More smaller units below RM1 million. Is this the start….?

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Remember the recent brouhaha over the flip-flop decision of whether to freeze over RM1 million developments outright or to consider case by case basis? According to Knight Frank Malaysia Sdn Bhd research and consultancy executive director Judy Ong, the recent freeze on condominiums and apartments above RM1 million will encourage the development of more shoebox dwellings below RM1 million. Here’s that full article in This is what she said, “Developers are expected to take stock of the situation by reviewing and re-planning their proposed products and may further defer property launches. We expect to see more bite-size units which translate to lower quantum pricing of below RM1 million coming into the market although moving forward, there may be risk of oversupply in this category of units.”

She also said that said that housing affordability is a key issue in Malaysia because the house prices have been trending up since 2010 and this has continued to outpace the rise in income levels. This is why the median house prices are beyond the reach of most Malaysians. She mentioned that many developers are now shifting to affordable housing. Ong also expects the demand for serviced office and co-working space to grow across a variety of industries such as technology start-ups and SMEs. This is also due to strong government-led initiatives by Malaysia Digital Economy Corp. She also shared that for conventional office spaces, the demand would come from those that are along rail networks such as the LRT and KTM lines as well as the Sungai Buloh-Kajang (SBK) MRT line. As for Tun Razak Exchange (TRX), this was what she said, “The TRX MRT station is one of the two interchanges between the SBK and the upcoming MRT Line 2 (the Sungai Buloh-Serdang-Putrajaya MRT line). Kuala Lumpur offers opportunities that parallel other western and regional markets, supported by [the] improving pool of premium and good grade office space and transport infrastructure, a multi-lingual educated workforce and competitive cost of doing business, amongst others.” Full article in Theedgemarkets here. 

First of all, I think (Yes, only an assumption) most of the buyers of above RM1 million homes are not for family stay. Especially those units around, next to and nearby city centre. It is more for lifestyle plus they could actually afford these over RM1 million properties easily. Thus, Judy’s assessment that more smaller units would be built so as to keep the prices below RM1 million seems valid. She said something along the lines of property prices rising faster than income. Well, here’s my earlier article. By the way, this does not happen only in Malaysia yeah…  She also talked about co-working spaces. Hey, I also believe it will be the future. Office space and business networking at the same time. Best fit!  In terms of office space along the rail networks, this is definitely true because in many HR teams that I have visited for the past few years, everyone tells me that the number of staffs coming to work via public transport is actually growing. In fact, one major reason why people are accepting or leaving their jobs would be how near the office is to the rail station!  For me, I think when I could no longer bear the jams, I would have to resign. Fortunately, DUKE expressway is ensuring I arrive home on time everyday. Haha.

Her comment about ‘competitive cost of doing business.’ is definitely true. By the way, competitive does not mean just CHEAPEST cost yeah. Even if ringgit is lower than many other currencies but imagine you are a MNC and you are not able to find the right talent pool here in Malaysia, would you still set up here? As for the MNCs already here, if the talents are all outside Malaysia, would they still be here? No MNCs are here to do charity… Last but not least, when more smaller units start, it may be harder togo back to bigger units in the future.  Imagine a developer built 600 sq ft today for RM800,000. They will certainly not be building 800 sq ft for RM800,000 in the future…  It will most probably be 528 sq ft at RM800,000 in the future. Happy following.

written on 23 Dec 2017

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