Local property market poised for more activity

NOW that the much-anticipated general election is over, the local property market looks poised for more activity with the number of new launches coming up. This will ease the pent-up demand among local property investors and homebuyers.

The wait-and-see attitude adopted by property developers in the months leading up to the general election should now dissipate, and with the US economy and property market on the mend, overall sentiment will be more positive going forward. The domestic real estate sector will also be given a further boost as more government-initiated projects, especially large infrastructure ones, are rolled out over the next few years.

This feeling of optimism was prevalent at The Edge Investment Forum on Real Estate 2013, held on Saturday, May 11. Themed “New frontiers in Malaysian real estate investment”, the annual event attracted more than 500 readers of The Edge.

Some eager participants arrived as early as 7.50am at Royale Bintang Damansara hotel in Mutiara Damansara and waited patiently for the doors to open at 9am. The participants also took the opportunity to check out the latest products at the booths of forum sponsor Malaysia Building Society Bhd (MBSB) and supporting sponsor Sunway Bhd.

The Edge Communications Sdn Bhd managing director Au Foong Yee set the tone for the forum in her opening speech. “As Malaysia’s leading and premier business and investment publication, we strive to give our readers credible, relevant and timely information to help them make informed business and investment decisions.”

Indeed, the real estate experts who spoke at the forum that day provided tips on investing; locations for property investments, from within Kuala Lumpur’s Golden Triangle to Penang; as well as on investing in real estate investment trusts (REITs).

Zerin Properties CEO Previndran Singhe was the first speaker to take the stage, and shared his outlook on the Malaysian property market. Previndran was bullish on the residential property market in 2013 due to the country’s growing population and rapid rate of urbanisation.

“Greater Kuala Lumpur is home to six million people; this is 20% of our population. By the end of this decade, there will be 10 million people living in Kuala Lumpur and its surrounding areas. All these people have one need — homes,” he said.

Previndran said developments that are in close proximity to the upcoming mass rapid transit (MRT) stations will attract investors. Such areas include Sungai Buloh, Kota Damansara, Kajang and Cheras. He also touched on possible investment opportunities in the Golden Triangle, on areas that would benefit from the River of Life project, and areas close to the Tun Razak Exchange mega development.

The second speaker Ho Chin Soon, director of Ho Chin Soon Research Sdn Bhd, was his usual lively and entertaining self during his presentation entitled “Looking below the radar: Emerging hot spots”. His advice was to “follow the infrastructure”.

Among the infrastructure projects in Penang that he mentioned are the soon-to-be completed Second Penang Bridge and the new road linking Tanjung Bungah with Teluk Bahang. In the Klang Valley, Ho noted a few areas that will benefit from the MRT and light rail transit lines as well as the Damansara-Shah Alam Elevated Expressway (DASH).

He also zoomed in on Cheras South, which he said will be one of the key beneficiaries of the Sungai Buloh-Kajang MRT line; the Pekan Ampang area, which is tipped to house one of the stations under the future MRT circle line; and the Cochrane area in Cheras, where an MRT station will be located.

Datuk Stewart LaBrooy, chairman of the Malaysian Real Estate Investment Trust Managers Association, whose talk was titled “Is this the ‘REIT’ time?”, was the third speaker. He had convincing reasons for participants to look at REITs as a secure investment with attractive returns. “You may not be able to buy Sunway Pyramid but maybe you can buy the lion’s nose,” he told the crowd. “You can buy a share in a property that you have no possibility of owning in your lifetime.”

The forum also featured a panel discussion on “The impact of the KL-Singapore high-speed rail” with three distinguished panel members, namely MBSB senior vice-president of corporate business Nor Azam M Taib, Sunway executive director Kumar Tharmalingam and Knight Frank Malaysia managing director Sarkunan Subramaniam.

Speaking from the perspective of financial institutions, Nor Azam said: “Financial institutions are very positive about the potential of the KL-Singapore high-speed rail (HSR) and are confident it will attract foreign investors.” He added that the HSR will benefit both Kuala Lumpur and Singapore by allowing more movement and activities between the two financial hubs when it is completed around 2020.

Nor Azam also discussed a few main lending considerations by financial institutions with regards to mortgages. Chief among them was the location of the property.

Sunway’s Kumar said the proposed HSR project will benefit Malaysia’s economy and property sector, especially the rental market. In the Kuala Lumpur city centre, for instance, hotels, serviced apartments and offices will be the likely beneficiaries. He also foresees the growth and development of smaller towns with stations along the HSR route. “Wherever the train stops, there will be development.”

Knight Frank’s Sarkunan too believes the HSR can have a significant multiplier effect on Malaysia’s economic growth and become a game changer in the Malaysian economy. He says the construction of the HSR is expected to add RM6.2 billion to the gross national income, stimulate the nation’s GDP by 0.5% per annum during its construction period, impact the construction and manufacturing sectors, and raise foreign direct investments. “It will impact the country’s socio-economical, real estate and tourism sectors among others, and fuel the growth of transit-oriented developments,” he added.

Sarkunan said a major beneficiary of the HSR will be Iskandar Malaysia, Johor. He noted that even before the announcement of the HSR, the property market in Iskandar, and by extension Johor, was already seeing significant growth. But all three panellists maintained that these are early days yet and investors will have to keep tabs on the HSR’s progress and alignment.

This story first appeared in The Edge weekly edition of May 20-26, 2013.

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