Swhengtee 8th Annual Property Forecast Talk 2015 “Decoding Property Investment Opportunities in 2015 A Totally Different Approach to Tapping Great Profits”
Category: Swhengtee News Published: Tuesday, 27 January 2015 01:45
More Competitive Real Estate Policies Needed to Keep Up with ASEAN
‘ASEAN EFFECT’ to impact our property market, so more open policies needed to compete, says property investment consultant
Malaysia needs to come up with more incentives to stimulate our property market as competition intensifies with the coming ASEAN integration. Elaborating further, international property consultant and speaker, Dato’ Sri Gavin Tee 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 impact of ASEAN integration, targeted at the end of 2015 in the form of AEC (ASEAN Economic Community), which Tee described as the “ASEAN EFFECT”, 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.” 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.
Tee further announced the arrival of “The Greater SEA Era” (Greater Southeast Asia) and the “8 Diamond Years in Malaysian Real Estate” in the first chapter of his Annual Forecast Talk.
“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.
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.
Tee was talking to reporters during his one-day seminar on “The Art of War in Property Investing” held at Sheraton Imperial Kuala Lumpur on Sunday.
Marketing overseas raises prices
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% 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.”
Prices are unlikely to drop
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,” said the property consultant. 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.
With over RM1 billion of property deals under his belt and potentially RM3 billion this year, Tee is acknowledged as one of the movers and shakers in the industry.