Brunei aims for younger buyers

KUALA LUMPUR: The residential property sector in Brunei Darussalam is picking up, with banks targeting a new generation of buyers by providing easy access to credit while developers roll-out new projects aimed at a younger population.

According to a report from Oxford Business Group on June 3, there has been an increasing number of younger buyers looking to become homeowners over the past two years, a trend actively encouraged by lenders and the real estate sector.

Bank Islam Brunei Darussalam (BIBD)’s head of product management and marketing solutions, Dona Eldeyana Johan said younger professionals are moving into the housing market, representing a change in life priorities.

She said previously, many young people would get a job, buy a car, travel overseas and only then consider settling down and purchasing a home – but the timeframe has changed, with home ownership becoming a priority.

"Studies have shown that the younger generation may buy a car but after that they think of a house before even starting a family, which is a significant change," Dona said.
Standard Chartered Bank’s general manager of mortgages, Brenda Low agrees, saying more young couples are applying to banks for home loans.

“These are people who are more financially savvy as they would prefer paying the loan instead of renting a house, because in 20 years they would own that house, which is more worthwhile," Low said.

This is a trend that Brunei Darussalam's lenders – both in conventional banking and the shariah-compliant segment – and real estate agencies are seeking to cash in on.

Some of the kingdom’s leading banks, including BIBD, Standard Chartered and Baiduri Bank, have put together packages aimed at attracting buyers from the younger end of the market, offering low interest loans spread over an extended term, in some cases up to 25 years or more.

Grace Chan of Baiduri Bank's home loan division said if buyers take advantage of the relaxed mortgage terms, they should be free of debt before they leave the workforce.

"We want to keep the loans for up to 25 years, and there can be arrangements to stretch the loan period to up to 30 years, but we of course would encourage customers to finish paying off their loans in the last few years before retirement, instead of continuing their loans till they leave their jobs,” she said at a property expo in mid-May.

While none of the banks are predicting a massive property boom or a bubble in the real estate market, there are a number of factors apart from easier access to credit that could spur activity.

Analysts are predicting rising interest in and around newly developed economic centres, such as at Muara and Tutong, where property prices are tipped to increase due to the Muara port project and oil exploration activities off the coast at Tutong.

However, rather than just promoting the region to younger buyers, experts are also suggesting investors get in ahead of the market to take advantage of rental accommodation.

"Property will tend to attract a higher demand. At the moment, pricing there is still quite stable, so it's a good time to invest now," according to Standard Chartered's Low.

"When the projects kick off, you will see more people investing in that area as expatriates and other employees need a home. Before the value goes up, it is tentatively a good time to invest."

It is also a good time for younger buyers to enter the property market, both to get in on any rise in prices and lay the foundations for their future.