The cost of staying grounded Posted : on 16/12/15
By Kent Tan
Kuala lumpur — Despite being generally viewed as the “more expensive” type of property, landed homes have also traditionally been the most coveted, with most aspiring to eventually live in one.
However, with price trends heading northward, it is a dream that is rapidly vanishing for many Malaysians. And it is not just the price of the property that is crushing hopes, but the cost of keeping it too.
This was the key point conveyed by Nixon Paul, a founding member of Carey Real Estate Sdn Bhd, in the Second Annual Malaysia Midyear Conference in Renaissance Hotel organised by Comfori Sdn Bhd.
According to him, conventionally, landed properties have always been the preferred kind of accommodation. In Malaysia, earlier generations had been brought up in landed dwellings, therefore, they tend to feel more at home in such living environments and are willing to fork out more to stay “grounded”.
Apart from offering convenient entrances, Nixon said landed properties are seen as the best way to hedge against inflation due to its popular demand. However, the cost of its upkeep is subjected to inflation as well.
In his speech, Nixon highlighted the main concerns of landed houses, namely the location, purchase price and security.
To afford a landed property, some home seekers settle for a location in the outskirts, but that does not appeal to those who need to live close to their parents or in-laws who have taken root in areas that have been transformed to matured townships over the years. Living in proximity to them is imperative as the parents can help take care of their young children while they are working.
Another major concern is the security, along with its monthly maintenance. The rental and capital yield may appreciate in five years’ time, but at the same time, the cost for the fortitude is also subject to inflation.
“I once told a friend of a bungalow measuring 2,700sq ft in Bukit Tunku selling for RM1.3 million. He responded in disbelief and could not contain his excitement. I brought him for viewing
the next day, and then he became less enthusiastic about the property. The monthly maintenance was RM1,400,” said Nixon.
“Maintenance has become expensive,” he pointed out. “For makeshift gated-and-guarded neighbourhoods, every owner is required to pay for the upkeep, but the challenge is, not everyone is willing to pay and the burden might be passed on to those who pay.”
“Another question raised for the makeshift gated-and-guarded neighbourhoods, services is its viability. Some guards will raise its boom-barrier for anyone. Secondly, not everyone can afford the monthly fees. People who bought into the neighbourhood some decades ago are not prepared to pay such monthly fees, especially those who are in retirement and have no income,” Nixon elaborated.
He opined that in order to own landed properties, some might opt to live further away from the city centre, buying into projects that come with gated-and-guarded facilities. Being able to own a landed property is an achievement as you are able to own your preferred type of property without having to pay high maintenance fees typical of city-living.
However, though the low living cost may seem like a perk, over time, they may be burdened by the increasing travel cost aggravated by the rising petrol prices and toll fares.
Nixon also reminded those who buy into projects in outskirt areas for its contemporary façade to be aware that in ten to twenty years’ time, they will lose their appeal like the old houses in Petaling
Jaya. The cost to maintain the appeal in order to draw in the right tenants is high.
He highlighted that the cost of keeping a landed property must be a key factor in the decision-making process. Does the developer and authority ensure long-term sustainability and its maintenance cost in ten years’ time, which will directly impact the rental return?
“It’s crucial for developers to come out with a progressive system for residents to absorb the maintenance fees. Some high-rises will have retail units that they lease out to subsidise the maintenance charges,” said Nixon.
Landed properties have also become less attractive to younger generations who opt for high-rises such as condominiums for its lifestyle concept, security and facilities, he concluded.
One of the major concerns in landed properties is the security, along with its monthly maintenance. Nixon (inset) says although the return may appreciate in five years, the cost for the fortitude is also subject to inflation.