20190221 Why a good property investor might be a product of academic learning?

20190221 (Thu)

Why did I say “a good property investor might be a product of academic learning”?

Earlier on I wrote about Property v Mutual Fund investing. I said “property investing is about own data”. Why is that has to do with academic learning? I need to further elaborate.

Financial market is efficient because most figures are reported and announced daily, in real time. On the other hand, real estate business is usually not reported. Your transaction will only appear in the database many months later, if it is ever reported. This is due to stamp duty as in JPPH (Jabatan Perkhidmatan Penilaian Harta).

Why academic learning? Property investing, if required to be studied well and through such knowledge (local to the geographical area), an investor has to learn the local market for a number of years. This is his own experience/data, his choice of property and location. It is not 100% applicable to other locations or other types of properties. Normally, it would be safer to use experience on the same type of property to different location. Regionally, it could be some similar drivers that affects the market as a whole.

Commercial property in City A might face the same market pressure similar to City B within the same region. People still go to shopping in A like in B. However, oversupply of property might be different from one city to another city. So, using the experience of one city and apply it over to another city is not a wise approach. For eg. competition of commercial space is different from one city to another city much due to market forces and supply and demand.

All that is about local research – going into the pulse of property in an area. So, good property investor is likely a more academic research person rather than a person talking from hearsay.

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