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‘Golden Decade’ for property investors

MAJOR SHIFTS: Despite the credit crunch and economic uncertainties worldwide, most experts during a recent seminar see a silver lining in the third quarter amidst major shifts in the real estate world

By KHAIRUL KHALID

Sweeping Changes: Globalisation is impacting worldwide real estate markets as governments around the world invite foreign funds to invest in their property developments. “The march of globalisation has not spared any country and we will see sweeping changes in the real estate world in the coming years. We will witness a shift in the flow of funds as they gravitate towards countries that offer the best returns in an uncertain global economic and political environment,” says international property consultant, Gavin Tee during the “Changing Face of The Real Estate World” seminar held at the Putra World Trade Centre last weekend.

One of his key observations was that globalisation will work both ways — by increasing the challenges faced by countries as well as presenting them with a wealth of opportunities.

Golden years: During the two-day event which was attended by approximately 1,200 participants, Tee shared his views and predictions on the property market in 2013. Although he admitted that this year would see more tightening of financing and possible tax increases, he was still enthusiastic about prospects for investors. He predicted that this decade will be the “Golden 10 Years” for local property investors and will see unprecedented growth in the local property market.

He also listed his picks of property hotspots in 2013 in Malaysia, the Klang Valley and internationally.

For the Malaysian market, Tee’s Top 10 picks are Iskandar (JB), KL City South (Jalan Cochrane area, Imbi, TRX (Tun Razak Exchange)), Kota Kinabalu, Penang (Bayan Lepas and mainland), Cyberjaya, Kuching, Tebrau, JB (CBD), Pangkor Island, KLIA region and Malacca.

His Top 10 Klang Valley hotspots include Jalan Imbi /TRX Zone, Jalan Cochrane, Jalan Duta/Mont Kiara, Mid Valley/Bangsar South Belt, Taman Desa/Seputeh, Cyberjaya, Petaling Jaya town centre (Sec 14), Shah Alam-Subang belt, KLIA (Kuala Lumpur International Airport) region and KLCC (Kuala Lumpur City Centre).

On the international front, Tee’s picks are London, Dubai, Moscow, New York, Madrid, Miami, Jakarta, Wuxi, Iskandar and Gold Coast in Australia. He observed that most of the property hotspots are moving southwards, both in Malaysia and international markets, citing places like Iskandar, Miami and some provinces in China that are located in the southern region of their respective countries.

Special zones: Another of Tee’s analysis is that governments around the world are taking more active roles in promoting their property markets to potential investors, unlike previously when demand was more market- and developer-driven. Government policy-making, urbanisation and infrastructure developments are influencing these shifts from a market-driven property market to more government-led projects.

“Most of these national mega projects cost astronomical sums and not even the richest private developers can afford to fund these projects on their own. Therefore, the governments have to step in. Even super rich countries like China are playing this game. Every province in China is trying to attract investments from foreign countries.

“These government initiatives in pulling in foreign property investors are usually backed by special vehicles or Special Economic Zones (SEZ), such as our own Iskandar in JB which has been a tremendous success so far,” says Tee who is positive that SEZs such as Iskandar can spread economic benefits not just to the respective regions, but to the whole country as well.

Public concern: The seminar also presented several industry experts talking about a wide range of topics. One of the issues addressed was the escalation of property prices in recent years that have caused public concern. “A lot of these public perceptions are partially caused by developers. Developers are trying to out price each other. Nevertheless, I believe you can still find property with reasonable prices but it is relative to how and what you are comparing them with. The key question is not whether prices are high, but whether houses are affordable. The public’s general incomes have to increase in tandem with escalation of prices to make things more sustainable overall,” said Tee Lian Eng, a lawyer.

Growth catalyst: Most of the panelists concurred that the property market has globalised and property investors nowadays have a wide array of opportunities to select from, not just locally but internationally. “Singaporeans have invested heavily in Malaysia, especially in Iskandar. The Singapore factor has sped up Iskandar’s growth.

“For example, the price of one condo in Singapore can easily fetch two units in Iskandar. That’s why Singaporeans are flocking to Iskandar, added to the fact that the Singaporean government is imposing stringent tightening measures to cool their property market,” said Wijay, a professional property investor.

Wijay also urged the Malaysian government to look into making the secondary (sub-sale) market more vibrant as the government stands to gain from the stamp duties of these transactions. “Limiting the investors means reducing revenue from this channel,” he stressed.

Tightening up: From a financing perspective, many investors are also wondering what new lending policies will be implemented in 2013. Michael Yeoh, a 15-year veteran in mortgage financing and investment is predicting that there will be more tightening measures on the horizon.

“Banks will probably tighten up a bit more on commercial and residential property financing. Loan growth this year might in the region of 6–8 per cent. Lending rate has been pretty stagnant. Nevertheless, whether the market is up or down, there will still be banks which will lend to home buyers.”

Yeoh advised borrowers to do a bit more research on the banks’ loan packages and the banks which are more willing to lend. “You could look at second-tier banks for loans and learn how various banks approve their loans. Different banks have different lending policies and guidelines.”

“To increase your chances of getting loans, you need to plan accordingly. For example, sometimes giving too many documents or too few may affect your chances of approval,” Yeoh said.

“Despite that, if you compare Malaysia with other countries that are also enforcing tightening measures in their banking industries, we are still better off. For example, banks in UAE (United Arab Emirates) and Singapore offer only 50 per cent margin of finance. In Malaysia, investors can still get as much as 70 per cent financing on their third property. Malaysia is still a good place to invest. If the property market heats up, the government will still need to do something about it, but it wouldn’t be as bad as other countries,” the mortgage expert said.

Oz appeal: On the international front, Australia is still one of the preferred destinations for Malaysian investors due to its proximity, overall stability and robust tourism. “Australia has had 21 years of uninterrupted economic growth. Our vast natural resources such as gas, copper and iron ore have given us the economic resilience to ride out the economic turbulence that has affected other regions,” said Adam Gilbert, Principal of Ruark Properties, Australia.

“Property investors can get up to 80 per cent LTV (Loan-To-Value) margin from the bank. From a gearing perspective, it’s a great place to be for foreign buyers,” added Gilbert.

NST RED and New Straits Times are the official media partners for the seminar.

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Panel speakers at the seminar (L-R) ... Michael Yeoh (mortgage financing and investment expert), Master Kenny Hoo (Good Feng Shui Geomantic Research), Adam Gilbert ( Principal of Ruark Properties, Australia), Gavin Tee (Founder and President, SwhengTee International Real Estate Investors Club), Lee Ding Ding (Organising Chairman), Tee Lian Eng (Lawyer) and Wijay (Professional Property Investor).

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