Property buying turning into unit trust buying? My view.

In The Star business today, one article caught my attention. According to Fundsupermart Malaysia general manager Wong Weiyi, with the rising property prices especially in Klang Valley, Penang and Johor, investors may just shift out from physical property assets into unit trusts. Wong also said that if investors were to go into unit trusts, for the equity ones he would recommend looking out of Malaysia and he personally recommended a country which he rated a five star “Very Attractive” rating, China. According to him, “China, which is a large part of Emerging Markets, Asia ex-Japan and BRIC strategies, sports some of the strongest potential upside amongst all markets under our coverage, owing to the market’s immensely depressed valuations at this juncture,”.

For those who has read for some time, you would know that when I listen to developers who talk about property prices rising, I tend to read more before I believe what they said. This is the same as a property guru who is the chief of a property investor club telling you that the property that he is representing is the best investment. So, when it is a general manager of a company which markets 237 funds tell you that there is a potential that property investors would choose to buy unit trusts instead, what do I think? I think it can be believed. The reason is because when you look at the transactions, it has gone down but the prices has done up. This meant that sellers may be earning good profits over the prices they bought earlier but they were not buying any new ones. I seriously do not think they would leave their money in FD and thus, yes perhaps Unit trust, at least those more conservative ones may just be sought after.

Nevertheless, if you ask me, I would still prefer going into the secondary market instead. This is because I think I stand a good chance in the slowdown to get a slightly better deal. Oh yeah, he recommended China. My view remain the same, China represents huge possibility but it also carries with it huge risks especially if the economy is slowing down. The properties are also way over-priced, even in secondary cities and I am not sure if the property bubble can be avoided. So buying unit trusts to me, still okay but if I have extra cash, I would not be buying unit trusts which are linked to China. Just a personal view, please still do your own homework before deciding.

written on 26 June 2014

Next suggested article:  Moody’s rating for Malaysia and the 86.8% household debt versus GDP


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