Focus MALAYSIA
THE WEEK OF DECEMBER 21 –
DECEMBER 27, 2013
Review 2013 / Outlook
2014 --
By: FocusM
This year was generally a
positive and vibrant one for the property sector, with the low-interest regime,
special schemes like developer interest-bearing scheme (DIBS) and higher loan
margins of up to 90%, despite some house-buyers holding off on the purchasing
decision before the general election in May.
The recent cooling
measures announced in Budget 2014 and those taken by Bank Negara Malaysia
As the market takes time
to digest and absorb these measures, will there be renewed interest in the
property sector, given that demand outstrips supply? Will this be the right time for potential
property buyers to go into the market, more so with the implementation of the
GST on April 1, 2015 ?
 |
| Datuk Seri Michael Yam President, Real Estate & Housing Developers' Association (REHDA) |
In general, the first
half of 2013 was positive for developers as the trend, based on a survey of
Rehda members, indicated that sales were better than in the preceding half-year
in 2012 and 2011.
The survey showed a
better sales performance in H1 2013, with 6,095 (56%) units sold
compared to H2 2012 with 4,822 (46%) units sold, and the number of
landed properties launched is dwindling, while launches of strata-property
units are on the rise.
The main challenges are labour
issues and the increasing cost of building materials like cement,
steel bars, sand and bricks, which increased by between 5% and 10% in H1 2013.
What are your
expectations for the sector in 2014?
With the cooling measures
announced in the recent Budget 2014, we anticipate a challenging time for
developers. Although the budget is
tailored to promote a more stable and sustainable property market, with the
imposition of a higher RPGT, the removal of DIBS, affordable housing
initiatives by the government and higher price threshold for foreign buyers,
these measures will bring some major changes in both demand and supply sides of
the equation.
The first half of 2014
will see an initial slow down in sales, as the market adopts a wait-and-see
attitude. This approach is compounded by
the fear factor of a higher cost of living and lowered affordability due to
increases in electricity, toll charges, gas and KL assessment rates that will
be effected in 2014.
We expect the rate of
sales to accelerate in the second half of 2014, as the population adapts to the
situation and realises that fundamentally, the demand for housing will not
change. As more youths join the
house-buying group and a lower supply comes onstream, there is only a small
window in which to buy before the GST kicks in, in the second quarter of 2015.
What do you
think will be the key events and challenges that will shape the sector’s
prospects next year?
With the various
stringent measures in place, developers will need to be more creative and
diligent in terms of coming up with better product offerings and pricing. Developers will need to focus on research and
marketing to reach target customers.
With the MRT projects in
the pipeline, especially in the Greater KL area, there will be a greater
housing supply. This will help relieve
the imbalance in supply and demand, including the focus on affordable housing
projects where developers are given an incentives of RM30,000 per unit by the
government to build affordable housing, aside from the role of PR1MA.
Among main challenges
will be the higher cost of compliance with new regulations such as 3% of the
development cost as deposit for a developer’s licence and the backloading of
progress payment drawdowns as stipulated in the revised Housing Development
Act. These changes will inevitably lead
to higher cost of development, leading to higher selling prices.
Inflationary pressure
will feature prominently as the rakyat adjust to the higher costs occasioned by
increased tariffs, toll charges and the reduction of subsidies.
Which areas in
Malaysia
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