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Malaysia’s property market in one word? Resilient.

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Media release by FIABCI Malaysia:

”Property sector to remain resilient due to government’s economic stimulus package”

FIABCI Malaysia believes the property sector in Malaysia will remain resilient with a projected soft landing this year due to the various measures introduced in the government’s economic stimulus package. 

FIABCI, the international real estate federation, Malaysian Chapter President Sr Michael Geh said the Malaysian property sector was buoyant and healthy in 2019 by recording an estimated transactions of 330,703 units valued at an estimated RM139.33 billion.

He said the total transactions for residential properties in Malaysia for the whole of 2019 is estimated at 204,840 units valued at RM71.03 billion, which is better than 2018 which recorded transactions of 197,385 units worth RM68.75 billion.

He attributed the better performance in the residential property market to the successful Home Ownership Campaign last year. “This year, the capital value and rental value of some property sectors could soften but this does not herald a property market crash as feared,” he said.
He said the hospitality & F&B sector will bear the brunt of this current economic downturn due to the pandemic for the short term. 

“The capital and rental value of office lots, shopping mall lots and commercial lots will also soften as there was already existing overhang of these lots from last year,” he said.
However, he said malls, retail and commercial lots located in prime areas or next to an MRT station will still continue to do well. 

“Properties in prime areas will continue to command good capital and rental value,” he said.
In terms of residential properties, he is certain the capital value of terrace houses and residential properties valued less than RM500,000 will be maintained.

“High end residential properties in desirable locations will have to sit in for this six months,” he said.

The sectors that are thriving now will be the warehousing and logistics sectors due to an increase in online shopping. “They will be in demand,” he said.

Geh noted that there are still a lot of overhang properties including for properties priced below RM500,000.

“I find that most of these overhang properties are located in undesirable locations such as in places without public transportation or connectivity and far from other amenities and work places,” he said.

He said these are the same overhang properties from last year that were located in secluded places lacked connectivity and amenities. He said the property market comprises two main things; market sentiments and the actual performance of the sector.

“Currently, the concern of the people have turned to economic livelihood and I would like to congratulate the government for addressing this with its timely economic stimulus package,” he said. Geh said the economic stimulus package by the government that included a six-month moratorium on housing and car financing was a good move to help the rakyat.

“Our government’s very decisive package especially the moratorium is one of the best stimulus packages introduced in Asia that will help the people to weather through this period,” 
“Some people have lost their income and jobs so this moratorium will make sure they won’t lose their homes too if they were unable to service their home loans for the next six months,” he said.

He said the moratorium impacts the property market as there will not be property foreclosures during this period.  “The property market will soften because of this but it will not crash,” he said. He said the additional stimulus package announced by the government for the SMEs is another welcomed move that will help people to retain their jobs and SMEs to survive during this pandemic.

He said this will help SMEs to stay afloat and also help the people to retain their jobs and livelihood. “This is good for the country’s economy post-Covid-19,” he said.

He welcomed the government’s decision to continue the implementation of all projects allocated under Budget 2020 including the ECRL, MRT2 and the National Fiberisation and Connectivity Plan (NFCP).

“I believe these infrastructure works will be a stimulus for the construction industry and also for the housing industry as it will create new hotspots for housing,” he said. He lauded the decision as he believed these projects will also stimulate the country’s economy.

“Post Covid-19, I foresee the property market will have just a soft landing because of the economic stimulus measures by the government,” he said.

— end of media release —

Actually, I have been asked many times if the property price will be coming down because of the Movement Control Order (MCO) or the COVID-19 pandemic. My answer has remained consistent. If we are ready with spare cash or could qualify for another home loan easily and we found a property (which meets all our expectations) and it’s priced 20-30% below the median property transacted price, then please do go ahead. There are unlikely to be too many of these properties lying around.

The reason? Supply of such units in a popular location is likely to be very small while demand from Malaysians who could still get their loans approved will always be far higher. So, if the opportunity comes, please grab it immediately and just remember that property investment is a long term decision. Happy investing and good to take note that FIABCI Malaysia’s view is that the Malaysian property market remains resilient.

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