What happens when a property we bought has a capital appreciation of 36%. How much do you think our earning in percentage term is? It depends on how much we paid for the down payment and whether or not have we sold the property of course. If a property was £1 million then (few years back) and it’s now £1.36 million pounds and we paid cash for it, the return is 36% divided by the number of years which we have paid for it. If it’s 3 years, then the return is a simple 12%. Not shabby but not super awesome.
If we had paid just 10% down payment for it, we have paid £100,000 and the rest are via loan. A 36% rise in capital meant £360,000. If we want to know what’s our return, we can use this to divide by £100,000 and this gives us a 360% return. Since it was three years ago, we could divide it by 3 and this gives us a simple return of 120% per year. Nope, it’s not a scam. It’s just the power of leverage which we have IF the property price really did appreciated by 36%. Usually, it does not appreciate so fast unless of course the starting price was extremely attractive. Anyway, the 36% which we are talking about here is for a Malaysian project inside London called Battersea Power Station.
Article in nst.com.my Malaysia-owned Battersea Power Station project has seen a 36 percent capital appreciation for units offered under its first phase. This meant that it will outshine many prime property developments in London. Battersea Power Station Development Company Ltd (BPSDC) international sales director Philip Mason said the sharp increase in value of Phase 1, known as Circus West Village, was expected to attract more interest for residential and commercial units under Phase Two and beyond.
BPSDC, the project development manager, is creating a new town centre for London, allowing people to collectively live, work, shop and dine under the same compound. Mason said, “Besides the iconic building, there is always a reason for everyone to come here. The Northern Line Extension (Battersea Power Station) will be a boon to attract more investors and visitors, giving accessibility to the two hubs of the London city – financial and the cultural districts.” Mason also shared that the overall Battersea Power Station project has a gross development value of £9 billion on 42 acres. Sime Darby Property and SP Setia each own a 40 per cent stake in the Battersea Power Station development. The remaining 20 per cent is held by the Employees Provident Fund (EPF). Article in nst.com.my
Good news definitely for the deep pocketed ones because buying in £ is not a small matter. I can also see my neighbour smiling because I know he bought a unit in phase 1 of the Battersea Power Station a few years back. By the way, Mason also said this in the article, “London is never going to be cheap. Those who wanted to invest, better do it now. A lot of people from overseas have already started investing in London.” I guess what he is saying is that London will always attract a lot of attention to its property market. As EPF has stake in Battersea Power Station, I hope what he says will be true for a very long time to come. Well, as for the majority of all other Malaysians, properties in Malaysia, especially in the Klang Valley will remain popular for a long time to come. Happy investing.
<Featured Image is courtesy of Stock Photos from Willy Barton>
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