When is best to buy into townships?

Living in a mature neighbourhood has its advantages. It has everything you need within minutes from where you stay.

A housewife could send the kids to school, drop her husband off at work and be back home in under 30 minutes.

The neighbourhood likely has nurseries, primary schools and even a secondary school. How convenient is that?

In the evenings, that same housewife could take the kids to the playground nearby for some recreation time.

For some of these neighbourhoods with public parks, the older folks could go for a stroll there. Or sit on a park bench and enjoy some fresh air, or read the newspaper.

For the average Malaysian, there’s only a small hiccup in the lifestyle described above – property prices.

If you are looking at a typical piece of landed property, it would definitely cost over RM1 million today and since the property is not new, you would have to spend more on major renovations too including electrical wiring and piping.

Or you could choose a high-rise instead at a more affordable price. However, this depends on whether you are fine with a smaller sized place because typical prices would be between RM800–RM1,000 per sq ft for condos in mature neighbourhoods today.

A good example? Bangsar South, which is only 8km away from Kuala Lumpur city centre or Desa ParkCity which is 20km away.

An emerging choice these days for many Malaysian families would be new townships.

Think a little further in terms of distance where the property price remains a huge advantage – sometimes as much as half or more when compared to mature neighbourhoods.

For example, a new home could start from RM600,000 versus RM1 million for a secondary home in a mature neighbourhood today.

For these townships, landed homes are still the norm. High-rise units will usually be built many years into the township’s development; when all the big pieces of land within the township are fully developed and also when the prices for the landed properties are climbing.

Amenities will also be added to the township in time – more nurseries, more schools, more banks, more eateries and many more places to chill with a slice of cake and a cup of coffee. As many say, the more cafes in a neighbourhood, the more expensive the area is likely to be.

What happens to a township is that starting prices for homes are usually low enough to attract buyers.

Remember the prices of Desa ParkCity’s landed homes when it first started? Yes, they were definitely within the “affordable” category and it was said that there were even unsold units when the keys were handed over to buyers.

Fast forward to today and any unit below market price will usually be snapped up, fast.

Should you buy into new townships then? Perhaps some better questions would be the following:

1) Does it fulfil minimum requirements for a home; connectivity, amenities etc?

2) Do you prefer closer and smaller, or further but bigger? It would be the same price anyway.

3) Are you prepared to change your lifestyle a little during workdays? The further away you are, the earlier you will have to leave for work.

4) Would your loved ones enjoy the many things which come with a township, from parks to lots of trees and sometimes a 5-star standard club house?

5) Are you aiming at good capital appreciation by starting lower? (quite certain by looking at the prices of many townships from its beginning to what it is today).

This article first appeared in kopiandproperty.com

Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.