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Property market to perk up

KUALA LUMPUR:  The Malaysian property market is not heading towards slump even though there may be a slowdown now as attractive financing packages and more realistic prices from sellers should perk up sentiment, according to real estate industry experts.

They said the current "wait and see attitude" by potential property investors and homebuyers may end soon, as sentiment is given a boost by the attractive purchasing environment.

Besides low lending rates, the financial crisis has prompted sellers to become more realistic in their prices and developers are coming up with attractive investment deals.

This was the view of real estate industry experts who spoke at "The Edge Investment Forum on Real Estate 2009: Residential property values: How low can we go?" on April 4.

Most of speakers were optimistic and enthusiastic about the outlook of the property sector in the country despite the current slowdown.

"Despite the current recession, the Malaysia real estate market is not headed towards a slump and there is still buying power in the marketplace," said Zerin Properties CEO Previndran Singhe.

This was a marked improvement from the last quarter of 2008 when there was almost no transactions at all. "Thanks to the low interest rates, people now want to invest in real estate and are keen on landed properties," Previndran said citing a sale of a parcel of land in Damansara Heights for RM610 per square foot (psf) in February this year.

"Transactions may be slow but they are happening. There is new capital inflow coming in. Even though it is very little, it's already flowing in," he added.

Another speaker Ho Chin Soon, director of Ho Chin Soon Research Sdn Bhd found that the property market had not experienced a bubble and hence there would not be a bust.

With commodity prices inching upwards again, there are visible signs that people are buying properties again, he said citing how a major developer managed to close RM25 million sales from one of its projects in just one day recently.

Some developers offering attractive financing packages to customers such as Sime Darby Property Bhd and SP Setia Group Bhd for instance had garnered encouraging sales during two recent sales campaigns while developers are eyeing opportunities to acquire land, he added.

The forum also included a panel discussion on "Property investment strategy in a recession with hyper-inflation - where should you put your money?"

Members of the panel were Knight Frank Malaysia managing director Eric Ooi, property investor Kam Wei Tsung and Hectares & Stratas managing partner Stephen Tew.

Ooi provided an outlook on high-end high-rise residential property in the Klang Valley where prices had generally declined between 10% and 20% from peak prices.

The market, he said, while it would soften a bit more in the short term, should provide prospects to seek good deals.

"We are seeing buyers starting to commit to purchases. This could signal the end of the wait and see period.  Sales are starting to happen already because buyers see that the prices of the properties they have been eyeing have dropped to a level they like," said Ooi.

Those still hoping for fire sales might want to rethink again as residential property investor Kam, who is also Platinum Property Ventures Sdn Bhd director, did not foresee fire sales.

The supply and demand for housing were at an equilibrium while property prices in the country have been conservative compared with Singapore and Hong Kong.

Speaking on the pros and cons of investing in property, Kam provided some tips to consider when investing during a recession, including a focused investment strategy.

Tew, who is also founder shareholder/director of Axis REIT Manager Bhd, gave some pointers on the investment potential of industrial and commercial properties.

Favouring semi-detached and detached factories for the space they come with and shophouses for the control owners can have over them; he said the yields were between 8% and 10% per annum for industrial property while commercial properties could offer fair yields of about 6.5% to 7.5% per annum.

Managing partner of Chur Associates Chris Tan, who spoke on the topic "Nightmares of a Landlord", related some nightmarish situations landlords face.

Resolving problems with tenants through the current set of legal remedies took a long time and in most cases, seem to favour the tenants.

An association for landlords should be established to help level the playing field for landlords, Tan said.

"An association will give landlords the opportunity to share information and set up a tenants database which will help in the tenant screening process," he said.

He added that a landlords association could help lobby for better regulations on landlord and tenancy thus making Malaysia an attractive place for international companies to invest in Malaysian properties.

Tan drew his experience in real estate from his involvement in the International Real Estate Federation, both regionally and locally.

He was part of the technical committee of the Prime Minister's Department to devise strategies to stimulate the property sector in Malaysia. He helped formulate the blueprint of the Malaysia Property Inc (MPI) to position Malaysia as an international property investment destination.

The Forum held at the Sime Darby Convention Centre on April 4 saw more than 600 participants. This is the third real estate forum organised by The Edge and presented by UOB Malaysia exclusively for The Edge readers. Several developers also showcased some of their latest developments and attractive deals for purchasers at the Forum including, SP Setia Group, Sunway City Bhd, Mah Sing Group, IOI Properties Bhd and Island & Peninsular Sdn Bhd.

Several participants also took home 12 Ho Chin Soon Research wall maps worth RM36,000 in a lucky draw.

A full coverage of the forum will be published in the coming issue of the City & Country pullout of The Edge weekly.

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