Category: Swhengtee News Published: Friday, 15 April 2011 08:00
Keen to know where the best places to invest in property are? SMART INVESTOR speaks to the founder of a property investors club on his top picks.
One of the most often-asked questions by property investors is, where are the property hotspots? Like favourite fishing spots, opinions on the best places to invest in differed from investor to investor.
Swhengtee International Real Estate Investors Club decided to get to the bottom of this when it conducted a survey amongst its members – and from the public at large – as to where such places were and whether or not such hotspots still existed in the local market.
Show Me the Hotspots
A total of 33 locations in Klang Valley – ranging from KLCC to Klang – and 23 locations nationwide, from Kuala Lumpur to Kota Kinabalu, where included in the survey. Based on the total data collected, the top 11 hotspots in the Klang Valley and in Malaysia, respectively, were selected.
According to the survey, KL and Petaling Jaya were voted the best property hotspots in the country. Petaling Jaya is still seen as where the most investment opportunities are present, thanks in part via the usage conversion of its buildings, old factories, and vacant land as well as the redevelopment value in its properties.
Based on data from the Department of Statistic’s population and housing census 2010 preliminary report, PJ is seen as having great investment potential because it is considered a mature township with a population of 1.78 million, which outstrips KL with 1.63 million.
However, according to the survey, KL still remained the preferred investment choice for investors, mainly due to the recently announced Greater Kuala Lumpur plan and as well as globalisation.
Data from Bank Negara’s House Price Indicators seemed to back this up when it was recorded that KL house prices surged by 9.9% year-on-year (y-o-y) in the third quarter (Q3) of 2010 after experiencing a slump of 2.5% previously.
The Game Changer
Swhengtee’s surveys were conducted before and after the MRT project announcement, and its reported impact on property prices in certain areas.
In fact, the 9.1km underground stretch of the Sungai Buloh – Kajang MRT – from KL Sentral to Taman Maluri in Cheras – bodes well for KL, as it will connect the capital to the rest of the Klang Valley.
It is also expected to accelerate economic activity in areas such as Bukit Bintang and the upcoming KL International Financial District. It is also expected to spur activities in tourism, shopping, sports and financial hubs as well as offering opportunities for hotels, high-end condominiums, and strata offices in Bukit Bintang and Jalan Stoner.
As the focal point of Malaysia’s property market, KLCC is thriving with commercial activity. Properties in the area cater for the international market, and are comparatively affordable, compared to most capital cities in Asia.
Swhengtee founding president Gavin Tee said this city centre area was still a major hotspot for investors. “Luxurious condominiums in this area have transacted at up to RM2,900 per sq ft last year, and I foresee the best of the high-end ones could escalate to RM5,000 within the next five years,” he said.
“Investment opportunities within this area are in high-end apartments below 1,500 sq ft and below RM1,800 per sq ft, which are attractive for mid-term investments. Strata offices are also good investments within these areas,” he added.
Aside from KL and PJ, where else are considered top investment destinations? As an established ICT hub and as an educational enclave in place, Cyberjaya was set for a transformation.
Several new residential and commercial developments such as Shaftsbury Square, Serin Residency, Mirage by the Lake and The Garden Plaza are taking place in the area, and the survey indicated the area as hotspot. Tee, however, was skeptical on this.
“We are expecting the neighbourhood to be dynamic and vibrant with more people settling down to live, work, play and entertain. The question is, could the latest hike in prices become sustainable?
“I think only selected properties would be worthwhile investments. High-end housing and medium cost apartment for student population can be a challenging investment even though many voted Cyberjaya as a hotspot,” he added.
Down south, the survey found that Johor appeared to have stable growth in housing prices, after a 0.1% dip in 2008. 2009 saw a rebound of 5.5% and a 1.4% growth y-o-y on Q3 2010. Huge investments, both domestic and international, were also flowing into Iskandar Malaysia.
“We foresee Iskandar as being a potential long-term hotspot, which could be very active in the far future and believe a sharp rise will happen in the next three years,” said Tee.
Melaka and Georgetown in Penang are historic cities, and are inscribed as cultural destinations on Unesco’s World Heritage List, while Gunung Mulu National Park and Kinabalu Park are inscribed as natural destinations.
These places, the survey concluded, are tourism hotspots, making tourism-related real estate in these areas among investments with the most potential. Old houses or heritage buildings are becoming the latest choice investment.
“We can see the emergence of commercial property, especially in Penang and Melaka, hitting the highest transaction marks in 2011. Last year, the residential sector in Penang was surprisingly highest at 9.7%, followed by KL at 8.2%, Selangor at 7.2% and Johor at 3.6%,” Tee said.
“So, I believe it is time to shift to commercial property in Penang and Melaka as residential properties have reached their peak,” he added.
Despite the strong potentials that still remained within the market, Tee cautioned that investors still have to pick where to invest wisely.
“While the property market may be running hot, whatever is hot may not necessarily be good for investment. We see people rushing or queuing up to buy a property, but they may end up buying a debt. Getting the right hotspot to invest is to assume you may profit from property investment,” he added.