Should you invest in high-end condos?

INVESTING your money in property is said to be one of the safest forms of investments. However, like any form of investment, one can always choose to either "play it safe" and get low, stable returns; or "up the ante, take on high risks and get equally satisfactory gains."

Investing in high-end condominiums is considered one sure-fire way to make great returns. However, given its risk appetite, it might not be suitable for everyone.

"It's a very niche form of investment and ideally for the super rich or those with good spending power," notes Standard Financial Planner Sdn Bhd's Jeremy Tan.

A good investment?

According to Malaysian Institute of Estate Agents (MIEA) president Nixon Paul, a high-end apartment is more than just about premium pricing.

"It's more than just about the interior. The criteria for a high-end condominium is defined based on its location, the finishes, managements fees and amenities that comes with it. And of course, there is a premium placed on all of these," he says.

MIEA deputy president Siva Shanker believes that investing in high-end condominiums is a great form of investment - if you have the money.

"High-end condominiums are good investments but they're not for everyone as they're very expensive!"

Still, investing in high-end condominiums is still a very popular investment option for many. According to Siva, take up for Bandar Raya Developments Bhd's (BRDB) upcoming luxury condominium project, Serai, has been quite overwhelming in just a few short months.

"There has been very low-key marketing done and by the time the advertisements came out, there were a lot of bookings," he says, adding that over 50% of the units have already been snapped up.

Located at Bukit Bandaraya, Kuala Lumpur, Serai comprises 121 condo units located in two 21-storey towers. Sold at between RM1,300 and RM1,500 per sq ft, the units range from 4,025 to 6,913 sq ft. There will also be two penthouses of 14,000 sq ft, priced between RM19mil and RM22mil.

Serai sits on six acres, the last piece of prime real estate in the Bukit Bandaraya area. Serai will have a gross development value of about RM900mil. According to reports, a majority of the buyers were Malaysians.

"The reason take-up for Serai has been so popular is because the location where the property is being built is one of the last large parcels of land available in the area, and people don't want to lose out."

Siva also points out that a selling point was the fact that the project's developer, BRDB, had a good track record.

He also cites BRDB's One Menerung high-end condominium development, which was priced at around RM600 per sq ft half a decade ago, but is now hovering at the RM1,200 per sq ft level.

"In five short years or less, you would have doubled your money! That's a 20% increase on returns per year, which is fantastic!"

Should you invest?

MyFP Services Sdn Bhd managing director Robert Foo says a person who wants to invest in high-end condominiums should first evaluate his wealth position before "taking the plunge".

"A potential investor should first consider if the investment will take up a big part of his investment. If it's too much, then it might not be a wise thing to do."

Age is also something to consider, says Foo, who feels that investing in high-end condominiums should be for older investors with a stable income base.

"If you're only 25 years old, then you shouldn't be investing in this, unless you have rich parents," he enthuses.

Foo adds that one should definitely conduct thorough research if they want to invest in high-end condominiums.

"If the market turns on you and you can't sell later, then you're in trouble!"

Nixon says those looking to gain returns on high-end apartments should take a long-term view on it and not hope to make quick gains overnight.

"It's a good investment but you should only do it for the long-haul - perhaps have a five-year view on it."

Demographic shift

Siva, however, points out that the increasing level of affluence has seen more Malaysians buying into high-end condominiums - not to invest, but to occupy.

"It's a trend that is shifting. In the past, you had Malaysians buying low-rise properties but today many are buying condominiums, especially high-end ones, in light of the fact that we are becoming more westernised and affluent."

He also notes that many expatriates in the past that used to live in high-end condominiums in the city are now living in the suburbs.

"This is to accommodate the international schools that are now being set up in the outskirts of the city," he says.