Mah Sing announced recently about their RM3.4 Billion worth of development in both Penang and Kuala Lumpur over the next 5 years. Two of the projects would be located in Penang while another two would be in Kuala Lumpur. They are The Coastal (RM320 million) in Batu Maung and the Ferringhi Residence Precinct 2 (RM750 million) in Batu Ferringhi. Personally, I would love Batu Maung more but if you are more Penangite in heart, then perhaps Batu Ferringhi. In Kuala Lumpur, the projects are the RM1.5bil Lakeville Residence in Taman Wahyu, Jalan Ipoh, and the RM900mil D’sara Sentral in Sungai Buloh. Personally, I like the one in Sungai Buloh. That will bring up the whole area surrounding it.
Next is something which I have always been wondering all along, the quality of the buyers for some of these reputable developers which typically carry premiums over the not so well known or well known for cutting corner. If I remember correctly, when Mah Sing launched their landed project in Batu Maung, the premium it carried was close to 20% versus a project in the surrounding. Today, this same project has appreciated 100%, according to Mah Sing. Thus, I think in this regard perhaps the bank rejections in terms of loans for their buyers are lower than the industry average. My friends in the industry were telling me about one developer which had over 50% loan rejection. If true, it means banks are still very strict. if not true, it means no one is buying what the developer is selling and they are trying to cover up. Either way, it’s good for the industry. Forces developers to rethink about their pricing strategy as the current market is indeed much more savvy and informed.
Personally, for primary properties, I am skewed towards reputable developers, not necessarily Mah Sing and also a few boutique developers whom I know personally. To me, if you are thinking about development as a continuous business for a very long time, everything should be done in the most professional manner possible. Do not sell lower but instead of actually lowering your margin, it’s just the lowering of the overall quality. Instead of the thicker tiles, you use the much cheaper and more fragile thinner tiles. For buyers, it’s pretty straight forward, always visit and understand what are some of the qualities of tiles which are in the market today. Then, you decide whether the developer is cheating on you or are they giving what they are promising. If they did not, make noise, put in Facebook and I think if the effect is big enough this particular developer would then be willing to shed 1% extra of its margin to rectify what they promised but never delivered. 🙂
written on 12 August 2014
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