Property is the equivalent of a long term investment, and we, as house owners should be interested in maximising our capital gains or rental yields. But what are the factors that affect these values?

1/ Tourist attractions

Theme parks, idyllic beaches and other nearby tourist points of interest create value for your property as you may convert it into a holiday home or for Airbnb purposes. A versatile home that fulfils multiple functions is also open to a wider market of buyers, making it easier for you to make a sale.

2/ Orientation

Malaysia is of a tropical climate, and the weather is comically described as a variation between hot and hotter. Hence, the orientation of your home is important to minimise your property’s exposure to direct sunlight. Opt for a house with a North-South orientation, which reduces heat while saving you the additional cost for cooling expenses.

3/ Topography

Pay close attention to the terrain and contours of the land surrounding your development.

Houses within a basin-like terrain, especially if it is below sea level, are prone to floods during the monsoon seasons as the ground serves as a water catchment area. Flooding may also happen during any time of the year if drainage systems are insufficient or defective. A good idea is to keep tabs on flood-prone areas and avoid those locations.

Some homes may be outside the flood zone but if the roads leading to and fro these premises are subjected to floods, then these homes might not be the best options.

Following the Highland Towers tragedy, buying property on steep slopes or below a hill should be undertaken with greater care. Buyers should ensure that developers building such properties have taken all the necessary precautions.

4/ Freehold or leasehold

With a freehold property, the owner has perpetual ownership on the land. In contrast, a leasehold property is subject to a 30, 60 or 99 years tenure, in which the ownership will revert to the state government upon expiry. 

When a leasehold property winds down to the critical period of its last ten years, it will be subjected to heavy discounts that may escalate to up to 55% or more. This is followed by a significant drop in value on every remaining year, down to the final expiry. Ideally, you will want to buy a freehold property. If your best choice is a leasehold property, then pay close attention to the remaining tenure.

These are merely some of the factors that affect the value of your property. For more, check out our guide Factors that affect the value of your property (part 2) for more information.