Malaysian property market set to reap lucrative rewards for investors
News has just been released by Thinkproperty.my, a highly reputable news source specialising in the Malaysian property market, that there are strong signs that that the market is going from strength to strength, making a popular choice with investors.
Said Asim Qureshi, CEO of Thinkproperty.my has said that “data confirms that confidence has truly returned back into the Malaysian property market. The results of this survey suggest that we will see higher prices over the next few months, which will in turn likely lead to further confidence. Now is an excellent time to buy.”
The market has seen a 3% rise in equity and the survey also revealed that 61% of respondents favoured investing in the property market than the other two main classes of investment.
“Now is an excellent time to buy. Interest rates are low, banks are becoming increasingly aggressive, and of course, market confidence is returning.”
Malaysia Property Market Will Continue to Grow
There are reports on the web saying that Malaysia property market is set to plateau this year but it just isn’t true. Everyone knows that Asian markets are going to continue to grow throughout any global slowdown, and Malaysia is one of the biggest benefactors of its growth. Areas like Sabah, Borneo are seeing massively rising tourism numbers from Asia’s rapidly expanding middle class, and Kuala Lumpur is developing into a chique commercial hub, on par with any of the world’s great capital cities.
The rising cost of building materials had people running for the hills shouting about how it would cause developers to wait and see what the market held in store before bringing their new Malaysia property onto the market. But that has not been the case; there are still plenty of new developments being unveiled in Malaysia.
DSR have just brought the Vivaldi development in Kuala Lumpur onto the books, an amazing development of luxury off-plan apartments, in the stunning Mont-Kiara district of Kuala Lumpur. Residents enjoy unique luxuries like a private lobby and elevators opening straight into apartments etc, as well as the obvious benefits of capital city life: being walking distance from great restaurants, high-end shops and boutiques, and even international schools.
Liam Bailey, head of international research for DSR gave his views on Malaysia’s potential:
“With global markets and economies having become so intertwined, when a big market like the U.S. starts to wean, it does trigger a domino effect, and that makes it easy for everyone to start battening down the hatches. But global markets becoming intertwined, and companies becoming so multinational as flights got cheaper and the massive growth in internet use, means there is sufficient money in global business, even in the likes of China and India alone, to regenerate global economies through foreign direct investment. For instance: China and India buying massive amounts of grain from Brazil because it is the cheapest supplier.”
“Malaysia grows because Asia is growing, not least through regional and medical tourism, the former increasing by around 20% per year, as the Asian Middle Classes grow, (In India, the number of people earning more than $5000 will double to 20million in the next two years), through new employment, promotion, and rising affluence in start-up businesses.
“Not to mention, the massive number of graduates from Asia’s shining educational systems some, going off to be doctors and high-earning lawyers, but some starting up businesses and becoming the next wave of property tycoons, or any other business they think up. Make no mistake, Malaysia property will continue to grow in value, the only effect the global slowdown may have is bringing capital growth down from 15-20% to 10%, which is still solid growth for an established market. Rental yields will continue to be strong at around 8%”
Regroup: Market will take 3 years to recover
Malaysia’s property market will take three years to recover from its current slump, the slowest revival in more than two decades, reflecting the reach of the worldwide financial crisis, Regroup Associates Sdn Bhd said.
“In the past four weeks, I’ve been staring at an abyss,” said Allan Soo, managing director and founder of Regroup, a Kuala Lumpur-based property consultant and home seller. “What’s changed is the global recession.”
A worldwide slowdown has sparked real-estate slumps from the UK to Singapore, causing Malaysian developers such as Magna Prima Bhd to scale back projects. Values of luxury homes in Kuala Lumpur, where prices surged to a record last year, may fall as an oversupply looms, according to Soo, who declined to give a specific forecast.
Malaysia’s property market took about a year to recover from the 1997-98 Asian financial crisis, Soo said. The rebound from the latest slump may start in 2010 and take as long as the recovery from the 1985 recession, Soo said.
Compared with 2007, interest from prospective buyers has dried up, Soo said in an interview in Kuala Lumpur last Thursday.
“Inquiries would come in right after we put up a sign board on properties,” Soo said. “Now, there’s none.”
Home prices will come under further pressure as the number of high-end apartments in Kuala Lumpur doubles to more then 30,000 in the next three years, according to Regroup.
Economic growth in Malaysia in 2009 is expected to slow to 3.5 per cent from about five per cent this year, according to the government’s estimates. Still, losses for homeowners may be capped because most bought properties in 2006 before the peak for less than RM1,000 a square foot, Soo said. The entry of foreigners last year pushed prices to more than RM2,000, he added.
Signs of fewer home purchases have already emerged. Bank loans approved for Malaysian home purchases in October fell to its lowest since February, according to Bank Negara Malaysia.
SP Setia Bhd, Malaysia’s largest developer, expects a 22 per cent decline in property sales to RM1.1 billion in fiscal 2009, Citigroup Inc said last Thursday. SP Setia’s officials couldn’t be reached in their office last Friday for a comment. The Kuala Lumpur Property Index has slumped 51 per cent this year, outpacing the main index’s 40 per cent slide.
Magna Prima said last month it cut the projected revenue from its biggest property development in northern Kuala Lumpur by almost half.Malaysia’s property market will take three years to recover from its current slump, the slowest revival in more than two decades, reflecting the reach of the worldwide financial crisis, Regroup Associates Sdn Bhd said.
“In the past four weeks, I’ve been staring at an abyss,” said Allan Soo, managing director and founder of Regroup, a Kuala Lumpur-based property consultant and home seller. “What’s changed is the global recession.”
A worldwide slowdown has sparked real-estate slumps from the UK to Singapore, causing Malaysian developers such as Magna Prima Bhd to scale back projects. Values of luxury homes in Kuala Lumpur, where prices surged to a record last year, may fall as an oversupply looms, according to Soo, who declined to give a specific forecast.
Malaysia’s property market took about a year to recover from the 1997-98 Asian financial crisis, Soo said. The rebound from the latest slump may start in 2010 and take as long as the recovery from the 1985 recession, Soo said.
Compared with 2007, interest from prospective buyers has dried up, Soo said in an interview in Kuala Lumpur last Thursday.
“Inquiries would come in right after we put up a sign board on properties,” Soo said. “Now, there’s none.”
Home prices will come under further pressure as the number of high-end apartments in Kuala Lumpur doubles to more then 30,000 in the next three years, according to Regroup.
Economic growth in Malaysia in 2009 is expected to slow to 3.5 per cent from about five per cent this year, according to the government’s estimates. Still, losses for homeowners may be capped because most bought properties in 2006 before the peak for less than RM1,000 a square foot, Soo said. The entry of foreigners last year pushed prices to more than RM2,000, he added.
Signs of fewer home purchases have already emerged. Bank loans approved for Malaysian home purchases in October fell to its lowest since February, according to Bank Negara Malaysia.
SP Setia Bhd, Malaysia’s largest developer, expects a 22 per cent decline in property sales to RM1.1 billion in fiscal 2009, Citigroup Inc said last Thursday. SP Setia’s officials couldn’t be reached in their office last Friday for a comment. The Kuala Lumpur Property Index has slumped 51 per cent this year, outpacing the main index’s 40 per cent slide.
Magna Prima said last month it cut the projected revenue from its biggest property development in northern Kuala Lumpur by almost half.
Is Your Home an Asset or Liability?
Assets vs liabilities
One of the basic points he tries to get across is to think of an asset as simply something that puts money in your pocket, and a liability as something that takes money from your pocket.
Thus your own home is always a liability under this thinking, and only an asset for the bank, since the mortgage payments take money from your pocket and puts it in the bank’s. Even after the mortgage is paid off, the home is still a liability because of rates and maintenance.
Whether an investment property is a liability or an asset depends only on whether rental income exceeds the costs of interest, rates and maintenance.
What Makes a Good Real Estate Deal?
So often, beginning real estate investors focus on techniques that they lose sight of the important issue: Is this a good deal? Learning to recognize a good deal takes research, education and, above all, experience. Here’s a good formula to determine whether a potential real estate purchase is a deal. It’s a simple acronym called C.L.E.A.R.
Cash flow
“Will this property cash flow?” Well, that depends on a lot of factors, such as the strength of the local rental market, the interest rate on the financing, and how much of a down payment you make. It also depends on whether it is a single-family or multi-family dwelling. All of these factors considered, ask yourself, “Will this property provide income?”
Then ask the question, “How will this property cash flow compared to other potential properties?” For example, a $150,000 house that rents for $1,000/month has a better income potential than a $300,000 house that rents for $1,600/month. A four-unit building that costs $400,000 may bring in $3,000/month in the same neighborhood.
Now, of course, whether the property will provide income to you begs the question of whether income is important to you. Is it? Do you earn other income? Do you need more income now, or is future equity growth more important? There’s no right answer to these questions, but are all factors to consider when looking at a potential purchase.
Leverage
Leverage is important for investors because the less cash you put down on each property, the more properties you can buy. If the properties go up in value, your rate of return goes up exponentially. However, if the properties go down in value and you have a lot of debt on the property, this can result in negative cash flow (see above).
Since real estate is generally cyclical, negative cash flow is only a short-term problem and can be handled if you have other income or a cash reserve to handle the negative. “Nothing down” investing is very attractive for the high-leverage investor, but should be approached with caution.
If you are a long-term player, leverage will generally work in your favor if the markets in which you invest appreciate in the long run and your income from the properties can pay for most of the monthly debt service.
Equity
Does the property you are purchasing have equity? Equity can take a number of forms, such as:
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A discounted price
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A potential fixer upper
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A rezoning opportunity
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A poorly managed property
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A foreclosure
There are many ways to create equity, but buying into equity is your best bet. Find a motivated seller who wants out of his property and is willing to give up his equity for less than full value. Or, buy a property that needs work that can be done for 50 cents on the dollar or less.
In other words, if the property needs $10,000 in work, make sure you get a $20,000 discount on the price or better.
Appreciation
Buying in the right neighborhoods in the right stage of a real estate cycle will result in appreciation and profit. However, timing a real estate cycle is difficult and is speculative. If you buy properties without equity or cash flow solely for short-term appreciation, you are engaging in a very risky investment.
Buying for moderate, long-term (10 to 20 years) appreciation is safer and easier. Look at long-term neighborhood and city-wide trends to pick areas that will hold their values and grow at an average 5% to 7% pace. Combine this tactic with reasonable cash flow and buying into equity, and you will be a smart investor.
Risk
Risk is a consideration that too few investors consider. Now ask yourself, “What if my assumptions are wrong?” In other words, do you have a “plan B”? If you bought for appreciation and the property did not appreciate in value, can you rent for positive cash flow?
If you buy with an adjustable rate loan and the rates go up, will this put you out of business? If you have a few vacancies, can you handle the negative cash flow or will it break the bank for you? Expect the best, but prepare for the worst. And remember, whenever you look at a property to purchase, think CLEAR: Cash flow, leverage, equity, appreciation, and risk.
Robert Kiyosaki Guide to Invest In Properties With 6 Steps
Kiyosaki & Dolf De Roos Revealed The 6-Steps How to invest in Properties and Real Estates
- Decide To Be Investor
- Find An Area
- Identify Properties
- Analyze, Offer and Negotiate
- Put together the deal
- Property Management
Become a Successful Kuala Lumpur Real Estate Investor
In Kuala Lumpur real estate, there are plenty of opportunities for everyone to accumulate wealth and become financially free. Poor financial planning coupled with wrong investments have made many people poor wealth accumulators.
Most people acquire their financial knowledge once they start working or though rial and error. This traditional of learning would cost them thousand of ringgit and it would set them back a few years financially. When it comes to putting money to work, it requires a different mindset and new set of skill that is best learned from the experts.
For example, many people have made wrong property investment that have cost them thousand of ringgit and a few of their life is required indo the damage. It is easy to get into properties but very difficult and costly to get out.
“You must get it right, not only the first time, but every time in property purchases-whether you are buying as investment or your own home.”
Kuala Lumpur real estate is one of the few cities where the majority can easily invest in one property every three to five years. Whereas, in countries like Singapore or Hong Kong, it is considered a major achievement to buy a second property for investment purposes.
Kuala Lumpur real estate has a huge advantage as the prices of properties are amongst the lowest in the world.
One can esily buy a medium-cost apartment that gives rental return of 7 to 9% per annum for as low as RM70,000. All you need to do is come up with a low payment of only 10%.
Properties also provide an excellent long-term investment vehicle to fund your children’s education and retirement needs while providing a steady and predictable passive rental income that will help you to gain financial independence and ultimately, financial freedom.
In Kuala-Lumpur-Real-Estate.com, I will share my expertise and experience to benefit all my readers and clients. So, stay tune for more article and strategy coming on how you can become a successful real estate investor.
Park View Service Apartments – A Mere 5 Minute Walk to KLCC
Park View Service Apartments, a 40 storey service apartments, the first of its kind to be a built in the Golden Triangle area was launched three years ago. The apartments are small studio units of 400 to 600 square feet, and with this, Mayland hit another pioneering first when it pushed the 400 square feet studio to the Malaysian public.