ASEAN KEY DESTINATIONS
When will the Malaysian property market pick up?
AT A recent property seminar organised by Asian Strategy & Leadership Institute, several developers and property consultants had a debate predicting when the property market will pick up.
Real Estate and Housing Developers’ Association Malaysia (Rehda) Patron Dato Jeffrey Ng Tiong Lip reckoned the residential sector should recover next year or in 2018.
Savills Malaysia’s Managing Director Allan Soo, who specialises in retail malls, expects a 2019 recovery.
Ng says the current slow housing market is actually good over the long term, although it is painful in the short term. It all depends on how we manage “the noise”.
“If next year is election year, the recovery – if there is one – will be after that because between now and then, there are so many uncertainties.
“There is a lack of clarity at the moment,” says Ng.
His reading of the property crystal ball of a 2017/2018 turnaround is by far the most positive and contrasts with Kenanga Investment Bank Bhd equity research head Sarah Lim Fern Chieh.
Lim expects house prices to be flattish or slightly weak depending on locations “over the next four to five years, if there are no major policy changes”.
Although it is widely accepted that the property cycle is between eight to 10 years, within this cycle are “mini two-year cycles. There were two-year up-cycle in 1999-2000 after the Asian Financial Crisis, and another in 2003-2004 and 2007/2007.
But after the 2008 global financial crisis, Malaysia had an extended five-year up-cycle between 2010 and 2014 with prices peaking in 2013, and this was largely due to quantitative easing.
Lim is expecting a longer consolidation period of between four and five years, starting from 2015, before the next up-cycle, barring any policy changes and the global economic climate. She is also expecting the property market to experience structural changes due to affordability and liquidity factors.
Notwithstanding the fuzzy horizon, there are nevertheless a few certainties which may well put the sector on a better footing.
First, home ownership has become a national issue. Second, the government, at both federal and state levels being landowners, are stepping up on affordable housing. Third, prices are expected to be more realistic going forward.
Rehda President Dato Seri FD Iskandar Mohamed Mansor is seeking government cooperation to reduce or waive development charges to bring down prices as this is “too challenging” for private developers to go it alone, considering today’s high land prices.
“If the government wants developers to build more affordable housing, give us cheaper premiums or don’t charge at all.
“We will then see more stability in prices, or even a reduction, if development charges and all sorts of other charges imposed on developers come down,” he says.
FD Iskandar says property development and land matters have been the biggest revenue earner for every state. Both federal and state governments own large tracts of land. Although he had made this call before, he was very passionate and firm this time around. Other developers, previously silent, are also quite vocal about the various land and development charges they have to fork out.
This is probably the first time developers are coming together to make a collective public call to seek a waiver or reduction of development and other aspects of compliance cost. The effectiveness of that call depends on the government’s will to act.
While developers can clamour for such waivers, what is facing the market today is weak sales and this in turn is forcing developers to tweak pricing and strategy a bit, hence the drop in the number of launches as they try push unsold stock.
Andaman Group’s Managing Director Dato Seri Vincent Tiew says developers will be offering “more realistic pricing” from now onwards with location being a paramount factor.
There will be more affordable housing and this can be seen from the various affordable housing projects being planned by both the federal and state government although the end-products are slow in coming.
This, says Tiew, can be seen in the various agencies under the federal and state governments, among them being PR1MA Corp mandated to build 500,000 units of affordable housing units by 2018, as outlined in Budget 2013.
A total of 240,000 houses were due by end-2015, with an annual mandate for 80,000 between 2013 and 2015. The number of completed units was 883 at the end of 2015. By the end of this year, 10,000 units are scheduled to be completed. The number of units approved to date are 232,807 against 1.24 million PR1MA registrants as of February 2016. All eyes will be on the affordable segment in Budget 2017.
Malaysia News, Property
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below