Langkawi is the New Property Investment Focus

The Legend is Back

1. Tun Dr Mahathir has won a glorious victory in PRU14 representing Langkawi Parliament.

2. In early 1980s, Langkawi island was an island of farmers and fishermen. in 1987, it was declared to be a duty free island. That was where the Langkawi saga started. Duty free shops started to mushroom and more and more people going to Langkawi. Tourism related businesses started to make a lot of money.

3. In 1991, the first Langkawi International Maritime Aerospace exhibition was held. According to the narration of the local, people had to sleep in airport, because there was simply not enough hotel back then. The once in two year event bring Langkawi under limelight, and it gain track of international attention since then. More and more international event such as La Tour De Langkawi, Supercar Exhibition, yacht exhibition  and triathlon events is held there. Today, the island is full of events all year long. You can check the event calendar here.

Behind the Limelight

4. Over the past 15 year with BN ruling without Tun M, Langkawi fades in the media facing the competition from its peers in Indonesia, Thailand, and Philipines. Even though the number of tourist grew from under 2 million to 3.6million, it's hardly reported in the news nor it was promoted well to the locals.

5. Langkawi faces the stagnation of tourist arrival growth since 2014 due to airport saturation of handling capacity. Currently it can handle 2.5 million arrival per year. The airport is under expansion and the first stage will complete September 2018. By 2020, the airport capacity will be doubled to 5.0 million a year. Kuah Jetty was saturated during peak season too. It's been expanded with new handling capacity of 7mil early this year.

The Next Saga In The Making

6. International luxury hotel chain, such as St. Regis, Ritz Carlton, Danna, Datai are in Langkawi today. St Regis spent RM 400 million to set up a complex with 85 hotel units. Averagely per hotel asset costs RM4.7million. Langkawi is poised to experience a high demand in high spending power tourist in the near future, when the new airport capacity is ready.

7. If you travel to Langkawi frequently, you can notice that there are more China tourist in recent years. The number of China flight is expected to increase. The South East Asia market is very big. Even with Phuket, Bali, Kosamui, Krabi in the competition, the market is still too big to be fully digested. The earth is rich enough to provide every one.

8. In Langkawi 2015-2030 masterplan, it's worth highlighting that the local authority still request for tender for hotel operator. The reason is simple - the hotel is still under supply, and will continue to be under supply. Currently, during peak seasons, even the rumah kampung are also fully occupied. The average occupancy rate for hotel has never go below 60% for the last 10 years.

The Land Rule Is Different Here

9. In Langkawi, you might see a lot of empty land, but you cannot simply develop on those land. Firstly, they need to protect their Geopark heritage. Langkawi has the oldest geopark in the country. The unique land formation is unique to the region. You can see, you cannot touch. More than 90% of the land available in market are Malay Reserve - only can be transacted among Malay Only. The non-Malay reserved land, are leasehold. Freehold land is as rare as gold.

10. To build a hotel, it takes at least 3 years. Imagine with new total tourist capacity of 12million (5mil from airport, 7 mil from Kuah Jetty), there are a lot of room to grow from current 3.6mil limited by airport and jetty saturation.Unfortunately, the land available for new hotel development is only so little, as a result of strict preservation regulation.

11. If you can find a freehold property in Langkawi, buy. Don't think,  because the freehold land is only so little in Langkawi. If you see any property in Pantai Cenang and Pantai Tengah, buy. Don't think, because in years to come, the new tourist capacity will pump hotel demand in the area like steroid. If you can find a property in the same area that can run as hotel and you have the money, don't just buy one. Because every single unit you don't buy, you are missing out a lot of potential income.

Key Takeaways

12. Some people might still think Langkawi as a forgotten island. Stop being a katak bawah tempurung, and start exploring. The sky might look the same as 10 years ago but the world has changed. Langkawi is not the same as 15 years ago; and it will not be the same for the 15 years to come. Do your homework. Visit the island, talk to the local authority. Check out the latest plans. You will change your mind. Happy investing!