The Penthouse, a luxury high-rise development by Method 123 Sdn. Bhd. in Tanjung Tokong, Penang. This development is strategically located between Jalan Bunga Hinai and Jalan Gajah, next to Costavilla Condominium.

This 29-storey tower comprises only 22 residential units, with standard unit size ranging from 5,000 sq.ft. onwards. The penthouse of The Penthouse has a build up area of around 9,000 sq.ft.

Property Project : The Penthouse
Location : Tanjung Tokong, Penang
Property Type : Luxury Condominium
Built-up Area: 5,000 sq.ft. – 9,000 sq.ft.
Total Units : 22
Indicative Price: RM 3,000,000 onwards
Developer : Method 123 Sdn. Bhd. (Tamarins Group)

Location Map:

This month, we will explore the effects of the Goods and Services Tax (GST) on various types of properties when it comes into effect next year.

Residential properties will be exempted from GST. Hence, the seller is not allowed to charge GST on the sale, lease and rental of residential properties such as condominiums, link houses, bungalows, serviced apartments, apartments or upper floor units of shophouses which have been approved for dwelling purposes.

GST is standard-rated for commercial properties. The GSTregistered seller charges GST on the sale, lease and rental of commercial properties. This means that the commercial property buyers or investors will pay GST to the GST-registered seller on the purchase of commercial properties such as shops or retail lots, factories, warehouses, hotels and offices.

Only a GST-registered company that sells you the commercial property, such as in the case of a property developer, is allowed to charge you GST.

If you were to buy from a private seller who is not a GST-registered company, the private seller is not allowed to charge you any GST even though he is selling a commercial property to you.

A GST-registered buyer who buys a commercial property and uses the building to run a business selling GST taxable supplies is allowed to claim back on the GST incurred. The GST payable on commercial properties does not become part of his cost of doing business.

The unregistered GST buyer, however, will not be able to claim back GST for the purchase of the commercial property. The GST becomes his cost of investment.

When he sells the property later on, the GST he incurred which he cannot claim back, will likely be included in the subsequent selling price.

The determining of commercial and residential units is subject to the design (before property completion), usage (after property completion), registration with relevant authority or the Sale and Purchase Agreement (SPA). This information is useful to buyers, investors, business owners and property developers of commercial and residential properties as the differentiation of the two type of properties will affect the pricing, upfront investment and GST claim.

By MICHELLE LIAN

Source: StarProperty.my

RM5 for a bowl of curry noodles? In my day, it was 50 sen!” Sounds familiar? No doubt you hear your parents and grandparents griping about today’s prices more often than not.

The reason for these price differences is simple and straightforward: inflation. We won’t go into the mechanics of inflation and its causes here; all we need to know in this context is that it devalues a currency over time by increasing the prices of goods and services.

Now, you might be wondering about the significance of inflation when it comes to mortgage loan repayments, and how you can utilize this knowledge. Let’s start from the beginning.

A misled mindset?

There’s a piece of conventional wisdom when it comes to property loans – pay them off whenever you have spare cash, and the more the better because you’ll be done with them earlier.

However, the opposite could ring true if you take into account the inflation factor. Simply put, RM1 – 30 years ago has a higher value than RM1 today due to inflation. Going by the same logic, RM1 now would obviously be of a higher value than RM1, 30 years down the line.

Imagine that a simple roadside meal will cost 10 times more, 30 years later. So, logically, paying ahead on your property loan instalments, you’d be using ringgit that would worth more compared to years down the line. Thus, wouldn’t you be losing out by paying more than you have to, despite shortening your loan tenure?

Inflation versus interest

Of course, the one major argument against this logic is that while you might save some money by outsmarting inflation, you would end up paying more anyway due to the huge amounts of interest over the years.

To gain a clearer understanding of the impact of inflation here, we have to get a little technical. Let’s take a home loan of RM450,000 paid over 30 years at a steady Base Lending Rate (BLR) of 4.2%. Your monthly repayment would work out to RM2,201.

For argument’s sake, let’s compare two hypothetical scenarios.

Scenario 1 – Standard repayments made to bank throughout tenure length

Scenario 2 – An overpayment of RM100 is added on each month throughout the tenure length

From the table above, it can be noted that overpaying your monthly instalments consistently throughout tenure will save you RM30,729 in total. But, does that value reflect the actual value saved when taking inflation into account?

Let’s now look at the two different inflationary scenarios to get a picture of how much value you actually stand to save from repaying earlier. All calculations are based on the discounted cash flow of the mortgage amortisation.

* Discounted cash flow payment = Payment/ (1+ (inflation rate)) number of months

If average inflation rate in Malaysia is at 4% throughout tenure: The amount saved after takinginflation into account = Only RM157in today’s ringgit. This is the value of the amountsaved based on present day value.

If average inflation rate in Malaysia is at 5% throughout tenure: You actually don’t save anymoney but end up “losing” moneyin a sense.The total amount lost after taking inflation into account = RM 2,786 in today’s ringgit.

From here, it becomes clear that by overpaying and saving that additional RM30,729 in the future, translated into today’s equivalent, the amount might be much less than you think simply because of the effect of inflation.

Summary

The mentioned scenarios were based on certain assumptions. What is more likely to happen is a random fluctuation in BLR and inflation rates over time. Still, the principles shown hold true.

What we want to highlight is how you can extract maximum value from your money by just following Loanstreet’s three simple rules for stretching the value of every ringgit.

In a nutshell:

1. If loan interest rates are higher than inflation:-
• Pay off your Loan (This article disregards investment options)
2. If loan interest rates are lower than inflation = Use your money for either:
• Investments or
• Consumption items
3. In most situations, keep only a minimum amount of cash (in savings/ Fixed Deposits (FD), etc, as your money generally devalues over time (Though there are certain exceptions).

One final note, please remember not to discount the importance of saving. There are times when you just might need that extra cash, or must save up for a future use. Do, however, practice wisdom and save just enough for practical purposes.

This is our simple guide to stretching the value of every ringgit.

>> Loanstreet.com.my is a website that helps Malaysians compare and apply for loans online, free of charge.

Source: StarProperty.my

Mah Sing Group CEO Ng Chai Yong with the scale model of the Southbay City project in Batu Maung.

Mah Sing Group Bhd will develop RM3.4bil worth of residential projects in Penang and Kuala Lumpur over the next five years.

Group chief executive officer Ng Chai Yong told StarBiz two of the projects would be located in Penang, while another two would be in Kuala Lumpur.

In Penang, Mah Sing plans to develop The Coastal for the RM320mil Southbay City in Batu Maung and the RM750mil Ferringhi Residence Precinct 2 in Batu Ferringhi.

The projects, opened for registration now, will be launched in October and November respectively.

In Kuala Lumpur, the group will launch the RM1.5bil Lakeville Residence in Taman Wahyu, Jalan Ipoh, and the RM900mil D’sara Sentral in Sungai Buloh soon.

“The projects in Penang are competitively priced at around RM800 per sq ft and RM900 per sq ft respectively for The Coastal and Ferringhi Residence Precinct 2, as they are located near the sea, with accessibility to the main trunk road and expressway leading to George Town.

“The Coastal comprises 156 professional suites and 100 residential suites, with built-up areas ranging between 575 sq ft and 1,300 sq ft.

“The projects in Kuala Lumpur are attractively priced at around RM550 per sq ft for Lakeville and RM660 per sq ft for D’sara Sentral,” he said.

To add value to the Southbay City project, Mah Sing plans to develop a 750,000 sq ft shopping mall in 2016.

“The mall will take about three to four years to complete.

“We are currently constructing a 424,000 sq ft shopping podium trends@southbay city for Southbay Plaza, which is expected to be completed in 2016,” he said.

Despite the stringent bank loan conditions which had caused the property market to slow down in the country, Ng said the group’s sales had remained buoyant.

“We don’t expect the pricing of our projects to soften, as they are all located in prime and strategic locations like the Southbay project, which is a stone’s throw from the first and second links in Penang and the Tun Dr Lim Chong Eu Expressway, leading to town,” Ng said.

From Penang, the sales contribution for 2014 fiscal year is expected to increased to RM371mil compared to RM326mil last year.

“From Greater Kuala Lumpur, the sales contribution is projected to increase to RM2.217bil in 2014 from RM1.563bil in 2013.

“From Johor, the group is targeting to achieve RM831mil in sales this year, compared with RM959mil last year.

“We set a lower sales target for Johor this year as we have already launched most of the key projects in the state last year,” Ng said.

According to Ng, the Southbay project in Batu Maung has achieved sales of about RM811mil as at March 31.

“To date, the take-up rate is over 90%. The value of Southbay properties has risen by 100% in terms of capital appreciation since completion four years ago.

“A terraced unit at Residence@Southbay had risen from RM780,000 to RM1.45mil in the secondary market,” Ng said.

Mah Sing’s focus for this year is to ensure that its products stay affordable.

“Over 80% of our planned residential product launches will be priced below RM1mil,” he said.

The group’s main focus is still on the Klang Valley, where the projects are expected to contribute 60% to sales this year, followed by Johor Baru (23%), Penang (10%), and Kota Kinabalu (7%).

“The prospects of the property market in this country continue to be positive in the middle to long term as the population is projected to grow, especially in the Klang Valley, which is expected to increase from seven million now to 10 million in 2020.

“The key infrastructure projects such as the mass rail transit lines and the proposed high speed rail connecting Singapore to Kuala Lumpur will continue to spur interests in the Klang Valley,” Ng added.

In Johor Baru, Mah Sing plans to launch the RM5bil Bandar Meridin East project in the second quarter of 2015.

The projects for Bandar Meridin East will be previewed end of 2014.

“The design for the master plan will take advantage of the natural terrain of the site and incorporate several lifestyle communities comprising terraced, semi-detached and bungalow dwellings.

“Focus will be on creating a living lifestyle with particular emphasis on community participation, and security and sustainability in guarded and gated environments.

“To enhance safety further, traffic calming devices will be incorporated to control speeds and provide safe environments for cyclists and children,” he said.

Source: StarProperty.my

Taman Puteri Emas, an upcoming mixed development by Lai Keat Development in Simpang Empat, Penang. This project is strategically located along Jalan Tasek, less than 10 minutes drive to Penang Second Bridge.

This development comprises:

• 40 units 2-storey semi-detached
• 59 units 2-storey terrace
• 12 units 2-storey shop house
• 2 units 3-storey shop house