Is real estate still a viable investment asset?

 While Malaysia remains a nation of growing young working population, the main challenge with regard to homeownership is the lack of wage growth rather than the lack of affordable products.

In the case of real estate, it has its own merits because it is tangible and with the title of the property under your name, it is physically yours.

FOR the longest time real estate is the preferred investment asset class for many people. There are fond memories when it comes to making the right investment and more so for property owners who have enjoyed capital appreciation or significant rental yield by investing in real estate.

We also frequently hear of stories on how ordinary working and middle-class families successfully provided education for their children through the refinancing or selling of their own real estate assets.

Even in the grander scheme of things, real estate constitutes 7% of the total RM1 trillion in asset under management of our Employees Provident Fund.

How is it that this popular asset class has fallen out of favour with so many investors today?

Whenever I speak to clients on investments and their allocation, I would hear all kinds of unconventional investments schemes (regardless of whether legitimate or not) but at the mention of real estate, they would tell me that the golden days are long over.

It is rather demotivating to hear such comments, especially when I have been involved in this sector for a large part of my professional career while witnessing its heydays.

Economic cycles come around

The study of economics and its application may be subjective at times but there is one single theory that holds true over the course of time – that is the economic cycle.

Every asset class goes through a cycle, including real estate. From boom to bust and boom again, various factors play a part throughout the cycle.

If at all we look deep into the real estate cycle, we would easily realise the trend or pattern through each cycle.

Many decades before, real estate was scarce and buying property was a very expensive affair due to the high interest rates on loans.

In the 1990s, the loan interest rate per annum is close to double digits.

In addition, there are no full flexible or auto balance reduction loan offerings unlike today.

Coupled with very low margin of financing, mortgages are costly becoming the main barriers to homeownership. Then there is the issue of the law on property development which is not as comprehensive as it is today hence from a project commencement to completion, it was largely an unpredictable timeline.

Today, the laws are extensive both in terms of the development process as well as for the protection of property owners.

As a result, we have seen many companies with unrelated expertise or core business in property venture into development.

At last count, there are close to 200 companies listed on Bursa Malaysia which has property development or construction related businesses.

Coupled with the Strata Title Act, landbanks can be unlocked vertically rather than just horizontally unlike how it was before. This contributed to an oversupply.

On demand side, while Malaysia remains a nation with growing young working population, the main challenge towards homeownership is the lack of wage growth rather than the lack of affordable products.

In the residential segment, National Property Information Centre data shows that the unsold units have largely fallen in the past year from 36,863 units worth Rm22.79bil at the end of 2021 compared with 27,746 units worth Rm18.41bil as of December 2022.

There are also substantial number of units of residential overhang in the country with units totaling 14,000 units worth Rm4.63bil (which is 53% of total unsold inventories) within the affordable price range of less than RM500,000.

This means the stagnant wage growth in the face of global inflation has seen the people’s purchasing power weaken.

When disposable income falls, debt level rises, naturally big-ticket purchases with long term monthly commitment fall on the back burner.

Accommodative measures and policies

Real estate cycle is highly susceptible to changes in economic policies and government regulations including tax regimes.

When there is an accommodative policy such as a low interest rate environment or in Malaysia’s case when Developer Interest Bearing Scheme (DIBS) was allowed, it spurred huge demand for real estate because holding on to cash has little value.

Funds would either move into equity markets or real estate markets and other instruments to generate yield.

When the policies started to tighten with higher interest rates making borrowing cost higher, or removal of DIBS and even imposing higher Real Property Gains Tax amongst others, there was a flight of capital from the real estate sector.

We are now beginning to see some ray of lights at the end of the tunnel following eight years of market oversupply since the peak in 2014.

The flood of newly completed projects and unsold inventories in the balance sheet of developers which naturally became a bane for the industry is seeing some improvement following the auto correction in the economy cycle due to two years lost to the pandemic.

In addition, higher raw material costs, inflationary pressure and the diminishing value of our currency has slowly helped the market adjust to the property price as what was once deemed expensive becomes more tenable. This will help with the rejuvenation of the real estate market with the exception for commercial office segment.

Hedge against inflation

When we talk about investment, we need to consider the underlying assets’ ability to hedge against inflation apart from its absolute return.

Ultimately, so long as the underlying asset over a duration of time can beat inflation and preserve the value of your money, that would make it a viable investment asset.

Apart from that, it is important to make comparisons across asset classes to determine what best suits your personal need.

Everyone has their own risk tolerance and investment horizon.

Subject to your individual preference, one should choose the asset class that one is most comfortable with. Some may find insurance products pragmatic, some may prefer to invest in safe-haven commodities like gold or silver, others may prefer equities or bonds.

In the case of real estate, it has its own merits because it is tangible and with the title of the property under your name, it is physically yours. This makes it a highly acceptable asset class to most people including some who are not particularly financially astute or do not fancy complex capital markets products.

Any time is a good time for own use

No doubt when it comes to investing, everyone wants to make money. Otherwise, it defies the objective of investment.

If investments do not reap returns, might as well leave the money in fixed deposit.

However, real estate is a one of-a-kind asset class that has tangible benefits and allows enjoyment of the assets with the benefits of investment value.

Unlike gold or silver, the enjoyment is limited to seeing it glitter in your safe deposit or alternatively, melting it to design custom jewelry.

For real estate, specifically residential, one can move in and reside in it while for commercial or industrial properties, one can use it for business purposes.

This makes the investment thesis in real estate different from other asset class such as equities or fixed income.

The benefit of tangible use and enjoyment makes the timing of investment less significant if one has actual use for it.

Quoting Li Ka-shing, if you are looking to buy property for your own stay and not for speculation purposes, anytime is a good time. 

Ng ZHU HANN Ng zhu Hann is the CEO of tradeview Capital. He is also a lawyer and the author of Once Upon a time in Bursa. the views expressed here are the writer’s own.

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Is Real Estate Still A Good Investment?

 

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A mediator in Russia's war with Ukraine, China's Xi holds call with Zelenskyy

#Ukraine #Zelensky #Xi Chinese President Xi Jinping spoke to Ukraine's Volodymyr Zelensky by telephone on Wednesday for the first time since Russia's invasion of Ukraine, fulfilling a longstanding goal of Kyiv which had publicly sought such talks for months. Zelensky immediately signalled the importance of the chance to open closer relations with Russia's most powerful friend, naming a former cabinet minister as Ukraine's new ambassador to Beijing. #Ukraine #Xi #Zelensky

We won’t sit by or seek to profit from war, Ukraine leader told

KYIV/BEIJING: Chinese president Xi Jinping spoke to Ukraine’s Volodymyr Zelenskyy by telephone for the first time since Russia’s invasion of Ukraine, fulfilling a longstanding goal of Kyiv which had publicly sought such talks for months.

Zelenskyy immediately signalled the importance of the chance to open closer relations with Russia’s most powerful friend, naming a former cabinet minister as Ukraine’s new ambassador to Beijing.

Describing the hour-long phone call as “long and meaningful”, Zelenskyy tweeted: “I believe that this call, as well as the appointment of Ukraine’s ambassador to China, will give a powerful impetus to the development of our bilateral relations.”

Xi told Zelenskyy that China would send special representatives to Ukraine and hold talks with all parties seeking peace, Chinese state media reported.

Xi, the most powerful world leader to have refrained from denouncing Russia’s invasion, made a state visit to Moscow last month. Since February, he has promoted a 12-point peace plan for Ukraine, greeted sceptically by the West but cautiously welcomed by Kyiv.

China will focus on promoting peace talks, and make efforts for a ceasefire as soon as possible, Xi told Zelenskyy, according to the Chinese state media reports.

“As a permanent member of the UN Security Council and a responsible country, we will neither sit idly by, nor pour oil on fire, still less seek to profit from it,” Xi said.

In a readout of the call on Telegram messenger, Zelenskyy said the two leaders discussed “possible cooperation to establish a just and sustainable peace for Ukraine”.

The White House welcomed the call, which it said it had no advanced knowledge of, but said it was too soon to tell whether it would lead to a peace deal.

“That’s a good thing,” White House national security spokesperson John Kirby said. “Now, whether that’s going to lead to some sort of meaningful peace movement, or plan, I don’t think we know that.”

France also welcomed the call, with President Emmanuel Macron’s office saying the French leader had pushed Xi to hold this call with Zelenskiy during his visit to Beijing this month.

The 14-month war is at a juncture, with Ukraine preparing to launch a counteroffensive in the coming weeks or months following a Russian winter offensive that made only incremental advances despite the bloodiest fighting so far.

There are no peace talks in sight, with Kyiv demanding Russia withdraw its troops and Moscow insisting Ukraine must recognise its claims to have annexed seized territory. 

 

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Get booster to evade new variant: the Arcturus subvariant !

 New COVID variant causing itchy, watery eyes

WHO monitoring new Covid-19 Arcturus subvariant detected in over 20 countries | THE BIG STORY

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PETALING JAYA: Health experts have advised the public to take precaution amid confirmation that the Arcturus viral subvariant has been detected in the country.

Professor in Public Health Medicine and Health Economy in Universiti Kebangsaan Malaysia Dr Sharifa Ezat Wan Puteh said although the SARS-CoV-2 XBB.1.16 (Arcturus) viral subvariant is highly infectious, nothing pointed to it being more dangerous than other Omicron variants currently in circulation.

“It is advisable for people to get a booster shot if they have not received one and wear a face mask whenever in crowded spaces,” she said, adding the government will soon be offering Bivalent vaccines which are especially effective for Omicron variants.

Prof Sharifa said symptoms of the Arcturus subvariant included itchy or sticky eyes, as well as high fever and cough – particularly among children.

“The Arcturus subvariant is highly infectious because it is difficult to be traced by our antibodies and because of that, it can cause people who already had Covid-19 in the past to be reinfected.

“This will cause an increase in Covid-19 cases in time to come, and the World Health Organisation has classified the Arcturus subvariant as a ‘variant of interest’ (VOI) that will be under careful observation,” she added.

Public Health Medicine Specialist Datuk Dr Zainal Ariffin Omar said the subvariant was fairly new and not much details was known about it so far.

“It is predicted to be more infectious and may cause a rise in cases, but regardless, people should be vigilant and follow the SOP including masking up and getting a booster shot,” he said.

Professor of Epidemiology and Public Health in Universiti Malaya Prof Dr Moy Foong Ming said Arcturus was the dominant variant in India and causing a new wave but added that cases were mostly with mild symptoms.

“According to WHO, while this variant seems to be spreading faster and escapes immunity, it does not seem to be causing more severe illness in individuals or in the population infected with Arcturus.

“However, even though it is not more lethal than other Omicron subvariants, we should take it seriously as it may cause severe illness to vulnerable groups,” she said.

Prof Moy said whether a variant will cause a wave in a country depended on the immunity of the population as well as the variant which was last dominant there.

“The public should practice TRIIS: Test, Report, Inform, Isolate and Seek medical help if infected.

“Those who do not have their vaccination up to date and have not taken a booster dose should do so as soon as possible,” she said.

On Monday, Health Minister Dr Zaliha Mustafa said a total of 12 cases involving the Arcturus viral subvariant had been detected in the country.

Six cases were detected in Sarawak, four in Selangor and two in Kuala Lumpur, she said.

The XBB.1.16 subvariant was first detected in the country in March, but the minister said the situation was under control and that health facilities were not under any pressure. 

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Important to mark DNA Day, crucial for discovery of the genome’s sequence

 

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EVERY year on April 25, the global scientific community unite to celebrate DNA Day, marking the momentous completion of the human genome project in 2003 and the discovery of the double helix in 1953.

On April 25, 1953, James Watson, Francis Crick, Maurice Wilkins, Rosalind Franklin and colleagues published papers in the journal Nature on the structure of DNA. By commemorating DNA Day, scientists and enthusiasts seek to emphasise the significance of DNA research and inspire future generations to pursue advancements in genetics.

DNA is like a recipe book for living things; it stores vital information that is passed down from one generation to the next. The information is stored in the form of genes that determine the characteristics of an organism, and is protected and held in place by chromosomes. In humans, the genome is made up of approximately three billion base pairs of DNA. Studying the genome and its variations can therefore provide insights into the causes of genetic disorders and help researchers develop new treatments.

DNA holds significant potential in the fields of medicine, anthropology and forensics. In forensics, DNA is frequently used to determine the guilt or innocence of suspects as well as to identify unknown deceased individuals, by analysing DNA collected from hair, skin or blood samples. DNA can also be used to trace a person’s ancestry and determine their ancestral homeland.

In medicine, genetic testing can identify mutations in a person’s DNA that increase his/her risk of developing certain diseases, such as breast or ovarian cancer. DNA sequencing can also help doctors develop personalised treatment plans for patients with cancer or other diseases by identifying specific genetic mutations driving the disease’s growth. In some cases, DNA testing can also diagnose rare genetic diseases that might be difficult to identify otherwise.

Additionally, newborns can be screened for certain genetic conditions that may not be apparent at birth, allowing for early interventions or treatments that can improve outcomes for them.

Precision medicine is an advanced approach that considers the individual characteristics of each patient, in particular their genetic profile. This approach has the potential to revolutionise scientific and medical progress and improve the health of families by providing doctors with the resources to identify specific treatments for various illnesses.

Historically, most medical therapy development has focused on the “average patient” using a “one-size-fits-all” approach to treatment. While this may be beneficial for some individuals, it can be completely ineffective for others. With precision medicine, doctors can develop tailored treatments that are customised to a patient’s specific needs, leading to more effective and personalised care.

That’s why it’s so crucial for us to have a full picture of the human genome, and why the discovery of the genome’s sequence was welcomed by academics and doctors everywhere.

As our knowledge of DNA and the information it encodes grows, we may one day live in a society with fewer and better-managed diseases, longer lifespans, and individualised medical care rather than mass-produced pharmaceuticals designed for the general population.

- PROF ZILFALIL ALWI, ABDUL HALIM FIKRI HASHIM and NOR RAFIDA MOHD SENI Universiti Sains Malaysia, Kelantan

Prof Zilfalil heads the Malaysian Node of the Human Variome Project and is also Unesco Chair in Human Genetics on Thalassaemia, a programme that involves over 850 institutions across 117 countries. 

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Malaysian Scientist in Tsinghua leads space stem cell research at top varsity , one giant leap for Malaysia

  Prof Dr Kee Keh Hooi from the School of Medicine, Tsinghua University in Beijing.     https://www.med.tsinghua.edu.cn/en/info/1352/1446.ht...

 

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Malaysian Scientist in Tsinghua leads space stem cell research at top varsity

 

Prof Dr Kee Keh Hooi from the School of Medicine, Tsinghua University in Beijing.

  

https://www.med.tsinghua.edu.cn/en/info/1352/1446.htm

Malaysian Scientist in Tsinghua

RealChunWai

Did you know that China is doing stem cell experiments in space? Get to know more about China's space explorations in this episode.

Guest: Prof Dr Kee Keh Kooi (Scientist, Tsinghua University)

Kampung boy leads space stem cell research at top varsity 

KUALA LUMPUR: It may seem like a galaxy far, far away when human beings from earth can stay for a long period of time in a spacecraft or even on the moon or Mars, but Malaysian scientist Prof Dr Kee Keh Kooi is already doing research on its effects on human bodies.

The Tsinghua University lecturer is heading a team to study how gravity and even radiation affect the development of human embryonic stem cells in space.

In short, understanding how human reproduction will affect human beings who will spend a long time in space.

The research is also to find answers as to how the human embryonic stem can differentiate in space.

“It is already happening as Chinese astronauts could stay for a period of time in a station on the moon, astronauts could orbit around the earth, and even ordinary people could travel to space,’’ he said.

The Sitiawan-born renowned academician was interviewed online from Beijing by Star Media Group adviser Datuk Seri Wong Chun Wai on his webcast programme @realchunwai on Thursday.

His accomplishment was highlighted by Prime Minister Datuk Seri Anwar Ibrahim when he spoke at Tsinghua University during an official visit to China last month.

China recently announced its readiness to start its lunar base on the moon within five years, ahead of landing astronauts there in subsequent years.

Dr Kee has also conducted his research via China’s first cargo spacecraft, Tianzhou-1, which was launched in 2017.

Its main task was to deliver fuel and supplies to the orbiting Tiangong 2 space lab, but it also played host to ground-breaking scientific experiments conducted remotely by earth-based scientists in China.

Dr Kee specialises in stem cell research and how it can be cultured for medical technologies to help patients suffering from Parkinson’s and Alzheimer’s diseases and even spinal cord injuries.

Besides devoting his time in laboratories, he also lectures undergraduate and post-graduate students at Tsinghua, which is regarded as China’s top university.

He spent decades in the United States, where he obtained bachelor’s and master’s degrees at Iowa State University. This was followed by a PhD at Weill Cornell University.

Later, he worked at the University of California, San Francisco, before taking up a three-year stint as a research associate at Stanford University.

The opportunity for him to take a leading role as a principal researcher came when he applied for a post at Tsinghua University after seeing a vacancy advertised in an academic journal in 2009.

“There was an opening for stem cell research at the university, and it caught my interest immediately,’’ he said.

Asked about the differences in the manner in which research is conducted in China and the United States, Dr Kee said that in the United States, individual research was common, while in China, a team of between 50 and 100 people could be involved in a big project.

Despite having spent over 12 years in Beijing, Dr Kee, who grew up in Johor Baru, makes it a point to visit Malaysia annually, especially during Chinese New Year.

His parents, who moved to Johor Baru from Sitiawan to run a coffee shop, are still operating at the premises in Gelang Patah.

Dr Kee is a former student of Foon Yew High School, one of the elite independent schools in Johor.

“Balik kampung is always on my mind. The minute China reopened its border, I took my family home to Malaysia for three weeks,” he said.

Dr Kee, who was born in Kampung Remis, a small fishing village, described himself as a kampung boy. His family, he said, is “a simple Teochew family”.

Dr Kee said he would be happy to conduct talks on his work at Malaysian universities if there are opportunities.

His advice to Malaysians who wish to study at Tsinghua or Peking University is simply to study hard, get good grades and be focused.

However, he added that there are many other universities in China besides these top two.

He said Tsinghua also offers other disciplines, especially at the post-graduate level in economics, architecture, and law, which are conducted in English for international students.

To watch the full interview with Dr Kee, follow @realchuwai on Facebook and YouTube. 

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