In my recent conversation with a savvy commercial property investor who’s also in property development, he said, ‘Commercial property remains a much better investment than residential property. Just look at all those high net-worth individuals. They buy commercial and not residential.” I laughed and replied, “Mr. S, as you have mentioned very clearly, it’s for high net-worth individuals mah. Not everyone can follow your footsteps lah.”
He explained his recent few purchases which he found for a very good price and how he is now putting it back into the market and enticing the buyers with a positive rental yield of even higher than Fixed Deposit. I seriously do believe that commercial property, especially shoplots in good areas to be a safe buy as long as it provides a positive rental yield, even if it’s lower than fixed deposit rate. This is because rental will increase over the years and the property has continuous capital appreciation too. Furthermore, the tenant is the one paying for the property on the owner’s behalf! Well, here are some latest analysis on shoplots too.
As per an article from themalaysianreserve.com Asiacap Valuer & property Consultants Sdn Bhd property valuer Kit Au Yong said, “Those who are pure trading in nature will be much more affected by the Internet retailing business, while non-trading shoplots such as services, and food and beverage will be less affected. However, they are not totally shielded as delivery services such as Grabfood is challenging the landscape to a certain extent.”
VPC Alliance (KL) Sdn Bhd MD James Wong said, “In residential areas, shoplots are catering towards the neighbourhood’s shopping experience and hence, will not be affected by the onslaught of online shopping.” As per data from the National Property Information Centre (Napic), the shop overhang numbers continue to increase at 13.9% to 5,760 units in the first half of 2019 (1H19) from 5,055 units in the previous six months. For a lot more numbers, please refer article from themalaysianreserve.com
E-Commerce will definitely continue to grow. However, there are a lot of things which e-commerce cannot replace yeah. We want to ‘lepak’ with some friends… We just want to enjoy a cup of smooth latte at Costa Coffee or even buy something from the nearby 24-hour convenient store… Last but not least, many are now doing their laundry outside their home and drying them immediately versus having to hang it to dry…
Always distinguish between those which e-commerce could replace versus those which it could not. Always look at the advanced property markets too. The shoplots in major roads continue to be frequented by never ending customers even today. This is despite the fact that e-commerce acceptance is even higher over there today when compared to us.
Where could we find good deals? Identify the area we like to buy. Find agents within that area and tell them about your intention. Soon, you will start to receive news about available units. View them, negotiate until the price you pay for will have a positive rental yield. Alternatively, dive into the auction market. However, for this market, it is vital to have enough cash yeah. In case the bank loan is not secured in time and the 90 percent has to be paid by you. Last but not least would be to look at overhang units.
Many times, there may just be good deals but if it’s just completed, then it will take some time before the whole row of shops start to become popular with people in the neighbourhood. As usual, convenience stores, mamak restaurants, 24-hour laundry stations, some franchise branded clinics and even budget hotels may just be the first few to open. If these survives, the signs are positive yeah. Happy understanding and buying.
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