If there is one word to describe the current market condition, it is “bewildering”. This was voiced by the past president of Malaysian Institute of Estate Agents, Siva Shanker, at the 2016 Malaysian Annual Real Estate Convention held in Connexion @ Nexus last week.
Speaking on how to seek the right property investment, Siva said the market has been bewildered with mixed sentiments generated by various articles, reports and experts that have been conveying diverse views.
“Some say the market is crashing, while the others say it is recovering. In my opinion, there’s not a single person alive who could predict what is going to happen,” said Siva.
He elaborated that iconic brands with premium features, such as Pavilion and Mid Valley, are commanding higher prices compared to similar products in their respective vicinity.
He also said the city centre has become a popular choice among high-nett-worth individuals, for example, the Kuala Lumpur City Centre (KLCC) area, where the condominiums have been doing well. The growth pace in the city centre is also faster compared to suburbs.
Compared to the past, an integrated development has become a popular choice of living. Brand and concept are driving demand and prices.
According to Siva, one major key is public transports such as the MRT. Siva highlighted that projects that are integrated with MRT services could be tagged higher, citing the Four Seasons Hotel KL where prices have gone through the roof.
“A survey conducted by Knight Frank Malaysia, collected from over 700 respondents, showed that the most favourable factor for Malaysian properies is infrastructure such as the MRT,” he added.
Siva opined that as properties in KL become more unaffordable, people are beginning to adapt to living farther away from the city centre.
Siva also said, due to current demand, the availability of contemporary facilities is essential. The comprehensiveness of facilities has become a competitive factor among developments. The gated-and-guarded feature has become a must among home seekers a well.
Quoting statistics from the National Property Information Centre (NAPIC), he pointed out that transaction volumes from 2011 to 2014 have fallen from 430,403 to 384,060, especially during the 2012-2013 gap, which saw a sharp drop of 10.9 per cent. However, the value of the transactions have not fallen in tandem, rising instead from RM137.83 billion to RM162.97 billion within the same duration.
He also said the slowdown in 2015 was due to the implementation of GST and the ensuing adjustment period.
“If you compare the first half of 2014 and the first half of 2015, the volume and value went down by 3.4 per cent and 6.6 per cent respectively. In the residential sector, the volume declined by 2.6 per cent and the value fell by a whopping 9.7 per cent,” said Siva.
He said that the last time property values went down significantly was in 1998, which created a subsequent bull-run.
“According to my analysis, the biggest problem in the residential sector lies with high-rises, especially the high-end condominiums, which have been over-built and have contributed to the 9.7 per cent dip,” Siva said.
He advised investors to be vigilant at all times, keep their emotions in control, practise caution when faced with contradicting analyses, and be wary of huge short term gains.