Property sales to see steady growth of 10% for 2013

KUALA LUMPUR: The Malaysian Institute of Estate Agents (MIEA) said it sees a steady sales growth of 10% across all sectors of the property market over the rest of the year, leading into early 2014. 

MIEA president Siva Shanker told the media at a property seminar yesterday he believes the property market will continue to do well, even though it is playing catch-up to the first half of the year, which saw a lot of launch delays and investor uncertainty before the general election in May. 

“The growth number we think we’ll see this year won’t be the same as the 20% to 30% we’ve seen over the last couple of years, but rather a steady, more moderate growth. 

“We don’t like seeing growth happening too fast because it could lead to a decline if the market cannot keep up,” he said, emphasising that there is no possibility of a property bubble. 

Siva said economic conditions in Europe, the US and China are also contributing factors to the slight slowdown in Malaysia’s property market during the first half. 

Commenting on the trends in the Klang Valley property market post election, he said 75% of the transactions seen in the first quarter occurred within the residential sector.

“Purchases of terraced houses and condominiums have been the primary driver for the first quarter, with total purchases in the residential sector amounting to RM7.6 billion so far,” he said. 

Siva expects the total value of transactions for 2013 to match 2012’s figure of RM37.5 billion. 

As for high-end condos, he said low occupancy rates do not necessarily reflect the take-up rate after a development is launched. 

“A lot of condominiums are not actually empty, there is a process to filling it up. When a new block gets finished, people will take time to move in, do renovations, or wait for tenants,” he said. 

The capital values of high-end condominiums have been climbing upwards since 2010, ranging from steep climbs in the KLCC/KL city area to more gradual climbs in other areas. 

In terms of Klang Valley land prices, MIEA deputy president Erick Kho said within prime locations, land prices range from RM2,000 per sq ft (psf) to RM2,500 psf and are expected to go up further. 

“In our view, land in the CBD [central business district] is still cheap considering its development potential,” said Kho. 

He said with selling prices in city fringe projects going up to RM1,000 psf, investors are shifting interest back to the KLCC area.

“Mega government and transport projects, like the MRT Blue Line, are expected to support land prices in the Kuala Lumpur CBD,” he said. 

He added that several hot spots to watch out for in the Greater Kuala Lumpur region would be Sungai Buloh, Cheras and a development triangle consisting of KL CBD, Klang and the Kuala Lumpur International Airport. 


This article first appeared in The Edge Financial Daily, on July 25, 2013.

Property sales to see steady growth of 10% for 2013

KUALA LUMPUR: The Malaysian Institute of Estate Agents (MIEA) said it sees a steady sales growth of 10% across all sectors of the property market over the rest of the year, leading into early 2014. 

MIEA president Siva Shanker told the media at a property seminar yesterday he believes the property market will continue to do well, even though it is playing catch-up to the first half of the year, which saw a lot of launch delays and investor uncertainty before the general election in May. 

“The growth number we think we’ll see this year won’t be the same as the 20% to 30% we’ve seen over the last couple of years, but rather a steady, more moderate growth. 

“We don’t like seeing growth happening too fast because it could lead to a decline if the market cannot keep up,” he said, emphasising that there is no possibility of a property bubble. 

Siva said economic conditions in Europe, the US and China are also contributing factors to the slight slowdown in Malaysia’s property market during the first half. 

Commenting on the trends in the Klang Valley property market post election, he said 75% of the transactions seen in the first quarter occurred within the residential sector.

“Purchases of terraced houses and condominiums have been the primary driver for the first quarter, with total purchases in the residential sector amounting to RM7.6 billion so far,” he said. 

Siva expects the total value of transactions for 2013 to match 2012’s figure of RM37.5 billion. 

As for high-end condos, he said low occupancy rates do not necessarily reflect the take-up rate after a development is launched. 

“A lot of condominiums are not actually empty, there is a process to filling it up. When a new block gets finished, people will take time to move in, do renovations, or wait for tenants,” he said. 

The capital values of high-end condominiums have been climbing upwards since 2010, ranging from steep climbs in the KLCC/KL city area to more gradual climbs in other areas. 

In terms of Klang Valley land prices, MIEA deputy president Erick Kho said within prime locations, land prices range from RM2,000 per sq ft (psf) to RM2,500 psf and are expected to go up further. 

“In our view, land in the CBD [central business district] is still cheap considering its development potential,” said Kho. 

He said with selling prices in city fringe projects going up to RM1,000 psf, investors are shifting interest back to the KLCC area.

“Mega government and transport projects, like the MRT Blue Line, are expected to support land prices in the Kuala Lumpur CBD,” he said. 

He added that several hot spots to watch out for in the Greater Kuala Lumpur region would be Sungai Buloh, Cheras and a development triangle consisting of KL CBD, Klang and the Kuala Lumpur International Airport. 


This article first appeared in The Edge Financial Daily, on July 25, 2013.

Should you invest in retail property?

PROPERTY investment has always been known to be a great and traditionally “safer” way to generate attractive returns.

Residential property aside, the commercial or retail sub-sector is also known to provide sound investment returns.

“For those looking to diversify their investments with steady yields and capital growth, retail property is a good option,” says an industry observer.

Factors to consider

As expected, location is crucial when it comes to property investment.

“There is an oversupply of shoplots today but there is also demand for it,” says Malaysian Association for Shopping and Highrise Complex Management’s past president Richard Chan.

“However, its success very much depends on where it’s located and what it’s selling,” he tells StarBizWeek.

Chan says accessibility and the property’s surrounding location are important.

“Today, location is not the only criteria. If a shopping complex is hard to access, it will be empty. Parking space is also important. Furthermore, if the surrounding location is well established, it would also do better.”

In terms of rental trends, Carey Real Estate Sdn Bhd managing director Nixon Paul notes that mini markets, fast-food outlets and banks tend to seek units in well-established areas with high pedestrian traffic.

“Corner units are always sought after irrespective of location, with mamak restaurants being the number one contenders.”

Nixon says food and beverage outlets tend to seek shops with reasonable car parking space available.

“The higher-end outlets tend to provide valet parking services to overcome this problem.”

He adds that landlords tend to shy away from snooker parlours, Internet cafes and massage parlours.

“Rental is only offered to these businesses when landlords have been unable to secure alternative tenants for long periods of time.”

Nixon says Sungai Wang Plaza and Times Square are two sought-after complexes.

“While many other shopping complexes have failed when spaces were sold to the public, these two complexes have succeeded extremely well. Prices in these complexes range from RM 3,000 to RM 20,000 per sq ft.

“The general perception among investors is that these complexes are in prime locations with a huge tourist population and as such tenants will always be readily available. Investors are also of the opinion that property prices in these complexes will appreciate in the longer term due to the strong rental demand.”

Benefits of retail property investment

One industry observer notes that retail property can provide long-term capital investment.

“Retailers usually want to do business for the long term and generally sign long leases. This provides stability to the investor.”

Nixon notes that there is a growing preference among investors to invest in commercial or retail property.

“When it comes to commercial property, there are less maintenance issues to contend with.”

He says when it comes to issues of financing, commercial properties currently have it easier with fewer restrictions in comparison to residential properties.

“Those who do qualify can secure small and medium-sized enterprise (SME) loans that can be used for working capital.”

Nixon also notes that as of late, residential bungalows fronting busy roads in Kuala Lumpur and Petaling Jaya have been given licences to operate under limited commercial purposes.

“Usage is limited to showroom and office use only. Advantages of bungalows over shops or retail spaces in complexes is that you get larger spaces for less money, better advertising exposure and private parking.”

Know what you’re getting into

While investing in retail property has its benefits, it does come with risks.

“The success of a business in a mall or shoplot is very much determined by the health of the economy,” says an analyst.

“For those looking for short-term gains, you can forget it! Think annual returns of between 3% and 4%. It’s a long-term thing,” says Chan.

Nixon says a growing concern among investors is that rental values are not increasing in tandem with the appreciation of selling prices.

“Valuation of shops often cannot meet asking prices and rental of the upper floors of shops are always a concern.

“Furthermore, older shops without lifts are generally not sought after by tenants and newer developments tend to take between three to five years before commercial activity and occupancy reaches optimum levels.”

He adds that investments in commercial property are generally more expensive in comparison with residential property and usually attracts the more savvy investors.

“Of late, many smaller and newer investors are also investing in these properties by pooling their resources and making collective purchases. Developers should consider building shophouses rather than shop-offices.

“Shophouses give investors an opportunity to buy a single property, stay in it and also generate rental income on the ground floors and lower floors. The floor that is designated for residential use needs to be fitted out with quality fittings and finishes and with car parking facilities.” - The Star

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Affordable ways of housing our nation

Last month, readers of this column were “brought around the world” to discover some exemplary public and affordable housing policies implemented in other countries. There are some interesting ideas that were derived from this exploration, which can be enlightening towards building affordable homes for our nation.

Hong Kong, Singapore, London and Australia have their own success stories with regard to building affordable homes. What they share in common is strong enforcement of policies with stringent rules.

Applicants applying for public housing in Hong Kong are required to undergo comprehensive credit tests covering the applicant’s income and assets.

In Singapore, the Housing and Develop­ment Board (HDB) flat owners-to-be are not allowed to own other properties in Singapore or in other parts of the world.

In London, applicants who wish to purchase a council house must own it as their only home and use it for owner occupation.

The Australian government came up with innovative ideas to increase the supply of affordable homes by offering financial incentives to individuals or entities to build and rent houses at 20% lower rental rate to moderate and low income earners.

It is statistically proven that these countries have reaped the benefits of their own respective methods. The question that now begs an answer is: What policies or housing models should we adopt to successfully house our own nation?

To deal with housing issues that involve population growth, income and development levels, there is no one model that fits all. What we can do is to learn from successful models and customise them to meet our requirements. It would even be better if we could successfully come up with our own model.

Earlier this year, our government set a goal to deliver one million affordable and low-cost homes to the public within the next five years. This is equivalent to an average of 200,000 homes annually. An institution, 1Malaysia People’s Housing (PR1MA) was set up primarily to build affordable homes and has been reported to have targeted 80,000 homes in the first year with slightly over 100,000 in the subsequent years.

The vision to build affordable and low-cost homes is applauded. Yet, questions of how it is to be achieved remain real. For instance, where should these houses be built? How to make these houses affordable to the rakyat? What regulations need to be put in place to ensure affordable housing is only owned by deserving families?

Universally, public housing is subsidised by the government due to cost and resource considerations. Land, for example, is the most crucial element in any housing development. Scarcity of land leads to costly land prices, especially in the city. The price of materials to build homes has increased over the years.

Therefore, without some form of government incentive or subsidy, it is virtually impossible for private developers to sell affordable, let alone low-cost homes.

The government can materialise its vision by providing aid in other forms. Since a lot of land resources are owned by the government, it can offer subsidies or incentives to private developers to use the land for public housing development.

Certain land belonging to government agencies, such as theRubber Research Institute (RRI), are very large and strategically located and are among the potential areas that the government can consider releasing to build affordable homes.

Another good policy would be to encourage the development of new townships in outlying areas rather than focusing on already developed and highly populated areas. Not only are these lands considerably cheaper, it would also alleviate the burden of over-crowded cities.

The government can build transportation infrastructure, including fast commuter rail and MRT along with other amenities such as schools and commercial hubs, to allow these new townships to prosper.

Besides looking at ways to build more affordable homes, addressing the delivery of the homes is equally important. PR1MA targets to deliver homes with prices ranging from RM100,000 to RM400,000 to the middle class with an average monthly household income of RM2,500 to RM7,500.

According to the information published on its website, PR1MA homes must be owner occupied, and a 10-year moratorium will be imposed, in which the property cannot be sold or transferred to another party without prior approval.

Additional consideration should include devising a comprehensive mechanism to determine qualified applicants and whether to impose any restriction on owning other property before applying for a PR1MA house.

The recommendations shared thus far are among the ideal policies and guidelines the government should consider seriously if it is to achieve its vision of housing the nation. The next critical success factor is to ensure the policies and guidelines are strongly enforced without any leakage that may sabotage the vision and leave deserving families in the lurch.

FIABCI Asia-Pacific Regional Secretariat chairman DatukAlan Tong has over 50 years of experience in property development. He is also the group chairman of Bukit Kiara Properties.

For feedback, email feedback@fiabci-asiapacific.com - The Star