Changing Property Investment Trends Posted : on 10/3/15

INVESTING IN COMMERCIAL BUNGALOWS.

Jalan Ma’aroff and SS2 PJ are good examples of how residential properties fronting busy main roads have turned into gold mines. Although these properties are registered as residential, the purpose of use is commercial and the rental returns they generate and the demand for these units are on the rise. Many of the investors, who purchased such properties initially, took a long term view and did not get a good rental return initially, but over a short period of time, rental rates increased and demand was overwhelming, these properties have now become prized assets for many.

 Unlike shop offices, these houses offer private parking, larger land areas, better frontage and the option to create larger built up areas with renovations.

Commercial Bungalows have their limitations as well, the use of these houses is usually restricted to showrooms and offices only. The local authorities are quite clear about this and licenses to operate for commercial purposes are renewed annually. Should the commercial activities carried out at these houses pose a problem to the neighbouring houses, the licenses are revoked.

INVESTING IN SHOPHOUSES.

These are the traditional investors and rarely invest in any other type of property. Here location and the quality of the tenant is a serious consideration. Unlike residential properties, most tenants who rent shophouses tend to rent for longer periods. There are hardly any maintenance issues as you are merely renting bare space.

INVESTING IN FOREIGN PROPERTIES.

Many are of the opinion that one should spread one’s risk and as such invest a portion of their finances in properties abroad as these investments may also see forex gains as well. (This is quite subjective as it can also work in reverse). Today the options are many, condominiums, student accommodation, houses, shares in companies operating nursing homes etc. Over the last 5 years, there was a dramatic rise in the number of Malaysians investing in foreign properties with UK and Australia being the favourite destinations.

INVESTING IN NEW DEVELOPMENTS

This I believe this is the favourite approach by most investors. Many make decisions based on the fact that everything is new and trendy.  Many are also of the opinion that the newer developments offer features that meet current trends. Further to this the fixtures and fittings are usually branded and stylish. This is specifically related to residential developments. Condominiums offer trendy lifestyle features while Gated and Guarded Developments, for landed properties are now the accepted norm. Today, security is a feature which is close to the heart of most home buyers and tenants, many are now reluctant to stay in housing developments where security features are non- existent.

Further to the above, the purchase of a property from a developer is made easier by very innovative and flexible financing schemes. From an investor’s perspective, a minimum down payment with the opportunity to realize a profit upon completion is an attractive option.

In conclusion, the options to invest are many but the savvy investors almost always have the following traits:

  • Keep their financing to a maximum of 70% of the purchase price.
  • Always take a long term view.
  • If they invest in residential properties, the management and the maintenance of the development is a serious consideration.

 

Nixon Paul

Carey Real Estate Sdn Bhd

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