We interviewed some of the members of PropCafe – Malaysia Real Estate Property Talk & Review – From Love Hate Passion to Buy Sell Rent about their passion and what PropCafe has got to offer. Read on and find out their most interesting insights in property scene.
1. Can you briefly introduce about PropCafe and what you guys are set to achieve with the site?
Propcafe: Founded in 2012 and Comprises of 7 of us, PropCafe founders were brought together by a common interest – “Passion and Love of Properties”. With the average age of around 38 years old, most of PropCafe founders involved in property investment since 2006 and never stop buying, renting out, or selling properties.
Coming from diverse backgrounds, from professional accountant, engineer, banker to retired and matured PhD candidate, the knowledge and analytical view point from us always makes the property investment discussion a very entertaining session.
PropCafe members accumulated portfolio slightly more than RM100 millions from over 100 properties and currently holding 85 properties which worth estimated RM80 millions. The investment portfolio covers Alam Impian, Ampang, Ara Damansara, Bandar Kinrara, Bangsar South, Bukit Jalil, Bukit Ceylon, Cheras, Cyberjaya, Damansara Perdana, Desa Pandan, Desa Parkcity, Eco Park, Kajang, Singapore, KLCC, KL City Centre(-Kampung Baru, Jalan Ipoh), Melawati, Penang, Petaling Jaya, Puchong, Rawang, Sentul, Setia Alam, Sierramas, Singapore, SS2, Sungai Besi, Sungai Long, Sunway Damansara, Tropicana, and TTDI.
Out Tagline – “ From Love, Hate, Passion to Buy, Sell, Rent – Home is my Family”. In long run, PropCafe.net aim to be one of the top property blogger in Malaysia.
Stay true to be anonymous, we are using coffee nicks in this roundtable.
2. We believe most of the people will think that the property in Klang Valley is very high at this moment and is it still worthy to invest in new development property? What are your views about the situation now?
Black Coffee: Developers have done their market research and their products targeted to specific market whether mass, upmarket or niche market. It is important to know what your needs and wants and focus on your priorities. As people say, there is no such thing as perfect property and if everything is perfect, normally the price wouldn’t be perfect. For developers that didn’t carry sufficient market study and overestimate the attractiveness of their products, the market will punish them accordingly.
Café Latte : From PropCafe’s Editors’ outlook and summary of the property market, property purchase for the purpose of own use, anytime is a good time to buy a property of your choice, if it is a love at first sight, the property fits your budget and wallet friendly, by all means go ahead with it. For investment, whole other sets of criterias come into play, to know more do follow and subscribe to PropCafe posts.
Caffe Corretto: More and more affordable properties emerged into market with the size of 1000sf+ and price tag of rm450 to 550psf. Many do not come with restriction on qualification or holding period unlike Pr1ma and Selangorku etc. It is good for late investors who can tap on this market to grow its portfolio. Many claimed that this type product always come with high density but it will be norm in future if you bring forward 5 year time. All developed countries all have gone through this phase.
These properties will work particularly well if near to public transport be it MRT/LRT/KTM/BRT. Market has enough studio or pigeon hole size properties to be absorbed in next 5 years and the psf wise has risen to a very high level, unless the location is superb and very near to KL City Centre, this is the product to avoid to invest in near future (to me).
For mid and up market, now is the best time for those have longer horizon investment plan i.e. Ownstay for couple of years but slightly skew with investment mind.
A lot of people mentioned also many guru said that you should not use ownstay as a reason to invest. I disagree, with limited resources or credit limit available, for those conservative investors, to trade up or keep current property to let and move to mid or upper market for longer period to realise the profit is not a bad idea since prices are relatively high now. Then why is it good when price is still high at the moment?
You can see the developer in up market segment is either slashing the pricing or launch new properties within the same township with no hike of price from previous launches in last two to three years (search harder and it is not difficult to find in with forum provides a lot new launches update nowadays.
In fact, some even lower with some tweak on its product or slight compromise on it materials. In short, developer will change their strategy in different economic condition, we as an investors need to assess to see what is fit into your strategy too. Don’t stop investing but of course, do it within your mean.
Soy Cappuccino : This question in fact is nothing new and one of the most popular questions had been asked long time ago . It is one of the most conundrum for the expert and I believe this question will be repeatedly asked again and again be it yesterday, today or tomorrow or ten years later ? .
I see 2015 real estate market where more likely buyers would likely adopt a wait-and-see strategy for six to nine months after the implementation of the GST. For all these indicators, I am expecting to see the change in most developers in Malaysia in their marketing and pricing strategy to adopt to the market comfortable digestion level to introduce product price range of 400k-600k with smaller unit size to the market.
It will interesting also that I am anticipating the change of property market trend in term of market requirements and paradigm shift of definition of home, where the emerging of new market is getting clearer – The Gen Y&Z lifestyle product:
1. Emphasing more on Lifestyle living with premium elegant address
2. Integrated mixed development will be getting more acceptable
3. The rise of SoHo, SoVo, SoFo , SoXo …
4. New developments of township at outer Klang Valley to keep the price at affordable range (The expansion of Klang Valley’s perimeter).
All In all, I would say 2015 property market is the key year to dictate the market on 2016!
Flat white: The bull run is truly over now and as investors, we do need to be extra careful with our strategies. We saw prices of similar products either stagnant, marginally more expensive or developers are changing their strategy by offering more inferior and higher density products in order to keep the price ‘attractive’.
We do continue to purchase but limited to good products on proven and strategic locations, generally the rule of thumbs is not outside of 30kms from the centre of gravity (i.e. KLCC if we have to stress it again). We believe that locationX3 still hold water when compared to far away places like beyond Kajang or beyond Rawang or Klang.
Of course any properties launched within the easy walking distance to the new LRT/MRT always draw our attention. The key words are within walking distance, not walkable distance.
Kopi O Peng: While most investors are focusing on new launches, only handful of the investors looking at value buys in the secondary market (be it from sub sales or auction sales), that is due to the fact that developers give incentives/ rebates/ low down payment scheme / GRR for certain projects, to the extent one look stupid if to deny such deals.
Notwithstanding the above, I favor secondary market more than primary market. To me, a million ringgit 2 storey link house in Bandar Utama is always a better and safer bet than 2 units of brand new 500k similar products in a new and untested area like in Semenyih, or Sepang.
Affogato: Yes, I think the price is high – I believe the market will have to digest all the incoming – and come to an equilibrium in terms of liquidity as well as demand/supply. We are also seeing more and more lower priced launches, at the expense of space; all small sized units. Nevertheless, there are pockets of launches here/there which are investable; and have potential to bring good returns. Investors are urged to crunch the numbers, and do proper due diligence – instead of letting the Sales Assistant do it for them.
3. Do you have a systematic method to hunt for property that gives high rental yield? Please provide examples.
Black Coffee: Whether you are looking for own use or investment, the first thing you should prioritize your needs and wants. Whether location, size, budget, rental, capital gain. From there you can start to hunt your property.
Café Latte: Start your research ASAP, start with a target.
Do a lot of research in a specific area, list down spends hours to narrow alternatives around the target ,ask of questions, study rental liquidity. We can go on and on, if you find the above interesting, I am sure you will know what do to next.
Caffe Corretto: Previously PropCafe members assess property, be it rental, new and old properties, with their own strategies and criteria. However, the power of 7 brains has helped us to form a systematic property assessment methodology. Currently this methodology with 7 categories and 50 factors are undergoing the modelling and calibration process.
With big data analytics in mind and using similar financial industry modelling and validation methodology that used by all international and local players, PropCafe hopes to introduce the systematic property assessment tool and property recommendation model to the property own-stayers and investors soon. Stayed tune.
Soy Cappuccino: Systematic? No. Not any high tech or rocket science. Just if you can get the product at 20% below market valuation and with return of 5% yield is good enough. If you want more then need to work harder for it. Typically will look at location, price, accessibility and product itself.
Flat White: Proven rental returns over 5% can only be achieved via subsale property with proven rental history. This can be achieved via putting many hours in analysing distress sale and the successful bidding of such sale.
Kopi O Peng: My investment benchmark is only buy if the property is 30% below market price, and at least with the potential of 6% rental yield. Your next question could be: where to find these kinds of deals?
Work with good agents, incentivise the agents who can get you a 30% below market bargain, even they have been already paid by the seller. Google for the 20 most wanted properties in KLV online, and invest in these developments or areas. From the list, pick and focus on the area that you know best and build portfolios on that particular area. Turn around time is vital, make sure you start collecting rental income 3 months after your purchases.
Affogato: No specific example in my case, as these cases are all unique and there is no common methodology for all different types.
4. Since you have published analysis on certain projects, where are the location or area that you think might fetch future appreciation as well as rental returns? Please explain the reasons.
Black Coffee: Every location and project is buyable as long as the buyers feel the project meet their requirement and expectation. Some prefer to buy in mature township or suburb or in city centre or upcoming area. There is no right or wrong location. Otherwise some location will turn out to be ghost town.
Café Latte: Not specific areas honestly. There must be some USPs in order to have good future appreciation, if everything is status quo, price will likely to be status quo, aka stagnant.
We value a lot on potential new infrastructures, especially MRT, shopping mall integrated to transportation hub such as MRT. Development that possesses these features will be the next hot spots.
Developments where resident have the options chose his/her transportation mode, commuting town center work place with ease. Shop with ease just a stroll down the block for groceries errand for the day, a blockbuster movie next 5 minutes from your home, banking amenities at your door step! These are the convenience we believe most people will be looking forward to, living in a residence integrated with bundle of entertainment, transport , recreation amenities is a lifestyle.
Caffe Corretto: It is a difficult question as everyone has their own preference to buy ownstay house means property investors need to guess where is the subsales buyers want to stay! Investors normally go for safe bet with matured areas. However, with this criteria, normally the price won’t come cheap. So next is to expand the area slightly outbound to search relatively lower priced property.
Example, with Puchong prices flied over last few years, investors or ownstayers already started to focus more in the area like Puchong South. Same applies to Semenyih last two years when Kajang landed prices also moved up substantially. Where is the best location next? I would say, if you are not savvy enough to predict where is the demand on subsale market in next few years, then go for the location that you familiar and use the expansion concept to move outbound to see any value buy if nothing is affordable in the prime area of favoured location.
Soy Cappucinno: No specific location. I always believe every location is unique and there always a good buy within the area vice versa there will be bad apples too. The questions is how to identify the bad apples from the basket of apples! It is just that you need to study more in depth which type product is highly in demand now or in the future for that specific area.
Flat White: High traffic, public transportation able and high concentration of human habitant especially the younger generation. We believe most of these places fall within the original klang valley locales such as petaling jaya, subang, puchong, cheras and kl city areas. Klang, Shah Alam and Kajang are the off shot.
Kopi O Peng: All matured areas with organic population growth. These areas are self-contained and less dependence on the imigrants from outstations or abroad. Locals tends to prefer to stay close to their parents, parents in law, siblings, friends, or closed to their work place. Matured areas are always the safer bets.
Affogato: Developments that area close to LRT ; but not right next to it. Liquid for own stay – easy to travel. And liquid for rental market. Proven in current environment. Need to be careful as well, as developers have also priced in this selling point. Location matters, am not convinced with Semenyih, Dengkil nor Rimbayu – I believe the rental yield will be poor; and price appreciation very slow.
5. What differs propCafe.Net to other property sites (in Malaysia)?
Propcafe: We are a bunch of property investors, who are from different background with different risk appetites; and we are not aligned to any developers.
Due to our different background with different risk appetites and we are not aligned to any developers, our review are unique, unbiased and presents our distinct opinion about a real estate development. Our research is in depth and we strongly believe in “the more you share the more you will get back”, we go the distance to give the readers great insight without recycle ‘promotion’ type of reviews provided by developers.
We care we share. Our review are unique, and presents our distinct opinion about a real estate development. Our research is in depth, we go the distance to give the readers great insight. We hope our readers like what we have presented so far, and continue to give support to visit us. PropCafe strive to be largest database of independent property review database in Malaysia .
We are not like just any property portals where most of it just provides a very limited basic info of a project or desktop review kind of information and we don’t really know where those editor/writer background originated from? Blogging nowadays is rather norm for eg food blogging, car blogging, holiday blogging and the list goes on and you can find quite a number of these kind of bloggers but Blogging of property is rather rare and new in Malaysia property industry as it’s lacking of “willing to share” community especially property investors because most of them either too busy to devote their time to do like what we are doing (most of the investor will be too busy investing!) or they had become gurus and those knowledge sharing session only can be attained by attending to their talk but not everyone have the flexibility on that.
So PropCafe was thinking to share our analysis and review over the internet for anyone who knows how to use internet to have the access on it. Hopefully one day we will have the largest database of property review database in Malaysia, where anyone can be easily accessed without attending any talk or launching and etc to find out more details. Imagine PropCafe is just like a virtual property project advisor where we using our expertise and experience of property investment to analysis a project from investor or own-stay POV!
To be honest, we spend quite an amount of time to share our thought and analysis here with the public so that the public are well aware of what are they buying into. Our aims are to share our “independent” analysis based on our experience and knowledge without being “compromised” in the hope where the next generation are more knowledgeable when coming into buying their first property.
Nonetheless we still believe the best way to change the society to be wiser when come to property is the through E-Education and there is why we are here and what we are doing now. We hope that we will be an inspiration and an example to the next generation like Gen-Y & Z to continue the spirit and passion of PropCafe, to continue sharing the knowledge with the community for a better knowledgeable and healthier property industry in Malaysia.
We don’t just recycle ‘promotion’ type of reviews provided by developers. We usually review our projects from the angle of purchasers and investors perspective. We provide analytical reviews of both the good and bad points of a project.
In future, we may venture into tools that enable prospective investors and buyers to source for their properties using the pre-determined parameters and give scores or indicators of their searches.
PropCafe never stingy to praise a property if we see the value in it. Similarly, we never shy to pinpoint the flaws of the properties. We always believe in sharing but not recommending as you yourself know what you want. Most of time, what you need is some guide and analytical information that we may miss out when you visit sales office. PropCafe is the one which fill this gap. Simple, if you read someone review and all information you can get it from sales office or developer website, then what you read is not property review, that is information provider.
PropCafe certainly is not in this category. Well, PropCafe still just an independent property review as of now, but it is going to change in the end of 2015 or early 2016 when our big plan (abovementioned) becomes materialise.
Going forward the blog will evolve and in future, we are venture into systematic property assessment tools that will assist prospective investors and buyers to make decision. We will not make revolution to the property market but the change will certainly make the ownstayers and investors love us!