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Politics no. Interest Rates and GST YES.

Posted in Property, KL / Selangor

The ‘war’ has been intensifying day after day. The ‘other’ side is always wrong no matter what they do, if they do or even if they don’t do. Yes, politics Malaysia. Fortunately, for commercial property investors, this is not at all important and should not affect their decisions of other to buy or not to buy. The two most important factors affecting their decision would only be rising interest rates and the new Goods & Services Tax (GST). Based on a survey by property consultancy Knight Frank Malaysia, only 4% regarded politics as important factor while 30 percent said increasing interest rate as important and 26 percent said it’s due to GST. This is indeed a good news. The survey is applicable for 2015.

It seems that property investors are pretty savvy when it comes to thinking objectively. Looking at the developed countries, you would be able to see that in all political engagements, the other side must be wrong. However, as long as the mud slinging does not translate into instability in the country, everything will continue to work.

In terms of attractiveness of where to buy for commercial properties, Kuala Lumpur’s Golden Triangle is the most attractive followed by Klang Valley. Penang comes third, followed by Kota Kinabalu in Sabah and Iskandar as the fifth most attractive. Actually if it is for commercial, I think Iskandar is indeed getting very expensive because you may be competing against Singaporean investors to buy. My personal rating would however be a little different. I rate Kota Kinabalu as higher than Penang. This is for commercial properties. Personally, I have stayed in Penang for 15 years and I go KK at least once per year as my wife’s from East Malaysia. I could see how KK continues to evolve very fast because everyone in Sabah or even out of Sabah, when they think of Sabah, the first thing would be KK.

Going down one level lower, mass rapid transit (MRT) would be the most important factor for commercial property market while 74 percent said that poor yield is a main risk hindering commercial property investment this year.  I think the survey is very comprehensive and should be a good benchmark. However, as usual, surveys are able to give a big picture but not smaller details. For example, not all commercial properties should be rated the same. Some are built by developers who simply does not understand what they are building while some are part of a huge integrated plan which spans over 10 years. Have you ever seen rows of shophouses built but not occupied with weeds growing on the whole block? I have and most of the time, it’s at a bad location. Perhaps the growth has yet to reach that location. Buy objectively.

written on 14 Mar 2015

Next suggested article: Klang Valley – Retail Space Over Supply

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