IF I have a time machine, I would want to go 20 years back and purchase a house either in Subang Jaya, Damansara, Puchong or Taman Tun Dr Ismail. Why? Because the prices of houses there have appreciated so much today. For terraced houses, the prices can exceed RM1 million.
If I have a crystal ball for forecasting, I want to know which are the good locations to buy a house of which the price will appreciate by more than twofold within the next five to ten years. But, I don’t have a crystal ball. If it can be purchased, it is better to get the crystal ball and sell it at a really expensive price so that I can become a millionaire quickly!
However, without a time machine or a crystal ball, we are still able to predict which areas will be the next Subang Jaya, Damansara or Puchong in the future. This is by identifying the property catalysts which already exist in a certain area.
There are a few indicators which we can use as a foundation to evaluate whether the price of property in a particular location will appreciate in the future.
This is the most important basic indicator for our prediction. Transportation network consists of the routes of expressways, light rapid transit (LRT) and mass rapid transit (MRT). Why is it important? A good transportation network enables us to commute daily to work. Definitely we would prefer buying or renting a house which are close to the expressways, LRT and MRT as it will shorten our time to reach our destinations and at the same time reduce our cost of living.
However, don’t be easily fascinated by advertisements promoting residential properties that are said to be near to those facilities. Examine first how “near” they could be. Go for a site visit. If the house is just next to the expressway, LRT or MRT, then that is really near. But that is not what we are suppose to find. We want a house which is close to the toll plaza to get into the expressway or near an MRT or LRT station. That defines the real meaning of “near to transportation network”.
The emergence of a new industry in an area will impact the price increase of surrounding houses. It will also bring in workers to support the industry and increase the population in that area. If you get news that Factory A will be offering 4,000 job opportunities, it should be treated as an opportunity. When it is operational, 4,000 people will be working there. This also means that there will be 4,000 families or individuals who will be requiring houses which they will either buy or rent. When the demand for houses increases, so does the rental and selling price.
Some of industries which can give a big impact on house prices are factories, oil and gas, information technology, aviation and finance. When we hear news of an aviation company that will purchase 100 new planes, this means it would also add more pilots, cabin crews and management staff. This would translate to more demand for housing. Hence, the area surrounding an airport is an attractive prospect for property investors.
When a new university opens in a specific area, the property market will also be alive. Let’s say, a university will take in 20,000 students when it officially opens, and hire hundreds of lecturers and support staffs who will all need houses. This will spur the demand for houses in that area. Besides universities, international schools and Chinese schools will also be a catalyst to the house prices.
Logically, locals with strong financial background and expatriates will send their kids to study there; turning the area into an elite and prestigious one. Only the well-to-do ones will live there and definitely the price of houses would be on the high side. This is why some developers are willing to build chinese schools in their project to enhance the value of the whole development.
To sum it all up, these are some property catalysts that you should be looking at if you plan to buy a house. Make sure you examine first if such catalytic developments exist in the area that you are considering, or they are in the planning stage. My advice is don’t buy a house if the area you are looking at will offer only one of these catalysts. What if this one catalyst that you are relying on does not materialise due to unforeseen circumstances? You would probably be keeping the house for the next 30 years as you are unable to sell it for a profit.
Aziz Ahmad is the founder of Hartanahguru.com