Monday, 21 September 2015

Sunday Dinner (+ Property Talk)

The title of this entry might not sound enticing at all, but yesterday dinner was truly an exceptional experience to me. Me and my family went to Setapak, KL to visit my younger sister who was staying in UTM hostel, so we went out for a supposedly haste dinner at a hawker centre. As we arrived at the hawker centre, there was no free table available so we had to share the table with one of the tables with only one guy sitting there enjoying his meal. But it eventually turned out to be a meaningful dinner.

If you know me well enough, I am a person who prefer to have meaningful conversations, conversations that can keep me pondering about various random ideas and hopefully leading to something constructive upon some deep thought process. The guy who was sitting right opposite us on the same round table, was a pensioner in his 60s hailed from Manchester, UK. I got quite excited and started to chat with him since I myself have just finished my study in London for three years, knowing that I have just bumped into a elderly man who can give me some insights.

Here are some questions that I asked him (in red) and below are his answers that I have tried to summarise in short:

1) Why did you choose Malaysia, specifically KL, for retirement instead of UK?

Deducting all the hideous factors of Malaysia such as its politics, street rallies and so on, Malaysia is probably one of the best places to retire in the world. Yes IN THE WORLD! Having limited retirement funds, he decided to move to Malaysia since the cost of living here is much cheaper than in the UK. Commuting cost here in KL is cheap with RM2 being sufficient to bring you to KLCC for weekend shopping, coupled with its vibrant nightlife. Can you imagine what life will be like in the UK as a pensioner? Sitting around the house watching TV and can't go anywhere because everywhere is so expensive. The best thing here is probably the food. The food here in Malaysia are cheap and delicious, which I myself wholly agreed on.

2) How do you normally spend time here?

Since he is a pensioner, he has got nothing much to do but still started off his day productively by going to the gym in his condominium. Then he will have breakfast, after which he will spend some time reading and going for some walks. In the evening he will go swimming or jogging, and the day ends with dinner. He lives with his wife, while his children are all in the UK working, as expected. He is pretty much living a good life here, and quite an active one too.

Somehow, we talked about property in Malaysia and how the prices here are getting higher and higher, almost unattainable by young working adults (like me) without some financial assistances from their parents. He said that the prices of properties here are determined by demand, and there are still demands by many foreign investors. IJM, Mah Sing and many other property developers are still coming out with lots of different projects, and these projects are still selling well. Blocks after blocks of buildings are being sold. Unlike in the UK, developers adopt build-then-sell system, while in Malaysia the developers work on sell-then-build basis.

He said Malaysia is all about property, and there are only three prime locations where the investors would put their money on for properties: Hong Kong, Singapore and lastly... Malaysia.

"This Ang Moh is not that simple", I thought to myself.

"Wouldn't you think the property in Malaysia are already overpriced?", I asked.

"The foreigners, especially the Chinese, Japanese and Koreans, are still putting their moneys on the properties here. As long as there are demand, the projects will still be running." Then he proceeded to give me a few examples where the multiple projects have been sold out. He himself is owning two properties here in KL, and two properties in Penang. Cash-rich!

He gave some pretty solid advices on me having to start thinking about retirement and start saving money, setting money aside for EPF and so on. Damn, he even knows about our EPF! But again, he has lived here for 11 years haha! Because what most young people do nowadays is spending most of their money and barely have enough savings left from their monthly salary. Of course I wouldn't be able to give you hard evidences (statistics or whatnot), but if you have asked enough people around, you will probably notice some general trends among people of different ages. But I assured him that I have started accumulating, slowly and surely hahaha!

So here it is, properties here in Malaysia are mainly driven by foreign demand than local demand. So it won't be surprising to see a whole block of condominium, with just a few lights switched on at night. Wouldn't it be unfair to our own local people? The Government has been launching many initiatives to help the lower/middle income groups to finance their own houses by building affordable houses, but are they doing enough?

What about those whose income fell below RM4k but slightly above the average median income of RM3200? Skim Rumah Pertamaku / My First Home Scheme introduced in year 2011? For the My First Home Scheme, the maximum property value is RM400k, but how often can you find a property worth RM400k (for joint borrowers with combined gross income not exceeding RM10k per month only) or less nowadays in prime areas (around KL)?

This morning I spoke to one of my seniors, and he was saying the properties here still sell pretty well for those below RM700k. Any properties above RM700k has seen a slowdown in sales, according to his friend who is a property agent. Seriously though, RM500k for a unit below 1000 square feet (3 bedrooms 2 toilets) is not impressive at all. I will say it's overpriced even, but that's the market price now! Imagine 15 years ago, my dad bought a 3000+ square feet house with only RM230k, and now the price is about RM550k. Property price growth is even faster than inflation.

Maybe I should just wait for the bubble to burst... Patience is a virtue.

Signing off.

Favourite Music! =)