5 Technologies to change property and real estate

In its latest Global Cities 2015 report, real estate firm Knight Frank has highlighted five technologies that will likely change the property sector.

It is remarkable to think that just five years ago no one owned an iPad (launched in April 2010), illustrating how quickly new technology becomes taken for granted today.

This is an example of a technological advance that has accelerated changes in how we work, shop and spend leisure time, with implications for commercial real estate. Some, who previously shopped regularly for books, CDs, DVDs, and video games, now access all these products through their tablet computer.

This has contributed to a reshaping of retail property, and sparked a wave of office-based start-ups that produce apps. Similarly, the popularity of e-shopping has buoyed demand for warehouses. New technology undoubtedly impacts the property market, raising the question, where will change come from next.

Office robots

Development has begun on telepresence robots, whereby a remote worker can log into a droid, traverse the office, see what is occurring, and speak to colleagues. Cleaning robots at home have already taken off. An office service robot that cleans, reloads printers, and performs basic security duties, could be a future extension of this technology. Future office buildings may need storage, recharge and service areas for these droids.

The internet of things

This is where everyday appliances are connected to the internet, so they can be controlled remotely or intelligently monitor how we use the device. For instance, a fridge could monitor its contents, and send the homeowner a suggested shopping list to his mobile phone with a ‘buy’ button. This would add momentum to the rise of e-retail, increasing demand for logistics property. Internet-linked machinery could also result in smart office buildings that partially manage themselves.

Drones

When Amazon rolled out plans to deliver small goods by drone helicopters there was initially a sceptical reaction. However, other firms quickly announced they too were testing drone delivery. In the future, logistics properties may come to resemble mini-airports, as drones come and go. EasyJet, the airline, has plans for its maintenance crews to use drones for aircraft inspection. Similarly, the property industry could use drones to inspect buildings.

Driverless car

A computer driven car, using wi-fi to communicate with other vehicles and receive traffic reports, should improve traffic flow and speed up commuting. The result will be a better quality of life in office districts, as efficient traffic movement allows more streets to be pedestrianized, improving public areas and passing trade for retailers. The city will become a more pleasurable experience encouraging people to work, live and shop there.

3-D Printing

3-D printers are being used more often for producing components, but those parts then need to be assembled into a working product, which will require quality control testing. This requires a factory. However, in R&D and specialist manufacturing, 3-D printing is having an impact, bringing down costs on short production runs. Consequently, we could see a wave of ‘start-up’ manufacturers offering bespoke or specialist goods, generating more demand for light industrial units.

For more information: http://www.knightfrank.com/global-cities-index-2015/specials/real-estate-technology/#sthash.l9ozavde.dpuf

By Andrew Batt, International Group Editor of PropertyGuru Group.

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Playing angel to startups as some successful Malaysian entrepreneurs made it big - part 2 & 3

How successful entrepreneurs can give back to their younger counterparts JUST as it takes a village to raise a child, it also takes ma...

Playing angel to startups as some successful Malaysian entrepreneurs made it big - part 2 & 3

How successful entrepreneurs can give back to their younger counterparts

JUST as it takes a village to raise a child, it also takes many different players in an ecosystem to raise a successful startup.

And one of the most valuable players in the startup ecosystem are those who have walked the path of an entrepreneur and succeeded in their own right. These players have a wealth of experience and expertise as well as capital to plough back into other budding startups.

Most times, they invest in the capacity of an angel investor.

By definition, an angel investor is an affluent individual who is willing to invest in a company at its earlier stages in exchange for an ownership stake, often in the form of preferred stock or convertible debt.

They typically fill the gap in startup financing between seed funding, likely provided by friends and family, and formal venture capital funding in later stages once the startup has gained some traction.

Angel investors are usually entrepreneurs themselves and have successfully cashed out of their ventures with deep pockets to spare.

Over the years, scores of entrepreneurs, who have tasted hard-earned success, have increasingly been giving back to the ecosystem by reinvesting their time, money and knowhow into other startups.

Unlike other sources of funding such as government grants and venture capital funds, the angel investors’ involvement in startups is vital given their experience in building successful companies.

This would enable new startups to tap into their network and expertise, giving them a higher chance at succeeding.

As some entrepreneurs note, “one entrepreneur betting on another is a great validation of the idea.”

Some Malaysian entrepreneurs who have made their mark in the startup scene have sowed back into the ecosystem. They include the likes of Azrul Rahim, founder of application launcher for PalmOS, Facer, and Mark Chang, founder of JobStreet. com, who recently expressed interest in backing entrepreneurs from underprivileged backgrounds.

Notably, like every investment, there are risks involved when investing in early stage startups.

To recap, startups are experimental by nature and therefore are meant to fail several times before they succeed. As such, it is important that angels understand that a high percentage of the startups they invest in may likely fail.

However, as with other types of investment, angel investors should have a portfolio of high growth startups to invest in. And in that basket of startups, a gem or two will return a big reward.

Take Berjaya Group’s Tan Sri Vincent Tan, for example, who is known to make quite a few bets with budding companies.

While not all of them have been known to be successful investments, Tan certainly uncovered a jewel in MOL, which he bought for US$3.2mil (RM10.5mil) in early 2000s and listed on the Nasdaq this year. He reportedly pocketed a cool US$200mil from the listing exercise.

The government is also increasingly encouraging more early-stage private investment in startups with the introduction of the Angel Tax Incentive, which is administered by a unit within Cradle Fund Sdn Bhd.

Angels who are eligible for the incentive are high net worth individuals with total wealth of more than RM3mil or high income earners with gross annual income of more than RM180,000.

Angel investing is indeed becoming more visible and formalised with the formation of networks that connect entrepreneurs and angels.

Most recently, local entrepreneur-turn-investor Khailee Ng, who co-founded GroupsMore and SAYS. com, was made managing partner at 500Startups. Through the fund, Ng has invested in multiple companies across the region.

The local startup scene can indeed benefit with the involvement of more angel investors. Entrepreneurs who have achieved their milestones should think of investing in the future and giving back to younger entrepreneurs.

Entrepreneurs who have been there understand the satisfaction of nurturing another venture.

So if you have succeeded with your company, perhaps it is time to consider investing back into the ecosystem by sharing your expertise and resources as angel investors.

Malaysia has more successful tech startups than many people realise

Investor interest: MyTeksi has managed to raise a total of US$90mil in funding over the past 12 months.

Much has been said about this being the best time to launch and grow startups due to the availability of funding, infrastructure and an accommodating environment.

Additionally, mergers and acquisitions suggest that there is much value to be derived from startups. Foreign corporate moves include the US$966mil (RM3.1bil) price tag that Google paid to acquire navigation app Waze and the US$22bil takeover of messaging app Whatsapp by Facebook.

No doubt, many budding entrepreneurs aspire to follow in the footsteps of these successful startups. In a globalised market, the success of startups is not limited to those with connections to or within the vicinity of Silicon Valley.

With the right experimentation and innovation, a startup can succeed even in a risk-averse culture. It is not impossible for startups to grow rapidly and achieve high revenues in a short time.

But budding local entrepreneurs often lament that there are few local heroes to look up to in order to benchmark the ability of the local startup scene in producing successful ventures.

Although they are few and far between and are generally below the radar, there are some local gems that have scaled up very quickly, attaining regional success in just a few years, and have caught the eye of internationalinvestors.

One such company is MyTeksi Sdn Bhd. The Internet-based taxi booking service provider, which was launched in 2012, has already established a strong presence in Singapore, the Philippines, Thailand, Vietnam and Indonesia under the brand GrabTaxi.

The MyTeksi app has reportedly been downloaded onto over 2.1 million mobile devices with more than 400,000 active monthly users in six countries and more than 25,000 taxi drivers registered with the network.

Most notably, the company has managed to raise a total of US$90mil in funding over the past 12 months, counting US-based Tiger Global Management, GGV Capital and Vertex Venture Holdings as some of its investors.

One of the key reasons for MyTeksi’s success, says co-founder Anthony Tan, is its focus on solving a real social problem. In this case, providing an efficient and safe platform to match taxi drivers and passengers.

Another homegrown startup that is shaking up its field is banking solutions company Juris Technologies Sdn Bhd.

When the company was founded in 1997, co-founder and CEO See Wai Hun said its main agenda was to market a data mining system. But See quickly realised that no one was interested in data mining because people were reeling from the shock of the financial crisis.

Thankfully, she was equally quick at spotting an opportunity to create software for bad debt recovery which would help financial institutions manage their workflow with their litigation team.

Juris was set up with the help of an angel investor but See noted that the company eventually bought back its shares within a few years of incorporation. The team has grown from 10 people when it started to a staff strength of 80 today.

Its product range has also expanded from just a component of the debt recovery software to software for debt collection systems, loan origination systems, credit scoring systems, conveyancing and loan documentation systems.

To-date, 11 banks, 900 lawyers, 200 collection agencies and 100 property valuers are using its systems and See is expecting revenue to hit a high of RM30mil this year.

Most recently, Juris joined the ranks of Endeavor Global Inc’s global network of high-impact entrepreneurs, being the second Malaysian company to do so.

The achievement gives Juris access to global investor network and partnerships that will enable the company to scale up for regional expansion.

Malaysia has seen other startups, including the likes of iMoney, Softspace, FashionValet, Piktochart and TextbookAsia, take flight and achieve success in various fields.

Local entrepreneurs can take heart that some of the action does take place on our home ground. It is possible to nurture the local startup ecosystem to provide startups with a good platform to thrive and contribute significantly to the growth of the country.

With the right combination of policy, infrastructure, funding facility and mentoring, the local startup industry could unlock another key growth driver in our economy.



By Joy Lee  



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Malaysia’s residential housing market ‘severely unaffordable’, said Demographia

Chang: 'For the past few years, HBA has sounded the alarm on the risk of a homeless generation.'

WHEN middle income professionals are unable to afford their own home based on a single income and have to team up with either a spouse or another person to qualify for a mortgage loan, then it is a sign that the unaffordability of our housing market has become critical.

A finding by US-based urban development researcher Demographia reveals Malaysia’s residential housing market is “severely unaffordable”, even more out of reach than residents in Singapore, Japan and the United States.

Demographia’s finding, cited by Singapore’s Straits Times in a report on Oct 14, rates housing as severely unffordable if the median of house price to annual income is 5.1 times.

Malaysia clocked in at 5.5 times, showing many Malaysians continue to be locked out of the housing market, compared with Singapore’s 5.1 times, while the United States’ and Japan’s housing markets were found to be “moderately unaffordable”.

Public interest group, National House Buyers Association (HBA) honorary secretary-general Chang Kim Loong says Demographia’s report supports HBA’s own finding that house prices, especially in the urban and sub-urban areas, have risen beyond the reach of many average Malaysians.

“For the past few years, HBA has sounded the alarm on the risk of a “homeless generation” made up of a growing number of young Malaysians especially the lower and middle income groups who are unable to afford their own home. When this homeless group grows in number, it can give rise to many other social problems,” he warns.

Siva: 'The fact that salaries have not kept up with the upswing in property prices have further worsened ... the situation.'

Chang says when even middle income professionals are unable to afford their own home based on a single income, the situation has become critical.

He says unless one is willing to be tied down by a long-term or back-breaking mortgage or mortgages, the high residential prices have rendered buying a house an increasingly uphill task, if not an impossible feat for the many lower income and average Malaysians.

“The skyrocketed prices have driven house buyers to take back breaking mortgages and many needed to combine their income in order to qualify for a mortgage, thus leaving them with very little or no savings after paying the monthly instalments and other basic necessities.

“This will place families at risk as they could fall into a deficit situation if any sudden emergencies happen to either of the borrowers,” Chang says.

He points out the possibility that in the event these borrowers cannot afford to pay their instalments and the banks are forced to auction off their properties, “there is a risk of a property bubble bursting, just like what happened during the sub-prime financial crisis in the US.”

“The borrowers and their dependents will also be faced with financial and emotional crisis that befalls their foreclosed property. Foreclosures can devastate a family’s economic and social standing, leaving them poorer instead,” Chang laments.

Chang says just six years ago it was still possible for a single middle level manager earning RM5,000 a month to buy a new double-storey link house in Kajang for less than RM250,000, and for a single executive earning RM3,000 a month to buy a new condominium in the Old Klang Road area for about RM200,000.

“Today, a new house in Kajang are in excess of RM700,000 but a middle level manager is just earning RM6,000 or thereabout a month. Recent launches of condominiums around Old Klang Road area are in excess of RM600,000, while the average salaries of executives are still around RM3,500 a month,” he laments.

He believes the maximum price that households with an monthly income of RM10,000 should purchase is only RM360,000 (RM120,000 x 3x).

“HBA has always stressed that affordable housing should be priced around RM150,000 to RM300,000, and not more then RM400,000 even for prime locations. Given that annual household income uses the assumption of two working spouses, there is a critical need for properties priced at RM150,000 to cater to single families and adults.

“We urge the government to further lower the threshold of affordable house price to between RM150,000 and RM300,000, and not more than RM400,00 even for prime locations,” Chang adds.

Chang says these houses, with minimum built-up of 800 sq ft and three bedrooms, need not come with fanciful finishing, but have just the bare necessities for a family’s comfort.

Stemming the greed

Malaysian Institute of Estate Agents (MIEA) president Siva Shanker concurs that the unaffordability housing issue has become critical over the past three to four years due to the sharp upswing in house prices.

“It was driven by the low entry costs with schemes such as no need for downpayment, developer interest bearing schemes and free stamp duty and legal fees, Although the Government has introduced various cooling measures and more responsible bank lending guidelines which has brought down the number of housing transactions, prices or value of houses still remain high.

“The fact that salaries have not kept up with the upswing in property prices have further worsened the unaffordability situation,” Siva explains.

HBA’s Chang points out the risks posed by “Investors’ Clubs” or “Millionaires Clubs” which are basically syndicated speculators incorporated by some ingenious individuals.

“They work in cahoot with developers, valuers and banks. Speculative buyers may be caught by the latest round of cooling measures. How the situation will pan out will depend on the holding capability of these speculators of which most of them may not have. Come hand-over time when it is time for these “investors” to flip their purchases, there may be a shortage of buyers for these properties, most of which were transacted at inflated and not real market value prices,” he warns.

Siva opines that the imposition of real property gains tax (RPGT) to tax gains from property transactions should be counted from the date of completion of the property and not from the signing of the sale and purchase agreement as what is being practised now.

This is given that it takes three years for high-rise residences to be delivered to buyers upon the signing of the sale and purchase agreement, and two years for landed property. Chang says the severity of the housing crisis for many Malaysians today calls for a workable housing delivery model to be put into action urgently before the problem spills over and cause more social problems in the country.

Housing the people has to be made the top thrust of the government and all possible measures need to be put to work fast and bottlenecks must be promptly addressed.

He says much more can be done to ensure a sustainable and orderly housing market for the people, stressing that holistic and concerted efforts need to be adopted.

“However, very often policies adopted are more for political expediency rather than for the betterment of the people.

“We need a single umbrella to monitor, regulate and police the performance of the various agencies that are entrusted with the role to ensure affordable housing index are met and properly distributed to the deserving ones. They must build the right quantity of the right property, at the right location, for the right populace, and at the right price.

“There must be full transparency on the location, number of units, registration and balloting process to ensure fairness to all eligible buyers,” Chang stresses.

A single database will enable individuals to learn about the availability of the affordable housing in their communities or in the communities they planned to move to, and understand financing options avail to them.

Siva also calls for a central planning and delivery agency to plan and coordinate all the affordable housing needs of the people. “The whole process should be totally transparent with a master registry to record all the database of applicants and successful candidates. There should also be a moratorium period of up to 10 years to ensure that the successful candidates offered these affordable housing will not be able to dispose these homes for quick profit.

“The federal and state governments should provide the land and other forms of incentives to encourage private developers to lend their support for these affordable housing schemes,” Siva says.

Chang agrees that giving incentives to developers that build affordable housing will motivate them to throw in their support to build more of such housing units, adding that building up the infrastructure connectivity to the still relatively undeveloped areas will make these places more accessible and improve demand for property in those places.

“HBA has proposed to the government to take the lead by unlocking more of its vast land banks to build affordable housing for the people.

“The reason why developers are not chipping in to build more affordable housing units is because of the so-called profit maximisation by industry players. It is either high-rise multiple hundred units or high-end luxury units. Very often it is a combination of both - luxurious high-end units.I have not heard of developers building single-storey terrace houses that were so prevalent in the past. Developers are refusing to build such price and low margin items and will rather focus on higher margin items. With land being a scarce resource, developers will maximise the value of their land banks.

“If the land comes from the federal and state governments, private developers will be more willing to throw in their support to develop affordable housing for those in need,” Chang concludes.

Source: ANGIE NG The Star/Asia News Network


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