For Reference

“ Datuk John Tan and his property development in Batu 11, Cheras “
Group assignment
BTQS2054 Development Economics, 2021/ 2022
No Name of student Group assignment Presentation

report mark: marks :
100 marks 100 marks
Name : LAU YONG LIANG
88% 81%
1
ID : 20WVR12800
(Total : 44) (Total:20.5)
Name : LEE HAN SEN
81%
2
ID : 20WVR12803 88%
3 Name : NG CHOONG WEI
ID : 20WVR12835 80%
88%
(Total : 44) (Total:20)
4 Name : NG XUE FENG
ID : 20WVR12840 88% 80%
(Total : 44) (Total:20)
Name : TAN ZHEN HUI
81%
5
ID : 20WVR12873 88%
Lecturer / Tutor : TS TAN TIEN SHEN / Assoc. Prof. Ts. Dr Abdul Rahman Bin Ayub
Tutorial group : 08
Program : BACHELOR OF QUANTITY SURVEYING
Submission : Week 9
Date prepared : 20 AUGUST 2021

DEPARTMENT OF QUANTITY SURVEYING
FACULTY OF BUILT ENVIRONMENT
DIPLOMA IN QUANTITY SURVEYING
ACADEMIC YEAR 2021/2022
BTQS2054 Development Economics

Bachelor of Quantity Surveying
RQS3S1
Group Assignment of minimum 2,500 words
Date of issue: Week 5
Date of submission: Week 9
Marks Weightage : Group marks (50%), presentation (25%)
Marking Scheme: Group marks (100%), Presentation (100%)
Datuk John Tan is a Managing Director for a plastic manufacturing company in Malaysia.
Unfortunately, the plastic price was fluctuating in recent years due to the fear of oversupply
in the market. Therefore, he is considering the options to either venture into the business of
property development using his company land or invest in other type of investment using his
company cash reserve.
You are a registered quantity surveyor who completed several projects over the past 10 years.
You are to address the following questions before giving your advice to Datuk John Tan.
1. List the types of investments available in the market. Advise the client on the risk, returns
and factors that affect the investment. Recommend one to the client with explanation.
2. Assess the past historical economic cycle based on GDP, Interest rate and relevant indexes.
Advise Datuk John Tan the current economic situation and best action to be taken as a
property developer.
3. Discuss the characteristics of property as an investment with example.
4. Examine the differences of property yields for shops, offices, industrial factories,
residential and recommend one for the client’s land.
5. Demonstrate your understanding of the concept income stream and property value for the
property development of client’s land by giving an example.
Instructions to students
1. Students are to form groups at their own choice of not more than five persons per
group.
2. Read the case study carefully; understand the instructions, read the report format,
cover page design, pagination, and type of binding, etc in the next few pages.
3. You should submit the group report (minimum 2,500 words) on end of week 9 to the
tutor concerned.
4. Clearly state the questions you have answered.
5. As each question carries equal marks in the group section. please attempt to answer
all of them.
6. Begin each new question on a new page.
7. As a reminder, students are asked to start reading power points issued to them that
covered materials of LW 1, 2, 3, and 4:
8. Beware of merely re-stating views from power point notes will not earn full marks.
Use your own words, and provide examples to show you understand the
concept/theory well.
9. Marks will also be given for research efforts based on the following criteria:
 Obtaining additional information beyond power point notes;
 Use library’s online databases such as Scopus, EBSCOhost, Emerald,
ProQuest, Science Direct, Springer, etc. Visit your librarian please.
 Originality of views; and
 Depth of analysis.
Format of Submission
1. All writing be typed by using Font 12 for Times New Roman.
2. The whole assignment must be written in English.
3. The report must be properly cited and referenced using Harvard System of Reference.
4. The cover page should include the name of programme and subject, student’s name
and ID number, lecturer’s name and date of submission.
5. Students are required to prepare standard report writing e.g., table of contents,
a list of references or bibliography and appropriate appendices.
6. Students will be given the feedback by week 10.
7. The marking scheme form needs to be attached together with the report during
Submission and late report submission will not be accepted.
8. For late submission, there will be a reduction of absolute marks from the
mark’s score submitted.
9. Late 1 to 3 days after deadline of submission: minus 10 marks;
10. Late 4 to 7 days after deadline of submission: minus 20 marks;
11. Late more than 7 days after deadline of submission: 0 marks.
12. You are required to generate and submit the similarity index report via Turnitin. In
addition, please attach the Student Self Declaration ( Coursework & e-Assessment).
The information for Datuk John Tan’s land is enclosed for your reference.
Location : 43300 Lot 2096, KG. BaruBalakong, Off Jln. Balakong, Balakong Selangor,
43200.( For education purposes only)
STUDENT’S DECLARATION OF ORIGINALITY
Submission (please circled): Coursework / Final e-Assessment
Course Code: BTQS 2054

Course Title: Development Economics
“The Coursework / Final e-Assessment submitted herewith is a result of my own

research / work. All information that has been obtained from other sources had been
fully acknowledged.
I understand that cheating / plagiarism constitutes a breach of University College rules

and regulations and would be subjected to disciplinary actions”.
Signature :
Name of Student: Lau Yong Liang
Student ID: 20WVR12800
Date: 19 August 2021
TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE



fully acknowledged.

Signature
Name of Student: LEE HAN SEN
Date: 19 AUG 2021



fully acknowledged.

Signature
Name of Student: NG CHOONG WEI
Date: 19 AUGUST 2021



fully acknowledged.

Signature
Name of Student: NG XUE FENG



fully acknowledged.

Signature
Name of Student: TAN ZHEN HUI

The marking scheme of BTQS2054 Development Economics (Group assignment)
Allocated
Group Assignment Criteria Very poor ( 1 Marks ) Poor ( 2 marks ) Average ( 3 marks ) Good ( 4 marks ) Excellent ( 5 marks ) W/T Group Marks
Marks
(Question 1) List the types of Relevant and
Totally irrelevant and very Irrelevant and limited Relevant but rather general
investments available in the comprehensive details
minimal input on the details with extensive Fairly relevant but limited details in the discussion of
market. Advise the client on given in the discussion of
discussion on the topic or mistake in the discussion details in the discussion of the topic. Student able to
the risk, returns and factors the topic. Student able to
that affect the investment.
not complete at all. Very of the topic. Poor the topic. Rather average advising the subject and
advising the subject and 4.4 X 4 17.6 / 20%
poor performance in performance in advising in advising the subject and knowledge with
Recommend one to the client knowledge with
advising the subject and the subject and knowledge knowledge in Question 1. emphasising details in
with explanation. emphasising greater
knowledge in Question 1. in Question 1. Question 1.
details in Question 1.
(Question 2) Assess the past Relevant and
Totally irrelevant and very Irrelevant and limited Relevant but rather general
historical economic cycle based Fairly relevant but limited comprehensive details
minimal input on the details with extensive details in the discussion of
on GDP, Interest rate and details in the discussion of given in the discussion of
discussion on the topic or mistake in the discussion the topic. Student able to
relevant indexes. Advise Datuk the topic. Rather average the topic. Student able to
John Tan the current economic
not complete at all. Very of the topic. Poor
in assessing the situation
assessing the situation and
assessing the situation and 4.4 X 4 17.6 / 20%
poor performance in performance in assessing knowledge with
situation and best action to be and knowledge in Question knowledge with
Group Assignment ( Question 1,2,3,4 and 5 )
assessing the situation and the situation and emphasising details in

taken as a property developer. 2. emphasising greater
knowledge in Question 2. knowledge in Question 2. Question 2.
Relevant and
Totally irrelevant and very
Irrelevant and limited Relevant but rather general comprehensive details
minimal input on the Fairly relevant but limited
details with extensive details in the discussion of given in the discussion of
(Question 3) Discuss the discussion on the topic or details in the discussion of
mistake in the discussion the topic. Student able to the topic. Student able to
characteristics of property as not complete at all. Very
of the topic. Poor
the topic. Rather average
discussing the characteristic discussing the 4.4 X 4 17.6 / 20%
an investment with example. poor performance in in discussing the
performance in discussing and knowledge with characteristic and
discussing the characteristic characteristic and
the characteristic and emphasising details in knowledge with
and knowledge in Question knowledge in Question 3.
knowledge in Question 3. Question 3. emphasising greater
3.
Relevant and
(Question 4) Examine the Totally irrelevant and very Irrelevant and limited Relevant but rather general
comprehensive details
differences of property yields minimal input on the details with extensive Fairly relevant but limited details in the discussion of
given in the discussion of
for shops, offices, industrial discussion on the topic or mistake in the discussion details in the discussion of the topic. Student able to
the topic. Student able to
factories, residential and not complete at all. Very of the topic. Poor the topic. Rather average examine the subject and
examine the subject and 4.4 X 4 17.6 / 20%
recommend one for the client’s poor performance in performance in examine in examine the subject and knowledge with
knowledge with
land. examine the subject and the subject and knowledge knowledge in Question 4. emphasising details in
emphasising greater
knowledge in Question 4. in Question 4. Question 4.
Irrelevant and limited Relevant and
(Question 5) Demonstrate your Totally irrelevant and very Relevant but rather general
details with extensive Fairly relevant but limited comprehensive details
understanding of the concept minimal input on the details in the discussion of
mistake in the discussion details in the discussion of given in the discussion of
8%
income stream and property discussion on the topic or the topic. Student able to
value for the property not complete at all. Very
of the topic. Poor
performance in
the topic. Rather average
in demonstrating the skill
demonstrate good skill and
the topic. Student able to
demonstrate great skill and
4.4 X 4 17.6 / 20%
development of client’s land poor performance in knowledge with
demonstrating the skill and knowledge in Question knowledge with
by giving an example demonstrating the skill and emphasising details in
and knowledge in 5. emphasising greater
knowledge in Question 5. Question 5.
Question 5. details in Question 5.
Sub-total 88 / 100%
After deduct [ ] marks(s) for [ ] day(s) late / 100%
Type t
DEVELOPMENT ECONOMICS
ORIGINALITY REPORT
11 %
SIMILARITY INDEX
10%
INTERNET SOURCES
3%
PUBLICATIONS
%
STUDENT PAPERS
PRIMARY SOURCES
1
www.investopedia.com
Internet Source 2%
2
www.moneysense.gov.sg
Internet Source 1%
3
realestate4investing.com
Internet Source 1%
4
academy.shareinvestor.com.my
Internet Source <1 %
5
www.moneycontrol.com
6
www.coursehero.com
7
courses.lumenlearning.com
8
www.straitstimes.com
9
www.elearnmarkets.com
Table of Contents
Table of Figure iv
1.0 Introduction 1
2.0 Types of Investments Available in the Market 2
2.1 Bank Deposit 2
2.1.1 Bank Deposits’ Return 2
2.1.2 Risks Involved in Investing Fixed Deposit 2
2.1.2 Factors that Affects the Demand of Fixed Deposit 3
2.1.2.1 Bank Negara Interest Rate 3
2.1.2.2 Additional Incentives 3
2.1.2.3 Economy Conditions 3
2.2 Unit Trust 4
2.2.1 Return of Unit Trust 4
2.2.1 Risk & Factors Involves in Investing Unit Trust 4
2.2.2.1 Liquidity 4
2.2.2.2 Interest rate 4
2.2.2.3 Currency 5
2.2.2.4 Counterparty factor 5
2.3 Bond 5
2.3.1 Bond’s Return 5
2.3.2 Risk Involved in Investing Bonds 6
2.3.3 Factors that Affects the Demand of Bond 6
2.3.3.1 Interest Rate 6
2.3.3.2 Stock 6
2.4 Property Investment 6
2.4.1 Return on property investment 7
2.4.2 Risk of property investment 7
2.4.3 Factors that Affect Property Investment 7
2.4.3.1 Interest rate 7
2.4.3.2 Government Policy 7
2.5 Shares 7
2.5.1 Return of Share 8
2.5.2 Risk & Factors that affect the share investment 8
2.5.2.1 Market risk 8
2.5.2.2 Business risk 9
2.5.2.3 Liquidity risk 9
2.6 Mineral 9
2.6.1 Risk and factors that affect the mineral investment 10
2.6.1.1 Price fluctuations 10
2.6.1.2 Operational efficiency 10
2.6.1.3 Science and technology 10
2.7 Commodity 10
2.7.1 Return of commodity 11
2.7.2 Risk in Commodity investment 11
2.7.2.1 Price risk 11
2.7.2.2 Political risk 11
2.7.3 Factor that affected the commodity investment 11
2.7.3.1 Political factor 11
2.7.3.2 Science and Technology 12
2.8 Foreign Exchange 12
2.8.1 Forex’s Return 13
2.8.2 Risk Involves in Trading Forex 13
2.8.3 Factors that Affects Forex Trading 13
2.9 Derivatives 14
2.9.1 Risk & Factor that affects the derivatives investment. 15
2.9.1.1 Liquidity risk 15
2.9.1.2 Market risk 15
2.9.1.3 Credit risk 15
2.10 Cryptocurrency 15
2.10.1 Risk & Factor that affects Investing in Bitcoin 16
2.10.1.1 Intangibility 16
2.10.1.2 Volatility 16
2.10.1.3 Vulnerable to Hackers & Frauds 16
2.11 Recommendation to Mr John 17
3.0 Past Historical Economic Cycle 18
3.1 Gross Domestic Product (GDP) 18
3.1.1 Factor Affecting Gross Domestic Product (GDP) 19
3.1.1.1 Government Expenditure 19
3.1.1.2 Business Investment 19
3.1.1.3 Net Export 19
3.1.1.4 Private consumption expenditure 20
3.2 Interest Rate 22
3.2.1 Factor Affecting Interest Rate 23
3.2.1.1 Supply and Demand of Money 23
3.2.1.2 Inflation 24
3.2.1.3 Central Bank 24
3.2.1.4 Global Interest Rates and Foreign Exchange Rates (FOREX) 24
3.3 Construction Industry Growth 24
3.3.1 Factor Affecting Construction Industry Growth 25
3.3.1.1 Political issue 25
3.3.1.2 Inflation 25
3.3.1.3 Interest Rate 26
3.4 Technical Recession 26
3.4.1 Factor Affecting Technical Recession 26
3.4.1.1 Financial factors 26
3.4.1.2 Psychological factors 26
3.4.1.3 Real factors 27
3.5 Demand and Supply of Real Estate 27
3.5.1 Factors Affecting Demand and Supply of Real Estate 27
3.5.1.1 Affordability index (demand side factor) 27
3.5.1.2 Population (demand side factor) 28
3.5.1.3 Economy (demand side factor) 29
3.5.1.4 Land use (supply side factor) 29
3.6 Advice to Datuk John Tan 30
4.0 Characteristics of Property Investment 32
4.1 Durability 32
4.2 Lack of Transparency 32
4.3 Illiquid 33
4.4 High Startup Costs 33
4.5 Investment Vulnerability 34
5.0 Differences of Property Yields 35
5.1 Shop lot 36
5.2 Offices 37
5.3 Industrial Factories 38
5.4 High Rise Residential 39
5.5 Landed Residential 40
5.6 Recommendations 41
6.0 Property Development 43
6.1 Concept Income Stream 43
6.2 Property Value 44
6.2.1 Shop Lots 44
6.2.2 Offices 45
6.2.3 Industrial Factories 45
6.2.4 High Rise Residential 46
6.2.5 Landed Residential 46
6.3 Recommendation on Selling Price to Datuk John Tan 47
7.0 Conclusion 48
8.0 Reference 49
Table of Figure
Figure 1 Risk vs Type of investment ……………………………………………………....17

Figure 2 GDP Growth in Malaysia for year 2000-2020 ...……………………...……..18
Figure 3 Net exports of Malaysia .…………………………………………...…………20
Figure 4 Private Consumption % of Nominal GDP: Quarterly: Malaysia 1991-2021 21
Figure 5 Interest Rate in Malaysia for year 2000-2020 ……...…………………….…22
Figure 6 Construction Industry in Malaysia for year 2000-2020 .………………..…..….25
Figure 7 Malaysia Population 2021 ……….………………………………………………28
Figure 8 Malaysia House Price Index from 2012-2020 ...…………………………..…30
Figure 9 GDP (RM Billion) and Annual Percentage Change (%) ......................................30
Figure 10 Datuk John Tan’s Land from Google Map…..……………………………………35
Figure 11 Datuk John Tan’s Land from JUPEM ……………………………………......35
Figure 12 Displacement from different locations of shop lots .……………………….36
Figure 13 Displacement from different locations of offices ……..…………………………37
Figure 14 Displacement from different locations of Industrial Factories ………..………38
Figure 15 Displacement from different locations of high rise residential ..……………....39
Figure 16 Displacement from different locations of landed residential ...……………...40
Figure 17 Concept of Mix Development Property …...…………………….……….…….41
Figure 18 3D Perspective View of Emerald 9, Taman Suntex, Cheras ..……….……..42
iv
1.0 Introduction
Economics is the social science that studies the production, distribution and
consumption of goods and services. It encompasses how individuals, businesses, governments
and the state choose how to allocate resources. The use of economics is to determine which
methods of labour produce better results for the economy.
Datuk John Tan is the Managing Director of a plastics manufacturing company in

Malaysia. Fluctuating prices and lower demand for plastics have led him to consider the option
of using his company land for a property development business or using the company's cash
reserves to invest in other types of investments.
The task was to research the type of investment that exists in the market to understand
the risk, return and other factors of that investment type. There are various types of investments
to choose from, such as equities, real estate, debt papers etc. This research aimed to provide
Datuk John Tan with the best advice and recommendations on which type of investment would
be more suitable for him.
1
2.0 Types of Investments Available in the Market
2.1 Bank Deposit
Bank deposits involve deposit funds into banks to safeguard money from theft and other risks
of losses (Kagan, 2020). To deposit funds in a bank, one must first open a bank account in any
commercial or other type of bank. In return, the bank would provide interest rates against one’s
balance amount. However, interest rates vary from bank to bank and from time to time,
depending on the types of bank accounts one holds. Nevertheless, one can open various
accounts, such as a current account, savings account, and fixed deposit account. A fixed deposit
is a savings or investment account that promises a fixed interest rate if the investor does not
withdraw the funds in a fixed period.
2.1.1 Bank Deposits’ Return

A fixed deposit account offers a higher interest rate when compared to a savings account.
However, they offer returns relatively lower than other investments such as properties, shares,
bonds, etc. In opening a fixed deposit account, one can choose a tenure. For instance, if Mr
John opens a fixed deposit account with a 12 months tenure, he will get an interest rate of
1.85% per annum. In other words, Mr John will get RM4,550 when the tenure ends if he
deposits RM250,000 with 12 months tenure.
2.1.2 Risks Involved in Investing Fixed Deposit

Although a fixed deposits account would offer a higher interest rate when compared to a
savings account, investing in a fixed deposit account would lose the flexibility of a savings
account as one’s funds are locked away with the bank for some time. On top of that, if an
investor withdraws his funds before the fixed deposit tenure ends, he could lose all or part of
his interest subject to a bank’s policy. Most fixed deposits in Malaysia are covered for up to
RM250,000 by Perbadanan Insurans Deposit Malaysia (PIDB). However, if a person deposits
RM500,000 in a fixed deposit account and that bank defaults. In that case, the PIDB will only
compensate up to RM250,000 per person per bank. Thus, although fixed deposits offer
protection against uncertainty, they offer insufficient protection against inflation. Generally
speaking, fixed deposits do not pay enough interest to keep up with inflation rates. For
example, suppose the fixed deposit interest rate is 2.7%, and the current inflation rate is 2%. In
that case, one might have only earned 0.7% in interest.
2
2.1.2 Factors that Affects the Demand of Fixed Deposit
2.1.2.1 Bank Negara Interest Rate
When the Bank Negara provides a higher interest rate for fixed deposits. In that case, the
demand for fixed deposits will increase as more people will be attracted to register a fixed
deposits account because it would offer a higher return. However, suppose interest rates remain
high during a period where the economy is weak. In that case, consumers and companies will
be unlikely to borrow and repay loans, and bank earnings would eventually suffer. In other
words, bank deposit’s demand will become lower at this point.
2.1.2.2 Additional Incentives

When a bank offers additional incentives such as zero transfer fees and free identity theft
protection, the demand for fixed deposits will rise. Individuals are usually drawn to anything
free or additional. Thus, the demand for bank deposits will rise.
2.1.2.3 Economy Conditions

When the economic condition is weak and full of uncertainty, individuals will tend to make
lower-risk investments, such as investing in fixed deposits. In contrast, when the economic
condition becomes more stable, individuals will tend to look for a higher-risk investment with
more return.
3
2.2 Unit Trust
A unit trust is a fund made of various assets such as shares, bonds, properties, etc. The portfolio
is then divided into units that are then sold to investors. The money one invested will be
gathered together with other investors by a professional fund manager. In return, each investor
will receive their returns based on their contributions. The fund managers are monitored by a
trustee, who helps to ensure that investment decisions are made in one’s best interests. In other
words, unit trusts help investors with limited funds to diversify their portfolios with several
different stocks and assets.
2.2.1 Return of Unit Trust

The investors invest in funds by buying unit trust. When the unit price is higher than the price
of a unit trust that investors buy, the capital gains are generated. However, some of the funds
need to pay dividends. The price of each unit is based on the fund's net asset value (NAV)
divided by the number of units in circulation (Understanding unit trusts, 2021). The net asset
value is the market value of the fund's net assets such as investments, cash and other assets
minus expenses, payables and other liabilities. The net asset value is usually calculated once a
day to reflect changes in the investment price held by the fund.
2.2.1 Risk & Factors Involves in Investing Unit Trust

There are some of the risks that affect investment unit trust. In market risk, the fund’s net asset
value or trading price will be affected by changes in the value of the fund’s assets, which will
be affected by changes in economic, political or market conditions. In conclusion, some
investors are willing to invest in unit trust because it provides them with a simpler, convenient
and time-saving way of securities investment.
2.2.2.1 Liquidity
Investing unit trust also will be affected by the liquidity risk. For funds listed and traded on
stock exchanges, the secondary market may also lack liquidity. This may affect the price at
which investors buy or sell the unit trust.
2.2.2.2 Interest rate

Besides, interest rate risk is one of the risks that affect the investing of a unit trust. Funds that
invest in bonds, debentures or other debt securities will face the risk of changes in interest rates
4
because the prices of debt securities are often the opposite of interest rates. For example, when
interest rates rise, the prices of debt securities usually fall.
2.2.2.3 Currency
Foreign currency or foreign exchange risk is also one of the risks that affect investing the unit
trust. Funds that invest in assets denominated in foreign currencies may face adverse currency
movements. The currency base of the fund may also be different from the investor's own.
2.2.2.4 Counterparty factor

Investing unit trust also will be affected by the counterparty risk due to the deterioration of the
financial situation of the counterparty or other reasons; the fund may face the risk that the
counterparty cannot fulfil its payment obligations.
2.3 Bond
Bonds can be interpreted as loans from an investor to a government or corporation.
Governments or corporations issue them to finance projects (Fernando, 2021). In return, the
government or corporation will make regular interest payments to the investor at a specific
interest known as coupon rate on the amount borrowed known as face amount until the maturity
date. When the bond matures, the government or company will repay the investor the face
amount and stop the interest payments . This method of investment is known as hold to
maturity. However, suppose the investor has decided not to invest until the maturity date. In
that case, he could always sell the bond to another investor any time at the prevailing market
price. Like fixed deposits, bonds offer a series of predictable cash flows with minimal risk to
one’s invested capital but higher interest. To start investing in bonds, one can open a
stockbroking account or buy from platforms like Fundsupermart or public mutual funds
companies. On top of that, bonds can be further categorised into Corporate bonds, Government
bonds, Islamic bonds, etc.
2.3.1 Bond’s Return

Bond’s returns are generally more predictable when compared to other investment options such
as stocks. This is because bonds pay out a fixed amount of income at a regular interval in the
form of coupons. For example, there is a long-term Malaysian Government Bond in the Bond
Supermarket that offers 5.24% per annual. However, it requires seven years to maturity.
5
2.3.2 Risk Involved in Investing Bonds
Although bonds are low-risk investments, they carry a higher risk when compared to fixed
deposits. This is because fixed deposits are insured up to RM250,000 by the PIDM, while there
is not a single statutory body that insures bonds. Besides that, bonds with higher default risks
also come with higher coupon rates. The amount of risk depends mainly on the stability or
credit rating of the issuer. For example, government bonds will generally have a lower coupon
rate when compared to corporate bonds. On the other hand, corporate bonds typically have a
greater risk of default as corporations can go bankrupt. Thus, the issue’s credit rating shall be
taken into account when investing in bonds.
2.3.3 Factors that Affects the Demand of Bond

2.3.3.1 Interest Rate
Furthermore, a bond’s value can fluctuate based on interest rates. If interest rates rise, one’s
bond resale value will decrease as more investors can allocate their money to invest in a
higher interest rate bond. Therefore, one would need to sell his original bond at a discount to
attract other investors if he chooses to sell his bond before the maturity date. In other words,
when the interest rates rise, the price of a bond will fall; when the interest rates fall, the price
of a bond will rise. However, price fluctuations would not be a concern for bond investors
who hold them until maturity.
2.3.3.2 Stock
Bonds and stock often have an inverse relationship, implying that bonds become more
appealing as stocks fall, increasing bond’s demand. In other words, bonds can be considered
as a stock investor’s safe heaven when stocks are not performing well.
2.4 Property Investment

Property investment involves purchasing a property to generate a profit through rental income,
ultimate sale, or both. Individual investors, groups of investors, and companies can all own
properties. It can be a long-term or short-term investment. The investor usually engages in
speculation for property investment. Speculation refers to investors buying or renovating
properties in a short period and then selling them for profit.
6
2.4.1 Return on property investment
The return on the property investment is in the form of dividends, interest rates, rents, or profit.
Compared with stocks and bonds, property investment is less affected by market fluctuations.
Monthly rental income provides the most direct return on property investment. Rents of a
property will increase over time if demand for rental property increases in the local market.
Once the property owner decides to liquidate and place the property on the market, the long-
term return takes the form of an increase in the property's price.
2.4.2 Risk of property investment

The risks of investing in property include long-term vacancy and falling prices, especially in
suburban areas. In addition, investing in a property without a tenant to pay the rent can result
in the investor facing high-interest rates on loans. This is because property investments are
illiquid and difficult to convert into cash quickly, thus affecting the investor's cash flow.
Therefore, property investment requires good planning as the return on this investment method
takes a long time, even several years.
2.4.3 Factors that Affect Property Investment

2.4.3.1 Interest rate
Changes in interest rates can affect an investor's ability to invest in property because higher
interest rates increase the amount and risk of an investor's investment. As a result, investors
prefer lower interest rate loans for property investments, which will reduce the risk and costs
of investment.
2.4.3.2 Government Policy

The housing policies introduced by the Malaysian government will affect investors' investment
in properties. For example, the real property gains tax (RPGT) policy is used to prevent
investors from over-investing in property and reduce the possibility of a property bubble.
2.5 Shares
Shares are traded between the buyer and seller through the stock market, equity market or share
market. Shares represent an equity interest in a company or financial asset. They are owned by
investors who exchange capital for these shares. Investment in the share market usually
requires consideration of investment strategies. It is traded through stockbrokers or electronic
trading platforms such as Rakuten. In addition, only the shares of large companies are listed on
7
the stock exchanges to make their shares more liquid and attractive to many potential investors.
Some international companies are listed on multiple stock exchanges in different countries to
attract foreign investors. For example, Nestlé is registered in many stock exchange markets,
including India, Switzerland, and Malaysia. This is because of the range of stock market
participants from individual shares investors to large investors located anywhere globally.
Besides, the stock market will provide all listed company news, announcements, financial
reports, and other company-level trading-related activities such as dividends that a company
may pay to their investors from part of its earnings. This is because the stock exchange ensures
price transparency, liquidity, pricing, and fair trading in stock market trading activities.
However the stock market may be a valuable investment, but it is fraught with market risk,
business risk and liquidity risk. As a result, some people are unwilling to invest in the stock
market due to the uncertainty and risk resulting in significant losses.
2.5.1 Return of Share

Investors can earn profit from stocks through capital gains or dividend income. Capital gain
means that the investor buys a low-priced share and sells them at a high price, thereby earning
the difference between them. The return on investment depends on the company’s
performance. The company will use a portion of its annual income to pay dividends to
investors. Therefore, the share price increases and dividends are the ways for investors to get
their returns. On the other hand, common shares enable having voting rights in the company
and possibilities of returns through price appreciation and dividends. However, the preferred
shares do not offer price appreciation. However, they can be redeemed at an attractive price
and offer regular dividends. As a result, the rate of return on stocks is exceptionally volatile
and risky.
2.5.2 Risk & Factors that affect the share investment

2.5.2.1 Market risk
Market risk is the risk of investors suffering losses due to stock market bubbles and economic
recessions that affect the financial market’s performance. This kind of risk cannot be
diversified or avoided. However, investors can reduce losses by investing in other tools such
as portfolio construction (Academy, 2021). For example, investors can protect themselves by
investing in bonds issued by different types of companies or governments.
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2.5.2.2 Business risk
Business risks usually come from unfavourable company operations or changes in company
leadership, or disappointing earnings reports. This is because when a particular company faces
an emergency or test, negative news such as serious losses caused by its improper operation
will affect investors' confidence in its company, which will cause the company's stock price to
fall (Academy, 2021).
2.5.2.3 Liquidity risk

Some unpopular stocks face liquidity risks due to a lack of buyers and sellers. This type of risk
will become higher, and investors may find it challenging to convert their assets into cash,
although the pricing spread of the stock will not be significant. However, investors urgently
need to convert their assets into cash. As a result, they may need to bear some losses or profits
to sell the unpopular stock (Academy, 2021).
2.6 Mineral
Almost all commercial products in the mining industry are extracted from the ground, including
raw materials such as silver, oil and gold. Besides, Investing in the mining industry requires
understanding the various types of mines and how to invest in them, such as buying shares in
mining companies, investing in new mining projects, or companies that provide mining
equipment. In addition, investors in mining stocks should be keenly aware of the cyclical nature
of the mining industry and its capital-intensive nature; even some of them consider gold and
silver as safe-haven investments (DiLallo, 2021). This is because gold and silver can create
volatile returns at certain times, creating opportunities to earn high returns for savvy investors.
Therefore, the mineral industry is an opportunity based on challenging investments with high
risk. The mineral investment risks are affected by various factors, including operational
efficiency, price fluctuations, political decisions, and regulatory authorities’ will. However,
the economic and commercial aspects of the mineral market are not in the hands of investors
and are mainly determined by global market conditions. Nevertheless, the risk can be
minimised by generating sufficient information during the stages of exploration or critical
economic analysis to ensure safer investment. Investment decisions made at all stages of the
mineral market revolve around the interrelated components of resources, risks and revenue.
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2.6.1 Risk and factors that affect the mineral investment
2.6.1.1 Price fluctuations
Minerals are the raw materials for energy or supplies that people need daily, maintaining the
demand for minerals. However, the price fluctuation rate of minerals is based on the demand
of the global market and the volume of supply, especially in certain seasons. For example,
some countries usually use coal for electricity production, resulting in a significant increase in
coal demand and price during winter (Chand, 2021). On the other hand, the mining side might
control its daily mining volume to reduce international price trends when the supply is greater
than the global demand. Therefore, the investor must focus on the volatile returns and risk of
mineral investment to measure the return on investment.
2.6.1.2 Operational efficiency

The operational efficiency of a mining company is the way to reflect the potential of a
company, especially in developing new mining projects. Mining new projects often require a
significant investment of funds. The return on investment needs to wait for some time.
Therefore, mining companies need good planning and management of their projects and
expenditures to deal with the various problems while waiting for returns. Those mining
companies with heavy debts are often the weakest to deal with economic downturns. The
failure of a mining company or mining project usually will seriously affect investors’
investment and cause investment failure.
2.6.1.3 Science and technology

The opening up of new energy has seriously affected investment in mining, especially in
petroleum. New energy vehicles are continuously promoted and valued by some countries,
such as China, which has led to a decrease in global oil demand. In order to solve the local air
pollution suffocation and the increasing threat of climate change, China has continuously
introduced policies to encourage its citizens to purchase new energy vehicles (Jin, 2021). In
addition, the continuous development of alternative energy sources in the market and people’s
awareness of environmental pollution will gradually decrease the demand for these mineral
products, affecting the risk of investing in mineral products.
2.7 Commodity
Commodities are basic commodities used in trading and can be replaced with other similar
commodities. Commodities are commonly used as input for the production of other goods or
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services. Commodities are divided into two categories such as hard commodities (natural
resources) and soft commodities (livestock or agriculture stock) (Fernando,2021). For instance,
gold, oil, beef, cereals, natural gas, etc. are the traditional commodities.
2.7.1 Return of commodity

Commodity returns provide investors with excess positive returns based on product price
fluctuations. Due to the outbreak of Covid-19 last year, the price of some commodities have
skyrocketed due to increasing demand for the commodities. For example, hand sanitizer,
masks, disinfectants, medical gloves and others are the commodities that the price has
skyrocketed.
2.7.2 Risk in Commodity investment

2.7.2.1 Price risk
The three groups that will face commodity risks are producers, buyers and exporters. In order
to prevent commodity risks, they must understand the risks and the methods to measure
commodity risk. The organisation uses external forces to control and determine that adverse
prices have led to commodity price risk. Similarly, adverse changes in commodities prices will
also affect the price of commodities impact business costs, and it will cause the cost (input)
risk in the business. When the amount of hedged assets is uncertain in the commodity market,
the quantity risk will also occur due to the manufacturer changes in commodity supply.
2.7.2.2 Political risk

The commodity also will face political risk in the market or business. The political risk will
significantly affect the profitability of business participants or the expected value of specific
economic behaviour. It is caused by the impact of compliance or regulation on commodity
prices or supply.
2.7.3 Factor that affected the commodity investment

2.7.3.1 Political factor
Furthermore, the commodities price can be influenced by other factors. The political factor is
a factor that influences the price of commodities because it can increase the prices of certain
commodities while lowering the price of other commodities. For instance, former President
Trump collected tariffs on steel and aluminium imports from other nations in 2018 (Hayes,
2021). The tariffs influence the price of aluminium and steel to become higher in the United
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States compared to other parts of the country. However, China also collected tariffs on
American crops to retaliate against Trump’s tariffs (Hayes, 2021). As a result, surplus crops of
America must be sold in other markets due to a drop in the demand of China. Therefore, the
price of crops in the United States fell in 2019 (Hayes, 2021).
2.7.3.2 Science and Technology

Technology has a huge impact on commodity prices. Due to the advancement of technology,
the production process brings higher output. It saves production time, so the marginal cost of
production will become lower. For example, aluminium was a precious metal until the
separation process was improved in the 19th and 20th centuries (Hayes, 2021). Hence, the price
of aluminium plummeted due to technological advances that reduced the marginal cost of
production. In conclusion, the investors will invest in commodities because the commodity can
withstand inflation, diversity equity risk and excessive positive return.
2.8 Foreign Exchange

The foreign exchange market is commonly known as Forex or the FX market. It is the largest
and most liquid market globally, with an average daily trading volume of $6.6 trillion. To put
this into perspective, NASDAQ is one of the largest stock exchanges globally. It has a daily
volume of about $250 billion, which is a tremendous amount of money. However, it is only a
fraction of what the Forex trades. Forex trading is also relatively flexible compared to other
financial markets. There is not a single centralised marketplace, and it is traded twenty-four
hours a day except for weekends. Trading Forex involves buying a currency and at the same
time selling another currency which is why currencies are always quoted in pairs. For instance,
USD/CAD is one of the most popular pairs in the forex market (Mitchell, 2021). In the
USD/CAD pair, USD is the base currency, and CAD is the quote currency. If the exchange rate
of USD/CAD is 1.2698, one USD is worth 1.2698 CAD. If the USD rises against the CAD, a
single USD will be worth more CAD, increasing the pair’s price. Thus, forex traders take
advantage of changes in the exchange rate to make a profit. For example, Mr John bought one
standard lot of USD/CAD at 1.2650 and decided to close his position when the price had risen
to 1.2698. He will make a profit of 48 pips which is equivalent to $480.
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2.8.1 Forex’s Return
A realistic return for Forex trades is about 1-5% per month. However, it should be noted that
this number results from a combination of trades that thousands of traders make, meaning that
there is always a possibility that something could go wrong (Axiory, 2021). Therefore, instead
of a 5% return, 1% of return is much more realistic (Axiory, 2021). However, it all depends
on how dedicated a trader is towards each trade and how much he trades (Axiory, 2021). Not
to mention that every trade carries significant risk (Axiory, 2021). There is a possibility to bring
a 5% return to -5% in a week. Hence, even if it is a 1% return, it is still regarded as a decent
return if the balance is positive (Axiory, 2021).
2.8.2 Risk Involves in Trading Forex

In forex trading, leverage allows a trader to increase his market exposure beyond his initial
investment. In other words, it enables a trader to enter a position for $10,000 worth of currency
with $1000 in a ten-to-one leverage scenario. However, it also comes with risk. A trader using
leverage might lose more money than what he deposited. As mentioned above, the forex market
is open 24 hours a day. As a result, currencies may be traded at different prices at different
times during trading hours. On top of that, counterparty risk is a concern as well. It refers to
the risk of a broker defaulting in a transaction.
2.8.3 Factors that Affects Forex Trading

2.8.3.1 Commodity Price
Canada is a massive exporter of crude oil, lumber, grains, and metals to the U.S. In a scenario
where the prices of these commodities increase, the U.S consumer price will also increase since
they purchase some of these commodities from Canada. As a result, the demand for CAD will
increase. In addition, higher oil prices would also attract foreign investors to invest in the
Canadian energy industry. As a result, this will lead to a fall in USD/CAD as investors favour
the CAD over the USD. On the contrary, the USD/CAD goes up when the price of oil goes
down.
2.8.3.2 Central Bank Interest Rates

The main task of central banks is to control inflation and maintain currency stability in their
country. They will accomplish this by controlling interest rates and managing the country’s
money supply. In a scenario where the interest rates in the United States are on the rise, foreign
investors will invest in the United States with higher interest rates, leading to an increase in
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demand for USD. Suppose a forex trader anticipates the US to hike interest rates unexpectedly.
In that case, he can buy the USD against a currency with lower interest rates to make a profit.
2.8.3.3 Unemployment Rates

Unemployment rates play an essential role in forex trading as well. It causes market volatility
because consumer spending is parallel with labour-market conditions. For example, if the
actual unemployment rate in the United States is higher than the forecast number. In that case,
the Federal Reserve will have to lower the federal funds rate. On the other hand, if it fails to
stimulate the economy, the Federal Government must employ fiscal policy measures such as
stimulating demand with unemployment benefits. Therefore, the USD value will decrease
when unemployment rises, and more forex traders will likely sell off the currency. On the
contrary, when the unemployment rate is less than expected, It is a good indicator for future
economic growth. As a result, more forex traders will buy the currency concerning the other
paired currencies.
2.9 Derivatives
A derivative is a general term for special financial instruments used to buy and sell in the
market and for contracts between two or more parties based on the value of agreed underlying
financial assets, indexes, or securities (Chen, 2021). The rate and time of return for such
transactions are derived from the performance of financial instruments such as commodities,
stocks, interest rates, securities or various indices in the market. In addition, derivatives can be
used for various purposes, including increasing exposure to speculative price movements,
preventing commodity price changes, or obtaining other assets or markets that are difficult to
trade. The main types of derivatives include forwards, futures, option swaps and their variants,
such as synthetic collateralised debt obligations and credit default swaps. These financial
derivatives can be traded on exchanges or over-the-counter (Vahey and Oppenheimer, 2021).
Investors are typically exposed to four common risk exposures when investing in derivatives:
market risk, liquidity risk, and credit risk. Therefore, investors need to be very cautious when
trading in such financial instruments. The losses may be greater than the initial capital invested
by investors. Also, as they do not represent any asset, their purchase or sale should not be
considered an investment.
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2.9.1 Risk & Factor that affects the derivatives investment.
2.9.1.1 Liquidity risk
Investing in derivatives will generate two kinds of liquidity risks, such as market liquidity risk
and capital liquidity risk. First of all, market liquidity risk refers to the increased risk of
insufficient market depth or market disruption resulting in the inability to close a position or
offset a specific position. On the other hand, capital liquidity risk is the risk that customers
cannot meet future cash flow obligations for derivative activities, such as the need for margin
calls in their future contracts.
2.9.1.2 Market risk

Market risk is the market of reference interest rates or indexes related to related assets or
derivatives, which includes the risk of adverse changes such as changes in asset prices,
volatility, or other market variables. Market risk is generated through derivative financial
instruments, which will cause fluctuations in interest rates or securities and also the market
prices of derivatives products.
2.9.1.3 Credit risk

Credit risk is when another party cannot perform its contractual obligation under the derivative
contract. Compared with derivatives traded through exchanges, over the counter derivatives
may have higher credit risks. This is because derivatives are conducted on the basis of “over-
the-counter”, and there will be formal documentation that will be executed.
2.10 Cryptocurrency
A cryptocurrency is a form of a digital asset. It is almost impossible to counterfeit a
cryptocurrency. These digital assets are not issued by any central bank, making them immune
to government interference (Frankenfield, 2021). Instead, they run on decentralised networks
based on blockchain technology. This technology acts as a distributed ledger enforced by a
disparate network of computers which helps ensure the legitimacy of each transaction.
Coinbase is one of the many platforms where one can buy or sell cryptocurrencies such as
Bitcoin, Etherum, USD Coin and Stellar, just to name a few.
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2.10.1 Risk & Factor that affects Investing in Bitcoin
2.10.1.1 Intangibility
Bitcoin is a digital asset, it does not have a physical form, and one could not touch or see it.
Furthermore, Bitcoin has value because individuals or corporations who invest in it say that it
has value. Despite that, in reality, there are no tangible resources that backed them up.
Therefore, if the market wherever deemed that Bitcoins no longer have any value, one would
result in financial loss.
2.10.1.2 Volatility
Since there is no single entity responsible for stabilising cryptocurrencies, the value of Bitcoin
is constantly changing due to various factors that are beyond our control. For instance, Elon
Musk announced that Tesla would no longer accept Bitcoin as payment for its environmental
impact, caused a collapse in Bitcoin’s price and lost 15% value in less than 24 hours. With such
an unpredictable market, there is no telling if one will get a return on investing in Bitcoin.
2.10.1.3 Vulnerable to Hackers & Frauds

Due to the nature of Bitcoin, it is vulnerable to hackers. Therefore, cyber-attacks are a risk that
one should consider before investing in Bitcoin. Furthermore, it is impossible to recover one’s
stolen Bitcoin from a central authority. On top of that, there are pretty many frauds in the
Bitcoin market since its rise in popularity. Thus, investors need to store their Bitcoin in a digital
wallet.
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2.11 Recommendation to Mr John
Figure 1 Risk vs Types of Investment
Based on the evaluation above, we would recommend Datuk John Tan to use his company land
to invest in the property development construction project. This is because the returns on
property investments are considered higher and more conservative than other types of
investments. In addition, the returns on property investment are more stable, and more profits
are gained from property investment such as interest rates, rents and property appreciation.
Coupled with the fact that Datuk John Tan owns the land, it saves the cost of purchasing land
to develop a property project and reduces property investment risk. Therefore, Datuk John Tan
should invest its free cash flow in developing property projects on his land to get more returns.
On the other hand, we do not recommend Datuk John Tan to use his free cash flow to invest in
equities or other commodity investments. This is because the economy of Malaysia is currently
in a recession due to the Covid-19 pandemic and also political instability, which has created a
highly volatile market for investments in equities, debt instruments and other commodities. For
example, the Movement Control Order issued by the Malaysian government has affected the
production value of various industries, their equities and debt issues, which makes them
required to take some time to recover their production value. As other investments are riskier
than real estate investments, we recommend that Datuk John Tan invest in developing new
properties projects to ensure that its investments are more stable and will bring greater returns.
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3.0 Past Historical Economic Cycle
3.1 Gross Domestic Product (GDP)
Figure 2 GDP Growth in Malaysia for year 2000-2020
Gross Domestic Product (GDP) is the total market value of all final/completed goods and
services manufactured and provided within a country's geographic boundaries in a particular
time frame. It usually is calculated annually (Investopedia, 2021). Final goods and services
mean the products are ready to be served, e.g. food, television and gasoline. GDP indicates the
economic growth of a country. The line chart above is showing the Malaysia GDP growth from
the year 2000 until 2020. The formula below shows the formula for calculating GDP.
GDP = private consumption + gross investment + government investment +

government spending + (exports – imports)
There are two types of GDP, the nominal GDP and the real GDP. The nominal GDP is
calculated based on the price of products produced in the year. In contrast, the real GDP is
calculated by the price affected by the economy’s inflation. The difference is that when the
price is increased but output remains unchanged, the nominal GDP will change and real GDP
will not change (Lumen, 2021). In order to identify a country's GDP growth every year, a GDP
deflator is introduced. The GDP deflator is used to calculate the yearly GDP index to measure
the price level.
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GDP Deflator = Nominal GDP x 100
Real GDP
3.1.1 Factor Affecting Gross Domestic Product (GDP)

3.1.1.1 Government Expenditure
Government expenditure means the government spends the funds on the goods and services
that are not provided by the private sector and it is important to the national welfare (My
Accounting Course, 2021). Government expenditures are used for social protection, education,
national defence, healthcare, etc. Tax increases are likely to offset the impact of increased
government expenditure which will keep aggregate demand (AD) unchanged. Nevertheless,
increasing government expenditure and taxation may lead to an increase in Gross Domestic
Product (GDP). Besides, increasing government expenditure may have a multiplier effect. If
government expenditure allows the unemployed to get jobs, they will have more to spend on
services and goods, thereby further increasing aggregate demand (AD). Government spending
may cause the final GDP growth to be greater than the initial injection (Elearnmarkets, 2018).
Therefore, Gross domestic product (GDP) will also be affected by government spending.
3.1.1.2 Business Investment

Business Investment is the expenditure of private enterprises and nonprofit organisations on
the long-term assets of physical capital used to produce goods and services (In Focus, 2021,).
Physical capital is generally classified into three categories such as structures, equipment and
intellectual property. The enterprises can accumulate physical stocks through investment,
thereby improving their ability to produce goods and services. Business investment affects the
growth of the economy. Increasing the business investment will increase the Gross Domestic
Product (GDP) level cause the enterprises produce and sell the tangible capital. Business
investment is one of the most volatile components in GDP and often fluctuates greatly from
quarter to quarter.
3.1.1.3 Net Export

Net exports are measured by calculating the total value of goods and services exported by a
country minus the total value of goods and services imported by a country (Hayes, 2021).
Whether net exports are positive or negative depends on whether a country exports more or
19
imports more (Tracy, 2020). Positive net exports mean the country enjoys a trade surplus, while
negative net exports mean the country has a trade deficit. Therefore, a country’s net exports
are an integral part of its overall trade balance. When our country exports goods and services
to other countries,our country’se Gross Domestic Product (GDP) will increase due to the
foreigner purchasing our country’s goods and services. On the contrary, if our country imports
goods and services from other countries, the Gross Domestic Product (GDP) will decrease due
to our country purchasing foreign goods and services. Therefore, net export is also one of the
factors that affects Gross Domestic Product (GDP) (Tracy, 2020).
Figure 3 Net exports of Malaysia
The data of Figure xxx shows the net exports of Malaysia from 2018 Quarter 2 until 2021
Quarter 2. The highest net exports of Malaysia is 2019 Quarter 1, and the lowest net exports is
2020 Quarter 2. The data also shows that the current net exports of Malaysia are positive net
exports. The data proves that the export of Malaysia is more than the import of Malaysia.
Therefore, Malaysia enjoys a trade surplus in net exports.
3.1.1.4 Private consumption expenditure

Private consumption expenditures are one of the factors that affect Gross Domestic Product
(GDP). Private consumption expenditure is an indicator of national. It willion expenditure and
will be considered in calculating Gross Domestic Product (GDP) estimates. It clearly states
how much people spend their money on services and goods. The services are provided by the
function businesses, Government and household workers. The services that are provided can
20
help the households do not need to do it by themselves. For instance, yard maintenance,
financial services and dry cleaners are included in the services (Amadeo, 2020). Besides, goods
can be deemed as tangible objects, and they can be classified as durable goods and non-durable
goods. Durable goods are goods that have more than 3 years or more of lifespan while non
durable goods have a lifespan of less than three years (Futures, 2021). For instance, cars and
furniture are durable goods, while food and clothing are non-durable goods. Services and goods
have higher demand and consumption for the public, so manufacturers will continue to provide
and manufacture them to fulfil the public’s demand.
Figure 4 Private Consumption % of Nominal GDP: Quarterly: Malaysia 1991-2021
The data on Figure xxx illustrates that the private consumption to Nominal GDP gradually
increased from 1991 to 2021 in Malaysia. According to CEIC, it shows the average of private
consumption to Nominal GDP is 47.6% from March 1991 to Jun 2021 (Ceicdata, 2021). The
private consumption expenditure will drive the country’s economy due to it occupying about
half of the Gross Domestic Products (GDP) in Malaysia. Therefore, the more money people
spend on services and goods, the faster the country’s economy will grow.
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3.2 Interest Rate
Figure 5 Interest Rate in Malaysia for year 2000-2020
The interest rate is defined as the amount charged by the lender to the borrower and is based
on a percentage of the principal of the total loan amount. The loan interest rate is usually
recorded annually and is called the annual interest rate (APR) (Banton, 2021). There are two
interest rate models of mortgage loans, namely simple interest and compound interest.
However, the borrower prefers a simple interest loan (Banton, 2021). Generally, the loan
interest rate given by the lender will be determined based on the borrower’s ability to repay
and measure its borrowing risk. For example, the borrower’s loan interest rate will lower when
the lender believes that the borrower’s loan is aw-risk. On the other hand, interest rates are used
for loans and apply to money earned from savings accounts or certificates of deposit (CD) at
banks or financial institutions. The terms of annual yield (APY) can be defined as the interest
earned on these savings accounts (Banton, 2021).
Simple interest is a simple way to calculate loan interest expenses. It is determined by

multiplying the daily interest rate by the principal multiplied by the number of days elapsed
between payments (Hayes, 2021). The table below shows the calculation of simple interest.
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Simple interest = principal X interest rate X time
Compound interest is the interest calculated based on the initial principal and accumulated
interest in the previous period (Fernando, 2021). Therefore, some lenders prefer this interest
because it will increase the amount faster than the simple interest, which indicates that the
borrower will have to pay higher interest. The table below shows the calculation of compound
interest.
Compound interest = p X [(1 + interest rate)n − 1]
where:
p = principal
n = number of compounding periods
3.2.1 Factor Affecting Interest Rate

3.2.1.1 Supply and Demand of Money
The supply-demand relationship for credit in an economy directly affects the interest rate in
the market (Heakal, 2021). This is because the floating rate of interest is determined by the
supply and demand for credit in the market, as the increase in demand for credit will increase
the loan interest rate. Generally, the supply and demand interest rates are different, and
individual banks or financial institutions control interest rates following the market interest rate
trends. Therefore, it is to ensure that the interest earned by the lender is greater than the interest
that needs to be paid (Heakal, 2021). This usually occurs when people deposit cash in a bank,
and the bank will use it for other purposes such as for investment activities or providing loans
to the borrower.
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3.2.1.2 Inflation
Inflation refers to the prices of goods and commodities taken into account by the overall price
increase in the economy (Moneycontrol, 2021). Also, the inflation rate affects the interest rates,
especially the higher inflation rate le, leadinga higher interest rate. This is because the lender
will receive a higher interest rate as compensation for the decline in the purchasing power of
the currency paid in the future (Heakal, 2021). Therefore, the speed and rate of inflation will
be linked to interest rates, which will also affect the investment plans of investors. This is
because the high-interest rates will deter potential borrowers.
3.2.1.3 Central Bank

The monetary policy introduced by the central bank may directly affect the interest rates in the
market. For example, the central bank will control inflation rates by raising key interest rates
during the boom phase (Moneycontrol, 2021). This is to reduce the amount of money that
people borrow for consumption and investment activities. Conversely, the central bank will
lower interest rates to stimulate national consumption and investment in order to boost
economic growth (Moneycontrol, 2021). Therefore, the objective of monetary policy
introduced by the central bank is to influence and control the market interest rates to a certain
level.
3.2.1.4 Global Interest Rates and Foreign Exchange Rates (FOREX)

Central banks may introduce monetary policy by using interest rate adjustments in the economy
to influence exchange rates to attract capital from investors around the world (Moneycontrol,
2021). This will increase the policy interest rate to show that interest rates in the economy are
higher, thereby attracting more investors' funds. Therefore, interest rates in the economy must
have a good relationship with global interest rate trends.
3.3 Construction Industry Growth

The construction industry plays an important role in the economy, especially for developing
countries. The activities of the sector are also critical to achieving economic development goals
such as housing, infrastructure and employment opportunities. In addition, large-scale projects
such as the MRT projects are an important means of increasing local employment rates and
accelerating economic growth. This is because the construction industry is the fifth largest
contributor to Malaysia's economy according to the Gross Domestic Product report 2019
(DOSM, 2021). Therefore, the recovery of the construction industry is also one of the main
24
driving forces of Malaysia's economic growth. However, many factors affect the growth of the
construction industry ,such as the country’s political issues, interest rate, inflation rate, and
other factors. The figure below shows the trends of the construction industry in Malaysia over
the past 20 years.
Figure 6 Construction Industry in Malaysia for year 2000-2020
3.3.1 Factor Affecting Construction Industry Growth

3.3.1.1 Political issue
Political factors can influence the government policies, and the decisions of government made
can affect the growth and trends of the construction industry. This is because the development
policies proposed by different politicians will be different due to political factors. Therefore,
frequent changes of the development policy by the government will seriously affect and slow
down the growth of the construction industry. Also, it may affect the progress, profitability and
expenses of the project, as the construction of each large-scale project is calculated in years.
3.3.1.2 Inflation
Large construction projects are likely to take several years to complete, and the annual increase
in inflation will significantly increase the cost of construction materials. Although the
construction company will predict the inflation rate in advance, sometimes external factors will
cause the inflation rate to continue to rise, even exceeding the budget of the construction
25
company. According to the signed contract, the construction company must absorb the costs
on its own, thereby reducing its profits and the company's opportunities for growth. Therefore,
inflation is one of the major factors limiting the growth of the construction industry.
3.3.1.3 Interest Rate

The floating rate of interest rates are important for the growth of the construction industry, as
construction companies often need to apply for loans from banks to develop new construction
projects and solve their cash flow problems. Therefore, the excessive floating rate of interest
rates will make it difficult for construction companies to control their cash flow and the cost of
loans will continue to rise. As a result, construction companies prefer low interest rates for
short-term loans to solve cash flow problems that arise at a specific time.
3.4 Technical Recession

Recession is a term used to indicate a slowdown or contraction in general economic activity,
and is used to refer to a continuous decline in gross domestic product (GDP) for two or more
consecutive quarters (Corporate Finance Institute, 2021). When a country experiences a
technological recession, it will be proven that the country is facing serious problems such as a
sharp decline in productivity, high unemployment, insufficient purchasing power, and even a
large trade deficit. Usually, this decline is short-lived as it can be affected by a major event
such as the Covide-19 epidemic.
3.4.1 Factor Affecting Technical Recession

3.4.1.1 Financial factors
From the perspective of financial factors, the economic recession is a direct consequence of
risky loans and excessive credit expansion of marginal borrowers. Insufficient money supply
and credit supply can exacerbate the speed of economic recession as banks cannot stimulate
the entire economy by increasing the supply of money and credit in the market. In addition, the
economic recession affects the real economy, and affects inflation and interest rate soaring. A
more serious thing that will happen is the risky long-term investment plan made by investors
before the economic downturn will form a bubble.
3.4.1.2 Psychological factors

Psychological factors are also one of the reasons for the economic recession, including the
radical participation of speculators in high-risk investments and the substantial economic
26
expansion. These speculative behaviors can easily trigger financial crises and economic
recession. A good example of this is the financial crisis caused by the real estate bubble in
2008. This is because too many people blindly followed the speculators to invest in a large
amount of real estate at that time, which directly caused the real estate bubble.
3.4.1.3 Real factors

Real factors are also one of the factors that affect economic recession. The real business cycle
theory can be understood as an economic recession caused by an economic shock, such as the
interruption of the global supply chain. This includes issues such as political tensions that have
forced certain cargo ships’ routes to be diverted or even cause wars, leading to temporary global
supply chain disruptions. This will incur losses to the company, and even change its investment
to deal with inflation and rising costs. Ultimately these negative factors will affect the stock
market, the country’s economic growth, index of gross domestic product and investors.
3.5 Demand and Supply of Real Estate

Real estate is a tangible asset consisting of property and the land on which it is located.
Although it is immovable, real estate is also affected by the relationship between supply and
demand (Investopedia Team, 2021). The law of supply and demand explains the relationship
between supply and demand of a good or service and how the interaction affects the price of
good or service. The housing market is heavily dependent on supply and demand. The law of
supply and demand determines the equilibrium price of real estate. If the supply of housing
becomes lower, the price will increase which often causes bidding wars. Many parties may
need a specific property and they all try to bid against each other by raising the purchase price.
When the seller accepts one of the offers, the bidding war will end and one of the units in the
available supply will be removed. Similarly, if the demand for real estate is higher, but the
supply of real estate is lower, the housing price will also increase. However, the weak economy
and oversupply of properties will cause the price of housing to fall due to low or no demand
for properties.
3.5.1 Factors Affecting Demand and Supply of Real Estate

3.5.1.1 Affordability index (demand side factor)
The affordability index measures the ability of ordinary people to buy specific items (such as
houses in a specific area) or afford the general living expenses of the area. This type of index
27
usually compares good prices or general living costs in one region with prices in other regions
or some measure of personal income (Kenton, 2021). When the income is increasing, it means
that people are able to afford to spend money on housing. In other words, the demand for
housing increases during periods of economic growth. In addition, the demand for housing is
often a luxury good. Therefore, the increase in income leads to a greater percentage of demand
increase (Pettinger, 2021) .
3.5.1.2 Population (demand side factor)
Figure 7 Malaysia Population 2021
Figure 2 shows the population in Malaysia is forecast to grow over 41 million in 2080. In 2021,
the population of Malaysia will be over 30 million which represents a gradual increase in the
population of Malaysia. The population is one of the important factors affecting the demand
for housing. It is not just the number of people, but the changes in the demographic. For
example, the increasing number of singles living alone has led to an increase in demand for
28
housing (Pettinger, 2021). The demand for housing not only depends on the population but also
on the average size of the family. Certain social and demographic factors have led to an increase
in the number of households which is faster than population growth. The demographic changes
include the issues such as the divorce rate, increased life expectancy and age of people leaving
home. As a result, the population is one of the factors affecting the demand for housing.
3.5.1.3 Economy (demand side factor)

The economy plays an important role in the demand for real estate. When the economy grows,
the demand for housing increased rapidly, indicating that the demand for housing was income
elastic. It is because increasing income enables people to afford large mortgages and encourage
demand for housing. However, when the economy is bad, the demand for housing is often low.
As the economy is not good, people’s financial resources are unstable and their affordability
has deteriorated, so the demand for housing has also become lower. Therefore, different
economic conditions will bring about different demand for housing, so there is a certain
relationship between economy and demand.
3.5.1.4 Land use (supply side factor)

Land use is exactly known as how the owner of land uses the land and it plays a vital role in
supply. All alienated lands are classified into 3 categories of land use such as agriculture,
building and industry. In other words, land use determines whether the developer can build a
residential or commercial property on a piece of land. The land use should be followed
depending on the titles that are released from the land offices. If the developer does not comply
with the land use, he/she will need to demolish the structures that do not comply with the land
use and get a penalty from the land office. Therefore, if land use does not match the demand
of new houses, it may lead to housing shortages and rising housing prices.
29
3.6 Advice to Datuk John Tan
Figure 8 Malaysia House Price Index from 2012-

2020
Figure 9 GDP (RM Billion) and Annual Percentage Change (%)
The current economy of Malaysia has been in a downturn due to the impact of the
Covid-19 pandemic and political instability. According to the data provided by the Department
of Statistics Malaysia, GDP in 2020 has started to recover after falling to a percentage of -
17.2, which is a good sign after the Movement Control Order period (DOSM, 2021). Although
the economy of Malaysia is still in a downturn, there are signs of a gradual recovery in 2021.
This factor affected the speed of the recovery of the economy and also includes the continued
weakness of the currency in the international market. As a result, the central bank of Malaysia
30
decided to lower interest rates and cut the key interest rate by 50 basis points to 2% to help
Southeast Asia's economy withstand the impact of the Covid-19 pandemic and also the energy
prices on exports (The Straits Times, 2009). Lastly, as can be seen from the chart above,
Malaysia's House Price Index (HPI) remained in a downturn, which may also be affected by
the Covid-19 pandemic.
Based on the current economic situation described above, it is suggested that the best
course of action for Datuk John Tan as a property developer is to develop affordable housing.
This is where Malaysia’s beginning to show signs of economic recession, which results in the
market’s consumption habits not favoring high-priced properties in the near future. Although
this situation will change as a gradual recovery of economic activities, the HPI has been in a
long-term downturn and it is difficult to justify consumers buying high-priced properties in the
current situation. In addition, the central bank of Malaysia has cut interest rates twice in order
to revitalize the economy, which will allow developers to raise funds from banks to develop
new projects at lower mortgage costs. During this period, speculative investors will also
purchase lower-price properties as they currently enjoy low interest loans and stamp duty
exemption under the Home Ownership Campaign program (Kathy, 2021). Therefore, the
development of affordable housing is currently the best short-term construction strategy to
prevent their companies from being eliminated by the market during the economic recession.
Normally, it takes several years for Malaysia's economy to fully recover. During
recovery, consumers tend to prefer low priced houses to high priced luxury houses. Therefore,
in the current economic downturn and low interest rate environment, the construction of
affordable housing has a greater market advantage and will bring more profits in the future.
31
4.0 Characteristics of Property Investment
Property investment provides a stable source of income, and can increase investors’ wealth and
rate of return through long-term asset appreciation. Investors need to understand the
characteristics of real estate investment in order to effectively formulate some profitable
strategies, and they can also avoid possible traps in property investment. Therefore, compared
with other investment tools, property investment is quite stable and conservative (Vazquez,
2015).
4.1 Durability
Property investment is durable and can build multi-generational wealth (Vazquez, 2015) .
There is no fixed maturity for property investment. As such, it can be preserved for longer and
be valuable for the property. It is often said that property investment is durable because
buildings built on the land can stand for decades or centuries. In order to maintain the durability
of the building, the investor needs to invest more money in repairs and maintenance for the
building such as repairing, inspecting and others. In addition, we need to ensure that the
building retains a good appearance and operates at optimum efficiency. Consequently, the
property will not deteriorate, and the value of the property or the building falls.
For example, most investors will buy properties for investment because the land has been
affixed to the property and can be held for decades. If the investors bought the land at prime
land and the land will have better value. The longer time for keeps the property then, the
property of the land more valuable. Therefore, in markets, sales tend to consist primarily of
stock rather than new builds (Wargent, 2017).
4.2 Lack of Transparency

There are some markets, such as properties and commodities that lack transparency. This
means that there is no very detailed information about the properties or commodities and the
risk of buying or investing is high. It is important that investors have to grasp the information
about the market and are able to change their thinking about their portfolio immediately
(Vazquez, 2015). However, real estate transactions work kindly differently from other markets.
This is because the seller can withhold and will not divulge any information about the property
to the buyer. As a result, the buyer has a risk to invest in the properties without any detailed
information.
32
For example, auction is one of the reasons for the lack of transparency in investment. This is
also a source of risk when the investor will bid to purchase the property being auctioned without
any specific information and knowledge about the property. Also, there is unseen sight
condition of the property such as wall crack, no pipework outside the house and sometimes
only the address and picture of the property are shown. Therefore, it is important to take risky
and venturesome considerations when making an offer with the seller.
4.3 Illiquid
An illiquid investment is an investment that takes a long time to invest and which is difficult
to convert quickly into cash because it takes a long time to sell the asset. It also cannot be sold
easily without a substantial amount loss in value(Realtymogul, 2021). Illiquid investment
includes investment in properties, cars and antiques are illiquid assets and others. Also, illiquid
investment cannot be sold quickly due to the lack of ready and the purchaser to purchase the
product. The lack of liquidity is good when it comes to investing in properties because
illiquidity contributes to a stable and appreciating asset class for long-term investors. However,
the problem with illiquid investments is that they are difficult to convert into cash quickly, and
often investors need to reduce their returns to sell the property quickly when they need cash
urgently.
For example, illiquidity should be part of the analysis when choosing real estate as an
investment. This is because it has a high potential return (Frankel, 2019). Therefore, illiquidity
is vital for property investment because there is a high demand for property types.
4.4 High Startup Costs

Startup costs are expenses that cover up to launch the business. Every business or investment
should start planning as early as possible to avoid unforeseen expenses used (Berry, 2021). It
must have full preparation and knowing exactly what expenses are worth. When planning
startup costs for business nor investment, should begin with research and estimate the cost to
start business or investment (Morah, 2021). This is to avoid taking the risk of losing money.
On top of that, the cost of property investment is higher than the other investments because it
includes purchase, closing costs, rehabbing and financing. But the reward of property
investment is high in cash flow and profits.
For example, an investor trying to buy a property and rent it to others. It means that to put more
money to buy a land or property and rent to the renter. It is profitable to earn. The longer the
33
rent, the more you earn. Therefore, there are several investors in this asset class since it is stable
and long-term income appreciation (Vazquez, 2015).
4.5 Investment Vulnerability

With property investments that are more vulnerable to potential risk. In this asset class, it is
very profitable for intelligent investors who have an effective plan for success. The property
investment can be fluid from time to time. Because of the change as cities and neighbourhoods
change in this investment. In investment vulnerability, the property investment is not a hands-
off static investment, but investment requires frequent attention.
For example, an investor should invest in the property at a suitable time. Therefore, the
investors must manage their investment themselves or hire a professional team to control the
property investment on their behalf (Vazquez, 2015).
34
5.0 Differences of Property Yields
Figure 10 Datuk John Tan’s Land from Google Map
Figure 11 Datuk John Tan’s Land from JUPEM
The figure above shows the location of Datuk John Tan’s land is located at the gridline of
3.040246,101.771308. A 7,700 square meters of land equals 82,882 square feet. Return
Operating Income (ROI) allows understanding of the return of investment. It is a percentage of
profitability that is calculated using the following formula.
35
Annual Rental x 100%
Property Price
5.1 Shop lot
Shop allows consumers to browse their needs of goods and services in a particular area.
Figure 12 Displacement from different locations of shop lots
Table 1 Displacement of shop lots to Datuk John Tan’s Land
Table 2: Calculation of yield for shop lots in different locations
By using the data from Table 2 above and excluding the construction of facilities such as
roadwork and pathway, the maximum number of shop lots that can be constructed is only 62
units (82,882 sq ft / 1,324 sq ft) and the minimum is 25 units (82,882 sq ft / 3,300 sq ft). Using
36
the average price per square feet, RM1,349.92, the maximum price can be collected is
RM111,368,400.00 (RM1,349.92 x 3,300 sq ft x 25 units).
5.2 Offices
Figure 13 Displacement from different locations of offices
Table 3: Displacement of Offices to Datuk John Tan’s Land
Table 4: Calculation of yield for offices in different locations
roadwork and pathway, the maximum number of offices that can be constructed is only 145
units (82,882 sq ft / 570 sq ft) and the minimum is 43 units (82,882 sq ft / 1,907 sq ft). Using
the average price per square feet, RM771,41, the maximum price can be collected is
RM63,757,036.05 (RM771.41 x 570 sq ft x 145 units).
37
5.3 Industrial Factories
Figure 14 Displacement from different locations of Industrial Factories
Table 5: Displacement of shop lots to Datuk John Tan’s Land
Table 6: Calculation of yield for shop lots in different locations
roadwork and pathway, the maximum number of industrial factories can be constructed is only
22 units (82,882 sq ft / 3,750 sq ft) and the minimum is 5 units (82,882 sq ft / 16,000 sq ft).
Using the average price per square feet, RM545.41, the maximum price can be collected is
RM44,996,325.00 (RM545.41 x 3,750 sq ft x 22 units).
38
5.4 High Rise Residential
Figure 15 Displacement from different locations of high rise residential
Table 7: Displacement of high rise residential to Datuk John Tan’s Land
Table 8: Calculation of yield for high rise residential in different

locations
roadwork and pathway, the maximum number of 30 storey residential property can be
constructed is only 4,110 units (82,882 sq ft / 604 sq ft x 30 storey) and the minimum is 2220
units (82,882 sq ft / 1,114 sq ft x 30 storey). Using the average price per square feet, RM501.70,
the maximum price can be collected is RM1,245,440,148.00 (RM501.70 x 1,114 sq ft x 4,110
units).
39
5.5 Landed Residential
Figure 16 Displacement from different locations of landed residential
Table 9: Displacement of high rise residential to Datuk John Tan’s Land
Table 10: Calculation of yield for landed residential in different locations
roadwork and pathway, the maximum number of industrial factories can be constructed is only
70 units (82,882 sq ft / 1,170 sq ft) and the minimum is 21 units (82,882 sq ft / 3,900 sq ft).
Using the average price per square feet, RM362.03, the maximum price can be collected is
RM29,650,257.00 (RM362.03 x 1,170 sq ft x 70 units).
40
5.6 Recommendations
When comparing low rise property and high rise property in a very limited land area,
high rise property is much more profitable. Limited numbers of low rise property such as shop
lots, factories, offices and terrace houses can be constructed. Whereas for high rise property,
the more storey it is, the more it can earn. But, instead of just a tower of residential property, a
mix development is encouraged. Figure 16 below shows the concept of mix development.
Mix development is the combination of shop lots and

residential properties, or even offices. A mixed development
can maximise the use of commercial land instead of just
residential properties with commercial land title. By
comparing the prices of shop lots and residential from
different locations, shop lots are way more higher than the
residential double or even triple. However, shop lots are not
encouraged to build for numbers of storey as the sales
performance for upper floor will be affected by the
consumers’ mind of thought. Consumers refuse to spend
their time walking up to the upper floor to get their needs.
Figure 17 Concept of Mix
Development Property Furthermore, including offices are much more appreciated.
offices are different from shop lots. Offices are a working
space for the employees working out their paperworks. The possibility of consumers getting to
the offices are very limited. The example for mix development is Emerald which is located at
Taman Suntex, Cheras. This project consists of 2 towers of service apartments, the ground floor
is built up with shops and offices on top of that (Emerald 9, 2021).
41
AB C D
Figure 18 3D Perspective View of Emerald 9, Taman Suntex, Cheras
With the concept of mix development, 30 storey of service apartments, 1 storey of shop lots
and 2 storey of offices, a rough calculation shows that the maximum price that can be collected
is RM1,484,322,620.10 (RM6,3757,036.05 x 2 + RM111,368,400.00 + RM1,245,440,148.00).
42
6.0 Property Development
6.1 Concept Income Stream
The conceptual income stream in a development property is the long-term or short-term passive
income that the property will generate for the developer in the future. Also, the income stream
also can be known as passive income (Oliver, 2021). By developing an income property it is
possible to earn ongoing income for the developer primarily by renting it out to others, and
waiting for the price of its property to appreciate and change its business strategy. An income
property is a form of investment property which can be a residential property or a commercial
property that is rented out to receive ongoing passive income. Therefore, it is important for the
developer to determine the required rate of return, and it will be calculated by analysing the
current rental price in that area and also need to take into account the monthly payments
required for the developer's mortgage (Kagan, 2021).
However, while conceptual income streams are attractive to investors, there are a number of
factors that can affect them. When considering a concept income stream, investors need to be
aware of the risks, including interest rates, housing market conditions, disruptive tenants and
political factors. Often political factors can influence the housing policies made by the
government, even policies such as raising stamp duty on housing. Therefore, investors also
need to have a financial cushion to pay for the maintenance and renovation of their property
and to deal with government policies such as property taxes. Income property offers investors
the security of properties with many investment diversification advantages and is less risky
than other investments such as equities and bonds (Kagan, 2021).
43
6.2 Property Value
Property value is influenced based on the type of property to be constructed and the location
of the said property. Investigation that went through allows us to identify the higher selling
price, lower selling price and average selling price (proposed selling price) in order to have
good sales performance with good profitability.
6.2.1 Shop Lots
Table 11 Recommendation on Shop Lot Property Value
44
6.2.2 Offices
Table 12 Recommendation on Office Property Value
6.2.3 Industrial Factories
Table 13 Recommendation on Industrial Factory Property Value
45
6.2.4 High Rise Residential
Table 14 Recommendation on High Rise Residential Property

Value
6.2.5 Landed Residential
Table 15 Recommendation on Landed Residential Property Value
46
6.3 Recommendation on Selling Price to Datuk John Tan
The proposed selling price stated is the recommendation selling price for Datuk John
Tan. The proposed selling price is recommended to achieve better sales performance and
greater profitability. If Datuk John Tan is required to sell his products in a very short period,
the selling price shall not lower than the lower selling price stated. Selling prices lower than
that may face losses and bankruptcy while prices higher than the price stated above may result
in bad sales performance. As government policy to stimulate the property market, the interest
rate was lowered from 3.29% to 1.75% by decreasing the stressness of the potential buyers
(Country Economy, 2021). Hence, the demand for property increased.
47
7.0 Conclusion
In short, this assignment is for Datuk John Tan to conduct a detailed study on the
feasibility of undertaking a property development. This takes into consideration many aspects
such as how to general a better income in terms of property development and factors that affect
the selling price of the building. This detailed study will provide Datuk John Tan with the best
recommendations and suggestions.
Based on a study of the types of investments available in the market, it was found that
the current stock market is experiencing high levels of volatility. In addition, the study on the
types of investments available also adequately outlines the risks and precautions to be taken.
Furthermore, by examining relevant indicators such as GDP, interest rates and housing sales
indices, it was found that Malaysia is recovering from the economic recession. The
development of construction projects is a viable plan during this period of economic recovery,
but precautionary measures such as reducing development costs must be taken to prevent cash
flow problems for the company. Furthermore, a study of the supply and demand of properties
in the vicinity has revealed that affordable housing development is the best option at the
moment to cope with factors such as the economic downturn.
In conclusion, recommendations on the type of investments that should be made during

the current economic recovery have been researched and discussed in this assignment and the
recommendations and research were submitted to Datuk John Tan. We hope that these
recommendations will assist Datuk John Tan in his future investments and property
development.
48
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“ Datuk John Tan and his property development in Batu 11, Cheras “

No Name of student Group assignment Presentation

Program : BACHELOR OF QUANTITY SURVEYING

Date prepared : 20 AUGUST 2021

BTQS2054 Development Economics

STUDENT’S DECLARATION OF ORIGINALITY

Submission (please circled): Coursework / Final e-Assessment

Course Code: BTQS 2054

“The Coursework / Final e-Assessment submitted herewith is a result of my own

I understand that cheating / plagiarism constitutes a breach of University College rules

TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE

STUDENT’S DECLARATION OF ORIGINALITY

Submission (please circled): Coursework / Final e-Assessment

Course Code: BTQS 2054

“The Coursework / Final e-Assessment submitted herewith is a result of my own

I understand that cheating / plagiarism constitutes a breach of University College rules

TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE

STUDENT’S DECLARATION OF ORIGINALITY

Submission (please circled): Coursework / Final e-Assessment

Course Code: BTQS 2054

“The Coursework / Final e-Assessment submitted herewith is a result of my own

I understand that cheating / plagiarism constitutes a breach of University College rules

TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE

STUDENT’S DECLARATION OF ORIGINALITY

Submission (please circled): Coursework / Final e-Assessment

Course Code: BTQS 2054

“The Coursework / Final e-Assessment submitted herewith is a result of my own

I understand that cheating / plagiarism constitutes a breach of University College rules

TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE

STUDENT’S DECLARATION OF ORIGINALITY

Submission (please circled): Coursework / Final e-Assessment

Course Code: BTQS 2054

“The Coursework / Final e-Assessment submitted herewith is a result of my own

I understand that cheating / plagiarism constitutes a breach of University College rules

TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE

assessing the situation and the situation and emphasising details in

Figure 1 Risk vs Type of investment ……………………………………………………....17

Figure 3 Net exports of Malaysia .…………………………………………...…………20

Figure 4 Private Consumption % of Nominal GDP: Quarterly: Malaysia 1991-2021 21

Figure 5 Interest Rate in Malaysia for year 2000-2020 ……...…………………….…22

Figure 6 Construction Industry in Malaysia for year 2000-2020 .………………..…..….25

Figure 7 Malaysia Population 2021 ……….………………………………………………28

Figure 8 Malaysia House Price Index from 2012-2020 ...…………………………..…30

Figure 10 Datuk John Tan’s Land from Google Map…..……………………………………35

Figure 11 Datuk John Tan’s Land from JUPEM ……………………………………......35

Figure 12 Displacement from different locations of shop lots .……………………….36

Figure 13 Displacement from different locations of offices ……..…………………………37

Figure 14 Displacement from different locations of Industrial Factories ………..………38

Figure 15 Displacement from different locations of high rise residential ..……………....39

Figure 16 Displacement from different locations of landed residential ...……………...40

Figure 17 Concept of Mix Development Property …...…………………….……….…….41

Figure 18 3D Perspective View of Emerald 9, Taman Suntex, Cheras ..……….……..42

Datuk John Tan is the Managing Director of a plastics manufacturing company in

2.1.1 Bank Deposits’ Return

2.1.2 Risks Involved in Investing Fixed Deposit

2.1.2.2 Additional Incentives

2.1.2.3 Economy Conditions

2.2.1 Return of Unit Trust

2.2.1 Risk & Factors Involves in Investing Unit Trust

2.2.2.2 Interest rate