This acticles contributed by selfmade deca-millionaire, CEO of listed company and currently venture into property development in KK. His meja project comprising mix development expected to be launched soon. Let us learn from the best..
The relativity of long term, medium term and short term- depending on the trade you are in, this has different meanings in actual time. For the commodity speculator, long term could be a week and short term could be a few hours! But for most of us, long term could mean around 5 years, medium term would be around 1-3 years and short term would be less than 6 months. For most retail investors in property, the above criteria would hold true. But the big money is made by people who can think even generations ahead! I realized that one reason why the Chinese as a race become relatively wealthy, no matter where in the world they are, is due to their willingness to think, act and invest in relatively longer terms than most other races. Chinese parents invest their resources not just for themselves or their children but also for their grandchildren AND great grandchildren! The implications of this trait which has become a habit, are quite revealing because it influences how they invest. Many Chinese families who started as small holders, tapping rubber, cultivating palm oil, cocoa, pepper etc have now amassed huge acreages of land which have become very valuable as development in the towns and cities reach their boundaries. Bangsar, Damansara, Kenny Hills, Ampang, Petaling Jaya, Subang were once plantation land. The ability to finance land banking through cash flow generated from agriculture is probably one of the savviest and safest ways to invest! Many of the big plantation companies in modern day context have built up extremely valuable land banks and are poised to reap the benefits from both an agricultural commodity boom as well as land development boom. Companies like IOI, Asiatic Development, KL Kepong, Guthries, Boustead, Sime Darby are some examples. Many years ago, the CEO of a multinational palm oil company remarked to me “We have been in the palm oil business in a big way for over 100 years yet the sale of this 1 estate eclipses all the accumulative profits we made from palm oil operations since we began!”- that estate was in Damansara!
Land is the first property that I ever accumulated in my portfolio. I always believe that land has no market value and its worth to buy as long as its reasonably priced. Land prices continue to go up in general and it has been proven that wealth main booster is vacant land. Looking backwards when I started accumulating vacant land in Kudat (year 2005), the prices are ranging from RM4K – RM12 per acres @ RM0.10-RM0.30 per square feet which is very cheap. Comparing to current transacted prices which is ranging from RM25k-RM35K per acre @ RM0.60-RM0.80 per square feet. On average market value has up by 600% over my invested cost. Imaging if you own 30 acres @ RM 150K / RM5 per acres..now easily worth RM 750K! Yes capital appreciation of RM600K within 5 years. As long as I dont sell, I believe the value will gradually maintain and going up consistently with current inflation rate. So far I haven’t found a very good reason why I should let go the land for fast profit. I might keep all my land under my portfolio for my next generation. At current lifestyle, spending habits and attitudes of acquiring new asset, I believe whatever I have is more than enough for myself. These I’m more into building asset for my next generation.
Time will proof how well your investment strategy works over time. There is no magic in this games. You only need some capital, time and guts to built your wealth!! Remember waiting is the cost for those who keep waiting for the right prices. Profit will be rewarded for those who already own the land and the longer they wait the higher the profit will be. These buy and wait is still proven the best strategy!!
As mention above by my close friend, even big listed corporation entire 100 years profit also can’t even match the profit of selling of one of their estate!! Happy Investing.
You cannot Grow Land..CK Wong & MY DAD