The decade is coming to an end, and people are excited about the year-end holiday season. We at Ohmyhome are excited for another set of reasons, and that being the outlook on the Malaysian property market in the year 2020!
A new year comes along a fresh new perspective.
What exactly is in store for the Malaysian property market for the new decade?
Potential market player consolidation
Early in December, Anwar Syahrin Abdul Ajib – managing director and chief executive of UEM Sunrise Bhd – said that he foresees the players within the Malaysian property market consolidating in the near future.
The Real Estate and Housing Developers’ Association Malaysia (REHDA) today boasts a membership of over 1,000 property developers in Peninsular Malaysia alone. Anwar says that there are too many real estate players out in the market, and consolidation is necessary to ensure industry sustainability.
UEM Sunrise Bhd, is in fact, a merger between UEM Land and Sunrise back in 2010. There are also rumours of UEM Sunrise merging with Eco World Development Group Bhd – another prominent property developer – in the near future through share swap deal, although Anwar declines to comment on the rumour.
What does a merger between two large companies mean for Malaysian property buyers? Conventionally speaking, a company merger combines both companies’ resources, expertise, and research & development, which may result in a better quality product at a cheaper cost.
Mergers and acquisition amongst property developers may also result in less competition, reducing variety within the marketplace.
However, within this crowded landscape, Anwar said that smaller companies without sufficient scale and financial resources might soon look to join larger outfits or risk being left behind.
Look out for rural high-rise projects
Dr Daniele Gambero – property developer consultant and public speaker – has recently released a report titled “Future trend in Malaysian Property Market“, in which he states that the market trend is moving towards high-rise properties rather than landed properties.
“A good mix of medium and high-rise projects will most probably be the future of the property market here in Malaysia. It all boils down to consumer wallet size and depth. 60% of the Malaysian population will soon be able to afford houses priced between RM350,000 and RM600,000, which is equivalent to 850 to 1,200 square feet property.” wrote Daniele.
Dr Daniele also explicitly advises property investors to invest in areas with future development and not in fully developed and mature areas. This is due to the properties being more affordable, offering more choices, as well as its ability to provide excellent ROI and attractive capital gain.
“Have a look at what happened in Puchong and what is happening in Serdang, Seri Kembangan, Kajang and Rawang. Not later than four years ago you could still find properties at less than RM200.00 psf in all the areas above,” he states.
“Today property values in these areas are all above the RM400.00 psf mark, up to a whopping RM600.00/800.00 psf for properties located in the much more ‘exclusive’ parts of Puchong or Seri Kembangan.”
Needs more to spur growth
With the recent announcement of Budget 2020, REHDA has opined that there should be more incentives for homebuyers to spur the growth of the property sector moving forward into the new decade.
REHDA president, Datuk Soam Heng Choon cited the Home Ownership Campaign – which lasted throughout the year- receiving tremendous response from both developers and purchasers.
“However, we hope more of such incentives will be forthcoming to further spur the industry,” said Soam in a media statement.
Finance minister Lim Guan Eng announced during the Budget 2020 speech that as many as 21,000 property units valued at RM13.44 billion have been successfully sold under the HOC 2019, exceeding the RM3 billion initial sales target.
Generally speaking, industry players within the property sector are fairly optimistic about the industry outlook moving into 2020. Although it may be too soon to tell if these predictions will ring true, these statements do show that the industry is showing healthy signs of growth, which may inspire confidence amongst Malaysian property buyers.
With the newly lowered price threshold of foreign property ownership from RM1 million to RM600,000 during the Budget 2020 speech, foreign property buyers will find it easier to access the Malaysian property market going into 2020.
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