Property Investment Slowing, Land Buying Increasing

What do you do when the stock market is down? According to many stock gurus, when people are fearful you should be courageous and buy. When people are way too bullish about the stock market, you should be fearful. Come on, if everyone whom you meet from the morning market until supper time is talking about the stock market, are you sure it is not over speculated? What about when property market is slowing down? In The Sun online today (7 April), AM Research said that many developers are buying up lands or also known as landbanking activities.
Many of them (developers) are expecting the residential demand to continue moving up once the effects from the RPGT moves wear of. Thus, all these transactions are still continuous because any listed company with a huge landbank is seen highly compared to one without much. The buying of these new lands are also at a higher price which gives confidence that the market is expected to continue moving up. A few examples were quoted, such as Mah Sing’s acquisition of a Shah Alam land worth RM327.4 million and another large private developer’s land in Canal City from Tropicana worth RM470.7 million.
Personally, I feel that no developer in the right frame of mind would want to spend close to RM800 million and hold the land for a few years. It will be developed soon enough. In fact, slow times would be the best time to negotiate for a better deal because both parties would be on a more equal status compared to when market was booming and every seller is CRAZY. Besides that, when market slows down, it gives every every developer some time to rethink their launching, is it over-priced? Should they sell a different product instead? Don’t you feel that the new launches in 2014 are much more reasonably priced? In Penang, there are developers who once proudly declared that their projects are awesome and amazing has started to advertise more. It’s not so much that the buyers have all disappeared. It’s more like, I better think carefully which project is better instead of just closing my eyes and buy whatever everyone says buy.
For buyers with cash, I think you are really KING for now. Exercise your financial powers wisely yeah.
written on 7 April 2014
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