PROPERTY investors will always tell you to buy properties that are located in a hotspot, and many of them will tell you that the best properties are always located in the Golden Triangle. In Kuala Lumpur, the Golden Triangle refers to the areas between Kuala Lumpur, Petaling Jaya and Bangsar. Click here to find out how Budget 2017 will affect the market and first-time homebuyers.
But properties in these areas are extremely pricey - and they are not the only areas which the properties have a great capital appreciation. So how do you define a property hotspot?
1. The psychological Golden Triangle
Unknown to many, the Golden Triangle can refer to more than one thing. According to a study done by a professional, a Golden Triangle (to a person) refers to the distance that they are comfortable travelling from home to reach everything else - for live, work and play. The distance studies revealed that people are usually willing to travel only 5 kilometres from home for everything else before they start feeling uncomfortable.
This is a phenomenon that not many are aware of, hence you will always hear of some people who think that Rawang is the most central of areas to live in, or perhaps that Cyberjaya is close to everything they need.
So if you are aiming to buy a property for investment, you will need to ensure that within a 5-kilometre radius from the development are a multitude of offices, entertainment spots and lifestyle centres to cater to the people of the area.
But does this mean that any mixed development will make for an ideal investment hotspot? Not necessarily.
2. Check out the population
Integrated mixed developments are all the new hype, as are new townships that promise a wholesome lifestyle of green parks, international schools as well as commercial centres in the vicinity. But the density of population in the area plays a big factor in whether the development will be a ‘hot’ one or not.
For example, if you build a township in a random spot in Rawang where there is no demand for housing, then it is highly likely that the demand for properties in that area will almost be non-existent at all.
However, if you build a similar mixed development in an area where the population is already bursting at its seams, then it is highly likely that the development will be sold out within months. Click here to find out about Best Areas for First Time Homebuyers in KL.
The logic behind this is simple demand and supply. If you build properties in unpopulated areas, then you will likely need to wait a long time for the demand of properties to reach your area.
There are however exceptions to this case such as in Mont Kiara. The area is in the middle of the city with great connectivity and great tenants. Hence, it is the assumption of many that Mont Kiara is a great place for property investment. But is it really so?
There are some who say that the area is overdeveloped with too many developments and not enough tenants. In order to have a good idea of whether this is true, just drive through Mont Kiara at night and notice just how many lights are lit in the windows of the high rises and how many are not. This is a good way of gauging the density of population in the area.
3. Ride on the research of big boys
An easy way to find a property hotspot is to follow the big boys as they have impeccable R&D teams. Anytime you hear rumours that an Aeon supermarket is going to be built in an area, property investors will immediately begin searching for viable properties in the area.
This is because an Aeon supermarket will only be built in an area after an extensive research is performed to ensure that there is sufficient population amongst other criteria in the area to patron the supermarket.
Other franchises that property investors follow are McDonald’s - as their biggest asset is not their Big Macs but their locations. If examined, you will notice that every single McDonald’s is located in a thriving area, and the branch is only built after extensive research on the population demographics.
4. The unexpected catalyst
Other ways to find a property hotspot is to find a catalyst. Some examples of an unexpected catalyst include industrial areas and universities - establishments that when they begin operating will require massive numbers of homes for their workers, tenants or students. Most often the public will not hear any news of its development, and only regulars of the area will know that something is up in the wind when the area is boarded up and construction begins.
A good example of this is the Taylor’s Lakeside University. Before the university was built, the area was a vast cul-de-sac with no prospects for capital appreciation. However, as soon as development on the university began with no news published anywhere of what it would be, property investors immediately began doing their research. And those who found out shortly after made handsome profits from their investments in the area when the property prices increased in value almost a hundred-fold immediately after completion of the Taylor’s Lakeside University.
A small room at D’Senza the residential high rise located beside the university can now be rented out for RM2,500 per month - and tenants are never in short supply.
So if you are a small time property investor starting out, do not be daunted by those telling you that you have to invest in the heart of Kuala Lumpur to get the best returns. This is not true at all, and even a low-cost apartment can get you handsome profits if you do your due diligence.
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