Avoid speculative investments

He is not perturbed that his reading of the Malaysian property market is against the herd. While most property development players do not expect sentiments to pick up for about another year or two, Zerin Properties CEO Previndran Singhe sees the market bottoming out soon while certain areas may have already levelled off.

He says his forecast is based on the trend of recent transactions and enquiries his consultancy has received in recent weeks.

“We are getting more calls now and there are more transactions compared with, say, three months ago. People are getting interested again; they are picking up assets at lower and more attractive prices,” he tells City & Country, adding that any further lowering of interest rates will have a positive impact on the real estate sector.

The market has softened in the current trying times, but there are some safe havens. Previndran identifies some of these as landed assets in the traditionally “hot” and high-end areas, such as Bangsar, Damansara Heights and Taman Tun Dr Ismail, where prices have remained resilient.

He says buyers are also keen on landed property in other areas, such as Sri Hartamas, Desa Sri Hartamas, Medan Damansara, Seputeh and Petaling Jaya, where values have not dipped but sellers are reasonable in their pricing.

As for high-rise homes, Previndran says those in Bangsar, Sentul West and East and Mont’Kiara have been resilient, as are some selected units in the Kuala Lumpur City Centre (KLCC).

“This is the best time to look out for good buys as sellers have become more reasonable in their asking prices,” he says. He believes that the best hedge during a crisis is still the real estate sector.

Since the downturn in 1997, Previndran says the Malaysian property market had been experiencing mini cycles, with the first mini boom in 2003 followed by another surge in 2008. On pricing, he says: “I think prices will be resilient, with KLCC facing some more downward pressure due mainly to the more speculative nature of the luxury condo market there.

“There are lessons property investors can learn from the previous financial crisis and one of them is, of course, to avoid speculative investments,” he adds.

Previndran will be presenting a paper entitled ‘Malaysian residential property market outlook — Any safe haven?’ at the coming The Edge Investment Forum on Real Estate 2009.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 745, March 9-15, 2009.