There are two types of growth for every property, which can be categorised into:-
How do we get direct growth and indirect growth if we buy from developers in Malaysia? First we have to understand:-
1. Direct growth is earned by buying with rebates offered from the day you buy it, you get immediate equity once you sell it. It is considered the hidden paper gain value.
2. Indirect growth is earned by buying something and doing nothing in a transition period to the future. It is automatic through the market sentiment and increases in property value when the area is growing and getting more demand.
So, how to look for growth properties?
● Transition Zone
● Pond Effect
● Fundamental Analysis
● Adverse Market Perception
● Media Attention
● Emerging Economies
● Prime Location
● Rise In Renovations and New Construction
● Phase One of New Development with Big Budget
○ Transition Zone happens when development of new projects make an area become matured, convenient and popular. This in turn makes the surrounding properties increase in prices tremendously.
○ Pond Effect creates price ripple effects to the surrounding properties. In short, the more expensive houses pull the prices of cheaper houses up – also because of the price lag.
○ Fundamental Analysis, it can be as simple as the increase of population because of the nearby MNC for job opportunities and leisure area for shopping. This indirectly increases the demand for houses for rental, sale and a place to spend the money at. Increase in demand translates to an increase in property prices.
○ Adverse Market Perception, it happens because of a negative mindset. Most people are pessimists during the market downturn and are biased against certain residential areas. For example, during the market downturn most people will abstain from purchasing properties but investors will still buy anyhow. Thus, the prices will still increase in the end.
○ Media Attention, it can be good or bad but most news in the papers and government initiatives are always reliable for the direction of a city’s future. It is free awareness and marketing by the media to get hints of future development in an area.
○ Emerging Economies in a well-planned and self-sustaining township by government. If it is an ecosystem complete with Education, Leisure, Business and Medical then it will be a good area to analyse and focus. Because, what do all expensive cities have in common? All those four items.
○ Prime Location like water, views and proximity to amenities always sell first. Have you ever noticed, most luxury properties are located near the sea? That the most expensive properties are also located near shopping malls?
○ Rise in Renovation and New Construction when you see there is a vast development in an area and mostly under construction. You have to analyse the area as it might be the next township which you might overlook or become a ghost town. You can just ride the wave of the development capital appreciation if it fulfils every criteria of a complete township. People are afraid when they can’t see or touch, but what if you can see and touch it? It is already an expensive and matured area.
○ Phase One of New Township Development, this is the easiest to recognise. You just have to have a piece of phase one of the township project. The keyword here is Phase One, as later phases will bring the prices up when it is launched. I believe you wouldn’t ever buy in phase 6 or last phase of the development for investment? Early stage purchasers have already made their money.
○ Big Budget if you happen to buy from a developer with a big budget. Then you are basically riding on the back of their budget as they will force the market and effort in the process. You do not need market your house as the developer will market it for you. That is why some investors only buy from well known developers.