Lots of landed, why buy high-rise units? (I still wonder)
This was an actual comment for a high-rise development in Ipoh in 2010. The statement is valid too because at the time, there were landed double-storey in Ipoh being sold for RM300,000. Fast forward 9 years later and that same condo which started at RM300,000 is now RM600,000 today. Project name: The Haven.
Same question in Melaka perhaps?
As a city, the size of Ipoh is 643 km². As a state, the size of Melaka is 277 km². Ipoh is nearly 2.5 times bigger than Melaka. Distance wise, Ipoh is slightly over 200km away from Kuala Lumpur while Melaka is 145km away. Ipoh has a lot of visitors during major holidays while Melaka has UNESCO Heritage City status and is busy on weekends with visitors from neighbouring states and Singaporeans too.
If there is a market for high-rise units in Ipoh, the potential for high-rise in Melaka is going to be better. Melaka is a smaller state, it’s nearer to Kuala Lumpur and has more visitors when we compare on an overall basis.
Unsold units problem?
Comparing 2018 versus 2017 shows an increase in unsold units of over 30% for Malaysia in general. Statistically, that’s an increase from 24,738 units of unsold and completed units in 2017 to 32,313 units of unsold and completed units in 2018.
When we look at Melaka, in 2017 it had 753 units of unsold and completed residential properties. In 2018, this has risen by SIX (6) units to 759 units. In percentage terms, this is not even a 1% increase as compared to the over 30% increase for unsold and completed residential properties in Malaysia. Briefly, Melaka is not part of the alarming unsold and completed residential properties in Malaysia based on the latest numbers from JPPH.
Focus on PDF formula
We know the potential for high-rise in Melaka. If we want to feel it, just try to book a home stay in Melaka during major holidays and we could feel the vibrancy of the property market. We also know that unsold and completed residential properties issue is not an issue in Melaka. However, buying the wrong property is still a wrong decision. To do due-diligence, we need to look at the PDF formula. P for Price, D for Developer and F for features.
According to Bank Negara Malaysia’s research, most Malaysian households could only afford a property of RM282,000 or lower. This is based on the current median household income. (Click here to access that report)
Risk versus appreciation
This means that if we intend to buy a property and hold it for future potential price appreciation, we should start as low as possible from RM282,000. As for the future, we must remember that the median household income of Malaysians will continue to rise with every passing year. Well, unless all employers stop giving yearly increments to employees. When household income rises, they could afford to buy a higher priced property in the future. This is why price is what we pay today and value is what we get in future. We could wait and buy in the future for a higher price or we could buy today and wait for the future to arrive.
Only if the property meets the Price expectation that we move on to the next important factor; Developer. Actually, these days, the number of abandoned projects are way lower than the 1980s. However, an established developer will be a much better choice compared to a newer one or a developer with their first project. We must remember that we are not buying a bowl of curry noodle. We are buying a property of a few hundred thousand and we will still have to continue paying to the banks even if the project is abandoned!
Look at the developer’s background. If it has been around for over 20 years and has completed many other developments, then it will be low risk and thus a good consideration. Furthermore, it’s easy to google for all the information today. If there are new projects launched without a proper website, my advice is to skip those projects because there are lots of other choices.
Visit the sales gallery and speak to the developer’s sales people. Are they able to answer many of your questions or are they hiding some issues? Did the developer do a proper showroom to show potential buyers that they are serious or do they merely use power point slides and brochures? Is everything very transparently explained and done so in writing?
If the construction has started, is it on schedule and is the developer continuing to update its buyers on the progress? Look at its other projects for reference too. All these are assurances that you are buying from a reliable developer.
Once the price is right and the developer looks reliable, we can look at the features being offered by the project. We must remember that even if the project is in the best location and has the best features but it’s TOO expensive or the developer fails to complete it, all these features are useless to us. Thus, the Price and the Developer equation must receive your passing marks before you start looking at the features.
1) Location – Is it near to the city centre with proper roads? Is it built in a good area with lots of greenery? These days, cities are becoming concrete jungle, thus a park is a much welcomed advantage.
2) Amenities – Schools, eateries, shops, medical facilities, supermarkets, shopping malls and more. Look at all the places surrounding the development to understand what we are buying into. As long as all these are within a 15-minute radius, then it’s good.
3) Facilities provided in the high-rise unit. Are the facilities what you are looking for? Will your loved ones enjoy those facilities? When there are too few units, the facilities provided will be fewer and the maintenance costs much higher. If there are higher number of units, then look at the land area for the development. A low density project may be built within a very small piece of land, that’s not an advantage actually.
4) Unit design. Walk through their showrooms. Is the design an easy-to-use kind of design without too many unnecessary corners? Look at the size of the rooms versus the living room and the kitchen. Usually, when the rooms are bigger, the living room and the kitchen will be smaller. Thus, all these depend on personal preference too.
Future price appreciation
No one could predict the future but if we are looking at the world of today, high-rise living will continue to become more common. In fact many of the elderly are moving into condos for safety, convenience and lifestyle.
It’s easy to conclude that landed is better based on history but if we have kids and the landed home is not a gated and guarded development, will we feel safe to let our kids run around outside the house? As for the thinking that landed gives better capital appreciation, let me share the latest chart by JPPH as below:
In conclusion, all properties give good potential capital appreciation and that includes high-rise units which is actually the second best after terrace homes where price increase is concerned.
Sri Melaka Residensi (SMR) based on the PDF formula.
Price – Standard sized units (864 sq ft) are priced from RM232,000 onwards. This is a very attractive entry price for a high-rise unit. For those requiring a bigger unit, they could opt for a 1,000 sq ft unit instead which is priced from RM261,000.
Developer – Potensi Lestari Sdn Bhd is part of the Setia Awan group which has been building homes in many towns and cities in Malaysia for over 25 years. You may want to look at all the latest construction updates about their projects in their Facebook page too. (link to Setia Awan FB page)
Features – Sri Melaka is a condominium development within the Bukit Serindit Recreational Park. We could call this a project within a recreational park. Every late afternoon, Bukit Serindit Recreational Park is full of people from all walks of life. This is a community one could join on a daily basis.
This project is targeted at buyers who wants to have full access to facilities for them and their loved ones. There’s no shortage of healthy fun with access to basketball, badminton & futsal courts, gymnasium, swimming pool, multipurpose hall and more. All these facilities provide everyone with a healthy lifestyle and not just looking at smartphone screens everyday.
Let’s look at the many facilities provided by SMR and the nearby amenities too.
The showroom is ready to welcome all potential buyers. Contact details are as follows:
Facebook page: Sri Melaka Residensi
Unit 110 Block G, Pusat Dagangan
Phileo Damansara 1,
No.9 Jalan 16/11 Off Jalan Damansara, 46350 Petaling Jaya, Selangor
Email | email@example.com
Article written in collaboration with Sri Melaka Residensi.
<Featured Image is courtesy of Stock Photos from ITTI Gallery >