3 Property Investment Myths Debunked (Finally)
Some real estate agents like to dispense advice to their property investor clients in the form of pithy adages that appear to have the ring of truth. Like these perennial chestnuts below that are regularly trotted out by some property pundits in the media. IMO these widely held beliefs about property investment are simply not true at all.
“High End Freehold Luxury Condos around KLCC are good hedges against inflation”.
My better half's father and uncle bought a freehold bungalow in Lorong Kemaris, Bangsar each in the 1970s for RM77,000. Now I think they're worth at least RM2.3 million each. Wowza!
But some freehold 5* KLCC condominiums within 100 metres of the iconic Petronas Twin Towers have appreciated by barely 70-80% from 2000 to 2022, compared to more than 100% for all KL properties. Yes that's right, the THEN most expensive $$$ Luxury Condos in KLCC when launched in 1999-2000 (3 Kia Peng and Kirana Residence) have over a 20 year period, acty UNDERPERFORMED the wider KL property market indices. In fact the 2022 CMVs of many 5* luxury condos are below their INFLATION adjusted launch prices 9 -20 years ago. You might want to Google the auction property prices of K Residence, Ampersand, Ritz Carlton, 3 Kia Peng etc or maybe ask your real estate agent.
See here : https://360kiranaresidence.com/klcc-property-news/home-truths1
“You make your money when you buy, not when you sell.”
Not true if you happen to be a foreign buyer of a high end $$$ KL property in a country with a strong currency relative to the Ringgit. That's because over a 20 year period (2000-2021) the Ringgit has underperformed relative to currencies like the AUD, HKD, USD, Sterlingand SGD. Will the Ringgit underperform these currencies in the future? Who knows?
For more details, read my 360 KLCC blog post: https://360kiranaresidence.com/klcc-property-news/marketing-kl-high-end-properties
“Prices of freehold KL properties in the Golden Triangle cannot possibly fall by 50% or more because land supply in core KL is limited.”
Really? I remember one particular property expert, when asked why property prices will not plunge 50% or more, giving the immortal phrase, “land cannot give birth to land” in reply. Indeed true, if a some what inelegant expression.
But in 2007 yours truly paid RM200 PSF for a fully furnished FREEHOLD 1500sf 3 bedroom apartment in the heart of KL - the Golden Triangle- at less than 50% of the purchase price paid by the previous owner, a property investment company. Another even more savvy property buyer I know very well paid even less than RM200 PSF for his two penthouses. For more details how yours truly bought a freehold Golden Triangle property at “half price” , please check out my post to my 360 KLCC blog here: https://360kiranaresidence.com/klcc-property-news/fc0ztl226t8vmf1y5tejbodx4j155k
Disclaimer and notes
I am not a registered investment advisor in Malaysia. If you wish to buy an investment property in Malaysia, you should consult a BOVEA registered real estate agent or valuer.
Property prices can go down as well up. Yours truly used to market unit trusts for a bank in Red Dot Island in another life. 30 years ago all unit trust marketing advertising in Red Dot Island had to include this phrase, “ Unit trust prices can go down as well as up” .
Picture credit:Aqqib Maula, Unsplash
