No Horsing Around With Your Investment This Year
the “men”, and not the “boys”,
among the players are best
positioned to withstand the test.
Buyers must watch out for offers
that are not realistic — you would
not want to be saddled with an
inferior product. Your best bet
would be to buy from established
developers that have a good track
record.
S P Setia’s innovative 5:95 scheme for its Setia Alam township was wellreceived
Brace yourself for a rough ride
in the Year of the Wood Horse.
Caution is thick in the air and
sentiments have largely been
reversed compared with a year
ago. A wait-and-see mood is now
the order of the day.
Interestingly, even feng shui
experts are giving conflicting
predictions on the real estate and
construction sectors in Malaysia.
A sign of uncertainty, don’t you
think?
Whatever the case may be, the
reality remains if developers have
been working hard to woo buyers
previously, they should expect
more trying times ahead.
The market-cooling measures
unveiled in Budget 2014 have
already kicked in, no doubt.
Though not unexpected what
with the escalating property
prices and household debts even
genuine buyers are not spared
the tighter lending regulations.
solely on the attractive Developer
Interest Bearing Scheme (DIBS)
and easy mortgage regime start
servicing their loans in a quiet or
downturn market.
In such a scenario, speculators
will have no choice but to
become longer-term investors or
exit at a loss.
For those who can recall, there
was a mixed reaction when S P
Setia introduced the innovative
5:95 scheme for its Setia Alam
township project in 2009.
Because the easy financing
scheme only required purchasers
to put a 5% downpayment, the
project was a big hit with buyers.
However, sceptics were worried
about the impact on the market
when these houses were ready
two years later. But as it panned
out, the units were completed
during an uptrend in the market,
so the buyers found themselves
in the money.
Besides the supply and demand
factor, the market is also
grappling with growing concerns
about inflation.
Speculation is not apparent on
the secondary market where the
subject properties are already
built and thus offer no immediate
“window” for price appreciation.
Consequently, the volume of real
estate transactions is getting thin.
Still, it is not all doom and gloom.
The good news is interest in real
estate has not faded altogether.
This is particularly so for select
property types, including landed
homes in preferred addresses
with good accessibility. Gated
developments remain attractive
because of security issues.
Affordable homes with immediate
or promised accessibility are also
much sought after.
Developers know that it is an
uphill task trying to win over the
shrinking pool of buyers in the
coming days. The cost of doing
business, land and building
materials is rising yet demand for
homes is subdued. With creative
pricing schemes such as DIBS
no longer allowed and financial
institutions more stringent on
financing, developers will have to
compete through cost efficiency,
product and design creativity,
branding and marketing.
Contrary to widespread
speculation, price dips have
not been noticeable. The real
test, however, will come when
speculators who invested based
Then there is the Goods and
Services Tax (GST) to contend
with from April 2015.
Banks Urged to
Subsidise Rates for
Low-Income Earners
Meanwhile, it’s no party for
contractors either. While
construction material prices have
not yet increased in tandem with
higher fuel and electricity costs, a
hike is imminent, like it or not.
Some may argue that a
lower demand for buildings
will bring down the cost of
building materials, but this is
not necessarily so because the
construction of the MRT and LRT
lines are in full swing. Adding
to that is the construction of a
large number of residential and
commercial buildings launched
last year and the year before.
Contractors who have won jobs
will have to bite the bullet to
complete them based on the
tendered rates. Those planning
to tender for new jobs will surely
raise the numbers in anticipation
of higher material and labour
costs.
On a different note, more
Malaysian developers are building
their portfolios outside the
country, particularly in London
and Melbourne. Meanwhile,
developers from these markets
are eyeing Malaysian buyers,
hence the high frequency of
exhibitions and sales of overseas
properties in Kuala Lumpur.
In the meantime, developers