/// Hot Topic
Year of Change for Property
The outlook for 2014 points to an
evolving landscape of possibilities,
tempered by current local
sentiment.
Different rules of engagement seem
to be leading the winds of change
in the property market this year.
Some may be tempted to think that
the elements of a perfect storm are
brewing with the new measures
outlined by Budget 2014, i.e. revised
RPGT (Real Property Gains Tax)
and the barring of DIBS (Developer
Interest Bearing Scheme), etc.
There is also stricter Loan-to-Value
(LTV) ratio calculations, electricity
tariff hikes and the increase in
assessment rates to contend with.
Still, others opine that the property
market will continue to climb
upwards in the second quarter –
albeit taking off on a more sluggish
pace during the first quarter of
2014. This is due to the current
sentiment of the market, with most
adopting a wait-and-see approach.
In view of people tightening their
belts and the rising need for
affordable housing, a few savvy
developers are already tapering
down their high-end offerings to
roll-out more affordable housing
projects for the people. In the past
few years, the property market has
been riding on an upward trend.
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In some cases, prices of residential
properties surging upwards by 30%
to 35% have been nothing out of the
ordinary. Fuelled by what seemed
to be like an unending game,
uncontrolled speculative buying and
a lack of supply meeting demand
have caused prices to rise, of which
property prices have been especially
robust.
In fact, an upward spiralling
trend – that witnessed property
prices surging way past the
perceived boom cycle to reach
unprecedented highs, has proven
that the property market has been
especially resilient. So much so, t hat
purchasing a property may seem
like an impossibility for the average
wage earner – even in his lifetime.
Another restriction spells that the
days of easy financing too is fast
fading – with Bank Negara Malaysia
(BNM) stepping in to exercise
stricter control with regards to also
imposing tighter lending criteria for
developers and property buyers
alike. Additionally, with the Goods
and Services Tax (GST) coming into
force on April 1, 2015, some argue
that the prices of properties will only
increase in the future, given the fact
that rising material and construction
costs inevitably contribute to the
domino effect. Industry experts
share their views below.
/// HOT TOPIC
REI Group of Companies CEO and
Co-Founder Dr Daniele Gambero
2014 is going to see a change in the
rules of property investment. The
Government, BNM and all the bank
systems are following the direction
by BNM which has changed the
rules of the game. RPGT and DIBS
are minor changes. The big change
is the imposed transparency
developers will face on selling
values. This brings back the basic
value of the brick. Developers were
selling bricks wrapped up with the
financial package – air-conditioners,
water heaters, kitchen cabinets and
what I call “free-but not- so-free”
items like free loan agreements and
MOT(Memorandum of Transfer).
Some developers even became
“travel agents” – even offering trips
to China. Others offered lucky draws
for cars but all these items are not
part of the value of the house. These
additional values that developers are
including in their sales are against
the regulations as the purchaser
is at the losing end. With the new
rules, the purchaser will buy “a-brickfor-a-brick” and get finance on the
brick for the real value.
I am happy there is a slow
readjustment to a healthier market,
provided investors will start
looking at property as a long-term
investment. Everything is mapped
out in the property price. It will
take six months for my forecast to
readjust. The next 10 to 15 years or
so, I think, will be positive.
Iskandar Malaysia in Johor, Klang
Valley, Penang, Ipoh and Kuantan
are present and future hotspots as
they offer a strategically sustainable
location for investors. Malaysia
has been legislated, so there is
no reason for a property bubble.
Speculations and prices are
pushed up because the number
of properties offered are low, as
compared to the current actual
demand. In this kind of situation,
developers start building houses to
the point where the offer is much
higher than the demand. At that
point, the bubble will burst, but
if you were to look at the current
prices in Malaysia and the house
index value, we cannot find any
huge jump in prices. The demand
for property units is so much higher
compared to what’s on offer, so the
outlook is definitely very positive.
Axis REIT Managers Bhd Chief
Executive Officer (CEO) and e\
Executive Director Datuk Stewart
Labrooy
We have to reboot how we think
about everything and how we