2014 Malaysian Property sector outlook

Senai Garden

Senai Garden

Experts and industry players who attended the recently held PropertyGuru Property Developers’ 2014 Outlook Forum expressed varied thoughts on what’s in store for the sector in the coming year.

Some gave positive forecasts, while others held a more cautious view, especially for commercial sector and the luxury residential market. However, an expert who graced the roundtable believes that the glut in the commercial sector is not a problem although it will take a while for the market to absorb the surplus.

Many attendees were also doubtful of the effectiveness of the new measures announced in Budget 2014 in addressing vital issues like low-cost housing and spiralling prices. Curbs include the imposition of the Goods and Services Tax (GST), the tougher Real Property Gains Tax (RPGT), abolition of the Developer Interest Bearing Scheme (DIBS), as well raising the entry price for foreign buyers to RM1 million.

For instance, a market observer noted that the GST will contribute to higher prices as constructions materials are liable for this levy. This analysis was also echoed by Gerard Kho, Country Manager of PropertyGuru Malaysia and moderator of the said event.

“With regards to GST, while the sale and purchase of properties are not impacted by GST, construction materials are liable for GST and as such, will contribute to rising prices,” he said.

Nevertheless, he feels that “a more stringent RPGT regime would see prices stabilising, but appreciation will come from factors such as construction cost rather than due to speculative activity or properties being flipped upon completion.”

This opinion was also mirrored by another expert, who noted that the new RPGT regime will not deter genuine owner-occupiers, first time buyers or those looking for a second property as an investment. It will also not deter foreigners looking to buy for the long term. So, it may attract more genuine buyers while deterring speculators. As for prices, it may deter the speculative effect, and eventually stabilise prices.

Another analyst was confident that the RM1 million minimum price for foreigners will have little impact as most of them are already buying more expensive properties. But he concedes that some foreign buyers could be affected.

An attendee also added that the removal of DIBS will help reduce overall cost of home ownership, but property developers will need to come up with new marketing techniques to attract buyers.

Finally, an expert reiterated the golden rule in property buying – “If for your own stay, go ahead. If for investment, consider all factors, such as location, type of property and affordability.” And most importantly, buy within your means.

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