Hi yonglip,
I am more bullish than you. I think MYR will appreciate at least 20% next 5 year and investor will make 20k more. If investor fund it from Singapore equity loan, the interest cost will further be reduced.
So ROE may be more than 100%. Better than equity investment.... Cheers...
Hi PH and everyone else,
Since most of us here either already have or are planning to get property/ies in Iskandar. This currency risk thing really should be a concern to all of us.
I'll start by sharing my own personal non -professional view about the currency risk for our property/ies in Iskandar, hope to hear the views from others in return.
On simple thought, we might be afraid that - what if 5 years later when we want to sell our unit, RM has further depreciated to RM3 instead of present RM2.45?
So if you sell your unit for RM 1 mil, instead of getting back approximately SGD408k based on current rate, we'll only get back SGD333k because RM depreciated? Here's my view - For
Singaporeans buying overseas properties, I think Iskandar Region is the only special oversea area which has a unique factor which will help us in having almost no risk on currency fluctuation. This is because the main idea of Iskandar region is to attract invesments from Singapore due to its close proximity to us. Thus in future most buyers for Iskandar properties, especially Nusajaya, will be Singaporeans(For your info Imperia at Puteri Harbour is 50% sold and Singaporeans made up 70% of the buyers). As most of us here are Singaporeans, ask yourself this question - How did you judge whether the property in Nusajaya which you've commited is overpriced or not? Obviously, we didn't judge the price based on Johor's average price. If we did, we wouldn't have bought a property which is obviously 3 times higher than average price in Johor. What we did was to convert the price to SGD and decide whether or not it is a price we are willing to pay. Right? Eg. A terrace is selling at RM500k, we'll convert it to appr. SGD208k and say - ok that's what I can afford. Thus no matter how RM and SGD fluctuate, we'll still convert the price in RM to SGD and make our decision.
So if a Singaporean is willing to buy your terrace at SGD500k five years later, he'll pay SGD500k no matter what the exchange rate is at that time.
Meaning if RM remains at RM2.45, he'll be willing to pay RM1.225 mil(SGD500k x 2.45).
If RM has depreciated to RM3 after 5 years, this same Singaporean buyer will still be willing to pay SGD500k, thus equals RM1.5 mil for your terrace(SGD500k x 3). So even though RM depreciate, buyers being mostly Singaporeans, will judge your selling price in the amount of SGD he is willing to pay - thus covering your losses in exchange rate.
But if RM appreciates instead of depreciates, don't need to be too happy. Let's say if RM appreciates to RM1 to SGD1. That future Singaporean buyer will still be only willing to pay SGD500k for your terrace(that converts to RM500k as exchange rate is 1 is to 1). Thus no matter appreciates or depreciates, you'll still get back the same SGD500k which the future buyer is willing to pay.
The above is for future selling price. As for buying price, it'll definitely be better if SGD is as strong as possible whenever we convert it to RM for payment of our property/ies. That equates to a lower buying price in SGD.
That's just my simplistic thought, please share your view and highlight what I may have overlooked.
thanks.
