4 Things To Consider Before Investing In Property At Tourist Spots Like Genting & Langkawi

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Vacation rental homes are becoming very popular, as seen in the widely viewed Netflix series, World's Most Amazing Vacation Rentals.

Plus, travellers nowadays are opting for private rooms and holiday homes instead of hotels, especially since they are so easy to book on sites like Airbnb, Agoda, Booking.com, and more.

Statista estimates that vacation rentals are projected to bring in USD402 million (RM1.7 billion) in revenue to Malaysia in 2021. The reliable data platform also predicts that revenue from vacation rentals in Malaysia will have an annual growth rate of 28.12%, resulting in a projected market volume of USD1.3 billion (RM5.5 billion) in Malaysia by 2026.

Depending on why you're buying a holiday home, there are different things to look out for.

If you want a home to stay in during the weekends or once in a while for vacation, you should find a place that gives you some privacy, while being not too far from amenities and attractions.

For long-term investment, it's important to look at upcoming developments and future potential of the property. On the other hand, what's important for short-term rental is a central location and good facilities.

If you're investing in a holiday home, your competitors range from low-cost motels to high-end resorts.

The idea of a vacation rental home is that it provides more value, flexibility, and comfort to visitors. For instance, for families travelling with children, a two-bedroom holiday home with a kitchen allows them to prepare their own meals and not have to worry about space, while enjoying the flexibility of driving around in their own car or a rented vehicle.

While a motel would be cheaper, it wouldn't feel as comfortable. On the other hand, hotel guests would have to pay a premium price to enjoy the same kind of space.

An important thing to consider is the property's outlook five or ten years down the road.

"Is your property a standalone building or part of a well thought out township?"

"For new development projects, will it be connected via public transportation in the future?"

These are all questions that you should ask yourself before investing in a holiday home. For tourist destinations, having good connectivity or a point of attraction like an adventure park could cause an area to become popular and increase in value.

If you are investing for short-term rental, an easy way to calculate ROI is by seeing how much income you can generate from your property each month.

For example, take a 380 sq ft studio unit in Tropicana Cenang, Langkawi, that costs RM520,000. You would be paying roughly RM2,000 in monthly instalments* and RM200 in maintenance fees.

If you rent out the place for RM250 a night and have a minimal 30% occupancy rate (9 nights with a guest), you'd already be able to make RM2,250 a month, enough to cover the cost of your investment.

In fact, 30% occupancy rate is a very modest projection — just imagine how much you could earn if it went up to 70% or 80% during peak seasons. Nevertheless, you have to consider the supply and demand of surrounding properties and hotels, along with the influx of visitors to the holiday destination.

*Calculated based on 10% downpayment with 30-year loan and 3.1% interest rate.

For those of you who've tried booking a hotel in Genting Highlands or Langkawi during peak travel seasons, you've probably realised how expensive hotel prices can get.

In 2019, Genting Highlands welcomed 28.7 million visitors, as published in the 2019 Genting Berhad Annual Report, with some hotels recording over 95% occupancy rates. Similarly, Langkawi had a record high of 3.9 million visitors that same year.

However, a simple search on Booking.com will show you that a hotel stay in Genting during peak periods (like a weekend in December 2021) will set you back RM450 to RM800. In Langkawi, on the other hand, affordable motels and homestays are aplenty, but you can expect to pay upwards of RM350 for a proper resort.

According to the same Genting Berhad Annual Report, 76% of travellers to Genting were day-trippers, while 24% were hotel guests. If you do the math, that would amount to around 18,870 hotel guests a day.

However, there are only roughly 16,000 rooms available in the whole of Genting Highlands, with the majority of 10,500 rooms being owned by Resorts World Genting across seven hotels.

That's why if you are thinking of buying a property for investment, there is a huge potential in vacation rental homes.

Tropicana Grandhills, located just 10 minutes from Awana Skyway and Genting Premium Outlets, is a 112-acre mixed development that will feature residences, commercial and wellness hubs, an international school, an adventure park, and a silver hair village for older folks looking for a relaxing place to retire.

Their first project, TwinPines Serviced Suites, is 3,000 ft above sea level, offering fully furnished units ranging from 379 sq ft to 1,330 sq ft, with a starting price of RM360,000.

One of the unique features of these residences is that they come with a daybed right beside the windows. This is great for lounging or can even be an extra bed for an additional guest. Besides that, Tropicana has designed these units with travellers in mind, with basic kitchen necessities and even a washing machine provided. The residence also comes with unique facilities like an outdoor heated pool.

View the virtual showroom for the studio unit and two-bedroom unit.

On the other hand, Tropicana Cenang is located right beside the most happening tourist strip in Langkawi, a.k.a. Pantai Cenang. It will boast a 5-star hotel, retail options, and residences catered for vacation rentals.

Its first project, Assana Serviced Suites comes fully furnished, with a functioning kitchen and access to lots of resort-like facilities. The unique thing about this residence is that each unit gets a sea view, and residents or guests can enjoy an infinity pool directly facing the Andaman Sea.

Units range from 380 sq ft to 1,310 sq ft, with a starting price of RM457,000.

Besides being fully furnished, the main attraction for Assana Serviced Suites is its strategic location along the Pantai Cenang strip, with direct access to the beach. The residence is also a short drive from Langkawi International Airport, which makes it convenient for incoming tourists and travellers.

Take a look at the show unit for Assana Serviced Suites.

What's great about investing in a property in Tropicana Grandhills or Tropicana Cenang is that they both come with property management services.

That means they will handle everything from booking visitors to housekeeping, while providing additional concierge services and more.