Friday, April 24, 2009

Retirement Housing in Malaysia

One of the major reasons to look overseas for retirement is to find cheaper housing. By shifting wealth out of expensive housing (the USA and western countries) into cheaper housing (developing nations), a retiree/investor can free up more cash for daily needs. One of these developing nations that is beginning to come onto the horizon is Malaysia.

The most popular cities for expat retirees -which comprise mainly Japanese, Korean, and British expats- are Penang and Kuala Lumpur. Johor Baru, in the south, has always been popular with Singaporeans as it is only across the causeway and much cheaper than housing on the island state. Housing in those three places tend to be the most expensive in the country, however, so there is a trade off between being part of those vibrant expat communities and keeping your costs down. For those on more restricted budgets, I suggest smaller cities outside the Kuala Lumpur/Penang metroplexes, such as Kuala Terengganu and Kuantan on the east coast, Alor Setar, Sungai Petani, and Taiping in the north, and Negri Sembilan in the mid-south. Additionally, Malaysia has two states on the island of Borneo, and the cities of Kuching (Sarawak) and Kota Kinabalu (Sabah) are more reasonable in price than KL and Penang.

While expats are not restricted to living in cities, the culture in rural locations probably does not suit the majority of expats, especially if they come with more developed lifestyles. But, if you don't mind watching the grass grow, then there are multitudes of smaller towns that have beautiful shoplot downtowns and a greater sense of community. For the more daring yet, it is possible to find a house to buy in a kampung, but expect it to be noisy (neighbor boys on motorbikes), smelly (open-burning year-round), and full of watchful eyes.

(Photo right: Kampung house)

Housing - For Purchase
Malaysia has the usual range of housing for purchase available, from the very cheap -old link houses in smaller cities outside the capital metroplex- to the high-end condominiums and bungalows in the exclusive neighborhoods sought out by politicians, business leaders and wealthy expats. Thus, Malaysia has something to offer for almost any possible retirement budget. The restriction on expat retirees, however, is that there is a minimum purchase requirement that is RM250,000 for nearly all states. At the current exchange rate of ~RM3.60 to US$1, this equates to a purchase price of US$69,000. It used to be only RM150,000 in most areas of Malaysia -when I bought- and this meant that for the equivalent of a downpayment in the USA (~US$40k), one could buy a house in Malaysia outright.

At this time, foreigners are limited to buying semi-detached houses (known as duplexes elsewhere), bungalows (stand-alone houses), or condominiums/apartments. Foreigners cannot buy link houses, the most common housing available. Link houses mean that every house is linked side-by-side with only the end houses having space to the side of the house.

Housing - For Rent
Expats can rent link houses, which come in 1-, 2-, and 2.5-story varieties. A typical two-story link house in KL will run RM1,500-3,000 per month depending upon location and whether or not it is an intermediate link house, or one of the end lot houses. I rented a two-story link house in one of the newer subdivisions in Petaling Jaya, one of KL's main suburbs, for RM1,300, and the house had four bedrooms, three bathrooms, and a nice sized living room (around 2500 sq. ft.). Later, I moved to the east coast, where I rented a five-bedroom semi-detached house (5 bedroom, 3 bathroom, around 3000 sq. ft) for only RM800. In fact, in my current location, link houses rent for as low as RM400 per month, barely US$100 per month!

Semi-detached houses (duplexes) are typically single- or double-story with at least two bedrooms and at least two bathrooms. They can be as small as 1000 sq. ft. to perhaps 2000+, for double-story houses. Typically the largest bedroom is the master, with an attached bathroom. There is almost always another bathroom and one or two smaller bedrooms. Many Malaysians hire live-in maids, and thus, the houses contain a very small room off the kitchen for use by the maid. Without a maid, the room is really only suitable for storage. Bungalows are much larger and can run up to 5000 sq. ft. or more, and tend to have much larger compounds.

It being the tropics, Malaysian houses these days are built out of concrete beams, with brick walls filling in the space and cement facing on the brick. They are not as cool as the old-style kampung (village) houses that were made from wood and naturally ventilating. Oddly enough, wood is very expensive in Malaysia, and only the rich can afford to build from the rich tropical timber varieties. One of the newly-retired is Jean Todt, he of Ferrari fame and the husband of Malaysia's own Bond-girl Michelle Yeoh. They have built a large retirement house in the east coast city of Kuala Terengganu which is said to have used special craftsmen in timber framing and accents. Not everyone will have the money to throw around like them, but for even the moderate well-off, Malaysia has much to offer.

Buyer Beware
For years Malaysia had only the sell-then-build policy for housing areas. Developers put together beautiful plans and dioramas, replete with glossy photos of what the development would look like after completion. Potential buyers would queue up to make their selections and make downpayments (typically 10-20%). And then they would wait. Often several years would go by before the development was complete. Housing was typically cookier-cutter in that every house was exactly alike and people would spend another 30-50% of the purchase price on remodelling their house. The problem is that the developments inevitably turned out NOT to look like the glossy photos or dioramas. And worse things happened especially when developers went bankrupt and left the owners with nothing to show for their downpayments.

These days, however, more developments are along the line of build-then-sell, and expats can get a good look at what is actually in place before buying, or renting. Condominiums, however, can be problematic in that the value-added amenities (e.g., swimming pools, exercise gyms, walking parks) tend to fall into disrepair quickly for a couple of basic reasons. First, many Malaysians prefer to park their investment money into real estate and, thus, there can be places where few owners occupy their houses or apartments, preferring to rent them out to people who have no vested interest in upkeep and maintenance. Secondly, developers will turn over the management of places to management agencies or groups, who have little enforcement strength to keep the monthly maintenance fees coming in.

I would be very careful, therefore, in purchasing from a plan or diorama. In fact, it is probably best to find a location that has predominantly owner-occupiers. This may mean avoiding areas that are owned by certain racial groups (the people who look at housing as investment), and rather looking at areas owned by groups of people with a greater sense of community and are themselves close to, or already in, retirement. It is this latter group that I joined when I made my house purchase in 2005.

Saturday, April 18, 2009

The Angsana Trees are in Bloom!

One does not need to spend much time in Malaysia to realise that shade is the main factor for drivers when choosing a place to park their cars during the day. And the number one choice for shade tree has to be the Angsana (Pterocarpus indicus, aka Pokok Sena in Malay;

The Angsana is a large deciduous tree of the Leguminosae family (has pea-pod-like seed pods) which grows to 1o meters in height and has a large oval crown. The leaves, pinnately-shaped (small ovals, and with two opposite each other along the entire branch) drop once a year (thats what deciduous means), but are quickly replaced. The tree produces pale yellow flowers in great profusion (see photos) and will occasionally fall to the ground during rainstorms, leaving a yellow carpet.

One of the things that I love to do in the capital of Malaysia, Kuala Lumpur, is to ride either the LRT or Monorail which are mostly above-ground and at the same level as the crowns of the shade trees lining KL's roads. I have noticed that the Angsana is one of the most widely-planted trees, which makes KL one of the more beautiful cities in Asia.

(Photo left: borrowed from until I get my own photo shot)

They say that the one drawback of the Angsana is that their roots grow close to the ground surface, and in fact, above ground near the base of the trunk (called a buttress root system). Thus, they are not suitable for planting close to drains or roads as they will push the pavement upwards causing a buckling and cracking. For me, I like that: it is just nature trying to take back the land!

One morning last week, after an early morning rainshower, I walked to work (5 minutes) and through the flower carpets of several Angsana trees along my route. As shown in the photos, Malaysian drivers love the tree for the shade it gives their PRECIOUS PRECIOUS cars. In fact, they will even walk across the street to the jogging park in order to park in the shade of an Angsana rather than park in a sunlite spot closer to the jogging track!! Amazing behaviour. Amazing tree.

(Photo right: courtesy of The Malaysia Star

Sunday, April 12, 2009

House Remodelling: 2006

In 2005, foreigners could purchase houses outside of a few places (Kuala Lumpur, Penang, Johor, East Malaysia, and Malacca) as long as the price was RM150,000 or above, and were either bungalows or semi-detached (what we call duplexes in the USA). I negotiated a price of RM160,000 for our house, a 3-bedroom, 2-bathroom, single story semi-D of 1,150 sq.ft. At the current exchange rate of RM3.60 = US$1, this equates to around US$39 per square foot for the purchase.
(Photo right: before)

Since the purchase, we have had many people (especially Chinese) say that we got a good deal. We had to remodel, however, in order for the place to be liveable. The remodelling costs totalled around RM49,000, which at the current exchange rate works out to less than US$12 per square foot. Here is the break-down of the major remodelling costs:
  • Retiling the living room, kitchen, bathrooms, and four small rooms: RM13,400
  • Rewiring the entire electrical system including the upgrading from single- to triple-phase: RM5,400
  • New lights: RM1,200
  • Kitchen cabinets, stovetop: RM12,500
  • Painting: RM950
  • Front roof (carpark) repair: RM3,000
  • Rear roof construction (for washing machine, drying rack): RM2,750
  • Sewer pipe replacement, septic tank cleaning: RM740
  • Bathroom fixtures (new): RM500
  • Unpaid water bill (previous owner): RM380
The bathrooms were a complete mess: old, rusted-out iron pipes, and grungy tiles. It was cheaper and easier to replace the entire bathroom floors and walls, and put in new fixtures than to contemplate repairing. Likewise, the kitchen was useless. There were only some old, doorless cabinets, half-eaten by termites. The tile was a hideous busy pattern of green and white, which made my eyes swim when I looked down. Again, it has easier to redo the entire kitchen; plus, it made the wife very happy.

(Photo left: after)

Outside, we put in a concrete pad and roof in the back to give my wife space for her washing machine and clothes-drying rack. The front car park roof had some minor leakage, which became major leakage after I attempted to repair said roof (and stepped through three times). Also, the iron sewer pipe, which runs above ground to the septic tank, had rusted through and been fertilizing the yard, which made for lush growth, but bad smells. All of these were replaced.

The yard was a mess of mud and weeds. Under them, I discovered buried construction rubbish which would have been too difficult to dig up and haul away. The decision was taken, therefore, to put grass sod over the top. We didn't keep track of money spent on the sod, but it would have been around RM2,000, I suppose. It was important to root out the lalang tubers, which would continue to produce even if covered. This was perhaps the most laborious task, but we benefit now by having a nearly weedless sod turf yard.
(Photo right: kitchen before)

All in all, we created a decent house, which is suitable for two people who don't need much in the way of living space. Although we have no park-view, we are close to the park (3 minute walk). Although we have no ocean-view, we are close to the beach (5 minute walk). Our house looks out over a road leading through our kampung, with the bicycle-riding neighbor children, and Mak Ciks and Pak Ciks hanging out and chatting with each other, whilst they tend to their laundry, and cats, and cars.

(Photo left: kitchen after)

House Purchase: 2005

After renting for nine years, we jumped at the chance to buy a house that was in a very central location and close to:
  • work
  • the beach
  • the park
  • the city center
and yet is on a dead-end road, thus, eliminating drive-through traffic. To top it off, the house was in a neighborhood reminiscent of a Malay kampung; in fact, there is a kampung next door full of the stilt-style wooden houses. Indeed, my Malay neighbors think of our neighborhood as their kampung-in-the-city and have planted fruit trees and vegetable bushes in the strip of land just outside their compound fences.

We had been looking for houses by using a Chinese realtor. She seemed to think that we were rich expats on an expat package when in fact I have always been on the local salary scheme. After looking at houses that were over-priced and with under-whelming quality, we decided to take a break from the hunting.
(2005 Photo)

One of my wife's friends told her about this abandoned house close to her apartment and we hustled over to take a look. Sure enough, we found a house missing both front and back doors. We did a walk-through and saw much rubbish, and a place in dire need of cleaning! But, there was no FOR SALE sign, and the next-door neighbor said that they owner lived far away and was probably NOT interested in selling. ("If he was interested," said the neighbor, "I would buy it.") I passed my phone number on to the neighbor, but it didn't seem possible that he would make contact with the owner.

Several months later, we were showing a prospective retiree couple around at houses and decided to show them what we might consider buying, if it was available. To our surprise, the house appeared to have been cleaned, with new doors, and there was a FOR SALE sign on the gate. The very next day, we contacted the realtor and after a 5-minute walk-through the minimally-remodelled house, we negotiated a purchase price with the realtor, and gave him a cheque of RM3,000 to show our earnestness. The seller came back with an approval, and we signed a Sales & Purchase agreement in June 2005. Little did we know then, but it would take over a year for the S&P to close.

Our S&P agreement had to approved by three different governmental bodies: the Foreign Investment Committee (FIC), the Malaysian Land Office (MLO), and the Governor's Office (Menteri Besar). The first two took only two months each, and were handled by our Malay lawyer. We ended up paying the lawyer around RM6,000 for all of the work including the S&P agreement, and the issue with the governmental bodies. In the end, the lawyer's fee was 3-4% of the total purchase price.

The Office of the Mentari Besar took much longer: nine months in our case. This was required for the house that we purchased has the following Restriction-in-interest: "Tanah ini tidak boleh dipindahmilik, dipajak, digadai melainkan dengan kebenaran bertulis daripada YAB Menteri Besar Pahang." (This land cannot be transferred, leased, or mortgaged without the written permission of the Mentari Besar of Pahang state.) I was told that it was to protect older Malays from being cheated out of their land and, in fact, one of my younger Malay colleagues told me that she and her husband also had to get permission from the Mentari Besar's office when they made a house purchase.

The house is on lease-hold land, with 99 years of permission, and we have around 70 years remaining. Some neighbors think that the government will eventually turn the lease-hold land into free-hold, especially since the neighborhood is nearly all Malay owned and occupied, especially by retirees.

One major benefit that Malaysia has over some of its Southeast Asian neighbors is that as foreigners, we can own property in our own name.
(2009 Photo)

Saturday, April 11, 2009

Moon Over the Kampong

Yesterday morning I just happened to catch the sinking full moon (bulan purnama) over the kampung houses down the street from me. At a few minutes before 7am, the sky was already becoming light and the moon was fading.

I got up earlier this morning to get better shots, but the moon stayed higher longer, and I had to settle for a moon partially obscured by some wispy clouds giving it a fuzzy outline, but at least the photo captured a bit of the twilight deep blue that I so love.

In his novel about Malaya (The Soul of Malaya), Henri Fauconnier quoted a Malay pantun (proverb) regarding the moon and its allusive meaning for young lovers:

Jikalau tidak kerana bintang,
Masakan bulan terbit tinggi.

Jikalau tidak kerana abang,
Masakan datang adik ke mari.

If not because of stars above,
Why does the moon rise so high?

If not because of you, my love,
Why should I ever venture nigh?

Early mornings are special in the tropics. If one can arise before 7am, the rewards are cool temperatures, chirping birds, quiet streets and (usually) an absence of open burning. After 7, however, the world begins to wake, the sun rises to its torrid apex, and the burners of the world do their best to share their smoke with us.

Thursday, April 2, 2009

Joke of the Month

I heard a joke several years ago that serves quite well to show one of the many differences between the three main races in Malaysia: Malay, Chinese, and Tamil (Indian). It goes like this:

There were three sailing ships caught in a massive storm at sea: a Malay ship, captained and manned by a group of Malay sailors; likewise a Chinese ship with Chinese crew; and also a Tamil ship and crew. How each captain handled the emergency goes some distance to explaining upon what each race considers of value.

The Chinese captain ordered his crew to load the gold, silver, and other valuables into the life-boats, in order to save the items with monetary value. This is because the Chinese are perceived as only being interested in accruing wealth.

The Tamil captain gave his crew the orders to load the women and children, the handicapped and the helpless into the lifeboats first. This is because (presumably), the Tamil Indians are concerned with social welfare and assisting the underclass.

cartoon archive at funnytimes.comThe Malay captain, however, called for a committee meeting! He wanted to appoint committee members, and sub-committees, and task forces, to study the emergency and then, maybe, come up with a solution. This, of course, reflects the belief that Malays love committees, which have hierarchy, gives them relationship, and establishes Who Is Important (see earlier post regarding this topic). It is highly doubted that the ship's committee would come back with any action points before sinking, and that IS the point. No one wants to be responsible, so the issue will be talked about until either forgotten, or else the event takes places and no one is to be blamed!! Management to Avoid Responsibility (MAR).