Malaysian Property Market-What Can Happen in 2014 and Thereafter

Millions of ringgits abodes

This article by Cheryl Poo in the Online The Star 25 Feb 2014 makes interesting reading.

I have edited it.

"Siva Shanker,the president of the Malaysian Institute of Estate Agents opines that the current glut of resal estate in the country will clear over time.

His reasoning?

The local economy is healthy and not in a tailspin. That means that the property market will be able to withstand the pressures of speculation and the curbs imposed by Budget 2014.

An artist impression of big bucks residences

For example, he said the Mont Kiara (excluding the surrounding Segambut areas) has in the last 20 years built an estimated 20,000 units. Iskandar Malaysia, on the other hand, has built some 40,000 units in the last three years. All this has created a lot of pressure on supply and apparently the market has already adjusted by staying away.

Meanwhile, on short term, this oversupply will continue to run its natural course. Expect many units placed in the market would not sell easily for now. However, he expects that by the second half of 2014, after a period of consolidation, buyers will emerge as they come to terms with the realities of the market.

2015 will possibly see an uptick in the property sector with the upturn going into 2016.

Siva believes that in the medium term, much of the oversupply will naturally sort itself out, adding that the
country’s relatively low exposure to the “international economic ups and downs” compared with Singapore will be an advantage to Malaysia.

“There’s also the trickle down effect from large infrastructure projects as more industries benefit from them,” he said.

Siva reported that apparently buyers were not keen on the secondary market, although it made up 80% to 85% of the local property market transactions in the last three years. He believes as high-rise property prices surges, buyers would be forced to look elsewhere for more affordable landed property – and they will find this in the secondary market.

Siva forecast that property prices around the KLCC area will reach RM 5,000 per sq ft within the next three to five years.

“As it is, Four Seasons Place in Ampang is going at RM3,500 per sq ft.

A very clear third strata will form now, which are properties that were completed in the last two years but flipped into the market. Those properties will face the most selling and renting pressure because they were purchased for sale on the day of completion.”

So, for those who intend to buy, know your budget and what you are looking for from now on. For sellers, best to wait out this current year before thinking of selling.

Remmeber the government's RPGT will bite quite deeply this time around.