Lock, Stock & Barrel: What happens as trends change

2017-10-02

I was chilling out over a drink with my friends Nixon Paul and Kayte Teh on a Friday evening. As in the norm when three property practitioners get together, the conversation drifted to the property market.

Kayte and Nixon are practising estate agents. They are partners in a successful real estate agency. Being on the ground every single day, talking to agents, buyers and sellers, they have a pretty good grasp of the state of the market.

A question Nixon threw at me which got me thinking. Trends are changing quickly.

The younger generation seems to prefer investing in condominiums and serviced apartments as opposed to landed properties.

They seem to prefer the more modern style of these new developments. The older generation, of course, leans towards landed properties.

As trends continue to change and the pool of young buyers continues to grow while, at the same time, the older-generation buyers continue to decrease, what would happen to older properties?

Many of these landed properties, built in the early seventies, eighties and nineties, are beginning to show ages. The style, look and feel are no longer the trend. Many of them would need major refurbishment to make them look modern again. And even then, they may never look as modern as the newer properties. You may refurbish your own house, but the rest of the houses on your row could still look old and aged.

For now, these properties, although old, are still able to command a premium.

This is simply because of a supply and demand situation. As long as demand continues, they will be able to achieve premium prices. But if the demand changes, what will happen?

Being a thought-provoking question, all three of us were in different minds.

My opinion is that landed properties will always be able to command a premium because the demand for such properties will never vane.

Every property investor will be forced to face such questions at some point in their life. An investment they make today may not be fashionable in the future. So how do you future-proof your investment?

There really is no way you can do this unless you have a crystal ball and can peek into the future. There are simply too many unknowns in the equation to make even an educated guess.

So what can investors do? Do your research thoroughly. Talk to real estate professionals. Study the market for some time before you make your investment decision. This will enable you to get a good feel of the market. With enough research, you will be able to gather as many facts as possible, to aid you in making the best investment decision.

Even after you have made a decision and invested in a property of your choice, continue to chart the progress of the market.

In time, you will learn to understand the ups and downs of the property market.

This will assist you in making future decisions.

Happy hunting and may the force be with you.

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