1. Leasehold vs Freehold
Homeowners generally prefer living in a neighbourhood with a freehold tenure rather than a leasehold. Ownership in freehold property remains intact with its titleholder with no time limit unless transferred legally to another party. A leasehold is a fixed asset with a maximum lease period of 99 years. Eventually, it has to be returned to the government, or the current owner needs to forego a fee to lease it further.
For those interested, the formula below highlights the premium on the land excluding the building situated on it. According to, Section 7 entitled ‘Premium’ of the Selangor Land Rules 2003,
Premium: 1/4 x 1/100 x Market Value of Land in Sqft x No. of Years to Renew x Land Area in Sqft
Example: For a 4000 sqft residential property in Damansara with 20 years remaining on lease, valued at RM150 per sq ft by the Authorities, the lease renewal fee will cost
1/4 x 1/100 x 150 x (99 - 20) x 4000 = RM 118,500
Property prices under the freehold tenure may differ from the leasehold, i.e. it could be higher or lower regardless but it is well known that freehold properties tend to perform better in terms of long-term capital appreciation due to substantial lease fee amounts.
READ: Looking for a Freehold 2-Storey Home in Klang? Check out Sime Darby's Bandar Bukit Raja?
2. Location
Image source: PropertyGuru Malaysia
There are multiple factors that deem a good location for some individuals. Let’s take a look at some below.
a) Distance from School, Workplace & Retailing Outlets
Generally, the closer they are to the housing areas, homeowners are expected to fork out more for the luxury. The availability of shopping centres and hypermarkets nearby definitely adds value to the premises. After all, shopping is one of the top family activities for us, Malaysians!
b) Security
With the current rising crime rates in Malaysia, any housing with added security becomes a necessity. Gate-guarded and fully landscaped neighbourhoods with perimeter walls, security personnel, and CCTV are desirable for safe-minded individuals. A premium can be inserted into the housing price if the community is fully secured.
c) Environmental qualities
The constant urbanization creates a shortage of green space views. Most individuals prefer the era with natural landscapes and views of green space. The opportunity cost of planting native tree species around the area is the amount that the developer could have received from the sale of more properties instead. This cost is reflected in the higher price of properties that have an acceptable threshold of environmental quality.
READ: The Future of Eco-Living in Malaysia
3. Accessibility
Image source: klia2.info
Getting from home to the city or around the city remains an issue for most Malaysians who are unable to afford private transport. They are obliged to take public transport such as trains and buses. Having LRT and MRT within a 20-minute walk from housing areas is convenient but to a certain extent. If located too close could result in congestion, noise, and petty crime. A 20-minute walk may appeal to be long for some of us; thus, it’s crucial that bus stops are close to the properties.
Highways are definitely one of the fastest ways to get to the city. Knowing that Malaysians will most likely locate the fastest route possible, housing areas with easy access to highways such as the LDP or Kesas are higher in demand and, therefore higher prices.
For those with cars, we all know how frustrating the task of hunting for car parks is. Countless litres of petrol are wasted searching for them. Ample car spaces make a particular area more attractive.
Other accessibility factors such as recreational facilities could drive up the property value. After a long day of studying and working, all we want to do is sit back and relax. What better way to do this than having a swimming pool, gym, and sauna, BBQ corner nearby? Obviously, this comes with a hefty price for the housing properties.
4. Future development
Image source: Edgeprop
High-end areas with appreciative development in the future are obviously valued more. One example includes the rezoning of land in Section 13 of Petaling Jaya from industrial use to commercial use. As a result of this shift, the value of this location spiked up.
The availability of land for expansion plays a part in property value. With vacant land in urban areas diminishing, for example in Klang Valley, and a general increase in population, land prices are rising.
Now you can secure a property that’s worth the investment
A general rule of thumb suggests a freehold property with a desirable location, efficient accessibility and ample space for development is consistent with the uprising price.
However, an average income could only fetch some of the factors above and so, compelled to prioritize. Here are some things to be aware of. Also, for those going in for the purchase, be sure to make use of our home loan comparison tool to get the best rates in the market!
*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.
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