Malaysia Real Estate Highlights - 1st half 2010
Apparently, the Real Estate markets in Malaysia are back on track.
Here are the highlights from the latest Knight Frank's 1st half of 2010 Real Estate highlights for Malaysia:
Kuala Lumpur
Penang
- Revived interest in the high end condominium market evident from fairly successful launches with more launches expected in the pipeline.
- The office market in Kuala Lumpur remained soft in 1H2010; overall rental and occupancy rates dipped amidst a moderate oversupply situation.
- Retail market sentiments continued to improve through 1H2010 fuelling upward projections of retail sales growth.
- The local hotel industry continued its growth in 1H2010 with higher tourist arrivals recorded, supported by strong domestic demand and global economic recovery.
Johor
- Penang continues to be a property hotspot with developers from both the island and the Klang Valley on the acquisition trail to increase their land bank on the island.
- Supply of retail space is set to increase with the scheduled completion of 2 prime shopping complexes in 3Q2010 and 2012.
- The growing sectors for the property market in Johor Bahru are high-end residential, commercial (shop offices) and industrial properties.
- Boosted by the development momentum of Iskandar Malaysia and the positive impact of the 10th Malaysia Plan, the property market is expected to be more active.
If you wish to read the full report, you can download it here: www.knightfrank.com.my/en/research-reports/highlights-malaysia
I don't think this news will please the MP for Balik Pulau who recently complained about the prices of recent developments in his disctricts (Affordable homes remain a dream) but it sure sounds like good news to Najib and its bid to attract foreign investments.
A contrarian take on the Malaysian property market: Malaysian Property Bubble? by Salvatore_Dali from the "Malaysia Finance blog".
My Views: Yes, the property prices in KL and Penang are frothy, well, not just frothy but very frothy. The ones still bullish are usually those who still have one or two properties in their hands, looking to offload.Almost every single valuation matrix would put property prices in KL and Penang in the overvalued category. The basis for housing - live in ownership or rental. For live in ownership, its affordability ratio. For rental, its effective yield relative to prevailing interest rates. On both accounts, affordability is out of reach and rental yields are falling rapidly.
Usually those still bullish will cite factors out of these two basis ~ most popular being foreign buying, followed by relative valuations compared to similar properties in other Asian cities. Bullshit and more bullshit.
Foreign buying, is basically speculation when they cannot even rent it out for a 2% rental yield. Foreign buying for capital appreciation is hocus pocus because locals will not take the foreign investors out ~ you bought at RM1,500psf, it will not be a local to buy from you at RM2,000psf. What you need is another more deluded foreign investor to pay you RM2,000psf.
Foreign buyers are mostly leaving finished units and houses empty. Don't believe me, go check out houses and apartments costing more than RM2m and RM1m respectively. If you can get 50% occupancy, call me and tell me where!!!
Relative valuations argument is even stupider, if you are a qualified accountant in Malaysia, after working 5 years you may get RM8,000 a month ... does that mean you will get RM8,000 a month in HK, Singapore?? Of course not, you may get HK$35,000 and S$7,500 a month. So, how does the relative property valuations argument stand up??? Properties, like any asset is just a reflection of the earning capacity of their residents .... unless you tell me that the bulk of Malaysian properties are taken up and lived in by foreigners!!??
But property bubbles do not get pricked so easily. When low interest rates is prevailing and other sectors of the economy are so weak, central banks cannot just raise rates to dampen property speculation as the broader economy will get hurt.
As unpopular as it may sounds, the measures will have to be property sector specific. I will support the following: anyone buying their second, third , etc properties ... should only be allowed a maximum of 70% loan from any financial institutions.
Agree 100% with "Salvatore".
Salvatore_Dali recently posted again on Malaysia Real Estate market.
His take hasn't changed. The Bubble is still frothy - http://bit.ly/dg8EUC