Despite the rather gloomy outlook for the property market in 2014 due to cooling measures announced in Budget 2014, renowned property investment consultant Dato’ Sri Gavin Tee remains upbeat due to several favourable factors. These include more choices for buyers especially for own use as prices are expected to correct slightly in both residential and commercial areas, and rising interest by foreigners due to our relatively lower prices compared to other markets.
“China, Macau, Hong Kong and Taiwan have even tougher tightening measures compared to Malaysia’s cooling measures which are relatively mild. So, despite the increase in Real Property Gains Tax (RPGT) and the increase in minimum purchase price by foreigners to RM1 million, I expect more interest from foreigners especially in the three globalised areas,” says the ever optimistic Gavin.
The three globalised areas are Greater Kuala Lumpur, Penang and Islandar region. The global purchasing power of foreigners has increased and they are particularly interested in financial centres, city centres and tourism areas. Gavin predicts we will start seeing more real estate activities in these areas from the second half of 2014.
“Malaysia is still politically stable and there is still plenty of cash around,” he notes, adding that we have a good 2-3 years of competitive advantage before other emerging markets such as Cambodia, Myanmar and Indonesia catch up with us and become more attractive to international funds.
Between 2010 – 2012, prices of property in Malaysia have shot up very high resulting in a series of cooling measures being implemented to slow down the market. The impact is showing as the market reacted with lower number of transactions from 2013. Cooling measures announced in Budget 2014 have obviously put a damper on the market but Tee reckons some areas may still see prices moving up. “Some growth areas may even see prices potentially hitting record highs. So, there are still a lot of buying opportunities out there provided you know where to look,” he says.
This is in line with Gavin’s prediction of a “Golden 10-Year” period for property investment in Southeast Asia including Malaysia back in 2010 just before the Malaysian property market surged to an all-time high in 2010 – 2011. The “Golden 10 Years” of the Malaysian real estate market is expected to continue to grow, and the short term dampening of confidence will not affect the long term prospect of the industry, he emphasises.
Gavin expects investors and developers to reenter the market towards the end of March which will help lift up the market. He also says many large-scale projects will kick off after Chinese New Year. The numerous mega projects planned by the government will spearhead the growth of Malaysia in the next couple of years, and the effects will be felt once the projects have gained momentum.
He is particularly optimistic about Greater KL development and the development potential of Melaka as the Melaka state government has many developments lined up. As a popular tourist destination, Melaka will also benefit greatly from Visit Malaysia Year 2014 and the spillover effect from tourism will help increase investment in the market.