What is the Best Area for Property Investment in Malaysia for 2018?

As news of the market softness and oversupply conditions (coupled with the recent interest rake hike) continue to loom over the Malaysian property market, investors are wondering what is the best area for property investment in Malaysia for 2018?

I can’t speak for the whole of Malaysia though, my expertise in areas lying outside of the capital is somewhat limited and I would not be in the know if places like Penang or Port Dickson or other such places outside of KL, are primed to experience superior growth over the coming years.

What I do know for certain is that a lot of new developments are being sold at future prices (as they always are) and that putting your money into anything close to Kuala Lumpur City center is worth your while – so long as the numbers make sense based on your property investment goals. Unfortunately, a lot of the time it’s hard to find anything in the Golden Triangle that has numbers that make sense.

But what if I told you that there was somewhere else, somewhere with huge upscale potential in the coming years, that also has exciting short term rental rates, with a good supply of tourists outside of KL that I’ve invested in?

Surely property like this exists only in our wildest fantasies?

Genting Highlands, makes fantasy become reality.

Genting Highlands Best Place for Property Investment in Malaysia for 2018
Source: http://www.gentinghighlandspahang.com/

The popular tourist destination that is most famous for its Casinos and cool 15o weather, has been undergoing a serious facelift these past few years. Along with it, the small township just below the resort and its numerous hotels – Gohtong Jaya, has been swarmed by the construction of a number of new residential developments.

Gohtong Jaya is normally a stop off for people who are heading up to the resort and casino for delicious local food which hasn’t undergone the ‘Genting’ price hike. Buying food in Genting is a lot like buying food at an airport, the cost of everything gets inflated and because you don’t have any other option, you’ve got to just deal with it. Gohtong provides you with a slightly cheaper alternative.

Stopping off here is both cost effective and a real treat. Just 15 minutes from the resort, there is some pretty amazing food here – from Bak Kut Teh to Fish Head Curry, you won’t be disappointed by the selection and quality.

Seeing the potential in the area, developers LBS Bina, OSK Property, Kerjaya Prospek and Pesat Bumi, have put millions of dollars into the area, creating amazing landmark condominiums for sale. Units are expected to be complete later in the year and and also in early 2019.

What is it exactly though, that the developers have noticed? Is there really so much demand in Genting?

I was wondering this too when I first heard about all the construction that was being done in the area. What was it that these billion dollar companies knew that I didn’t? The answer was actually right under my nose (or just above, depending on how you looked at it). All I had to do was look at what was in store for Genting’s future.

20th Century Fox World Theme Park

Genting Highlands closed their famous Genting Theme Park in 2014 for renovation for world’s very first, 20th Century Fox World Theme Park to take its place. The theme park will span over 10 acres and feature more than 25 thrill rides based on some of Fox’s most memorable franchises including, Alien, Planet of the Apes, Ice Age and Night at the Museum.

Basically, this is Fox’s ‘me too’ moment as they compete with the likes of Universal Studios and Disneyland in the Theme Park space. Being the first and only one of its kind (for the time being anyway, a 20th Century Fox World is also under construction in Dubai), does make it have significant advantages over its competitors and adds that much more allure to Genting.

If the fact that the area is home to a first of its kind theme park, doesn’t already make your eyes glitter at the potential of this place as an amazing location for short term rentals and quite possibly the best area for property investment in Malaysia in 2018, you’re in luck, cause I’ve many more juicy details that might just do the trick.

Sky Avenue & Sky Casino

sky avenue Genting best area for property investment in Malaysia for 2018
Source: http://www.kuala-lumpur.ws/magazine/sky-avenue-genting.htm

In addition to the facelift I mentioned earlier, the resort has done substantial renovation to a major portion of its infrastructure and built a new segment of more than a 100 retail outlets and restaurants. This new segment includes a brilliantly designed double story casino that’s significantly larger than the casinos in the old wing of the resort.

The beautifully constructed Sky Avenue mall is directly connected to the Sky Casino and will remind you that retail is not dead. Fancy somewhere to spend your freshly made winnings? Just exit the casino and there you are. For a new mall, the crowds here are like nothing that of what new malls in KL and PJ could ever hope for.

So, let’s see, what else do we have? A supersized theme park, a gigantic casino and a brand-new mall that’s practically attached to the new casino. Surely there can’t be more to Genting?

You bet there is.

Genting Highlands Premium Outlets Mall

genting premium outlet best area for property investment malaysia for 2018
Source: http://www.kuala-lumpur.ws/magazine/genting-highlands-premium-outlets.htm

As part of the upgrading works, Genting also revamped their cable car system, with the new base station being located at Gohtong Jaya (where all the developments are located), they have also moved the bus station here as well. To put it plainly, they’ve made it such that there’s a direct route you can take from this base point up to the main resort and casino area, either by cable car or by bus.

Located right beside this complex is a newly opened factory outlet store, circa 2017. The Genting Highlands Premium Outlets Mall features more than 150 stores of everyone’s favourite brands such Hugo Boss, Superdry, Ralph Lauren, Coach, Adidas, Nike and many others. The factory outlet stores major attraction is that they offer amazing exclusive discounts throughout the year, so people can get their branded goods cheaper than they would be able to at regular outlet stores in KL.

It’s not like another mall was really needed to spice up the whole area but sometimes (if you’re really lucky) you get more than you really need.

Yet, it keeps on getting better.

Zouk Nightclub & Arena of Stars

Zouk Genting The best area for property investment in Malaysira for 2018
Source: http://jetunnel.blogspot.sg/2015/08/new-zouk-club-kl-trec-is-now-number-1.html

Voted one of the best Nightclubs in the world by DJ Mag, Zouk plans to open its third outlet 6000 feet in the air in Genting Highlands later this year. The nightclub is extremely popular and has built itself a brand name that is synonymous with partying. The new venue is likely to see DJs from across the globe pay them a visit and play host to some of the best raves and parties in the coming years. This means, many, many, more tourists!

To top it all off, Genting makes sure that they are able to provide on the entertainment side themselves. In addition to the rest of their renovation works, they have also renovated their Arena of Stars, which now seats 5000 people and has its own schedule of events that include concerts, theatrical performances and musicals. The venue has welcomed the likes of performers such as Elton John, The Black Eyed Peas and even Taiwanese singer Jolin Tsai and Hong Kong celebrity Jacky Cheung.

Ok, so I’ve proved to you that the area is great for tourists and there’s lots of human traffic throughout the year. But does it really make it the best area for property investment in Malaysia for 2018? I can hear you asking me already though, what are the numbers like? Can I afford an investment property here?

Let’s go over what the developments in the area are. There are currently 4 new projects in the area, not counting the Ion Delemen project, which is located slightly further up from Gohtong. There are also a number of old condominiums at the location that haven’t been maintained very well and are located deeper into Gohtong away from the main area.

So, what new projects are there?

There’s Vista Residences, Midhills, Geo38 and Windmill. These 4 projects are what make up the developments currently available for my picks for the best area for property investment in Malaysia for 2018.

How do they differ?

I’ve prepared a handy table for your reference of what the offers were like. They also do differ in exact location with Vista Residences being closest to the main road and Midhills being the most far away. All the developments are within 5 minutes of each other though.

Do bear in mind that these offers may no longer stand but it’s what was pitched to us when we first went down to the show rooms and enquired middle of last year. Also, the cost per square feet will vary depending on the size of the unit and these figures are based off the corresponding unit size.

 

Project

Total Units Unit Size (sf) Psf Cost (RM)

Loan Repayments* (RM)

Vista

1134 1037 669

3126

Midhills

610 557 705

1769

Geo38

579 923 587

2441

Windmill

1108 362 1060

1729

*Loan repayments have been calculated at 4.4% for a 30-year tenure.
#Maintenance fees average at 0.33 psf.

Not sure what to make of the numbers? Let’s go through what we have column by column.

So, the first column is to give you an idea of the density of the project. It’s one of the things that’s important to know when buying a new investment property as it will give help you figure out how easy or difficult it will be to rent out your unit and sell (should you consider doing so) in the future. Exclusivity is always a great selling point.

The next column shows the size of the unit, followed by the cost per square feet. If you compare these numbers to what you would be paying for something around KL city center, (or even around outer KL itself) you’re looking at prices which are significantly lower.

Why am I comparing the area to KL hotspots? I feel that with the number of tourists passing through the area, it wouldn’t be a good comparison to look at some more fringing areas. Data from Genting showed that in 2015, they had more than 19.4 million visitors that year which is closer to the estimated 15 million tourists who came to KL that year.

19.4 Million Tourists

If you don’t believe the statistics, you should pay Genting a visit to see just how crazy it is up there. As soon as you enter the Casino, you know the stats don’t lie. There are people everywhere, all the time – even on an off-peak weekday.

Think about this for a moment though, that 19.4 million was after the old Genting Theme Park was closed and before all the recent additions in infrastructure that I’ve mentioned above. The 20th Century Fox World theme park is sure to push these numbers to all-time highs.

The same Genting report also stated that the four hilltop hotels – Genting Grand, Maxims, Resort Hotel and First World Hotel posted 90% overall occupancy rates throughout 2015. This implies that there were definitely periods where there would have been more tourists than there were actually rooms for.

So, there’s a need for rooms, and we know how much the property here costs. How much can a single room property nett us per night? Does the math make sense?

Since none of the developments are ready and it’s not really fair to look at the older more run-down condominiums and guest houses, comparing the rates to the Ion Delemen Hotel I mentioned earlier seems to be the fairest.

Single rooms at Ion Delemen fetch about RM300 per night off peak. So, conservatively I would say that you’d be able to rent out a room in any one of these Gohtong developments for RM250 a night. Looking at the estimated loan repayments, it’s easy to see that it shouldn’t be all that difficult to completely cover your loan repayments even with utility bills and maintenance fees and then make a decent profit on the top for your property investment. 50% occupancy would mean RM3750 per month. Talk about a great rental yield!

Of course, these aren’t hard figures and at the moment, there is no concrete way to tell for sure. I’ve walked you through my thought process though and I hope I’ve made a decent case for why I feel that Genting Highlands is the best area for property investment in Malaysia for 2018.

Realising the potential of the Gohtong Developments is as simple as putting two and two together. There’s going to be a demand for more rooms once the remainder of the attractions come online. (The numbers don’t lie) Once Zouk and 20th Century Fox World are up and running, the numbers of visitors is bound to skyrocket. I am speculating here, but I would argue that it’s informed speculation that is based on facts and numbers.

Reading over the article only makes me more excited to see what the future holds for the area and I look forward to making a blog post sometime next year with some hard facts and figures to let you all know exactly how well the area has performed and if indeed, Genting Highlands was quite possibly, the best area for property investment in Malaysia for 2018.

Edit: See additional info on the latest Genting Highlands project that was just launched in April 2018 and will be completed in 2022 – here.

Disclaimer: We have put our money where our mouth is and we have invested in two properties in the area. We own a one bedroom unit at Ion Delemen which is being managed by the developer at 7% GRR and another one bedroom unit at Midhills.

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