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20181109 What property will be most affected during a downturn? Part 4

20181109 (Fri)

What property will be most affected when there is a downturn? Part 4.

Type of (use) of property. Most people who made wrong investment decision and suffer loss because of wrong type of property.

Do NOT simply buy the below property:

Retail space in mall

4 storey Shop house

Land

These properties are for the seasoned investors, they are not for newbies. Please do NOT listen to the salesperson telling you that it is hottest investment of all times. There is no such thing as hottest investment and it is still waiting for you. Hottest investment won’t wait for you. It should have been sold out! Those waiting for you are no more ‘hot’. So, forget about it!

Retail space in a mall is the worst of all the 3 above. You pay through your nose for it. Moreover, it is a little space of 200 square feet. Some bigger ones can be used for big retail stores – like those 20,000 square feet, may be some branded outlet might be interested. Nevertheless, It cannot be used for all businesses. You cannot use it for car repair, restaurant (no water source), or even as a small warehouse. What would most people use it for? Selling souvenir item, hand phone, jewelry, and toys. How much could these items profit to sustain your rental? In fact, people are going online to buy all these items now. This is tough business model to sustain your rental.

4 storey tall shop lot has better usage compared to retail space in a mall. However, only the ground floor has commercial value. Upstairs are really most left unused. Some businesses will utilize the higher floors as offices and storeroom. Nothing else.

Prime land is the best among all the above. It might be costly to buy but the value comes with the potential profit it could generate if developed one day. Comparing to a shop or a retail space, prime land has long term appreciation. Though, it has no rental value compared to shop or retail space. And, it does NOT have the issue of maintenance so if you have long term plan, like keeping for your kids it might be worth the investment.

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