The property market is on the right trajectory for growth, despite some issues and challenges to be shouldered, opined industry players at the PropertyGuru Malaysia Real Estate Summit, held last week.
Officiated by the Deputy Finance Minister Datuk Lee Chee Leong, he shared on how the market remains positive and expects it to remain soft in the next couple of years in his keynote speech.
He stressed how severely unaffordable Malaysia’s residential homes are, with prices hovering at 5.5 times the median income compared to Singapore’s 5.1 times.
He also emphasised that this pertinent issue must be addressed by all parties particularly local authorities and property developers.
To maintain a balance in the market, he said both must exercise due diligence before arriving at development decision to avoid an oversupply situation.
Concurring this was speakers of the summit, who addressed and provided insights and innovations on how to shape the future of the country’s real estate.
Meanwhile, Steve Melhuish, PropertyGuru founder said, Malaysia is one of Asia’s fastest growing markets, and in an increasingly globalised world, the event brought together some of the region’s industry thought leaders to share their views.
“Despite recent market challenges, there was overwhelming enthusiasm – supported by strong underlying fundamentals and ongoing domestic and foreign investment. Malaysia’s real estate growth prospects are healthy and PropertyGuru is proud to play a part in supporting the industry.”
Here are key takeaways from the one-day summit:
Matching the Mismatch
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Jones Lang Wootton executive director Prem Kumar noted that the mismatch between property prices and income levels have worsened.
This happened with the increase of house prices rising faster than the growth of income levels which have easily grown 10 times over the past 30 years.
“Income levels are rising at a minimal rate compared to the hike in property prices, especially residential units, that even joint loan applications by buyers to gain lending were reaching saturation point.
Joint loans were usually leveraged by developers to sell the more expensive properties but they were not able to catch up with the growth of property prices,” he said.
Prem Kumar stressed that there was a fallacy in thinking that income levels are high, resulting in producing high-end properties in the last couple of years.
“This caused a severe mismatch and has woken the market up to shift towards the affordable sector,” he added.
Nevertheless, it is now in the favour of the masses for there will be an increase of supply for the affordable home category.
Clear and Efficient Information
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There is a need for a better flow of quality information to become more efficient said Khong & Jaafar Sdn Bhd managing director Elvin Fernandez.
He calls for more information on transactions and the various segments within the sector to enable buyers and investors to understand the market better.
Therefore, he among other key speakers urged for a more clear and efficient housing saying that better information flow would lead to effective decision-making, transparency and create a higher level of maturity in the property market.
Prem Kumar, on the other hand, said market lacks transparency particularly in terms of transaction information, as the government does not have stringent requirements on how developers report their sales performance.
He also was quoted in local dailies saying the government should support a free market and avoid over regulating as certain controls and measures are needed to ensure that the public at large makes well-informed decisions, especially in property purchases.
Relax Regulations for First-Timers
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Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Seri FD Iskandar Mohamed Mansor who delivered his keynote speech said he would like to see an end to the financing issue, especially for first time buyers, and properties below RM500,000.
He appealed to the government to relax regulations for first-time house buyers and affordable properties which includes a cheaper interest rate and longer loan tenure for transactions or even two generation loan schemes.
He told reporters that house buyers are constantly facing difficulties with the upfront payments. Therefore, if the loan margins [by banks] given are lower than the usual 90 percent, this would dampen the buyers’ eligibility for home purchases.
Additionally, he said that incentives allocated for schemes to help first-time buyers, such as the RM30,000 incentive per unit built under the MyHome Scheme, are insufficient and urged the government to increase them in the coming Budget.
Of Transformation, Innovation and Sustainability
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Malaysia is experiencing a rapid upgrade in infrastructure and managing principal of Orkney Investments Malaysia, Rafiq Jumabhoy believes that the China’s One Belt One Road initiative is expected to have a transformative effect on Malaysian real estate over the long term.
Rafiq said a rise in services will be seen with new skills sets being cultivated and opportunities for property development given the great demand for housing, especially among the younger generation.
In the meantime, keeping aligned with tech savvy buyers, more Internet-centric innovations are making waves in real estate such as Blockchains.
“Innovation is changing the real estate landscape as technology is transforming conventional business in various industries, and we must keep abreast with these savvy changes particularly among the millennials,” said Chief Executive Officer and Co-Founder of REMS Advisors and FundPlaces, Tan Kok Keong.
Tan predicts the Internet-centric way millennials respond to the world has changed how people consume goods and services.
“The younger generation are able and willing to use technology to transact, and more likely to look at an investment based on returns, rather than property ownership,” he said.
Another breakthrough in the real estate landscape is the adaptation of drone technology said Avetics Chief Executive Officer Weiliang Zhang.
Fairly new to Malaysia, drone technology can increase productivity-related issues in the construction industry.
“There have been limitations to the adoption of modern practices, with a limited adaptation of information technology such as BIM and lack of data and information-driven decision-making which can now be enhanced with this innovation,” he said.
Lastly, sustainability is trending when it comes to real estate and it’s the way forward said Deputy Managing Director of Ho & Partners Architects, Nicholas Ho.
“Technology is changing the way we live. It is where smart cities are heading that in turn is improving lives and efficiency and it is crucial for us to adopt and make the necessary changes,” he said.
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