The current downturn in Malaysia property market provides good buying opportunities for property investors. Here are several strategies for property investors who are keen to invest in Penang Properties.
1) Determine your strategy
Before you venture into property investment, you should determine your purchasing strategy and evaluate whether it meets your income and growth expectations. For example, if you want a steady passive rental return, consider apartments and condominiums in areas close to major industrial parks, commercial centers, university, hospitals, where there is sure to be a constant supply of renters.
Conversely, if your investment strategy is to buy and hold a property so you can build equity for a capital gain, landed homes at Penang Island may offer steady capital growth and sustainability in the long term due to limited supply of land bank or escalating land cost for landed homes.
2) Avoid investment pitfalls
Like any other investments, property investment is often associated with risks and pitfalls that prudent investor would want to avoid. Learn more on 10 Most common mistakes made by first time investors.
3) Select the right location
According to the old real estate saying, “The only three things that matter in real estate are “location, location and location”. The property needs to be in a good location close to schools, shops, transportation centre and recreational facilities. The fact that a posh bungalow that is sitting next to a garbage dump has very low desirability factor and fetch poor value. Conversely, a sea-front condominium unit within the heart of the city or along the Gurney Drive promenade will have high desirability factor and therefore constantly attracting potential tenants and investors.
4) Buy property with positive equity
Buy property from motivated sellers, buy auction property at public auctions or buy bargain property that can bring you positive equity. Due to the imperfection of the property market, there are times when sellers are motivated or must sell at all costs urgently at below market price. In a slowdown market, property sellers are more realistic in their asking prices and receptive to offers by interested buyers.
5) Look for a catalyst
One sign that an area is up-and-coming and has potential to be a new vibrant growth center in the future is the development of new critical infrastructure projects such as construction of Second Penang Bridge and the expansion of Penang International Airport and other NCER projects which when completed, would spur more investments and developments to the Batu Maung/Bayan Baharu areas of Southern Penang Island as well as Batu Kawan of Southern mainland Penang. The completion of Jelutong Coastal Highway and Buterworth Outer Ring Road (BORR) have indeed transformed its corridor areas into new property hotspots with many new housing schemes mushrooming along these highways.
When you see new highways, roads, schools, hotels and major shopping centers being built, it’s a sign that the community is set for a vibrant growth.
6) Capitalise on tax relief / incentives provided by SSP
Residential purchasers can take advantage of the tax relief on interest paid on housing loans up to RM10,000 a year for 3 years between March 10, 2009, and Dec 31, 2010 under the recently announced Second Stimulus Package (SPP) Mini Budget 2009.
Whilst for business owners, it is a good time to renovate and refurbish your commercial premises as expenditure incurred on renovation and refurbishment between 10 March 2009 and 31 December 2010 will be given Accelerated Capital Allowance, which can be claimed within 2 years. The Allowance is capped at RM100,000.
There is also no capital gains tax when you dispose off your investment property as the Malaysian Government has abolished Real Property Gains Tax (RPGT) since 1/4/2007.
For more related articles on strategies in property investments, I like the following FREE web blogs of Milan Doshi and Bill Zheng, learn more :- Do properties Make the “Prefect” Investment? ; Part I and Part II By Milan Doshi and A straightforward guide to property investment strategies By Bill Zheng.
View of high rise buildings near Gurney Drive as seen from the playground of CRC.
For advisory on property investments in Penang and Kuala Lumpur, email to us at Izrin & Tan Properties Sdn. Bhd or call us at +604 6588333 (Penang Office) or +603 92839782 (Kuala Lumpur Office) and we would be pleased to assist.