area of the property, number of rooms, potential renovation costs due to expansion or layout restructuring and suitability for future expansion to determine its compatibility to your needs. For newlyweds, do not forget to consider the extra rooms for your future children.

If you are looking for investing or a rental property, you need a clear approach with cost-effective solutions and a well-planned property rental management strategy to optimise your rental yield. If you want to save the cost of engaging agents or a property management company, you need to determine if you have the capability to do it on your own.

Again, start with gathering information about the property types that are popular for rent, the targeted potential tenants, their preferred rental price range, etc. Then continue to identify and assess the property based on the needs of your targeted tenants.

In addition to this, you should continuously monitor the progress around the targeted property area. Are there any growth plans and projects to spur the development of that area, such as upcoming MRT lines, connection to highways and other developments that might affect your investment return direct and indirectly?

You should also be prepared for vacant tenancy periods without rental income as this will represent an opportunity cost to you. Hence, your sensitivity towards the growth around the property area will assist you to seize the opportunity in pricing the rental accordingly.

Potential capital appreciation and positive rental income is a property investor’s ultimate goal. Nevertheless, few can accurately predict their actual investment return as this will depend on the overall development and progress of property location – actual versus expected.

Given this uncertainty, it is important for you to have a practical plan to secure the rental yield and a well-planned exit strategy prior to investing in any property. As such, one can apply the PCM model prior to the investment instead of blindly following what is recommended by people around you.

Impact On Your Financial Health

Malaysia currency of Malaysian ringgit banknotes background. Paper money of one, five, ten, twenty, fifty and hundred ringgit notes. Financial concept.

The above examples should give you a fair idea on how you should approach a property purchase in the future. But is this sufficient for you to make the right property-related financial decisions? Will the purchase have a positive or negative impact on your overall financial well-being? To answer this, we will need to overlay the decision-making process with a holistic financial planning perspective.

Broadly speaking, holistic financial planning provides you a 360-degree view of your financial situation, taking your current and future financial expectations into consideration to empower you to make more informed investment decisions. A holistic financial planning empowers you to constantly be on guard against possible investment risks and potential financial costs as you expand your property portfolio holdings.

Working on strategic asset allocation helps you manage your investment risk while stabilising your overall investment returns. For example, strategic asset allocation will remind you to invest less than 40-50% of your funds in properties.

Understanding key financial ratios provide valuable information to help you monitor your debt ratio to avoid over-gearing and keep track of your emergency funds in the event of a scenario without rental income. Cash flow management will help you ensure that you have sufficient cash for down payment without using up your emergency funds, and give you clarity on how you can continue to save and invest for other goals once the property loan repayment starts.

In conclusion, there is no doubt that property investing has a big role to play in growing one’s net worth. However, there are pitfalls in investing in this asset class so the practice of opportunity management approach utilising the PCM model, coupled with holistic financial planning, will help to minimise.

About the Author

Jess Hon is a Licensed Financial Planner with Finwealth Management Sdn Bhd and would like to assist millennials to take control of their own finances and achieve financial happiness. She can be contacted at jesshon@finwealth.com.my

We at Smart Investor and Finwealth is committed to help you better manage your financials. Get a free consultation from an expert by filling in your details here: https://www.smartinvestor.com.my/SIxFinwealth

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27/04/2022
Property Investing In A Post-Pandemic World, 4 Things To Consider
Planning to do some property investing after the pandemic? Here are some factors to help you find rewarding deals.

Real estate investment is one of the most preferred forms of medium to long-term investment, especially for Asians. It increases in value and generates ongoing passive income over time.

Despite the Covid-19 pandemic that took a toll on Malaysia’s property industry, experts say the property market will likely recover in 2022 with renewed consumer confidence and the expected recovery in Malaysia’s overall economy. They anticipate that property investing will get better in the first half of this year before it begins to pick up in the second half.

“All signs are pointing towards 2022 being a recovery year for the property market in Malaysia. It is predicted to be stable in the first half with gradual improvement in the second half. While many are adopting a wait and see approach, landed properties in the Klang Valley are hitting new highs each month,” says Chan Ai Cheng, President of the Malaysian Institute of Estate Agents.

4 Factors To Consider In Property Investing

With the attractive low interest rates and property prices on an upward cycle, it seems like a good time to snap up some good properties. However, you do need to have a sound knowledge before venturing into the world of investment properties.

According to Chan, some of the factors to consider when investing in a property in Malaysia include:

1. Purpose Of Property Investing

Are you looking to make money through rental income or property appreciation? What you plan to do with the property makes a difference in deciding the type of property you need to buy. It also helps you narrow down the available options to find one that is better suited for your needs.

2. Location And Neighbourhood

Location is one of the most crucial factors to consider when investing in property. Other factors include accessibility and connectivity, amenities, plans for future development, proximity to transportation network, and how safe is the location from natural calamities like floods or landslides.

“For me, I look for properties within easy reach of areas I am familiar with. There may well be opportunities in other localities, but it is always best to invest in locations you know best. You would have better knowledge of the neighbourhood, past prices, and potential for the area compared with buying on one’s hunch,” she explains.

3. Type Of Property

The main three types of property investing include residential, commercial, and industrial.

“In Malaysia, most investors buy residential properties with a minority investing into commercial and industrial properties,” Chan says.

Popular residential property options include landed properties like terraced houses, semi-detached houses, or bungalows. For non-landed properties, they include highrise or strata residential properties such as condominiums, serviced residences, and apartments.

Each property type has its own set of terms and guidelines or considerations; thus, you need to determine what you are looking for in advance.

4. Budget

Your choice of property to invest in should not only be a good investment, but it should also fit within your budget.

When calculating your budget, remember to factor in all initial costs such as downpayment, legal fee, stamp duty, bank processing fee, valuation fee (for subsale), as well as renovation expenses to get the property ready for use.

Besides the monthly loan instalment, you also need to budget for recurring payments that come with owning a property such as monthly maintenance charges, annual quit rent and assessment tax.

While most people buy directly from the developer and the secondary market, Chan says that there are some investors who focus only on picking up investment properties via public auctions. So, how do you find a profitable investment property in Malaysia post-pandemic?

“Data is key,” says Chan.

“Do your research on the type of property and the location you have your eye on. Although most hold the view that investing in property should not be an emotional affair, it is quite hard to separate the two.”

According to Chan, if prices of properties within the area you are targeting have had a downward adjustment in asking prices – then it might be worth your while to put in an offer.

With the rising cost of building materials and disruptions in the supply chain, Chan indicates that this might lead to higher property prices. This is favourable to property owners as real estate has historically been viewed as a good hedge against inflation—when housing prices rise with inflation, owners will see appreciation.

Besides being a hedge against inflation, if done right, property investing can get you a substantial return through passive income and equity gains.

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25/03/2022
Digital Solutions For SMEs

With many companies being forced to pivot, digital solutions are in demand.

The sudden pandemic has caused some small and medium-sized enterprises (SMEs) to lose their positions. Most of them are traditional, non-information enterprises, offline businesses, or lack effective digital management models and are isolated by the pandemic.

In the beginning, there was general confusion over high threshold, high costs and long cycle of digital transformation.

“After the pandemic, more and more companies have discovered that accelerating digital transformation can accurately control inventory, improve management efficiency and reduce business operating costs,’’ says Volservers Solutions managing director Tan Yik Jaan. While many SMEs have started to digitise (convert their data and documents into a digital format), they have yet to embrace digital transformation and change their business model; slow internet connection (many industrial estates do not have fibre optics infrastructure) is also a problem.

Digital transformation involves looking at holistic solutions like enterprise resource planning (ERP) and customer relationship management systems. Supply chain management (SCM) has moved to 6PL which is an artificial intelligence driven SCM, but many SMEs have not gone beyond 3PL that offers first stage supply chain integration.

“SMEs need to have a progressive mindset that embraces business transformation with digitalisation (converting business processes to use digital technologies) as a tool,’’ remarks Small and Medium Enterprises Association of Malaysia (SAMENTA) national secretary Yeoh Seng Hooi.

Apart from the lack of financial and skilled resources, SMEs also face challenges in protecting their digital platforms and data from cyber-attacks.

“A difficult part of the digital journey is to find the right partners at an affordable cost,” explains managed security service provider Vigilant Asia group CEO Victor Cheah.

Most SMEs already have two years’ experience of manoeuvring through their digital journey in the pandemic, and a common challenge is the execution and integration of processes.

“The hit to the tech supply chain has resulted in massive delays in many hardware reliant products and solutions, while continuous uncertainty is affecting cost especially on hardware reliant solutions,’’ says IT asset lifecycle management solutions company Rentalworks Malaysia managing director Alan Puah.

SMEs need to have a progressive mindset that embraces business transformation with digitalisation– Yeoh Seng Hooi,SAMENTA

Potential roadblocks
The biggest challenge faced by SMEs these days is integration across multiple systems. “The most difficult part for SMEs is the mixing and matching of various solutions that can solve their problems while allowing for future expansion,’’ says Wavelet Solutions CEO Vincent Lee.

To address this integration issue, Wavelet Solutions, an ERP solutions provider for SMEs, provides operational data lake solutions built on Amazon Web Services (AWS) platforms. (A data lake is a centralised repository for structured and unstructured data at any scale, while AWS is the world’s most comprehensive and broadly adopted cloud platform).

For digital transformation, the digital experts from Volservers work closely with brands across various industries to help SMEs grow their brand identity in the market.

Volservers is an experienced market research agency that provides panel and full-service research solutions, online survey programming, hosting and reporting services to the market research industry, and builds a pleasant customer experience for customers’ platforms.

User-centric expertise at Volservers looks deeply into user behavior, expectations and business goals when designing a seamless journey for customers’ products. “We provide interactive UI/UX designs, web and mobile applications for multiple platforms, namely, on Apple and Android, to help maximise customer reach,’’ shares Tan.

In terms of cybersecurity services, Volservers has the capabilities to identify vulnerabilities in clients’ environment and develop strategies to remediate and improve their security posture. Volservers’ services consist of solutions that protect customers’ IT infrastructure such as endpoint protection, web application firewall with anti-DDOS and much more. This includes an experienced security incident response team to ensure minimal recovery time and damage to customers’ business reputation.

In terms of managed IT services, Volservers has multiple platforms of solutions whether it is in cloud or hybrid infrastructure; its team offers support, product consultation and monitoring for multiple operating systems and databases.

Today, there are many cyber threats including zero day viruses and ransomwares which cannot be detected by traditional anti-virus and firewall solutions. Vigilant Asia is able to provide 24/7 monitoring which is bundled with advanced tools to provide protection, detection and remediation services. These tailor-made services include vulnerability assessments, security frameworks and training.

“It is affordable for SMEs to subscribe to our services which are tools provided based on a subscription model, on a per-user-per-month basis,’’ explains Cheah. Concerns over cashflow and work mobility has also prompted many SME to seek leasing programmes for endcomputing devices; short term rentals of preloved or previously used laptops and tablets are highly sought after.

To help customers navigate through the whole asset life cycle process, Rentalworks offers its mobility device leasing programmes with fixed monthly repayments plus cloud-based firewall, flexible tech support and data erasure for device end of life.

“Our specially-curated lease-to-use approach ensures that the process of deployment, maintenance and refresh are all managed by Rentalworks, making it easy for SMEs to focus on growing their businesses,’’ says Puah.

The SME digital journey is a longterm process; despite the economic reopening and return to physical locations, the road to digitalisation has started and will continue to score greater achievements.

28/01/2022
Gen X VS Millennials In The Workplace

There have been countless studies about the generational gap between Gen X and millennial workers, with the topic stirring up much debate to this day. Broadly speaking, Gen X are born between 1965 and 1980 and are currently 41 to 56 years of age. Millennials are born between 1981 and 1996, ranging between 25 to 40 years of age.

With the Movement Control Order (MCO) forcing many businesses to operate remotely, many millennials took to the situation like a duck to water thanks to their digital savviness and familiarity with
remote working tools. However, with offices reopening after the MCO was lifted, many now find themselves at a crossroads and are often reluctant to return to a centralised workspace.

“The reality of the matter is that employees were forced to adapt to the culture of working from home, and just as they got accustomed, it is now time to revert to the old ways of working with added restrictions – the SOPS,” says Rita Krishnan, the managing director and training consultant of Impian Helang.

To her, CEOs and management of any company will return to the office and face new challenges, some of which they have never dealt with in the past thanks to the unprecedented effects of the Covid-19 pandemic.

“In the past, it was performance and productivity that mattered most for organisational growth,” she recalls. “But today, compassion with high
emotional intelligence is crucial, being the way forward in managing the workforce, especially in retaining the talents.”

In Deloitte’s 2021 Millennial and Gen Z survey, it was found that only 38% of millennials felt comfortable voicing concerns to supervisors about work stress.

This suggests that many are unable to trust or anticipate a clash with higher ups about the rigours of work. A correlation can be drawn to 31% of millennials taking time off work due to pandemic-related stress and anxiety. According to the survey, almost half of them gave a different reason to their employers, likely due to a stigma around mental health at work.

It is no surprise that CEOs and senior management figures today must be more well-rounded figures – able to lead and dissect numerical patterns as well as business strategy, but being able to relate to their subordinates on a more personal level rather than simply boss and employee. However, the difference in age can often mean that there is a clash in culture and expectations.

The topic is widely documented and debated, with both sides often convinced that they are not compatible with the other. This often boils down to a mismatch in terms of ideology, with Gen X workers likely to espouse more traditional work values, while Gen Y or millennials subscribe to more flexible or unconventional working mantras.

“Generally, Gen X are hard workers while Gen Y are smart workers,” she postures. “Gen X do not jump jobs and are comfortable with where they are. This may seem like the safer option but can also be dangerous as career progression is not usually an option.”

What about the retirees?
For all the talk of Gen X v s millennials, the pandemic has also depleted the savings of many retirees. This has resulted in an influx of retirees in their fifties and sixties re-entering the job market, but who may be under the impression that time has left them behind. However, Krishnan believes retirees have much to offer in terms of their knowledge and experience, and suggests that there are many job opportunities for such individuals.

“Training and consultancy in sharing a wealth of knowledge, experience and skills that were useful then and useful now,” she shares.

The experience accumulated by such individuals suggests that within them is a treasure trove brimming with a wealth of knowledge; they simply need to leverage this into potential job opportunities.

“I believe in reinventing and recycling talents that upholds the reputation of recreating past performance. This is where retirees can attend the HRD Corp Certified Train-The- Trainer programme, for a new career altogether whilst recreating and reliving the successes of their past,” adds Krishnan.

Job hopping a competitive disadvantage?

Krishnan also suggests that the typical Gen Y employee prefers to job hop often in order to gain experience quicker as well as to be exposed to various industries. While she does not dismiss this career strategy, she highlights that it also has its pros and cons.

“Employers are reluctant to invest in and develop employees who show no promise of ‘stayability’,” Krishnan explains.

“The working style of Gen Y comes with the mindset of expectations – less work, more pay, with flexi hours.”

This shift in mindset is evidenced by concrete data. The Deloitte survey indicated that job loyalty is slipping among millennials, with 36% of respondents open to leaving their current employer within two years if the opportunity arose, a drop from 31% in last year’s survey. However, 34% of millennials say they would only consider leaving after five years, which suggests it is not prudent for senior managers to paint the entire generation with the same brush.

She believes that, although difficult, this difference in culture and expectations can be bridged with programmes that facilitate interaction between Gen X and millennials.

“It is important to allow employees to explore their skills and abilities with the intervention through team bonding programmes where Gen X and Gen Y can interact and learn from each other,” says Krishnan.

These types of considerations should be taken into account by HR departments, especially when it comes to upskilling the workforce, an area in which Krishnan is well-versed.

“The pandemic has altered traditional training styles, and the responsibility of the HR department would be to select relevant training programmes related to industry needs,” she says.

“At the same, employees’ morale and productivity levels can be elevated using positive reinforcement.”

She is also a keen advocate for companies to develop a psychological connection with their employees, resulting in a relationship that presents “a sense of belonging”. This demonstrates the company caring about their employees’ personal development and workforce growth. Such a result would inevitably translate into a win-win situation for both company and employees.

26/01/2022
Avoiding Investment SCAMS

What you should look out for and how to not fall for these malicious schemes.

The economic impact brought on by Covid-19 has led many people into financial distress.

Those looking for quick gains could easily fall into investment schemes that take advantage of their desperation and fears. Some of the victims might use all of their life savings or even obtain bank loans to participate in such schemes.

For the perpetrators, their goal is simple: profit from the plight of their victims. While the stealing of private information and hard-earned savings are not new, such investment schemes are regularly updated and amended so as to portray a look and feel of legitimacy.

People should educate themselves about the investments they are considering. Perhaps, start with being mindful about content and marketing scams. Here are some useful tips that help with identifying new scammer methods:

TREND #1: MARKETING GURU SCAMS […]

TREND #2: CRYPTOCURRENCY SCAMS […]

TREND #3: VIRAL FAKE NEWS THAT CAN PHISH AND USE BEHAVIOURAL TRACKING […]

[ …read the full article HERE ]

04/08/2021