Local property sector set for recovery, says Kong

PETALING JAYA: The local property market is set to strengthen and grow in the coming years if the strong comeback in 3Q2009 is any indication of an economic revival, said Minister of Housing and Local Government Datuk Seri Kong Cho Ha.

He attributed the improving situation to the two-pronged impact of foreign investments and increased domestic demand, adding that home prices are forecast to see further upside, driven by huge liquidity in the economy as well as further rebounds in residential rents.

"Malaysian real estate offers good returns-on-investment (ROI) as long as the chosen location is viable," he said.

He added that the local property market is rebounding after the global economic slowdown, citing the planning of more upmarket projects, increase in sales and rising investments as signs of recovery.

Speaking to reporters after the National Property and Housing Summit 2009 organised by the Asian Strategy & Leadership Institute where he delivered the keynote address on Oct 19, Kong said Malaysia's property developers have become more experienced, resulting in a lower number of abandoned housing projects.

According to Kong, there are officially 148 abandoned housing projects in the country, of which 12 have been successfully revived to completion by the Ministry of Housing and Local Government.

“We are in the midst of reviving another 48 projects, which are in various stages of completion,” he said, adding that these projects were mostly in Selangor due to the larger volume of property developments in that state compared with others.

In response to a question about further measures to safeguard the homebuyers’ interest, besides conducting checks on the directors' and owners' backgrounds, he said that it was also up to the local state governments who provide approval for housing projects.

“We practice an open economy. If (the property developers) have obtained all the relevant approvals and come to our Ministry for a housing developers' licence, we cannot say no,” he said.

“As developers, the business risk is theirs, not ours. They have to take the risk of developing and selling the projects. They should also have the wisdom to research their markets properly.”

When asked about his ministry's wish list for Budget 2010, which will be unveiled on Oct 23, Kong declined to go into details, saying with 2010 being the final year of the Ninth Malaysia plan (RMK-9), the Ministry of Housing and Local Government would continue to uphold current projects until 2011.

He added that under the RMK-9, his ministry was tasked with building 74,000 units of low-cost homes under the Projek Perumahan Rakyat (PPR). “We have another 10,000 to 12,000 units to go, which I feel is an achievable target,” he said.

In his keynote address, Kong said Malaysia was attracting attention from foreign investors due to the federal government's policies such as zero tax on property gain transactions, a relatively stable GDP growth, increasing demand from foreign investors for local properties and increased globalisation.

"There are also positive signs that the US recession is bottoming out and this will stabilise the region's economy and spur its recovery during the last quarter of the year," he said.

"This recovery is expected to provide a favourable base for both residential sales and leasing markets in the Asian region including Kuala Lumpur, Singapore, Hong Kong and Jakarta."