1. Tang Chee Meng, COO, Henry Butcher Marketing

His view on the Real Estates Market in Malaysia:  Extracted from THEEDGE FINANCIALDAILY 13th June   2011.

Snapshot of the residential market 
The market peaked in 2H07, thanks to investors’ confidence streaming from the bullish stock market and investor-friendly measures.


The exemption of real property gains tax (RPGT) in April 2007 attracted strong foreign investment, particularly in the high-end condo sector around Kuala Lumpur City Centre (KLCC), extending to Ampang Hilir, Bangsar, Damansara Heights and Mont’Kiara. It was the first time residential prices topped commercial office values.


The global economic meltdown softened the market after 3Q08 as foreign interest waned. Prices of KLCC condos dipped 20% to 30% off their peaks in 2008. The medium-cost segment however, remained stable.

The market picked up in 2Q09 with strong demand for landed homes. Developers managed to maintain sales volumes but with lower profit margins. However, the luxury condo sector remained soft due to low foreign interest and the reintroduction of the 5% RPGT.


The improvement in the residential market can be attributed to the introduction of attractive financing schemes, low down payments and the recovering Singapore market.


In 2010, total volume of property transactions jumped 11.5% compared with a 1% dip in 2009, and 36% higher than in 2005. The value of transactions increased 33% in 2010 against a drop of 8% in 2009, up 91% from that recorded in 2005.


Demand for landed homes increased, registering significant price increases of 20% to 30% in certain locations. Attractive financing schemes and other incentives drove sales in the primary market. Escalating prices of landed homes led to concerns of a possible bubble resulting in the reintroduction of the 5% RPGT and a cap on the loan-to-value (LTV) ratio for the third property loan onwards.


While new condos in popular locations did well, the secondary market for larger luxury condos in KLCC remained sluggish. A preference for smaller units priced below RM2 million was noted among local investors.


Outlook 
The residential market will see stable but slower growth than in 2010. Prices will stabilise and  any increase will be gradual of about 5% to 10%, aided by cooling measures.


Landed homes  are expected to perform better than high-rises with rising interest in properties along the proposed mass rapid transit (MRT) route. Suburban areas and smaller towns are expected to benefit from the My First Home Scheme.


In the high-end condo market, concerns of oversupply and slow rental market linger in KLCC and Mont’Kiara. Smaller units, more innovative concepts, designs and packaging are being introduced to stimulate interest.


Significant projects since 2007 
First:  The Kuala Lumpur International Financial District covering 34.4ha at an estimated cost of RM 26 billion is touted as the new financial hub and will change the city skyline.


Second:  Binjai on the Park in KLCC set the benchmark in luxury condo prices when one of its penthouses sold for RM38 million.