The Malaysian Reserve | March 19, 2014
By John Gilbert
KUALA LUMPUR: Residential property demand is expected to increase in the second-half (2H) of this year as buyers try to beat the April 1, 2015 deadline, in anticipation of higher prices due to the implementation of the Goods and Services Tax (GST), said chartered surveyor and international property consultants CH Williams Talhar & Wong (WTW) MD Foo Gee Jen said.
Foo said the uncertainty of whether buyers will have to bear any rise in costs for new houses, could likely motivate them to buy or invest in properties before the GST is implemented.
He said the rush on property purchases will also balance the slower 1H of 2014 with stronger demand as many potential property buyers are currently in a “wait and see” situation.
“There are still ‘grey areas’ in the property sector which the government needs to look at, especially in material costs and related costs that should or should not be pushed on to the customers.
“However, it would be good for property buyers to make a decision within the first six months and this in tandem will also push up property prices and demand, which will benefit the developers,” Foo told reporters at a media briefing entitled Property Market Outlook 2014 in Kuala Lumpur yesterday.
He said the GST is not entirely zero-rated for residential properties as there is uncertainty on how the government will resolve the grey areas concerning residential projects.
A WTW survey showed the outlook for the property sector in Malaysia, particularly the residential and industrial sub-segments, is expected to remain robust in 2014 despite a minor setback due to the government’s cooling measures like the Real Property Gains Tax and Developer Interest Bearing Scheme.
The measures, which also involved tightening of loans by banks, will have some impact.
However, the demand and purchase of residential property is expected to remain robust despite these measures.
The WTW survey showed the industrial sector will continue to grow at a healthy pace, supported by both foreign and domestic investments.
“The only setback for the industrial sector is that it requires huge capital outlay and as it requires huge capital expenditure for development, it is an area developers must work hand-in-hand with the government as infrastructure projects are very expensive,” Foo said.
Adding that growth of industrial developments has been consistent between 10% and 15% annually, Foo said developers should look into areas such as Klang and Shah Alam, which offer good opportunities to develop industrial projects.
The WTW survey showed industrial premises moving up marginally in 2013 with selected industrial areas such as Shah Alam seeing rents appreciate strongly from RM1.20 to RM1.50 per sq ft (psf) in 2010 to RM1.30 to RM2.75 in 2013, while other areas such as
Taman Perindustrian KIP in Kuala Lumpur have seen industrial rents remain flat in 2013 at RM1.40 to RM1.70 psf compared with 2012.
Pandamaran Industrial Estate in Klang saw 3% to 4% growth annually from 2010 to 2013 — rising from 80 sen to RM1.10 psf in 2010 to 90 sen to RM1.20 psf in 2013.
On green buildings, Foo said the government must offer incentives for buildings that have green features and to encourage developers to build green buildings like in Singapore and Hong Kong.
Foo said property prices will not ease and will continue to go up and as such, buyers should look at secondary market as an alternative as there are still areas that offer good property buys.
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