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Developers will be happy to see the crisis-filled year coming to a close
and hoping to get back into the swing of things in 2010 and ahead. There
could be a temporary lull period during the traditional Lunar New Year
festive season in mid-Feb 2010 when the market will be quiet but the
pace is expected to pick up right after. Market confidence is returning
and all indicators seem to point to a recovery to a certain extent.
The Malaysian government has estimated a Gross Domestic Product (GDP)
growth of 3.2 per cent for 2010 and most analysts agree this is
achievable. Malaysian Rating Corp Bhd (MARC) has given its own 3.6 per
cent GDP growth prediction after taking into account some of the
expected weaknesses in the US economy, which will affect Malaysia’s
trade performance.
But is it too early to pop the champagne? During the recent Asia-Pacific
Economic Cooperation forum (APEC), ministers who attended the meeting
mostly agreed that the global economic crisis was far from over and the
expected upturn was just a respite rather than a recovery.
Property prices in Malaysia, especially within the prime Kuala Lumpur
area, are unlikely to see a huge jump in values like what is happening
in land-scarce Singapore and Hong Kong recently. Malaysia has more than
enough landbanks for developments.
For 2010, many industrial players feel that Malaysia’s property market
will be performing well because:
1. The interest rate is still very attractive despite its tendency to
increase in the near future because of the economy’s improving
conditions. Furthermore, finance institutions are moving toward
risk-based pricing in determining more sustainable interest rates for
the industry.
2. Due to the population growth in Malaysia, the demand for residential
properties will remain strong for years to come.
3. The removal of the 30% Bumiputra equity quota for companies seeking
to list on Bursa Malaysia will encourage more domestic and foreign
direct investment, which will further stimulate the property industry.
4. Developers continue to roll out housing projects with innovative
designs, higher quality, 10/90 property financing scheme etc.
5. As the economic condition improves and the household income gradually
increases, Malaysians will be prepared to commit to more capital
spending such as buying houses.
6. As global economy gradually recovers, foreigners are flocking back to
Malaysia to buy properties as we have one of the highest quality and
cheapest properties to offer in Asia.
From a wider perspective, Malaysia may need a few more years to fully
recover. As for property values, Kuala Lumpur may never be on the same
level with Singapore or Hong Kong for several reasons. The average
monthly take-home income of a Malaysian worker is much lower by
comparison. Crime, poor public transportation and haphazard city
planning, are perpetual issues crying for a solution. No matter how
high-tech, environment-friendly or great-looking a building is, its
property value is still determined by its location and living
environment. Factors like how safe is it to walk the streets at night or
how easy is it to take a taxi home are still important questions that
the discerning foreign property investor will ask. The Malaysian
government still has a lot of work to do in order to create the right
environment for property values to appreciate and for foreign property
investors to come in.
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