An abuse of the word "serviced apartment"
More and more property types are being ambiguously marketed as both residential and commercial, with titles such as SOHO (small office, home office), SOVO (small office, versatile office), SOFO (small office, flexible office), lifestyle suites, serviced residences and serviced suites, among others. Many of these projects' brochures depict young working professionals in suits toting briefcases, next to images of double beds, saunas, barbeque areas and jacuzzi.
You may heard sales pitch like this: "Our units are like condos but we call them serviced apartments because we have 100 units of shop lots on the ground floor".
However, if there's no management, rental return, housekeeping services or security policy, and it wasn't fully furnished either, this is somehow misrepresentation.
Besides commercial land costs usually being priced higher, properties on commercial titles require owners to pay peak energy, water and sewerage rates as well as quit rent and assessment charges.
The buyer is paying property taxes which are normally double those of residential taxes. In other words, your water price is the same price as the one the Pappa Rich operator pays. The electricity rate is double, and the deposits they take from you are also higher.
Alternatives
Not all residential units on commercial land parcels need to remain designated as commercial however. Upon applying for strata titles, developers may apply for the title's conditions ("syarat nyata") to be converted to containing residential apartments ("bangunan kediaman") as well as shops.
That way, the rate applied to these apartments is a mixed rate ("kadar bercampur") which is less than the rate for commercial shops. "To do this, they just have to pay a nominal additional premium of RM100," says a spokesperson in the strata title department of Selangor's land and mines office.
There may even be a 50% reduction in chargeable quit rent if the number of shops is less than 2% of the number of homes, eg two shops underneath 200 apartments. Alternatively, these shops may be assigned as "common areas" of a condominium, in order to fully designate the development as residential.
Just give developers a plot ratio* that each location deserves.
More dialogue between property investors, industry players as well as federal and state governments is necessary to achieve a framework that better captures the needs of the evolving populace. This should ideally result in a more accurate treatment and less ambiguous marketing of these properties.
From: The Sun Daily, 27th Jan 2010
http://www.thesundaily.my/news/278343
* Building permissions for residential developments are based on units or population per acre, while commercial developments are based on plot ratio (total built-up area per land size).
For residential developments to be profitable, developers go for large units which allow them to sell more built-up area per acre. As the demand for big units, the bungalows in the sky, ended (because those who can afford them have already bought them), smaller units sized below 1,200 sq ft and priced below RM500,000 or RM600,000 have been selling like hot cakes at launches.
"Let's say you have a piece of land that is 100,000 sq ft large and you get a plot ratio of 10, so you can build 1,000,000 sq ft of so called offices. Once you have that 1,000,000 sq ft, you can carve those out into any size you want, like 600 sq ft or 700 sq ft."
More and more property types are being ambiguously marketed as both residential and commercial, with titles such as SOHO (small office, home office), SOVO (small office, versatile office), SOFO (small office, flexible office), lifestyle suites, serviced residences and serviced suites, among others. Many of these projects' brochures depict young working professionals in suits toting briefcases, next to images of double beds, saunas, barbeque areas and jacuzzi.
You may heard sales pitch like this: "Our units are like condos but we call them serviced apartments because we have 100 units of shop lots on the ground floor".
However, if there's no management, rental return, housekeeping services or security policy, and it wasn't fully furnished either, this is somehow misrepresentation.
Serviced Apartment
The homeowner must understand the original concept was like with Micasa in KL. It's a commercially run operation. Serviced apartments are paying a premium for the commerciability of places like this. So people should be very hesitant to buy this.Besides commercial land costs usually being priced higher, properties on commercial titles require owners to pay peak energy, water and sewerage rates as well as quit rent and assessment charges.
The buyer is paying property taxes which are normally double those of residential taxes. In other words, your water price is the same price as the one the Pappa Rich operator pays. The electricity rate is double, and the deposits they take from you are also higher.
Alternatives
Not all residential units on commercial land parcels need to remain designated as commercial however. Upon applying for strata titles, developers may apply for the title's conditions ("syarat nyata") to be converted to containing residential apartments ("bangunan kediaman") as well as shops.
That way, the rate applied to these apartments is a mixed rate ("kadar bercampur") which is less than the rate for commercial shops. "To do this, they just have to pay a nominal additional premium of RM100," says a spokesperson in the strata title department of Selangor's land and mines office.
There may even be a 50% reduction in chargeable quit rent if the number of shops is less than 2% of the number of homes, eg two shops underneath 200 apartments. Alternatively, these shops may be assigned as "common areas" of a condominium, in order to fully designate the development as residential.
Trend
There has been a trend for more self contained developments (mixed use developments in which residents live, work and play are being designed), where you can live upstairs then go to the gym, to the movies or shopping downstairs. And with the advent of the MRT, there will also be more transit orientated developments with high rise apartments and retail spaces clustering around stations.Just give developers a plot ratio* that each location deserves.
More dialogue between property investors, industry players as well as federal and state governments is necessary to achieve a framework that better captures the needs of the evolving populace. This should ideally result in a more accurate treatment and less ambiguous marketing of these properties.
From: The Sun Daily, 27th Jan 2010
* Building permissions for residential developments are based on units or population per acre, while commercial developments are based on plot ratio (total built-up area per land size).
For residential developments to be profitable, developers go for large units which allow them to sell more built-up area per acre. As the demand for big units, the bungalows in the sky, ended (because those who can afford them have already bought them), smaller units sized below 1,200 sq ft and priced below RM500,000 or RM600,000 have been selling like hot cakes at launches.
"Let's say you have a piece of land that is 100,000 sq ft large and you get a plot ratio of 10, so you can build 1,000,000 sq ft of so called offices. Once you have that 1,000,000 sq ft, you can carve those out into any size you want, like 600 sq ft or 700 sq ft."
