Can we afford to buy that property?

There was this small 700 sq ft condominium unit that seemed rather promising for retiring in, priced at more than half a million ringgit. There were no steps to manoeuvre, no slippery floor tiles and the bath was elderly friendly. The project had all the merits for retiring in with nearby amenities.

There was another unit, about RM800,000, which was about twice the size, which, from the start, was way beyond the radar of affordability. So off to the financiers.

The first, after looking at the relevant documents, and assuming the purchase would be for the small unit, looked up and smiled broadly. Doable!

The little heart smiled, relieved! Incidentally, according to ancient Chinese culture and beliefs, it is the heart that is the fountain of wise decisions - and bad ones - not the mind. That is why, the word wisdom (hui) is written with the heart symbol as its base, or root word. Unlike Romanised languages, Chinese is based on pictograms or pictures.

So let's consider the second and bigger unit. Doable! That is shorthand for getting the bank's stamp of approval, that is, getting a loan would not be a problem.

But wait! It will be a stretch after retirement, she cautioned.

A second and third bank officer were consulted. Both gave an outright No! even for the small unit.

The conversation went something like this:

“We could approve it for you. We just lengthen the tenure up to 20 years but you make your repayments based on a 10-year tenure. But you will be the one to suffer when you retire.”

The third officer said: “You can put in 40% of the purchase price, instead of 10%. Or you can stay with 10% downpayment, we stretch your repayment, but six months before the unit is completed, you sell your present house, and put in a big lump sum. But you will be the one to suffer because it is a huge risk you are taking.”

They said it will not be right to earn the commission because they will not be doing their good turn for that day if they were to go ahead with the loan application. They want the good karma to remain with them. Both convey the same message not a wise purchase at all. So perish the thought.

Before parting ways, they brought up several reasons why a property purchase was not the best decision. That was when the moment of truth came, which brought about the sobering effect, came. Being a bit defiant, another type of financier certainly not an Ah Long was consulted; a reputable lender, but one that does not come under the purview of Bank Negara's regulations.

Incidentally, the most recent change in lending criteria when evaluating loan eligibility is based on the net income of applicants, and not the gross income, as was done previously.

This new lending guidelines deduct all personal commitments which may include car and computer loans, personal and credit card loans. It also includes contributions to the Employees Provident Funds and other deductions. The loan application is based on the net figure.

Another broad smile came from the fourth financier. No problem! Doable. Unfortunately, the terms and conditions are not attractive. At that point, the question was not how desirable the property may be, but how much does one want it? Does the end justify the means?

When one arrives at such a metaphorical fork in the road, there will be two sets of emotions. The greedy little heart says, “Go on, take the risk”. And there will be all sorts of justifications you've worked long enough and you deserve it. While wisdom says, “Wait! How will you finance it after retirement? Do you want this apartment at all cost?”

The crux of this rigmarole is this, there are always ways to get around to getting around rules and regulations in order to have what we perceive as “our prize”.

When it comes to the stage when one wants something at all cost despite the hordes of naysayers and the little barriers to entry, then maybe it is best to just walk away.

A property consultant said he has come across clients who want to buy a property so much that they begin to take all sorts of risks. “Buying a property should not stretch one's resources to the point of having to give up the little treats in life,” he says.

So, there goes the little 700 sq ft to somebody else! - The Star

> The saying “when there is a will, there's a way” does not sit well with deputy news editor Thean Lee Cheng.

More strategic plan required to meet need for affordable housing

PROPERTY prices are a favourite subject for conversation among Malaysians.

It is to be expected. Everyone is looking to buy a house or apartment, either to have a roof over his head or to sell it for a profit at some point in the future.

To have a house or apartment of your own has become a must for most of us Malaysians today, a condition further encouraged by the Government's home ownership programme.

On the face of it, this is a good policy. Everyone should be given the opportunity to have a place of his own, a home that offers a decent level of comfort and well-being, yet within his means.

However for the average Malaysian, particularly those living in or around urban centres, the prices of property have risen so high that they can no longer afford to buy.

As an expert in the real estate sector in Malaysia pointed out recently, the prices of homes in a city such as Petaling Jaya have risen more than 30 times in the past 40 years. In the same period, salaries have gone up a mere 10 times.

As a result, people are now expected to downgrade from a landed property to an apartment, usually. Even so, people are paying more in monthly instalments and taking longer up to three times to fully repay their home loans. In short, if you buy an apartment today, you will probably spend the rest of your working life paying for it.

As a result, they also end up paying a lot more in interest to the bank, compared with their parents or grandparents 30 or 40 years ago.

Given that 76% or five million households in Malaysia have incomes below RM5,000 a month, many homes on the market today are priced beyond their affordability.

In addressing this issue, the Government has imposed a quota for low-cost housing projects. Private developers are expected to chip in by setting aside a certain percentage of their projects for low or medium cost homes.

More drastic measures have recently been proposed. For instance, the Kedah state government is mulling a proposal to require private developers to allocate up to 60% of their projects for affordable housing, up from 30% now.

Over and above this proposal, the PAS-led government is also mulling the possibility of restricting the sale of property in certain districts in Kedah to Kedahans only. The state believes this move would reduce speculation on property prices, thus ensuring that houses remain affordable for Kedahans.

Such proposals seem ill-conceived, to say the least. On the whole, be it at the federal or state level, a more strategic plan is necessary to meet the housing needs of those in the lower to middle income group.

At the same time, there must be room for a dynamic property market where investors can expect some returns for putting money into property.

Developers are well aware of the need to ensure that all Malaysians have equal access to housing that they can afford, and for the most part are supportive of any move to this end.

However, it must also be noted that for developers, other concerns come into play when planning and deciding on new projects, such as types of houses, price range and location.

As business entities, property development companies have to meet profit expectations of shareholders as well, and building homes and selling them at RM42,000 or below is certainly not going to help meet those expectations, especially in the urban centres where land costs are very high.

Another consideration is mobility. For the lower income group in particular, the ability to get around for work, school and other daily necessities at an affordable price is essential.

For the most part, it does not make sense for them to buy a low or medium cost home in a locality that is not served adequately by cheap public transportation to enable them to go to work or for their children to go to school.

For them, buying a car may not be an option, and taking the taxi to work is a luxury many cannot afford.

For these reasons, it makes sense for the Government to build affordable housing for the lower income group, with contributions to subsidise these projects funded by private developers.

Developers would have had to spend money anyway if they are to meet the quota of affordable housing in their respective projects. The money would be better used if it is channelled to the Government for a more strategically planned housing programme.

The Government could also ensure that the right infrastructure be put in place to ensure that those who buy into the low or medium cost homes that it is building also have access to affordable public transport and other facilities. With almost unlimited land bank, the Government could easily build a school within the development as well, thus meeting another essential need.

By taking full responsibility for affordable housing, the Government could also ensure that they are well maintained. For the most part, low-cost apartments in Malaysia are not well maintained.

If residents or owners fail to pay the monthly service charges regularly, there would not be sufficient funds to ensure proper maintenance. As a result, many of such apartment blocks end up looking like slums in just a few years.

Any attempt to control property prices runs against the free-market concept that we practise. For most of us, even those who buy a house to live in for the long term, putting money into property is a form of investment.

When we were younger and had just been married, we struggle to pay the mortgage for a house that we believe is reasonably big enough for our spouse and two or three children.

When our children are grown up and on their own, we may decide to sell the house and opt for a small apartment instead. Hopefully the house would have appreciated in value and there would be a decent sum left for our retirement.

Is that too much to expect? - The Star

> Teh Lip Kim is the MD of SDB Properties Sdn Bhd, a lifestyle property company. Bouquets and brickbats are welcomed. Send by email tomd@sdb.com.my.

MK Land to build more affordable housing

IPOH: Property developer MK Land Holdings Bhd says there will always be a demand for affordable houses and it will continue to build them even during an economic downturn.

Chairman Tan Sri Mustapha Kamal Abu Bakar said the company had 2,800 ha land bank on which 114,000 houses could be built and that it would focus on Selangor, Perak and Kedah.

He said MK Land had completed 44,479 houses valued at RM5.6bil, including some 30,000 affordable units. — Bernama

Teng furnishes proof 16-storey block of flats planned for site

NIBONG TEBAL: Penang Barisan Nasional has claimed that it has evidence to prove that the previous state administration had made provision for public housing on the 0.4ha land in Taman Manggis, George Town.

State Barisan chief Teng Chang Yeow showed the media a copy of a 2003 internal memo which was said to have been written by the then director of Housing and Local Government of the State Secretary’s office to the then State Secretary.

He said the memo stated that two blocks of affordable housing units had been originally planned to be built on a 1.97ha (4.93 acre) plot of land at the junction of Jalan Zainal Abidin-Lorong Selamat.

“However, based on a standardised plan that was similarly adopted by the Federal Government, only one 18-storey block of flats could be built then, while the remaining plot of land was to be kept for future development.

“And, according to the architect concerned, a 16-storey additional block could be built on the remaining piece of land,” he told reporters at former Bukit Tambun assemblyman Lai Chew Hock’s office in Lorong Bukit Tambun, Simpang Ampat, here yesterday.

Teng said the Housing Committee in the state executive council back then had further discussed the matter on April 29, 2003 and June 24, 2003, where it agreed that a block of flats under the People’s Housing Project (PPR) with rental should ideally be developed there.

On Thursday, Chief Minister Lim Guan Eng claimed that the previous state administration had not made any provision for public housing to be built on the 0.4ha plot of land in Taman Manggis.

Lim had refuted as “completely untrue” an earlier statement by Teng that the original plans under Barisan Nasional’s administration were for a community housing project on the prime land.

Teng said he also ran an online search with the Penang Municipal Council’s One-Stop Centre and found that the council had received a planning permission application for the construction of a 30-storey building on Lots 305, 306, 313 and 314 at the site.

“So, my original statement is true and I stand by it.

“But, my question back to the state government (now) is whether it is prepared to scrap the 30-storey building and build affordable houses there instead?”

He said the Chief Minister had been quoted in newspaper reports as saying that the particular piece of land had been identified for the construction of a private hospital with 150 car parking lots.

Teng said Lim should make it clear whether the proposed 30-storey building was for the private hospital that he had mentioned.

“There is a proposal submitted for planning permission and they (seem to) claim ignorance. That is why I (had) said don’t twist the facts. If the MPPP president has failed in her duties to inform the state and has probably caused the state to mislead people, she should then be demoted,” he said.

Teng queried that if the particular piece of land could accommodate the proposed 30-storey building, then how could it not be suitable for a 16-storey block of affordable homes? - The Star

State blacklist forced us to sell land, say Umno duo

GEORGE TOWN: Two state Umno leaders, accused of profiting from a land sale, have claimed that they were forced to sell off the land because their company could not get development approval from the DAP-led Penang government.

In denying allegations that their company sold the 4ha land in Balik Pulau within four months for a profit of RM5mil, Bukit Gelugor Umno division head Datuk Omar Faudzar said:

“We were forced to sell the land as our company (Aseania Group of Companies) was blacklisted.

“Every development project must go through the state planning committee chairman Lim Guan Eng. For instance, when we submitted a plan to build semi-detached houses in Bandar Perda in 2011, we were told to pay RM516,000 premium and to build affordable housing,” he claimed in a press conference at the Barisan Nasional new office in Jalan Datuk Keramat here yesterday.

Omar admitted that the land in Kampung Terang was purchased at RM22 per sq ft in October 2010 and sold to a property developer at RM33 per sq ft on Jan 10 this year.

“The land transaction did not take four months as alleged by state PKR vice-chairman Datuk Abdul Halim Hussein. Besides, we were forced to sell the land as our company was blacklisted,” said Omar.

He claimed that three other companies — UDA Holdings Bhd (UDA), JKP Sdn Bhd and Penang Regional Development Authority — were also blacklisted.

“For the past eight years, we have contributed by building 2,033 low-cost and low medium-cost units in Balik Pulau priced between RM25,000 and RM55,000,” he said.

Also present at the press conference was state Umno deputy chairman Datuk Musa Sheikh Fadzir.

Musa, who was named as the other Umno leader, challenged Abdul Halim to speak up against the development of an international school on a 2.4ha site and Asian Women Leadership University (AWLU) on 40ha in Balik Pulau.

Both Umno leaders are shareholders of Maison Height Sdn Bhd, a subsidiary of Aseania which Abdul Halim claimed had sold the land for RM13.5mil to a third party developer in May within four months, raking in RM5mil.

He alleged that the two bought the land from 31 Balik Pulau residents for RM8.5mil in Jan this year. - The Star

Rep: Riverbank settlers need to move for anti-flood works

THE flooding woes in the Sungai Pinang area in Penang will not end until all the residents living on the river’s banks have been resettl-ed to make way for Phase Two of the flood mitigation project there.

Datuk Keramat assemblyman Jagdeep Singh Deo urged the remaining 30% of the 204 affected residents living in 101 structures along the banks of the Sungai Pinang, to vacate their homes.

“We are seeking the co-operation of these residents to come forward and have talks with the Drainage and Irrigation Department (JPS) on compensation.

“The project can only begin once all the residents have been resettled.

“This is the only way to resolve the flooding woes in the area once and for all,” he told a press conference at the site near Sungai Pinang recently.

He added that he hoped the project, which would take at least a year to complete, could start by the end of the year.

The project costing RM150mil is listed under the 10th Malaysia Plan.

It involves the widening and deepening of the river from Kampung Rawa to the Dhoby Ghaut bridge to help alleviate flooding in the surrounding areas.

Jagdeep Singh was earlier quoted as saying that he would shave his head if floods still happened in Sungai Pinang once the mitigation project was completed.

He said that so far, 70% of the residents living along the banks had agreed to the compensation deals.

Jagdeep Singh was commenting on flash floods which affected several low-lying areas recently.

He added that he had urged officers from the district office and JPS to clear the rubbish traps placed along the river more often.

“I was told that the JPS only comes once a month (to clear the traps). This is not enough.

“They have to come more often, at least once a week, as the water level will certainly rise whenever there are heavy rains.

“This will cause flash floods in the area,” he said. - The Star

被槟议长指当“中介”卖马来地 巫统2领袖反驳指民联不专业

槟城20日讯）针对槟州议长拿督阿都哈林揭露巫统领袖当“中介”卖马来地，豪赚500万令吉的指责，巫统槟州署理主席拿督慕沙及武吉牛汝莪区会主席拿督奥玛弗沙反驳，指自己的发展公司在槟州民联政府不公平的对待下，无法进行房屋计划才被迫转卖土地。
指民联建屋条件苛刻
也是槟州国阵竞选主任奥玛弗沙周五召开记者会澄清，他任职总经理的发展公司Asenia Group在2年前以每平方尺21令吉向31户马来甘榜的居民购买土地，欲发展该地段建造房屋计划却遭不公平对待，被州政府提出苛刻条件，要求付逾51万令吉的高额附加地价（premium tambahan），因此迫于无奈之下才转卖。他当时了解自己公司被州政府列为黑名单，才被要求苛刻的条件，而且只有他的公司被这样对待，因为除了他之外，慕沙也是该公司的主席，两人热衷政治活动，属槟州政府敌对阵营，因此成为“政治受害者”。他斥林冠英不专业，应该公平对待每个槟州人民，无论对方是哪个政党人士。
难承担银行利息卖地
他补充，该公司最后唯有以每平方尺33令吉出售有关土地，因该地段是贷款买下，公司无法承担庞大的银行利息。他反驳阿都哈林指提高价格转售，导致槟岛房价上涨的原因。他解释，他公司曾以每平方尺42令吉在白云山购买地段，建造130单位的廉价屋，价钱只介于2万5000及5万5000令吉，因此每平方尺33令吉依然可建造廉价屋，不会导致房价上涨。
他指这只是阿都哈林为了成为浮罗山背的候选人的政治把戏，马来人不会因此被骗，因为对方提出的都不是事实。慕沙斥阿都哈林不用透过欺骗浮罗山背巫裔获取支持，反之应在浮罗山背建更多廉价屋，因为当地房价动不动就上百万令吉。他指自己身为商人，有人要卖土地价钱合理当然可以接受，加上当时并没反对声，反之州政府欲在浮罗山背一块6英亩的土地建国际大学而驱赶人民，人民反对却不见阿都哈林出来为人民伸冤，他挑战阿都哈林若有本事应阻止政府，不然就只是槟州首长林冠英的“奴隶”而已。- 光华

Cloudy outlook for Malaysia, says ADB

KUALA LUMPUR (July 18): Weakness in the global outlook clouds Malaysia’s prospects given the country’s close integration with the world economy, according to the Asian Development Bank (ADB).
In its revised Asian Development Outlook (ADO) 2012 released last week, the ADB said growth in Malaysia is moderating to about 4% in 2012, then quickening to 5% in 2013 as the external environment improves and domestic demand will again play its role to anchor growth in the region.
“Private consumption will have to depend on the government’s plan in 2012 to raise wages for the public sector and also for their one-time offer of cash payment to the low- and middle-income groups which constitute 53% of all households in Malaysia,” ADB said.
It added that the labour market is likely to soften this year, particularly in the trade-exposed industries. Job vacancies in January 2012 declined steeply from a year ago. Consumer sentiment weakened late last year.
Private investment in export-oriented industries such as electrical and electronics products will be subdued by the weak global outlook this year, although investment will likely be relatively buoyant in industries that depend on domestic demand. The ADB said the government is pressing ahead with its Economic Transformation Programme launched in 2010 and will proceed all the way to 2020.
“This US$58 billion (RM183 billion) programme was introduced for development of higher value-added industries and infrastructure in partnership with private investors.
“Included in this programme are construction projects such as the US$11.5 billion mass rapid transit rail system in Kuala Lumpur, the redevelopment of the Sungai Besi military airbase and a large site near the centre of the capital for residential and commercial purposes,” it said.
The ADB said the production sector will play a role in driving growth in 2012. “The government has eased some restrictions on foreign investments in 17 services subsectors such as accounting, education, legal and medical services, following a similar move for 27 subsectors back in 2009.
“Inflation rate will most likely recede to 2.4% because of the moderation of domestic demand coupled with the lower prices of imported commodities,” the ADB said.
The ringgit appreciated by 3.4% against the US dollar in the first quarter of 2012 and this helped to dampen inflation which is predicted to pick up to 2.8% in 2013. The ADB said Malaysia’s exports of merchandise will most likely drop this year due to torpid global trade and softer price of export commodities such as palm oil. Imports will increase at a modest rate with forecasts of substantial surpluses, it said.
“Subsidies for fuel, staple foods, electricity, health and education rose from 1.3% of total government spending in 1990 to 14.3% in 2011, which is about 4% of the GDP.
“Subsidies reduce inflation but raise fiscal deficit, reduce budget funding for social and economic development, and distort resource allocation,” the ADB said. It said developing Asia will expand by 6.6% this year and 7.1% next year, lower than the 6.9% and 7.3% forecasts in ADB’s ADO published in April.
This article appeared in The Edge Financial Daily on July 18, 2012.

Singapore housing market needs more certainty — Conrad Raj

JULY 19 — Singapore National Development Minister Khaw Boon Wan’s comments in Parliament on the state of the property market illustrate the conundrum of viewing a glass of water as being half full or half empty.

Noting that residential property prices have moderated in recent months, he said the various measures to cool the market “have helped buyers, including those at the middle and low end of the market”. 

Growth in mass market private housing prices outside of the central region slowed to 0.4 per cent in the second quarter of the year compared with 1.1 per cent in the previous quarter, while overall private home prices moved up just 0.3 per cent in the first six months of the year compared with 6 per cent a year ago.

And there is a warning more measures might be introduced if the situation requires.

“These are positive signs that the market is moving towards a stable and more sustainable path. We continue to monitor the market closely, and remain ready to revise and enhance the policy, if and when the situation demands it,” Khaw said.

What exactly is the ministry monitoring, and what are its targets or goals? 

It is also good to see that short-term property speculation has fallen sharply, as indicated by the relatively low volume of sub-sales. But the fact remains that home prices have not come down — they are still at historical highs.

Perhaps the ministry should be clearer about its goals and targets. What exactly is “a stable and more sustainable path”, in its view?

FOREIGN BUYERS

Yes, the proportion of foreign purchases of residential property has come down — from 20 per cent last year to 7 per cent for the first six months of the year.

This is perhaps because of the introduction in December last year of the Additional Buyer’s Stamp Duty (ABSD). 

Foreigners (albeit those from America, Switzerland, Liechtenstein, Norway and Iceland are exempt because of certain trade agreements) here have to pay an ABSD of 10 per cent when they buy a home here.

But what is the proportion of purchases by foreigners that Singapore would be comfortable with? I am sure we do not want to eliminate foreign sales altogether. 

Also, what about the proportion of sales to permanent residents, who have been said to be one of the main causes of the steep jump in prices in sub-sales of housing board flats? 

SPELL OUT THRESHOLDS

As I have argued before in a previous column, there must be a fairer and more transparent way of introducing measures to cool the property market. 

It is not fair for the government to sell land one day and introduce cooling measures the next, as it has done previously. Buyers and sellers should not have to suffer huge losses by being caught unaware.

Property development takes time. It is often a five- to six-year proposition between buying the land, developing it and finally selling it. In the meantime, loans and other finances have to be managed. 

Forecasts are made under prevailing conditions and with current factors in mind. Developers may feel shortchanged if the government one day puts up a piece of land for sale and soon after introduces measures that are negative to developers. 

Residential property buyers and investors would feel likewise, if they purchased a property on current assumptions and conditions, and find the government introducing measures to dampen the market the next day. 

Buying a property is a considerable investment; for most people it makes up a big chunk of their assets and life savings. 

Property, in a society where a very large proportion own their own homes, impacts almost everybody. There is therefore a need for greater clarity in our housing policies. The government should spell out the benchmarks or price thresholds that would entail a response in action from the ministry.

Also, if the government believes in market forces, the “reserve price” in government land sales should be abolished. You cannot say that market forces should prevail and at the same time artificially prop up land prices with the reserve price. The national coffers might suffer a bit, but it might perhaps help make housing more affordable.

There must be more certainty in the property market. There should be less — or no — speculation on when and what measures the government would introduce to curb or cool the market. — Today

* Conrad Raj is Today’s editor-at-large. - The Malaysian Today

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.

European developers avoid ‘unlucky’ homes to tap Far East demand

LONDON, July 19 — This September, work starts on a development of 22 homes around a Chinese-style courtyard, pavilion and pond. Enclosed by high white walls, it will have Chinese symbols adorning an entrance gate topped with a roof reminiscent of a Far Eastern temple.

It is being built not in China but Fuenlabrada, an industrial suburb 17 miles (27km) south of Madrid, the capital of debt-ravaged Spain where thousands of construction projects have stopped in their tracks.

“The Chinese have a saying; crisis is synonymous with opportunity,” said Jose Parra, chief executive of the Spanish developer Grupo MAIN, referring to his decision to tap the local immigrant Chinese population after the financial crisis sapped demand among his fellow Spaniards.

“We’re building for the Chinese because they are a very wealthy community in Spain and the rest of the world.”

Parra is one of a growing number of European property developers using Chinese tastes and traditional beliefs such as feng shui, a system designed to maximise positive energy flow, to entice rocketing numbers of cash-rich Far East buyers.

All of the Fuenlabrada homes, which were designed and laid out according to the laws of feng shui, have been reserved with a €5,000 (RM20,000) deposit and Parra plans to build another 70 once the scheme completes in 2014.

The trend has even more momentum in London, where a third of the best new-build homes were sold to Far East buyers last year, up from just 4 per cent in 2009, property consultancy Savills said.

While British buyers have struggled to get mortgages from banks crippled by the global financial crisis, strong economic growth in Asia has created immense wealth, fuelled by manufacturing, construction and commodities. The number of US dollar millionaires in Asia outnumbered North America for the first time in 2011.

Should restrictions barring Chinese citizens buying more than US$50,000 (RM150,000) worth of foreign money be lifted, a wave of buyers from mainland China could boost prices for the best London homes by 15 per cent, Savills said.

“We’ve all had to become aware of what the Chinese look for and what will stop them from buying,” said Sebastian Warner, partner in residential development at property consultancy Knight Frank.

Feng shui is a 4,000-year-old Chinese land management system that attempts to increase health and wealth by boosting the flow of positive energy in a given environment and adherents reject properties upon the advice of feng shui practitioners.

“Most Chinese grow up with certain cultural beliefs,” said Philip Yong, a 60-year-old Malaysian Chinese who is flat hunting in London. “It’s like you instinctively know what kind of food you should eat.”

Yong, who owns homes in Toronto, Singapore and Kuala Lumpur with good feng shui, is looking for a property near the River Thames due to his belief that water channels positive energy.

“There’s a certain sort of energy level that one looks for and you can sense when it’s in the neighbourhood,” he said, adding that narrow streets, busy road junctions and houses with little natural light all entail poor flows of positive energy.

London developer Native Land was unable to sell a string of flats in a Chelsea block to Far Eastern buyers last year due to their layout.

“We were scratching our heads trying to work out why they wouldn’t sell. We were eventually told the bathroom door was too close to the front door, which meant the good fortune flowed out of the property,” said chief executive Alasdair Nicholls, who said he would avoid similar layouts in future.

A belief that certain numbers bring good or bad luck is also relevant. Some buildings in China change floor numbers to omit the number four because it sounds like the word for “death” in Chinese, while the number eight is considered lucky as it sounds like the word for “prosperity”.

Native Land’s 227 luxury apartments in a Richard Rogers-designed scheme on the opposite side of the River Thames from St Paul’s Cathedral in London do not contain the number four for that reason, Nicholls said.

Harry Handelsman, chief executive of UK developer Manhattan Loft Corporation, has used a feng shui master on seven of his company’s properties, including the £200 million (RM1 billion) restoration of a hotel next to London’s St Pancras International train station.

The company added crystal furnishings, which are believed to help channel positive energy, and altered interior layouts to counter the negative effect that departing trains have on the site’s energy under the principles of feng shui.

Meanwhile, Berkeley Group imported tons of marble and Chinese granite for the interiors of a 50-storey apartment tower south of the River Thames, one of many developers that push their Far Eastern credentials in their marketing material.

While feng shui adherents believe ponds and fountains help positive energy flow, they dislike sharp angles as they break the path of energy. A pillar in the main lobby of the Heron tower skyscraper in London was changed from square to round for this reason before it opened in 2011.

Feng shui masters can charge up to two per cent of the building’s development cost depending on their reputation, with bigger schemes typically costing tens or hundreds of millions of pounds.

Feng shui master Michael Oon, a former forensic scientist with London’s Metropolitan Police, cited Apple’s London Regent Street store, as an example of a building with good feng shui.

“For London, the energy flows from Regents Park, Hyde Park and Green Park,” Oon said. “Energy flows down Regent Street, straight through Piccadilly and to the River Thames. The Apple store is on a bend on the road so the energy goes straight through the door,” Oon said.

Meanwhile, he said, oil giant BP’s myriad problems began after it moved its UK headquarters from Finsbury Square to St James Square in London’s West End in 2002, a location that positive energy bypasses. A BP spokesman dismissed the suggestion as “outrageous and stupid”.

A decision by six Chinese banks to set up London offices close to the Bank of England in the City financial district was likely related to feng shui, property agents said. The Bank is seen as an authority figure and therefore a source of good energy.

Beliefs in feng shui manifest most strongly in the designs of buildings in Hong Kong and Singapore. For instance, a residential block facing Hong Kong’s Repulse Bay waterfront has a hole in the middle purportedly to allow dragons that live on a mountain behind to drink water from the bay.

Younger more western-minded buyers can pay less attention.

Those buying as an investment were keener to get a good bargain than good feng shui, said Michelle Zhang, head of property consultancy DTZ’s China desk, who changed her telephone number to include more number eights after taking the job.

“It’s something nice to have, but not a must-have. As a priority on their shopping list, it comes after price and location,” she said.

Either way, many developers still err on the side of caution.

“I cannot say I’m an absolute believer but if millions of people believe in a particular thing and it doesn’t affect the aesthetic of what we’re doing, I don’t see why not,” Handelsman said. — Reuters