Dual Key
Condominium

Is Dual Key the Future of Property Development in Malaysia?

In recent years, the concept of dual-key condominiums has been gaining traction in Malaysia’s property market, sparking a debate among potential buyers and investors. With its unique design and promising benefits, many wonder whether dual-key condominiums are indeed the new trend in property development and whether Malaysians should consider purchasing them. To shed light on this topic, let’s delve deeper into the dual-key concept and explore its potential advantages.

Understanding Dual-Key Condominiums

A dual-key condominiums, also known as a dual-key unit or dual-key condo, is a type of residential property that comprises two separate living spaces under a single title. Each unit within the condominiums comes with its own entrance, kitchen, bathroom, and sometimes even separate utility meters. Essentially, it is like having two condominiums in one, providing residents with enhanced privacy and flexibility. It caters to diverse lifestyles and investment objectives. Despite some considerations regarding management and rental logistics, its popularity continues to grow, reflecting its appeal to both homeowners and investors alike. As Malaysia’s urban areas evolve, the dual-key concept stands out as a contemporary housing option that addresses the evolving needs of modern living.

Benefits of Dual-Key Condominium

Rental Income Potential

One of the most attractive features of dual-key condominiums is their potential for generating rental income. With two separate units, owners have the option to rent out one of the spaces while residing in the other or rent out both units. This dual-income stream can help offset mortgage payments, making property ownership more affordable. Additionally, the rental demand for smaller units is often higher, especially in urban areas, allowing owners to command competitive rental rates and maximize their returns.

Dual-key condominiums present a lucrative opportunity for generating rental income, owing to their unique layout comprising two separate units within a single property. By renting out one unit while occupying the other, owners can enjoy a steady stream of rental income to offset mortgage payments and enhance overall affordability. Other than that, the high demand for smaller rental units, particularly in bustling urban areas, enables owners to command competitive rental rates, thereby maximizing your returns on investment.

Additionally, the flexibility of dual-key condominiums allows owners to adapt to changing market conditions by adjusting rental strategies, such as short-term rentals or catering to specific tenant demographics, further optimizing rental income potential.

Easy management and maintenance

Dual-key condominiums offer a unique advantage when it comes to managing and maintaining the property, thanks to the proximity of the landlord and tenant living next to each other within the same building. This close proximity streamlines various aspects of property management and maintenance, enhancing convenience for both landlords and tenants.

For one, rent collection becomes a much more straightforward process and even in cases where rental payments are made online, the knowledge that the immediate neighbour is the landlord can serve as an additional incentive for timely payments. Secondly, if any maintenance issues arise within the rented unit, such as plumbing problems or electrical issues, the landlord can swiftly address them without delay. This ensures tenant satisfaction and preserving the property’s condition.

Capital Appreciation Potential

Investing in dual-key condominiums offers considerable potential for capital appreciation over the long-term period. Properties situated in prime locations tend to experience accelerated appreciation, and owning a dual-key condominiums in such coveted areas can lead to substantial capital gains. The inherent flexibility of dual-key units, catering to diverse buyer preferences and lifestyle needs, further enhances their marketability and resale value.

Moreover, ongoing urbanization and population growth contribute to increased demand for conveniently located housing solutions, driving up property values in desirable areas where dual-key condominiums are often situated. With ongoing developments and infrastructure improvements in surrounding neighbourhoods, it can definitely further boost property values, offering investors the opportunity to capitalize on capital appreciation trends.

Multi-Generational Living

Dual-key condominiums are well-suited for accommodating multi-generational living arrangements, providing families with the flexibility to adapt to changing household dynamics. With two separate living spaces under one roof, families can comfortably accommodate elderly parents, adult children, or extended family members while still maintaining a sense of privacy and independence. This arrangement fosters closer familial bonds and facilitates shared expenses and caregiving responsibilities, offering practical benefits and enhancing overall quality of life.

Moreover, the growing trend towards multi-generational living in urban areas reflects changing demographic patterns and cultural norms, further driving demand for dual-key condominiums designed to cater to diverse household compositions. Additionally, dual-key condominiums often feature shared amenities and communal spaces, facilitating family gatherings and creating a sense of community among residents, contributing to a more enriching and fulfilling living experience.

In conclusion, the dual-key concept is a trend in property development that’s not going anywhere soon, offering a promising and innovative housing solution that appeals to both investors and homeowners alike. From rental income potential to capital appreciation and multi-generational living, the versatility of dual-key units makes them a viable option for Malaysians looking to invest in real estate or secure a comfortable living space for their families. However, as with any property investment, thorough research and consideration of individual circumstances are essential before making a purchase decision. Ultimately, whether dual-key condominiums become the new norm in Malaysia’s property market will depend on evolving consumer preferences and market dynamics.

Reference/Credits:

Exploring Freehold vs Leasehold

With the rapid pace of property development and the continuous influx of new listings into the market, individuals considering their next home purchase or investment now have an extensive array of options to assess before making a decision.

When it comes to property acquisition, one of the pivotal choices you’ll encounter is whether to select freehold or leasehold tenure. Each ownership type presents its unique advantages and disadvantages, underscoring the importance of comprehending the disparities before making a choice.

Freehold Ownership

Freehold ownership grants you full ownership rights over the property and the land it sits on indefinitely. This means you have the freedom to use, modify, and transfer the property as you see fit without any time restrictions. One of the main advantages of freehold ownership is the sense of security and permanence it offers. You have full control over your property without having to worry about lease expirations or renewals. Additionally, freehold properties often appreciate in value over time, providing potential long-term financial benefits.

However, with great autonomy comes greater responsibility. As a freehold owner, you are solely responsible for maintaining the property and covering all associated costs, including repairs and taxes. Furthermore, freehold properties tend to come with a higher initial purchase price compared to leasehold properties due to their perpetual ownership status.

Leasehold Ownership

Leasehold ownership, on the other hand, grants you the right to use the property for a specified period, as outlined in the lease agreement with the landowner or freeholder. While leasehold properties offer a more affordable entry point into the property market, they come with certain limitations and considerations. One of the primary advantages of leasehold ownership is affordability. Leasehold properties are typically more accessible in terms of upfront costs, making them an attractive option for first-time buyers or those on a tighter budget.

However, leasehold ownership also comes with its share of drawbacks. One of the main concerns is the finite nature of the lease term, which can range from a few decades to several centuries. As the lease term diminishes over time, the value of the property may depreciate, potentially affecting its resale value. Additionally, leasehold properties are subject to ground rent and service charges payable to the freeholder, adding to the overall cost of ownership. Moreover, leaseholders may face restrictions on property alterations and subletting, limiting their flexibility compared to freehold owners.

Freehold vs Leasehold

Tenure security

Freehold
Tenure is forever.
Both property and land are owned forever* by the purchaser.

*Note that state governments have the right to take back freehold land for major projects such as MRT or economic development and provide compensation to the owner.

Leasehold
Lease period of typically up to 99 years
Starts from 30 years and is subject to renewal but in some rare cases, it may even last up to 999 years.

Ownership

Freehold
Buyer has ownership of the property and land.
The owner has all rights upon the property and land.

Leasehold
Buyer returns ownership at the end of the lease to the landowner or government.
The buyers have the option to renew at the end of the lease.

Cost

Freehold
More expensive to own.
Freeholds usually cost more as it includes both land and property. The plus side is homeowners get more flexibility to renovate or make changes to the house and land.

Leasehold
More affordable to own.
Leaseholds generally cost less than freeholds but come with more renovation restrictions.

Transfer of Properties

Freehold

Less hassle when transferring ownership.
The process is usually more straightforward. A freehold property transaction can typically be completed within 90 days of signing the Sale and Purchase agreement.

Leasehold

Lease transfer requires state approval.
Homeowners will need a letter of consent from the landowner (the state). This process can take 6 months to almost 1 year.Property transfers from Bumi to non-Bumi owners will also need more time to approve.

*For second-hand leasehold properties, it will take more than a year in KL and Selangor.

Resale Value

Freehold

Higher resale value, lower rental yield.
Freeholds tend to appreciate in value faster but they give lower rental yields due to a higher entry price point.

Leasehold

Lower resale value, higher rental yield.
Leaseholds older than 30 years may stagnate or depreciate in value so they are usually more suited for shorter-term investment purposes but with a higher rental yield..

For those considering property investment, here’s a comprehensive analysis to ponder before finalizing your decision.

Freehold Property Investment

Investing in freehold property offers several advantages, notably its potential for robust returns. Industry experts suggest that freehold properties can yield returns averaging 6-7% annually, surpassing many other investment options. Moreover, freehold properties often appreciate over time, augmenting overall returns. However, it’s vital to acknowledge the associated risks. Property depreciation is a possibility, influenced by factors like economic shifts or gradual property wear.

Furthermore, acquiring freehold property necessitates a substantial upfront investment, potentially requiring a mortgage or significant loan depending on the location and size of the property. Ongoing maintenance and repair costs for the land and property can pose financial challenges.

Freehold Property Investment

Leasehold property investment presents an attractive prospect for those seeking higher returns. Industry insights indicate that leasehold properties can generate returns averaging 15-20% annually, markedly surpassing freehold counterparts. This is primarily due to lower initial investment requirements, as leaseholders pay solely for property use over a fixed period.

Nonetheless, there are notable risks to consider. Notably, leasehold properties lack property appreciation potential since leaseholders do not own the land. Consequently, property value remains stagnant, offering no benefit from appreciation. Moreover, at lease expiration, ownership reverts to the landowner (freeholder), potentially posing challenges in recouping initial investments, particularly with shorter lease periods.

However, there are also pros to a leasehold property. A leasehold property typically commands a slightly lower price compared to a freehold property, offering investors better value for their money with lower entry costs and higher rental yields. Developers often enhance leasehold properties with additional facilities and features to make them more appealing to buyers.

Ultimately, the choice between freehold and leasehold property investment hinges on individual circumstances and investment objectives. If seeking long-term investment stability with potential for appreciation, freehold property may align with your goals. Conversely, if aiming for shorter-term, high-yield returns and accepting higher risk, leasehold property could be the preferred option.

References / Credits:
https://www.linkedin.com/pulse/freehold-vs-leasehold-properties-which-offers-better-shihabab
https://www.cimb.com.my/en/personal/life-goals/investment/freehold-vs-leasehold-which-should-you-buy.html
https://www.iproperty.com.my/guides/freehold-vs-leasehold-title-malaysia-what-property-buyers-should-know-64117