Cover Story
By Angain Kumar
Housing and commercial estates have been mushrooming around Ipoh, especially in areas such as Meru, Jelapang, Klebang and Lahat of late. What is behind the growth of this once nascent property market? Has this erstwhile lethargic town finally woken up or is it just a flash in the pan? Ipoh Echo attempts to unravel the phenomenon by eliciting answers from experienced realtors in the city.
The views of some of the industry’s prominent players are sought. The scribe began by interviewing Kesavan Parthan of Kesavan Realty whose office is located at Jalan Kampong Simee, Ipoh.
The absence of legislation to regulate selling, buying and renting of properties is a bane to the local real estate industry
As someone who has been involved in real estate in Ipoh for over three decades, Kesavan described the current trend as “picking up with time”. Residential and commercial properties, he said are being snapped up by buyers from all around the country. “This is the stark reality,” he posited.
Investors from Kuala Lumpur and from across the Causeway flock to Ipoh to capitalise on the relatively cheap prices of property here. “Meru Valley is a fine example. Due to its proximity to the Plus Expressway and easy access to government departments nearby, investors buy houses here and rent them out to individuals who work in the vicinity.”
The demand for properties within the city centre too is high. This is evidenced by purchases in places such as Canning Garden and Ipoh Garden. “Prices of houses in these residential areas have escalated by almost 50 per cent,” he said.
Old properties fall prey to banks which value them disproportionately thus affecting loan dispensation. But this does not deter the diehards from acquiring them knowing well that demand will eventually outstrip supply.
“They’re prepared to cough out more to buy these used houses despite the banking policy, as the returns are good,” added Kesavan. He has acted as intermediary for many of these outstation buyers.
A primary concern of new house buyers, however, is safety. Therefore, the design of housing estates like Bandar Baru Sri Klebang and Meru Desa Park, which incorporates safety and security, is a key selling point for developers.
With the introduction of the Real Property Gains Tax by the government in 2014, the risk of excessive speculation and price manipulation by fly-by-night investors are being significantly reduced.
Government Initiatives
Realtor Gladwin Agilan, from Oriental Realty, welcomes the boom in the Ipoh property market but maintains that the city should not lose its rustic image to over-development. “Thanks to government initiatives and planning, new townships with creative products are much sought after by buyers,” he said.
“Meru Raya, a northern suburb of Ipoh, is a fine example,” said Gladwin. The authorities’ decision to build a state-of-the-art bus terminal, relocating government departments and the establishment of Tenby International School in the area has led to an increase in demand for houses there. This has resulted in developers, such as Kinta Real Estate and Kinta Properties, to move in to cater to the needs of the discerning public.
Innovative products such as gated communities with recreational facilities like club houses and playgrounds are the in-thing today. These amenities are fast becoming part and parcel of the modern society and Ipoh is no exception.
Rapid growth in the area has led to capital appreciation and investors who have purchased properties in that area are reaping the dividends. A fully furnished 2-bedroom apartment (916 sq. ft.) in Golf Vista in Meru Valley now commands a rent rate of between RM1500 to RM1700. Sold in 2003 at RM150 per square foot (psf), the property is now valued at RM300 psf, double the original amount.
Gladwin refers to bungalow units in Canning Garden, especially those along Jalan Keliling and Jalan Lau Pak Kuan, which are being used for non-retail business purposes. These 5100 sq. ft. bungalow lots are rented for about RM2500 per month. They are a much cheaper alternative than buying a business premise in the location which can cost as much as RM1.7 million. This is much favoured by small-time businessmen who do not want overhead costs to burn a huge hole in their pockets.
“Premium properties in Ipoh are far more affordable than in Kuala Lumpur or Penang. Coupled with the low cost of living and a quieter lifestyle, the property market in Ipoh will go up.”
Gladwin has this advice for those seeking to purchase new properties. “Ensure a clean credit record and invest in property at a young age. Make it a priority above your other needs.”
Least Optimistic
Of all the realtors the scribe spoke to, Nicholas Poh seems the least optimistic about the growth of the property market in Ipoh. According to him, rising prices of goods and a ballooning government deficit contribute to the slowdown.
“The pattern of spending amongst the general public has changed over time. Most folks are reluctant to fork out money to purchase properties,” said Nicholas with some remorse. “There has been much speculation in the market because of the previously low interest rates but the new tax policy has placed dampeners on this development.” The reason for buying properties in Ipoh is again divided. The majority do so as a form of investment while the minority buys them for their personal use.
Ipoh’s overabundance of natural attractions, says Nicholas, makes it a preferred choice for buyers. More and more young people are flocking to newly-opened townships that suit their needs for security and safety. However, he feels it is wrong to assume a co-relationship between new townships and a booming property market.
When asked to comment on the recent increase on the minimum cap for foreigners to purchase properties, from RM500,000 to RM1,000,000, he said that it would not have an adverse impact on the market in Ipoh. He attributed this to the strength of the ringgit, as compared to the foreign currencies of those wanting to buy properties here.
The policy, he insists, has much to do about protecting the local market. However, development of properties to the south and south-west of Ipoh, covering Batu Gajah, Pusing and Lumut, is slow due to one simple reason – distance from major arterial roadways that connect Ipoh to other parts of the country.
Location, Security and Safety
“The most important factor in buying property is security,” says estate agent Jasmine Lee, also from Kesavan Realty. Due to the increasing crime rate, it has been a primary concern for most individuals seeking properties in Ipoh. Companies who hire foreigners require them to live in gated community for their safety.
Besides safety, a good location is equally important for property seekers. The trend currently is for young people to buy property closer to where they work. They prefer new townships to seasoned housing estates. One of the reasons being loans for older houses are much harder to obtain than houses in new townships.
Youthful buyers prefer contemporary homes where they are able to obtain a higher loan margin, up to 90 per cent of the house’s price. These buyers normally look at the aesthetics of their homes and the prestige attached to the houses’ addresses. “Thompson Road, Tiger Lane and Jalan Golf Club may be pricey but because of their chic address, we have youthful buyers here,” said Jasmine.
On the mushrooming of housing projects around Ipoh, she insisted that these projects are being built based on demands. “The demands are being fuelled by trendy and savvy thirty-somethings who want an upgrade from a link to a semi-detached structure, and so on.”
Location, according to Jasmine, is of utmost importance. She cites Meru Valley as an example of a prime property area which was previously viewed as “too far” by many. Now, due to its location, relative to the growth of Meru Raya, it has become highly desirable. Soon supply will outstrip demand, prompting an artificial rise in property prices.
Conclusion
When all is said and done, is managing a real estate agency a worthy vocation in Ipoh? There are many views, some for and some against. Those who have been long in the profession, like Kesavan Realty, are in for the long haul and are, therefore, unperturbed by seasonal developments. They are better equipped to ride the storm than those who are in for short-term gains.
Malaysia, unlike countries in the West, still practices a rudimentary form of selling and buying of properties. In Australia, it is mandatory that house sales and rentals be made through an approved agent. Commissions are fixed and everything is done above board. In short, sales of properties are ensured notwithstanding the time frame and the interests of both buyer and seller are protected.
Over here it is something else. Selling of properties can be an onerous effort, as owners prefer to do the selling, and renting, themselves rather than through an intermediary. The question of trust is uppermost in the minds of the sellers. The absence of legislation to regulate selling, buying and renting of properties is a bane to the local real estate industry.
Kesavan Realty
Kesavan – 019 555 8100 Office: 05 515 5555
Jasmine Lee – 016 523 2899 Office: 05 515 5555
Oriental Realty
Gladwin Agilan – 012 526 1000 Office: 05 546 6600
Nicholas Poh
012 308 7663 or 019 574 7663
