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Premium due to ‘next to’ MRT station? Here are some thoughts.

Should we pay premium then for developments which are next to LRT / MRT stations then? Answer is Yes because they do deserve some premium over developments which are further away. Oh yeah, it’s definitely not wise to buy if the rental is no longer able to cover the monthly mortgage yeah. There’s a limit to how much rental people are willing to pay just because the property is next to a MRT station. Plus… every new development which is not out of the city centre would usually be nearby or next to a LRT / MRT station nowadays. How much is that ‘extra?’

Parking cost, petrol price vs the extra property price – If we have to park our car nearby the station to take the train and the parking fee is RM5 per day, that will be around RM110 per month.We assume the petrol cost to be RM2.50 / day. This will be RM55 per month. 1 litre of fuel is enough for 10km of drive. For many cars of 1.5 litre or below, they could usually drive up to 15km depending on traffic situation. In this case, when we turn the RM110 + RM55 to mortgage payment per month, we could decide to pay an extra RM36,000 for that property which is connected to the MRT station instead of buying one which is further away and we need to drive and park. Image showing the calculation.

Time / convenience? – Money aside, many would prefer to wake up at 730am instead of 630am. If it’s within walking distance, 730am is good enough as we could be at the station by 8am.  If we need to drive, then perhaps starting at 7am is better so that we are not stuck in a jam. How do we value this extra 1 hour for 22 days every month? That’s something we have to decide yeah. If it’s RM5 per extra hour every working day, that’s RM110 per month and this amount alone is worth another RM22,000 in property price. Perhaps a senior manager may want to put this extra hour as something worth RM10? Then, that’s an extra RM44,000 in property price.

Future potential? – Once all the land beside these MRT / LRT stations are fully developed, new developments would need to be built further away. Depending on the prices which these new developments further away could be priced, this will help to push the developments within walking distance to rise. Remember though that we should be guided by monthly rental. No point in buying a property within walking distance to the train station but the rental is not able to cover the monthly mortgage.

Buy with full due diligence. Properties within walking distance to the train station is NOT necessarily the best buy unless they are also near to other amenities such as schools, banks, offices etc. It is also NOT necessarily the best buy unless it’s accompanied by good design, workmanship and even maintenance. After all, maintenance is the actual key to property price appreciation. Last but not least, it is NOT the best buy if the price is simply too high. This is not a selection of ‘how near to the train station.’ The distance and the convenience is ultimately just one of the considerations. Happy evaluating.

written on 29th November 2018

Next suggested article:  My project is XXX metres from the LRT station? Here’s one 6 metres away

 

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kopiandproperty.com

kopiandproperty.com is everything about property related writings and news. Enjoy reading with a latte.

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