COVER STORY: The way forward for 2013?

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SNIPPETS OF IDEAS: Two industry players suggest steps to be taken to take the property industry to the next level

Moderate expectations with measured optimism is clearly the theme for 2013 property market outlook judging from the opinions of most of the experts and industry leaders contacted by NST RED. On the other hand, 2012 can perhaps best be described as a near perfect balancing act with the biggest impact being mild ripples from some of the market tightening policies by Bank Negara.

Perhaps the most commented is apparently the ‘non-impact’ of the 5 per cent increase in RPGT rates. Says Sr Adzman Shah Mohd Ariffin, Chairman of the Property Management, Valuation and Estate Agency Division of the Royal Institution of Surveyors Malaysia (RISM), “the RPGT measures unfortunately did not have too much impact on the speculators since they still managed to make good money in the last one year if they managed to flip their newly completed properties launched 2 – 3 years ago.”
 
As a result, he suggested that a higher RPGT rate should have been imposed to curb speculation in the property market as “the speculators were at times making excessive profits even before the construction of the properties was completed.” He added that this would have improved the tax revenue.
 
Other suggestions made by Adzman to sustain the property market include the following:
 
• Bank Negara should monitor closely the sentiments in the property market in order to be able to react quickly especially in unlocking the market for affordable housing and to avoid making any abrupt changes in policy. Stakeholders involved in the property industry especially NGOs such as the House Buyers’ Association and professional bodies should be consulted first without fail before any major announcement or commencing any public discussion on introducing new measures. The rules and regulations which affect existing and future homeowners should therefore be thought through carefully to avoid any negative perception.
 
• The Ministry of Housing and Local Government must play a larger role to monitor the launch prices of new residential developments especially in suburban locations where the price may have been artificially inflated more for the lifestyle concept and frills rather than based on actual prevailing land and construction cost.
 
The Ministry should also take action on improving the quality of workmanship as shoddily constructed properties are unfortunately still a major issue for some of the new high-end residential developments especially stratified properties. This could certainly affect the long-term value of such properties given the poor rate of rectifying the defects even by some of the major developers.
 
• The introduction of the Strata Management Bill 2012 will also give more opportunity to developers to have more say in the management of strata properties and if not carefully monitored by independent parties, may result in failure to address the rights of the purchasers especially in decision making, in fulfilling their obligations especially in providing common amenities and facilities as promised and also in administering the management and maintenance of common properties. This could then adversely affect the long term value of the development schemes.
 
The Ministry of Housing and Local Government must also ensure that the imposition of the Build-Then-Sell (BTS) (10:90) is firmed up in 2013 and carried out as planned by 2015, making it mandatory for all developers. At the same time, there should be a balancing effect which helps to alleviate any financial burden facing the developers under this scheme which if not addressed carefully, could translate into even higher development cost and gives the developers the opportunity to sell at even higher prices.
 
• The Ministry of Finance who is the custodian for the records on property transactions must find ways quickly to expedite the availability on a timely basis of the transaction prices for property professionals and financial institutions. This will tremendously improve market information and help the public to make a more informed decision when assessing the value of the property versus the asking price quoted by the vendors. The role of the Valuation Department and the National Property Information Centre (NAPIC) must be enhanced in order to ensure this can be achieved.
 
• Whatever the outcome of the general election is, the Economic Transformation Plan (ETP) and the Entry Point Projects (EPP) must be implemented and completed in order to ensure that the commitment on getting the infrastructure ready for 2020 is fulfilled for the rakyat. The MRT, for instance will also help to unlock the development potential of properties in the vicinity of the route by making them more accessible to public transportation. The development in the Iskandar Region must also be progressed at a faster pace to lock in the investors.
 
‘Challenging year’: Meanwhile, from a developer’s point of view, 2013 will be yet another challenging year, with affordability and supply as key factors that will potentially impact Malaysia’s property market. K.H. Sim, Chairman of Allstones Group Asia Sdn Bhd is of the view that the residential market should maintain its momentum next year with landed property still commanding premium prices and faster sales rates, while reasonably priced condominiums and serviced apartments would continue to draw interest in key cities.
 
Sim further said that in 2013, homebuyers should expect similarly priced homes with added values such as Developer Interest Bearing Scheme (DIBS), free furnishings, rental guarantees and free legal and/or service charges to offset the steep prices.
 
“With many pending project deliveries in 2013 and 2014, we expect this to be a stressful period, as speculators would find it difficult to procure tenants or sub-sale buyers when this supply comes into an already saturated secondary market.”
 
The developer cautions that 2013 will see an oversupply of commercial and office properties, especially within the Klang Valley. “With several new commercial areas planned within KL city centre entering the 2013-2014 property scene, this market segment is at risk of being further dampened. With approximately 20.7 million sq ft of new office space available within the next three years, the supply rate is expanding faster than demand and such projects will eventually cannibalise the existing market.” He added that the take-up rate of this sector would depend on overall economic growth and the influx of Foreign Direct Investments (FDIs).
 
Sim urges the government to address vital issues such as corporate governance, corruption, crime rates and infrastructure improvements to ensure that the country remains attractive to investors.
 
He also suggests that PR1MA (Perumahan Rakyat 1Malaysia) developments be located adjacent to Mass Rapid Transit (MRT) stations to cater to middle and low income groups, as they are natural customers of public transportation. “Keretapi Tanah Melayu (KTM) should also be encouraged to put up PR1MA housing adjacent to its stations.”

 

K.H. Sim


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