More S'poreans cross Causeway to
buy homes
Favourable exchange rate and lure
of landed property are among the reasons cited
Melissa Tan
Teo Cheng Wee
When Ms June Chan first went to Johor Baru to scout for
potential properties in February, she spotted a villa going for a
pretty price.
Built on a sprawling 16,000 sq ft compound was a
single-storey bungalow with three rooms and a swimming pool. It was
in the Leisure Farm development, in Johor's Iskandar region. The
price: RM3.8 million ($1.52 million).
Within two months, Ms Chan, 52, decided it was a good
deal and plunged in.
"It's a second home for living in while my Singapore
house is for rental," said Ms Chan, who is single and retired from
a multinational corporation two years ago. She is now doing
humanitarian work.
With property prices rising in Singapore, more
Singaporeans have begun looking to Malaysia for investment or to
buy their second homes. The weakening Malaysian ringgit, the lure
of owning landed property and familiarity with the country are
reasons they cite for looking north.
The Malaysian property market has been heating up in
recent years, much like in the rest of Asia.
Official figures from Malaysia Property Inc - an agency
that promotes Malaysia's real estate internationally - the total
transaction value of real estate in Malaysia was RM137.8 billion
last year, up 28 per cent from RM107.4 billion in 2010.
About 2 per cent of that figure is foreign
investment.
Johor has seen the strongest surge in interest from
foreign investors in the past year, according to the agency.
In the first half of 2010, foreigners made up only 4 per
cent of Johor property transactions, for properties priced above
RM1 million. In the corresponding period last year, however, that
figure shot up to 25 per cent.
Much of the demand has been generated by the buzz over
the Iskandar region, earmarked by the Malaysian government as a
major growth area for the country.
There are also now big Singapore companies investing in
Iskandar.
Temasek Holdings has a joint-venture project with
Malaysia's sovereign wealth fund Khazanah Nasional to develop land
in Iskandar. CapitaLand has been appointed project manager for a
2ha urban wellness project in Medini North, a region in
Iskandar.
Growing interest
Property agents have also been pulling out the stops to get
Singaporeans interested by advertising, conducting roadshows and
taking busloads of potential investors on property tours.
Ms Donna Lim, property agency HSR's overseas department
head, said the number attending its property exhibitions has risen
sharply from last year. Agents say the number of transactions by
Singaporeans has also risen.
While there is no official data, agents like Propnex say
that Singaporeans bought 50 units in the second quarter of the
year, compared to around 25 units in the first three months. It is
marketing five projects there in total, located in Johor, Kuala
Lumpur and Cyberjaya.
Mr Peter Lim, head of Leisure Farm Singapore, which
arranges free trips for buyers, said Singaporeans had bought 35
units in the development over the past two months, compared to
about a dozen in the first two months of the year.
Mr Edwin Tan, director of the Paragon Residences @
Straits View Malaysia project, also in Iskandar, said Singaporeans
booked 116 units at a roadshow earlier this month, compared with 54
bookings from Malaysians.
Apart from Singaporeans, Malaysians living in Singapore
have also been buying property there.
Lecturer Jude Nesa Rajah, 51, bought his first JB
property on impulse eight years ago after seeing the developer's
promotional booth at a shopping centre. He paid RM100,000 for the
1,016 sq ft unit in Bukit Indah. It is now worth RM220,000.
A Singapore permanent resident and father of two, he
said: "My investment is literally paying for itself... we've been
renting out the place for seven years now, for RM1,000 a
month."
He said he is looking to invest in more properties when
the market cools, adding that he hopes to retire there with his
48-year-old wife, a teacher.
While Johor properties have always seen demand, now
Singaporeans are also heading further north, scouting for potential
investments in Kuala Lumpur, Penang and Malacca.
Ms Lily Tan, senior marketing and sales manager at Hunza
Properties, said Singaporeans were the top buyers of Hunza's newest
condominium Gurney Paragon in Penang, making up about 15 per cent
of total unit sales.
But unlike those who buy property in Johor as their
second or retirement homes, Singaporeans who buy in Kuala Lumpur
and Penang tend to view purchases as investments, said PropNex
chief executive Mohamed Ismail.
Ms Goh Yu Ming, 32, bought a 4,000 sq ft condominium unit
in Kuala Lumpur's main shopping district, Jalan Bukit Bintang, last
year for RM2 million. Ms Goh, who works in investor relations,
believes she can get a rental yield of 6 to 8 per cent.
Rental yields in commercial hubs like Kuala Lumpur and
Penang range from 5 per cent to 6 per cent, while in Johor they are
typically 4 per cent to 6 per cent. In contrast, Singapore
residential properties generally yield 2 per cent to 3per cent,
consultants said.
The weakening of the ringgit against the Singapore dollar
is expected to further stimulate demand. It has fallen by 2.7 per
cent in the past year to reach a 14-year low against the Singapore
dollar.
'Here, I live like a
millionaire'
A DREAM HOME IN
JOHOR: Mr Talib is happy with his double-storey
corner terraced home in Johor Baru, which has five bedrooms and a
swimming pool. He took a 30-year loan from a Malaysian bank to
finance the RM500,000 (S$200,000) house. He lives with his
homemaker wife, 55, and their 27-year-old businessman son, and
shuttles between his JB home and Singapore for work. -- ST PHOTO:
LAU FOOK KONG
With five bedrooms and a swimming pool, 55-year-old Singaporean
Abdul Talib Jantan's corner terraced house in Johor Baru's Setia
Eco Gardens is his dream come true.
"I planned this for a long time," said the operations
manager at an engineering firm here.
Three years ago, he started looking for a suitable
retirement home in JB, and settled on the double-storey unit by
listed Malaysian developer SP Setia that is a 15-minute drive from
the Tuas Checkpoint.
He took a 30-year loan from a Malaysian bank to finance
the RM500,000 (S$200,000) house.
After he got the keys last year, he sold his four-room
Housing Board flat in Jurong West for $450,000. He had bought it
for $216,000 in 2004.
He spent nearly half the $330,000 he had in hand to
renovate and furnish the house, and add a swimming pool.
He is happy with his home, not least because something
similar in Singapore would be beyond his reach.
"My house is surrounded by mountain scenery, and security
is tight. You need to clear two layers of security gates to come
in."
He said many of the homes there are owned by
Singaporeans.
He lives with his homemaker wife, 55, and their
27-year-old businessman son; they shuttle between JB and Singapore
daily for work.
Mr Talib said: "There's no way I could live like this
back home. Here, I'm a millionaire."
Alvin Lim
Diversifying
investment
THREE CONDO UNITS IN
PENANG: Mr Tan Kok Nguan, 43, with his daughter
Amelia, 13. He lives in a Serangoon condo with his family. -- ST
PHOTO: KEVIN LIM
Mr Tan Kok Nguan, 43, was so impressed by the location and
design of a condominium in Penang that he bought not one, but three
units.
The regional director for a logistics company bought the
units at the seafront Quayside condominium in Tanjung Tokong, in
the north-east of the island, for about RM1.05 million (S$420,000)
each two years ago. Today, they are worth about RM1.4 million each,
he said.
With the ringgit falling by about 10 per cent since 2010,
this means his apartments are worth about $100,000 more per
apartment now.
He said that he had wanted to diversify his investment
portfolio but, with property in Singapore getting too expensive, he
looked to Malaysia.
He considered Kuala Lumpur, but settled on Penang as he
saw strong economic potential in the northern state. He is also
familiar with the place as he goes on regular business trips
there.
"Penang isn't just a nice place, it has got economic
potential," he said, noting the presence of multinational companies
such as Dell, and the influx of medical tourists.
He also believes that Penang is safer than other places
in Malaysia.
But while he may have taken the plunge, Mr Tan said he
did it with his eyes open.
For one thing, he believes that it is best to stick to
developers with a track record.
In this case, the condo was developed by Eastern and
Oriental (E&O), one of the largest luxury property developers
in Malaysia.
Aware of the developer's reputation, he made his move
after seeing an advertisement for Quayside in The Straits
Times.
Mr Tan, who lives in a Serangoon condominium with his
wife and two teenage children, said that he might be tempted to
sell one unit if its value hits RM1.6 million.
In the meantime, he expects to collect the keys next
March and hopes to rent out all three units.
But he is determined to keep one unit for his eventual
retirement, adding: "It is just so beautiful there."
David Ee
BUYERS BEWARE
Buying property overseas is not all roses, the experts warn.
Buying in Malaysia is not the same as buying in Singapore and there
are risks, not least that buyers may not eventually get what they
expect.
Disgruntled investors, including Singaporeans, of Sabah
luxury development Nexus Residence recently took developer
Karambunai Corp into arbitration for not paying almost one year in
arrears on its "lease back" rental payments due to them, said a
CNBC report last week.
Bank of America Merrill Lynch economist Chua Hak Bin, who
covers the Malaysian economy, said buyers would be left in the
lurch "if the developer goes under" as they are not as well
protected there as they are in Singapore.
"It wasn't uncommon after the Asian financial crisis (in
1997). Interest rates were soaring and developers couldn't bear the
costs," he noted.
Political risk is another concern, said PropNex chief
executive Mohamed Ismail. 'The downside of buying in an overseas
country is that the policies and the government can always change,
so nobody can be very certain about the political stability and
currency devaluation.'
There is also the issue of security, or the lack
thereof.
Malaysian developers have been introducing extra features
such as double-gated precincts and Nepali guards to help
Singaporeans feel more comfortable about living in their Johor
homes, said Mr Ismail.
Mr Ku Swee Yong, chief executive of International
Property Advisor, said Iskandar properties might be overpriced
right now due to the hype. He added that the Malaysia property
market was murky in many locations because there was no clear
data.
"There is no real secondary market. The market price is
whatever developers manage to sell at and that is artificial," he
said.
WHAT BUYERS NEED TO
KNOW
Q: How can a buyer
get financing?
As in Singapore, a buyer will be referred to a banker through
property agents, sales executives working for the developer,
lawyers, or via walk-ins at bank branches.
Q: What is the rate
for a home loan?
Rates range from 4 per cent to 5 per cent.
Q: What loan-to-value
(LTV) ratio can buyers get?
For foreigners, most financial institutions grant loans of 70
per cent to 80 per cent of the purchase price.
Q: What is the
minimum purchase amount?
That depends on the state. It ranges from RM250,000 (S$99,700)
in Johor to RM1 million in Penang.
The minimum is half a million ringgit in Kuala Lumpur.
Q: Is there stamp
duty?
Locals and foreigners pay stamp duty from 1 per cent to 3 per
cent for purchases.
Q: What other fees
are there?
There is a tax of 5 per cent if Singaporeans sell the house
after holding it for less than five years. The tax is 10 per cent
if the house is sold within two years.
Buyers also have to pay property tax. This is generally 6 per
cent of the annual rental value of residential properties and
payable in two instalments.
Answers by Coreen Kwan, head of retail banking at CIMB
Bank Singapore
top news, The Sunday Times, July 22 2012, Pg 6
