Your 10 Questions for Senator Datuk Abdul Rahim Rahman
How would your role in real estate and then politics, prepare you for your role in the Senate?
T K Lim, Kuala Lumpur
I started my real estate consultancy firm 35 years ago and entered politics almost at the same time.
I hope my professional, political and business experience will enable me to bridge the ideals of policies and strategies discussed in the Senate with the real life experience of the rakyat and the business communities, especially those relevant to the real estate industry.
As a newly appointed senator, how would you contribute to nation building?
Firdaus Abdullah, Kuala Lumpur
I hope to address key national policies and strategic directions through comments and debates in Dewan Negara in a manner that directly relates to the man on the street and strengthen the strategies particularly relating to housing needs, real estate development and economic equitabilities.
You would have seen a number of property bubbles in your career. How did you ride them?
Siti Hafiza, Gombak
In my 35 years as a property consultant, I have gone through three serious recessions and property bubbles – in 1986, 1997 and November 2008.
The 1986 recession came 10 years after I started my practice. Since the firm did very well during the first 10 years of the practice, I could ride the recession through the savings and investments made during the profitable years. Though I had to reduce the salaries of some of my senior staff, I did not have to retrench any staff nor close any office; by that time we already had 12 offices.
The 1997 property bubble was more serious and hit us harder. Many would remember that some “big boys” went under and some financial institutions had to be restructured. Property prices were reduced to as low as 50%, and at some places even more. Again, somehow we survived without having to close any office nor retrench staff.
With regard to the recent economic downturn, fortunately Malaysia was not as hard hit as some countries in the West. Our consultancy business was hardly affected.
What is your advice to someone who wants to buy a property now? What are the pitfalls he should avoid if he were buying a residential or commercial property?
Teh Ang Chong, Penang
Property is always a good form of investment. However, do be wary of properties in secondary locations where accessibility, infrastructure and facilities are lacking as they generate poor demand and hence, poor capital appreciation, and are very hard to let.
When buying a residential property still under construction, make sure you know the background of the developer and their past developments’ track record to ensure that they can deliver on time and as per the promised quality of finishes.
Be careful of rental guaranteed schemes and promises of low maintenance charges; some are genuinely good deals whereas some are just marketing tools that have hidden risks to purchasers. I would suggest you seek advice from a registered estate agent and even the House Buyers Association of Malaysia before making any commitments.
For commercial properties, location, accessibility, exposure and market catchment are paramount factors to ensure a good rental. Also, engage a registered valuation firm to assess the appropriate purchase price of the property.
Was it difficult making it in the field as the first Malay realtor? Are you grooming your children to follow the same path?
Kumar M, Segambut
I am not the first Malay realtor in the country. When I started the business on Dec 1, 1976, there were already at least three prominent Malay practising valuers and estate agents.
Though a big challenge, it was not all that difficult to start the business as there was little competition. Whilst there were a lot of “coffeeshop” brokers, there were few companies in the practice.
I started only with a capital of RM10,000 and a staff of four including my wife who was my part-time estate agent. I was able to open two branches/offices within six months.
I have four children, three of whom work in the company. I am training them to take over the business when I retire.
What is your outlook for the property sector for this year?
Chong Ming, Petaling Jaya
In spite of the global financial crisis, the property outlook in Malaysia is good generally but you need to look at specific sub-sectors and locations.
Generally, the residential market is expected to remain stable except for high-end condominiums especially in the KL City Centre area. There is a threat of oversupply of these high-end condominiums as more units are being completed and entering the market without strong improvement in market demand, which traditionally is linked directly to rental demand by foreign expatriates.
Demand for landed residential properties in established suburban areas will continue to grow, as shown by the steady capital appreciation in those areas, albeit a lower rental compared with high-rise developments.
With regards to the office sector, there are signs of oversupply emerging with additional space of around 8 million sq ft coming into the market by end 2011 and 2012. Nonetheless, there is still a shortage of prime Grade-A office buildings in the country, especially those with “green” certification.
What would be the key elements in the implementation of the various massive projects being planned in and around the (KL) city by government-linked companies and how would it benefit the country?
Hamid Abdullah, Kuala Lumpur
The key elements in implementation would have to be complementary synergistic product formulation and strategically-timed release of products into the global market. It is also crucial to practise good governance in project administration.
The projects must not be competing head-to-head for the same market niche. Each of them has to have its own sub-niche to create a larger market catchment for these national interest projects to collectively add value to the country’s global competitiveness and attractiveness to investors.
Timing of these projects must be synchronised to capitalise on global market exposure against other international global city developments in neighbouring countries in the region.
The practice of good governance has increasingly become a key trait in a globally competitive economy. This applies to both industry players, financiers and investors as well as to the local community in terms of wealth distribution, employment creation and opportunity for businesses.
Malaysia has fallen behind in terms of the quality of life index especially in terms of security, public transport accessibility and general well-being of the people. What are some of the necessary policies to improve the quality of life?
Sally Teoh, Cheras
Under the Government transformation programme, the government introduced six national key result areas (NKRAs) to increase our standard of living: reducing crime, fighting corruption, improving educational outcomes, raising living standards of low income households, improving rural basic infrastructure and improving urban public transport.
Policies on “Decisional & Procedural Transparencies” and “Point of Accountability” are two major steps towards ensuring the success of the NKRAs. In addition, some more immediate-term solutions would be for authorities to restrict high density developments in already overcrowded areas, to ensure adherance to gazettements of Nature or Forest Reserve, and proactiveness in providing more public areas and parks for recreation and leisure activities.
I have to commend City Hall (DBKL) for “preserving” certain areas as “green lungs” by taking proactive measures to protect existing open spaces.
Being the owner of several residential properties, mostly high-rise developments in Mont’Kiara, and not having invested in stocks or bonds, how should I maintain the value of my assets as I move into my golden years? I am concerned about the possible over-supply of condominiums. Should I consolidate and move my money into landed properties?
Ang, Kuala Lumpur
I am assuming that cash flow is your main concern as you enter your golden years. An avid investor like yourself are surely aware that rental returns for condominiums are generally superior than those of landed properties. Thus, condominiums would give you better function in terms of cash flow post retirement.
Nevertheless, as new condominium units enter the market, rental prices may be very competitive, hence diminishing your return on investments. Maintaining the asset value of your condominium is a tougher task than for a landed property. You are bounded by factors such as the state of maintenance of the common areas.
You have to ask yourself whether maintaining asset value is more important than realising a sufficient monthly cash flow. If you have sufficient sources of income from other means and you are thinking for the benefit of your children, in terms of the value of their inheritance, perhaps it is better for you to cash in for a landed property.
Capital values of landed properties generally appreciate faster than condominiums, hence maintaining asset value would be easier through this form of investment. But then again, you will not enjoy the gains unless you liquidate the real estate; for which you would have to bear other related transactional costs.
What will happen to older established areas that do not come with security? Will these properties drop in value as more strata-titled projects are being planned?
I do not think the values of these older properties have dropped – even if they had, it would not have been solely due to absence of security services. Landed properties offer its owners a unique set of benefits. We can see many housing estates engaging private security service providers, with approval and consent from the local authority, to guard their housing area and hence make up for the deficiency in the security level in their neighbourhood.
Of late, gated and guarded developments have become popular and they have been fetching higher prices in the market. But this is not just due to their security services but for their concepts as a whole, with combination of good layout, design, building finishes, density of development and their landscape gardens and open spaces.