September 24, 2018
I do not believe there’s only one way when it comes to property investment. I also do not subscribe to the view that we must all buy landed because they cannot grow land or that there’s so many high-rise units, why still buy high-rise? Lastly, it’s definitely not necessary to ONLY consider hotspots because it may have become too expensive for many. I think this is the exact same strategy in the stock market too. Buy with price but look for value. Recently, I wrote this: Will prices keep rising for landed? (even in older neighbourhoods?) Perhaps it was not that clear. My view remains the same. Demand is always driven by ‘affordability’ tag. It could be affordable to some of us but it may not not affordable to others. Successful businessmen can definitely ‘afford’ something much higher priced. Thus, a RM2 million home may still be affordable to them.
Remember the days when the landed properties in Desa Parkcity was only over half a million? Or the terrace homes in PJ which was only a few hundred thousand ringgit? Those no longer happen, that’s why properties nearby these areas start and continue to rise. So, the question is not whether newer areas would increase in price or not. Or to debate about whether to buy hotspot or newer spots. The question is always are we anticipating the hotspots of today to continue to be loved by everyone but NOT everyone could afford them. If they are loved by everyone but some could NOT afford them, then they will have to buy somewhere nearby but more affordable. That’s how newer areas start to build up. Frankly, if KLCC is still extremely affordable today, why are people buying over 15km away, followed by over 25km away and now over 40km away?
In the share market, say BURSA, there are already many blue-chip counters loved by many. What has happened is that their prices have grown to be near to their current value or sometimes over-valued. If we take a long term view, there’s really nothing wrong to buy because if we buy a fully-valued stock today, one year later due to their superior performance, the price we paid today would become ‘great value.’ However, there is really nothing wrong to look at some other cheaper stocks which may share same attributes as that blue-chip; great management team, good product / service and even consistent track record. In the case of property, look at all the hotspots but beyond just the name, understand the reasons WHY they are now a hotspot. Then, use the SAME criterias and evaluate cheaper areas. For areas which has some of these attributes with plans for the rest, this may be a good buy today for the future years. Happy understanding.
written on 13 Sept 2018
Next suggested article: Property prices. Congestions will push it lower? Fat chance.