Embattled investors singed by the
performance of the equity and financial markets in 2008
may want to look at more tangible assets to invest in
going forward.
In such an unpredictable environment,
one of the most tangible of assets is property,
especially for more conservative investors who are
looking for steady but unexceptional returns.
That leaves the question of when and
at what price point investors should acquire properties,
assuming that more gloomy economic and business data are
still on the way which may have an effect on consumer
sentiment and therefore, negatively impact property
prices.
Those in the property industry, from
developers to agents, will tell you that any time is a
good time to buy property, especially if purchasing to
stay because there is a probability that postponing a
purchase may result in that particular property becoming
unavailable or becoming pricier.
On the other hand, now may be the
time to conserve cash and wait for opportunities, even
for those who are looking to upgrade. For those who are
investing for returns, that is a more difficult question
to answer because launch prices have not plateaued
although secondary market prices have fallen.
Property industry experts will tell
investors that prices have not risen by much in the
country compared with Singapore while falling secondary
market prices may be due to any number of factors
including location, accessibility, amenities and the
number of new units coming into the market in any
particular location.
iProp Realty Sdn Bhd managing
director Victor Lim says investing in commercial
property is always a safe bet. “If you look around,
there are fewer good commercial properties compared with
residential properties, so they can command a premium,”
he tells
StarBizWeek.
He says compared with residential
properties, business tenants are a more stable source of
income. “Tenants in residential properties have a
tendency to move whereas business tenants will stay
longer,” Lim says.
He says the general rule of thumb is
that the investment must yield at least 6.0% gross
return before it can be considered. However, prime
locations will also have better capital appreciation.
Victor Lim
“I’ve a client who invested RM1.6mil
in a shopoffice in the early 2000s in Desa Sri Hartamas
and sold it last year (2008) for RM3.2mil,” Lim says.
He says investors may not wait even
when times are bad. “Another client who has been eyeing
a plot of land in Puchong bought it for RM2mil cash,
sometimes investors just have to seize the opportunity
and wait it out,” he adds.
Lim says another way to diversify a
property investment portfolio is through purchasing real
estate overseas. “Those who buy abroad do so for a
number of reasons, maybe they’re buying with an eye to
migrating or maybe it’s for their children’s education,”
he says.
“I know a number of my clients have
started to look at properties in the US and Australia
because of their attractive prices. They cashed out of
the local property market early this year and are now
looking at the US and Australia, at least one of them is
serious about the US,” Lim says.
On the other hand, Hartaemas Real
Estate Sdn Bhd marketing manager Bernard Yong says that
for the year ahead, condominiums in prime locations are
still a top pick.
However, he says a good time to
invest in property is probably at the beginning of the
second quarter of 2009. “I’m looking at Mont’Kiara
condominium units, at prices between RM500 psf to RM600
psf,” Yong says, adding that Bangsar is another
alternative.
He says launch prices have not come
down but developers have become more creative at
selling. “They’re giving more incentives or more
creative financing,” Yong says.
He says secondary market prices for
residential properties in Mont’Kiara, KLCC and KL
Sentral have been affected with the KLCC location being
the most speculative.
“From next year till 2011, there are
between 8,000 to 9,000 condominium and serviced
apartment units becoming available in the KLCC location
where demand for units of 1,000 to 1,600 sq ft has been
healthy but the larger units are unsold,” Yong says.
He says that while properties closer
to the Petronas Towers may not see any drop in prices,
there may be a stagnation of prices for newer projects.
“Those looking to buy into the
location may see opportunities there,” Yong says.
