Starting this thread because I wanted to share my views and feedback on this project.

Previously, there were 2 thread created by forumer @hoe_blackout but he has removed it after I revealed the potential risk behind the project. Not wanting to let my effort go down the drain, I've decided to capture share my views on the whole project by creating my own thread. This is the original post of the thread:


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My take on the project and the concept:

I stay in PD and feel that although there has been quite some development in recent years, such as the PD Waterfront project (with names like McDonald already in operation with Starbucks and Kenny Rogers coming soon), I still feel that it will be hard for these type of investment (GRR for hotels/resort).

Chances to flip is very hard as the market is very small, especially if you are looking at PD itself. And if the contract is not renewed after the first 3 years, what are you going to do?

Bear in mind, its 3+3+3, that means the 2nd 3 year contract renewal is subjected to the 1st 3 years operations. Will you be able to sell it after that? If no, then you would have to rent it out on your own. For a resort/hotel, that means you will be very busy as interested parties would most probably be short term guest (a few days only).

You would be lucky if you get a guest that wants to rent for more than 3 days (what's there in PD?!?!?)

While the returns for a short term/daily rental might be ok, it will also be very time consuming and energy sapping. Unless you have a few units, and also a maid to do the daily housekeeping once guest check out, I would prefer to avoid such investments.

There are many GRR schemes in Port Dickson (most of the resorts/hotels are sold based on this scheme) and a handful of them only are barely surviving, others are close to being dead.

And more importantly, on the developer:

Splash is developed by TANCO HOLDINGS BERHAD. So far, for the past 3 quarters for Financial Year 2013, the company has been making a loss of RM10million!

To make things worse, this company was once a PN17 (financially distressed) company few years back.

http://www.thestar.com.my/story.aspx?sec=b...iness%2f8760719

http://www.propertyguru.com.my/property-ne...ater-theme-park

Please do your due diligence before investing in this project.

For me, it is not feasible at all since the concept is hard to sell and it is a product of a very problematic company.

Thank you for sharing, very interesting points that I myself wasn't aware, about BCH.

Just like you, my main objective is to share what I know, especially regarding the developer, in hope that other investors don't fall victim to TANCO.

PD Waterfront service apartments would be a better bet.

Incidentally, I am quite familiar with Malacca too since I travel there every week, for work related stuff.

Malacca's property scene is much more active, with more volume. I am guessing you are referring to Straits Residence? My response will always be, 'What's next once you get back the property?' or 'What's next if they don't extend the contract anymore?/Only for the first 3 years?'

Worth to highlight that it will be a real challenge to handle it on your own, especially if the rent is for short term only/a few days. The high ROI (6%) that developer is offering is based on the daily rental model, which will yield higher returns but at the same time, take much more effort since there is housekeeping and so on.

Unless you have a few units and have the time, and also a maid, I think it's better to look at other opportunities, it's just not worth the hassle, in my opinion. Market/demand for rental will be there, but are you up to it to do the dirty work on a daily basis?

Meet guest, collect deposit, record details, pass to them the keys, collect back keys, check suite condition, do housekeeping.
That's one complete cycle.

You have to remember, it will still be very hard because there is simply not enough volume, if done by agency.

Let's take some numbers so that it's clearer. Straits Residence will be managed professionally for 6 years, with 300 units, 6 full time front desk staff, and 10 full time housekeeping staff. If there is an agency, and let's say they manage to secure 10 units, they will still at least need 2 full time runners (equivalent to mobile front desk staff) and at least 2 housekeeping staff. Cost per studio unit to serve is already high. Plus, what track record do they have? I'm assuming there are such agencies around and already in operation, no doubt about that. But they are most probably small ones with no solid track record. Those that are good at it, will have grown to be the management companies of hotels and resorts that we know of.

Another thing that you need to take into account when doing ROI for GRR investment product is the cost to refurbish. If I'm not mistaken, the cost of refurbishment is equivalent to 1 years rental! That means, for your 6th year, you will not be receiving any rental at all.

Thus, your ROI = [(rental per month * 12 months * 5)/ (12 months * 6)] / cost of your studio unit. This will work out to be just under 5%, and not 6% as claimed by the sales agent.

I'm a sucker for details, so pick up all this points, besides personal experience. I have a GRR property too but its for students and in KL.

You are right, in 2020, that pigeon hole in centre Melaka should be worth much more than what it is selling for right now. But again, to remind you, liquidity is not really there, relative to properties in KL, Penang or JB. That's my only real concern, where your money will be stuck and might not able to roll when you want to.

Wow, it's almost a year since I started the thread. Hope nobody got caught in the investment. Unless one is based there in PD with lots of time, as mentioned previously, stay far away from such investments.

Yeah, agree on that. Since he/she has already committed, no point still trying to bring up all the risk and cons of the project. Rather, it's always about moving forward. Afterall, whether a property investment is acceptable or not depends on individual preference.

If he/she is comfortable with it even though there is minimal capital appreciation or not much liquidity, then good for him/her.

Best to seek a full refund then. If got small admin fee, then just let them have it. This project is really very risky, from my personal evaluation. Better to be safe than sorry.

If you want to take them on, you can take it to the housing tribunal. Under the law, they are not allowed to collect deposit, although almost every developer does that. You might as well give it a shoot, nothing to lose.

The 9 years is a 3+3+3? If yes, do take note that the % could be possibly REDUCED after the 1st term of 3 years. Have a GRR project, the nett rental reduced by 10% for the 4th-6th year (2nd term of 3 years). Long list of reasons including GST and rising cost. Oh well....

Yeap bro. It's dead. Six feet under. But on that note, although this project is dead, PD is certainly much more happening than it was 7 years back. Short term rental has certainly gained traction with platforms such as AirBnB more mainstream now. More F&Bs and also more tourist activities in PD. But all in all, still far from being a real estate investment heaven.