Depending on who you are talking to, the Malaysian property market will continue to head north or sail into stormy waters.
Interestingly, those who went into the market recently tend to see the market extending its climb next year. Conversely, those who missed the boat say a bubble is on the brink of bursting. On the sidelines are the property consultants who, unsurprisingly, are mostly bulls. Developers, understandably, will prefer to keep their feelings to themselves.
Be it stocks and shares or real estate, the goal of investment seems simple enough — buy low and sell high. In reality, this is not as simple as it sounds. Rapid globalisation and a blurring of boundaries have exposed our market to the vagaries of local and global sentiment. Timing, it cannot be emphasised enough, can make or break an investment.
To put the Malaysian property market into context, prices surged in 2010 even though the increase paled in comparison with that of our neighbours. But the rise in prices is not felt across the board. The clear beneficiaries are the more strategically located traditional townships that are playing catch-up with the attention-grabbing newer addresses in the economic hubs.
As for addresses where prices are seemingly taking a breather, this is not altogether unhealthy; they would have got their share of investor attention not too long ago. Already, prices in the Kuala Lumpur City Centre, for instance, are slowly but surely making a comeback.
Like it or not, property prices will continue to move up — think inflation, supply-demand and growing insistence on better-quality buildings. It is a fallacy that prices will stagnate. More so, as Malaysia strives to move up the value chain. It is more important that a bubble is not built up and that foreign direct investment (FDI) flows in.
Affordability is relative. While it is no longer possible to buy a landed two-storey terraced house in the more accessible parts of Kuala Lumpur or Petaling Jaya for under RM500,000, there are always the older apartments and condominiums for the picking.
Another option would be addresses further away from the city.
The enhanced connectivity to be provided by the RM36 billion mass rapid transit (MRT), on which construction will soon start, will help in this regard.
More than that, the MRT will effectively open up new tracts for both work and living and in the process, create a multiplier effect.
Infrastructure enhancement aside, it is vital we do not take our eyes off wooing FDI. Conducive investment guidelines are key, but precise execution is even more vital. For the people, there must be total buy-in on why Malaysia is courting FDI.
2011 promises to be no less interesting and dynamic for the property sector, what with mergers that have created mega-property development companies and the anticipated thrust of the development of Iskandar Malaysia.
In the heart of KL, it is still too soon to expect any significant physical changes in the prime Kampung Baru area with its fragmented land ownership. It is noteworthy, however, that the Kampung Baru Development Corporation 2010 Bill was tabled for reading at the Dewan Rakyat earlier this month with debate scheduled for March 2011. The establishment of Kampung Baru Development Corp is in sight.
Meanwhile the MRT, aimed at solving Greater KL/Klang Valley’s transport woes, will cover some 60km and have 35 stations, with work on the first line linking Sungei Buloh to Kajang to begin in July next year. The enhanced accessibility will no doubt heighten the potential of the 3,400 acres of Rubber Research Institute of Malaysia land, which the EPF has been given the mandate to develop. The MRT — the largest infrastructure project ever undertaken in Malaysia — will be government-owned.
Let us not forget that the MRT is but one of the many pieces of the puzzle necessary to make Malaysia a preferred real estate destination. A lot of work remains to be done.
Au Foong Yee is The Edge Malaysia’s chief marketing officer. Top of her 2011 wish list is for the government and private sector to be on the same page in wooing FDI.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 838, Dec 27, 2010-Jan 2, 2011
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