Think be­yond houses and con­dos

New Straits Times - - Property - SIVA SHANKER

the ma­jor­ity of peo­ple, when­ever they think of real es­tate, it will be of houses or apart­ments.

Stud­ies showed that the ma­jor­ity of Malaysians only pur­chased one prop­erty in their life­time - their home. For them, their first pur­chase re­mained their home for the rest of their lives.

Of course, there are those who pur­chase a prop­erty but do not end up liv­ing there. They opt in­stead to rent a house for a va­ri­ety of rea­sons the main one be­ing con­ve­nience.

Some­times, of course, they can only af­ford to pur­chase a smaller prop­erty, but are able to af­ford the rental on a larger prop­erty. Per­haps they bought a prop­erty that was far from their work­place and, there­fore, are choos­ing to rent that prop­erty out and live in a rented house closer to work.

The num­ber of peo­ple who be­come prop­erty in­vestors are by far and large, the mi­nor­ity. This is in­deed a pity, as prop­erty re­mains the best hedge against in­fla­tion.

If you want to mul­ti­ply your wealth, this in­vest­ment habit has to start early. If you wait un­til your 40s or even 50s be­fore you be­gin your in­vest­ment jour­ney, it may be too late. You then risk fac­ing the dilemma faced by most Malaysians - com­plete re­liance on your sav­ings in the Em­ploy­ees Prov­i­dent Fund.

And we have enough sta­tis­tics to show that this money lasts only for a short time.

The ma­jor­ity of prop­erty in­vestors choose to in­vest in res­i­den­tial prop­er­ties. Houses and apart­ments have been the tra­di­tional pre­ferred in­vest­ments. In re­cent year, the pro­lif­er­a­tion of ser­viced apart­ments has of­fered an­other in­vest­ment source.

Most peo­ple who in­vest in ser­viced apart­ments do not re­alise that these are com­mer­cial in­vest­ments. And a com­mer­cial in­vest­ment at­tracts com­mer­cial rates and taxes. Your quit rent as­sess­ment and other taxes will be dif­fer­ent from a res­i­den­tial prop­erty. Even your rates for wa­ter and elec­tric­ity will be cal­cu­lated on com­mer­cial rates.

And let’s be hon­est, many of these ser­viced apart­ment will not re­ally come with the fullfledged ser­vices that should ac­tu­ally be pro­vided in a true ser­viced apart­ment.

It’s time Malaysia prop­erty in­vestors start open­ing their minds and con­sider al­ter­na­tive in­vest­ment as­sets. Res­i­den­tial as­sets are at­trac­tive in­vest­ment as­sets, but there are other al­ter­na­tives avail­able. It is a sound in­vest­ment strat­egy to have a var­ied port­fo­lio in your bas­ket.

Last year, res­i­den­tial prop­erty sales formed the largest por­tion in the prop­erty mar­ket, ac­count­ing for a whop­ping 63 per cent of all real es­tate trans­ac­tions. Sales of agri­cul­tural lands were a far sec­ond, com­ing in at 21 per cent.

The other sub-sec­tors col­lec­tively ac­counted for the bal­ance of 16 per cent. We seem to be too top heavy, with most con­sid­er­a­tion given to res­i­den­tial prop­er­ties. This has prob­a­bly been the sin­gle largest con­tri­bu­tion to the over­sup­ply sit­u­a­tion we are now fac­ing.

Too many con­do­mini­ums have been built in the last few years and the general con­sen­sus is that these units, when com­pleted, will not be able to find ten­ants.

Let’s open our minds and con­sider al­ter­na­tive in­vest­ment as­sets be­sides houses and con­do­mini­ums. Happy hunt­ing and may the force be with you.

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