Affordability and Property Investments Posted : on 10/3/15

The mantra amongst the middle income earners is, If You Don’t Buy Now, Next Time You Cannot Buy.

To a large extent this is true as property prices have increased sharply over the last 10 years. The cost of land, building materials and labour has risen quite dramatically and therefore it is difficult to envision prices coming off.

The general feeling is that the longer you wait the more expensive the property becomes and as such the urgency to commit to the purchase of a property. There are many who buy a property merely to ensure that they don’t miss the boat.

So where is all this kind of hype leading to? The average man on the street is left with very few options, unless he/she is willing to travel further away from the city / town centres.

While the average man may be willing to travel, this again poses another problem, and that is the costs incurred in travel. Our public transportation system still lacks the kind of connectivity that can meet the needs of the people living in the areas that are deemed cheaper.

While the government has taken necessary steps to address this problem in the Klang Valley, with the development of the LRT, MRT and the KTM Komuter services, these transportation services are still in the early development stages.

 The authorities should also consider extending connectivity to locations where there is ample housing already available. An example of this would be Bukit Beruntung and Nilai. There are thousands of people who purchased properties in these locations for own stay and investment purposes and were left with abandoned and vandalized properties. Even the industrial and commercial properties were not spared from vandalism.

However, if one was to take a drive to these two locations today, you will be surprised to see that over the last 10 years, the population in these two locations have grown dramatically and the whole atmosphere here seems promising with activity.

More and more factories are in operation and commercial activities have also improved. This is because these two locations offered cheap and affordable options to those with limited funds. Despite the high crime rate and the lack of public facilities, there were many who braved the early challenges and moved to these two locations.

Today Nilai houses thousands of students who attend the colleges and universities located there. This itself has opened up opportunities for property investors. Student accommodation has become a big business in Nilai and this in turn has attracted commercial activity.

In Bukit Beruntung, it is a slightly different story. Here, the industrial activities have picked up considerably. Industrial land here was considerably cheaper in the early days and the availability of labour was also a factor which enhanced the growth of the industries.

While the industrial activities picked up, this in turn accelerated commercial activities.

The point to consider here is this, if you have limited resources to invest, then you should consider investing in lesser developed locations as the prices of properties are cheaper and the entry levels makes it financially comfortable. However, one must be prepared to take a long term view on these investments.

Today we have many property investors rushing in to purchase properties located in the more established locations. Here the prices of properties would on an average range from RM 700,000 to RM 2 Million. This would be dependent on the location, type of property, connectivity etc. The question here is, why put all your eggs in one basket when you can spread your risk in other locations.

There are opportunities to purchase bungalow lots measuring 20,000 sq ft, shop offices, link houses, factories and many others with prices ranging from RM150, 000 to RM500, 000 only in these locations.

Property investments, needs us to take careful consideration of our financial resources and our objectives. If you have the finances to invest in prime locations, then by all means go ahead, this is the safest way forward. However if you do not have the finances, locations such as Nilai and Bukit Beruntung offer options for the longer term investors. Opportunities are plentiful; one just needs to look a little harder.

Nixon Paul

Carey Real Estate

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