If only I could afford… (thinking distance versus price)

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This morning, I had breakfast with a good friend in Solaris Mont Kiara. He told me that his friend who’s a Real Estate Negotiator (REN) specialising in Mont Kiara and its surrounding areas used to have so many expats asking about renting in Mont Kiara everyday but these days, those numbers have reduced a lot. I told him that with the slower market, rental prices in KLCC and Bangsar had also reduced and this will definitely also have an effect on Mont Kiara too. I asked him if price is the main issue and he’s an expat, which would be his top and bottom choice if he had just these three choices; KLCC, Bangsar and Mont Kiara. His first and third choices were the same as mine; KLCC top and Mont Kiara 3rd. Both our choices are based on distance versus price. Same price, three choices of the same type of property will usually come down to distance. (Personal choice okay, no need to debate on which area is better, more connectivity, better views etc)

When we look at the market in general, most buyers / renters will have to base their decisions on price. Well, except for those who could afford anywhere they want. Else, how much we earn on a monthly basis determines where we could afford to buy. Want to stay next to KLCC? Be a successful businessman. Else, go for KLCC VIEW instead… (the further we are away from this view, the cheaper it will be) Here are 5 reasons why buying further is still a good choice and it does not necessarily just those few areas everybody loves yeah.

#1 Further means less demand currently. This is why the prices that we buy will usually be lower priced (gross or price per sq ft) than if we were to buy somewhere already popular and wanted by everyone we know. True for both high-rise or landed. New townships will usually start with landed and high-rise will start to follow when the area’s popularity and population starts to rise.

#2 Appreciation is still applicable yeah whether they are popular or not so popular areas. Just do not buy the totally-will-not-have-a-chance kind of area lah. People often tell me that the hotspot they bought into appreciated RM200,000 within the past 3 years. If we are talking about investment, it’s also the % as well. Example, RM800,000 increasing by RM200,000 is slightly slightly behind RM300,000 increasing by RM80,000…

#3 Further means bigger.  Developers will usually have a much bigger piece of land and they can be more generous with the use. A smaller piece of land in the middle of a mature neighbourhood would have to be fully maximised and this is why the built-up for landed would usually be smaller while if it’s a high-rise, it’s either higher density to be cheaper or super expensive and lower density.

#4 Affordability is the key for future demand. It’s true that prices for mature neighbourhoods are far higher than that of newer areas. The reason is not because of demand alone, it’s more of fixed supply. There’s just no new land to build new supply of homes. Thus, fewer supply versus higher demand means higher prices. However, if the M40’s salaries (what’s M40? Read here) could only rise by 6 percent every year and they need homes, they will need to evaluate all choices.

#5 Appreciation of the extras… I remember a Cheras friend once told me that Cheras is the best. It’s close enough to the city centre and it’s mature and there’s continuous development. She bought a landed property in Semenyih and is now planning to move there. Why? It’s modern and it’s new. (emotion) It’s gated & guarded and the guards wear nice uniforms! (safety) It has parks after parks after parks and all her friends love her new place. Yes, she has to drive 50km on a working day but truth is, it’s not like she could wake up at 7am in Cheras during a working day anyway…

There are a lot of cons in buying further too yeah but there’s already many of those articles written. Just google for them to read yeah. Oh yeah, if money is not an issue for me and I have too much of it, I will choose to stay in hotels instead and with full concierge service. I will not be choosing to stay in a luxury condo in city centre and having to walk down the street or through a covered walkway to the nearest LRT / MRT  station. Then again, I am just another working professional like most Malaysians. We watch what we buy and we try to maximise what we get from what we buy. Happy thinking.

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written on 14 April 2019

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