Investing in properties

 

Azizi: It is not how much you earn but how much you save that matters.

 

By THEAN LEE CHENG

THERE are opportunities in good times and bad times. Patience is the key and holding power, the foundation to it all.

Azizi Ali, who wrote How to Become a Property Millionaire says whether it is good or bad times, one must manage their money well. Good times do not mean you spend as though there is no tomorrow. The strategy may differ.

“The same rule applies in investment. There are good investments all the time. While property is a solid investment, this does not mean you can buy anything. The golden rule is location. There must be demand, and this you only get in big cities or towns. If you want to buy for your own stay, you can buy anywhere.

“There are some locations like Bangsar, Bandar Utama and Subang Jaya which are popular for both. So although prices may go down in a downturn, the value can still hold up.

“It is not how much you earn, but how much you save that matters. For those who have saved or are patient and brave enough, there are opportunities always,” says Azizi.

Bolton Bhd executive director Chan Wing Kwong says generally, there is a preference to buy when the cycle is down and to sell at the peak of the cycle.

“What is a war chest? It is when you make available funds. So when the downturn comes, you buy. Inflation is always there. Unfortunately, it has picked up speed today. What is important is you need to see how the economy is going to reposition. It is a temporary market distortion.

“Anything that is able to hold its value is considered an hedge. Historically, in any country, properties are used as a tool to hedge against inflation. When a property is built, it tends to cost more than the previous one. The price of the old property will be pulled along. So when you build a new project, it is marked up. But there are factors like location, supply and demand. So keeping money in a bank will erode the value,” says Chan.

As for the type of properties, for those who can afford, the high-end ones in a good location are always a better hedge. The risk factor is much lower as high-end properties do not fluctuate much. Secondly, the high end always moves first.

Chan says the question to ask today is, while there may be demand, what is the price? “This is what we call the bottom feeders. They wait for the price to drop. The last two years, people were chasing prices and they bought thinking the price will go up further.

“There is a difference when you buy for your own needs and when you buy for investment. When it is a need, you decide on the location you want to live, based on supply and demand. When it is an investment, there are others issues to consider,” says Chan.

Standared Chartered GM for consumer lending Francis Loh says they have segmentised the mortgage market into four areas: first time buyers, upgraders, refinancers and investors.

“Irrespective of the economy, or interest rates increase, first time buyers will still have to buy. The upgraders may postpone or live with what they have,” says Loh.

He says generally, all four segments are still pretty active, with investors in the Klang Valley more so.

Outside the Klang Valley, Loh is seeing more first time buyers. The bank is also seeing more foreign buyers than before, particularly in the KLCC and Bangsar area. As for Mont’Kiara, there are a lot of upgrading going on there.

“We see a lot of developments in Batu Pahat, Malacca and Ipoh. We expect mortgage loans to be maintained in the second half of this year and will consider how things unfold before we look at 2009. As to what buyers look for, besides location being the paramount factor, security is also a major factor,” Loh says

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