I thought that is Cantonese?.....
Chinese shld be, 谁不知道老妈是女人

Oopsi!!!

Soli soli. Gua punya salah.

Errrrrrrrr.....sori..... I don't understand Malayu at all.....

Since many developers accept and are promoting DIBS, may be it is time for the gomen to impose "build then sell" concept so that completion risks and market risks remain with the developers rather than passed to buyers.

"Build Then Sell" will kill the primary market and probably is the best way to curb the incidence of speculations in the primary market, though it is too harsh for developers.

Anyway, the govt has no intention to make BTS compulsory for now... but is looking at ways how the govt can be a genuine player in the housing sector, i.e. PR1MA, offering homes less than RM500k to meet the demands of the masses of working people. In years to come, private developers would probably need to move up the value chain to offer products that greatly distinguished from social housing like PR1MA.

Another thing is the govt may want more private developers to fund the surrounding infrastructure to the whole extent instead of relying from DBKL or Majlis. In order to enhance the value of properties, private developers would have to build their linkage to public transport or even build more new parks new police beats and new ramps/roads or BRT (bus rapid transit) to their sites. This is already happening now... but still not good enough. How many private developers out there are like Sunway willing to build a totally new modern BRT Line? How many township developers are like S P Setia able to have their own communal police?

Private developers will definitely incur many more additional costs, so their target market will also have to change to the affluent group of people. (according to bank data, the number of high net worth individuals in malaysia could easily double in years to come)

Demand and supply theory will greatly dictate the property market but that is one part of the story as there are also regulatory, environment, macroeconomics and other external factors that are also dictating the market. At the end, I think it all comes down to how confident are you in the Malaysia economy. (ASEAN economies if becoming more integrated will definitely make our economy stronger)

This post has been edited by accetera: Jun 30 2013, 05:33 PM

I also agree "build then sell" ! (now you write longer and I understand what you said )

DIBS means the developer adsorb interest expense during construction phase. So, the price of properties is imputed in the selling price (ie. price increase)

If you want "build then sell", not only does the developer need to bear the interest expense, they have to find banks to lend them money during the construction phase. So, instead of now DIBS interest mostly BLR - 2.4% = 4.2%, business loan is around 8%+. So the cost of construction is increased, and guess what ? The cost will be passed on to the consumers --> another round of price increase.

How you expect the price of property to come down ?

Boss according to some of my bankers, banks r oso forced to giv bridging loan to big timer devs like ms sps uoa etc etc a special rate which is oso BLR-x.xx. So Dev actually dun suffer much even with BTS. But ll pass on cost to buyers with common bank interest charges.

Tats the best part in BTS. Even if u know Devs r making tats much but can't stop them fr launching higher price if BTS implemented. Higher price due to the higher risk and heavier cost which ll definitely pass onto purchasers. However, even so, I ll support tis BTS with my legs up too. We purchasers shouldn't dig out fr pocket b4 the products r finalized and handed over. No to support dibs in tis case but just tat, a reasonable deposit is sufficient for Devs to kick start a project and complete it if they wanna sell off 100%. In between buyers can save lotsa headache and its not bcos of dibs where u dun pay interest, but bcos of a higher possibility of completion of the project.

For current practice, v pay up front, v service interest, v face the defects, v face the risk of abandon projects, but devs enjoy many more than purchasers. A rich Dev ll transfer the 1st fund collected fr a project to buy lands or kick start a 2nd project. Not to say its unfair. In biz world, any1 who r smarter usually turn out to b winner.

Dunno if my povs r logic onot. Pls correct me if I'm wrong.

This post has been edited by ManutdGiggs: Jun 30 2013, 06:29 PM

It is the other round. If Build-Then-Sell concept is implemented, all additional costs like interest and construction risk will be passed on to purchasers by factoring it into selling price. Also with this BTS, people will feel that 2nd hand properties have no much difference from 1st hand properties, thus this will push up prices in secondary market. Overall, BTS will only push up both 1st hand and 2nd hand properties.

BTS is to remove risk of purchasers from purchasing an abandoned project and dismiss developers without sound financial, but it cannot be used to control prices.

i agree with the interest part but why is the construction risk passed to buyers? doesn't a buyer buy only when it is completed and cf'ed under bts?

What I mean is the construction cost fluctuation risk/cost overrun. All these will be factored into initial selling price definitely.

Boss,
Banks always love to do business with big timer. They would love to provide bridging loans because they can be their panel. In the current environment, the developer can sell first, so the bank view the developer's risk as very low (bridging loan only for the beginning 1 year), hence they can provide cheaper interest loan. Anyway when the project is launched, the housing lots are sold and the risk is transferred to individual buyers, who the bank view them to have much lower risk than the risk of the business. The bridging loan facilities amount is also reduced when the units are sold.

But if it is BTS, the risk is uncertain until 3-5 years later. So the risk still rest on the business instead of individuals property owners. I think the interest rate will be a lot higher than individual property buyer's rate as bank need to bear more risk

Besides, I think for higher interest rate the developer can still charge back to the customers. More pertinent question will be can the developer secure bridging loans for their projects ? In order to get the bridging loans, the developer in BTS environment will need more resources to prove to their bankers they are capable to undertake such big projects (not every developer is favoured by the banks). And this will cost a lot more money. These additional resources may include higher paid up capital, higher value of assets to pledge with banks as debentures etc which otherwise were not needed in the current sell-first-build-later arrangement

Just my view, may not be what the banks think

As for transferring the 1st fund collected from a project to kick start 2nd project, the housing ministry has this strict HDA a/c where the funds collected for this project must be used for this particular project only. By law, they cannot utilise the funds from this project for other projects. However, this is the rules, and you know I know in Malaysia, it is easy to manipulate and malaysia boleh

Anyhow, BTS is good for the consumer. It will eliminate those abundant project problem which cause hardship to innocent buyers who still need to pay the bank despite not having the property to stay in.

This post has been edited by EddyLB: Jun 30 2013, 07:01 PM

what is "initial selling price"?

you mean under bts, buyers still need to lock into an initial price only to be legally bound by a new price if dev f'up and run into massive cost overruns?

Developers are already paying interest under DIBS and priced in.

Under current arrangement, in event of cost over run, developer could abandon the project and leave buyers high and dry. Under BTS, the developer could priced cost over run into selling price, and buyers need not to bare the completion risk.

Developers are the party making millions, why should buyers bare construction risk, market risk, completion risk for developers?

May be you like to elaborate more; "Also with this BTS, people will feel that 2nd hand properties have no much difference from 1st hand properties, thus this will push up prices in secondary market. Overall, BTS will only push up both 1st hand and 2nd hand properties."

This post has been edited by icemanfx: Jun 30 2013, 10:52 PM

If one has a choice, why want to board a overloaded boat to cross open sea, which may not survive severe storm.

Great analysis, well said~~

Anyway i do have worries on how Government of Malaysia (GoM) implement their plan~~
as far as my understanding~~the GoM always have good plans~~but the one who really implement it...mostly their own people~~in short~~the top tier developers only got a small piece of the cake~~ therefore, we really has to wait and see how PR1MA will be able to drive down the property price and benefit the people~~

Put that apart~~thousands of new unit will be available in the next 2~3 years~~
The supply is definitely plenty~~especially the pricey mickey mouse units~~assume 70% of all the new units are for own stay (VERY optimistic!!) there are a thousands more units left over for flipping~~again im trying to stress the high supply of new units~~

Demand~~hmm this is tricky~~ although KL is still the heart of Malaysia~~but recently the development seems to be moving out of KL~~partly due to scarcity of land, congestion, cost/price or even due to the MRT project...some say Cyberjaya will be next hotspot~~some say Rawang~~or maybe Johor~~it will create plenty of opportunity elsewhere~~ no doubt there are still new plans in KL but my point is~~but the demand should not be concentrating crazily at KL like it used to be~~ in other words..demand on KL maintain or only increase slightly~~

Well~~~the news says FDI is reducing for Malaysia~~we are not as attractive as we used to be to rest of the planet~~external demand should be weak~~actually really not hard to guess when Europe is struggling, US and China is slowing~~

Now~~if GoM brings cheap and good mickey mouse units under PR1MA~~i think it is not hard to guess what will happen to the pricey ones~~

Additionally, GoM is highly indebted~~sooner or later (i bet very soon), GoM has to repay it~~we are not strong like the USA, they can print more money to buy back their bonds (QE)~~GoM cant~~so be prepared guys~~~GoM will wanna take more money from its fellow citizens~~

Just my two cents on the latest development of the economy~~

This post has been edited by terryble: Jun 30 2013, 11:02 PM

Ah....... Debate on bts again, huh?
Let's speculate what is gonna happen IF that is going to happen:
1. Big jump in price due to temporary no supply of 'new' housing for the initial period it is implemented. Demand > supply temporary due to pent up demand.
2. Greater manipulation of prices from developers. Since it is fully completed, why should the developer start offering their product at the lower end of the pricing spectrum? They would start with high price. Demand good, then raise price further. If no good then only lower the prices slightly until market accepts it. In short no more bargain prices for property purchasers.
3. Less developers as only big boys gets to play this game. Less competition, more monopoly of the trade.
4. If you think it is tough to buy property in hot launches, wait till bts is launched. For good projects, only cabled people would be offer to buy. Common people would not stand any chance at all.
5. Anybody has any idea on financing costs between bts and stb concept. Stb is basically relying on purchaser's financing to finance the job. If bts, you can only imagine the additional cost the product comes with. Again higher selling prices.

There are plenty more reasons. But having said so bts do have it's merits as well. There would be less abandonment of projects. No more compromise on qualities because it would be wysiwyg.

Yes, u are right bro. So i choose a boat which i think it is not overloaded. If u think it is overloaded then u can walk, everyone have their own preference....nobody force u to go on board ma

just be reminded that unbeatable boat is not exist in this world..

Boss, trust me when I say the past few years, it is the speculators and banks that are making more than the developers.
For instance, a project selling at rm500psf. How much do you think the developer price is? Do you think their land cost, const cost, development cost, financing cost, consultation cost, administration cost, sales and marketing cost, etc would result in say less than 300psf to enable them a fat 50% profit?

Do you know that a lot of utility company actually charges a % of the sales value nowadays as contribution charges? Similar to sales and admin costs?

Not forgetting as more and more legislation is imposed on development nowadays. Eg. Minimum green space, minimum facilities such as Surau or nursery, open field for landed, etc. all these compliance again translate to cost.

Titanic was touted to be the unsinkable ship and yet it sunk.

Without DIBS, sales will slow down. How much? That is the question.... Maybe some developer will re-package.

But the impact is on the buyers (ie midfleclass worker bee) as well, I have friends who assume they will get that % of increment over 3 years and willing to take the plunge to take the loan and load up with debt, thus having little cash left at end of day. But with DIBS, they are not worried now as they do not need to service the loan in that period; after completion, majority are tempted to offload seeing 30-40% asking price.

I have friends selling after buying with DIBS, these friends still hunt for new properties; some hold on to the property( for whatever reason) even trying to rent out to minimize negative cash flow(ie rental vs monthly bank payment).

DIBS is a "good candy". Without DIBS, or repackaged variant, these group of people will look for other "investment" scheme.