Where are the property hot spots?

Is it too late to put money in the local property market? No, according to Ho Chin Soon Research Sdn Bhd director Ho Chin Soon.

"You can buy properties as the market is stable. This I am confident about," he says.

"The years 2005 and 2006 were good times to buy properties. However, it does not mean it is too late. There are those who say Malaysian property prices have been rising, but if you consider the inflation rate and other economic factors... the market is actually stable," shares Ho, one of the speakers at The Edge Investment Forum on Real Estate 2007.

Ho: The Klang Valley will remain the No.1 growth region in the country for many more years to come

In his presentation entitled Property Hot Spots: IDR, NCER and Klang Valley, Ho says the good times would last another two to three years. "I do not mean that the recession is set to hit in 2010; it is just that if the cycle repeats itself, it may happen then. Knowing the right timing is important. The new real estate mantra is location, timing and branding. What is the use of the right location (hot spot), if the timing is wrong?"

Hot spots
Ho says while there are certain spots that are "hotter" than others, all spots are interlinked with a trickle-down effect. "The Klang Valley will remain the No 1 growth region in the country for many more years to come. The growth in Klang Valley is in line with global urbanisation trends," he offers.

The Klang Valley, or the Kuala Lumpur Conurbation, still has a lot of potential, says Ho. He adds that it is a young city with some five million to 5.5 million people and an impressive growth rate of 4.8% per annum.

"The Klang Valley's locational centre of gravity is Petaling Jaya New Town Centre and the prime spots are the Golden Triangle and Mont'Kiara. If you are looking at buying landed houses, try and focus within the first tier of 15km from PJ New Town. You can settle for the second tier, but locations further than that are not advisable."

Mega cities
The rise of China alone has increased global competition and this, together with the emergence of India and Vietnam, makes the market tougher. "Look at what is happening in the world today. The strong urban shift has given rise to mega cities and the fight for mobile citizens has started. Our government sees the need to attract more foreign direct investment and new growth centres, such as Iskandar Development Region (IDR) and Northern Corridor Economic Region (NCER), are ways to attract investors."

Ho ranks Penang as the No 2 growth area after the Klang Valley. "The question now is, can Johor overtake Penang in 10 to 15 years? The population growth in Penang is weak and IDR's strong. However, it is the reverse when it comes to the house price index: Penang is strong while IDR weak." (See chart.)

He sees the IDR as a test bed for a radical shift in economic policies. It has the potential to experience strong growth if two major hurdles — civil service delivery and political objections — are dealt with.

On the NCER, Ho laments the fragmentation of the land holdings. Breaking them up into parcels of 5 and 10 acres makes it very difficult to plan real estate projects. The NCER has a lot of untapped potential tourism spots and with Penang as its centre, it appears promising. When the second bridge and monorail come up, they will not only increase accessibility, but also spur real estate development.

Branding
If now is still a good time to buy, what will happen when projects are completed only in two or three years?

Citing his mantra of location, timing and branding, Ho says those who don't know much about location and timing, can opt to buy from a "branded" developer. There is always a risk when it comes to property investment. For peace of mind, it is always safer to stick to known developers, he adds.

Since 1989, Ho has carved a niche by supplying land-use maps containing information on land usage and ownership. His maps cover areas such as the Klang Valley, Penang, South Johor, Ipoh, Kuantan, Melaka and Seremban.

Ho is a fellow of the Institution of Surveyors and a member of the Board of Valuers, Appraisers and Estate Agents Malaysia.

By The EDGE MALAYSIA