Property in Malaysia for sale and rent | Buy, Rent and sell real estate and homes

Different investment tool will have different risk of return, eg. stock, property, securities, fix deposit, gold, trust fund.. etc.
Property is one of the item that place under low risk investment item. I personally feel that not all the property are riskless in return. How to smartly invest in property? how to calculate risk of property? what is the factor influence the risk and value of property? Area? type of property? quality of property? or size of land occupied?

Gavin

Why do you say that people say property is a low risk investment? I think it really depends on why type of property you invest in and the way you invest.

Property is a hugely varied asset class and I do not think it is fair to say it is generally a high risk investment, or a low risk investment.

Buy a house in a prime part of KL, and it's generally quite low risk. Buy some speculative development and it's high risk.

But if you take out 100% financing on your house in a prime part of KL and it can be a high risk investment. Buy a piece of commercial land without any financing and it might be a relatively low risk investment.

Answering your questions:
Generally residential property is less risky than commercial property as people always need a place a live. Generally prime areas are less risky than less prime areas as the demand from prime areas is often deeper especially relative to the amount of supply there is. If you want to know how to measure risk, read about something called volatility.

I hope this helps.

Hi,
Ya, I state that property is a low risk investment cause when it compare with others investment method in market like equity, trust fund those high risk high return and short term investment item. I think property is low risk because of the appreciation of land value. In term of accounting book value, we will depreciate the value of property year by year, but it only applicable to the building build on top of the land. In fact the land will only appreciate.
Let see another assumption.
10 ac of land developed a luxury residential building. Unfortunately, the demand is low due to location or some others issues. Then the investor who had purchased those properties are said lost in this investment item. Instead of declare as lost, I prefer to name it as lower return or slower return. Because those properties still have it value although is not as high as the investor expectation, and the land value will still appreciate year by year. The investor will not totally lost his money. In other hand, the investor possible lost all his money if he bought equity share and then the company bankrupt.
So, the risk in property investment can said is compare among property quality. Some property bring high return, some are not.

Thanks for your feedback, I got 3 important point from your reply and i hope i get it rightly. First, you mention about the source of financial. If totally self sponsor then the risk of getting into financial problem will be omited. Second, you compare between residential and commercial property. \"people always need a place for living\", but not everyone need a office. So the risk and return of invest in commercial property can say is higher than residential. Thirdly, you mentioned that prime area and less prime area. This can explan why KL property's value always higher than kedah.

I am interesting about the volatility u mentioned. izzit a method of measuring risk? I'll find out more regard this. Thanks for sharing!

If you want to minimize risk, try investing in completed properties. Investing in new projects face the risk of project being abandon by the developer due to running of out money.

Gavin

I agree, it's land, in developing countries, that one should focus on. But the price of land generally fluctuates more than the price of buildings. So, in terms of risk, it's not that obvious that land is the safer choice.

Volatility is the standard deviation of the change in value of an investment with a specific time horizon. It is often used to quantify the risk of the investment over that time period. It's not frequently used for real estate - more for equities and shares which are more liquid (so it's easier to track how the prices change with time).

Asim

there is another main factor that will affect your property value - change of planning by the local goverment.

Today you are still enjoying the green park in front of your house, tomorrow you will be surprised to hear that the green park has been approved for converting to wet market.

As for commercial proeprty, today your shop is visible and accessible from the front road, tomorrow you will be shocked when u hear that the goverment has approved to build a flyover in front of your shop.