There is no real estate if there is no law. Real estate, like any investment, is actually a byproduct of the law. The law gives you the fundamentals in real estate – from the issuance of the land title, recognition of boundaries and ownership. Therefore, observing the legal trends in property investment will give you a head start in making your property investment sustainable in the long run. Here are ve pointers to take you through at least the next 10 years:-
Home Buyer Protection Over Investor Protection
If you buy a house and you stay in it, you will get more protection over someone who buys for investment purposes. The last few years were essentially a nationwide home ownership campaign by the Government, with a focus on affordable housing. If house ownership gets harder, buyer protection will get increasingly better – as the authorities will want you to own your house. Having a roof over one’s head is key before housing becomes a state welfare like in the case of many of the developed nations that concentrate purely on affordable housing.
Harder to Become A Developer
Tun Dr Mahathir Mohamad’s Vision 2020 foresees Malaysia becoming a developed nation.
“Delay expected, destination targeted” – we might not get us there by 2020, so perhaps a few more years down the road is needed. Personally, I’m hopeful. In a developed country, there will be less developers as there will not be much land to build on. There will be compliance matters, and if you want a good location, you will have to tear down existing buildings and restart all over again. The Housing Development laws put a lot of obligations on developers while the entry cost is higher. Adding further insult to injury is the Goods and Services Tax (GST), the weaker ringgit and oil price slump. Private housing property developers may soon join the likes of the panda and the Malayan Tiger as endangered species in time to come.
As Malaysia slowly progresses into developed nation status (perhaps in 10 to 15 years time), to buy a rst-hand property then would be a very expensive proposition. Some may need to get used to buying second-hand property though the problem is, we always want new things!
Property investment is now a team sport. It is no longer an individual game. The barrier of entry is higher while bank nancing is tightening. Therefore, you will have to nd a couple of like-minded individuals and leverage on each other.
You also have to be more innovative, as you can’t just rely on “ ip and keep” strategies anymore. You have to come up with new ways to raise your capital that are not just limited to the bank. You will also need to consider the way to sell and dispose of your property. So, work together with your buyer or seller.
You need to transform from the tiger that hunt alone to the lion that hunt in a pride.
Property Management Is The Driver
Those who solely buy property and sell property aren’t Investors – they are just property traders. A good Investor must know how to manage the property and add value to it. If you just buy and hold on to the property, the wait to cash out could be longer given that the Real Property Gains Tax (RPGT) is high for early disposals, and your margins are thinning out in today’s context. Therefore, you will need to know how to squeeze water out of stone. We are entering an era of low yield and high appreciation. You either have to compete via price or selling features – for instance, paint your unit orange to attract that niche buyer!
Strata Is The Way Of Life
Strata is not your everyday product.
You have to be very involved, whether it concerns the service charge, sinking fund or management of the property.
You’re part of it – and no different from a shareholder in a corporation. If your condominium is managed properly, the price of the units will de nitely go up.
It isn’t about whether they serve a buffet during the Annual General Meeting (AGM). Strata is all about “Love thy neighbour”; It is no longer, “My home is my kingdom”.
If only one person doesn’t pay the service charge, this effectively means the whole condominium or apartment is under-maintained. Here’s a sad fact:- What is the average number of people who pay on time? 50%. The percentage is higher for high-end projects because owners know about strata living.
The management is not your enemy. Being ignorant of what strata living is all about is by far, the greater the enemy. Now, think about your property investment portfolio and see how knowing these ve trends could be helpful to you. Also, knowing is never enough without taking action.
Source: PropertyInsightPrev. Article Next Article