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The investment thread (Finally)

dumb1

Alfrescian
Old Timer
Something not quite right here. If the buyers did not take up financing and paid in cash, it is reasonable to expect that within 10 years, the title would have been transferred to them, and therefore they are the legal owners of their homes. If this is so, then banks have no rights to foreclose their houses. Doesn't figure, or am I missing something.
You take a housing loan, the lender has a lien on your property. But your property under construction is being mortgaged by the developer who borrows from the bank to finance the construction. When the developer default payment, the bank seizes the property and your property go up in smoke. You can only sue the developer for failing to give you clean title. You bank will sue you if you default your payment. As long as you pay your loan, your lender wouldn't care whether your finally got a clean title.
 

Frodo

Alfrescian
Old Timer
http://www.coreinvestors.asia/is-iskandar-property-still-worth-investing-in-2016/

Interesting article...sorry if someone has shared this earlier.

BTW, anyone attended the flipping property seminar 2 days ago at Bukit Indah last Sunday? If have, can share what was being talked about? This seminar was mentioned at the bottom of the above article. I didn't go, even though I was there with friends, because I wasn't aware of this seminar. :p

But the person conducting the seminar seems to be a super flipper!:biggrin:
 
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Tekkun

Alfrescian
Old Timer
http://www.coreinvestors.asia/is-iskandar-property-still-worth-investing-in-2016/

Interesting article...sorry if someone has shared this earlier.

BTW, anyone attended the flipping property seminar 2 days ago at Bukit Indah last Sunday? If have, can share what was being talked about? This seminar was mentioned at the bottom of the above article. I didn't go, even though I was there with friends, because I wasn't aware of this seminar. :p

But the person conducting the seminar seems to be a super flipper!:biggrin:
My thoughts on this interesting article.

1. Iskandar is starting a new phase of rapid economic growth from services and manufacturing including multiple billion dollar projects projected to drastically increase population growth in 2016 by at least 40,000

Note that the construction period of any manufacturing factories is about 2 to 3 years. That means you won’t see any activity until 2018.

2. China developers who are projected to contribute the most to the housing glut are in fact targeting mostly foreigners and won’t make a big impact on the sales of local market, and foreigners are buying.

Not true, otherwise they would have dedicated marketing booth set up in Suntec City. But we cannot deny demographically it will affect the locals.

3. Industrial growth is still going strong and demand for industrial property continues to rise in this economy

Too few lower cost industrial SME factories had been launched. And those SILC zones are out in the middle of nowhere but those with holding power might consider when the infrastructure improved. Cheap agriculture land with potential for industrial conversion is good. Sadly, not so sure can be sold to Singaporeans.

4. Despite our own Johorians and property experts having negative view about iskandar future, more international businesses are investing more into Iskandar every year and we are on track in terms of foreign investment

Matter of time where Free Trade Industrial Zones will be opened for influx of manufacturing FDIs in Johore. Question is when.

5. Affordable housing is in short supply and developers are shifting their focus to building more of these to meet market demands instead of luxury condos. Foreigners also are slowly coming back to the market in the high end property segment (over RM 1 million)

The keyword is selective high end property segment. Does not apply to all luxury condos.
 

Frodo

Alfrescian
Old Timer
My thoughts on this interesting article.

1. Iskandar is starting a new phase of rapid economic growth from services and manufacturing including multiple billion dollar projects projected to drastically increase population growth in 2016 by at least 40,000

Note that the construction period of any manufacturing factories is about 2 to 3 years. That means you won’t see any activity until 2018.

2. China developers who are projected to contribute the most to the housing glut are in fact targeting mostly foreigners and won’t make a big impact on the sales of local market, and foreigners are buying.

Not true, otherwise they would have dedicated marketing booth set up in Suntec City. But we cannot deny demographically it will affect the locals.

3. Industrial growth is still going strong and demand for industrial property continues to rise in this economy

Too few lower cost industrial SME factories had been launched. And those SILC zones are out in the middle of nowhere but those with holding power might consider when the infrastructure improved. Cheap agriculture land with potential for industrial conversion is good. Sadly, not so sure can be sold to Singaporeans.

4. Despite our own Johorians and property experts having negative view about iskandar future, more international businesses are investing more into Iskandar every year and we are on track in terms of foreign investment

Matter of time where Free Trade Industrial Zones will be opened for influx of manufacturing FDIs in Johore. Question is when.

5. Affordable housing is in short supply and developers are shifting their focus to building more of these to meet market demands instead of luxury condos. Foreigners also are slowly coming back to the market in the high end property segment (over RM 1 million)

The keyword is selective high end property segment. Does not apply to all luxury condos.
Thanks for sharing your views! In your opinion, is there reason to be optimistic about Iskandar properties when looking into the next few years? Although there is no “bao jiak”, is it a “bao si” prospect?
 

eric3417

Alfrescian
Old Timer
Boom & Bust is a natural cycle of any Investment Vehicle property included.
But the Long term trend is always positive (UP).

So, it's all about Holding power to ride out the cycle.
As long dun Over-commit should be fine.
Coz not easy get Tenants in JB.

:smile:
 

Tekkun

Alfrescian
Old Timer
Thanks for sharing your views! In your opinion, is there reason to be optimistic about Iskandar properties when looking into the next few years? Although there is no “bao jiak”, is it a “bao si” prospect?
To me JB is already a brownfield and there will be a growth cap for any new property. You can say you have the highest condo and living in a pent house, etc Yes, there will be some clusters of new condos but let’s not carried away by those planned ones which has not been built yet. So is there potentials? Depend on how you define potential. Is it upside within a short period or is it a good place to stay and let it appreciate over time? Human nature is such that if you are not used to the area people, hotspots, red light and crime, you would be on guard and extra careful. So which are you?

People ask me why I bought into Iskandar. I had in the past given all those reasons. But what I did not give is the intangibles. I never believe in planning and promises. I never believe those politcians and those who create news to make their position looked important. Of course I am biased to say PH has potential if not I be slapping myself. But to invest particularly where you do not know much, you need information.

Knowledge of where to invest especially Industrial properties is the result of going through information obtained from searches from Government institutions such as MIDA (Malaysian Industrial Development Authority) and MITI ( Malaysian International Trade and Industry). For residential the approvals on building plans submitted to the local authorities is good enough. No, those information is not for sale. You need to dig it out yourself.
For those who are asking the same question on potentials of Iskandar, I would say everybody’s way of looking at things is different. Do you own research, do not depend on heresay, gossips or rumour. Do that little bit of extra leg work. My "bao jiak" reason is not necessary yours.

I would say, I am satisfied with the limited knowledge I have that I did make a good buy into PH. Needless to say money is important but my priorities has many other areas other than financials. And I do not look at short term. I am looking at 2019 to decide what to do with it. Yes, I am optimistic.

“Bao jiak” or “Bao si” is something like this. When you married a girl, you never know she is going to bear your kids. All you had then is you are in love and nothing else matter. If she bear you a half a dozen, would you say you married a good wife? What is she did not bear any? Is she a bad wife? The main thing that is most important is she became your wife and you are happily married. No such thing as “bao jiak” or “bao si”. :smile:

As long as you did your best, It is good enough. You do not regret saying you should have done better.
In life, you can only move forward. The future of your kids is your goals. Nothing else.
 
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Frodo

Alfrescian
Old Timer
To me JB is already a brownfield and there will be a growth cap for any new property. You can say you have the highest condo and living in a pent house, etc Yes, there will be some clusters of new condos but let’s not carried away by those planned ones which has not been built yet. So is there potentials? Depend on how you define potential. Is it upside within a short period or is it a good place to stay and let it appreciate over time? Human nature is such that if you are not used to the area people, hotspots, red light and crime, you would be on guard and extra careful. So which are you?

People ask me why I bought into Iskandar. I had in the past given all those reasons. But what I did not give is the intangibles. I never believe in planning and promises. I never believe those politcians and those who create news to make their position looked important. Of course I am biased to say PH has potential if not I be slapping myself. But to invest particularly where you do not know much, you need information.

Knowledge of where to invest especially Industrial properties is the result of going through information obtained from searches from Government institutions such as MIDA (Malaysian Industrial Development Authority) and MITI ( Malaysian International Trade and Industry). For residential the approvals on building plans submitted to the local authorities is good enough. No, those information is not for sale. You need to dig it out yourself.
For those who are asking the same question on potentials of Iskandar, I would say everybody’s way of looking at things is different. Do you own research, do not depend on heresay, gossips or rumour. Do that little bit of extra leg work. My "bao jiak" reason is not necessary yours.

I would say, I am satisfied with the limited knowledge I have that I did make a good buy into PH. Needless to say money is important but my priorities has many other areas other than financials. And I do not look at short term. I am looking at 2019 to decide what to do with it. Yes, I am optimistic.

“Bao jiak” or “Bao si” is something like this. When you married a girl, you never know she is going to bear your kids. All you had then is you are in love and nothing else matter. If she bear you a half a dozen, would you say you married a good wife? What is she did not bear any? Is she a bad wife? The main thing that is most important is she became your wife and you are happily married. No such thing as “bao jiak” or “bao si”. :smile:

As long as you did your best, It is good enough. You do not regret saying you should have done better.
In life, you can only move forward. The future of your kids is your goals. Nothing else.
Thanks again for taking the time to pen down a detailed answer. If I understand you correctly, it means taking the time to do your own research, and knowing for yourself why you even want to buy a property in JB. Armed with whatever knowledge that you have satisfied yourself with, you can then take the plunge with both eyes opened and not look back.
 

Tekkun

Alfrescian
Old Timer
Thanks again for taking the time to pen down a detailed answer. If I understand you correctly, it means taking the time to do your own research, and knowing for yourself why you even want to buy a property in JB. Armed with whatever knowledge that you have satisfied yourself with, you can then take the plunge with both eyes opened and not look back.
Yup. Do it with full knowledge and after that no regrets whatever other say.
Eg. Let's say you want to buy a condo. There's so much land around it. You need to look at the masterplan to see who is going to be your neighbour. Would you prefer a hospital, a police station or even a mosque next to it? Developers all very smart. They will gloss their brochures nicely. Afterall they are not responsible to tell the real picture of their neighbour. They only need to say what their property is.

Or you saw a university coming up. The next thing you need is to study about student accommodation. These are mid end condos that will have rentals. Make a mistake and buy high end condo, you will not get your yield. Find out in advance who is building what and when.

But cannot afford to make mistakes when it come to industrial properties. Too expensive to be careless.:smile:
 

sgcount

Alfrescian
Old Timer
When we are talking about Iskandar, I think it's really best if we buy for our own use. Then there will be no worries. Renting and reselling are both out of the question for most. Buyers must be gung-ho and have stable financials to not expect to get back the money. Just like buying a car or splurging on some expensive hobby.

I look at the pathetic rental amount, I think it's better not to rent out. It can't cover even half the monthly loan amount. And the chances of tenants not taking good care of the property seems to be high.

I've looked at the different areas of Iskandar on the map and also went to parts of it. The whole place is damn huge!!! As they often describe, it's 3 times the size of SG. There is still a lot of land that can be developed. Even for those land parcels which have already been sold, you will see that many developers have not even started doing anything to them yet in the last 1-2 years.
 

eric3417

Alfrescian
Old Timer
Perhaps sustain a loss on initial investments but not possible Total Loss.
Economic Cycle is unpredictable. U never know what's coming. Stay open minded.

:cool:
 

Frodo

Alfrescian
Old Timer
Perhaps sustain a loss on initial investments but not possible Total Loss.
Economic Cycle is unpredictable. U never know what's coming. Stay open minded.

:cool:
Unless the developer run road, it should not be total loss. Perhaps from investment point of view it is not productive or efficient or worthwhile, especially if one is thinking of flipping and profiting within a few years and this cannot be realised. But if buyer can hold on I believe he can still gain in the longer term.
 

sgcount

Alfrescian
Old Timer
We can't predict the future but what I meant is, there will be a lot less stress if we are buying solely for own use. I've accepted that fact. Previously, I was totally on the opposite side of the camp, ie mainly for investment. But after much reading and asking around, realized the rental really cannot make it or even non-existent.

Also, in order not to have false expectations, it's better to make sure one is prepared to fork out the finances. If along the way one needs the money, it may be impossible to get out so easily. Longer the gestation period, there will be more money out also due to paying the various expenses and bank loan.
 

Tekkun

Alfrescian
Old Timer
We can't predict the future but what I meant is, there will be a lot less stress if we are buying solely for own use. I've accepted that fact. Previously, I was totally on the opposite side of the camp, ie mainly for investment. But after much reading and asking around, realized the rental really cannot make it or even non-existent.

Also, in order not to have false expectations, it's better to make sure one is prepared to fork out the finances. If along the way one needs the money, it may be impossible to get out so easily. Longer the gestation period, there will be more money out also due to paying the various expenses and bank loan.
Happy to see that you have come to terms.
Sorry to say this but when you first came in to this forum, you were really upset.
Let's hope the developer contribute back through late delivery.

Life is a journey. We learn new things every day.
 

sgcount

Alfrescian
Old Timer
Happy to see that you have come to terms.
Sorry to say this but when you first came in to this forum, you were really upset.
Let's hope the developer contribute back through late delivery.

Life is a journey. We learn new things every day.

Thanks. Have to face reality and come to terms with it. If got chance I prefer it to be for investment. Otherwise, just have to enjoy it!
 

Tekkun

Alfrescian
Old Timer
How do we actually spread our investments in our daily life?
Bonds? Unit Trusts? Reits? Equities? Fixed deposits? Condo? Landed? Factories? On going business? Currency? Tust funds? CPF? etc....

----------------------------------------------------

IN the last two years, the Employees Provident Fund (EPF) has been able to declare dividends of more than 6% even when banks were offering negative interest rates for deposits due to the performance of its porfolio of foreign equities.

In the first quarter of this year when the global markets were down, the returns from the foreign equities portfolio were lower and this has impacted the overall gross income that the retirement fund earned. The trend is similar for most other funds in the world.

If the equities market does well, so will retirement funds.

It is easy to see why the equities market is important for retirement funds such as the EPF to garner returns of 6% or more.

The EPF’s asset allocation can be broken into four broad areas, which are fixed-income instruments such as Government and corporate bonds, equities which are stocks, money market instruments and assets that hedge against inflation.

A total of 51% of the funds managed by the EPF are placed with fixed-income instruments that offer yields of less than 4%. That has been the case since 2009.The amount of money placed with equities markets locally and overseas is 43.8%.

Of the remaining amount, about 1.9% is placed in the money market instruments, while 3.2% is invested in property and infrastructure assets such as highways and buildings that give long-term returns. In a nutshell, essentially 94.8% of the funds are placed with the fixed income and equities markets.

However, with fixed-income instruments such as Government bonds giving a return of 4% or less, obviously the returns from the equities market have to be much higher for the retirement fund to generate a return of more than 6% per annum over the last five years.

A look at the 2015 annual report lends credence to the fact that the income from the investment in equities is key to contributors getting a dividend of 6%. Last year, of the gross investment income of RM44.23bil, almost 59% came from investments in equities.

What’s interesting is that the returns from the foreign equity investment are more than 50% of the total earned from this segment of investments done by the EPF.

That has been the case for the past two years at least because the domestic market was not performing.

Hence, contributors have been enjoying dividends of up to 6.75% because of the EPF’s investments in foreign equities that started some nine years ago.

In fact, after the 1998 crisis, there was reluctance to allow funds such as the EPF to place their money outside Malaysia. The reasoning was that the currency risk was too high.

However, after some risk management studies were done by the retirement fund, it was decided that the EPF should place some money outside the country for two reasons.

Firstly, it was a matter of prudence in case the domestic economy goes into a slowdown, as it has been the case in the last 18 months.

The second reason is the fund was becoming too big to stay invested in Malaysia only. There was a “concentration risk” and it was a big problem. The opportunities offered in the domestic market were not big enough for the EPF.

For instance, the Bursa Malaysia market capitalisation is about RM1.2 trillion now. After stripping out the companies that are not “viable” for long-term investments and family-owned entities where the shareholding is controlled, there are not many companies left for the EPF to place its money in.

The EPF’s total amount allocated for investments in equities is 43.8% of its fund size or almost RM300bil. If the EPF were to pour the entire amount into Bursa Malaysia, it could control all the major stocks.

There would not be any room for other funds to enter Bursa Malaysia. The EPF would also not be able to exit its investments and it cannot earn any trading profits. Clearly, there is limited depth in Bursa Malaysia for a fund as large as the EPF.

Even when it comes to property, there are not many choices for the retirement fund if it were to place all its money in the country. Assuming 2% of the RM685bil is allocated to buy property, that is almost RM14bil.

If forced to place its money only in the domestic property market, the EPF will end up buying assets that are far from desirable for its contributors.

So, the EPF has to continue placing money outside the country if contributors are to stand any chance of earning 6% dividends.

The fund has been cautious in placing money overseas and there is no reason to doubt its ability to assess risk in the future.

The EPF’s investments overseas started with an allocation of 10%. Initially, the money was placed very slowly through external fund managers.

After the 2008 financial crisis when the United States was hit by a financial crisis, the EPF aggressively took up positions in the overseas markets. Today, 25% of its total assets are placed outside Malaysia in the form of various kinds of assets.

It has not grown in the last year or so because the Government has placed restrictions on funds not putting their money outside the country. In fact, they wanted the funds to sell their assets overseas and bring back the money to help strengthen the ringgit.

But the reality is that it is not wise for retirement funds such as the EPF or Kumpulan Wang Amanah Pencen to be restricted in their choices of investments.

The ringgit will improve when the fundamentals of the country get better. It will not change even if the funds are to liquidate their positions and bring back the money.

Going forward, the trend is for retirement funds to place more money outside the country as the size grows. The domestic market is just too small for them.

For instance, Norway’s pension fund derives its income from the country’s surplus oil revenue. It has placed 70% of its money outside the country because the economy is too small. The fund is the largest in the world with assets under management at US$875bil.

A point to note is that Norway’s fund is not a real pension fund but the country’s reserves from the surplus of oil revenue. It can take on more risk.

As for the EPF, it is a retirement fund and gets its money from depositors. It may not be able to take as much risk as the Norway fund.

However, considering the EPF’s track record, it should be given more leeway to put money outside the country if and when the investment panel feels that it is appropriate.

The EPF’s returns are based on realised profits. So, it is real.

The retirement fund has a proven track record and should not be lumped together with other funds that have placed money outside the country and have not brought about any returns.

As proven in the last two years, without the income from the foreign equities market, ordinary Malaysians would not be able to enjoy the returns of more than 6%.
 
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