Buying real estate is about more than just finding a place to call home. Investing in real estate has become increasingly popular over the last few years and has become a common investment vehicle.
"Developments and construction do not make money. That's a fact. It's only when you start selling (your property) that you start making moneyâ€, said Colin Tan, Asean's renowned real estate analyst.
Delivering his paper, "Real Estate Investment: Secrets That Guarantees Successâ€, at SHAREDA's PropEX 2017, Colin commented that a smart developer would study on the consumer needs and see the demand before planning to build something that suits the community. Here are Colin's 5 secrets to success:
1. Timing, timing, timing - 1976 - 1997: Singapore was still a developing country. In an emerging state, you can buy anytime and chances are your investment will appreciate. - In a mature market, you have to watch what you buy. A mature market tends to go on a seesaw ride and plateau. - When there's a little sign of "recoveryâ€, that's when you should consider buying - this is applicable on a global, national and regional level.
2. Prices will NOT always go up - Advancement in construction methods makes developments cheaper - Land is not that scarce - Most people's real income doesn't grow that fast to push prices - Malaysia national price index remained cheap despite overcoming the crisis 2008, despite the subprime and Lehman crisis. Malaysia property market is matured.
3. Invest with governments - Government penalises those who goes against and reward those who go along in terms of cooling measures, legislation etc. - They are the single most powerful entity in any country. They can make things happen. - They are also mostly the single most wealthy entity in most countries.
4. Invest in beauty - A unit with a nice view with pretty architecture is important - it changes the price of the property - Beautiful properties will generate more demand
5. Worst case scenario - Can we service the loan if one of us loses our job in a few months? - Can we service the loan if the unit is not rented out for a few months? - Will we be forced to sell at the wrong time? - Be careful of excessive rebates - greater risk of loan clawback