Developer introduces shared ownership model

Developer introduces shared ownership model
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KUALA LUMPUR (Jan 19): Can’t afford a property? Ho Wah Genting Property Sdn Bhd has a proposition — why not share the property?

The property arm of Ho Wah Genting Group (USA) Ltd has recently introduced a new property investment concept for its two maiden hotel development projects in the country — Goldmen Suites near Bukit Bintang, Kuala Lumpur and HWG Resort in Port Dickson, Negeri Sembilan.

The investment concept for Goldmen Suites and HWG Resort, based on a shared property ownership model, was introduced to the Malaysian market on Nov 11, 2017. Some 200 registrations of interest were received that day.

Located at the junction of Jalan Kampung Pandan and Jalan Imbi, Goldmen Suites is a proposed 60-storey hotel project with 600 rooms, each with a built-up size of 500 sq ft. The project, which has a GDV of RM900 million, is a joint-venture project with Lembaran Beruntung Sdn Bhd, which is the landowner. The land is currently being leased to a carpark operator. Earthworks are expected to start once the lease expires in March this year.

HWG Resort is a seafront development in Port Dickson with a GDV of RM900 million. There are three components in this project — a cruise entertainment hub, hotel town and water chalet. The water chalet component offers a total of 182 units with four different layouts ranging from 974 sq ft to 2,312 sq ft. The project is being developed by Earth Synergy Sdn Bhd, a wholly-owned subsidiary of Ho Wah Genting Property. The piling works will begin soon.

“The common thing these two projects have is their investment model. We all know commercial property investment in prime areas has always been limited to a small group of investors due to the high cost involved. We want to fill the gap and give the opportunity to more people to invest in luxury properties by making it more affordable while reducing the investment risk,” said Gavin Lim, the executive director of Ho Wah Genting Property.

Under this shared model, he explains, every unit in these two projects is allowed a maximum of 12 owners, with Ho Wah Genting Property being one of them so it can play the administrator role.

“At Goldmen Suites, instead of coming up with RM1 million for a unit, you will just need to fork out RM125,000 to become one of the 12 owners of a 500 sq ft hotel suite to enjoy benefits such as a 30 nights-in-a-year entitlement either for your own use or to be rented out for returns,” Lim said.

To avoid concurrent bookings by the unit owners during peak season, flexibility is given to the owners to utilise all their 30 nights’ entitlement at one time.

“The building is divided into three zones according to entry prices. If you are at the lowest entry-point zone, you can book any of the rooms in that zone when you want to use more than one night’s entitlement on the same night [for your guests]. For those under the entry price zone 2, they can book rooms at zone 1 and 2; while for those in price zone 3, they can book rooms in all three zones or the entire hotel.

“The higher-priced zones on the higher floors accord you better views and more rooms available for the owners’ use,” Lim said.

Besides paying RM125,000 as a one-off payment or a maximum of 24 months’ instalments to the developer, every investor will also need to pay RM700 in monthly maintenance fee.

“RM700 is the cost to maintain the entire building — the common areas, the facilities, your unit room services, as well as to use our platforms to rent or trade your investment worldwide,” Lim said.

Use of blockchain and possibly bitcoin

According to Lim, the record of ownership and benefit entitlement will be done using blockchain technology.

“Blockchain is probably one of the most transparent and wide-reaching systems. When an investor wishes to exit the investment plan, they can target worldwide buyers via our blockchain platform. Of course, besides the smart contract, investors will also need to sign the conventional contract to legally change the ownership title,” Lim explained.

He added that the company is also exploring the possibility of allowing bitcoin to be used for the transactions. “When we use the blockchain system, people will wonder if we are accepting bitcoin. As a developer, we prefer hard cash because developing requires cash flow. But we are exploring the possibility of accepting bitcoin because our market is worldwide — Japan, the US, Singapore and other countries that are very familiar with blockchain and bitcoin. We need to cater to market demand,” Lim noted.

When an investor decides to exit, there will be a stipulation in the sale and purchase contract stating that every owner has equal right.

“People will be worried; for example, what if one of the 12 investors wants to exit but others want to stay — would it cause any conflict? In the contract, when they buy into a shared ownership, they are buying into undivided share in a property. It means each and every owner has the equal right to make a decision. You don’t have to go through all the shareholders for the consent of exit. Only the admin of the unit title, which is Ho Wah Genting Property, is involved in processing the exit,” Lim explained.

He said one of the aims of this investment model is to encourage people to invest and do business, hence the lower entry point with no guaranteed returns.

“I believe leaseback and guaranteed returns are just different forms of discounts, not really a return. We do not offer them. In fact, we encourage investors to lease their nights with all the short-stay platforms available in the market,” said Lim, who expects a 20% to 30% take-up rate locally for both projects by the first half of 2018 as it mainly focuses on foreign buyers from Singapore, China, Japan and the US.

Ho Wah Genting Group (USA) Ltd is an investment holding company engaged in promoting entertainment membership, junket operating services, online entertainment gaming, investing and marketing of real estate.

This story first appeared in pullout on Jan 19, 2018. Download pullout here for free.