05/05/2021
𝗖𝗼𝘃𝗲𝗿 𝗦𝘁𝗼𝗿𝘆: 𝗪𝗵𝗮𝘁 𝘁𝗼 𝗹𝗼𝗼𝗸 𝗼𝘂𝘁 𝗳𝗼𝗿 𝗶𝗻 𝘁𝗵𝗲 𝗽𝗿𝗼𝗽𝗲𝗿𝘁𝘆 𝗺𝗮𝗿𝗸𝗲𝘁 𝘁𝗵𝗶𝘀 𝘆𝗲𝗮𝗿
Last year was a tough one for almost all property sectors. According to data from the National Property Information Centre (Napic), in 1H2020, Malaysia’s property market transaction volume and value decreased 27.9% and 31.5% respectively compared with the previous year. While most property consultants believe there should be some recovery this year, it will depend on the Covid-19 vaccine as well as the performance of the job market and economy.
Some consultants think there will be opportunities for investors in the auction market with foreclosures likely to increase, but others believe that owing to government intervention and the low
interest rate environment, this might not be the case. On the other hand, this could be a golden opportunity for first-time homebuyers to purchase their dream home. However, as property is a long-term investment, the age-old advice of doing your homework and buying what you can afford continues to hold true.
The following are the consultants’ thoughts and comments for 2021.
A lockdown brought the economy and property market to their knees in 1H2020. The resumption of activities and proactive fiscal stimulus measures by the government helped buoy the economy in 2H2020. Considering the economic and social costs, policymakers and the public have come to a consensus on a blanket economic shutdown in the future. This should restore some confidence and certainty, facilitate decision-making and effectuate transactions, although volatility will linger until a Covid-19 treatment is found.
Historic low interest rates, coupled with a string of homeownership incentives, will reduce the barriers to residential purchase, or better, accelerate the buying plans of prospective buyers, who may enjoy more bargains and a wider selection.
On the commercial front, lower borrowing costs, rental adjustments and readiness to negotiate are conducive for tenants and investors who are on expansionary mode. Inevitably, there will be owners who experience cash-flow issues. Hence, they may be encouraged to let go of their properties or opt for a sale and leaseback arrangement in exchange for liquidity. This will present opportunities for investors to pick up quality assets in prime locations with reliable income-generation capacity. Additionally, the infrastructure undertakings listed in Budget 2021 will boost the confidence of investors when they assess about investing in Malaysia.
This pandemic has undoubtedly attested to the value of technology-readiness. Technology has essentially negated the physical obstacles in our work and consumption needs. For businesses, technology has proved to be an effective tool to transition their operations amid the recurring disruptions, and a strategic platform to explore new avenues for business continuity or even survival.
This pandemic crisis also highlighted the importance of prudent planning based on a feasibility framework rather than sentimental optimism. For instance, residential properties that are in sync with demand in terms of location, pricing and product will have an edge.
Generally, domestic demand was characterised by higher stability but lower net worth, while the opposite was seen when it came to foreign demand. Therefore, a global-scale crisis like this poses a question to property players with regard to striking the right balance between domestic and foreign demand.
In Budget 2021, the government continued its commitment to deliver more affordable housing. Since the new supply is entering an already-soft and overhang market, planning, backed by thorough analysis and market study, is needed. Drawing from the lessons learnt from some underperforming affordable housing projects in the past, the approach for this segment has to be more methodical and curated to avoid aggravating oversupply.
In 2021, the low base effect from negative growth in the previous year dictates that gross domestic product (GDP) growth will take its course, although the real gains on the ground may not be as evident. For the property market, any corresponding improvement may only be observable from 2H2021 owing to information lag. From a long-term sectoral perspective, apart from logistics and warehousing, Covid-19 could also be a boost for some niche sectors, namely data centre and cold storage facilities.
References link : https://www.theedgemarkets.com/article/cover-story-what-look-out-property-market-year
