Chinese parents keen to enrol their children in international schools but reluctant to pay the exorbitant tuition fees in the mainland are turning to Thailand as an option, a trend that has bolstered the local property market.
Peggy Wang, a mother of a 10-year old girl and six-year old boy, is one such parent who opted to move to the northern Thai city of Chiang Mai, where annual tuition fees at less than 60,000 yuan (US$8,732) are a quarter of the 240,000 yuan her children’s Beijing bilingual school had charged.
“The teachers in the Beijing school change frequently, but in Thailand, teachers have families there, so the faculty is stable,” Wang said. “In Beijing, my children have to take extra English classes after school in the absence of an English-speaking environment outside class, but not in Thailand.”
She plans to send her children to international schools in Bangkok when they get older, where fees will rise to about 100,000 yuan a year. To prepare for that, she has bought a 31 square metre flat in Bangkok for 650,000 yuan, in addition to the Chiang Mai villa she lives in and a flat in Pattaya.
Wang is among a growing group of Chinese parents disillusioned by the costs of local international schools and the rote-learning in public schools in the mainland, and looking towards Thailand as a destination for education and investment.
According to Chinese international real estate website Juwai.com, the volume of enquiries for Thai properties in the first half of the year exceeded that for all of 2017, with Thailand rising from No 3 last year to become the top destination for Chinese buyers. It said it had received purchase enquiries amounting to US$962.2 million since the beginning of last year.
Monthly tuition fees of US$2,744 at Shanghai international schools are currently the world’s highest, according to the International Schools Database. Beijing is second most expensive at US$2,519. By comparison, fees in Bangkok and Bahrain are US$1,032 and US$422 respectively.
Education is a common factor driving Chinese overseas property investments. Anxiety over the shrinkage of domestic wealth under a depreciating yuan, high inflation and shortage of viable investment options are other reasons. Next to traditional investment destinations like US, Canada and Australia, Thailand has its advantages – it is geographically closer to the mainland and less expensive.
Chris Deng, a businessman from eastern China’s Nanjing city who shuttles between China and the US, bought a 35 sq m flat in central Bangkok for 1.3 million yuan this year. He said he planned to send his daughter, now two years old, to a local kindergarten, and possibly primary school in Thailand.
“I want my kid to grow up in an international environment,” he said.
Deng said he considered his Thai investment as part of a global portfolio that includes property assets in the US and other mainland cities.
“In Thailand, I can get a 5,000-6,000 yuan monthly rent. In Nanjing, I get a similar rent for my 100 sq m home, which is now valued at 5.6 million yuan,” he said.
An annual yield of close to 10 per cent was the major draw for Jennifer Wu, a 25-year-old Chongqing native to invest in Bangkok. Wu bought a 28-sq m flat for 566,000 yuan, via Uoolo, an app that helps Chinese buy properties overseas.
“I heard that universities there are good, which could be an option for my future kids,” she said.
Wang said parents who can afford the higher fees for mainland international schools would prefer to pay them as sending their children elsewhere usually require a parent giving up a career to move overseas with the child.
“But living in Thailand hasn’t changed much for my children and me. Each time when we land in Beijing, they kept asking me, when we could get back to Thailand?”
Mirror, mirror on the wall, which residential property is the fairest of them all? Well, ultimately it depends on your financial capability, location and personal needs – but let us lay out the differences for you.
Are you tired of paying rent every month or have your parents been dropping hints that it is time for you to leave the roost? Or perhaps you were inspired to consider jumping onto the home ownership bandwagon after reading our recent article on how to buy a house in Malaysia in 12 steps?
So you are pretty confident that you are financially ready, only, what property type should you go with? – worry not, there are so many types of homes in Malaysia for you to choose from! Most first-time homebuyers are aware of the two main categories: landed and high-rise, but lo and behold the distinction between residential properties do not stop there. Just drop by our New Launch property listing page and you will see a long list of property types including terrace, apartment and bungalow.
Why don’t you sit back and relax while we take you through the top 8 residential property types in Malaysia:
Typically, high-rise residential units bear cheaper price tags in comparison to their landed counterparts but do bear in mind that pricing differs greatly between locations. We also share the latest Per Sq ft pricing for each property type in Selangor, as recorded by brickz.my. where the source of sale data is from the Valuation and Property Services Department (JPPH).
»Typical size range: 650 sq ft – 1,500 sq ft
»Median PSF: RM412 (July 2017 – May 2018)
A condominium or condo is an individually-owned housing unit within a multi-unit or strata building, where a typical unit will comprise of at least 2 bedrooms and 1 bathroom. Ownership of a condo is restricted to the unit only and does not include other common properties like the swimming pool and lounge area.
A condo unit is typically smaller than a landed residential unit but it is a popular option among city dwellers for its wide range of facilities which typically include a swimming pool, gymnasium and a children’s playground. The higher-end developments usually boast a fancier set-up which includes themed gardens, spa facilities and infinity pools. Some luxury condominiums are even larger than a landed home with impressive built-ups of up to 10,000 sq ft!
Owners also enjoy at least one allocated parking space and round the clock security. Take note that you will have to fork out a sum of money for service charges, which are monthly payments for maintaining common facilities and common property.
»Typical size range: 550 sq ft – 1,200 sq ft
»Median PSF: RM295 ( July 2017 – June 2018)
In Malaysia, an apartment is similar to the condo albeit being the cheaper version. The distinction therein lies in the type of facilities offered. An apartment has lower-end and more basic facilities like outdoor parking space, 24 hours security along with elevators and a common playground or sports area.
They may not seem as glamorous but apartments are a great option for a starter home as it bears a very attractive entry price. There are many older but well-maintained apartments scattered throughout strategically located residential neighbourhoods in states such as Selangor and Penang.
For example, Bayu Apartment in Damansara Damai (pictured below) may be a middle low-cost development but it offers a swimming pool, covered car park and a barbeque pit. You can get a 3-bedroom unit measuring 750 sq ft for roughly RM250,000.
Alternatively, house hunters could consider apartments under the RUMAWIP project, which is an initiative under the Ministry of Federal Territories to make homes affordable for middle-income earners living in the city. For instance, Lily Apartment, one of the more recent developments in Kuchai Lama, is reasonably priced from only RM 300,000.
»Typical size range: 400 sq ft – 900 sq ft
»Median PSF: RM186 ( July 2017 – June 2018)
The flat is an option for home seekers who are on a shoe-string budget. Being on the lowest end of the house price spectrum, flats are popular among the working class.
Flats sold between July 2017 and March 2018 in Subang Jaya for instance, have a median price of RM 148,000. It is quite a steal for those who do not mind its lack of security and facilities. However, flats across the country get a bad rep for being undermaintained.
Most flats do not provide any amenity whatsoever except for an open parking lot and maybe a surau. There are no elevators too as most buildings are walk-ups and are at most 5-storeys tall.Nevertheless, there are flats up to over 20 stories tall with shops and mini markets located on the ground floor, these tend to be low-cost housing schemes built by the government.
#4 Serviced Residences/SoHos
»Typical size range: 400 sq ft -1,200 sq ft
»Median PSF: RM613 ( July 2017 – May 2018)
A rung higher than the typical condo, serviced residences are usually marketed as being more luxurious and exclusive. Depending on the price range, some units even come fully-equipped with hotel-like facilities such as a concierge and room service.
However, the majority of serviced residences being launched are almost exactly the same as condominiums except for their land type. The former bears a commercial title and are usually part of an integrated or mixed development. Many serviced residences in the Klang Valley are connected to a mall, retail shops and even offices.
A great example is the KL Getaway serviced residences (shown below) which are part of a bigger development comprising of residential, retail and office components.
Quite a few developments are marketed as Small-office Home-office (SoHos) where these units bear loft-like layouts, enabling owners to utilise them as both a home and office. Even though serviced residences and Small-office Home-office (SoHos) bear commercial titles, these properties are ‘residential-purposed’ and are thus considered as a housing accommodation. They have standard Sale and Purchase Agreements (SPAs) and fall under the jurisdiction of the Housing Development (Control and Licensing) Act 1966 (HDA).
Serviced residences are suitable for millennials and city slickers alike for its prime location and easy access to retail outlets like shopping malls and hypermarkets.
Gaining popularity even outside of the Klang Valley Conurbation, 91% of the 1,530 serviced apartments launched in Malacca this year have been sold, as revealed by the National Property Information Centre (Napic) in its Q12018 Report.
#5 Terrace House/Link House
»Typical size range: 750 sq ft – 1,600 sq ft
»Median PSF: RM368 ( July 2017 – June 2018)
Terrace homes are also known as links houses, even though one is larger than the other. A terrace house shares its walls with the property next door, where corner lots tend to be larger in size. They are usually built 1 to 2 storeys high with between 10 to 12 units in each row of houses. A basic 1-storey unit will have 3 bedrooms and 2 bathrooms whereas a 2-storey home will feature 4 bedrooms and 3 bathrooms.
With the exception of highly urbanised areas like Kuala Lumpur, Penang and Johor Bahru, terrace homes are still the number 1 preferred property type in Malaysia due to its value-for-money characteristic, where one is able to own a larger than average home at an affordable price tag.
Urbanites should not despair however, there are still quite a few hidden landed gems in Selangor, where one can obtain a sub-sale property within the RM500,000 range. Those seeking newer properties should also consider checking out suburbs such as Bangi, Klang, Sepang, Rawang and Semenyih where developers have been launching reasonably price terrace units within gated and guarded developments in the recent years.
Meanwhile, in Johor you can score a new terrace home measuring an impressive 1,237 sq ft from as low as RM270,888.
»Typical size range: 2,000 sq ft – 12,500 sq ft
»Median PSF: RM368 ( July 2017 – June 2018)
Bungalows are the ‘loners’ of the group, as this standalone home usually sits on a private plot of land, where square footages and land area vary greatly.
As per the law of diminishing returns, the median price per sq ft decreases as unit size grows, thus explaining the low median PSF recorded in Selangor (RM368).
Should you look at the bigger picture however, you will discover why these homes are touted as the preferred option for the rich. Looking at brickz data, a 3-storey, 4,314 sq ft bungalow in Setia Eco Park, Setia Alam sold in January 2018 might have a reasonable PSF of RM302 but its selling price topped RM3.3 million!
Nevertheless, selling prices fluctuate greatly according to location, land area and of course, age. Older, single-floor bungalows in Ipoh for instance, hover in the RM300,000 range.
»Typical size range: 2,300 sq ft – 5,600 sq ft
»Median PSF: RM310 ( July 2017 – June 2018)
Semi Ds or semi-detached homes are basically a pair of houses which are mirror images of one another and they share a common wall to form one building. The other sides of the property is similar to a bungalow, with open land at the (free) side, front and back.
In the past year (July 2017 – May 2018), Taman Aman Perdana in Kapar garnered the highest semi-D sales in Selangor with 282 transactions. The double storey homes bear built-ups between 2,400 – 3,200 sq ft and a median PSF of RM271.
»Typical size range: 560 sq ft – 7,000 sq ft
»Median PSF: RM329 ( July 2017 – May 2018)
A townhouse can be described as a vertical terrace house, there are usually 2 houses stacked upon one another, where each unit could comprise of either 1 or 2 floors respectively, depending on the house height.
These buildings which look like one big home from the outside also resemble a low-rise walk-up; lower units can be accessed directly from the ground floor whereas the higher units can only be entered through a staircase on the side of the building.
This property type is also marketed as cluster homes, which are uniformly designed, landed homes built in clusters. Located within a gated and guarded (G&G) housing estate, owners get to enjoy recreational facilities such as a clubhouse and park with other residents within the development.
The Cahaya SPK Premier Townhouse in Shah Alam, for instance (pictured above) is located within a G&G compound and boasts clubhouse facilities and 3 thematic gardens.
Selling prices are quite affordable, with newly-launched townhouses in the Klang Valley and Johor going from as low as RM368,000 and RM604,800, respectively.
DISCLAIMER: The source of Sale data is from the Valuation and Property Services Department (JPPH) which officially records a property transaction once the stamp duty for the Sales and Purchase Agreement is paid while the source of rent data is from agents’ listings listed at iProperty.com. Analytics are based on the data available at the date of publication and may be subject to revision as and when more data becomes available.
Know their dissimilarities before deciding which is a better buy
There’s no doubt that buying a house is a lifetime commitment. Apart from getting a job, tying the knot and having children, purchasing a property is also seen as an important part of one’s life. However, with so much information out there, understanding the property market can be intimidating, even outright confusing at times.
Some of the areas that need serious consideration include planning the budget of the property, selecting the optimum area for the property as well as knowing the documents that will be needed in order to purchase a property. But, believe it or not, for most people, the thing that confuses them often times is whether to choose a Freehold, Leasehold or Bumi Lot – otherwise known as Bumiputra Reserve or Malay Reserve Land. Below entails the explanation for each Land Title type, featuring the differences as well as the limitations.
Freehold properties have always been the preferred one as it is perceived permanence in the title. Freehold property is when the state sets aside a plot of land and disposes it indefinitely to an individual. This is seen when the developer build freehold bungalows, private housing and condominiums. So when the developer owns the land, properties built on it are transferred to the buyers provided it is a landed residential property such as a bungalow or a terraced house. This ownership will be in the form of Master Title. However, for condominium or other high-rise residential properties, the buyer owns a stake in the condo (based on the units) but the developer still owns the land. In this case, the developer will distribute the ownership via Strata Title.
Freehold land definitely has a fair bit of advantages. As such, owners face fewer and less stringent restrictions when they want to transfer their land to someone else. Besides that, they also have the right to subdivide and allocate the land, although it is still subject to town planning controls. Even though there isn’t any development taking place on a freehold land, the state still cannot claim the land from the owner, which means owners are not forced to stick to a deadline. Apart from that, the land also goes through stable growth provided the property as a whole is in a good condition. If there’s a chance for redevelopment of old freehold properties, the owners will still be compensated.
As for the restrictions, do note that certain freehold properties will require the consent of the state when transferring ownership. Therefore, it’s advisable for potential buyers to look at the title of the property to find out if there are any restrictions on the land before purchasing it. Apart from that, unlike leasehold, only environmental and town planning controllers can limit freehold developments. Under the Land Acquisition Act 1960, the state can take back freehold land if it is for public purposes such as an MRT project or economic development.
Leasehold is the least preferred land title in the market. The properties on leasehold land typically come with a lease of 30, 60, 99, or in some cases, 999 years. Such land comes with a lot of restrictions and they are written down in the lease. The tenant is required to care for the land as defined by the land legislation. If the state deems the tenant unfit, the security of the tenure can be compromised and the state can also forfeit the lease for non-performance.
As for the restrictions, here are a few that’s worth mentioning:
1. It takes longer to sell
During the period of ownership, only the state or an equivalent can grant approval for a transfer of the lease. The sale for a leasehold property takes 3 + 1 months and it only starts after the state has given its consent, which can take anywhere from six to a year. This means that reselling your property can be a problem in the future.
2. Value can be lower than freehold
When we speak of the value, experts say that properties with a 99-year lease go up at a similar rate with its freehold counterparts during the first 20 to 30 years. In some cases, leasehold properties do gain more value than freehold ones during the early years. However, beyond 30 years, the value stagnates and depreciates until the expiry of the lease.
3. Financing might be more difficult to obtain
Another problem one might face is with financing. Financial institutions tend to be reluctant to lend to those wanting to acquire leasehold properties with less than 50 years remaining on the lease. Most banks will pick to borrow money to leasehold properties with at least 75 years left on the lease. Even if you get your financing approved, your loan amount will most likely be lower than the maximum 90%, which means you have to fork out the remaining amount by yourself.
4. The price value is lower than freehold
Here’s another bad news. Price-wise, leasehold property may or may not be cheaper than a freehold of similar specifications. Assuming all the details of the properties are equal, like built-up area of the building and the land size, the price of a leasehold property if often 20% lower than a freehold one.
Just like the title indicates, Bumi Lot is open for sale or lease only to Bumiputera which include Malays, Sabahans, Sarawakians as well as non-Malay Muslims. These property types exist in every new development where a certain percentage of the developments have to be allocated to Bumiputera. For instance, in Klang Valley, all new developments must allocate 30% of its units as Bumi Lots. If you wish to convert the Bumi Lot to a non-Bumi Lot, it will require much time (counted in years) and in most cases, the requests are usually rejected. Bumi Lots are also least considered by investors because their market is limited and its price appreciation is considered to be the slowest among all the three land titles.
We have good news for aspiring home seekers – iProperty.com.my will soon incorporate the latest data points from brickz.my (and more) into the property listings available on our site, saving you valuable time and effort.
Soon enough, visitors to iProperty.com.my can view updated data information in the property description page when they click on a residential project, including the property’s median price per sq feet (PSF), as well as Y-O-Y capital appreciation and asking rental yields percentages.
If you are unfamiliar with these data terms, read on!
Premendran Pathmanathan, founder of brickz.my and currently the GM of Customer Data Solutions at REA Group Asia (Parent company of iProperty.com.my) explains the importance of timely property data and how it can assist Malaysian consumers in making the most informed real estate decision.
#1 Why is data important for consumers?
We all know there are two parties in a real estate transaction – the seller and the buyer. When it comes to pricing, the former’s main concern will be “Am I underselling my property?” while a buyer will always question “Am I overpaying for this house?”
When shopping for a sub-sale property and scrolling through listings online, you will see the property’s description, including the number of bedrooms, unit size, project facilities and all that. However, you are going to need more information to determine whether you are getting your money’s worth or not – in particular, consumers require real-time performance data.
Most purchasers have an idea of the property type and area they wish or purchase into, but many have no clue over current market values and other pricing denominators including median price PSF, median prices in the area, etc.
Hence, they rely on word of mouth or anecdotal information when making a real estate purchasing decision. You may come across some data across a few sites when researching online, but most of these data, (if they are legitimate in the first place) are outdated or are no longer relevant as the figures displayed are from more than a few years back.
There are the quarterly statistics and yearly reports from the National Property Information Centre (Napic) under the Ministry of Finance’s Valuation and Property Services Department, but these data points are very macro (state-level) and do not dive into a specific area or neighbourhood, let alone a specific residential project/landed home scheme.
#2 Was that why you founded brickz.my, which compiles and presents actual data of transacted sub-sale property prices in Malaysia?
Yes, everyone should have access to reliable, accurate and up-to-date transacted sub-sale property price information. Brickz’s mission is to make actual transacted data in Malaysia transparent besides providing the latest and legitimate insights to help homeowners, investors and real estate agents save hours of property research time.
Brickz.my sources data from the Valuation and Property Services Department (JPPH), which officially records property transactions once the stamp duty for the Sales and Purchase Agreement is paid.
Home shoppers can instantly see the property’s latest sales history, its sale value, per sq ft price as well as median prices of properties in the area. Meanwhile, homeowners can stay informed about their property by keeping track of the volume and value of similar homes being sold recently, thus getting a clear idea of the real estate supply and demand in their area.
Users can play around with the tabs and filter according to residential districts or dive into a residential project. For instance, should you click on Damansara Villa, a freehold condominium in the prime neighbourhood of Damansara Heights, you will be privy to the latest sales records and median PSF as well as the unit size and the number of bedrooms.
These data points will help you determine if you’re overpaying for that unit you have your eye on. On top of that, you can easily streamline the kind of property you would want to live in, be it condominium or terrace home as well as your preferred residential neighbourhoods to check whether your target property falls within your budget or not; allowing you to conduct your property due diligence much more quickly and effectively.
#3 What about capital growth and rental yield values?
Capital growth is the value by which the property increases over time while rental yield is defined as the returns on a property investment from a rental perspective – these two figures are usually calculated and presented in an annual or Year-on-Year basis.
Property buyers are split into 2 groups: The first is for those buying a property for investment purposes (investor) while the other is a genuine home buyer (first time home buyer) or owner-occupier.
Investors are particularly interested in rental yield figures as they will want to put their money into an investment that would provide the most lucrative returns. Meanwhile, first time home buyers are very keen on capital growth because their first purchase is usually a starter home and they will have plans of upgrading after 5 years or so. Hence, they will want to know the resale potential and whether they can secure a tidy profit when selling off their home.
#4 So how can a consumer find out about growth appreciation and rental yield figures?
At the moment, there isn’t any capital growth and rental information on brickz.my. However, a consumer is able to gauge capital appreciation manually using brickz.my as the website allows you to filter property pricing according to specific date ranges. So, if you were to select condominiums transacted in Sentul from January to December 2017, a median price will be shown. For example, the median price says RM500 per square feet.
Next, when you change the date from January to December 2016 and the data shows RM450 per square feet. Hence, you can quickly calculate the growth – it has appreciated by 11.11%. (RM500-RM450)/RM450 X 100%
But, you don’t have to go through the hassle anymore in the near future.
We have good news for aspiring home seekers – iProperty.com.my will soon incorporate the latest data points from brickz.my into the property listings available on our site. Thus, visitors to iProperty who click on a listing can view additional information in the property description page, namely the property’s median price per sq ft and the area’s median price per sq ft (for the same type of property).
For example, say you’re buying an apartment unit in Mont Kiara for RM700 per square feet; you might think it’s a good deal as Mont Kiara is a very popular and established suburb. This might have been the median price in 2015 or 2016, but it could have fluctuated since then. What if our latest area median per sq ft figures inform the user that similar condominiums in the area are going for only RM600 per square feet? Of course, you would opt for the property that is 15% cheaper.
However, consumers still have to further evaluate the property based on their personal wants and needs – you might prefer the unit at a better location with superior facilities and more convenient connectivity links, e.d distance to MRT/LRT stations.
Next in the pipeline, we will be including the latest capital appreciation figures and asking rental yield percentages into each of iProperty.com’s listings as well – so consumers can look forward to getting better insights into the property market and the unit that they are interested in.
In the meantime, make sure to check out our data analysis articles, where we zoom into an area and dissect current data including current purchasing trends, what are the most popular projects and what are iProperty.com users searching for.
#5 What advice would you give to property buyers and sellers?
If you are in the midst of making a decision on whether to buy or sell your property, make sure to look up supporting data beforehand. The beauty with brickz.my and soon, iProperty.com’s data is that it is legitimate and transparent to everyone in the industry. So if you’re a seller and you feel your property needs to be sold at a higher price, please prepare your reasonings beforehand as your buyer will also have the same data as you!
Should your unit not have any extraordinary features or USP’s, then look at the area’s median price and set your selling price accordingly. As for buyers, please be prepared with all this readily available information before attending a property unit viewing. Not only will be more confident as a consumer but by staying more informed on the market activity, it makes for a more efficient and confident process when engaging with a real estate negotiator once you are ready to transact.
KUALA LUMPUR (July 26): There are clear signs of improvement in the property market and it is expected to pick up sometime in the second half of this year or the first half of next year, according to real estate consultancy Knight Frank Malaysia.
This follows the historic conclusion of Malaysia’s 2018 General Election, coupled with the strong growth momentum of the economy, it said in a statement released with its Real Estate Highlights: 1st Half of 2018.
Knight Frank Malaysia managing director Sarkunan Subramaniam shares that the property market saw a gentle recovery during 1H2018 as more clarity in the policies of the newly elected government unfolded.
“I believe the rents of high-end condominiums will stabilise and prices will hold. However, office rents are expected to remain competitive due to oversupply in certain locations, with the exception of Penang, which has a robust office market with limited existing and incoming supply,” Sarkunan said.
According to the report, the office sector in Penang has registered slight improvements in both occupancy and rent levels in 1H2018.
The outlook of Penang’s office market is expected to remain resilient with no immediate incoming supply and increasing demand, especially from corporations as Penang has the highest approved manufacturing foreign direct investments in the country at RM8.5 billion in 2017.
“I believe foreign investors will be coming back in 1Q2019 as we are expected to have more transparent policies with the new government,” Sarkunan said.
He also foresees the industrial and logistics sector to grow as Malaysia continues to draw healthy levels of investment in the manufacturing and services sectors.
In the high-end condominium segment in Kuala Lumpur, Knight Frank Malaysia’s associate director of residential sales & leasing Kelvin Yip observed that potential buyers and investors are switching away from a “wait-and-see” approach and are genuinely seeking for bargains in the market.
Furthermore, “developers are getting more aggressive in promoting their products by conducting nationwide roadshows. Based on the current trend, we expect the residential market to record more transactions in 2H2018”, Yip shared.
He added that the rental market is believed to have bottomed out as more enquiries have been received recently.
He added that the capital city Kuala Lumpur will remain as a well-liked investment destination among foreigners as prices are still reasonable compared with other major Asian cities.
“Unlike cities such as Hong Kong and Singapore, where foreign buyers are subjected to additional buyer’s stamp duty, Malaysia’s residential market remains relatively investor friendly to foreign buyers,” Yip concluded.
Meanwhile, the KL fringe office market was resilient in 1H2018 with both rental and occupancy levels holding firm despite the oversupply of space in certain locations in the Klang Valley.
In 1999, the 23.5-kilometer overhead Skytrain opened in Bangkok, providing the traffic-clogged capital with its first mass transit rail system.
But it took about a decade for the new transport system to really take off among commuters – and thereafter among property developers. Now, there are worries that the mass transit system has become a bit too successful as a property stimulus as new developments mushroom along the line across the city and in its outskirts.
“When it was under construction many luxury department stores and five-star hotels didn’t want a Skytrain station to be built near them because they thought the train would attract to much riffraff,” recalled Simon Landy, former executive chairman of Colliers (Thailand), an international property consultant.
The “ramp up” in ridership was a lot slower than anticipated by the Skytrain’s investor, BTS Group Holdings PLC. During the first year of operation in 2000, it had less than 150,000 passengers per day. That figure had grown to about 400,000 per day by 2010.
Nowadays, there are at least 750,000 passengers a day on the Skytrain, which can be packed to almost Tokyo-like push-and-shove levels during the rush hours.
Mixed-use luxury hotels and upscale department stores have sprouted up or are under construction near most centrally located stations and land prices along the track in Bangkok’s central business district (CBD) have soared 1,000% between 1998 to 2017, according to CBRE Thailand, an international property agency.
The number of condominiums in Bangkok have grown from 2,600 units in 1998 to 630,000 units now, with the majority following along mass transit tracks, CBRE data shows. The condominium building boom took off after 2004, shortly after the government’s Mass Rapid Transit Authority (MRTA) launched the Blue Line, known as the MRT, which added an additional 21 kilometers of subway rails to the urban network.
“Mass transit has been a key factor in the boom in the condominium market since 2002 up to now,” said Aliwassa Pathnadabutr, managing director of CBRE Thailand. “The downtown area has a total existing and future supply of 32,517 units, 22% located within 800 meters of the MRT, 44% located within 800 meters of BTS and only 32% located more than 800 meters from a mass-transit system.”
While Bangkok’s sprawl was spreading further outwards into the suburbs between the 1980s and 1990s, over the past two decades the mass transit system has “anchored the city center” around the downtown and midtown mass transit stations, she said.
And future growth, at least in the condominium segment, is sticking close to the extensions of the mass transit rails outside the CBD. “We are tracking 110,175 units of under-construction condominium supply in midtown and suburban locations, of which 28% are more than 800 meters from a mass-transit system, while 72% are located within 800 meters of mass stations,” Aliwassa said.
Of course, mass transit systems are not the only factor driving Bangkok’s condominium boom. “Other factors that impact the growth of the condominium market include growing urbanization, the trend away from extended to nuclear families, rising disposable incomes, higher availability of mortgages and foreign buyers,” she said.
While foreign buyers are a growing factor, Thais themselves have proven the main market for the initial phase of the condominium boom, which has accompanied changes in urban lifestyles, rising incomes and a trend away from suburban housing developments to city condominiums, real estate agents say.
But this market is showing signs of “fragility,” according to the Bank of Thailand (BOT), the central bank, which recently warned of a higher ratio of new mortgages with loan-to-value rates of 90%.
“We have seen certain banks, particularly the mid-sized banks, that have been a bit more aggressive in providing credit to home buyers in certain segments, and that’s led to a high loan-to-value ratio and we’ve seen rising NPLs (non-performing loans) coming from certain segments,” said BOT Governor Veerathai Santiprabhob. “There could be segments of the home market that need to be watched more carefully,” he said.
After three years of fairly slow economic growth in Thailand, the number of unsold condominium units in Bangkok rose to more than 30,000 last year, mostly in the medium price range, between 100,000 to 200,000 baht (US$3,012 to US$6,024) per square meter. Prospects for sales have improved somewhat this year, with gross domestic product is expected to grow more than 4%.
With the medium-price condominium market somewhat sated, some of the bigger property developers started to invest in “super luxury” condominiums a few years ago. Now there may be too many of those high-end units on the market.
“Whereas three years ago, you had one of two projects priced above 300,000 baht (US$9,033) per square meter, now you’ve got 20, and the Thai market at the top end isn’t that deep,” Landy said.
As such, developers have started to look abroad for sales. Sansiri PCL, which has a wide range of condominium blocks in Bangkok ranging from medium priced to super luxury – including units at its 98 Wireless Building that are going for 700,000 baht (US$21,084) per square meter, has been targeting the wider Asian market.
“We have international sales offices in Shanghai, Guangzhou, Shenzhen, Beijing, in Singapore and one in Hong Kong,” said Poomipak Julmanichoti, Sansiri executive vice president for international business development.
“Both Hong Kong and mainland China are our key customers,” Poomipak said. “The company is expecting significant growth of 25% in international sales in 2018, compared with 2017, with the Hong Kong and China markets contributing about 70% of that, about 35% each.”
Sansiri has targeted sales of 45 billion baht (US$1.4 billion) this year, up 14% year-on-year, with an estimated 13 billion baht (US$392 million) expected to come from foreign sales, he said.
One reason condominium developers have gone for the super luxury market is because land prices in Bangkok’s CBD have soared over the past three years, a reflection in part of the growing scarcity of available space. This scarcity may be the factor that prevents a glut in the segment, analysts say.
“Even if a developer has the financial means to build such a project, finding the right location to do so is becoming ever more challenging as most of the prime locations have already been bought up recently and are under development,” CBRE’s Aliwassa said.
To finance such projects, many developers have turned to Thailand’s bond market, which like the stock market has been hit by capital outflows in recent months due to higher interest rates offered in the United States.
Fitch Ratings Thailand Ltd has estimated that bonds issued by property firms amounted to 425 billion baht (US$13.6 billion) over the past five years, growing 20% annually. The credit rating agency urged bond buyers to be selective about the properties they backed, noting a wide range in risk depending on the projects and market segments.
Still, economists and financial analysts are still cautious about ringing alarm bells about a possible Bangkok property bubble.
“Debentures issued by property developers command a share of 11.8% of the total debentures issued by the private sector,” said Charl Kengchon, chief economist of the Kasikorn Reseach, a private sector research company. “Considering the fact that property is a capital intensive business, I would say we are not overexposed to the sector.”
Like central bank governor Veerathai, Charl cautions that Bangkok’s property market has many segments, some of which are more worrisome than others.
“Unless we are having a major economic downturn or experiencing sharp increases in interest rates, I think it will be difficult to generalize the situation across projects and companies,” Charl said. “Some may be doing better than others.”
Don’t worry too much about KL property glut as market will eventually adjust itself, says MIP president
PETALING JAYA (July 3): The housing and commercial property glut in Kuala Lumpur is not a great cause for concern as the market will eventually adjust itself to accommodate the excessive supply, said the Malaysian Institute of Planners (MIP) president Ihsan Zainal Mokhtar.
“We are not worrying too much for the glut as the developers and the market will always adjust itself. We have adjusted rather well to changes in the past,” he reporters at a press conference on the upcoming 10th International Conference on World Class Sustainable Cities 2018 (WCSC 2018) today.
However, he noted that city plans have to be flexible to adjust to changes in the market.
He cited Melbourne as an example. “Melbourne used to have the issue of office glut in the early 90s. And what Melbourne did was allow these offices to convert into residences, although the concept of staying in the CBD (central business district) wasn’t [popular] at that time.”
“You cannot just accept things as the way they are. Even the city plan, it has to be able to adjust and flexible enough to change the market forces,” he added.
WCSC 2018, which set to be held on September 27 at InterContinental Kuala Lumpur, will see experts from both local and overseas discuss the issues that KL had and will be having in the future while the city moving towards to the goal of become one of the world class cities, said organising chairman Michael Fu Yueh Yee.
“The conference will explore how KL and other cities in Malaysia can prepare for today’s and tomorrow’s challenges, to be more liable, resilient, inclusive and sustainable, through better planning, technology and social innovations towards implementing the new agenda for all,” said Fu, who is also the exco member of Rehda Youth.
Themed “Kuala Lumpur: Today & Beyond”, WCSC 2018 will be jointly organed by the Real Estate and Housing Developers’ Association Wilayah Persekutuan Kuala Lumpur (Rehda KL), MIP and the Malaysian Institute of Architects (PAM).
The event is endorsed and supported by Dewan Bandaraya Kuala Lumpur (DBKL).
More than 550 delegates representing the built-environment industry professionals, city managers, government agencies, residents’ groups, NGO’s and city stakeholders are expected to participate.
The WCSC 2018 will feature speakers from both local and overseas sharing their expertise on international best practices and case studies from other world class cities, including MIP’s Ihsan Zainal Mokhtar, Khazanah Research Institute director of research Dr Suraya Ismail, Avanath Capital Management CEO and National Multifamily Housing Council 2018 past chairman Daryl Carter, Kohn Pedersen Fox Associates senior associate principal Heejin Kim, Mayor of Seoul Park Won-Soon and representative from DBKL.
Also present at the press conference today were PAM council member Norzakiah Arshad and Mustapha Kamal Zulkarnain, president Ezumi Harzani Ismail, DBKL town planning department senior deputy director Nik Mastura Diyana Nik Mohamad and Rehda Youth treasurer Ra Adrina Muztaza.
THAILAND’S condominium market has been resilient with sustained growth for 10 years since the global financial crisis in 2008.
Recently, there have been warnings from the Bank of Thailand governor to commercial banks on their lending practices about the ongoing high loan-to-value (LTV) rates as well as risk from unsold inventory and oversupply.
Lessons learned from the 1997 Thailand financial crisis has led to more cautious approaches from both commercial banks and developers during the past two decades. There are certain indicators we could use as guidelines to ensure market stability.
Developers can gauge whether an oversupply is occurring by determining if there are more speculators/investors than end-user buyers and buy- to- hold investors. A prudent developer will keep track and analyse buyer and potential buyer’s profiles and purposes for purchases. One measure they can do to monitor the risk of having too many speculators is to set a higher percentage of down payment. With more money invested up front, investors and speculative buyers would be less likely to cut loss on their property investment and hold on to it longer to recoup the investment in the event of market uncertainties.
Another question that is worth asking when determining market conditions is to measure whether the prices of property have increased to a price beyond the affordability of local end-user buyers. Today competition for developable land has driven land prices up substantially. Land cost has become the highest component in development cost. Prices for even mid-market products in Bangkok has gone beyond the purchasing power of most blue-collar workers and has led to high unsold supply.
Banks have been careful since 1997 to ensure they do not repeat the mistake of over lending with high LTV ratios which greatly increases the risk of non-performing loans (NPL’s). Availability of mortgages is one of the drivers for the growth of the property market; however, it could be a double-edged sword if the loans issued are low quality and results in higher NPL’s. Banks could consider lowering LTV ratios and impose stricter lending policies to reduce risks of underperforming loans. Another measure that could mitigate risk is for the developer to implement a pre-approval process for mortgages as a condition before selling the properties.
Due to the ever-higher prices, developers are now taking their projects to foreign buyers in hopes to unload unsold inventory. In the past three years, foreign buyers, especially Chinese and other Asian buyers have helped to reduce the unsold supply in the Thai condominium market. This trend will continue as Thailand is one of the few countries that does not charge foreign or second home buyers additional stamp duties. Apart from being a popular tourist destination, other factors include affordable prices, ability for foreigners to own condominiums, proximity to a city centre, convenient transportation, and good amenities.
The real issue in selling greater percentages of units to foreigners is that most foreign buyers, whether end-users or investment driven, are much more sensitive to any negative sentiment, political or economic, that may arise. This increases the risks for developers if there were negative news to provoke foreign investors to pull out and cut losses. Keeping the ratio of foreign buyers lower per project and increasing down payments on units could be a prudent approach to minimize risk.
Appropriate government stimulus policies could also help to boost the property development sector. For example, using stimulus policies that are focused on completed projects with attention given to end user demand could help lower the level of unsold inventory and strengthen the market while keeping demand less speculative and more buy-for-use focused.
Risk management policies can be implemented at every level from government, developers to financial institutions working together to create a clear and realistic forecast of supply and demand to safeguard a country from real estate bubbles. It requires diligence in monitoring the market and a level of market transparency to ensure that bubbles do not occur. Land costs is a crucial part of the development process as, today, it represents the largest cost of any project. Developers should cautious to ensure that land prices they purchased are going to be affordable to their target segments and study their target customer group to ensure that enough real demand exists as compared to supply. As land prices continue to rise, especially in prime locations, the land price to product price value proposition will need to be more scrutinised.
Rising prices for land near future mass transit lines and in neighbouring provinces drove the average land price in Greater Bangkok to a 32.3% year-on-year increase in the second quarter of 2018.
The Real Estate Information Center (REIC) on Friday reported the top five locations where prices of undeveloped land rose the most in the second quarter compared with the same period last year.
They were led by the Phra Khanong-Bang Na-Suan Luang-Prawet area, where prices were up 53%, followed by Nakhon Pathom with a rise of 39.1%.
In third was Ratburana-Bang Khun Tien-Thung Khru-Bang Bon-Jom Thong with a rise of 38.2%, and Samut Sakhon came in fourth with an increase of 27.4%.
Inner Bangkok locations where land prices per square wah topped 3.17 million last year saw the fifth-highest increase at 20.1%.
The REIC found that land prices in locations tabbed for future mass transit lines were 52.1% higher than those in locations where no mass transit is planned.
At the same time, land prices in locations where a mass transit line or extension was under construction were 32.1% higher, and those in locations where mass transit lines currently operate were 24.2% higher.
Among locations where mass transit lines currently operate or are planned for construction, locations along the skytrain’s Sukhumvit Line saw the highest increase in land prices at 26.8%.
Close behind were prices for land near the Orange Line from Thailand Cultural Center to Min Buri (up 23.5%), the Dark Red Line from Hua Lamphong to Maha Chai (up 21.4%), the Blue Line route of Bang Sue-Tha Phra-Hua Lamphong-Bang Kae (up 21.3%) and the skytrain’s Silom Line (up 21.2%).
The REIC also did an analysis of changes in price for undeveloped land by categorising by city zone, which designates land use. The centre found that the highest year-on-year increase in land prices was in high-density residential areas (up 56.1%).
That was followed by land in industrial areas, where prices rose 29.8%. Land in community residential areas or in Pathum Thani, Nakhon Pathom and Samut Sakhon saw a rise of 19.7% in land prices.
Land in low-density residential areas saw an increase of 13.1% in price. Land prices in commercial zones rose 6.6%, while land in medium-density residential areas had a rise of 3.6% in price. Land prices in agricultural areas rose 2.6%.
Most Common Mistakes Of Real Estate Photography
One of the most common phrases known to man is a picture is worth a thousand words. Therefore, when trying desperately to sell a property, both agents and homeowners most genuinely consider the extreme importance in the pictures of the actual home being listed. Paying strict attention to detail is a valuable factor to making sure the property in the image gets properly illuminated, and makes the viewer of the picture crave the home.
Maximizing Your Photography
Here are some great tips on how to withdraw from the five most common real estate photography mistakes. An image of the property your selling being blurry is one of the most familiar inaccuracies. The reason why this happens is because most people try to take professional pictures with their hands, neglecting the fact that most hands slightly shake when you try to restrain them from moving.
Use a Tripod
Buying a tripod could be the best solution to this problem because it deletes the shakiness of your hands. It’s also very cheap and could be great for the interior shots needed to give some much needed sharpness to the image. Also, try your best to get rid of any clutter lying around that can potentially distract probable buyers from the details you’re trying to capture with the picture.
Focus on the Horizon
You should definitely focus on the horizon specifics of the picture as well. Take a stroll through your mind and try to think of any picture that looked good or was alluring when something within the image was crooked. It doesn’t happen often. When aiming at the house that you want taken, use grid lines to make sure the building or property isn’t crooked. Remember attention to detail is a great way to avoid future problems in advertising a specific home.
Turn Off Flash
By turning off the installed flash of the camera sometimes you can avoid unattractive reflections off of mirroring surfaces. Using natural light from the sun gives pictures a more prevailing look than using the flash for most pictures that aren’t in the dark.
Think About Space
The composition of the picture can also be an intriguing way to reel in potential buyers and customers. You should always get as much space in view whenever you are framing a specific shot. One of the veteran sneaky tricks in doing this is to never add ceilings or wall dividers within the picture because it gives the image some sort of an illusion to how roomy the interior space actually is. This small tip can definitely add more people to the interested list.
Use Wide Angle Lenses
In all honesty it’s extremely smart to invest in a wide angle lens just because it imprisons a lot more space inside the picture than any other type of lens. Another exclusive tip for not making these common mistakes is to never use your phone to take these type of pictures no matter how hi-def they are.