The Star
November 12, 2001
A PLEASANT surprise that has been the topic of conversation in the local real estate industry recently is the launch
of the Country Heights Damansara bungalow lots which attracted sales worth RM150mil on the day of its launch on
Sept 29. The news is still spreading like wild fire.
Some delegates at the recent National Property Conference held in Kuala Lumpur were talking about it during tea
breaks and over lunch. “It is good news for the industry,” said the CEO of a property development company who felt
that the lacklustre property market needed a bit of a boost.
Public-listed Country Heights Holdings Bhd’s (CHHB) successful property debut in the Klang Valley was even more
impressive considering the shrinking consumer confidence following the Sept 11 incident. Few would dare to proceed
with a high-end property launch but the cheques handed over by eager purchasers who packed the CHHB sales office
said it all.
As CHHB boss Tan Sri Lee Kim Yew laughs all the way to the bank for pulling off a sort of coup, other developers
may be figuring out ways to emulate CHHB’s innovative investment scheme that has spurred purchasers to plonk in
a cool few million ringgit for a freehold land that few would care to give a second look a few years ago. Even
now many people do not know its exact location.
The 200-acre project is on the right side (coming from PJ) of the Lebuhraya Damansara Puchong (LDP) and in the
established neighbourhood of Taman Tun Dr Ismail and Bandar Utama. About 600 names were collected during a priority
buyer registration in June.
On the first day of the launch for “priority registrants” on Sept 29, 120 of the total 323 bungalow lots were sold.
The size of the lots were between 10,000 and 15,000 sq ft at prices ranging between RM100 and RM158 psf.(per sq
ft) These priority purchasers also enjoyed a special rebate of 9% off the purchase price.
The price of a 15,000 sq ft lot at say RM140 psf would amount to RM2.1 mil. Yet there were some people who bought
more than one lot! Add another RM1 mil or RM2 mil for construction cost, it can cost a whopping RM5mil to RM6mil
to build that dream house!
Normally when the property market is soft, buying land for a bungalow may be the last thing on one’s mind. Priority
would be to buy a roof over one’s head, be it a low-cost flat or a bungalow. However, to get people to buy land
on a fairly sloppy terrain and at a premium in Country Heights Damansara, would require more than just a top location.
That’s where Lee, who turned the world’s largest open cast mine into the integrated Mines Resort City in Seri Kembangan,
Kuala Lumpur, has the answer: CHIPI, the Country Heights Innovation in Property Investment which CHHB has partnered
with Great Eastern Life Assurance.
The gist of CHIPI is that it is a kind of payback scheme where the purchaser is “rewarded” the original purchase
price of the land after 35 years from the date of purchase, provided the buyer fulfils certain terms to be a “loyalty
customer”.
It looks like an endowment scheme except that one need not go for a medical check-up.
CHHB executive director C.S.Ong said to be a “loyalty customer” one must satisfy three conditions: (a) buy the
property during the sales launch (which was Sept 29. The next being Nov 17). The purchase must be finalised on
the day of sale; (b) the balance payment must be received in full in accordance with the agreed schedule of payment
in the Sale & Purchase Agreement and (c) prompt payment of service charge.
However, Ong said so long as the purchaser fulfils the first two requirements and has made full payment, he would
be issued a certificate by Great Eastern that entitles him to a payout of 60% of the purchase price at the end
of 35 years.
If the buyer keeps his property at the end of the first year (upon full payment), he will be entitled to another
10%. He will get another 10% at the end of the second year. Great Eastern will issue a certificate for each entitlement
that will stay with the original purchaser even if the property is sold to another person. He can also pass it
on to two of his children.
The buyer could cash the certificate before the 35 years but the cash payout would be based on a table of cash
value that a buyer could enjoy even at Year Zero, which is worth about 11% of the value of the certificate. The
longer the buyer keeps the certificate the larger the payout.
The scheme is clever is many ways. It appears that everyone is a winner. CHHB makes a fast sale and the money helps
to pay for the land; the buyer gets two products: a piece of prime land that seems to stand a good chance of further
appreciation and a money-back guarantee; Great Eastern gets its share of business; copy cats may follow and this
may help them sell their products and, the neighbourhood gets a boost in terms of premium land values.
Ong is confident that the value of the land would appreciate to about RM250 psf in three to four years. For example
leasehold bungalow land at the Mines Resort City has risen from RM140 psf to RM218 psf. The Country Heights freehold
bungalow land in Kajang is valued at around RM50 psf.
However some people are sceptical whether this can be achieved in such a short time. The Seputeh Heights freehold
bungalow lots are priced between RM138 and RM208psf. Prime bungalow land at the nearby Tropicana Golf & Country
Resort was priced from RM108 psf when launched this year.
Ong said purchasers would be shown the contour of the land and advised on how to build on the slopes. It would
cost on the average about 15% more in construction cost but the advantage is that each house would have its own
unique character and a good view.
A payback scheme is not new as some timeshare companies also pay back the full amount of the purchase price of
a timeshare product after a specified period (usually more than 30 years). However, of late new memberships of
these timeshare products do not enjoy such benefits anymore.
The proposed Villa Spa Suites, an exclusive five-star spa resort hotel suite in Pangkor Island also boasts of a
kind of investment protection plan that has a buy back option in Year 6 and a trustee payback certificate by Year
36.
Unless one has the holding power, the scheme may deter speculators out for a quick kill. For the cash-rich buyer
who does not need to borrow much and plans to build and stay in his own bungalow, the payback guarantee is an added
incentive.
However, like many projects selling bungalow land, there will be investors who may end up not building their bungalows
at all.
Some owners may test the market by artificially inflating the land values further. Already the asking prices of
double-storey link houses in Desa Sri Hartamas in KL are between RM600,000 and over RM700,000! The market value
of a property can be built up by constant hype and positive perception.
The danger is when you over-inflate property prices, the bubble may burst one day.
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