Sunday, August 20, 2017
Wednesday, August 16, 2017
Residential units in integrated developments advised to form sub-management corporations
Those staying in integrated developments could choose to form their own sub-MCs (management corporations) to focus on issues related to the management of the residential segment of the development.
Kuala Lumpur City Hall (DBKL) Commissioner of Buildings (COB) legal officer Md Azmi Mohd Shari said currently there is a project in Mont’Kiara that will see the formation of a sub-MC this year.
“As integrated developments comprise many components, it is difficult for the management corporation of the whole development to take care of every stakeholder’s rights or to handle various conflicts that may arise,” he said during his talk at today’s “Strata Management Dialogue 2017” organised by Rehda Institute.
For instance, he cited the example of residents in one of KL’s integrated developments which comprises residences, a shopping mall and hotel, are jumping because the developer decided to divide the maintenance cost of the whole development including for the maintenance of the mall and hotel, among the residents.
“This might not be fair to the residents as the common area and facilities are huge in an integrated development, and not every space could be used by the residents,” Md Azmi explained.
Hence, there is a need to form a sub-MC to look at this issue and to discuss on a reasonable rate, with the developer or property owners, he added.
In his session entitled “Strata Living in Greater KL”, Md Azmi also shared his views on short-stay operations in stratified residential properties.
He noted that if the majority of residents in a residential development agree to have short-stay activities within their community, they could have enact bylaws covering the matter into their house rules. However, residents should take note that house rules can be changed from time to time Md Azmi said.
As for commercial properties such as serviced apartments, short-stay businesses will not be an issue as the property itself is designed for commercial usage, but the operator needs to get the authorities’ approval before starting the business. For such property owners who are interested to rent out their units for short stays, they could get the necessary approvals from the Tourism and Culture Ministry for their properties to be rented out as home-stays.
Kuala Lumpur City Hall (DBKL) Commissioner of Buildings (COB) legal officer Md Azmi Mohd Shari said currently there is a project in Mont’Kiara that will see the formation of a sub-MC this year.
“As integrated developments comprise many components, it is difficult for the management corporation of the whole development to take care of every stakeholder’s rights or to handle various conflicts that may arise,” he said during his talk at today’s “Strata Management Dialogue 2017” organised by Rehda Institute.
For instance, he cited the example of residents in one of KL’s integrated developments which comprises residences, a shopping mall and hotel, are jumping because the developer decided to divide the maintenance cost of the whole development including for the maintenance of the mall and hotel, among the residents.
“This might not be fair to the residents as the common area and facilities are huge in an integrated development, and not every space could be used by the residents,” Md Azmi explained.
Hence, there is a need to form a sub-MC to look at this issue and to discuss on a reasonable rate, with the developer or property owners, he added.
In his session entitled “Strata Living in Greater KL”, Md Azmi also shared his views on short-stay operations in stratified residential properties.
He noted that if the majority of residents in a residential development agree to have short-stay activities within their community, they could have enact bylaws covering the matter into their house rules. However, residents should take note that house rules can be changed from time to time Md Azmi said.
As for commercial properties such as serviced apartments, short-stay businesses will not be an issue as the property itself is designed for commercial usage, but the operator needs to get the authorities’ approval before starting the business. For such property owners who are interested to rent out their units for short stays, they could get the necessary approvals from the Tourism and Culture Ministry for their properties to be rented out as home-stays.
Friday, August 11, 2017
Monday, July 17, 2017
Seremban 2 attracting more buyers from the Klang Valley
In the early stages of its development, 95% of IJM Land Bhd’s Seremban 2 purchasers were from Seremban or neighbouring areas. Over the years however, as infrastructure development and amenities improved, many people from the Klang Valley had chosen to settle down here.
“The buyers’ profile has changed over the years. Now around 20% of buyers are from the Klang Valley who are working in Bangi, Cyberjaya, Kuala Lumpur and even Petaling Jaya,” IJM Land Bhd central region senior general manager Datuk Hoo Kim See told TheEdgeProperty.com.
“With the improved infrastructure, amenities and road network, Seremban 2 has become a place for work, play and stay and is especially suitable for families,” said Hoo, who himself moved from KL to Seremban 2 in 2000.
The 22-year-old Seremban 2 initially spanned 2,300 acres and was a joint venture between IJM Land and the Negeri Sembilan state government. It serves as an extension to the congested Seremban town.
The satellite town is currently 90% completed with 13,000 homes and over 1,000 commercial properties.
“But with an additional 1,500 acres purchased in 2000 for the development of Seremban 2 Heights, it has now expanded into a 3,800-acre township with a mix of offerings,” Hoo said.
Upcoming launches
The developer will be offering more mid-range landed homes and a project known as Safira Apartment in Seremban 2 this year.
It has launched the final phase of Rimbun Vista (Rimbun Vista 2), two months ago and has seen 75% of the 187 double-storey superlink homes of 22ft by 70ft and 22ft by 80ft, taken up.
This low density guarded development is located near the North-South highway with easy access to the Ainsdale and Seremban tolls. It features a four-acre central park with basketball court and 1.5km jogging and cycling path.
“An upcoming project Rimbun Harmoni is slated to be launched in August. The site is situated on elevated ground offering a good view of the hill park,” he said.
Rimbun Harmoni comprises 228 units of double-storey terraced homes measuring 20ft by 70ft and 22ft by 70ft, with selling prices from RM528,000 onwards.
Another double-storey terraced housing project offering over 105 homes measuring 22ft by 65ft will be launched this year, but the names and unit prices have yet to be determined.
IJM Land also plans to launch Safira Apartment by year end offering 242 apartment units with a built-up size of 820 sq ft. The indicative selling price starts from RM250,000.
Safira Apartment is located close to the Seremban district administration centre, the State Court Complex, a health clinic and the Seremban district police headquarters as well as the Fire and Rescue Services headquarters.
Hoo said the affordable pricing and its location where various government agencies are, have attracted the attention of buyers.
Seremban 2 comprises 18 residential communities, seven schools, a 15-acre city lake park, a sports complex and commercial business parks.
Accessibility in and within Seremban 2 is via a six-lane dual carriageway that eases traffic flow even during peak hours.
There is also a 30-acre adventure hill park where residents could enjoy panoramic views of Seremban 2.
Nearby amenities include malls like Mydin, Aeon shopping centre and NSK Hypermarket. Food and beverage choices, government and private hospitals are within 15 to 30 minutes’ drive.
“All the infrastructure developments (parks, schools and roads) were planned from day one in our master plan and this is what makes Seremban 2 a success,” he said.
Property transactions in Seremban 2 were slow in the first five years, but once the early phases were delivered and the infrastructure was completed, sales increased significantly.
The population in the self-contained township has also increased to 62,000 people now. Community activities are regularly held to bring the residents together. For instance, the IJM Run which will be held in August 13 has attracted 8,000 participants this year within two months’ of registration compared to 1,000 participants five years ago.
Capital appreciation
Seremban 2 purchasers have seen the value of their properties double or triple over the years. According to Hoo, the double-storey semi-dee units known as Acacia that were sold at RM350,000 in 2008 are now going for RM1.1 million.
Meanwhile, Kalista Residence condominium units of 926 sq ft have seen their price climb 28% to RM320,000 from RM250,800 during launch in 2013.
The higher-end projects including the two-storey Sri Carcosa bungalows are now asking for over RM2 million. The cheapest selling price back in 2006 was around RM600,000.
In terms of rental, Hoo said there is strong demand from students from the universities and colleges in Nilai and people working in the neighbouring industrial areas. “The rental yields are between 4% and 6%, depending on property type,” he added. For example, a double-storey Saujana Duta semi-dee unit is fetching a monthly rental of RM4,500, generating 4% yield.
The three-storey shop offices in Biz Avenue could be rented out for RM8,000 and above, generating 10% to 14% yield while rents for the double-storey shop offices at Uptown Avenue are around RM4,000 to RM5,000, generating 8% to 10% rental yield.
“We expect prices to rise further in the future. However, it still depends on market sentiment, inflation and economic growth,” he opines.
Hoo also believes the KL-Singapore High Speed Rail which will have a transit station in Seremban will boost the growth of the township further.
“The buyers’ profile has changed over the years. Now around 20% of buyers are from the Klang Valley who are working in Bangi, Cyberjaya, Kuala Lumpur and even Petaling Jaya,” IJM Land Bhd central region senior general manager Datuk Hoo Kim See told TheEdgeProperty.com.
“With the improved infrastructure, amenities and road network, Seremban 2 has become a place for work, play and stay and is especially suitable for families,” said Hoo, who himself moved from KL to Seremban 2 in 2000.
The 22-year-old Seremban 2 initially spanned 2,300 acres and was a joint venture between IJM Land and the Negeri Sembilan state government. It serves as an extension to the congested Seremban town.
The satellite town is currently 90% completed with 13,000 homes and over 1,000 commercial properties.
“But with an additional 1,500 acres purchased in 2000 for the development of Seremban 2 Heights, it has now expanded into a 3,800-acre township with a mix of offerings,” Hoo said.
Upcoming launches
The developer will be offering more mid-range landed homes and a project known as Safira Apartment in Seremban 2 this year.
It has launched the final phase of Rimbun Vista (Rimbun Vista 2), two months ago and has seen 75% of the 187 double-storey superlink homes of 22ft by 70ft and 22ft by 80ft, taken up.
This low density guarded development is located near the North-South highway with easy access to the Ainsdale and Seremban tolls. It features a four-acre central park with basketball court and 1.5km jogging and cycling path.
“An upcoming project Rimbun Harmoni is slated to be launched in August. The site is situated on elevated ground offering a good view of the hill park,” he said.
Rimbun Harmoni comprises 228 units of double-storey terraced homes measuring 20ft by 70ft and 22ft by 70ft, with selling prices from RM528,000 onwards.
Another double-storey terraced housing project offering over 105 homes measuring 22ft by 65ft will be launched this year, but the names and unit prices have yet to be determined.
IJM Land also plans to launch Safira Apartment by year end offering 242 apartment units with a built-up size of 820 sq ft. The indicative selling price starts from RM250,000.
Safira Apartment is located close to the Seremban district administration centre, the State Court Complex, a health clinic and the Seremban district police headquarters as well as the Fire and Rescue Services headquarters.
Hoo said the affordable pricing and its location where various government agencies are, have attracted the attention of buyers.
Seremban 2 comprises 18 residential communities, seven schools, a 15-acre city lake park, a sports complex and commercial business parks.
Accessibility in and within Seremban 2 is via a six-lane dual carriageway that eases traffic flow even during peak hours.
There is also a 30-acre adventure hill park where residents could enjoy panoramic views of Seremban 2.
Nearby amenities include malls like Mydin, Aeon shopping centre and NSK Hypermarket. Food and beverage choices, government and private hospitals are within 15 to 30 minutes’ drive.
“All the infrastructure developments (parks, schools and roads) were planned from day one in our master plan and this is what makes Seremban 2 a success,” he said.
Property transactions in Seremban 2 were slow in the first five years, but once the early phases were delivered and the infrastructure was completed, sales increased significantly.
The population in the self-contained township has also increased to 62,000 people now. Community activities are regularly held to bring the residents together. For instance, the IJM Run which will be held in August 13 has attracted 8,000 participants this year within two months’ of registration compared to 1,000 participants five years ago.
Capital appreciation
Seremban 2 purchasers have seen the value of their properties double or triple over the years. According to Hoo, the double-storey semi-dee units known as Acacia that were sold at RM350,000 in 2008 are now going for RM1.1 million.
Meanwhile, Kalista Residence condominium units of 926 sq ft have seen their price climb 28% to RM320,000 from RM250,800 during launch in 2013.
The higher-end projects including the two-storey Sri Carcosa bungalows are now asking for over RM2 million. The cheapest selling price back in 2006 was around RM600,000.
In terms of rental, Hoo said there is strong demand from students from the universities and colleges in Nilai and people working in the neighbouring industrial areas. “The rental yields are between 4% and 6%, depending on property type,” he added. For example, a double-storey Saujana Duta semi-dee unit is fetching a monthly rental of RM4,500, generating 4% yield.
The three-storey shop offices in Biz Avenue could be rented out for RM8,000 and above, generating 10% to 14% yield while rents for the double-storey shop offices at Uptown Avenue are around RM4,000 to RM5,000, generating 8% to 10% rental yield.
“We expect prices to rise further in the future. However, it still depends on market sentiment, inflation and economic growth,” he opines.
Hoo also believes the KL-Singapore High Speed Rail which will have a transit station in Seremban will boost the growth of the township further.
Saturday, July 8, 2017
Common problems in a sub sale transaction
A typical transaction for a sub-sale and purchase agreement (SPA) of an immovable property (whether a landed property or strata titled property) in the secondary market is normally divided into three stages:
The pre-SPA stage.
During the pre-SPA stage, the investigations carried out at this stage are basically on the property and the vendor.
When a vendor sells his property, it is reasonable to believe that he wants to receive the proceeds of sale in the shortest possible time. On the other hand, when a purchaser buys a property, he wants to get early vacant possession of the property, or get vacant possession within the contemplated completion date of the transaction.
At the pre-SPA stage, it is prudent for the real estate agent to conduct due diligence on the property and the vendor with the assistance of a solicitor, so that the agent may advise his vendor client and also provide the relevant information to the purchaser.
Since the agents and negotiators are in the front line before the solicitor prepares the draft SPA, it is prudent for them to investigate the property and the vendor.
These are some of the issues and decisions that may affect the purchaser and the vendor’s decision to go through with the transaction.
Who is the registered proprietor of the property?
If the property is still in the developer’s name, the original purchaser (aka the vendor) may write to the developer to do a direct transfer of the property from the developer to the second purchaser. However, if the developer does not agree to do a direct transfer in favour of the second purchaser, then a Memorandum of Transfer will be signed between the original purchaser and the developer. At the same time, the original purchaser will sign a Memorandum of Transfer with the second purchaser.
After both Transfers have been duly adjudicated and stamped, both Transfers will be sent to the land office/registry for simultaneous registration, firstly from the developer to the first purchaser, and then from the first purchaser to the second purchaser.
Some developers accept requests for direct transfer, but others will not. If the property is subject to a restriction in interest, then generally the developer may not agree to do a direct transfer to the second purchaser as the developer would have obtained a blanket consent to transfer the property to the first purchaser.
Where the property is subject to a restriction in interest, the developer will firstly transfer the property to the first purchaser. After the first purchaser has been registered as proprietor, then only can he sell to the second purchaser subject to obtaining the consent of the State Authority. This type of transaction will exceed the normal completion period of three months.
The owner of the property is deceased.
When a person dies and has left a will, then the executor of the estate of the deceased person has to apply for a grant of probate to enable him to deal with the property of the deceased person.
When a person dies without leaving a will, then the administrator of the estate of the deceased person has to apply for grant of letters of administration to enable him to deal with the property of the deceased person.
When the owner is deceased, we need to find out if the executor or administrator has been duly authorized by the court to deal with or sell the property of the deceased owner through the grant of probate or the grant of letters of administration respectively.
The executor or administrator of a deceased’s estate has the capacity to enter into a sale and purchase agreement to dispose of the property of the deceased owner.
Without the grant of probate or the grant of letters of administration, there is no authority to sell, and the SPA will not be signed. Parties are to ensure that all the legal formalities have been duly complied by the executor or the administrator of the estate of the deceased owner so that the completion date of the SPA to be eventually signed may be ascertained.
Who has custody of the title to the property?
Where the property has not been transferred to the vendor, it will be desirable to inquire whether the developer or the vendor has the custody of the title.
If the title is found to be lost or missing, then it may not be advisable to sign the SPA. It may take a few months from the time of application to obtain a new title from the relevant authority.
If the parties proceed to sign a conditional SPA despite the lost or missing title, then the process of completion of the SPA will exceed the normal completion period.
The identity of the vendor.
If the vendor is a foreigner, and if his name in his identity card and in his passport differs, then the purchaser’s financier may require various documentation to be executed by the vendor to declare and state that the person named in the identity card and in the passport are one and the same person.
If such a discrepancy is discovered from the beginning, then it should be rectified immediately to avoid delays in the disbursement of the purchaser’s financier’s loan.
To ascertain the correct and property identity of the vendor is important to ensure that there are no unnecessary delays in the completion date of the SPA.
Check the title for the correct express condition where the category of land use is “building”.
Where the property being sold is an office unit, it is important to ensure that the express condition stated in the title does not state “untuk rumah kediaman’ (for residential purpose). The correct description is “untuk pejabat” (for commercial purpose).
In one SPA transaction, the vendor wanted to dispose an office unit. After the purchaser had placed a deposit to buy, he discovered that the express condition in the title stated ‘untuk rumah kediaman’ when it should state ‘ untuk pejabat ‘. This could be due to an inadvertent mistake on the part of the relevant authority. The purchaser and his solicitors objected.
The SPA had to be drafted in such a way to indicate that the vendor was given a specific period of time to rectify the error on the title, failing which the SPA would be terminated. There is thus an element of uncertainty which would extend the completion period of the transaction.
Property held on leasehold tenure.
If it is a leasehold property with a restriction-in-interest endorsed on the title against the transfer and the charge of the property without the consent of the State Authority, then it is imperative for the vendor to apply and obtain the consent to transfer from the State Authority before the purchaser may proceed to buy the property from the vendor.
Generally, the application for the consent to transfer is approved by the State Authority. However, if the vendor is a bumiputra and the purchaser is a non-bumiputra, then there could be a risk that the State Authority may not approve such application. If further appeals are not entertained by the State Authority, then the sale and purchase agreement will become ineffective and will be terminated.
Where the property of the vendor is caveated.
If a land search on the property reveals that a private caveat has been entered on the vendor’s property, then obviously the purchaser will not proceed with the signing of the sale and purchase agreement, unless the private caveat is first removed.
On the other hand, if the preliminary land search shows that there are no caveats on the property, then the parties will proceed with the signing of the sale and purchase agreement.
However, if after the sale and purchase agreement has been signed, and another land search subsequent thereto reveals that a caveat is lodged on the vendor’s property, then if the vendor fails to withdraw the caveat, then the sale and purchase agreement may be terminated and in such an event, the vendor will have to refund all monies paid towards the account of the purchase price to the purchaser and pay compensation to the purchaser, as the case may be.
Developer in liquidation.
There have been instances where after a housing project has been completed, but before the strata titles are transferred to the original purchasers, the housing developer company has gone into liquidation.
In such an event, a liquidator may be appointed and requested to act on behalf of the wound up housing developer company in handling the documentation pertaining to the execution of the memorandum of transfer in favour of and for the benefit of the original purchasers.
When an original purchaser does not intend to obtain registered ownership of his property but desires to sell it, then he has write to the liquidator to seek its consent to a direct transfer in favour of the second purchaser.
Upon receipt of such a request, the liquidator will conduct a verification of ownership exercise, and upon being satisfied that the legal formalities and requirements have been complied with by both the original purchaser (currently in his capacity as vendor) and the second purchaser and are found to be in order, and after payment of an administrative fee by the original purchaser to the liquidator, then the process of execution of the direct transfer by the liquidator in favour of the second purchaser may commence and proceed accordingly.
In the above situation, it will be prudent for a due diligence to be undertaken before the original purchaser decides to sell and the second purchaser decides to purchase the property so as to avoid or expect unnecessary delays in the intended sale and purchase transaction.
- The pre-SPA stage;
- The formation of the SPA stage;
- The completion of the SPA stage.
The pre-SPA stage.
During the pre-SPA stage, the investigations carried out at this stage are basically on the property and the vendor.
When a vendor sells his property, it is reasonable to believe that he wants to receive the proceeds of sale in the shortest possible time. On the other hand, when a purchaser buys a property, he wants to get early vacant possession of the property, or get vacant possession within the contemplated completion date of the transaction.
At the pre-SPA stage, it is prudent for the real estate agent to conduct due diligence on the property and the vendor with the assistance of a solicitor, so that the agent may advise his vendor client and also provide the relevant information to the purchaser.
Since the agents and negotiators are in the front line before the solicitor prepares the draft SPA, it is prudent for them to investigate the property and the vendor.
These are some of the issues and decisions that may affect the purchaser and the vendor’s decision to go through with the transaction.
Who is the registered proprietor of the property?
If the property is still in the developer’s name, the original purchaser (aka the vendor) may write to the developer to do a direct transfer of the property from the developer to the second purchaser. However, if the developer does not agree to do a direct transfer in favour of the second purchaser, then a Memorandum of Transfer will be signed between the original purchaser and the developer. At the same time, the original purchaser will sign a Memorandum of Transfer with the second purchaser.
After both Transfers have been duly adjudicated and stamped, both Transfers will be sent to the land office/registry for simultaneous registration, firstly from the developer to the first purchaser, and then from the first purchaser to the second purchaser.
Some developers accept requests for direct transfer, but others will not. If the property is subject to a restriction in interest, then generally the developer may not agree to do a direct transfer to the second purchaser as the developer would have obtained a blanket consent to transfer the property to the first purchaser.
Where the property is subject to a restriction in interest, the developer will firstly transfer the property to the first purchaser. After the first purchaser has been registered as proprietor, then only can he sell to the second purchaser subject to obtaining the consent of the State Authority. This type of transaction will exceed the normal completion period of three months.
The owner of the property is deceased.
When a person dies and has left a will, then the executor of the estate of the deceased person has to apply for a grant of probate to enable him to deal with the property of the deceased person.
When a person dies without leaving a will, then the administrator of the estate of the deceased person has to apply for grant of letters of administration to enable him to deal with the property of the deceased person.
When the owner is deceased, we need to find out if the executor or administrator has been duly authorized by the court to deal with or sell the property of the deceased owner through the grant of probate or the grant of letters of administration respectively.
The executor or administrator of a deceased’s estate has the capacity to enter into a sale and purchase agreement to dispose of the property of the deceased owner.
Without the grant of probate or the grant of letters of administration, there is no authority to sell, and the SPA will not be signed. Parties are to ensure that all the legal formalities have been duly complied by the executor or the administrator of the estate of the deceased owner so that the completion date of the SPA to be eventually signed may be ascertained.
Who has custody of the title to the property?
Where the property has not been transferred to the vendor, it will be desirable to inquire whether the developer or the vendor has the custody of the title.
If the title is found to be lost or missing, then it may not be advisable to sign the SPA. It may take a few months from the time of application to obtain a new title from the relevant authority.
If the parties proceed to sign a conditional SPA despite the lost or missing title, then the process of completion of the SPA will exceed the normal completion period.
The identity of the vendor.
If the vendor is a foreigner, and if his name in his identity card and in his passport differs, then the purchaser’s financier may require various documentation to be executed by the vendor to declare and state that the person named in the identity card and in the passport are one and the same person.
If such a discrepancy is discovered from the beginning, then it should be rectified immediately to avoid delays in the disbursement of the purchaser’s financier’s loan.
To ascertain the correct and property identity of the vendor is important to ensure that there are no unnecessary delays in the completion date of the SPA.
Check the title for the correct express condition where the category of land use is “building”.
Where the property being sold is an office unit, it is important to ensure that the express condition stated in the title does not state “untuk rumah kediaman’ (for residential purpose). The correct description is “untuk pejabat” (for commercial purpose).
In one SPA transaction, the vendor wanted to dispose an office unit. After the purchaser had placed a deposit to buy, he discovered that the express condition in the title stated ‘untuk rumah kediaman’ when it should state ‘ untuk pejabat ‘. This could be due to an inadvertent mistake on the part of the relevant authority. The purchaser and his solicitors objected.
The SPA had to be drafted in such a way to indicate that the vendor was given a specific period of time to rectify the error on the title, failing which the SPA would be terminated. There is thus an element of uncertainty which would extend the completion period of the transaction.
Property held on leasehold tenure.
If it is a leasehold property with a restriction-in-interest endorsed on the title against the transfer and the charge of the property without the consent of the State Authority, then it is imperative for the vendor to apply and obtain the consent to transfer from the State Authority before the purchaser may proceed to buy the property from the vendor.
Generally, the application for the consent to transfer is approved by the State Authority. However, if the vendor is a bumiputra and the purchaser is a non-bumiputra, then there could be a risk that the State Authority may not approve such application. If further appeals are not entertained by the State Authority, then the sale and purchase agreement will become ineffective and will be terminated.
Where the property of the vendor is caveated.
If a land search on the property reveals that a private caveat has been entered on the vendor’s property, then obviously the purchaser will not proceed with the signing of the sale and purchase agreement, unless the private caveat is first removed.
On the other hand, if the preliminary land search shows that there are no caveats on the property, then the parties will proceed with the signing of the sale and purchase agreement.
However, if after the sale and purchase agreement has been signed, and another land search subsequent thereto reveals that a caveat is lodged on the vendor’s property, then if the vendor fails to withdraw the caveat, then the sale and purchase agreement may be terminated and in such an event, the vendor will have to refund all monies paid towards the account of the purchase price to the purchaser and pay compensation to the purchaser, as the case may be.
Developer in liquidation.
There have been instances where after a housing project has been completed, but before the strata titles are transferred to the original purchasers, the housing developer company has gone into liquidation.
In such an event, a liquidator may be appointed and requested to act on behalf of the wound up housing developer company in handling the documentation pertaining to the execution of the memorandum of transfer in favour of and for the benefit of the original purchasers.
When an original purchaser does not intend to obtain registered ownership of his property but desires to sell it, then he has write to the liquidator to seek its consent to a direct transfer in favour of the second purchaser.
Upon receipt of such a request, the liquidator will conduct a verification of ownership exercise, and upon being satisfied that the legal formalities and requirements have been complied with by both the original purchaser (currently in his capacity as vendor) and the second purchaser and are found to be in order, and after payment of an administrative fee by the original purchaser to the liquidator, then the process of execution of the direct transfer by the liquidator in favour of the second purchaser may commence and proceed accordingly.
In the above situation, it will be prudent for a due diligence to be undertaken before the original purchaser decides to sell and the second purchaser decides to purchase the property so as to avoid or expect unnecessary delays in the intended sale and purchase transaction.
Sunday, June 25, 2017
House prices finally coming down?
However, the latest data from the Valuation and Property Services Department’s Property Market Report 2016 showed that the Malaysian House Price Index (HPI) had in the fourth quarter of 2016 (4Q2016) stood at 243.3 points, down by 1.8 points, or 0.7%, against 3Q2016.
This is the first quarterly decline since 4Q2008, when the HPI contracted by 2.4 points, or 1.83%, to 129 points from 131.4 points in 3Q2008. Since then, the index has been reflecting an escalation in prices, until now.
The report stated that the quarterly dip in 4Q2016 was attributed to the downtrend in prices experienced in most states, with the HPI in these states seeing negative growth of between 0.1% and 3.2%. Other states that have recorded a dip in the HPI include Penang (-3.2%), Sarawak (-1.9%), Sabah (-1.4%), Kuala Lumpur (-1.4%), Pahang (-1.2%), Perak (-0.9%), Kelantan (-0.5%), Selangor (-0.2%), Kedah (-0.1%) and Perlis (-0.1%).
Only three states — Johor (0.9%), Negeri Sembilan (0.9%) and Terengganu (1.8%) — recorded positive growth. Price movement in Melaka was unchanged.
“When the HPI records a decline, it means prices have registered a drop, so one can conclude that on the whole, prices have declined in 4Q2016 from the previous quarter, which is clearly a manifestation of the soft market condition,” he tells TheEdgeProperty.com.
He adds that the price dip could also be attributed to the lower net prices of some new property projects due to discounts via rebates, freebies and interest-free easy payment schemes offered by developers, although their official prices may not have dropped.
Looking ahead, Tang says it remains to be seen whether the drop in 4Q2016 is just a temporary blip or the start of a downtrend over the next few quarters. “My personal view is that the HPI will recover in 1Q2017 but will remain fairly flat through the year.”
However, Metro Homes Sdn Bhd director See Kok Loong thinks the HPI will continue to see gradual downtrend due to the soft market condition, which has also seen property owners lowering their asking prices.
“The increase in stamp duty for real estate transactions priced above RM1 million from 3% to 4% starting January 2018 and the impact of the goods and services tax (GST) as well as the China government’s curbs on capital outflows are expected to have an impact on the market,” he says.
See adds that there have been slightly more buying enquiries recently but for high-end properties, most people are still taking a “wait-and-see” stance as they believe the next general election will happen soon.
“Therefore, we believe that the high-end segment will remain soft until after the election, whereas affordable properties will continue to perform well,” he continues.
Is the worst over?
Nevertheless, to MIDF Research analyst Alan Lim, the market seems to be looking up and the drop in the HPI in the last quarter is only temporary. His confidence lies in the 5.6% growth recorded in the Malaysian economy in 1Q2017 — the fastest growth recorded in two years — against the 4.1% recorded in the same quarter last year.
“As the economy improves, income levels and visibility tend to be higher. Hence, we expect consumers to have higher confidence in buying property,” he says, adding that the rise in consumer confidence is expected to boost property sales and help sustain overall property prices going forward.
MIDF Research’s report on May 11 noted that the HPI grew by 5.6% y-o-y to 243.3 points in 4Q2016, although the growth was slower than the five-year average growth of 9.1%.
“There is some decline q-o-q but we think this should be temporary as the Malaysian economy has picked up. The outlook for property price growth is better in Greater KL (Selangor and KL) due to the urbanisation factor,” read the report.
The report also pointed out that the 1Q2017 consumer sentiment index (CSI), which improved to 76.6 points from 4Q2016’s 69.8 points and 1Q2016’s 72.9 points, suggests that the demand outlook for property among the potential buyers has improved and this should translate into better sales in 2017 as consumers are generally more optimistic and have indicated their cautiously ambitious spending plans.
House prices in Johor trend upwards
Despite the drop in transaction value and volume of residential property, house prices in Johor continue to rise.
The state recorded 26,186 residential property transactions in 2016, down by 15.69% from the previous year. The value of transactions also fell by 7.6% to RM8.58 billion from the previous year. The HPI for Johor grew 7.7% y-o-y in 4Q2016 and 0.9% q-o-q.
Metro Homes’ See opines that the increase in Johor house prices could be due to newly completed projects that were transacted at a higher price. However, Tang points out that the marginal rise in the HPI cannot be taken as an indication of a hot market for Johor, in view of the declines in both volume and value of residential transactions in the state last year.
He notes that all states registered declines in volume and value of residential property transactions in 2016, with the exception of Kelantan, which interestingly recorded a 16.4% increase in volume of transactions and a 7.2% increase in value of transactions.
“Perlis, which recorded a marginal 1.2% drop in volume of transactions, actually registered an 11.6% increase in the value of transactions,” he adds.
Residential property market yet to bottom
Going forward, Tang says the residential market in all states will remain soft in 2017. He thinks the market has yet to bottom and the soft market conditions will persist for the rest of this year and possibly the first half of next year. He says the decline in the volume and value of residential property transactions only just started in 2013 and 2015, respectively.
According to the National Property Information Centre’s data, the number of residential property transactions in 2013 was 59,210, down 8.06% from the 64,402 in the previous year, although the value was up 7.19% to RM16.22 billion in 2013.
The number of residential property transactions in 2015 was 59,490, an increase of 1.23% while the value of the transactions dropped 11.34% to RM10.35 billion.
“The outlook for the overall residential property market will remain soft in 2017 with continued declines in both volume as well as value of transactions, but prices are not expected to dip significantly,” Tang says.
According to the Property Market Report 2016, the volume of residential property transactions in Malaysia dropped by 16.61% last year to 49,608 transactions from 59,490 transactions in the previous year. Total transactions value in 2016 was down 9.51% to RM32.97 billion from RM36.46 billion in 2015.
Saturday, June 24, 2017
Tropicana Aman / Eco Sanctuary / Bandar Rimbayu
Tropicana Aman is a 863-acre, RM13 billion development.
Sinaria Shop Offices
Eco Sanctuary is a 309-acre, RM8 billion development.
Bandar Rimbayu is a 1,879-arce RM11 billion development..
Blossom Square Shop Offices
Canal City Background
The Selangor state government is set to gain an additional RM550 million under the new terms of agreement signed with Tropicana Corporation Berhad over the sale of an 1,172 acre land in Kuala Langat for RM1.3 billion in April 2013.
Mentri Besar Mohamed Azmin Ali said the state government is now entitled to a 9% share of the Gross Development Value (GDV) of the land, the payment period was shortened from 20 years to 12 years, and that Sapphire Index Sdn Bhd (SISB), wholly owned subsidiary of Tropicana, is barred from selling the land to third parties.
"Under these new terms, Mentri Besar Incorporated (MBI) estimates that the state government can gain an additional RM550 million in returns," Azmin told the state assembly today.
He said the estimated returns are calculated based on Tropicana's submission to Bursa Malaysia that the land, formerly known as Canal City, in Kuala Langat near Kota Kemuning has a GDV of about RM20 billion.
The land was initially sold for RM587 million at a value of RM18.50 per sq ft payable in 12-year installments, with the state government entitled to 5% GDV share and 3% profit share, amounting to a total of RM1.3 billion payable over 20 years.
However, 11 months after the sale and purchase agreement was signed between MBI and SISB, the latter sold 308.72 acres of land to Prominent Stream Sdn Bhd, a wholly-owned subsidiary of Eco World Development Sdn Bhd, at a value of RM35 per sq ft or RM470 million, with a net profit of RM170 million.
Azmin said the old agreement was lopsided to the advantage of Tropicana and the new MBI management had reviewed the terms so to better safeguard the state's interests.
"The new MBI management reviewed the terms so that the interests of the state government are protected, with fairer returns that are secured and guaranteed within a more acceptable period," he said.
Tuesday, June 20, 2017
More homes on auction but few takers
The number of homes that went under the hammer has been rising over the last few quarters, reflecting the overall property market slowdown. But for auctioneers, the auction market has been woefully uneventful with little interest from bidders. Is there cause for concern?
According to data from online auctions listings platform Auctionguru.com, auction residential properties have risen 14.4% to 6,225 cases in 1Q2017 from 5,442 cases recorded in the same period last year. In terms of value, the figure has climbed 31% to RM1.8 billion from RM1.375 billion in the first quarter of 2016 (1Q2016).
The uptrend has been gradual since 2Q2016, following a steep fall of 17% to 5,442 cases in 1Q2016, from 6,543 cases in 4Q2015.
Chia believes the current slumber will continue into the subsequent quarters due to the cascading effect emanated from the secondary market, where more property owners will be selling to realise their capital gains and restructure their investment portfolio.
“Thus, market supply will increase and it will be harder for owners to cash out. Consequently, some of the property owners who encounter financial constraint may eventually be forced to abandon their monthly financial commitment for their leveraged properties,” he explains.
Selangor, Johor and Perak top the list
Among all the states and federal territories — including Putrajaya and Labuan — Selangor, Johor and Perak have topped the list with the highest number of properties that went under the hammer in 1Q2017.
Selangor dominates with 2,272 properties worth RM784 million being put up for auction, making up about 36% of total auction cases in 1Q2017.
Johor and Perak registered 817 cases worth RM227 million and 656 cases worth RM61 million, respectively, making up about 13% and 11% of the total cases. Putrajaya, Labuan and Perlis have the least number of auction cases, with just 6, 8 and 12 auction cases, respectively.
In terms of value, Selangor, KL and Johor led the pack. KL had 484 properties worth RM336 million, while Penang had 558 properties valued at RM128 million put up for auction in 1Q2017.
Chia notes that Selangor has recorded the highest number of foreclosures in the residential property segment as the state is highly developed and is the most densely populated in Malaysia. Therefore, property transactions in the state will tend to be higher.
He also spotted a rising number of luxury landed homes and newly completed high-rise homes being put up for auction.
“Our records showed that quite a number of units at The Raffles Suites located at Bandar Uda Utama in Johor, which was completed about one year ago, were being foreclosed in 1Q2017.
“Some of the reserve prices stipulated for units in that property were almost equal to or below the initial purchase price,” he notes.
According to Auctionguru.com’s records, the first auction of a unit from The Raffles Suites was seen in January, and since then, there have been 32 units put up for auction.
Launched in 2013, the 311-unit freehold condominium was selling from RM389,400, or an average of RM570 psf. The recent auction listings in May showed that the reserve price is about RM467 psf.
A more realistic approach to market price
Chia opines that the reserve price of an auction property more or less reflects the real value of the property.
“The reserve price is based on bank valuation where the land value and future growth potential are the main considerations,” he explains.
For luxury properties that were set at an exorbitant price previously, their price valuation will be challenged if their future growth potential is questioned.
“However, the reserve price may not always go downwards, even for repeated cases. In some cases where the property is located in prime areas, the reserve price can increase in tandem with the land value,” he emphasises.
For example, a 3,294 sq ft duplex condominium in One KL located at Jalan Pinang, KL city centre has a reserve price of RM4.25 million, or an average of RM1,290 psf, in February this year. TheEdgeProperty.com transaction price data showed that One KL’s average selling price in 2016 was at RM984 psf.
Chia perceives the current situation positively as such market “adjustments” are necessary for the market to recover. He opines that the local residential market is relatively resilient and the segment is fairly shielded from economic fluctuations.
“Challenging business conditions, coupled with negative sentiments on the local front, may prolong the expansion of the foreclosure market. However, for bargain hunters, there are more opportunities on the market,” he concludes.
According to data from online auctions listings platform Auctionguru.com, auction residential properties have risen 14.4% to 6,225 cases in 1Q2017 from 5,442 cases recorded in the same period last year. In terms of value, the figure has climbed 31% to RM1.8 billion from RM1.375 billion in the first quarter of 2016 (1Q2016).
In 2Q2016, there were 5,505 cases, a slight increase of 1.16% from the previous quarter. The figure climbed 5.7% the following quarter with 5,818 auction cases. In 4Q2016, the number had risen to 6,154 cases worth RM1.797 billion. In 1Q2017, the volume and value of auction cases increased slightly by 1.15% and 0.3%, respectively.
Last year, a total of 22,919 homes worth RM6.26 billion went under the hammer compared with 19,132 cases valued at RM3.66 billion in 2015. There were 24,806 cases worth RM4.1 billion in 2014.
Overall, comparing annual figures, the number of auction cases has been decreasing over the past three years. There were 26,101 properties worth over RM9 billion put up for auction in 2016 compared with 28,750 valued at RM7.63 billion in 2015. In 2014, there were 35,577 cases worth RM7.9 billion.
Auctionguru.com executive director Gary Chia tells TheEdgeProperty.com that although there are more residential properties on offer for buyers, the market has been lacklustre as buyers are cautious and are staying on the sidelines. He notes that not only has the crowd that attends the auction events become smaller, but the number of bidders has also shrunk.
“I have seen some good deals in the [auction] market as some properties have seen their reserve prices go significantly lower than the market price, especially high-rise properties in Kuala Lumpur city centre, but they still face difficulties in finding buyers,” he says.
For instance, a 2,444 sq ft apartment at The Troika in KL city centre was put up for bid with a reserve price of RM2.4 million in January this year with an average price of RM948 psf, which is 22.6% lower than its average transaction price of RM1,272 psf in 2016, according to TheEdgeProperty.com data.
Another example is a 3,750 sq ft serviced apartment at The Oval in KL city centre, that had a reserve price of RM4.1 million in January this year (RM1,093 psf), which is about 16% lower than last year’s average transaction price of RM1,306 psf.
“During market boom times, it’s normal to see more than 20 bidders for one property, but now, it would be lucky if five to six people would bid for one property as it has become a norm now to see just one or two bidders, or sometimes none,” he adds.
The report also showed that among the 6,225 auction cases in 1Q2017, about 50% or 3,094 properties are repeat cases, which means that these properties have been put up for auction for two times or more. Notably, there were 3,131 new cases valued at RM8.24 billion registered in 1Q2017 alone.
“Thus, market supply will increase and it will be harder for owners to cash out. Consequently, some of the property owners who encounter financial constraint may eventually be forced to abandon their monthly financial commitment for their leveraged properties,” he explains.
Selangor, Johor and Perak top the list
Among all the states and federal territories — including Putrajaya and Labuan — Selangor, Johor and Perak have topped the list with the highest number of properties that went under the hammer in 1Q2017.
Johor and Perak registered 817 cases worth RM227 million and 656 cases worth RM61 million, respectively, making up about 13% and 11% of the total cases. Putrajaya, Labuan and Perlis have the least number of auction cases, with just 6, 8 and 12 auction cases, respectively.
In terms of value, Selangor, KL and Johor led the pack. KL had 484 properties worth RM336 million, while Penang had 558 properties valued at RM128 million put up for auction in 1Q2017.
Chia notes that Selangor has recorded the highest number of foreclosures in the residential property segment as the state is highly developed and is the most densely populated in Malaysia. Therefore, property transactions in the state will tend to be higher.
“Our records showed that quite a number of units at The Raffles Suites located at Bandar Uda Utama in Johor, which was completed about one year ago, were being foreclosed in 1Q2017.
“Some of the reserve prices stipulated for units in that property were almost equal to or below the initial purchase price,” he notes.
According to Auctionguru.com’s records, the first auction of a unit from The Raffles Suites was seen in January, and since then, there have been 32 units put up for auction.
Launched in 2013, the 311-unit freehold condominium was selling from RM389,400, or an average of RM570 psf. The recent auction listings in May showed that the reserve price is about RM467 psf.
A more realistic approach to market price
Chia opines that the reserve price of an auction property more or less reflects the real value of the property.
“The reserve price is based on bank valuation where the land value and future growth potential are the main considerations,” he explains.
For luxury properties that were set at an exorbitant price previously, their price valuation will be challenged if their future growth potential is questioned.
“However, the reserve price may not always go downwards, even for repeated cases. In some cases where the property is located in prime areas, the reserve price can increase in tandem with the land value,” he emphasises.
For example, a 3,294 sq ft duplex condominium in One KL located at Jalan Pinang, KL city centre has a reserve price of RM4.25 million, or an average of RM1,290 psf, in February this year. TheEdgeProperty.com transaction price data showed that One KL’s average selling price in 2016 was at RM984 psf.
Chia perceives the current situation positively as such market “adjustments” are necessary for the market to recover. He opines that the local residential market is relatively resilient and the segment is fairly shielded from economic fluctuations.
“Challenging business conditions, coupled with negative sentiments on the local front, may prolong the expansion of the foreclosure market. However, for bargain hunters, there are more opportunities on the market,” he concludes.
Wednesday, June 14, 2017
Going for homes under the hammer
Looking for bargain properties? Some people may consider looking at properties that are being auctioned off.
Especially during a property market slowdown like now, the auction market could be a place to find a bargain, especially for high-end properties.
“There seems to be more high-end condominium units valued at more than RM1 million put up for auction now. If the economic situation continues to be sluggish, we may see more owners of high-end homes defaulting their loans,” says Property Auction House Sdn Bhd executive director Danny Loh.
However, keep in mind that even though you may be interested in a certain unit up for bid, as a buyer, you may still face a problem getting financing right now.
“[Also], many investors are reluctant to commit [into buying a property] now as they foresee a further downside of the property market. Fewer qualified buyers mean that the same property may need to go through more than one round of auction before it can be sold off,” he concludes. The reserve price goes down 10% after every round of auction.
Properties on auction are sold on an “as-is-where-is” basis. Thus, one should have a clear picture on the property’s value.
AuctionGuru.com.my executive director Gary Chia says bidders need to understand the sale conditions of a particular unit on auction as each case may come with different conditions.
Besides, some properties may have a private caveat attached to them. This means that the property has been secured by other bidders but is still qualified to be auctioned. A property with a private caveat will not be financed by financial institutions. However, the caveat can be removed by filing an application to the court. This will take about two to three months, says Chia.
In fact, purchasing a foreclosed home is not a simple process and there are many things that one should be aware of. You certainly do not want the property you purchased to turn out to be more trouble than value.
Here are the good and bad about purchasing auction properties in Malaysia.
Pros:
1. Fixed selling/auction dates
2. Selling price, seller’s particulars and property details are open for all to see
3. Possibility of purchasing a property below market value
4. Equal competition among potential buyers during auction
5. Wide range of property selections (commercial, residential, land)
6. Seller may benefit from higher selling value due to competitive bidding
Cons:
1. No sales track record of the auction property
2. Complex sale conditions and bidders may not know what they are getting themselves into. Bidders are advised to always obtain a copy of proclamation of sale and conditions of sale from the auctioneers or lawyer, and read it through carefully and to understand what charges are undertaken by financial institutions and what are not.
3. Private caveat on property. A property with a private caveat will not be financed by financial institutions.
4. No vacant possession – the current occupiers of the property may refuse to vacate the property and the successful bidder may have to vacate the occupiers at own cost
5. Outstanding or hidden charges, such as maintenance charges, will have to be settled by the successful bidder as these charges are not borne by the financial institutions
6. Unable to view the interior of the property prior to auction
7. Bidder may overbid when caught up in a competitive bidding environment. Bidders should always be aware of their budget and check with the bank on the maximum loan amount available.
Steps to purchasing a foreclosed home:
1. Identify the property — Take note of the property description, the address and other relevant information. Set your objectives first. What are the purposes of buying? For own occupation, renting or long-term investment?
2. Inspect the property — You are not able to view the interior of the property because the bank does not have the keys to the property, but you can view the exterior and surrounding area.
3. Talk to auctioneer or sales agent — Interested buyers are encouraged to engage auctioneers or estate agents familiar with the property for more details.
4. Prepare bank draft — Prepare a bank draft equivalent to 5% deposit of the reserve price for Loan Agreement Cum Assignment (LACA). For non-LACA properties, the deposit is 10%. Also, be prepared to top up the difference between the deposit of the reserve price and the deposit of the final sold price immediately after the auction.
5. Read the fine print before the auction commences — Take your time to read and fully understand the terms and conditions of sale. If you need any clarification, seek guidance from the auctioneer before the auction commences.
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