Market to consolidate in 2014.4

THE EDGE WEEKLY ISSUE#995

THE WEEK OF DECEMBER 30, 2013 – JANUARY 5, 2014

City & Country Section

LOCAL CONSULTANTS’ POLL: By THE CITY & COUNTRY TEAM

JEROME HONG
MANAGING DIRECTOR
PA INTERNATIONAL PROPERTY
CONSULTANTS (KL) SDN. BHD.

Outlook

In the Klang Valley, we expect more launches, especially landed residential units in fringe locations and upcoming suburbs, as land is scarce and expensive in prime areas.  Launches near upcoming LRT extensions and MRT lines will likely comprise stratified residential / mixed-use components with smaller units.

In Johor, future growth will be fuelled by rapid developments in Medini, Nusajaya, Danga Bay, Desaru and Pengerang, the Proposed Rapid Transit System, High Speed Rail and Rail Double Tracking from Gemas to Johor Baru, as well as catalytic developments in other sectors such as education, retail and tourism.

Overall, the property sector is expected to take a breather in 2014, impacted by the various cooling measures as well as state policies.  While the volume of transactions is expected to decline further, property prices are expected to remain competitive, with growth seen in selected locations / property types, albeit at slower pace.

The rental market is expected to pick up in the short term, as purchasers are more cautious.  However, in the long term, demand for residential homes will remain for those who want to own a home and or seek long-term rental income.

On the primary market, investors should look at mixed-use developments linked to the transportation lines especially units with good sizes that are competitively priced and have good leasing prospects.

On the secondary market, investors should look at stratified homes in established locations or popular suburbs that are still reasonably priced, have a good rental market and give reasonable returns.  The locations include Taman Desa, Old Klang Road, Petaling Jaya, Subang Jaya and Mont’ Kiara.  Two and three-storey shop houses in established or upcoming commercial precincts of popular townships and schemes will also enjoy a good rental market.

Despite the cooling measures, Malaysians looking to own or invest in properties are expected to continue to buy good products in strategic locations, as proved by the strong responses to recent property launches that contradict the so-called prevailing cautious sentiment.

As long as there is liquidity in the market and low interest rate environment continues, demand for residential products will remain, albeit at a more muted level, as property is a safe haven, especially when the stock market is volatile.

The latest measures will further dampen market sentiment, both among local and foreign purchasers / investors.  Hopefully, there will not be more drastic cooling measures.  Instead, there should be more concerted efforts to attract foreign investments.

States such as Johor and Penang, however, are proposing and additional levy on transactions involving foreign property buyers on top of the sharp hike in RPGT rates.  This will further dampen their buying interest as they look elsewhere to where policies are more favourable.

Wish list

• The good progress of the on-going MRT work to continue; and
• More PR1MA and affordable homes to be launched to cater for growing demand from first-time homebuyers and those in the lower-income segment.