What Is Leasehold
In Malaysia, there are 2 types of properties, namely leasehold and freehold. Leasehold is defined as state land disposed off by the state authority to an individual for a term not exceeding 99 years, which upon expiry should be reverted to the state authority. Whereas, freehold is defined as state land disposed off by the state authority to an individual in perpetuity for an indefinite period.
What this means in simpler terms is that Leasehold properties are essentially built on state owned land, which are leased to the developer for a tenure of 99 years. Subsequently any investor who buys a unit in a leasehold property does so knowing that his ownership has a 99 year long life span after which he is customarily given the option to extend the lease from state.
How does this affect my investment
The leasehold factor has absolutely no effect on the appreciation value of a property for the first 30 years of its lease period. For those 30 years the leasehold property appreciates with the same exact margins as a freehold property, and yields the same annual returns. Its sale within those 30 years is equally as feasible and marketable as the freehold. It is only after the 30 year mark that the leasehold factor starts having any affect whatsoever on the appreciation rate of the leasehold property.
Why invest in leasehold
In Malaysia some of the most prime and lucrative property investment opportunities are built on leasehold land. This is also true in countries like the UK and Australia..
At MRE, we provide our clients with various customized investment strategies tailored to their individual needs. However one factor remains common among all our suggested strategies, which is for any planned investments to have a life span of not longer than 15- 20 years at the most. A well planned, and sound property investment should always have an estimated exit time, and regardless of your investment type or purpose, your exit time should not exceed 15-20 years from date of acquisition.
As such MRE advises its clients to invest in primly selected leasehold properties with full confidence and security, offering full guarantees of high return, and secured successful exits within up to 25 years.