kingoflostfools

I wouldn't worry about it. I've been renting in Penang since I got my MM2H in 2011 and I've never had a problem with it.

If looked at from a pure economic perspective renting is far and away the better option, but the reason people buy, especially in retirement is to ensure security.

I can completely understand that justification, but you have to realise that you are paying a premium to buy which does not exist in rental situations.

SushiFan

King, I agree with your view and will continue to rent.

bakedbean

Yes, but you cannot take it with you.

kingoflostfools

True bakedbean, but money that I don't spend elsewhere can be allocated to drunken debauchery and naughtiness, which is my personal preference.

JC3

I think from an economic perspective the “Is it better to rent or buy?” question is a difficult one.

Something to think about if you have the cash available to buy a property, is what annual return you could get on your cash by investing it elsewhere.

For example, if you had bought a detached home in Penang in Q1 2011, five years later in Q4 2015 it was worth 83% more, a gain of about 13% a year. Of course one has to factor in buying and selling costs and RPGT/CGT (5% on the capital gains made, if you sell after five years).

On the flip side, if you were a cash property buyer you would have also saved yourself from shelling out rental payments every month for five years.

In my view it’s not very easy to get a 13% annual return from stocks and shares without taking substantial risk.

See some malaysia-house-price-index figures here:
http://britishexpats.com/forum/malay...2015-a-878806/

Other concerns with buying include winning or losing on the exchange rate, a property crash, and very importantly – can you sell the property again when you want to?

JC3

Davita

I could never afford to buy any property until I left the RAF and worked abroad...so FWIW.....

Since then I've only bought places to live-in and not intended for speculation ... yet all those properties have made substantial gains when sold (2 in Hong Kong; 3 in Vancouver; 1 in Arizona; 1 in London).
Currently we reside between an apartment in Jakarta and villa in Bali and both have increased in value considerably...but not sold.

I've also invested in stock markets, and now mutual funds, and none of those investments, which were planned to make money, have been as good earners as the un-intended properties have been.

Please don't ask me about the yachts I've failed to make any money when selling...I get a red-face....
However I did sell a Mercedes 350SL, after 10 years, for more than I paid.

NeonHippy

To quote an old adage, 'Past performance is no guarantee of future performance'

Anyone lucky enough to have bought into Penang 5-10 years ago will have made a pretty profit by getting in at the start of the property boom. I don't regard this as any kind of indicator that it would be a sensible thing to do today. Looking at one of the property websites a few days ago suggested that property prices in Penang have been slowly declining over the last 12 months. I do think the property boom is over for Penang with each new development trying to out luxury the previous development, last year's super properties will become less desirable and their value should fall.

Like Davita I have made some spectacular gains from various properties that I have lived in but now in my sixties the aim is to enjoy some of those gains rather than pass them on to family. So the need to own a growing asset seems less relevant than when I was in my twenties.

I've just checked the funds that I invested in 5 years ago and my gain is around 55%. Maybe not as good as JC3's house but my profit is easily realisable tomorrow without becoming homeless. For retirees in Malaysia I find it hard to justify property purchase in today's climate.

JC3

I agree with NeonHippy - 'Past performance is no guarantee of future performance' and property prices in Penang have definitely slowed considerably over the last year or two. As a result developers are slowing down new builds, and the launch of existing projects nearing completion.

It’s perhaps also worth noting that there’s something like a 13 year oversupply of apartments and condos in Penang (i.e. it would take 13 years to sell all those available for sale at the present rate of transactions).

Is the property boom over on Penang Island? Who knows?

In my view:

• Development land is in increasingly short supply, with any empty land along the coast between Gurney Drive and Batu Ferringhi (and now Teluk Bahang) being built on or snapped up by developers for their landbanks.
• The planned new highways and public transport masterplan will have a huge impact making some parts of the island much more attractive to potential buyers.
• Penang is a unique place in Malaysia. It’s somewhere that many Malaysians dream of retiring to.
• Landed property is generally a better long term bet than condos – however buying landed property is more expensive now for foreigners.

Since February 1, 2014 the thresholds (for foreigners) are:
MYR 1 million for all types of property in Penang State (Or RM500,000 for foreigners with MM2H)
MYR 2 million for landed property on Penang Island (Or RM500,000 for foreigners with MM2H)

More views, facts, and figures on the Penang Property Market here:

Penang - A Sustainable Property Market

Penang property market immediate outlook challenging, says Knight Frank Malaysia | Penang Property Talk

Henry Butcher Penang Property Market Research Report 2016 (13 pages)
http://www.henrybutcherpenang.com/up.../HB%202016.pdf

JC3

Davita

Whilst agreeing with neonhippy's theme of 'when do you stop thinking investing and retire happily' and is an objective that I now pursue...I'm 80 next birthday and still find that concept difficult and always looking for the next good investment...it's a Scottish thing!!!

I love the idea of at least having one property to call your own but agree that investing in property in 'foreign lands' does have risk. A devalue of assets can be recovered when one is younger, and employed, but more difficult in senior years.

Therefore, having a diverse portfolio is the key to a good sleep...and a decent stock of wine...

bakedbean

Only on paper!! The property market is not exactly buoyant at the moment.

I have flip-flopped, u-turned, on whether to rent or whether to stay in my bought condo, and current thinking is to continue staying in my bought condo unit** Why? It's mine. It's a bit of security. Nobody to kick me out.

I've heard of a couple of friends recently who are having to move from their rented flats. The owners wish to put the flats on the market (though I could tell them that the property market is not good).

What I am saying is.... what if you are in your 80s and renting. Do you want to be still moving around every few years? Maybe a few health problems. I know...being so cheerful keeps me going

(** unless I change my mind again)

Oh...and another thing I have noticed amongst friends is that those who advocate renting usually have a little bought bolthole somewhere in the world to "go back" to. A bit of security somewhere else.

JC3

Yup. Therein lies the rub.

I’ve met several retired expats in Penang who sold up in the UK and have been here a few years, who now lament that they could no longer afford to buy the home they sold in England if they moved back. Some feel stuck here, and it seems that very few British expats intend to live in Malaysia until death. This is partly because they’ll probably need the NHS in old age, and private health insurance gets very expensive in your seventies and eighties.

With average house prices in England increasing by about 28% over the last five years (i.e. about 5% a year) it’s easy to see how house prices can run away from you.

Once off the UK property ladder for a few years, inflation and increasing house prices can make it almost impossible to get back on again without downsizing. If you brought your capital to Malaysia and were also unlucky with exchange rates going against you, then that 28% house price increase could easily double.

These days, £11,321 buys just one square metre of a home in Chelsea. Gulp!

JC3


UK house price data here:
UK House Price Index

IanBlakeley

We’ve been toying back and forth buy/rent for some time now, erring towards renting, rental is fairly low in comparison to cost to buy. Finally looks like we’re be moving to Penang in a couple of months the thinking currently is to rent out the houses in the UK where yield is higher, typically 4 – 4.5% in the south and use that money to rent a condo (location TBC) with the difference letting us live until such time as pensions et al kick in. Not sure what we’ll be willing to pay but looks like somewhere around RM3K should get somewhere. Not that falling pound is helping the calculations.

With the buying rules now if we were to look for property to buy I’d be concerned about possible falling prices and Condos don’t always age well so it would have to be landed and with me on the deeds that’s RM2Million not the sort of loose change I have without selling in the UK.

bakedbean

Sounds like a sensible plan to me. Do your homework re rentals then ask,on here. In Penang there are a LOT of empty units. So bargain hard.

montakute

Do real estate agents in Penang typically work showing rental units every day of the week? I'm used to real estate agents showing places on weekends in North America but I'm wondering if perhaps it's the norm in Penang that agents don't typically show properties on Friday/Saturday/Sunday.

NeonHippy

True there are a lot of empty units around at the moment but not all of these are available for rent. It is (to my mind at least) a crazy view of the Chinese that it is OK to buy property purely to sit on for the capital growth.

I know of three terraced houses in a row that are at Straights Quay that have never been connected to the services. I also recently looked around a quite old development on Pearl Hill and was shown a unit that the owner had bought as a shell and where the wiring was hanging out of the walls because he had never even bothered to fit wall sockets or light switches!

Bargaining hard depends much upon your expectations and what you are prepared to accept. There is an awful lot of tat around at the moment and yes you can bargain hard for these if you are prepared to accept them. But every now and then a gem pops up. Not everyone reads this forum and if you bargain too hard you could loose that gem. This happened to me only last week. We had been bargaining for a beautiful landed property for a couple of weeks when we got a call from the agent stating an American had viewed the property and agreed to pay full price with no wish list there and then.