The Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector (PEPS)’s president, James Wong said the global and regional environment would significantly influence the outlook for the Malaysian economy.
“The local market is not recovering as fast as Singapore and Indonesia but the initial drop at the end of 2008 was less severe at between 15% and 20% compared to Singapore and Indonesia of about 25% to 30%,” he told a media briefing on the third Malaysian Property Summit 2010 here on Dec 22, 2009.
The one-day summit will be held on Jan 26, 2010 at Sime Darby Convention Centre in Bukit Kiara.
“As a result, Singapore and Indonesia have subsequent staged a higher percentage rate of recovery whereas the recovery in Malaysia is at a slower rate,” Wong said.
Wong said the secondary market for upmarket condominiums will remain soft at least until the second half of 2010 because of existing oversupply and new launches. However, the secondary market for landed properties remains firm.
He said, during the height of the global meltdown in the last quarter of 2008, upmarket condominium prices were at their lowest, with the KLCC experiencing a price dip of as much as 30%. Prices have since recovered slightly and recent launches for condominium developments were encouraging.
As for landed residential property, he said: “We expect more property launches next year, and landed property will do well next year.”
Office rents will come down as more supply come in by end 2010.
“Many office building projects which started 2-3 years ago are nearing completion and are facing occupancy problems as companies are postponing decisions to relocate to bigger and expensive premises,” he noted.
Consumer spending has not dropped alarmingly and most mega shopping malls reported that consumer traffic is still high and consequently, occupancy levels are high and demand for prime retail space remains strong at 84% in the Klang Valley.
Hotel average occupancy rate in KL in Q3 2009 was 66% while the average room rate was reported to be RM277. Due to competition, many hotels are undergoing rebranding and refurbishment exercises.
“The Kuala Lumpur hotel market is getting more exciting with the Four Seasons, Grand Hyatt, Raffles and St Regis opening hotels in the near future,” Wong said.
On the 5% Real Property Gains Tax (RPGT) to be imposed in January 2010, he said foreign purchases may be affected.
“Although the projected 5% drop in potential capital gain is relative small, its repercussions may be more damaging as it has reinforced a perception by foreign investors that government regulations in Malaysia are not consistent and this increases the risks of investments in Malaysia,” he said, adding that this might significantly affect foreign direct investments into Malaysia in 2010.
“We strongly urge the government to exempt properties held for more than five years from the RPGT and to bring forward the base year to 1.1.2000,” he said.
However, director-general of Valuation and Property Services Department (JPPH) Datuk Abdullah Thalith Md Thani said the re-imposition of RPGT would not severely impact the local property market.“The market is affected by the general economy. Furthermore, the market is currently a buyers market and the RPGT is imposed on sellers,” he said.
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