REDEV Properties is coming to Malaysian shores. What so special about REDEV properties? Well, for one, unlike the usual land banking offering that you hold long-term for capital gains, with REDEV you are able to earn both income and capital gains. REDEV allows you the opportunity to hold a direct investment (undivided interest) in prime Canadian commercial properties for a fraction of the cost it would take you to invest in a commercial property in Malaysia. And did I mentioned REDEV commercial properties are fully tenanted as well?
REDEV Properties has been syndicating commercial properties to investors since 2001. Today, they own and manage 25 well located, fully occupied commercial properties along with 4,000 investors. Eighty percent (80%) of the investing partners are Canadians and this speaks volume in terms of the credibility of the investment offered. In fact, they recently won the Hong Kong Business High Flyers of 2008 award.
The 3 founding members are Richard Crenian, Howard Manley and Darwin Forer. They partnered up in 1981 and since then have developed over 11,000 condominiums and commercial properties in Canada. By 2001, they changed focus to redeveloping established commercial properties. It had become cheaper to buy existing properties than developing new ones, and with long term leases already established, it posed less risk and provided immediate cash flow.
By partnering up with REDEV, you enjoy immediate cash flow generated from existing leases with regional and multinational companies. You are expected to earn between 6% - 10% net income pa. Commercial properties leases are long and secure leases of 5 - 20 years. The best part is... these are Triple-Net Leases where the tenant is responsible for all taxes, insurance, miscellaneous expenses and all costs associated with repairs. This protects you as an investors.
On top of your 6%-10%pa cash flow, you enjoy capital gains as well. At the end of 5 years, investors will vote to either sell or refinance the property. REDEV has a historical capital gain of 140% after 5 years. You have a clear exit strategy.
Commercial real estate is normally beyond the reach of the average investor. REDEV provides a platform for investors to simply own a percentage interest for as little as C$25,500 in freehold property, with existing tenants and existing cash flow. This is a very secure investment with land titles (undivided interest) and a trustee to safeguard your investment. Their current project Sturgeon Plaza has established tenants such as Canada Post and Royal Bank of Canada. An excellent investment such as this is expected to be sold-out very soon. If you are interested, drop me a comment now!
p/s: Don't miss out on this!
Speaking of starting afresh, while the financial crisis still lingers over us, many (including me) believe the worst is over. So are there anything for us to look forward to in terms of investments?
Before we move forward, let us briefly recap how the financial crisis actually started (I know its painful to remember things sometimes, but one should always learn from the past). It all started with the US housing bubble which peaked in 2005-2006. High default rates on sub-prime loans begin (sub-prime loans are loans which are in the riskiest category in the consumer loan market). Basically the financial institutions keep dishing out money to house buyers that have low credit rating. As house prices begin to stagnant or fall, house owners can no longer refinance their houses to keep up with their high interest rate mortgages. High defaults and foreclosures in turn plunge the US housing market even further.
When all these collapse, it spilled over to the financial markets. Many of these sub-prime loans are repackaged into financial instruments such as mortgage-backed securities (MBS) and a form of credit insurance called credit default swap (CDS). These are in turn sold to investors. Financial institutions who suffered losses includes Lehman Brothers (since bankrupt) and AIG (who received close to US$180 billion in US government aid that it has yet to repay). The spiraling effects include falling global consumer wealth, substantial financial commitments by governments all over the world and a significant decline in economic activity globally.
Going forward, US Federal Reserve Chairman, Ben Bernanke recently gave his comment on the US economy stating, "I've seen some agreement among the forecasting community at this point that we are in a recovery, that we will see growth in the third quarter continuing and that growth will continue into 2010. But the general view of most forecasters is that that pace of growth in 2010 will be moderate..."
Recent gains in stock prices, rise in consumer confidence and home building activity, reinforces Bernanke's view that the worst is over. The Standard & Poor's 500 Index has soured 58% since March 9, 2009 when it hit a 12-year low. Reuters/University of Michigan Index of Consumer Expectation rose to 65 in August 2009, and climbed to 69.2 in Sep 2009; signally future spending is likely to rise. US Building Permits rose 2.7% to a 579,000 annual rate in August 2009; signally an increase in future construction. Things are indeed starting to improve and next we can talk about where best to put our money to take advantage of the recovering US & global economy (A new form of investment is about to hit the Malaysian shores)!
A 260 acres open space earmarked for the building of Penang Global City Centre (PGCC) in Malaysia is currently surrounded by controversy. So much so that the former Chief Minister of Penang, Tan Sri Dr Koh Tsu Koon has to dodge bullets by the current Chief Minister, Lim Guan Eng at a debate entitled The True Story Behind the Land Controversy in Penang. A one-liner by Lim Guan Eng sums it up for the debate that night: “If there was no corruption in the previous Barisan Nasional government, then they would not have fallen in the March (2008) election tsunami.” Yep, I guess that says it all FORMER Chief Minister, Tan Sri Dr Koh Tsu Koon!! The list of land scams by the authorities in Malaysia goes on:
- Businessman alleges irregularities in sale of Penang Turf Club land.
- Land scam to be investigated.
- Politicians identified as likely culprits in land scam.
- Multiple land titles issued.
- Experts to improve e-Tanah land registration system.
When I propose foreign land investments to investors in Malaysia, I tend to get this question a lot, “How come you guys don’t invest in land in Malaysia instead?” Or another popular one, “How come we get development approved in Malaysia so quickly and yet in Canada it takes 2 - 4 years of planning?” Hmm……let’s see. Could it be because there is no transparency in land dealings in Malaysia compared to Canada? Could it be because like in the example of PGCC, where the land zoned as “open space” sold at RM43psf is now worth RM250psf when it was rezoned as “mixed development” in a controversial way (despite public protest)? Could it be because the developer tends to need close political ties (smells of corruption)? Or could it be because it is not uncommon for multiple land titles issued on the same parcel of land (manipulation of the land registration system)?
In Alberta, Canada, the government guarantees the accuracy of the land title. As a result, anyone who suffers a loss due to an error on the title or even as a result of a fraudulent transaction may take steps to obtain compensation from the government through the operation of the Assurance fund. The titles are electronically registered and provides easy access via a web-enabled Spatial Information System (SPIN). You can easily verify land ownership over the Internet.
Over in Alberta, Canada it takes 2 - 4 years for development approval because they follow a very systematic process that even incorporate public hearings where adjacent land owners are invited to raise their concerns. All views are taken into account before development approvals are given. And no… greasing a politician’s hand will not get your development approval ahead any faster!
Maps are easily available at the town/city council websites to verify the status of the land you are investing in. Land Use Bylaw Map, Area Structure Plan (ASP) Map and Future Land Use Map are useful maps whereby you can identify whether the land you are investing in is incorporated in the town/city council master plan.
1. Land Use Bylaw Map - Tells you what is the current permitted land use.
2. ASP or Future Land Use Map - Tells you what is the future permitted land use.
The essence of making money from land banking is when a parcel of raw land is bought up by a developer for development so make sure that the land you are investing in has development potential by utilizing the various maps. If the land is clearly stated as residential usage… as long as the developer doesn’t apply to get a casino or commercial mall approved for that land, it is more of a matter of complying to the town/city council regulations to get the development approved. In Canada… it is systematic and transparent. I will end my post with a few examples of town/city council maps below:
Source: landbankingdotus
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