Auspicious time for property investors

JAKARTA (JP): If investors have planting seasons like farmers, now and sometime next year should be the right time for those with extra money to plant their seeds in property.

Property analyst Panangian Simanungkalit says this is the best time to invest in property, as the appreciation of the dollar and tight liquidity has forced many property companies to slash prices.

Suppose you have Rp 600 million (US$171,000) of money remaining from the Rp 1 billion you set aside for portfolio investment, and are wondering what to invest it in.

Since the brutal fluctuations in the stock market make investing in that sector out of the question, why not spend it on property?

But wait. How will you know that you have made the right decision in your choice of investment?

Panangian says there are three steps to take before you finalize any property transaction: field survey, legal survey and using instinct.

Before choosing, you may want to consider these three smart choices of land, small to mid-size houses and shop-houses.

The most important step before buying the property is to inspect the condition of the property and pertinent legal documents.

Check if there is progress in the area, if the development area looks healthy and if all certificates and legal papers are available and in order.

Find out if the developer is listed with the Indonesian Real Estate Association or in the Office of the State Minister of Public Housing, to avoid fraud and costly deception.

Of course, price is everything, but what is more important is the size of the property. You don't want to buy something that will end up a burden.

Panangian says the most saleable plots of land are those between 350 and 450 square meters. Anything bigger and more expensive would be hard to resell.

For houses, better buy one no bigger than 150 square meters and priced under Rp 75 million, or else there will be the likelihood of a tough resale.

He says it is better to invest in a shop-house that costs not more than Rp 300 million and is in a strategic location. Keep an eye out for bargains from owners who defaulted on their payments.

Make sure to check all the clauses of the payment system before you pay. The same applies to legal papers and documents, which should be in your hands before you say goodbye to your money.

Planning to get a housing loan? Look into the bank in which the funds are available.

Some banks give higher interests rates on housing loans, and they are likely to give the loans readily. A word of warning applies: those with higher interest rates may just be one of the "problem banks".

An interest rate between 22 to 25 percent would be considered normal, Panangian says, but 30 percent would be too high.

Before putting your name on the contract's dotted line, check if all the requirements have been fulfilled. Rely on the sensible and traditional means -- your instincts -- in gauging the legitimacy of the seller. There have been many instances of hit-and-run developers.

Don't rush yourself, as property prices will stay a bit lower for at least the next two years. You have plenty of time to be choosy, and wary, in sizing up the property market. (das)