VIABLE?: There is a market for Chinese New Village houses but enter with your eyes open
NST RED catches up with Mr See Kok Loong, Principal of Metro Homes Sdn Bhd for his views on the market for Chinese New Villages
• RED: Is the existence of Chinese New Villages still sustainable during this time, especially with rapid economic growth, urban expansion and escalating property prices?
See Kok Loong (SKL): Yes, they are still sustainable but would be in a different form soon especially for those that are next to large pieces of land which might be bought up by developers. The land is usually held by three generations of family members, so you might have four to six, even up to 10 persons having small shares and it will remain that way unless they sell out to a developer. Problems might crop up in terms of payment of the land premium and leases.
Usually, if the land surrounding the Chinese New Village is undergoing rapid development, the developer would want to buy over the Chinese New Village land to develop as the property would have ready buyers. The difficult part is for the developer to get all the owners to agree to sell.
• RED: What are the roles to be played by the government and private sectors to protect the interests of residents in Chinese New Villages?
SKL: The government is offering low renewal fees for leases to extend to 99 years. As land is a state matter, the federal government needs the support from the states.
Usually all the Chinese New Villages also come with some cultural or religious activities like temple activities which can be turned into tourist attractions by the government.
• RED: In terms of infrastructure development, are Chinese New Villages well integrated with other new developments surrounding them?
SKL: Yes, developers are keen to develop near locations of Chinese New Villages as they provide the population and demand for new houses or properties. Some of the villages have been around for over 50 years and there is therefore a strong demand for new properties after two to three generations.
Having said that, there are still some villages lacking proper planning and the existing road and infrastructure cannot cater for today’s needs.
• RED: What is the trend of property price of a “village” house compared to new houses (condo/terrace/bungalows)?
SKL: The price of village houses are normally quite low due to poor access roads, short leases and consequentlybanks are reluctant to finance them especially if the lease is below 30 years.
However, upon obtaining the extension of the lease, the price would go up. A village house will usually come with a land area of 40-50 x 70-90 feet ( approximately 4,000- 4,500 sq ft ) which is much larger than a modern terrace house.
The building itself could be very old and is either fully wooden or half-wooden and half-brick.
Compared to village houses, new properties have commanded good prices in the last few years as developers not only sell the properties per se, but also the overall lifestyle, environment and security packaged together. Further, with the strong support from banks with easy and high margins of financing, such new properties have seen record high prices.
• RED: Is there a market for village houses? What is the appreciation rate like (if any)? What about rental of these houses? What are the problems associated with staying in a village house?
SKL: Yes, there is a market for village houses especially those with road frontage which could be converted for commercial usage. However, the price appreciation is slower than normal housing because sales of these properties are limited to certain groups of purchasers only.
Rental rate on the other hand is reasonable due to its proximity to amenities such as the city centre, bus terminal etc. In terms of security however, it still leaves much to be desired while maintenance costs could be high.