Why are hotspots HOT? (and how to buy into a future one)
If we are currently a young working professional in the KL city centre (office bound job) and we like to buy a place we can call our own, it will usually be a smaller sized home which we could afford and it should be nearby the LRT or MRT. In fact we will most probably only join companies which has access to a LRT / MRT station. As soon as we get married and planning for kids or even have babies, the needs change. Usually, when we want to buy a bigger home or even upgrading from a high-rise to a landed and we ask our friends about the areas they would love to buy in, their answers are usually similar; buying into hotspots. Anyway, as long as these hotspots are still affordable, that’s best. Let’s understand why the answer are usually hotspots. Usually, it will be due to these few reasons.
1. Availability of amenities.
These hotspots are usually self-contained townships. Once you are home, you have everything nearby your home. From banks to clinics to supermarkets and even F&B places, these mature neighbourhoods would usually have everything everyone needs. For families with kids, primary and secondary schools or even international schools would be a necessity.
Moving beyond these family necessities, petrol stations, recreational parks and even medical centres would all complement one another and this will make the area a hotspot. Due to all these convenience availabilities, many are willing to pay more for the homes located within these mature neighbourhoods. However, the prices have now grown to a level which is prohibitive to the majority, even senior managers! This is the reason why newer integrated developments are usually further away from the city centre so that it’s more affordable. With the availability of land space, it will have the potential and flexibility to build all the amenities which are available in mature neighbourhoods of today. Here’s one example 70km away from the KL city centre; Bandar Sri Sendayan.
2. Connectivity for drivers or commuters.
Developers are touting the distance of their projects from the nearest LRT / MRT stations. This is a very important point especially for the young working professionals of today. They may not even need to own a car if they stay near the LRT station and their office is near the LRT station too. However, this does not apply to everyone, especially those with a family. A very good example would be my wife, my two kids and I. Every morning, my wife sends them to the nursery. She told me that driving is not just more convenient but definitely safer than walking to the nearest station with the two kids and later walking to the nursery from the station with the two kids. What happens during rainy season? As for me, I do take the MRT once every 2 weeks but that’s applicable only if I have no appointments. Else, it will not be easy to keep scheduling the meetings only at places with public transport. Perhaps integrated developments which is a short drive away from a major expressway will be a better choice when it comes to liveability vs affordability.
3. Potential for continuous capital appreciation.
Usually, when we buy a blue-chip counter in Bursa Malaysia, the price is already at or near the peak. The reason is because it’s already a famous and hot stock and everyone wants to have a piece of it. However, the world famous stock investor Warren Buffett would tell us, “Price is what you pay. Value is what you get.” He wants us to understand the business before we buy because if we buy a stock which is fundamentally sound at a lower price, the value in the future would be greater than the price we pay.
Property investment is the same. Everyone knows that the hotspots of today were not hotspots long time ago. That was why the prices then were much lower than today. Over the years however, as all the amenities were added, connectivity were enhanced the area would soon become a hotspot. The question we should always ask before we buy a property is this. “Will the area I am buying get even better in the near future. What are the developer’s plans for the area for the next 5-10 years.” If the answer is a positive one and the price is still affordable, I think we may have found a hidden gem. This maybe one which will offer a continuous price appreciation as the years go by. By the way, property prices should not be like a rocket, else the whole market will crash soon after. Happy investing.
Perhaps a look at a cool project in Kuala Lumpur?