Quote:
Originally Posted by Unregistered
Hi Mr Zhang
Just a word of caution before you plough your hard earn money into investing into Msia esp since theres a lot of media hype being play up on Iskandar Development etc.
Before you even talk about buying a property anywhere in the world. Always always ask yourself what do you intend to buy a property for? Investing eg Flipping, Renting out or for Retiring or Staying?
If you cannot even answer the above question, my advise is take that money and put it elsewhere. Let me share with you some tips on investing (if thats your intention) in Msia esp in Iskandar/Nusajaya:
1) Govt regulations ->
Very fickle, can change every election year today say RM500k restriction on foreign ownership of property, tomorrow is RM 1million. My question to you is DO YOU know the implications for this?
If you had bought at RM500k to satisfy the RM500k restriction which may be a good deal for you, think again, how much do you need to sell it now? RM 1million (if sudden change in ruling) now how many investors will be willing to pay RM 1 million for a second house when they can get a new one at RM 1 million at an even better location with better view.
FYI, the Thomson line to be extended into Johor is still in planning stages. Plans can and will change depending on the mood of the Msia govt.
2) Tenant ->
Forget about renting to local. Why do I say so? Take a look around Iskandar/Nusajaya, besides manufacturing, education hubs, hospitals, theme parks etc are they any big financial institutions or MNC around? If no, next think about the kind of tenants you going to get. Do you think they can pay that kind of sky high rent with their meagre salary?
Oh you may say I can rent to expats then, think again, if you had that in mind, 100 others will also have that in mind, do you think you can get the kind of rental yield you want?
3) Land size
Do you know how big Msia is or even Johor? Now where is the property value when anywhere (as long as govt regulations are met) can be build and promise by developer that this piece of land will be the next paradise. FYI, our dear sinkie govt will not help you in the event your property value tank coz its not their business eg think CLOB in 1998.
Here are 3 tips for you to consider if you are investing, I have more but I am too tired to mention all of them. I am just using Johor as an example. But you may say I am talking about KL, but I can tell you its sama sama even for Penang coz its all under Malaysia.
If you are planning to stay or retire there, it will be a totally different story. Why am I mentioning all these? Reason I dont want to see another so called "investor" lose his shirt or pants again esp after the 1998 Asia Financial Crisis.
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You raise valid points - not in the most modest or polite manner, but valid points nonetheless.
I think the key point to go in with your eyes open. Know what the investment thesis is, know how much you are willing to risk, and know the potential downside.
If you go into malaysia, and then get surprised that there is no rental, well, you haven't done your homework. Or for that matter, get surprised the
MRT is not built, or that the government change their policies. Those are known risks - and I venture, risks that have been priced in, to a degree.
My investment thesis is clear. Its an
MRT bet. Size wise, the bet is intended to give me potentially healthy upside if I'm right, without hurting me too badly if I'm completely wrong.
Downside analysis then.
1. Capital Value Losses - Look, its S$50k downpayment at RM350 psf, right next to City Square / CIQ. Even if housing prices crash, I think the guy that bought Paragon Suites next door at RM900 psf is going get hit before I get hit, so capital value wise I should be ok.
2. SGD Appreciation - My nett exposure is S$50k. Rest of it is hedged via a RM loan.
3. Rental risk - Worst case I do not get rental for 6 yrs while waiting for the
MRT bet. Including maintenance of RM400 per month, its S$1k per month, so max S$72k. Not a small amount, but won't affect my lifestyle in the slightest. And this is the biggest risk, but I think it can be mitigated if I accept reduced rental.
Potential upside ? If
MRT materialises, and surrounding condos increase to RM1.2k psf to 1.5k psf, then I think RM700 psf is not a massive stretch. And if the SGD depreciates to the long term average of 2.2:1 (against 2.5:1 now), and if I manage to lock in rental, then my S$50k becomes S$300k.
Very limited downside, potentially meaningful upside.
Why not Singapore, you then ask. Well, I'd like to due to familiarity, safety etc. But I think at the current time, the potential downside is definitely more than the potential upside. And also, because the sums are so large, one mistake is definitely going to have the potential to materially affect my lifestyle.
But to each his own. I've done my calculations, and am happy with my investment thesis, warts, risks and all.