Modest growth next year

KUALA LUMPUR: The Malaysian real estate market is expected to grow at a modest rate next year underpinned by continued economic recovery and liquidity in the market, said property consultants.

“Soft markets such as the office market may see better growth than markets where prices are already quite high,” said Knight Frank Malaysia managing director Eric Ooi.

He said the outcome of the anticipated general elections and the possibility of higher interest rates would have a slight impact on the market.

“Investors in general want stability. So, whichever the government of the day, stability is important,” he added.

Ooi also expects a minimal rise in interest rates, as major increases would affect repayments of loans and the general affordability of property. He was speaking at a press briefing on the upcoming 4th Malaysian Property Summit 2011 organised by the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector, Malaysia (PEPS). Ooi is the organising chairperson.

VPC Alliance (KL) Sdn Bhd James Wong who was also at the press conference said the property market’s growth may be slowed by fears of a double dip in the US economy as well as the debt crisis in Europe.
From left: Mani, Choy, Ooi and Wong at the press conference.
He however dismissed the possibility of a property bubble in Malaysia “in the foreseeable future”, as steep price hikes in residential properties were only observed in landed properties at “very choice locations” in the Klang Valley and Penang as well as upscale condominium projects due to substantial pent-up demand for these products.

“This is assisted by the 5% to 10% deposit easy financing schemes by developers where you don’t have to pay anything until the project is completed,” he added.

Wong expects many of the loans from these easy financing schemes to mature around the first quarter of next year, prompting a slight increase in non-performing loans.

On projects proposed in the Economic Transformation Programme (ETP), Wong said the government needs to create clear guidelines for private financial initiatives (PFI) which is the crux of the ETP as 80% of its funding is expected to come from the private sector.

“For foreign contractors, developers... how are they going to come in to participate in the Greater KL projects or the Kuala Lumpur International Financial District for example?” he asked.

Also present were Rahim & Co (Sel) Sdn Bhd managing director and PEPS president Choy Yue Kwong and PEPS council member Datuk Mani Usilappan.

The summit will take place on Jan 18 next year. It will discuss the direction and trend of the real estate market next year in the context of the global and local economic climates, Bank Negara’s latest measures to rein in zealous lending as well as escalating prices of homes in prime locations.

Speakers will also address topics such as the performance and outlook of the office, retail, industrial, hospitality and luxury condominium markets; real estate investment trusts; and the Greater Kuala Lumpur’s mass rapid transit system’s impact on property values.

This article appeared on the Property page, The Edge Financial Daily, December 17, 2010.

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