Subsale vs New Property: Which is the Better Investment in Malaysia?

When you’re in the process of buying a house in Malaysia, one important consideration is the timing of your purchase. Understanding when to buy can significantly impact your overall investment, whether you’re eyeing a subsale property or a new property. Here are the main stages of property purchases in Malaysia and their pros and cons.

Type of Property in Malaysia

1. Off-Plan Property:

These are homes that are still in the planning or construction phase. When buying off-plan, you’re purchasing a property before it’s fully built, which often comes with a lower price compared to completed homes. This option is ideal if you’re looking to save money or want more flexible financing options. However, risks include construction delays and potential changes in the final design. Always ensure the developer is reputable to avoid issues.

2. Newly Built Property:

New Property offer the advantage of a brand-new home, typically equipped with modern features and minimal need for repairs or renovations. While this can be appealing, it often comes with a higher price tag compared to off-plan purchases. Additionally, you might have limited say in customizing the design unless you buy early in the construction process. For many, the convenience of moving into a fully built, brand-new home outweighs the higher cost.

3. Subsale Property (Existing Homes):

Subsale refers to buying a pre-owned or existing property, where you can inspect the home, neighborhood, and overall condition upfront. The benefit here is certainty, you know exactly what you're getting. However, older homes may require upgrades or repairs, which could increase your costs. This option suits buyers looking for immediate occupancy without waiting for construction but who are prepared to budget for potential renovations.

Pros, Cons, and Costs of A Subsale Property

Pros of A Subsale Property

1. Immediate Availability

Subsale properties are ready for you to move in or rent out as soon as the deal is finalized. This allows you to start earning rental income right away or move in without waiting for construction to finish.

2. Established Neighborhoods

These homes are often in well-developed areas with existing amenities such as schools, shops, parks, and public transportation. You benefit from the convenience of an already thriving community which providing a more comfortable living environment.

3. Market Transparency

When buying a subsale property, you can easily track how property prices have performed in the area over time. This data helps you make a more informed investment choice.

4. Negotiable Prices

Subsale property prices are often negotiable, especially if the seller is in a hurry to offload the property. This can give buyers an advantage, potentially securing the property at a lower price than initially listed.

Cons of A Subsale Property

1. Upfront Costs:

Subsale properties typically come with higher upfront costs, including down payments (often 10% of the property price), legal fees, and stamp duties. These costs can add up quickly, making the initial financial burden heavier than that of new properties with more flexible payment schemes.

2. Potential for Repairs and Renovations:

Since you're buying a pre-owned home, there might be a need for repairs or upgrades, which could increase your overall expenditure. Older properties may require maintenance work such as repainting, plumbing repairs, or even structural fixes.

3. Limited Customization:

Unlike buying a new property where you can sometimes influence design choices, subsale properties offer little to no room for customization. You may need to renovate or redecorate to fit your preferences.

4. Outdated Designs:

Depending on the age of the property, subsale homes may feature older architectural styles or interior layouts that don’t meet modern design preferences, making the property less attractive without significant updates.

Costs of A Subsale Property

1. Down Payment

Usually around 10% of the property price, this is required upfront. For a property priced at RM500,000, the down payment would be RM50,000.

2. Legal Fees

Legal fees for the sale and purchase agreement, as well as the loan agreement, can range from 1% to 2% of the property price, plus disbursements.

3. Stamp Duty

Stamp duty for the transfer of ownership is calculated based on the property price, starting at 1% for the first RM100,000, and increasing on a sliding scale.

4. Renovation Costs

If the property requires renovation, costs can vary significantly. Basic renovations like repainting or minor repairs could cost anywhere from RM10,000 to RM50,000, while more extensive work may run into hundreds of thousands.

Pros, Cons, and Costs of A Brand-New Property

Pros of A Brand-New Property

1. Modern Design and Facilities

Brand-new properties come with the latest designs and modern features, such as energy-efficient systems, contemporary layouts, and smart home technology. This means you’re getting a home that’s built to suit modern living standards.

2. Lower Maintenance Costs

Since everything is new, you won’t have to worry about immediate repairs or maintenance. Builders often provide a warranty period, covering defects that may arise, giving you peace of mind for the first few years.

3. Attractive Financing Options

Developers frequently offer attractive financing schemes, such as low down payments, zero-interest payments during construction, or rebates, making it easier to manage cash flow during the purchasing process.

4. Higher Potential for Capital Appreciation

New properties, especially those in growing areas, tend to have higher appreciation potential compared to older properties. As the area develops and amenities improve, the value of your property can increase.

5. Customization Options:

If you purchase during the construction phase, some developers allow you to customize certain aspects of the property, like flooring, fixtures, or interior design elements, giving you more control over the final product.

Cons of A Brand-New Property

1. Waiting Period

If you buy an off-plan (under construction) property, there’s typically a waiting period for the property to be completed. Construction delays are possible, meaning you won’t be able to occupy or rent the property until it’s fully built.

2. Uncertain Market Conditions

The property market can fluctuate during the construction period, and unforeseen changes in the economy or demand might impact the future value of your property.

3. Limited Location Choices

New developments are often located in up-and-coming areas, which may not be as established as older neighborhoods. It could take time for nearby infrastructure, such as schools, shopping centers, and public transport, to fully develop.

4. Higher Purchase Prices

Brand-new properties generally come with a higher price tag compared to subsale homes. Developers price these homes at a premium, considering the modern features and the potential for future appreciation.

5. Higher Stamp Duty

New properties, particularly in premium developments, can come with higher stamp duty costs, especially if the property is priced above RM500,000. This adds to your overall cost burden.
 

Costs of A Brand-New Property

1. Down Payment

Similar to subsale properties, brand-new properties usually require a down payment of 10% of the purchase price. However, some developers may offer incentives that reduce this initial payment.

2. Legal Fees

The legal fees for a brand-new property generally fall within the same range as subsale properties, between 1% to 2% of the purchase price. However, some developers cover these costs as part of their promotions.

3. Maintenance Fees

For new properties, especially high-rise developments, there are often maintenance or service fees for shared facilities like gyms, pools, and security. These can range from RM0.20 to RM0.40 per square foot monthly, depending on the property.

4. Miscellaneous Costs

You might need to spend on furnishing and interior design since new properties typically come bare. This could cost anywhere from RM10,000 to RM50,000 or more, depending on the extent of the work required.

5. Stamp Duty

The stamp duty for brand-new properties is calculated similarly to subsale properties, on a sliding scale based on the property price. For instance, a property priced at RM600,000 would attract a stamp duty starting from 1% to 4% based on tiers.

Things to Consider Before Investing in A Subsale Or Brand New Property

Things to Consider Before Investing in a Subsale or Brand-New Property Investing in property, whether it’s a subsale or a brand-new property, requires careful consideration to ensure you maximize your returns. Here are the key factors to think about before making your decision:

1. Your Budget

• Subsale Property: Upfront costs include a 10% down payment, legal fees, stamp duties, and possible renovation expenses. The initial investment is higher, but you may negotiate the purchase price to make it more affordable.
• Brand-New Property: While you might get attractive financing packages from developers, new properties tend to be pricier. However, developers often offer incentives such as reduced down payments or rebates that can ease the financial burden.

2. Location and Development Potential

• Subsale Property: These properties are typically located in mature neighborhoods with established infrastructure. You can assess the long-term value and convenience of the area based on the current amenities and property trends.
• Brand-New Property: New developments are often in emerging areas, which may lack full infrastructure. However, the long-term capital appreciation potential can be high if the area develops quickly.

3. ROI/Capital Appreciation

• Subsale Property: With a subsale property, especially in prime, established areas, you can see a steady increase in value over time. The property's capital appreciation is typically lower than a new property but can still be substantial if the area maintains its desirability.
• Brand-New Property: Brand-new properties often offer higher ROI and capital appreciation potential, especially in growing locations. As infrastructure improves and demand rises, your property's value can increase significantly.

4. Rental Yield

• Subsale Property: Established properties can provide an immediate rental income with a fairly predictable rental yield based on the area's history. However, you may need to spend on renovations to attract high-paying tenants.
• Brand-New Property: New properties may take time to generate rental income, particularly if the area is still developing. However, newer homes often command higher rental rates, which can result in a higher rental yield once demand in the area grows.

5. Market Trends and Demand

• Subsale Property: Subsale properties benefit from stable demand in established neighborhoods. Market trends are easier to analyze since you can look at historical data and performance in the area.
• Brand-New Property: Investing in a new development means riding the wave of future growth. Market trends can be harder to predict, but high demand for modern amenities and new infrastructure can drive future appreciation, particularly in emerging hotspots.

6. Immediate vs. Future Use

• Subsale Property: If you need a property for immediate use or rental income, subsale properties are ideal as they are ready for occupancy. You won’t have to wait for construction or approvals.
• Brand-New Property: You may face a waiting period if you purchase an off-plan property, which could result in delays before you can occupy or rent the home. However, you are getting a brand-new, modern property upon completion.

7. Maintenance and Repairs

• Subsale Property: Older homes may require repairs or upgrades, adding to your investment cost. If you prefer a home that doesn’t need constant maintenance, this could be a drawback.
• Brand-New Property: New properties come with minimal maintenance needs and typically include a warranty from the developer. This allows you to enjoy a stress-free experience for the first few years.

Potential High-Growth Investment Areas in 2024

When looking for property investments with strong potential for appreciation, it's essential to target areas that are undergoing development or benefiting from infrastructure improvements. Here are some of the top high-growth investment areas in Malaysia, based on current trends and future potential:

1. Iskandar Puteri Malaysia (Johor)

Why Invest?

Iskandar Malaysia continues to be a hotspot for property investment due to its strategic location near Singapore, rapid economic development, and government-backed projects. The region is benefiting from foreign direct investments (FDIs), especially in manufacturing and technology, special financial zone and also becoming Malaysia's first Korean Cultural Town in Forest City, Johor Bahru.

• Growth Factors: Major infrastructure projects such as the Rapid Transit System (RTS) Link connecting Johor Bahru and Singapore are set to boost connectivity, driving up demand for both commercial and residential properties.
• What to Expect: High potential for capital appreciation in residential and mixed-use developments, especially in areas like Nusajaya and Medini.

Brand New Properties For Sale

1. KingsWood

• Horizon Hills, Iskandar Puteri (Nusajaya), Johor
• New Project: 2026
• Cluster House

2. Sunway Maple Residence

• Jalan Medini Selatan, Iskandar Puteri (Nusajaya), Johor
• New Project: 2024
• Semi-D Terrace House

Subsale Properties For Sale

1. Meridin Executive Suites

• Jalan Legoland, Iskandar Puteri, Johor
• Completion Year: 2017
• Condominium

2. Senadi Hills

• Iskandar Puteri (Nusajaya), Johor
• Completion Year: 2022
• 2-storey Terraced House

2. Puchong (Selangor)

Why Invest?

Puchong has transformed from a suburban township to a thriving urban area, thanks to improved connectivity and commercial developments. It is a well-established area with a good mix of residential, commercial, and industrial properties.

• Growth Factors: The ongoing expansion of the Klang Valley Mass Rapid Transit (MRT) and Light Rail Transit (LRT) lines has improved Puchong's accessibility, making it more attractive for both residents and businesses. The area's proximity to Kuala Lumpur and Petaling Jaya adds to its appeal.
• What to Expect: Mid-range properties in Puchong are in high demand, with potential for rental yield due to its location and growing population. Key areas like Bandar Puteri and Taman Puchong Prima are expected to see continued appreciation.

Brand New Properties For Sale

1. The Wyn Residences 

• Jalan Puchong, Bandar Puchong Jaya
• Completion Year: 2028
• Serviced Apartment

2. Anggun Villa II

• Bandar Kinrara, Puchong, 
• Completion Year: 2026
• 3-Storey Semi Detached

Subsale Properties For Sale

1. 16 Sierra Township

• Sierra 6, Persiaran Sierra Utama 1, Bandar 16 Sierra
• Completion Year: 2018
• Condominium

2. SkyPod Residences

• Persiaran Puchong Jaya Selatan
• Completion Year: 2015
• Service Residence

3. Semenyih (Selangor)

Why Invest?

Semenyih has emerged as a high-growth area for affordable housing and new township developments, catering to middle-income families and first-time homebuyers. Its relative proximity to Kuala Lumpur and major highways makes it an attractive alternative for those seeking lower property prices.

Source: SP Setia

• Growth Factors: The completion of key infrastructure projects like the LEKAS Highway and PLUS Expressway has greatly enhanced accessibility to Semenyih. Additionally, the ongoing development of Malaysia Vision Valley (MVV 2.0), which spans nearby regions, is set to drive further economic growth and demand for properties.
• What to Expect: With plenty of new townships and housing projects in the pipeline, investors can expect long-term capital appreciation. Areas like EcoHill and Setia Eco Templer are popular for their green living concepts and family-friendly environments.

Brand New Properties For Sale

1. Chorus @ Summer Breeze, Setia EcoHill 2

• Setia Ecohill 2, Semenyih, Selangor
• Completion Year: 2025
• Double-storey Terrace House

2. Balau Homes II 

• Jalan Broga, Semenyih
• Completion Year: 2026
• 2-storey Terraced House

Subsale Properties For Sale

1. Camellia Residence

• Jln Kesuma 8/3, Bandar Tasik Kesuma
• Double-storey Terrace House

2. Kiara Plaza Service Apartment

• Kiara Plaza, Jalan Semenyih
• Completion Year: 2017
• Service Apartment

4. Bayan Lepas (Penang)

Why Invest?

Bayan Lepas is one of Penang's most sought-after areas for property investment due to its proximity to the Penang International Airport, industrial zones, and the famous Bayan Lepas Free Industrial Zone, which houses many multinational corporations. It's also a key area in Penang's growing tech and electronics industries.

• Growth Factors: Infrastructure developments like the Penang Transport Master Plan (PTMP) and the Penang South Islands (PSI) project are poised to further enhance connectivity and boost property values in Bayan Lepas. The area's well-developed infrastructure and industrial growth make it a prime location for residential and commercial investments.
• What to Expect: Properties in Bayan Baru, Queensbay, and Sungai Ara are highly attractive for both expatriates and local professionals. Investors can anticipate steady rental yields and strong capital appreciation due to the influx of skilled workers and ongoing infrastructure improvements.

Brand New Properties For Sale

1. Lucerne Residences 

• Bayan Lepas, Penang
• Completion Year: 2026
• Condominium

2. MUZE @ PICC

• Sungai Nibong Kecil, Bayan Lepas, Pulau Pinang
• Condominium

Subsale Properties For Sale

1. The Clovers

• Taman Sri Bayan, Penang
• Completion Year: 2017
• Condominium

2. Meridien Residence

• Sungai Ara, Penang
• Completion Year: 2014
• Condominium

Other Article:

• Property Projects Near the RTS Link in Johor Bahru
  
• What is Loan Compression and Its Impact on Real Estate Investment?
• Understanding Property Taxes in Malaysia for Foreign Homeowners