10/10/2023
Investing in Real Estate - Residential
By : Mohd Shafirul REN58152
10 Oct 2023
Are you looking for ways to grow your wealth through real estate investment in Malaysia? If so, you are not alone. Real estate is one of the most popular and profitable investment options in the country, especially in the post-pandemic era.
However, investing in real estate is not as easy as it sounds. It requires careful planning, research and ex*****on. You need to know the market trends, the legal aspects, the financing options and the risks involved.
In this post, I want to share with you some of the best real estate investment strategies and tips for 2023, based on various sources and reports. This post would be focusing more on residential since my last posting focused more on commercial property.
According to PropertyGuru Malaysia1, the residential property market outlook for 2023 is positive, as the country recovers from the pandemic and enters the endemic phase. The market is driven by:
The increase in asking prices: This reflects the confidence and optimism of sellers and developers, as well as the demand and supply dynamics of the market. Asking prices are expected to increase by 5% to 10% in 2023, depending on the location, type and quality of the property.
The relaxation of standard operating procedures: This allows more activities and transactions to take place in the property sector, such as site visits, viewings, launches and sales. This also encourages more buyers and investors to enter the market, as well as more foreign buyers who can benefit from the Malaysia My Second Home (MM2H) programme.
The government initiatives and incentives: This includes the Home Ownership Campaign (HOC), which offers stamp duty exemptions, discounts and rebates for eligible buyers; the Rent-to-Own (RTO) scheme, which allows low-income earners to rent a property with an option to buy it later; and the Real Property Gains Tax (RPGT) exemption, which waives the tax for disposals of up to three properties per individual until 31 December 2023.
According to New Straits Times2, some of the trends and tips for the residential property market in 2023 are:
The focus on landed properties: These properties are preferred by buyers and investors who value space, privacy and security. Landed properties also offer higher capital appreciation and rental yield than high-rise properties. However, they are also more expensive and scarce, especially in prime locations.
The demand for affordable apartments: These properties are suitable for buyers and investors who have a limited budget or who want to diversify their portfolio. Affordable apartments are usually priced around or under RM 500,000 and are located in popular areas with good amenities and connectivity. However, they also face competition from other similar projects and may have lower quality or maintenance standards.
The niche for small units or high-end projects: These properties cater to specific segments of the market, such as young professionals, singles, couples or expatriates. Small units are usually sized below 500 sq ft and offer convenience and functionality at a lower price point. High-end projects are usually located in prime areas and offer luxury features and facilities at a premium price point. However, both types of properties may have lower occupancy or resale rates than other types of properties.
According to Knight Frank3, some of the challenges for residential real estate investors in 2023 are:
The rising interest rates: This refers to the increase in the cost of borrowing money from banks or other lenders. Rising interest rates can affect the affordability and feasibility of residential real estate investments by increasing mortgage payments and reducing cash flow.
The oversupply situation: This refers to the excess of available properties compared to the demand from buyers or tenants. Oversupply situation can affect the valuation and attractiveness of residential real estate investments by lowering property prices and rental rates.
The market uncertainty: This refers to the unpredictability of future events that may affect the demand and supply of residential real estate assets. Market uncertainty can affect the decision-making and confidence of residential real estate investors by creating volatility and risk.
Based on these trends, some of the best residential investment strategies for 2023 are:
Buy-and-hold: This strategy involves buying a property and holding it for a long period of time, usually more than five years. This allows you to benefit from capital appreciation, rental income and tax advantages. This strategy is suitable for investors who have a long-term vision, a stable income and a low risk appetite.
Flip: This strategy involves buying a property at a low price, renovating or upgrading it and selling it at a higher price within a short period of time, usually less than a year. This allows you to generate quick profits from market inefficiencies, distressed sales or value-added improvements. This strategy is suitable for investors who have a short-term goal, a high cash flow and a high risk tolerance.
Rent-to-own: This strategy involves renting a property from a seller with an option to buy it at a predetermined price within a specified period of time, usually three to five years. This allows you to lock in the purchase price, build equity through rental payments and enjoy tax benefits. This strategy is suitable for investors who have a medium-term plan, a moderate income and a moderate risk appetite.
These are some of the best residential real estate investment strategies and tips for 2023 in Malaysia. I hope you found them useful and informative.
If you have any questions or comments, please feel free to share them below. I would love to hear from you.
Thank you for reading and happy investing! 😊
Mohd Shafirul REN58152
0122062307
