Malaysian property market to avoid slump

PETALING JAYA: The local property market would be able to escape a property bubble, such as the one that is affecting neighbouring countries, as it is mainly driven by domestic demand, according to several industry experts.

Hence, the domestic demand would enable the local property market to stay resilient, they said at a roundtable discussion on Corporate Real Estate Investment Opportunities organised by Zerin Properties.

The panelists agreed that the real estate market, particularly the residential sub-sector in well located areas in Klang Valley, continues to be attractive to both local and foreign investors, according to the conclusion of the experts which was posted on its website www.zerinproperties.com yesterday.
 
According to International Real Estate Federation (FIABCI) Malaysia president Datuk Richard Fong, the property market did experience a “slight bubble” in the high-end sector in Kuala Lumpur particularly in KLCC, Mont’Kiara and Hartamas where property prices have doubled over the last three to five years.

Fong advised investors to look out for deals when looking for condominiums in Kuala Lumpur City centre, especially those between the region of RM800 and RM1,000 psf.

“One should grab when you find sellers looking to cash out at a 30% discount from the property’s peak price,” he said at the roundtable discussion moderated by Hall Chadwick Asia Sdn Bhd chairman Kumar Tharmalingam,

Zerin Properties chief executive officer Previndran Singhe said: “We are still resilient although transactions are slowing down. After Chinese New Year festive period, you can see developers launching products but in order to be successful, they have to be innovative,” he added.

He added landed properties continue to remain the best form of property investment. “With developers offering 5/95 and 20/80 financing schemes, the primary residential market is becoming attractive. Then two years down the line, investors can also enjoy some gains from capital appreciation.”

The panelists also said with liquidity in the marketplace, innovations by developers and the Malaysia My Second Home Programme also increase the attractiveness of acquiring local real estate.

The panelists also observed that investing in Real Estate Investment Trusts (REITs) is also becoming popular as an alternative form of investment.

Axis REIT chief executive officer Stewart LaBrooy said investors found REITs attractive due to its hassle-free nature and higher yields which can easily reach 12%. “For foreign investors, liquid investments are far better than having the burden of a physical property like finding a tenant. When it comes to REITs, they can cash in and out as they please.”

On the commercial office sub-sector, the panelists agreed that KLCC’s iconic Petronas Twin Towers landmark continues to be attractive for large multinational corporations. According to Previndran, rental rates in KLCC are not expected to “fly” due to sustainable demand.

However, the office market could get a bit soft in Petaling Jaya with new supply coming in from PJ8 and V Square while rentals are stable in micro locations like Damansara Heights and Bangsar.