This article is written in response to a discussion I had with a few friends who are also property investors. What’s happening to property market Malaysia? One of them kept pestering me if the market is good enough to buy luxury properties today. I told her that her term of luxury property is not the same as mine. I rate her ‘luxury’ condo choice as only a slightly higher end condo, that’s all. Nowhere near luxury yet. Let me explain my opinion which is ONLY my personal opinion. Some say, lower end means those low cost flats. Higher end means RM1,000,000 and higher. My personal opinion today? Low end would be RM300,000 or below. Affordability should only be up till RM550,000 for those who has household income of RM10,000 or higher. Above RM1,000,000 is luxury. In terms of price per sf, I would rate anything below RM350 per sq ft as lower end and RM750 per sq ft above as quite high end. RM1,000 per sq ft or higher would be luxury.
What about those in-between? I call them the ‘mixed-blend.’ The mixed-blend are properties which happen to be in an area which is considered a premium hotspot. Yet, due to the very high price per sq ft, the slightly not so rich Malaysians who still wanted that address would buy something smaller. Thus, perhaps a 1,000 sq ft but that said high-rise may cost them RM850,000 or higher. The address is certainly a posh one but the size is definitely not. Perhaps this is okay because these days we do not host many friends visit anyway. Should the hotspot address alone provide such a high premium? It really depends on the buyer. If they feel it’s worth it, why not? If the question is asked to me, my answer is no. With a family of four and my parents staying with me, it is impossible for me to buy just a 1,000 sq ft condo no matter how awesome that area is said to be.
The good thing about these mixed-blend homes is that there are still people who would buy them. Location will always be the primary reason for property decisions. This is despite the fact that the number of these areas with LRT or MRT stations are definitely increasing. The number of malls are also increasing. The number of international schools are also increasing.
The bad thing about these would be that this target market is definitely not huge. If I am super-wealthy, I would not want to buy a high-rise in an area where all the other units are higher priced than mine. So, I seriously do not think these mixed-blend homes would attract the super-wealthy. Yes, I am neither super-wealthy nor interested to buy these mixed-blend homes.
Thus, if the sole purpose to buy is with the hope that the RM850,000 home would soon rise 20% to RM1,020,000 when completed, please think again. I would wish my friend all the best but I think the situation today is BBB. Definitely not the 2009 – 2012 BUY, BUY, BUY but has turned to, ‘Better Beware Brother.’ Read here for the BBB article: Is there really such a thing as BBB today? If possible, buy to stay first. It is unlikely that the property market of Malaysia would suddenly turn around anytime soon. It will be safer since you can still stay there and wait for better times even if the price did not rise to the point that you wanted. Happy deciding whether it’s low end, higher end, luxury or even mixed-blend.
written on 22 Sept 2015
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