Changing Property Investment Strategies – Though what may seems right now is that Malaysia property market is at the bottom end of the property cycle; property transactions continue to decline and inventories are building up rapidly . Although cost of living continues to climb on a dismal growth but income growth remains stagnant – this tells us that most Malaysians fail to qualify for home loans especially young Malaysians that have the desire to start a family . Home affordability seems to be too far for them to own even if they want to rent or own serviced apartments like Desa Green .
Changing Property Investment Strategies
Speaking of financing, even developers are struggling to obtain financing from the banks; some banks have even stopped to borrow money to residential developers . Household debt in Malaysia is considered highest and we are still in the era of ugly and bad debts . Besides , the economic indicators shows that we are unlikely to improve in the following year or two and it is foresee that there will be stricter lending requirements to home owners – like the US subprime crisis in year 2008 .
This is where the property investors will need to devise new investment strategy; using the economic signals to foresee which investments will be profitable in this cycle . Seasoned and sophisticated investors will advise you that there won’t be idiot proof strategies that will guarantee endless profit growth but sustainable growth . They rely heavily on statistics to make sure the value is what it’s worth whereas shallow investors are blindsided by the price .
The difference of property value and price is heavily influence by the property market cycle , it is also judged by its highest and best utilization . Currently , most properties’ prices are higher than the value due to the affordability issue and demand-supply gap and as far as we are aware , the current economic situation does not support a robust tenant market .
The slow economy does not indicate that it is a bargain city . Most ‘profit seekers’ (short term investors) prefer to snap up those primary and secondary properties because it is being sold off at a good discount and there are investors who cannot get tenants will have to witness their assets turning into a cash sucking liability . Investors are forced to play waiting game also known as the holding power , you got to have a strong holding power in this one . It is thrilling during the hunting but once the property is in your hands; that’s when the real oops moment comes.
Why You Must Changing Property Investment Strategies
A consequence of this ‘excitement’ is the misguided behaviour is already visible; many over enthusiastic investors purchased their properties during the Developer Interest Bearing Scheme (DIBS) era which is between year 2012 to 2014 , without conducting any due diligence . This resulted many investors have troubles keeping up with their monthly repayment are now seeing their properties being repossessed . Back then , the foreclosures occur after six to nine months of defaulting but due to sheer volume of defaulters, banks now only allow default of two to three months .
What are the alternative investment opportunities that investors can capitalise on during the bottom of property cycle ? The advice we can give is to look into rent-to-own schemes or venture into land banking through group purchases, click here to understand further rent-to-own schemes . While rent-to-own schemes seems like does not require any capital to get involved but land banking is a good strategy to hedge against inflation . As for land banking , aspiring investors should consider group ownership in order to reduce cost of capital .
Future growth area such as Eastern Economic Region as well as agricultural land zoned for township developments that has promising options . Apart from that, investors can opt for auction properties as the rising numbers of houses to be put in auction has been increasing drastically . Registered auctioneer says that approximately 70,000 units in the local auction market and what’s even better is that it could possibly obtain up to 70% discount for auction properties that is also inclusive of hot spot areas .
There are auction scenario where a penthouse apartment in Mont Kiara was sold off at half of its market value at RM500 per sq ft from RM1,000 per sq ft . You could be in luck if you find a corner lot double storey terrace home in prime areas is valued as low as 40% below the market value .
In all , investors should be mindful when they invest ; study the property not just for capital gains but also location stability and the quality of neighbourhood . Research deeply and understand the property market situation and finance facilities that should equip you with better ammunition to go into the property market battlefield . – Changing Property Investment Strategies .