/// Hot Topic
More Cooling Measures Will Dampen
Property Market
/// HOT TOPIC
”We expect to see more
housing developments
in these areas,
particularly those with
potential access to
public transport links
such as the light rail
transit extension and
the upcoming Klang
Valley mass rapid
transit lines,” it said.
The mid -to high-end residential
market in Kuala Lumpur is
expected to “self-correct” in the
next six to 12 months, with the
impending implementation of
more cooling measures aimed at
curbing speculative activities, said
international property consultant
Knight Frank Malaysia.
“Overall, the slew of cooling
measures is anticipated to dampen
speculative activities,” said Knight
Frank, referring to the increase in
Real Property Gains Tax (RPGT) for
disposals made within five years
of the purchase of the property
and the ban on Developer Interest
Bearing Scheme (DIBS).
Other cooling measures include
increasing the minimum price for
properties to be purchased by
foreigners from RM500,000 to
RM1,000,000, and requiring banks
to give out property loans based on
net selling price (after discounts and
rebates) rather than on gross selling
price.
“While we expect lower volume of
transactions going forward, property
prices, in particular for landed
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residential units, are expected to
remain competitive with positive
growth for those located in selected,
established or upcoming areas,
albeit at a slower pace — mainly
due to limited existing or incoming
supply, and higher land cost,” it said
in its report Real Estate Highlights
for Kuala Lumpur, Penang and Johor
Baru for the second half of 2013.
The global property consultancy
firm also noted that more property
developers are now adopting a
“wait-and-see” approach to evaluate
the impact of these new cooling
measures.
“Going forward, we expect to
see developers offering greater
discounts and more freebies in
view of the abolishment of DIBS
in order to push sales and remain
competitive in the primary market.
“Some developers are also starting
to focus on township developments
in upcoming suburban locations,
such as Rawang and Kajang in
Selangor, where demand for
housing with affordable price
remains strong.
Meanwhile, Knight
Frank believes that
landed houses priced
between RM600,000
and RM800,000, as well
as high-rise residential
properties priced
below RM500,000 will
continue to attract
strong demand,
particularly from firsttime home buyers and
upgraders.
The overall outlook is
expected to remain
challenging, impacted
by the various cooling measures,
softening demand and the
expectation of interest rate hike this
year which will dampen sentiment,”
it said.
On the Kuala Lumpur office market,
Knight Frank sees tenants being
spoilt for choice as supply continues
to outstrip demand, with landlords
offering attractive incentives to
retain existing tenants and attract
new tenants to maintain and
improve their levels of occupancies.
It also noted that several property
developers have adopted a cautious
stance by deferring the construction
of their office projects, with work
to commence only when they have
secured pre-leasing commitment
from potential anchor tenants.
“But the concerted efforts by
InvestKL to attract multinational
corporations (MNCs) to set up their
regional hubs in Kuala Lumpur
are expected to help cushion
the high level of office supply.
As at November, nine MNCs had
committed to set up or expand their
operations in Malaysia,” it added.
Additionally, Knight Frank has a
cautious optimism on the Klang
Valley retail property sector as
consumers are expected to
tighten spending ahead of further
government subsidy rationalisation
measures as well as a hike in
electricity tariff and toll rates.
Nevertheless, the Kuala Lumpur
hotel market is set to remain
resilient with concentrated efforts
from the government to ensure that
the tourism sector remains at the
forefront of the country’s economic
development.
On Penang’s property market,
Knight Frank said it is expected to
remain in its consolidation mode.
“With the new measures introduced
in Budget 2014, the high-end
residential sector is expected to be
affected to a higher degree while the
commercial sector should remain
relatively stable.
“On the other hand, the
impending opening of the Second
Penang Bridge and the Penang
government’s efforts to spur
developments in the southern parts
of both the island and the mainland
will very likely lead to brighter
prospects in these locations,” it
added.
The Johor Baru property market is
also expected to remain firm in the
medium term with more Malaysians
and Singapore-based developers
expected to venture into Iskandar
Malaysia.
“Development activities will continue
to be concentrated within the city
centre, Danga Bay, Nusajaya and
Medini locality within Zones A and B
of Iskandar.”
Knight Frank said besides high-end
condominiums and apartments, the
Iskandar region is expected to see
more retail malls and purpose-built
offices coming up in the skyline.