Everytime anyone asked me about buying condo, my advice has always been, if you buy for your own stay, buy one which you like, even if it slightly premium compared to another one which is further and meeting 90% of your expectations. However, if you are buying for investment, strive for rental first instead of thinking about the capital appreciation of few years ago. It is not likely to happen again. Not impossible but not likely. There’s too many restrictions in the market today which is good, keeps the market healthier instead of speculative all the time.
In The Star, dated 9th July, it was reported that there may be a ‘price war’ for rental because of the completion of new units of luxury condos. This was the view of the Malaysia Institute of Estate Agents (MIEA) president Siva Shanker. According to CH Williams Talhar & Wong Sdn Bhd (WTW) managing director Foo Gee Jen, these units which ranges from RM1,000psf to RM1,500 psf will be coming into the market within 6-9 months more and is likely to cause a ‘frightening’ time.
I always think that RM1,000 psf is considered high, irregardless of area because the truth is, there are still so many plots of lands which developers can build. Plus, for a typical family of 4 with two breadwinners, they need a 1,200sf condo to be comfortable but to pay RM1,200,000 for it, plus the usual RM100,000 renovation, this family is likely to be cutting down a lot of their other expenses if they are to afford such a new condo. For those who are single, I think the likelihood that they are willing to pay over RM500,000 for a 500sf unit is going to be small. At least I personally think it’s really a waste of money. Why not just buy a cheaper and bigger condo and rent out one or two rooms instead?
Anyway, I am not any developer or real estate agency owner, thus my view remain to be a very tiny little opinion of a small time property investor. I will not be buying anything above RM1,000 psf anytime soon because I do not believe this market is robust enough currently to withstand any prolonged slowdown. Ok, the real reason, I could not afford such units, happy? My focus remain for a much longer term continuous rental and slow appreciation of capital. I think this should be a safe view until I retire.
written on 9 July 2014
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