When rental units become a norm in the future

I think most buyers today are spoilt for choice when it comes to properties. Every advertisement I see these days would have the T inside; LRT, MRT and KTM…  In fact the units are attractively priced too. Attractive to those who have been saving for the past 5 years and has accumulated enough downpayment for an affordable unit. RM600 per month x 12 (months) x 5 (years) is equal to RM36,000. Already more than 10 percent for any property below RM350,000. Well, if they happen to be a couple, then the total saved would have hit RM72,000.  What happens when the buyers are ‘not’ able. I fear they are not able because the temptations are non-stop. Smartphone marketers are getting ever smarter. If you do not have the money, you can do 12-month instalments and these days, there are already 24-month instalments. There are also way too many handbags on offer for 50-70 percent lesser. The only issue is, after the discounts, the price to be paid remain to be in the thousands. Worry not, credit card to the rescue. Okay, many more reasons why even when the earnings are over RM4,000 it is never enough.

For everyone’s information, my junior colleague (only a few years younger) who earns less than RM4,000 per month has just bought her second property this year. (after listening to my talk. Haha)  She usually brings packed food and despite earning below RM4,000 she could save NEARLY thousands per month. Nope, nothing to do with crazy. She’s just not following the majority. Since she is not the majority and the majority would need help with downpayment, what will happen? Well, the banks are not likely to give you 100 percent loan (they better NOT) and the government is definitely not rich enough to give 10 percent to everyone, else as usual even Malaysians who do not qualify for such benefits would also apply. One way to get around this no downpayment? Rental units. How do we cater to the market? Build lots and lots of rental units. Well, at least until the single becomes married and could then combine their income for a small unit elsewhere instead of renting.

In China, the central government is already asking for help from developers in developing a long-term rental market. Well, in China, things happen really fast. Country Garden, a Guangdong-based Chinese property development company is responding to the government’s call and has launched its BIG+ apartment project. Country Garden’s president, Mo Bin said that the company aims to develop one million apartments for long-term renting in major and second-tier cities by the end of 2020. 1 million units within 2 years. (That is 500,000 units per year and this is just ONE developer.) Full article in atimes.com here.  

When we look a little deeper and further, it is plain to see that perhaps this is the future. The norm in the future is for most of everyone to just rent a unit. Maybe a small unit but to rent until they needed a bigger unit and that’s when they would need their partner to share half the cost. Perhaps that is why my two close HK ex-colleagues told me that buying without marrying is tough. To afford a unit, the salaries have to be combined. Buying would be limited to only those who somehow managed to save or happened to have super rich parents. Okay, do not be alarmed yet. This rental trend is not yet strongly established in many advanced property markets yet. Not even in those markets where the median prices are under the severely unaffordable category yet. What we can do today is to keep following these news and if these built for rental units become the majority of all units built, then it will start in Malaysia. Happy believing yeah.

written on 24 Dec 2017

Next suggested article:  I want to get married at 30. A bit of strategizing is good too.

 

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2 thoughts on “When rental units become a norm in the future

  1. Yes, I do agree with your above comment on your junior colleague that it is always possible to own 2 properties with salary below RM5K.

    Majority of people do not think so even their salary are RM5k+ and above. We still hear a lot of people earning high salary and still complain they could not afford to buy a property. The reason I can conclude is they do not work and think hard enough. I even got a friend who used to be working like us, but now already retired in her 40s and owned more than 4 properties.

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