Tuesday, May 24, 2011

Malaysia Property Market ROI by States in 2010

When you buy a property, the first thing that come to you mind will mostly likely to be “What is my potential return of investment (ROI)? However you know that no one can guarantee you the exact ROI. What you really can do is the study the past history or so called track record. What do you think of the property capital gain in Malaysia for all the states? Let’s see…

Malaysian State Average Transaction Value (RM) 2010 House Price Increase (%)
Kuala Lumpur 488,522 25.3
Putrajaya 310,625 -27.2
Pulau Pinang 265,078 17.1
Sabah 222,698 17.4
Labuan 204,852 -11.6
Johor 166,802 12.3
Sarawak 142,927 7.9
Pahang 127,159 8.4
Melaka 127,081 4.4
Kedah 122,772 -5.2
Negeri Sembilan 116,808 -2.4
Perlis 106,562 7.6
Perak 94,764 3.3
Kelantan 82,337 39.5
Terengganu 74,056 7.7
Source: NAPIC, 10MP, RAM Economics
This table concludes few things as in general:
  • The most expensive houses in Malaysia is at KL. Well, I thought is Penang but Penang is not even at the second price. So, can I say Penang property is still considered cheap as compared to KL and Putrajaya?
  • The cheapest houses in Malaysia is at Terengganu and followed by Kelantan. Well, this is not a surprise to me. Want cheap house? Go to Terengganu!
  • The highest ROI of property investment in Malaysia is at Kelantan! Wow, again my impression is either KL or Penang. Another Blogger (i.e. Kris) told me is Sabah which is kind of surprise to me too. It has the same capital gain (i.e. 17%) with Penang.
  • The lowest ROI of property investment in Malaysia is at Putrajaya! Who say property sure make money? Look at Putrajaya, Labuan, Kedah and Perlis. They have –ve ROI. I’m surprise that Kedah is –5.2% or perhaps I should said I”m sad to hear the news. Hopefully this doesn’t apply to my property in Kedah.

Discussion
Having said so, this data is only for 2010 and if you look at it for long term (e.g. 10 years), the property price should appreciate around 3% to 4% (based on my personal observation), not as much as you think and due to the compound interest you should see the capital gain is around 30% for 10 years or since year 2000. 
The property price went up crazy in the past 2 years (i.e 2009 and 2010) was due to the severe stock market crash of 2008 and therefore investors switched their focus to the property market (safest investment vehicle). 
So what is next? One high possibility is the property market may be stable down for the coming years as now the investors are switching back to stock market. What do you think?

10 Comments:

Alvin Lim said...

hahah, that's why it's funny when some investors are telling me that Putrajaya properties are good, bla bla bla. I told them to take a look....and look CAREFULLY....will anyone actually want to stay there?

There are. But not many. And the price definitely doesn't justify the demand.

Anyway, will be nice if we can find out about Klang Valley in particular.

ChampDog said...

Been to Putrajaya around 10 years ago, definitely I don't want to stay there. But now still the same?

Interesting, Klang Valley. It will be close to KL I think. The property in Klang is quite HOT also right...

Btw, the Penang data consists of the mainland and the island. Therefore the Penang island itself could appreciate higher than or at least close to KL.

Doable Finance said...

It seems real estate all over the world is down.

Michael Tsen said...

property is an element that will go along well with our future political movement, next 3-5 years will be ok for west malaysia while east malaysia will have a good 15-20 years to go.

price is almost not a factor if we are talking about the investment perspective. historical trend is fine but play a much less vital role here.

With the right strategy, even location location location not a factor also.

ChampDog said...

Wow, next 15-20 years for east Malaysia. What makes you so sure about it? Mind to share?

Why price is not a factor? Won't the price reflects to the buyers affordability which eventually reflects to the demands?

So, right strategy doesn't need to consider the location at all? or it is a plus? I thought the location is always the key factor. :D

ChampDog said...

@Doable Finance, Asia is still up, I think. :)

TCKhew said...

Wow, pretty hard to believe Kelantan's properties have the highest ROI, some more the 2nd cheapest in whole Malaysia. But I think most people prefer buying properties which are near to their staying places, I mean for investment purpose. As it is easier to manage the sales and purchase process. Even for rental purpose, it is still easier for us to check whether the tenant is taking care of our property.

ChampDog said...

Yes, agree with that. Buying houses near our staying place is always easier to manage. You will also know location well too (e.g understand the surrounding areas and etc.) :)

Anonymous said...

I think property market ROI by cities is more accurate.

ChampDog said...

City or States? I'm not sure about that but you might have a point.

In fact, KL,Putrajaya, and Labuan are considered as "Federal Territory". Technical speaking, it should be by states and federal territory. :)


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