Saturday August 14, 2010
THE REAL ESTATE BY ANGIE NG
RISING house prices show that residential properties have become the “hottest” pick for investors who are flushed with cash and believe investing in a tangible asset is a good investment choice.
Although it may seem that the property market is on a “wholesale revaluation exercise” with prices climbing across-the-board, it is actually not so.
A check in the newspapers’ classified pages under the “houses for sale” column show that the price hikes are location centric. There is always a price to pay for convenience and living close to mature neighbourhoods with good basic amenities and infrastructure.
If one cares to check around, there are still many affordably priced (RM300,000 to RM400,000) new or second-hand houses out there, but one must be prepared to stay further away from the “conveniences”.
I believe there are various reasons why people invest in property over other investment instruments. The property market’s tenacity in withstanding the global financial crisis must have converted many sceptics to build up their investment portfolio with property assets.
Malaysians’ penchant to save has translated into lots of liquidity available for investment. Savvy investors will invest their money in instruments that will offer good returns over cost and risk.
The prevailing low savings interest rate and the under performing equity market are some of the “push” factors that are promoting property investment.
While these financial instruments are still affected by the external uncertainties in the US and Europe, property investments are very much locally-driven and has proven to be a reliable asset class.
The value of Malaysian properties, both houses and shop lots in good locations, have sustained very well so far and there have been more upsides than downsides.
The quick rebound of the property market in Singapore and Hong Kong may also have contributed to a resurgence in property buying here.
There is also pent-up demand for properties as some people who have procrastinated on signing on the dotted line previously have decided to do so now after seeing the market’s ability to withstand the tough times.
Supply has been slow to catch up after widespread project deferments by developers in 2008. New project launches have just resumed towards the later part of last year.
The high demand over supply has naturally resulted in housing prices escalating in various parts of Kuala Lumpur and the Klang Valley. Penang is also another hot property market where prices have come close to Kuala Lumpur levels and still climbing.
This is a good opportunity for less well known developers with reasonably sized land bank to build affordably priced homes to woo buyers.
One way developers can do this is to come up with products that allow buyers the flexibility to decide their own house built-up and layout plan, just like in the “Sims” computer game.
Instead of the “one-size-fits-all” model that is the norm now, it will be a value added service to buyers if there are various sizes and layout plans to choose from.
Some families have elderly folks and it would be more practical to have at least one or two bedrooms downstairs for a double-storey house.
I have heard mothers of teenage children staying in 2½-storey to three-storey houses complaining that they are “cut off” from what their children are up to these days. They yearn for “the closeness” of their single-storey or double-storey houses.
Large central parks would be another huge selling point as residents would like to unwind and relax in the open environment.
At the end of the day, all stakeholders must do their part to ensure the property market continues to be sustainable.
Developers should be more pro-active and ensure they take the necessary steps to “tune in” to their customers’ needs and ensure more timely launches to meet rising demand.
Buyers also have the responsibility to be prudent and not to over-commit themselves or default on their loans.