With Budget 2015 to be announced on October 10, the national is preparing itself for the final countdown to this year’s budget. Gavin Tee, founder of SwhengTee Internatioanl Real Estate Investment Club, hosted a roundtable discussion titled “Real Estate Policies and the People: A Roundtable Discussion” and invited 13 active real estate industry professionals to comment on four major topics and to offer suggestions to the government in drafting policies that are favourable to the industry.
Participating professionals include Mainco Berhad Chairman Dato’ V.Siva, IHSV Advocates & Solicitors Elizabeth Siew Wai Kit, B.I.Group Director Tan Hwa Chuan, Chur Associates, Founder and Managing Partner Chris Tan, Savills Rahim & Co, Head, Residential Sales & Letting Guy Major, CIMB Securities Director(Head, Business Development, Retail Equities) Michael Tee Wee Huat, GM Training Academy Founder & CEO Miichael Yeoh, GDS Properties Principal Realtor Govin Bala, Greater Synergy Group Founder & CEO Ahyat Ishak
REI Group CEO Daniele Gambero, veteran real estate investor Gordev Singh, Carey Real Estate Managing Director Nixon Paul and Tee & Teoh Advocates Solicitors Dato’ Tee Lian Eng.
Tee Urges for Adjustments to Policies
According to Gavin Tee, the various real estate cooling policies implemented by the government since Budget 2014 has been too general and affected the entire market, not just speculators as originally planned. In fact, many first time buyers with limited financial resourced found themselves to be most adversely affected by these policies.
He also urges the government to address the negative spill-over effects from the MAS tragedies and to table real estate policies that are investor friendly in order to attract foreign investment back to the country following the months of bad press.
Homebuyers to Enter Market
Tan Hwa Chuan feels that the policies in Budget 2014 have already taken effect and many developers have responded with different marketing strategies targeted at homebuyers instead of investors.
On the previous practise by many speculators to buy properties and quickly flip for a profit, Nixon Paul agrees that it is a very unhealthy practice, and he believes that the steps taken by the government has actually played positive roles in addressing the issue.
Gordev Singh feels that the regulations has cause much headache for investors as the problem of increasing property prices is worsened by the increasing difficulty in obtaining loans. He feels that since the government has already effectively reined in speculation, it is perhaps time for the banks to relax lending requirements so as not to stifle the market.
Innocent First Time Shoppers
On the issue of affordability, Tee Lian Eng feels that whilst there were indeed various policies implemented in 2014 to increase home ownership amongst the youth, the fact remains that many are unable to afford properties. He feels that this is mainly due to the fact that the policies only scratch the surface of the problem without addressing the underlying root causes. He hopes that the government will reassess the current policies and develop a more targeted approach towards addressing the issues.
Dato V.Siva added that there are still many uncertainties and even fears surrounding the imminent implementation of the GST in April next year. He suggested that the government take a closer look at the tax system and a more proactive approach to helping the Rakyat gain a better understanding.
Review Lending Policy
Mortgage expert Miichael Yeoh sees the tough lending policies as the biggest obstacle facing the real estate market. Figures state that up to 48% of the loans are rejected, and with the figures especially high amongst first time buyers, the outlook is not good for many young buyers.
Guy Major opines that the demand for properties is fundamental and will not halt; the investment objective then is to focus more on specific locations rather than any single region.
As to the build-then-sell model to be implemented in 2015, Daniele Gambero hopes that the government will enter into more dialogues with the private sector and developers to gain deeper understanding on the issue to avoid potential negative impacts.
Open-ended minimum amount for purchase by foreigners
In a country which encourages tourism and economic growth, factors like affordability and value for money often attract foreign buyers and investors into the country. But this liberal policy has been curtailed due to the imposition of the minimum purchase price by foreigners. For example, some properties are excluded altogether from being bought by foreign buyers even though the selling prices per square foot are very high; this is because of the much smaller built-up area which translates to prices going below the required minimum amount stated by the policy (RM1 mil). With the increase in the supply of hotels, resorts, SOHOs, retails, students accommodation, etc.; which are in high demand by foreigners, this policy has the negative effect of discouraging such purchases by foreigners, thus having a negative effect on our economy especially towards tourism industry. As such, Tee proposed that the minimum floor of RM1 million should only apply to residential properties while it should be more flexible when it comes to commercial properties. “This will help to attract more foreign investments in these developments.”
Readjust “GRR” Policies
Gavin Tee pointed out that rental guaranteed investment schemes have been popular with many foreign and local investors, but the banks have recently implemented many restrictions to the schemes. He believes that there is a need for greater flexibility and leeway as these projects such as hotel units, resorts, studios, student accommodation and retail units are required professionally managed which should prove to be more secure for the banks in addition to being a good direction forward for the entire real estate market.
Looking Forward to Favourable Policies
Ahyat Ishak hopes that the government can continue to actively upgrade infrastructure and the rail transit system, including effective cost management and a well-designed bus transit system. He stresses that a good public transport system is one of the key considerations for many homebuyers.
Chris Tan highlighted the need for the government to assure the public to avoid any panics as the current situation is not as dire as some of the data and figures might have suggested.
Elizabeth Siew hopes that the government can focus its effort in tackling the inflation instead of increasing the intensity of real estate cooling measures as she believes that the root cause of any escalation in prices ultimately boils down to the overall inflation the country is experiencing. In addition, she hopes that the Federal and State Governments can be consistent in their policies to ensure that the policies meet their objectives.
Michael Tee hopes that the government will not raise interest rate further for fear of additional inflation that might burden the people. He also suggested that the government considers personal and corporate tax rebates to help reduce the burden on the people.