I wrote this article in the end of 2009. Amazingly, it still rings true and I find that people still need to read it. So here it is, revived from the depths of thinkproperty.my:
“Can you see the Petronas twin towers from here?”
The look of disappointment comes on the faces when the agent shakes their head in negation. That question is not really asked by an eager prospect expat tenant, it’s asked by eager Malaysian investors who have it in the back of their heads that this is the view that people want.
They were not exactly wrong, the view fetched a premium. But this was engraved in the property constitution of Malaysia: The twin towers were the gravitational center where neighborhoods orbited, the tip of the real estate price fountain from which the square foot decreases in value as the distance from KLCC site increases. Market was centered around it, and Dubai style prices started emerging walking distance from it.
2008 brought a wake up call, and rents before prices headed south. Winds of change came to the fair tropical city, and the market went through a painful act of growing up. Realization came that there is sweet life elsewhere on the Malaysian property map than KLCC. Business was living it up around the Curve and Tropicana, Desa Park City was selling out, and projects as far as outside of Shah Alam were no longer second fiddle.
Moreover, these projects were actually coming out nicely, quality-wise as well as amenities. But the lesson of KLCC was still in the air, and the same effect that almost hit Mont Kiara, became instinctive with investors: buying strictly because other people are buying, is a bad idea.
People started thinking:
– Is this unit affordable by most people I imagine?
– Are there enough customers for my type of property that would like to own in this location, in this condition and at this price?
– Are the amenities in the area good enough and serves the purpose of the demographic of my renters?
Such questions brought around purchases, purchases that were smarter. And the flow of investment started bringing the prices up again, appropriately not as centric to the KLCC as before. It went back to its basics, where investors are trying to satisfy needs to make the buck, not think what option makes the quickest buck.
That was one of the most important distinguishing factors of the successful traders and investors I worked with througout my life. They rarely ever thought “what is selling a lot? Let’s buy that, it’s obviously in demand”. No, they mostly thought “what is in demand that people needed? Let’s provide that”.
A subtle difference, but a crucial one, and a property investor already provides something that people need: a home. It needs however to be a good home that caters to all the attached desires, and if you can imagine it and understand it, then you can provide it. If you buy property in an area because this is the way you believe others are doing it and everybody must be right, you will have no vision, no coherent plan, and will end up with a property that will make sense to few people.
The market spoke, and the participants followed. KLCC vicinity is nice and convenient, but is not everything in KL, there are a lot more beauty and gratification and convenience and amenities in other neighborhoods and in other urban areas.Where there are needs and desires, there should be providers.