Category: Swhengtee News Published: Tuesday, 03 March 2015 14:17
Kuala Lumpur: As the Asean Foreign Ministers Retreat concludes in Kota Kinabalu, there is little doubt that Asean's property markets hold great future potential in some of the 10-member countries which are still developing and growing with populations full of young people eager to make their mark in the world.
For example, in a report on Asean property, Malaysia's property developer Mah Sing Group Bhd which has real estate development projects in Sabah and Thailand's Quality Houses (QH) are Nomura Research's Asean property yield picks that are expected to offer above-average yields and dividend growth in 2015 and 2016.
In Manila, real estate properties are at half price levels of some types in Malaysia and Singapore. Jakarta is benefitting from the influx of professionals from all over the world just like Singapore, Kuala Lumpur and Bangkok.
International property consultant and speaker, Dato' Sri Gavin Tee opined that the impact of Asean integration, targeted at the end of 2015 in the form of AEC (Asean Economic Community), will have what he described as the "Asean Effect".
Tee announced the arrival of "The Greater SEA Era" (Greater Southeast Asia) as further liberalisation takes place down the road among the 10-member Asean states, this region, which currently is the fastest-rising economy in the world, may be the best place to scout for properties due to its huge upside potential, he said.
"Now is the time to seriously consider cross-border investments and what better place than Malaysia? With the double whammy of oil price drop and depreciating ringgit, this is the best time to invest in Malaysia from the point of view of foreigners," said Tee, who is also the Founding President of Swhengtee International Investment Alliance.
Tee said commercial properties such as shopping malls, hotels and student accommodation should be excluded from the four-unit limit on bulk purchases in West Malaysia as these type of properties are purely for investment purpose.
Tee remarked that 2015 will be a year Asean Chairman Malaysia takes the world by storm, also as a member of the United Nations Security Council and make the biggest step forward in the nation's history. Growth in 2015 is poised to be comprehensive and will be a direct contrast from the "misfortune" of 2014. All in all, Malaysians can look forward to a great year ahead starting from February, especially in the field of real estate.
Tee was talking to reporters during his one-day seminar on "The Art of War in Property Investing" held at Sheraton Imperial Kuala Lumpur recently.
The property expert was of the view that Asean could turn out to be the biggest beneficiary of the current global economic slowdown "as companies decide to cut costs and relocate to cheaper destinations."
Hence, Tee said, Malaysia needs to come up with more incentives to stimulate its property market as competition intensifies with the coming Asean integration.
Elaborating further, he said Malaysia has to aggressively come up with strategies and policies to adjust to the increasingly complicated and challenging globalised environment in property investment.
For example, policies have to be more investor-friendly such as in the case of hotel serviced apartments.
"Such apartments are geared towards foreigners, so why impose a minimum purchase price of RM1 million? This segment does not affect the low-to-middle income group, so how would raising the minimum price help them?" he asked.
"Besides, foreign purchasers comprise only a very small percentage of purchasers of Malaysian properties." Tee also pointed out that the minimum price for foreigners have brought about a situation where people are forced to build or sell properties at RM1 million and above so that foreigners are eligible to buy.
Further, Tee urged the government to grant more incentives in areas with huge development potential due to its economic advantage or underdeveloped areas that would reap great benefits from the participation of foreigners, a concept that is similar to Medini in the Iskandar region.
Purchasers in Medini currently enjoy exemptions from Real Property Gains Tax, no corporate taxes for selected businesses and no minimum requirement for foreign purchase.
"The visa fee waiver for foreigners including tourists from China is a step in the right direction although for the Chinese tourists, it is better to grant them visa upon arrival," Tee said, emphasising that Malaysia is competing with our Asean neighbours for their tourist dollars.
"We absolutely need more incentives to attract foreigners, not just in the tourism and property sectors but also in education and medical tourism."
Tee also stressed that cooling measures should not be applied across the board but should be more segment-specific and targeted at specific problems."
On the other hand, for locals, this is a challenging year as the imposition of GST, difficulty in obtaining financing and the increased cost of materials drive prices up.
"This year is full of opportunities but where there are opportunities, there are also risks and 'traps', he warned, adding that people would have to be extra careful with their investments yet not miss the opportunity to invest."
Describing this year as a year which will see the convergence of many unfavourable factors, he's of the view that only the strongest will survive.
On why prices have risen so much during the last few years, Tee explained that prices are still relatively low but in some areas where foreigners are targeted buyers, prices have gone up much faster due to higher marketing costs overseas, higher commissions for overseas agents as well as due to speculators who underwrite and re-sell at higher prices.
"As a result, marketing Malaysian properties overseas can raise prices up by as much as 10 per cent which is normal when property goes globalised. However, in some cases, foreign agents further topped up the price which has the effect of pushing up prices to unsustainable levels."
Fortunately, these cases only formed a very small percentage of properties and does not affect the general market, he said.
"But this gave rise to the perception that prices are very high. For Malaysians, it would seem that properties are overpriced but for the foreigners, the higher prices don't make much difference to them."
As for whether prices will drop this year, Tee opined that prices might even rise for medium to low cost housing due to the higher cost of land, materials, labour and the imposition of the GST.
"For these properties, due to the lower margin of profit, it's very difficult to adjust the pricing whereas for higher margin products especially overpriced properties, we can expect to see some price adjustment downwards this year," opined Tee. He is however optimistic that properties in certain segments such as tourism-related, industrial, medical and educational will benefit greatly from the 'Asean Effect' and will emerge as the hottest and most sought after investment.
According to Tee, Asia on a whole can no longer be seen merely as emerging economies, but should be considered bona fide global player that has entered a phase of explosive growth.
He added that 80 per cent of the world's biggest metropolis will be located in Asia within the next 10 to 20 years, and that Asia will be home to 60 per cent of the global population. Not only that, the middle class is rapidly growing in Asia 60 per cent of the world's middle class will be based in Asia.
Tee is convinced that the real estate market shall experience another decade of sustained growth, while there will be market corrections in some cities during this period, there is no denying the healthy long term prospect.
Amongst the different market segments, tourism, retirement, education and healthcare properties will likely experience the most significant growth. Tee believes that South East Asia will be one of the forerunners in the growth of Asia.
Source: Daily Express Online