Opinion: Real estate outlook for 2011

By Sherry Koh | Jan 14, 2011

Year 2010 saw the increase of property prices despite key changes that took place, such as:

• • March and May: 5 bps rate hikes

  • October: Full loan for first-time buyers and stamp duty exemption of 50% on instruments of transfer on a house not exceeding RM350,000

  • November: Central Bank announced the implementation of a maximum loan-to-value (LTV) ratio of 70% for people buying their third house onwards

StarProperty.my asks the individuals below about their expectations for the property market for year 2011.

SM Faliq

Naza TTDI, Group Managing Director

“The property market here is resilient and I am confident it will grow stronger in 2011. The exciting development plans that Malaysian Prime Minister announced in the Budget 2011 will act to spur the real estate market, especially in globalised areas where economic activities are most active. Property investors must be aware of the strategic plans announced by government as the real estate market in Malaysia will move forward with globalisation. No doubt the implementation of a maximum loan-to-value (LTV) ratio of 70% will affect the investing movements in the housing market but this will be balanced by the Economic Transformation Programme (ETP) that is poised to create new prospects and opportunities in the real estate market.

I do believe that the Greater Kuala Lumpur project will also contribute to the property market heating up in 2011. The continued foreign interest and rapid growth in urban areas that is strategically planned and developed will not only make the property market more attractive to investors but also promote the development of the surrounding cities and towns.

Our new signature development surrounding the Matrade project at Jalan Duta will hopefully create the right buzz and interest from both local and foreign investors. The development itself is planned to complement the city of Kuala Lumpur yet iconic in itself lending to our nation’s international presence.

There are in fact many Malaysian developers who are capable of developing properties of international standard. In this regard, NAZA TTDI is one of the top privately owned companies with the capability and potential to successfully develop large scale mega projects and also niche boutique projects of international standards.

As we all know, success of any development is gauged not only by the construction of the physical buildings, but also how successful the developer has been able to establish a viable and thriving community in the area of development. In today’s climate where the purchasers have many choices in deciding where to live, locate their businesses and offices, it is important for the developers to offer innovative products that responds to the requirements and the needs of their prospective buyers and tenants. This is what NAZA TTDI strives to do for all our developments regardless of magnitude, GDV or land area.

2010 − a great year, 2011 − even better!”

Ho Hon Sang

Managing Director of Property Development Division, Sunway City Berhad

“We remain optimistic of the market outlook for 2011 due to steady employment rate, ample liquidity and attractive financing packages. Property is still deemed as a preferred inflation hedge. The demand will remain strong for landed residential properties but this is confined to certain strategic locations in the Klang Valley. The shortage of supply especially in good locations will command good secondary prices while new launches will be much sought after.

We do not think that Malaysia will experience a property bubble due to the limited supply of land in prime areas and availability of liquidity at the banks and institutions such as the Employees’ Provident Fund (EPF). While the 70% cap on LVR will affect the property market, we do not foresee it to have an adverse impact. We believe buyers will continue to search for quality properties as they remain a safe and solid asset class. Latest round of quantitative easing by the US will see some funds inflow to this part of the world.

Developers will continue to launch lifestyle-driven housing concepts as this will be a trend that is here to stay. Developers are also designing houses with larger built-ups and surrounded by lush greenery to accommodate families wanting a green and spacious living environment, away from the hustle and bustle of city life. Security is another important factor which explains the demand for gated and guarded projects. Homebuyers will be attracted to new lifestyle features that are aesthetically pleasing and functional at the same time.

2010 − improved market conditions and a good year due to return of market confidence, 2011 − positive progress with vibrant and competitive outlook due to strong offerings from developers for customers.”

Chang Kim Loong AMN

National House Buyers Association, Hon. Sec-Gen

“Unless the Government does more to curb excessive speculation, property prices especially in urban and even sub-urban areas will continue to rise beyond the reach of many wage earners, especially those fresh into the work force or about to start a young family. Even middle income wage earners with joint salaries are unable to buy in.

One will notice that the pay cheque increase does not commensurate with the increase in prices of residential property. People buy in on the premise that economy is growing or allegedly to be increasing. In an event of a downturn it would trigger a snow ball effect. Ask the man-on-the-street; don't just seek opinions of parties with vested interest i.e. developers, builders, real estate agents, property consultants who are there to sell property.”

Gerard Kho

Reapfield Properties, Senior Vice President

“We expect that the property market will still be buoyant and vibrant in 2011. It is hard to predict how much the market will continue to grow as an actual figure but we are able to comment there are many factors which would ensure that the market remains very sustainable:

1. Inflation is on the way up. Building materials cost increasing and with upward pressure on wages are crucial reasons why there is no reason property would head south.

2. Immigration of more than 3m people to the greater Kuala Lumpur ensures housing pressure

3. Infrastructures, e.g. LRT, road networks will ensure that the growth will be in tandem with these main infrastructures planned

4. Stability of the government will ensure confidence amongst the investor market

Property market is the driver of the economy and it is best to leave it to the banks to moderate the lending based on cost of funds and the true value of the properties. To comment on the market response to the cap on LVR is premature. Our view is that it would not drastically affect the market as the lending institutions will accommodate for these new rules.

2010 − vibrant/sustainable, 2011 − a brilliant year.”

Khoo Boo Tee

Newfields Property, Executive Director

“The momentum is still there. Therefore I think it will carry on from last year. In my opinion, everything seems steady. Developers are still launching new projects and people are still buying. Most of them buy to stay, so the cap (LTV) from the government doesn’t really matter.

The population is there. If you look at the Economic Transformation Program (ETP), the population in Kuala Lumpur will be approximately 10 million by 2020. Now, I think we have about 6 million people. Therefore the demand for properties will definitely be there. The cap is good for the industry as a whole.”