Slowing down? Unlikely.

Hands up, how many say 2015 is going to be another slow year for property transaction numbers? I see a lot of hands there. Well, I think all of you are right. However, are we looking at a prolonged slowdown? Well, the prices that some of the embassies are selling their land indicates otherwise. The reason I say so is because there are not many developers who would like to buy a piece of land worth RM225 million and then do nothing to it for a few years. Please correct me if I am wrong. Even if internally generated funds, this is still bad because it meant that the developer would have less cash for other potential investments. If it’s through loans, then the longer the developer delays, the higher the interest that it will be paying for that loan of RM225 million, right? That piece of land that we are talking about is the land of the German government. Referring to an advertisement by Savills Rahim and Co, the expected total price for the two pieces of land would be RM225 million. Yes, ONLY the land. It is unlikely that the buildings would be maintained. It has to be flattened and a much higher density residential be built. I think it would be residential. Oh yeah, this is already higher than what was reported last year, the indicative price then was just RM200 million. WIthin one year, over 10% up. The piece of land is sited near the KLCC and you can walk to the KLCC LRT station as well as the Raja Chulan monorail station. Unfortunately, these kind of location are getting lesser, thus the premium will likely go higher.
Another comment from the president of the Malaysian Institue of Estate Agents (MIEA), Siva Shanker supported the notion of great location equals to  easy to sell properties. He said, “It doesn’t matter as the purchaser will be in it for the long term. It’s a big opportunity as you might not be able to buy an address like this again. Whoever is buying the properties is not a speculator that’s looking to flip it and make a profit in a few years.” Of course, please be reminded, when you buy in these kind of location you should also be prepared in case the market slows down and you need to wait a little before selling it. This is because even if you can afford to buy, the people who can afford to buy from you are not the mass market people that we are talking about. The market is likely to be smaller, thus higher premium due to exclusivity.
If you think the German government is reaping huge money, well, it was also reported that the French Embassy land in Jalan Ampang may be sold for an estimated RM700 million! Haha. Yes, it’s a bigger piece of land and the sale is by tender. The agency handling this would be CB Richard Ellis Malaysia. It is expected to be sold next year. I would love to know which developer is the final winner for this tender.
There’s little choice for these embassies. The profits they obtain would allow them to maintain the embassy for a very long time. Instead of employing lots of security guards, they can rely more on the security provided in a higher end purpose-built, high-rise office buildings as well as better facilities too. In fact for an embassy building by itself, it is likely that the number of security guards must be many times higher because intruders can come in from many different directions. Moving would save them money, headaches as well as having access to much better environment as these office buildings are likely to be nearer to malls too. Oh yeah, they do not even need to employ gardeners too. Let’s see what’s the plans are like for these lands. Of yeah, if you are thinking of a RM1 million unit, well I think it’s going to be tough. 🙂
written on 25 Dec 2014 (Yes, I am writing this on Christmas Day)
Next suggested article: Property Prices, Prime Locations, Embassy Land Sale


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