Property Share Bond FD Gold

Capital Yes Yes No No Yes

growth

Income Yes, rental Yes, dividend Yes, coupon Yes, interest No

growth rate

Capital risk Moderate, High, market Low, Low chance Low, only lost
the market is volatile bondholder is bank or stolen
reality does taking bankrupt
not fall too precedent,
much initial
investment
will return in
a maturity
period

Income risk Moderate, High, the Low the Low, interest No

depend on dividend is coupon rate is is fixed
the quality of not fix fix
tenants

Initial High Low High, can be Middle, Low

investment 10 years, and Maybank
the minimum RM1000, 2.6-
RM250,000 2.9%
Tax High, RGPT Low Low Low Low

Convenience Moderate, Low Low Low Low

amount of depend on
management the tenants

Illiquidity Illiquidity, Liquidity, Middle Middle middle

need long paper
holding investment
power.
 Property investment
Direct Indirect
-owner, investor, developer 1. REIT
2. Share

Pro Pro
- Have ownership to make decision - Low risk REIT
- High income - High income Share
- Able borrow money - Low initial investment
- Low management cost REIT
- Divisible
- Liquidity
- Short-term investment

Con Con
- High risk - Partial ownership
- High initial investment - High risk Share
- High management cost - Low income REIT
- Indivisible cant buy or sell part - High management cost Share
- Illiquidity need strong holding power - Unable borrow money
- Long term investment

Fiscal Policy Monetary policy

Expansionary Policy Regulated by ministry of
When: finance (MoF) by reduce tax
Unemployment rate high and increase government
Inflation low spending
Recession
GDP low Reduce tax: exemption, covid,
automobiles relief tax
Government spending:
economy plan, having
incentive
Regulated by central bank
negara by changing the
interest and money supply
Reduce the OPR to 1.75%
Increase the money supply, for
lend more money to people
Encourage people spending

Purpose is to stimulate
economic

Contractionary policy Increase tax Increase rate opr to 3% reduce

Reduce government spending the money supply, discourage

RPGT exemption for property disposal is expected stimulate the property market especially
secondary market in jan 2022
 Developer funding
Short-term
-serve as the initial development cost and
working capital
- land cost, construction cost, professional cost
- more suitable for merchant investor / trader
- who don’t want hold property long time. Will
construct the building and sell once completed
Debt
-issue bond or loan
Commitment: pay the coupon rate and the
initial investment will return in a maturity
period
Benefits – developer does not lost the
ownership and power, the bondholder cant
involve in company activities, cant influence the
decision making
Secure loan: secure the collateral which is the
asset, share, land, property, plant and
machinery
Unsecure loan: secure without any asset and
get the fund, based on the trust of the
company background, strength, and reputation
Long-term
- Same as short-term as working capital
- Fund the retention of project in a long
period time
- The market is not stable,
- Minimize the effect of void period
- May stop funding when stable tenant,
normally 30 years
- more suitable to investor
- who will construct building and hold for
the continuous income
Equity
-is a company capital
-issue share
-joint venture with other company to get
funding
Commitment: is pay the dividend (not fix),
promote the share to the existing shareholders
in a low price
Reason is company need fast money, the
existing shareholder more familiar to company,
a incentive to shareholder
Con – company lost the partial of ownership.
The shareholder has the power, to involve in
company activities. Can influence the decision
making
If company cant pay the dividend the
shareholder may lost the interest and quit from
the investment
Joint venture can share the knowledge, risk,
workload, capital, resources like labour
 Corporate funding Project funding
-raise the fund on company itself -raise the fund on the project
-more reliant on the creditability of company - more reliant on the profitability of the project
-equity finance: new share, right issue (existing -equity: joint venture with other big company
shareholder in a discount), retained earnings -debt: bank loan
(surplus profit after expenses)
Debt: secure and unsecure loan, bond,
debentures Big, middle, small company: yes depend on the
project
Big company; yes
Middle: depend
Small; low

Short-term and long-term funder in property investment

- Based on the liability (short or long), payment and compensation (certain and uncertain,
predict and unpredict), choice of investment (short-term-share, FD, REIT, long term – bond
and payment)
- Financial institution will diversify the risk, EPF 2021 46 bond and short-term loan , 45
share ,5 property, 4 FD

Typical of development

Forward funding

Project management fees

Rental sharing

Sale and lease back

Profit sharing and profit erosion

Claw-back agreement

Sustainability of property

Land

-site selection

-site location

-brownfield redevelopment

Finance

-green loan

-incentive sustainability property development

-carbon taxation

Planning

-transport and access, TOD

-ecological and land issue

-zoning and use issue

Design

-energy and carbon

=ventilation reduce the emission

=renewable energy

-waste management

=increase the recycle and reduce the waste landfill

=recycle bin in site, or using precast or prefabricated

-material selection

= using recycle material instead of virgin material like timber

=steel

-water use

=reusing the existing water grey water from washbasin or washing machine, or using black water
from toilet

= collect the rainwater in site

=install dual flush or low flush wc, water metering and sensor

-pollution and biodiversity

=use less machinery like pilling, reduce air and noise pollution

=enhance biodiversity, the green space such as the green wall

-life cycle costing

=consider in long term, not only initial cost

=led lighting rather than tube lighting

-health and well being

=90% time in house

=natural ventilation

=interior planting
Construction

- Privacy
- Personal control
- Interior planting
- Noise
- Colour
- Access to window
- Lighting

Reporting and rating tool

- Corporate social responsibility

- Sustainable reporting

Social

- Increase Job opportunities, secure the income and reduce the unemployment rate
- Green space and public space, life of quality and generate a community
- Inclusivity and accessibility, consider the special need resident, escalator and wheelchair
ramp
- Health and well-being, natural ventilation, personal control, interior planting, colour, lighting
- Restore heritage building, historical building can create a sense of unity to social

Economic

- Increase job opportunities, stimulate the economic

- Mixed use development TOD project, residential, commercial, infrastructure in same area,
increase accessibility and the value of land
- Infrastructure accessibility, attract the tourism
- Green sustainability with certificate (GBI) attract investor
- Energy efficient, like LED renewable energy solar panel reduce the operation and
maintenance cost
- Local trading and procurement, select the local material reduce the transportation cost
 Land cost
Risk increase land cost
Cause: planning of infrastructure
Due to scarcity and saturation of land in CC, developer shift to sub-urban. The demand
increase, price also increase
Solution: purchase the land after getting the planning consent, but landowner may increase
the price. then developer can negotiation to lock the price. or joint venture with landowner,
but need to ensure there is surplus profit to share

Building cost
Risk increase the building cost
Cause: market is volatile, need time to planning. Inflation increase the material cost. If have
VO then may also increase cost even delay
Solution: suitable procurement design and build. Impose contingency sum for unforeseen
event and additional cost. Impose the liquidated damage, value management

Rental value
Risk reduce rental value
Cause: cancellation of major infrastructure. Fiscal policy reduce the tax and monetary policy
reduce the interest. Increase the purchase power. Purchase rather rent or sell rather rent.
Too many competitor
Solution: pre-let incentive for early bird. Secure the income. Prevent oversupply. Shorten the
void period. Bank more confidence. Reduce the funding cost
Secure anchor tenant like eaon, cinema. Attract small tenant. More confidence

Interest rate
Risk of increase OPR of monetary policy
Cause: delay of construction, bank still charges the funding cost of interest
Solution: negotiation with bank fixed the interest7 -7.5%. Pre-let/ impose LD

Building and rental sensitive, which a little bit change bring major impact to the profit. Developer
need take care, not underestimated