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.
â€œDevelopments and construction do not make money. Thatâ€™s a fact. Itâ€™s only when you start selling (your property) that you start making moneyâ€, said Colin Tan, Aseanâ€™s renowned real estate analyst.
Delivering his paper, â€œReal Estate Investment: Secrets That Guarantees Successâ€, at SHAREDAâ€™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 Colinâ€™s 5 secrets to success:
1. Timing, timing, timing
â€¢ 1976 â€“ 1997: Singapore was still a developing country. In an emerging state, you can buy anytime and chances are your investment will appreciate.
â€¢ In a mature market, you have to watch what you buy. A mature market tends to go on a seesaw ride and plateau.
â€¢ When thereâ€™s a little sign of â€œrecoveryâ€, thatâ€™s when you should consider buying â€“ this is applicable on a global, national and regional level.
2. Prices will NOT always go up
â€¢ Advancement in construction methods makes developments cheaper
â€¢ Land is not that scarce
â€¢ Most peopleâ€™s real income doesn't grow that fast to push prices
â€¢ 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
â€¢ Government penalises those who goes against and reward those who go along in terms of cooling measures, legislation etc.
â€¢ They are the single most powerful entity in any country. They can make things happen.
â€¢ They are also mostly the single most wealthy entity in most countries.
4. Invest in beauty
â€¢ A unit with a nice view with pretty architecture is important â€“ it changes the price of the property
â€¢ Beautiful properties will generate more demand
5. Worst case scenario
â€¢ Can we service the loan if one of us loses our job in a few months?
â€¢ Can we service the loan if the unit is not rented out for a few months?
â€¢ Will we be forced to sell at the wrong time?
â€¢ Be careful of excessive rebates â€“ greater risk of loan clawback