By Dr. Daniele Gambero
Previously we saw the first three Golden Rules for a profitable property Investment. Read more at 6 Golden Rules For A Profitable Property Investment (Part 1).
As I already mentioned earlier, there are really no secret rules or special tricks to have a good and profitable property investment; it is mostly a matter of using a lot of “common sense” and applying the fundamentals of Propenomy.
Rule 4 – Identification Of The Correct Location
If you have followed the past issue, you should know that the affordable homes are one of the big drivers for the next several years in property investment.
It is important to identify the right location – look for the right property at the right place! Property experts always recommend places which are highly accessible and I totally agree with this. Mobility and accessibility are two extremely important factors.
Nowadays property prices are highly related to the scarcity of development land and the land cost. From this, we can understand how the Southern Corridor of Klang Valley started growing as the next hot spot for property development and consequently investment.
Refer to the image above to better understand the implications of land cost on property values. As investors, we surely want to have good possibilities of capital appreciation in a decently short period of time. Do not forget that property should be a medium or long-term asset and consequently, we should expect a good capital appreciation within a timeframe of 5 or 6 years.
The price trend in the Southern Corridor (Semenyih and Bangi) seems to be very similar to the one in Puchong area.
In 2006/2007, Puchong was a brown field with mostly industrial projects, looked at as a “cheap” destination without a great future for capital appreciation. At that time, residential properties can be purchased for as low as RM180 psf. But in less than 10 years, the residential value has increased tremendously and Puchong became the new Petaling Jaya, or seen as an extension of it.
By 2020/2023, the Southern corridor is expected to follow the same trend, by being the next hit location for a highly profitable property investment.
It is also important to note that the top 20 developers in Malaysia have already started launching medium and big townships in these locations, which are poised to become the next property hot spots.
UMLand Bhd was the first to go to the south corridor in 1997, launching their Bandar Seri Putra township. Other developers went right after UMLand Bhd includes SP Setia, Eco World, MKH Bhd, UEM Sunrise, I&P and many more, all having their developments under construction at the moment.
Rule 5 – Look For “Scarcity”
If you like to be a “smart investor” you should look for something that nobody else is having in terms of design, size, type or features.
Imagine if you are buying a residential apartment in a development which offers 1,000 units in two sizes – 800 sqft and 1,300 sqft, where the smaller ones make up 85% of the total number of dwellings. If you will buy the 800
If you purchased the 800 sqft unit, you will get a cheaper bargain; but you will have a tough competition in terms of sale and rental once the project is completed.
Now in the Southern Corridor, a property investor can find a wide range of choices: high density serviced apartment; low-density condominiums; landed properties from huge to regular sized built-up.
As a smart investor, do a proper survey of the available projects. Look out for the ‘scarcity’ factor, which will make your unit appealing in the future and allows you to get tenants or buyers without a hassle. Refer to the image below if you’re intended to check out the properties at this next hot spot.
Rule 6 – Malaysian Currency: Light And Heavy Ringgit
The Iskandar Malaysia developments were a hit due to its close proximity to our neighbouring country Singapore. The currency differences in both Malaysia and Singapore was the demand driver, as a middle-class earner in Singapore can easily earn up to SGD3,500 a month and properties in Iskandar Malaysia were quite affordable for them.
The situation is quite similar if we look at both Greater KL and the Southern Corridor of Klang Valley. More and more people from Klang Valley are seeking for a highly paid job in KL Centre, but prefers making the Southers Corridor of Klang Valley as their residential address.
As Ho Chin Soon explained in his recent talk, there are possibilities to earn well in KL and live further away in places which have a lower cost of living – such as Kajang, Bangi or Semenyih.
This is 100% true! In terms of earnings, there is a 15% to 20% pay difference in KL and also in the areas mentioned above. As for the other costs, a Mamak restaurant in KL, Mon’t Kiara or Bangsar charges around RM16 for a Roti Kosong or RM18 for a Nasi Lemak. Meanwhile, in Southern areas, these items can be purchased for less than RM2 each. The image below is a menu which was taken from a restaurant near KLCC area.
The low cost of living will be the main driver to boost the demands for homes in the Southern Corridor and there are are high chances of getting your investment double in less than 5 years.
Happy hunting and do get in touch with me if you need more information regarding this!
If you have any queries or you would like to comment and ask for further information, the author, Dr Daniele Gambero, welcomes feedbacks and questions at: daniele.g@reigroup.com.my
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Dr. Daniele Gambero is the CEO and co-founder of a strategic marketing consultancy firm, REI Group of Companies. He provides strategic marketing consultancies, investment studies, researches, property market reports and business valuation all around the world.
Dr. Daniele Gambero has been engaged as a speaker in REHDA KL, REHDA Johor, Wealth Mastery Academy, Comfori, ASLI, PIHex and Mastery Asia. Through his ability in structuring local and global macro / micro economic indicators to look into the Malaysian Property Market, he centers his speeches on the rightness of property investment based on current and future market values, location, future infrastructures and their impact on the market trend.
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