Post date: Sep 27, 2010 1:29:30 PM
According to OSK Research Sdn Bhd in its recent report, Malaysia's property sector is set to see its biggest residential boom in a decade, led mainly by medium- to high-end landed properties. “The sector may peak sometime in 2012/13 before going into a potential slump, when mass housing boom will take over and continue in the first half of this decade. In fact, the research house was of the view that this sector was already entering the early stage of a property "super cycle".
Excited by such a prospect, we asked property consultants Ho Chin Soon and Gavin Tee for their opinions and the following are their responses:
Ho Chin Soon: The up-swing in real estate prices for middle and upper middle class properties has already begun.
Gavin Tee: In my opinion, I would say that a major mass housing boom will not likely occur for the entire real estate industry. But there might be oversupply in big cities such as Klang Valley, Penang, Kota Kinabalu, Melaka and Johor. The effect is most visible in globalized areas such as KLCC, Bukit Bintang and the surrounding business districts.
Besides, I believe that tourist areas might also be affected by the boom.
My reasoning is that when the international real estate market and economy recover from the downturn, it will spur global trading and economic activities, which will result in more foreign investors investing in our local real estate market. This might lead to the housing boom.
However, this is only applicable to certain areas where the foreign investors are interested in and it is not an overall market boom. In fact, based on Malaysia’s history, it is rare that a general boom or general bust would strike our property market.
Are we in the early stage of the “Super Cycle”? I would say that our current market conditions do not depict such a scenario yet. Perhaps it is happening to the high-end condos but I still think that the signs are not strong.
Government policies and foreign investment guidelines are crucial factors in this matter. We will have a better view after the budget 2011 is released. Perhaps by March 2011, we will be able to attract more foreign investors and if that happens, it might be the beginning of a “Super Cycle”.
In addition, I believe that 2012-2013 would be a high peak for commercial properties, high-end condos and landed properties. I don’t think that the general secondary market will enjoy the benefit of the “super cycle”. And, I don’t think there will be a slump after the cycle, especially for medium-cost houses. There might only be minor price adjustments for medium cost houses even if other types of properties are facing the boom.
Moreover, I foresee that institutional or international players (big players) will be more interested to invest in areas that are more globalized such as locations with high-end properties and commercial properties. These prime assets in the market will eventually be owned by a few giant corporations.
In the next few years, the rental market will be the leading real estate market. Unfortunately, in Malaysia, our management skills and knowledge are not up to international standards yet. So, rental management business could be one of the rising industries when the super cycle comes.
Note: Gavin Tee is founder and President of SwhengTee International Real Estate Investors Club, and has more than 20 years of experience in property & retail marketing in both the United States & Malaysian markets. He has written a book on Property Rental in Malaysia and is host of a Chinese TV show on real estate in Malaysia.