The range of condominium options that Penang has to offer can easily bedazzle buyers and one could find buying a confusing process. Thus I have come up with the most complete top 10 tips that will outline what you should look out for when buying in Penang.
When considering a condominium, you should decide what is most important to you as either an investor looking for capital appreciation or rental yield or as a homeowner seeking a retirement or holiday home. Bare in mind that foreigners are permitted to acquire residential condominiums where the price exceed RM1,000,000 per unit, therefore it is important to choose a development in a good location that has the facilities and management to attract both foreign tenants and owners.
2. Act Early
The Early Bird catches the worm, so get in early and act quickly. As soon as a project is released it is best to move decisively in order to pick the unit(s) that best suit your requirements before others take them.
3. Buy Wisely
I hate to use a tired cliché, but location, location, location are still the three most important rules of real estate. Many people buy property for its future “potential” but if a location is good today, it will be even better tomorrow. Additionally, location is not just where the property is situated, but also its distance from the city center, nearest markets, malls, and schools. Being close to amenities save time, and this is one thing that money can’t buy.
4. Size matters
In Penang majority of the condominiums are built large and you will be able to find 3+ bedroom units ranging from 150 sqm to 400sqm, which are very popular among the locals. Smaller one and two bedroom units range from 70sqm to 200sqm and are very limited, but they are able to attract foreigner tenants and owners who are looking for the perfect holiday accommodation.
5. Avoid Oversupply
If your investment strategy is to achieve an attractive rental yield, I would advise that you consider the smaller one and two bedroom units where there is no oversupply in Penang. Location wise, long-term corporate tenants may demand easy access to the city center, while retirees and long-stay tourists would prefer a sea view and to be close to the local amenities and the beach.
Exteriors in disrepair can adversely affect property values and one of the biggest benefits to living in a condominium is that other people do the maintenance for you. They cut the grass and maintain the grounds, they fix the roof, and there are plenty of workers on hand to help. So check what the maintenance fees cover as some developments may be on a very low fee but are poorly maintained. Expect to pay between RM 0.35 – RM 0.50 per sqft per month for an adequately maintained building.
7. Unexpected Fees
Ensure that you check who is responsible for such things as state consent application fees, loan processing fees, legal fees and the stamp duty on title. If you are buying a new development, the developer would usually cover the state consent application fees – but this isn’t always the case and you could be faced with unexpected fees if you don’t read the contract properly.
8. Sinking Funds
Everyone needs savings and condominiums are no different. The sinking fund is a contingency fund held by the management office to pay for building upkeep and repair work that are not usually covered by the maintenance fees. In a new building, the sinking fund is very rarely used for the first few years, but in older buildings the owners could be asked to top up the fund from time to time as necessary.
9. Use a Lawyer
If you are purchasing a resale condominium, make sure you use a lawyer to read through the sales and purchase agreement and handle the transfer in your absence. I am surprised to hear that many buyers are told they don’t need a lawyer, particularly as they wouldn’t dream of purchasing a purchasing a property in their home country without one, so why should Malaysia be any different.
10. Use an Agent
Always use a reputable real estate agent to ensure you receive the best possible advice on buying. Whether you wish to rent or resell your property, it is wise to ensure you will receive a professional after sales service from someone you can trust. A professional agent will also make you aware of any developments or developers who are best to avoid and make safer recommendations of reputable developers for your to consider. Agents will provide the best possible information and resources, as they want to keep coming back each time you buy.
Those are the top 10 tips that you need to consider before marking a purchase or rent. As you may be unfamiliar with the geography of Penang, I hope the information that I have shared will go a long way in helping you make sensible choices.
As a parting comment, remember this: before you sign anything, visit the location, get to know the roads, check out the nearby amenities, schools, markets, malls, hospitals and then and only then do you decide.