THE 'E' FACTOR
by Lim Lay Ying
Property Times, New Straits Times
06th November 2004

Homebuyers today, especially the younger ones, have been showered with so much knowledge and tips that many have become what we in the industry would like to call “black belt consumers.” Their expectations today are much higher than what they once were a decade ago, but this is old news.

When scouting around for a home, be it a new condo or a townhouse or something else, features of the development such as price, location, number of bedrooms and baths, floor layouts, amenities, views, incentives, and so forth, are usually at the top of their mind. The married ones are an even more demanding lot – who would only be persuaded when the ‘E’ factor measures up to their expectations.

The ‘E’ factor, namely – Education, is what Albert Einstein calls it the “holy curiosity of inquiry”. For the layman, it means simply the presence of good schools.

Good schools with high quality teachers, are like diamonds to a crown – they multiply value. There is an Irish proverb that says, “Put a silk on a goat and it is still a goat”. Hence, a development can have a parade of facilities and elaborate landscaping, but without good education facilities around, it would still need to work very hard to attract buyers/renters.

Imagine Mont’ Kiara without its highly reputable international schools: would it be what it is today? Quite likely not. Mont’ Kiara International Scholl and Garden International School draw the international community to properties in Mont’ Kiara (two-thirds of its residents are foreigners!) Because of this pull factor, the strong demand for homes in the locality has resulted in higher rents which in turn contributed to impressive capital appreciation and the upmarket/elite neighbourhood image.

Some local schools have had the same impact. Take for example the well-reputed schools of Puay Chai, Sri Aman, Assunta, Bukit Bintang, Damansara Jaya, and LaSalle, in the Petaling Jaya suburbs. Residential and commercial properties around those schools have appreciated many folds since the last decade.

Well-respected public and private schools therefore, can and do have a far reaching impact than one may realize. Consider the following:-

Reputable schools motivate homebuyers

It is not uncommon to hear of people willing to travel the distance just to send their kids to a good school (although the authorities require people to send their children to the nearest schools), or buying into a home where the location is near a reputable school. Our recent surveys show that excellent schools were one of the public amenities that were most desired in new townships (garnering almost 80% votes) – much more than 24-hour security services, central parks, open space, or even broadband facilities – see Table 1 & 2.

Reputable schools trigger growth

The last couple of decades saw migration from the capital city to new suburbs located off the expanded web of new highways (such as NKVE, LDP. SPRINT, etc.). Population grew and so did the amenities including schools. Over the years, colleges and other institutions of higher learning joined the fold, leading to economic and business expansion, and even greater demand for properties.

Good schools shape communities

Good education can help young people become mature adults, caring family members, and effective citizens. This can lead to communities which are more civic-minded and responsible. This in turn helps to lower crime rates and strengthen the bond amongst families within the community.

Some businesses and organizations view themselves as partners in shaping communities, and thus lend their hand in setting and supporting high learning standards to make a difference in their local community. Employers and employees, after all, are parents too and they want to live and work in communities with good schools because they know that good schools and healthy communities go together. This is even more apparent in affluent areas where parents have much higher expectations from schools in the area.

Good schools boost property values

As good schools upgrade society’s values and attracts businesses and investments, demand for properties follow suit. But that equation is a long one and it takes time for the whole process to bear fruit. Nevertheless, it is definitely a rewarding scenario.

It is thus obvious that the ‘E’ factor offers tremendous opportunity for real estate developers of new townships. It acts as a potential catalyst for commercial and upscale residential properties for the wealthier bourgeois who are willing to pay top dollar for their children’s education.