Property outlook rosy in 2014 despite cooling-off measures - Part 3

Focus MALAYSIA WEEKLY ISSUE 055

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 to end special schemes offered by developers are seen by many as timely moves to curb speculative activities.

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?

FocusM spoke to developers, the Real Estate and Housing Developers’ Association, the House Buyers Association and an analyst on the performance of the property sector in 2013 and the outlook for next year.

How did the year pan out for your company?

It has been an exciting year for us, with the completion and delivery of Verve Suites Mont’ Kiara’s fourth and final tower, Vox Tower, with its Versilical Sky Beach on the roof; and the soft launch of Verve Suites KL South on Old Klang Road.

It has been a significant milestone to see the completion of Verve Suites Mont’ Kiara, a pioneering project featuring sky lounges of various concepts on each penthouse level of all four towers.  The first sky lounge concept, the Vertigo Living Concept, was introduced to Malaysians in 2006 and delivered in 2009.  While many others have tried to follow, we are excited that Verve Suites Mont’ Kiara today has four world-class sky lounges and living concepts for the benefit of residents and for the enhancement of value for homeowners.

With Verve Suites KL South, BKP is pushing the envelope with the introduction of the Vercadicos Living Concept and Vercadicos Sky Bridge.  The Sky Bridge, and engineering feat spanning two towers, will feature some of the popular features of previous sky lounges while introducing ideas to Kuala Lumpur and Malaysia.  Its iconic form will attract much attention and once again be a benefit of residents as well as a unique feature that will continue to protect and enhance the value of the project for homeowners.

What are your expectations for your company and the property sector in 2014?

It is shaping up well for BKP and the property sector.  While the government has introduced cooling-off measures, these effects will be absorbed and digested by the home-buying public some time in 2014.  Thereafter, expect renewed interest as demand continues to outstrip supply.  In fact, I am telling my friends and peers that now is a great time to pick up a property if they are in the market for one.

What do you think will be the key events and challenges that will shape the outlook of the property sector next year?

Affordability will continue to be a challenge for homebuyers looking for property in the years to come.  It is a theme that is a global one, not unique to Malaysia.  Governments in developed countries are printing money irresponsibly.  The US was doing it, Europe was doing it and Japan joined in this time last year.  Asian countries have had to do likewise, whether they are willing to admit it or not, to ensure their currencies remain competitively weak, so as not to affect their exports.

With all this liquidity, cost are being pushed up and immediately being reflected on the stock markets and property markets globally.  The challenge facing governments is that while they are printing money, they are unable to move the lower-income strata to a middle- or higher-income model.  This is the biggest responsibility and challenge of governments globally, and will ultimately reflect how people view property prices.  It is no wonder people are upset and often, developers incorrectly get the blame for this.  This Syndrome is another example of the commonly-used phrase “Don’t shoot the messenger”.

Cooling-off measures are a short-term fix, that in the long run create more problems than they solve.  It has been shown many times in our region that these measures are ineffective over the long run, as long as money continues to be irresponsibly printed by governments around the world.  China, Hong Kong and Singapore have had countless cooling-off measures, that work for a few months before causing property prices to spring back with a vengeance.

People intuitively know they need to protect themselves against the eroding value of fiat currencies, and that property is one of the safest ways of doing so.