Malaysia Property Market ROI by States in 2010

When you buy a property, the first thing that come to you mind will mostly likely to be “What is my potential return of investment (ROI)? However you know that no one can guarantee you the exact ROI. What you really can do is the study the past history or so called track record. What do you think of the property capital gain in Malaysia for all the states? Let’s see…

Malaysian State	Average Transaction Value (RM)	2010 House Price Increase (%)
Kuala Lumpur	488,522	25.3
Putrajaya	310,625	-27.2
Pulau Pinang	265,078	17.1
Sabah	222,698	17.4
Labuan	204,852	-11.6
Johor	166,802	12.3
Sarawak	142,927	7.9
Pahang	127,159	8.4
Melaka	127,081	4.4
Kedah	122,772	-5.2
Negeri Sembilan	116,808	-2.4
Perlis	106,562	7.6
Perak	94,764	3.3
Kelantan	82,337	39.5
Terengganu	74,056	7.7

Source: NAPIC, 10MP, RAM Economics

This table concludes few things as in general:

• The most expensive houses in Malaysia is at KL. Well, I thought is Penang but Penang is not even at the second price. So, can I say Penang property is still considered cheap as compared to KL and Putrajaya?

• The cheapest houses in Malaysia is at Terengganu and followed by Kelantan. Well, this is not a surprise to me. Want cheap house? Go to Terengganu!

• The highest ROI of property investment in Malaysia is at Kelantan! Wow, again my impression is either KL or Penang. Another Blogger (i.e. Kris) told me is Sabah which is kind of surprise to me too. It has the same capital gain (i.e. 17%) with Penang.

• The lowest ROI of property investment in Malaysia is at Putrajaya! Who say property sure make money? Look at Putrajaya, Labuan, Kedah and Perlis. They have –ve ROI. I’m surprise that Kedah is –5.2% or perhaps I should said I”m sad to hear the news. Hopefully this doesn’t apply to my property in Kedah.

Discussion

Having said so, this data is only for 2010 and if you look at it for long term (e.g. 10 years), the property price should appreciate around 3% to 4% (based on my personal observation), not as much as you think and due to the compound interest you should see the capital gain is around 30% for 10 years or since year 2000. 

The property price went up crazy in the past 2 years (i.e 2009 and 2010) was due to the severe stock market crash of 2008 and therefore investors switched their focus to the property market (safest investment vehicle). 

So what is next? One high possibility is the property market may be stable down for the coming years as now the investors are switching back to stock market. What do you think?