Real estate approved investments in Malaysia dropped 70 percent.

Just read another alarming piece of news for the property market, or is it? Isa crisis about to hit the Malaysian property market? According to MIDA’s numbers, approved investments in real estate for Malaysia dropped 70 percent from RM88.6 billion in 2014 to RM 26.9 billion in 2015. On an overall basis, Malaysia’s approved investments for 2015 at RM187billion was also 21 percent lower compared to 2014. MIDA however said that RM187 billion is still above its targeted annual average of RM148 billion. It was RM235.9 billion in 2014. So, perhaps they are right, Malaysia is still having a surplus from previous years when compared to the targeted number.  Happy? Sad? Confident with the number?

Actually, for those who kept saying that Malaysia’s property market has oversupply, this should be a good news. If the government kept approving all these new real estate investments, it should be pushing towards a bubble building and one day, bursting? For condos, read here: Luxury condominiums oversupply in Kuala Lumpur  For Iskandar, read here: How true is Iskandar’s oversupply situation? In terms oversupply for commercial properties in Penang, read here: Retail Penang is facing oversupply, more coming  Even today, many are questioning why are there so many approved new high-rise offices being approved. Aren’t there already oversupply of offices in KL? Read here: KL office rental under ‘threat’ due to over-supply Let’s hope this sudden drop can give the property market a breather. Honestly, as long as this is not continuous year after year, it should be just fine.

 

To those who believe that this is an alarming news indeed, then do note that today the whole world is potentially in a recession. Read here: Getting ready for the next global recession? China is slowing a lot when compared to just years ago if they do not have the largest reserves in the world, the whole world may be in deeper trouble. Even our strongest neighbour economically, Singapore has started to show some weakening signs with the continuous low oil prices. There are no signs of oil price recovering soon and even Petronas is looking to reduce its expenditure by RM15 – 20 billion for 2016! The approved real estate investments have to slow down with all these happening the background. We better be worried more if it does not.

Personally, the drop simply reflects what is happening in the world today and we should keep promoting Malaysia, that’s all. I am sure MIDA is not going to just sit down and do nothing. Seriously, luxury properties are the first to be hit when slowdown happens, especially when there are too many of them. As long as we buy objectively, everything looks okay for now. Anyone thinking of quick money should avoid the ‘sticky’ property market. Oh yeah, Ringgit has strengthened a bit compared to the nearly 19 percent fall last year. Perhaps better times are coming and it’s time for other countries’ currencies to be tested instead. As a Malaysian, I think we have had enough in 2015 where our currency is concerned. Happy ‘real estate’ thinking.

written on 1 Mar 2016

Next suggested article: Demographics Malaysia and property demand 

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