Immigration & education drive property prices; Secondary property sales may take lead

Immigration and education are two drivers of property prices in cities in the next 10 years to 2024, said property consultancy Knight Frank International.Its Asia-Pacific reaearch director Nicholas Holt said up to 76,000 Ultra High Net Worth Individuals (UHNWI) from China have immigrated the last 10 years – the highest – while up to 72% of Malaysia’s UHNWI send their children abroad, the highest. (See graphics below).

The cities include London, New York, Hong Kong and Singapore.

Holt was presenting his Wealth Report 2015 updated till third quarter 2015 at the 25th National Real Estate Convention in Kuala Lumpur.

He defined UHNWIs as those with US$30mil and above in investible income excluding their primary residence.

In an Attitudes Survey involving 600 advisors of UHNWIs by Knight Frank, the advisors – bankers included – said about 10% of their Malaysia’s ultra-high net worth clients were considering changing their domicile in the earlier part of this year.

“This compares with an overall 12% in Asia who are considering changing domicile,” said Holt.

Data show drop in primary market transactions

SUBANG JAYA: The ongoing slowdown in the local property sector could see transactions in the secondary property market overtaking that of the primary market.

Citing data from the National Property Information Centre (Napic), PPC International Sdn Bhd managing director Datuk Siders Sittampalam said the economic slowdown has affected transactions in the primary property market this year.

“Siders: ‘Total volume of transactions in the primary market has dropped, and this has also resulted in values dropping. >>

“Total volume of transactions in the primary market has dropped, and this has also resulted in values dropping.

“As such, there will come a time when the secondary market will lead the primary market,” he said at a press conference after the launch of the 25th National Real Estate Convention (NREC) 2015 yesterday.

Siders said it was difficult to provide a specific timeline on when he expected transactions in the secondary market to exceed that of the primary market.

“In terms of value, the primary market will find it harder to match the secondary market due to rising land and building costs,” he said.

Siders said he expected transactions in the primary market to improve once cooling measures imposed on the local property sector have been relaxed.

“Once the economy picks up and Bank Negara backs off on its cooling measures, the primary market will pick up again.”

He also said a drastic hike in interest rates will have an impact on the property sector.

“Over the last few years, the property market had been steadily growing due to various measures such as the developers interest bearing scheme (DIBS). Because of these measures, pricing in the market has been distorted.

“Now, when people have committed to their loans, especially youths and first time buyers, and there is a sudden hike in interest rates, there will be a dip in the market.

“Loans go bad and many properties will go under the hammer. This will not be a healthy market.” Siders said he was hopeful that any interest rate hike by the central bank would be a “sustainable increase.”

Bank Negara maintained its overnight policy rate in September at 3.25%.

The NREC was organised by the Royal Institution of Surveyors Malaysia and the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector, Malaysia.

The event highlighted major concerns for the future of the real estate industry in Malaysia during the current economic period.


Related posts:

Malaysian property market is still ‘sparkling’

Away from the city: Developers are now turning to more affordable areas outside the Klang Valley like Negri Sembilan.

Continuing an examination of the property sector post Budget 2016, Sunday Star discovers that, despite high prices, investors remain upbeat because demand for property continues to outstrip supply many times over.

INVESTOR Ahyat Ishak says for the rakyat, property prices are “beyond annoying”.

They see all these new properties springing up – but, he points out, these are not “rumah mampu milik” (affordable houses) and are only “rumah mampu tengok” (houses you can look at but not own) for most of us because of the high prices.

“Property has become something of a bad taste in the mouth and people have become negative. And the market feels negative even though property prices continue to rise,” he says.

Although there is this “huge disconnect” between what’s being built and what people can buy, many developers continue to “defy gravity”.

“They do business as usual and offer properties beyond afforda­bility,” says Ahyat, who runs workshops for potential property investors and is the author of the 2013 bestseller, The Strategic Property Investor.

Dr Daniele Gambero, a marketing and strategic consultant for developers, says over the past few years developers have been over-delivering high-end, high-cost properties.

Towards the end of last year, however, they started developing more affordable areas further out from Kuala Lumpur, such as south, east and west of the city within the Klang Valley, as well as in places like Semenyih near Selangor’s border with Negri Sembilan and Nilai, Negri Sembilan.

Gambero says most of the big property developers in the country have had launches in these areas, quoting as an example, Malaysian Vision Valley, a 108,000ha development extending from Nilai to Port Dickson in Negri Sembilan.

He notes that developers have been buying up land in these areas at affordable prices like RM15 to RM25 per square foot compared with several hundred, or even several thousand, ringgit they would have to pay for land in the Klang Valley or KL.

At such prices, he points out, developers can actually build affordable houses of say 1,600sq ft to 1,800sq ft, which are reasonable sizes for families, and which are in such high demand.

“But instead of doing that, one of the things I find a bit funny is that developers have been building huge homes of 2,500sq ft to 3,000sq ft.”

Doing the math, Gambero points out that a 1,600sq ft house selling at RM300 per square foot would come up to RM480,000, but a 3,000sq ft house at RM300 per square foot would cost a whopping RM900,000.

“So unfortunately, developers have again brought the end house price to an unaffordable level!” says Gambero who is the CEO of the REI group of companies and who is an Italian expatriate who has been in Malaysia for almost two decades.

He has been doing extensive research on per capita income, household income, and the value of affordable homes in both Selangor and KL, which represents one-third of the country’s population and says that, “If you get it right here, then you can replicate it in other areas”.

He breaks the figures down into categories.

There is this ‘huge disconnect’ between what’s being built and what people can buy, yet developers ‘defy gravity’. – Ahyat Ishak

For Selangor, he estimates the need for low-cost houses is relatively low as only 8.2% households need houses that costs RM120,000 and below, while the figure in KL is 6.2 %.

The majority of households (63.6% in Selangor and 61.6% in KL) can afford houses priced between RM260,000 and RM600,000 (see chart for break down).

Gambero notes that only 15.4% in Selangor and 16.3% in KL can afford houses above RM500,000 up to a maximum of RM700,00.

“But if you look at what the big property guys are offering, most of the houses are above RM600,000. It doesn’t make sense,” says Gambero.

And, he points out, banks are no longer providing 90% financing for these huge houses because of overpricing.

“Banks are not stupid. They have been doing their homework and they have been coming up with the same conclusion that I have been coming up with, which is that there is going to be an oversupply of big homes and you (developers) are not going to clear your stock.”

Gambero points out that in the last three to four years, more than 60% to 65% of the supply of houses that developers built have been directed toward the top 20% of Malaysians who hold 40% of the country’s wealth.

“These are the people who can afford to buy whatever the market is throwing at them.”

But what about the rest?

You don’t hear of prices dropping. Because demand is 10 to 20 times higher than the supply of homes. – Dr Daniele Gambero

Prices won’t drop

Adrian Un has been involved in a number of property launches.

And he says that it is not true the property sector has been lacklustre.

One has to just look at all the pictures on Facebook and other social media sites to see that there are still a lot of people queuing up to buy properties.

“These are actually people queuing up to buy. I have seen huge numbers placing their cheques to buy. Whether they are first time buyers or not, we don’t know. But the situation is not as bad as being portrayed in the media or as claimed by the developers.

“The buying sentiment for units costing from RM300,000 to RM800,000 is still pretty much positive,” says Un who is the CEO and cofounder of Skybridge International, a property education and investment company.

But with everyone saying property prices are now sky-high, are there still properties out there going for RM300,000 or RM400,000?

Un says developers have been building small shoebox units of about 450sq ft to 600sq ft to entice Gen Y people to enter into the property market. These are priced between RM300,000 and RM500,000 and are often near the LRT and other amenities.

“So even if it is RM700 per square foot, a young graduate earning RM3,000 calculates it based on his affordability to pay the instalment. So he sees it as being quite affordable because the absolute entry level is RM400,000.

“A lot of the Gen Y have been on a learning curve on how to be a millionaire.

The Gen Y see owning a property as an investment. It also gives them bragging rights. – Adrian Un

“They are starting off early to be financially free and see owning a property as an investment. It also gives them bragging rights,” he says.

So these small units are still very much in demand and selling, he says, even though the rental might not be enough to cover the loan instalment.

“It’s already happening now. Demand for these units (to rent) is not big in numbers. Buyers would have to lower their expectation on the rent. So over the next one or two years, it is going to be a renters’ market. And it still boils down to location – if you are within 12km to 15km of the city, and there is a good infrastructure hub with the LRT and amenities like a shopping mall and hospital nearby, I don’t think it will be that bad,” he says.

It is the higher end properties priced at RM1mil and above which are struggling, says Un.

He says sales for these have been slow because many investors have already chalked up a lot of loans over the last four to five years for properties, so it is not as easy to secure more financing to buy another.

For Un, it is the secondary market that is going to struggle next year.

This is because there is a mismatch of perception between owner and buyer: the owner is positive the price of his house, even though it might be old, has climbed substantially but the buyer will not be willing to pay that price because he has an alternative to go to, which is the primary market to buy a new house.

Un agrees that banks are very careful when giving out loans these days. Instead of one valuation quote for the property, he says, most banks now demand for quotes from two valuers.

“Valuers are very cautious. They are professionals, so I don’t think they are willing to give the offered price for a new housing area that has just been completed.

“Once a house is completed and the seller asks for a sky high price, the valuers will not justify his asking price.”

But says Un, even with the mismatch, the price of landed semi-detached properties and bungalows will not drop.

He reckons to have bought a house priced at more than RM1mil, the buyer would need an income of at least RM15,000 a month to qualify for the loan, and logically the buyer would have to be at least 28 years old to earn that kind of money. So at that age, he says, the buyer would probably have understood how borrowing costs work before making the purchase and would have the holding power.

“He will hold it until the market recovers,” he says.

Optimistic about the economy

Two weeks ago, Budget 2016 was tabled in Parliament.

With regards to housing, there was no change in the measures already in place to curb property speculation, such as real property gains tax (RPGT) rates and prohi­biting developers from offering the Developers Interest Bearing Scheme (DIBS).

For Un, there was not a single exciting thing for the housing industry in the budget. But this is not unexpected, he says, because the industry was not anticipating any freebies or goodies anyway.

He says the measures implemented over the last two years have “somewhat worked” to cool down property prices “a bit”.

“For the government to do away with the RPGT or actually come back to DIBS now will create some kind of uproar among the public.

“I don’t think they want to be in the bad books of the public,” he says.

So naturally, he says, “affordable housing” was the main property sector element in the budget, devised to please the people.

Ahyat, however, has a more upbeat take on Budget 2016 for the housing sector.

He says while there was nothing big for the housing sector itself, there are huge plans for development and infrastructure.

He loves that RM5bil has been allocated to develop Malaysian Vision Valley and that RM7bil has been earmarked for developing a KL International Airport “Aeropolis”.

He feels “vindicated” that RM11bil is being pumped into Cybercity Centre in Cyberjaya because, while other investors shy away from Cyberjaya, he is one of the few who see potential there.

For him, the MRT II Sungai Buloh-Serdang-Putrajaya line coming up, which will be completed in 2022; the LRT 3 line from Bandar Utama to Johan Setia, Klang, which will be ready in 2020; and the KL-Klang Bus Rapid Transit (BRT) are exciting. There are also plans to build new hospitals and upgrade airports, he points out.

He says these are clever ways to spur growth, although it does not solve the massive problem of spiralling house prices and income levels that do not rise as fast to keep up.

“The budget is not a magic tool to fix problems. It is the Government’s forecasted expenditure,” he says.

Ahyat says he likes to “sniff” at the direction of development.

“I follow the infrastructure and investment. The moment they talk about billions in development, I stop, take a look and follow the money (to invest).”

Gambero’s first impression when reading Budget 2016 was that it was like an “economic crisis budget” where “you keep low, try to find shelter, stay put and wait for the next year to pass”.

But after reading through it for the third time, he finds it a “pretty decent” populist budget.

It is good, he says, that Sabah and Sarawak are getting funds to complete their long-awaited Pan Borneo highway, and that there are incentives, subsidies, and tax exemptions in the budget that will put more money in the pockets of the people.

“Increasing the welfare of the bottom 60% of the rakyat will definitely spur, in the medium term, the housing market. They might find enough money to buy a long-awaited home.”

Gambero sees the Malaysian Vision Valley development as “just the opening chapter of a totally new history of infrastructure for the southern corridor” and he loves the BRT because, unlike trains, buses are flexible and can go anywhere.

For him, Malaysia’s economic fundamentals are in the right place.

He says the GDP is quite steady although this has decreased a bit, the unemployment rate is still very much under control, foreign reserves are still very high, the economy is still developing, and the current account balance is still positive even though crude oil prices have dropped.

He says most international agencies have given Malaysia a positive outlook even though Malaysians themselves like to “cry and look down on the country”.

“The worst thing right now is the political instability. That is not a small joke.

“We have this political uncertainty about the future. A lot of laymen are asking ‘what if’ and ‘what comes next’ and saying that ‘if the Opposition takes over, the country will be a mess’, and ‘if Umno keeps ruling the country there is a big question mark about the future’, and ‘who is going to rule Umno? Do you choose someone based on loyalty or capability?

Despite all this uncertainty, Gambero remains optimistic about the economy.

“We have to take shelter for the next three to six months, but some shy signs of recovery are already visible.

“It will be more visible after Chinese New Year. The general feeling is that after the Chinese New Year, consumer confidence will begin rising and the housing sector will start moving ahead again.”

He says Malaysia’s under-supply of houses is still high compared with general demand.

He points out that even though developers have been experien­cing negative sales in the last few months and that there are a number of uncompleted sales with buyers pulling out because of uncertainty and perception, developers are still not dropping prices.

“There has been a big fall in the number of transactions in property this year but prices are still stable. You don’t hear of prices dropping. Because demand is 10 to 20 times higher than the supply of homes.”

He reckons Malaysia has at least another seven to eight years of a “sparkling” property market.

By Shahanaaz Habid, The Star/|Asia News Network

Property is the safest way to invest

Liquidity risk: If your objective of purchasing properties is to leave your child or children with a sizeable monetary legacy when you pass on, there may be other viable alternatives.

Works on fundamentals still vital

TIME and time again, we hear about the need to save up to buy our first property. Then we hear about why we should save up to buy the next property (presumably for the “certainty” of investment gains), and the success stories of those who made their first million, primarily through property investment.

So, anyone who has received a healthy dose of these for a few years would naturally deduce that in order to gain significant returns to our investment portfolio, the key is property. This does not always hold true.

As with any investment, you must still go through the fundamental questions that help you ascertain whether property is the right tool for you.

We will get back to what these fundamental questions are after forming a backdrop from two somewhat representative examples.

In 2009, 38-year-old Albert bought a 4,300 sq ft condominium at a prestigious location in the heart of Kuala Lumpur for RM4.3mil. At RM1,000 per sq ft, many would deem this a good buy; more so now that the current market value has risen to RM5.1mil.

Now, let’s see this “gain” from a different perspective. Since Albert bought the property for investment purposes, he had two options to earn returns from this investment – either rent it out for an amount higher than the loan repayment value, or sell the property to monetise the higher market value.

Unfortunately for Albert, he has as yet not been able to find a buyer even though it has been six years since he bought the property. Given the softer property market, although he has been lucky to find a tenant, he is receiving a rental yield that is lower than his loan repayment.

This is fine as long as Albert remains gainfully employed and is able to afford the loan repayment for as long as it takes to sell the property.

Capital gain

Let us look at another property owner. Also in 2009, Nik and Sara, a newly-married couple, purchased a 3,100 sq ft landed residential property in a fast-developing suburb in the Klang Valley for RM350,000. Unlike Albert, they bought the property for their own residential use.

Over the years, given that their home is located close to a major shopping mall and to the highway, the market value of their property rose to the current RM1mil.

Did they “gain” from this property? Similar to Albert’s case, in order for Nik and Sara to make capital gains from this property, they would need to sell it to lock-on the value.

However, since they are residing in that property, selling it would mean looking for alternative accommodation.

Would they be able to maintain the same standard of living (i.e. an equally convenient 3,100 sq ft living space, and so forth) with the proceeds received from the property sale? If not, then like for Albert, the higher market value would not have resulted in any direct investment gain for them.

But unlike Albert, it doesn’t matter as they did not purchase the house as an investment instrument and the loan repayment does not result in any unexpected negative cashflow.

So on the backdrop of both these scenarios, we are ready to move on to the fundamental questions you should consider when assessing the suitability of any investment instrument, property or otherwise. The six most fundamental considerations are, perhaps, best rendered acrostically as O.H.A.M.L.A.:

  • Objective – or what you hope to use of those funds for (i.e. the capital) in the future;
  • Holding period – the length of time you are able to sustain financially without touching the returns    or capital for that investment;
  • Affordability – would you need to compromise your standard of living if there is no cashflow from     the investment throughout the holding period;
  • Market risk – the quantum of price movement that you could stomach during the holding period;
  • Liquidity risk – how long would it take for you to sell the investment and receive your funds; and
  • Alternative instruments – are there any that could achieve the same investment objective with lower risks attached.

Going back to Albert’s case; he bought the condominium with the objective of making significant capital gains in five years (i.e. the holding period).

At the point of purchase in 2009, he assumed his employment status would not change and that he would earn the same or a higher salary over the course of his holding period. However, he is now self-employed, hence his earnings are no longer fixed each month.

Therefore, the affordability factor is now compromised as he needs to ensure his loan commitments are met each month despite a fluctuating income.

Next, although he made the fair assumption (which turned out to be right) that the property would appreciate in market value in the future, he underestimated the liquidity rush when investing in properties, i.e. finding a willing buyer for the price he is willing to sell and getting the cash from that sale within a short period of time.

As many of us may have experienced, due to legal and loan documentation requirements, it could take up to a few months to get back our funds even after a willing buyer has been identified.

Lastly, unfortunately for Albert, other alternative instruments that could perhaps meet his investment objective for significant returns (eg. investing in high risk companies in the stock exchange or investing in a start-up company) also carry similar, if not higher, risks.

First-time buyer

That said, property or real estate remains an important instrument for most investors. For a first-time property buyer, owning a property that you could live in removes the risk that rental prices could escalate where you may be forced to compromise your lifestyle to find alternative accommodation.

Individuals with significant excess funds after investing in a diversified portfolio consisting of instruments such as high yielding deposits, blue chip shares, unit trusts, endowment insurance plans and bonds, should consider property as the next instrument to augment their investment portfolio.

If you are an investor seeking a consistent stream of income, other than rental income, alternative instruments that could give you that regular payout could be unit trust funds with an income-generating mandate, endowment insurance plans, high dividend blue chip stocks or even bonds.

With all these instruments, especially unit trusts and endowment policies, you would be able to easily liquidate your investments and get your sale proceeds within 14 days or less. This is important when you do not have a significant amount of excess cash in hand for potential financial emergencies.

If your objective of purchasing the property is to leave your child or children with a sizeable monetary legacy when you pass on, there may be viable alternatives. For some, this means building up a stable business for the children to inherit.

For many others, there is always the traditional portfolio that consists of shares, unit trust funds, bonds and so forth.

The lesser-known alternative would be to purchase a universal life insurance policy that would ensure your beneficiaries receive a sizeable payout after you have passed on.

So if you are 40 years old, instead of spending RM2mil to buy a bungalow in Kajang that your children may likely liquidate anyhow once you have passed on – after all, your intended legacy was the cash value of the property – you could instead spend a little over quarter that amount to purchase a universal life policy that would pay RM2mil in cash to your children once you are gone.

By using O.H.A.M.L.A. as a guide, your investment universe could open up your world to a wide array of instruments beyond property to help you meet your objective. As the old proverb goes: There are more ways than one to skin a cat.


Yeo is OCBC Bank (M) Bhd head of wealth management.


In uncertain environment, keep cash and be flexible
Funds likely to flow back to emerging markets
Another battering for stock markets, KLCI down 18 pts

Related post:

IMF Managing Director Christine Lagarde participating in the Asia Finance Conference at the Bank of Indonesia, in Jakarta, Indonesia o…

What household debt means and how to manage it ?

House debt_means

The difference between ‘healthy’ and ‘unhealthy’ loans

I have received queries about what household debt means and the best ways to manage it.

Household debt is basically all forms of loans with interest rates taken from entities that provide financing. The loans can be secured with assets such as real estate loans (housing and commercial properties), or without any collateral such as personal and credit card loans.

Residential and commercial property loans have capital appreciation potential over the long term. According to statistics from National Property Information Centre, the annual appreciation rate for house prices has averaged 9% in the past five years.

Even if we assume the average house prices only appreciate 5% per annum, it is still an ideal asset which we can live in, and at the same time it grows in value.

If you refer to the chart above, the effective interest rate for housing loans is only 4.65%, which is lower than its annual appreciation rate.

On the other hand, the effective interest rates for car loans range from 5% to 7.5% depending on car model and loan term (effective interest rates are calculated from the advertised headline rates of 2.5% to 3% depending on the tenure of the car loan).

On top of higher effective interest rates, the value of private vehicles depreciate about 10% to 20% per year based on car insurance calculations and accounting practice.

In fact, everyone knows that the day you drive the car out of the showroom, its value drops by 15% to 25%!

The effective interest rate for personal loans is 9% to 10%, while credit card effective interest rates can go as high as 18% to 24% (again, like car loans, the effective interest rates per year are much higher than the advertised rates).

If these loans are spent on items that do not appreciate over time and on perishable items, then the depreciation rates are high and there are no returns to speak of.

The real estate loans (housing and commercial properties) that will appreciate in the longer term, can be deemed as “good debt”.

Car, personal and credit card loans, which have higher interest rates repayment and do not generate value in the future, and are considered as “unhealthy debt” or “bad debt”.

The chart above illustrates the effective interest rates on different household debt components. It also reminds me about the household debt I shared in my last article. What does our nation’s household debt really mean to us? How much of it impacts us if we include its interest rate, appreciation and depreciation values?

According to Bank Negara, our household debt was at RM940.4bil or 87.9% of gross domestic product (GDP) as of end-2014.

Large burden

Residential housing loans accounted for 45.7% (RM429.7bil) of total debts, hire purchase at 16.6%, personal financing stood at 15.7%, non-residential loan was 7.7%, securities at 6.5%, followed by credit cards and other items at 3.9%.

Our household burden is larger if we include the servicing of incurred interest rate for loans. Much of it comes from the higher interest rates to service hire purchase, personal financing and credit card loans.

It reinforces my belief that if we take a debt to invest or secure appreciating items such as housing and other valuable assets, they will eventually provide a higher return in the longer term which more than compensates for the interest rate paid on the loans.

My belief is substantiated by Bank Negara’s Financial Stability and Payment Systems Report 2014.

The report states that properties remain an important investment for many households to finance children’s education, provide a form of financial security for the next generation and preparation for retirement.

Our government can help us achieve higher investment on housing and other valuable assets by looking at ways to reduce our dependency on other types of loans.

Reducing dependency

Example, to provide a comprehensive public transportation system by aggressively expanding mass rapid transit, buses, mini buses, and taxi service to cover more areas.

This will reduce the dependency on private vehicles which in turn help us to divert our financial resources to more fruitful areas or secure a roof over our heads.

As shared in my previous article, housing loans in advanced countries comprise an average of 74% of total household debt compared with ours at 45.7%.

This tells me that we, as a nation, are spending too much of our already high household debt (87.9% to GDP) on high interest/high depreciation “bad debt” such as a car, credit card and personal loan.

Now is a good time to relook into our debt portfolio and the interest rates incurred, and check whether we are having a healthy or unhealthy debt burden.

FIABCI Asia-Pacific Regional secretariat chairman Datuk Alan Tong has over 50 years of experience in property development. He is also the group chairman of Bukit Kiara Properties. For feedback, please email

Related posts:

Can Malaysia’s household debt at 87.9% in 2014 be reduced to 54%?

According to McKinsey’s study, Malaysia’s household debt to income ratio is highest at 146% in 2014, way above the level of the United States (99%) and Indonesia (32%). When we break down the household debt, 45.7% of …

Unfair housing loan agreement 

 MOST if not all house buyers will require financing to buy their dream
homes. While there appears to be stiff competition among banks for …

Homes are cracking !

Homes cracking

PENGERANG: Dozens of residents who were relocated due to the development of the Refinery and Petrochemical Integrated Development (Rapid) expressed disappointment over the poor workmanship of their new homes in Taman Bayu Damai.

They are upset that their houses, which are less than a year old, have already started cracking, with some wide enough for fingers to go through.

They blamed this on soil movement.

“The foundation for many of the houses have started to slip, causing huge holes to appear below our single-storey bungalow,” said retiree Lukiman Sastaro.

The 67-year-old, who moved from Sg Kapal, said his house was among the worst hit.

“I got over RM300,000 in compensation and used RM105,000 to buy this house. The rest went into renovations,” he said, adding that he was now having sleepless nights.

“Even my driveway sank by several centimetres,” said Lukiman.

Another resident, Sia Pek Im, 61, said she was worried about the safety of her two grandchildren after huge cracks appeared in her kitchen.

“But I have nowhere else to go,” she said.

Another, Hamidon Ahmad, said he, too, suspected that there was soil movement and that the developer had not carried out proper mitigation works before building the houses.

“I decided to carry out repair works on my own as I am worried for my family’s safety,” said the 56-year-old.

“Even my relatives’ home next door is affected. The relevant agencies should check if the houses have met the safety criteria before the Certificate of Fitness is issued,” he said, adding that the site used to be a swamp.

Kota Tinggi district officer Mohd Noorazam Osman confirmed that it was a geological problem due to earth movement.

“We are working with the state Economic Planning Unit (Upen), which is in charge of the project to remedy this,” he said.

“Residents’ safety is our main concern and houses that are badly damaged will be demolished,” he said, adding that it was up to Upen to decide what action should be taken against the developer or contractor.

State Upen director A. Rahim Nin said the Johor government had appointed a private contractor under the design-and-build concept for the 631 houses in the area.

“So far, 555 units have been given to residents who were relocated from Kg Sungai Kapal, Kampung Langkah Baik and Kampung Teluk Empang,” he said.

“We have directed the contractor to repair the defects – as based on our agreement with them. The defect liability period is two years,” he said, adding that 67% of the complaints had been addressed so far.

By Nelson Benjamin The Star/Asia News Network

Related posts:

Who is responsible: developer, contractor, local council, or house-owner for the damages?

 House buyers, learn your rights

Who is responsible: developer, contractor, local council or house-owner for the damages?

Slope management

Who is responsible for slope management? Does the responsibility come with the property bought by the purchaser?
IJM_BJ Cove Side_20141112_154129

THE collapse of a slope deep in the jungle does not concern house-owners, nor do landslides along our highways or roads. They just cause a bit of inconvenience to road users.

The Government deploys men, machinery and money to get the road cleared as quickly as possible so traffic can flow again.

It is different with the slope, which is (usually) at the back of a house. The house-owner did not build it. It came when he bought the house, designed by the developer with the approval of the local council. Because it is in his compound – or because he will be affected by it in the event of a collapse – the house-owner is responsible.

But in reality, is it as simple as that? It is more than a matter of money, it may also involve lives.

The Construction Industry Development Board (CIDB) in collaboration with the Urban Wellbeing, Housing and Local Government Ministry organised a seminar some months ago. Tan Sri Ramon Navaratnam, adviser to SlopeWatch, a community-based organisation, highlighted his personal and distressing experience with the slope in his house compound. He needed to have it repaired and he was driven from pillar to post by government officers, the contractor was dilatory and the cost was high.

But who is responsible?

House-purchaser dilemma

When a house-purchaser takes his house from the developer, the latter does not certify that the slope is safe in terms of design, and “as built”, except that it is understood to have been approved.

Victim: “It had been built at the bottom of a nearly-vertical slope formed by excising the toe of a hill. Though he had no need for it, the developer would not sell the house without a part of the bottom of the slope; not only did it add to the cost of the house, it made him responsible for the upkeep of the slope.

As expected the slope collapsed, not once but twice. You see the rubble-wall collapsed with the soil when the pressure became too strong. This time, a strong wall was built together with weep holes to remove rain water that seeped into the soil so that it did not become too heavy. It held up for us but the same slope running into the neighbour’s side, collapsed.

“Are they lucky compared with the buyers of houses built on top of Bukit Setiawangsa, while they were at the bottom of the slope? The developer had apparently removed the earth from it to form the bed of the highway, the Duta-Ulu Kelang Expressway (Duke). With the entire slope removed, the houses are perched precariously at the top, as the cliché goes, like a disaster waiting to happen.

So who is responsible? Is it the developer? Where will he be after six years or if available, will he argue that the purchaser bought the house fully aware of the risks? What are the rights of a subsequent owner? Does he has any recourse against the first owner? What about the local council and professionals who approved the slope – which to an untrained eye – seems to be an unsafe construction?”

House-owners are not only innocent victims of a developer’s recklessness or the developer’s appointed professionals, be it an architect or engineer.

They may also be liable through no fault of theirs because of the way developers have disturbed the lie of the land and left it in an unsafe state for the house–owner to take care of it.

The most enduring memory is the Highland Towers episode about 20 years ago, of which there is still no satisfactory closure. The disaster should have been a wake-up call on the process of approvals and accountability.

Only a draughtsman was convicted for the design of the drainage which caused water to flow un-channelled into the ground under the condominiums causing it to turn into mud which, of course, flowed against the piles causing them to move and knocking the building off its supports. The Ampang Municipal Council (MPAJ), which approved the diversion of the drainage, was excused because of the statutory immunity it enjoyed under the law.

So, should it be more careful and conscientious? Have we not learned the right lessons from it?

There are many questions for which there are no answers.

Slope management – overcoming challenges

The question with regard to slope management brings to mind a slope management seminar held earlier this year which attracted about 400 participants. The speakers held top posts in the Public Works Department, Urban WellBeing, Housing and Local Government Ministry, SlopeWatch, head of hillslope development in MPAJ and geotechnical engineer Datuk Dr Gue See Sew. Participants attentively asked the panelists pertinent questions.

As we forge ahead, we ask ourselves, have we done enough? If not, what can we do more? What are some of the issues and challenges we are facing as residents, owners, consultants, planners, financiers and enforcers of the guidelines, managers of slopes and public safety?

And whose responsibility is it anyway? There were proposals, suggestions and recommendations for an action plan that will be adopted for its intended implementation. Some were for immediate application, while some were medium and long term in nature. Unanimous resolutions were made at the end of the seminar.


Some of the pertinent resolutions were:

> Improve and simplify the current guidelines on hill-site development with safety enhancement.

> Increase awareness of contractors on good slope construction practices

> Strengthen the enforcement of authorities to penalise errant slope owners

> Review the planning policies and determine the height and density of buildings to blend with the environment

> To immediately do an inventory and to gazette all remaining hill-slopes, including those that are still on state land under the Land Conservation Act, National Land Code and the Town and Country Planning Act.

> Review slope-related designs not only confined within the boundaries of the project, but within the surrounding areas.

> Make it compulsory under the law for a geotechnical accredited checker, as an independent checker, to check and verify that slope design and construction are safe and done to the best engineering practices.

> Major earthworks and slope strengthening need to be done first before construction of any buildings and structures in the development takes place

> Local authorities to collaborate with community monitoring groups (to be the eyes and ears)

> To make it compulsory for slope owners to appoint professional engineers to inspect slopes on a regular basis on high-risk slopes and to rectify any defects for slopes of certain categories

> New engineered slopes to have a maintenance schedule and manual, including drainage systems. Old slopes, in particular, should be under a maintenance programme by the local authorities

> Introduce a fund to cover long-term infrastructure maintenance of certain slopes that require high maintenance and are handed over to local authorities

But the most important of them is to set up a centralised body to support the 154 local authorities on new hillside developments. It should be modelled after the geotechnical engineering office in Hong Kong.

The Government and public will be hearing more of this proposed “centralised body” in due course from the Expert Standing Committee on Slope Safety initiated under CIDB.


By CHANG KIM LOONG – Buyers Beware The Star Nov 15 2014

Chang Kim Loong is the honorary secretary-general of the National House Buyers Association.

I RECENTLY moved into our new house in Sungai Ramal Dalam. I bought the property back in 2012 and we received the vacant possession in J…

Money, money, money … Love of money is the root of all evil !

Lets not use Money as an all-powerful weapon to buy people

ONE can safely assume that the subject of money would be of interest to almost all and sundry. ABBA, the Swedish group, sang about it. Hong Kong’s canto pop king, Samuel Hui made a killing singing about it. Donna Summers, Pink Floyd, Dire Straits, Rick James and quite a few more, all did their versions of it.

Is money all that matters? The ‘be all and end all’ of life?

This will certainly be a fiercely-debated subject by people from both sides of the divide; the haves and have nots.

Just last week, my 12-year-old asked if the proverb Money is the root of all evil is true. Naturally, like most kids of his generation, he would not have a clue as to how difficult it is for money to come about. Or why, when it does come about, it has the power to make and break a person. To a Gen-Z kid, the concept of having to ‘earn’ money is somewhat alien. Simply because everything he ever needs and beyond is ‘magically’ provided for.

Forget about teaching this generation to earn their keeps, just expecting them to pick up after themselves is a herculean ask. But we are not here to talk about that, instead, is money really the root of all evil? Perhaps, the proper answer would be ‘the love of money is’.

Let’s see what sort of evil comes with this love of money. Top of mind would be corruption, covetousness, cheating, even murder, just to name a few. These, of course, are of the extreme.

What about at the workplace? How does the love of money or rather the lure of money affect the employment market? Let me take on a profession closer to my heart, the advertising industry. Annually, our varsities and colleges churn out thousands of mass communication and advertising grads. Of these, only a handful would venture into the industry. Where have all the others gone?

A quick check with fellow agency heads reveals that many have opted to go into the financial sectors as the starting packages are somehow always miraculously higher than those offered by advertising agencies. A classic case of money at work. For those who have actually joined the ad industry, some get pinched after a while because of a better offer of … money, and more. (As if this is not bad enough, the “pinchers” are often not only from within the industry but are clients!)

The fact is there is absolutely nothing wrong in working towards being the top of one’s profession and getting appropriately remunerated for it. The problem starts when money is used as the all-powerful weapon to ‘buy’ people. Premium ringgit is often paid to acquire many of these hires, some of whom, unfortunately, are still a little wet behind the ears. Paying big bucks for talent is all right, as long as the money commensurate with the ability and experience of the person.

Case in point is if an individual is qualified only as a junior executive with his current employer, should he then be offered the job as a manager and paid twice the last drawn salary? All because some of us are just so short on resources.

Now, hypothetically, if this person was offered the managerial post anyway, would he be able to manage the portfolio and deliver what is expected of him? Would he, for instance, ask what he needs to bring to the table? After all, he has suddenly become the client service director and draws a salary of RM20k a month. Does he actually need to bring more new businesses, or what? We can call ourselves all sorts of fancy titles but the point is we have got to earn it. As they say, the proof of the pudding is in the eating.

Having served on the advertising association council for the past nine years and presiding over it the last two, it concerns me greatly to see the how money is affecting and somewhat thinning the line of qualified successors to the present heads.

The lack of new talents coming into the ad business is increasingly worrisome. Though it may look a seemingly distant issue to most clients, they must now take heed. The agencies are business partners and if there is going to be a dearth of talents it will surely affect the clients’ business in the near future. So rather than pinching the rare good ones from the agencies, would it then not be in the clients’ best interest to instead remunerate the agencies so to secure better and higher standards of expertise? Food for thought, eh?

Pardon me for being old school. I am a firm advocate of the saying that one should not chase money. First learn to be at the top of your trade and money will chase you. Then again, we are now dealing with and learning how to manage the present generation. A generation of young, smart, fearless, and somewhat impatient lot who may not be as loyal as their predecessors. A generation that loves life and crave excitement. Adventure is in their blood and ‘conforming’ is a bad word. And money, lots of it, makes the world go faster for them.

As elders, we need to look hard and deep into how to inculcate the right value of money in this new generation. These are our children. They are the future. If we make no attempt to set this right and instead keep on condoning the practice of over-remunerating them, we will be in trouble. The fact that Malaysia will soon have to compete in the free-trade region further allows money to flex its muscles more. I shudder to think what would happen to our young ones if we keep on mollycoddling them with the wrong idea that they ought to be highly paid just for breathing.

Folks, my sincere apologies if I have inadvertently touched some tender nerves but a wake-up call this has to be. For our dear clients, think about the proposition to review your agency’s remunerations – upwards I mean. This, over taking people from the industry, will save you more in the long run.

For those of us in the agencies, let us keep polishing up our skills and not let money be the sole motivator. If you are good, others will take notice. Work hard, the rewards will come. Just exercise some patience.

I leave you with a saying that one Mr Jaspal Singh said to me when I was a rookie advertising sales rep with The Star eons ago: “Man make money, money does NOT make a man”. (Or woman, of course.)

Till the next time, a very Happy Deepavali to all.

God bless!

By Datuk Johnny Mun, who has been an advertising practitioner for over 30 years, is president of the Association of Accredited Advertising Agents. He is also CEO of Krakatua ICOM, a local ad agency.


Get every new post delivered to your Inbox.

Join 1,252 other followers

%d bloggers like this: