Posts Tagged ‘investments’

Own a condo or landed property for the price of a HDB!

Thursday, February 2nd, 2012

Ever dreamed of living in a bungalow/semi-D/terrace house, with space to call your own, and a garden for your kids and pet to play in, or even a place to put a pool? And set off fireworks during the New Year, or firecrackers during the Lunar New Year?

Or perhaps a high-rise condominium, with full facilities where you can swim, play tennis, have BBQ with your friends, and enjoy unblock views from your apartment?

Or for the sea lovers, own a house right by the sea, where you can dock your own yacht!

And all this, for the price of a HDB flat?

It is possible. A 1615sqft/150sqm condo the price of a 3-room HDB (700sqft/65sqm) in prime areas like Queenstown, ora landed property or a penthouse for the price of a 5-room HDB.

Recently, there’s been an increasing number of Singaporeans, PRs, and even expats, who have been buying property in Iskandar Malaysia, with most buying in the areas just north of Tuas (ie. Nusajaya). Unlike JB at Woodlands checkpoint, the developments north of Tuas are organized and well-planned. Several developers bought up huge chunks of land, and then developed their own townships, with amenities like shopping malls and so on.

This is in line with the Malaysian Government’s plans to develop Johor into a vibrant city, consisting of a Medical Hub (eg. Thomson Medical), Educity* (eg. Newcastle Medical School, Marlborough College UK, Netherlands Maritime Institute of Technology), Entertainment (eg. Legoland, Hello Kitty Indoor amusement Park, Johor Premium Outlets, Pinewood Studios UK), and Financial & Industrial areas. Their own Johor administrative offices have also moved into the new area.

But I work in Singapore. Whats the use of owning a property in Malaysia?

Well, there are a few groups of people who buy property in Iskandar.

One group consists of mainly Singaporeans or Malaysians (Singapore PR) who are willing to commute into Singapore via tuas checkpoint daily, in exchange for enjoying a bigger house or condo (their space), and spending RM instead of SGD. There are various ways of getting to/from Singapore. Some drive, while others take the Causeway Link Bus which brings you to Jurong East Interchange, and there is also a bus company that sends kids to their Singapore schools in the morning.

Another group buys property as a weekend home or a future retirement home (renting it out in the meantime). Imagine, it’s tough to retire in Singapore, as the cost of living is so high. However, if you have a property in Malaysia, by the time you retire, your mortgage would have been paid off (through rental or earned income), and if you sell/rent your HDB flat, you would have a comfortable sum of money to live on. Definitely more than what CPF Life can provide for you.

There’s also a third group, which consists of expats working in Singapore (and also in Malaysia).

When Rochelle and Geert Hulst and their two children, Eloise (6) and Alex (5), decided to stay in Singapore for the long term and find their own home, they faced a tricky decision: buy a three-bedroom 1,200-square-foot apartment at Reflections, with its buzzing location near HarbourFront, or buy a 17,000-square-foot piece of land in tranquil Malaysia and build the house of their dreams for a quarter of the price. Read more …

But is Malaysia safe?

Not every country is perfectly safe. Even Singapore has its fair share of crime. However, Nusajaya in general, is better patrolled and guarded than the older side of JB. Also, they are stepping up security in the area, and Nusajaya consists of a very large % of foreign investments (ie. Added pressure for their Government to ensure better security).

Also, most of the developments are gated and guarded, even the landed properties.

Malaysian authorities maintain crime is on the decline but Mr Wan conceded the ‘negative perception’ remains. Given that foreigners are a big target of its high-end homes, UEM Land’s focus on ensuring better security for Nusajaya which spans 24,000 acres and is one of Iskandar’s five flagship zones, is not surprising. The state administrative offices are located there as are attractions such as Legoland which is slated to launch in September.

Mr Wan said nine out of ten buyers of UEM Land’s waterfront properties in Puteri Harbour are foreigners. In its East Ledang and Horizon Hills projects, they comprise 70 and 50 per cent, respectively.

Buying a house in Malaysia might not be everybody’s cup of tea, but at least now, for those who might find themselves priced out of the market, there is an alternative option for consideration.


Hey, even our PM is all smiles about Iskandar!

Check out this site if you wanna find out more.

* Can Malaysia support so many Universities in Educity? What’s interesting to note is, even though there are quite a number of Universities, each only offer something specialized in a certain field. For example, Newcastle offers only medical courses, while Netherlands Maritime Institute of Technology offers transport, shipping, seafaring, maritime and logistics management courses. Other universities likewise only has a certain department here.

How to make HDB housing affordable (Part 1)

Thursday, May 5th, 2011

My Proposed Solutions – Plan A

(This is a continuation of a previous post.)

This is based on the existing housing system and policies.

1. Fix the Valuation process. The current valuation system is as mentioned previously, a big part of what has caused housing prices to balloon.

Yes, the surveyors are independent from HDB, and should value the property value fairly. However, they should stop trying to include COV prices with every new valuation. How can a flat cost $15-$20k more in one month? It’s human nature to always want to sell your flat above valuation. That doesn’t mean that the flat’s value is such.

2. Raise the HDB income Ceiling. Doing this will allow more people to be eligible for HDB loans and housing grants. This would lower their down payment to 10%, and with the grants, this sum is more attainable. Furthermore, the only cash they have to fork out upfront is the COV. (Bank loans require 5% cash). On top of that, interest rates will be pretty steady at 2.6% per annum.

3. Come up with new kinds of flats. Actually, HDB already has shown some flexibility in this area. I viewed the Dawson floor plans some time back, and they allowed different configurations for their new 4-room flat.

You could choose to have 2 bedrooms and 1 larger living room (for when you do not yet have kids), and then subdivide an extra room out of the living room in the later part of life (for when you have 2 kids wanting their own rooms), or simply get rid of all the rooms except the master bedroom (for when your children have moved out, and now have kids, so that there’s more space for the extended family to mingle during visits).

My suggestion is a modification of the above – Let home owners have a home that can grow with them. Instead of selling a 4-room flat, package it in a 2+1 configuration – A 2 bedroom flat connected to a studio via a door in the middle which can be locked on both sides. (similar to the connecting doors in hotel rooms). Locking it creates 2 flats, while leaving it makes it a single unit. It takes up exactly the same floor area and has exactly the same number of toilets and room. The only difference is that it has two separate main entrances.

What’s the point of selling these kinds of flats? Refer to the diagram below, and consider the following:

    Stage 1 A young couple can choose to live in the studio first (yellow), and then rent out the 2 bedroom flat (brown). The rental can help pay for their mortgage + some extra cash*, and help them save money to start a family.

    Stage 2 When their first kid comes along, they can then move to the 2 bedroom flat (brown), and then rent out the studio (yellow). Their rental income will decrease, but it’ll still help cover most of their mortgage, with the rest payable through CPF*, leaving them enough money to raise a family.

    Stage 3 Another kid comes along, and soon their kids are old enough to have their own rooms. The studio (with the connecting door) can then be used as the master bedroom, and each kid can have their own room. At this point, there is no rental income. But by this time, the parents should have established their careers, and should earn enough.

    Stage 4 The kids have grown up and have married. The nest feels empty now. The couple can then choose to retire in the studio (yellow), and rent out the 2 bedroom flat (brown). (Or live in the 2 bedroom flat and rent out the studio.) The rental becomes their ‘retirement income’.

In this way, the flat grows with the family’s needs, providing rental income to cover their mortgage when they first start out, and in old age, provides income for their retirement. At the same time, since not all their OA is used to pay for the flat, there is actually some money to contribute to the minimum sum.

Note that the above scenario does not take into account the fact that rental income will increase as the years go by.

With the Additional Housing Grants available, the lower income will also have the chance to get a 2+1 (4rm flat), and be able to service most of the mortgage with the rental. This beats limiting them to getting a 2-room flat, and then never being able to upgrade due to limited funds. Of course different flat configurations like 1+1 (3rm flat) or 2+2 (5rm flat) can also be offered to suit different income levels.

Some may question, “you can already rent out your spare rooms currently, so why divide the flat into 2 flats?” The answer is simply this: Privacy leads to higher rents. Room rentals only fetch about $500-$600k. And for this amount, you lose your privacy, you have to pay for their utility usage, and sometimes, they mess up your house or kitchen.

Besides, like I mentioned before, it’s still takes up the same space as an existing 4-room flat! I mean, if the Government intends to open the doors to foreigners, at least let the locals benefit in some way.

*Based on a 4room flat price of $350k, 30 year loan @ 2.6% interest
– Monthly Installment = $1,261
– Current 2 bedroom flat rental = $1.5-$2k
– Current 1 bedroom flat rental – $1.1k (based on 1 rental. It’ll probably be lower, at perhaps $800)
– Figures based on HDB Website

And that’s the end of Plan A. Got to hit the sack. Need to work tomorrow. Check back tomorrow night for Plan B.

*Update* Plan B has been posted.