Property market is so-so? A developer just announced a 6 times higher net profit.

A friend asked recently why developers continue to build if they have not yet fully sold their projects? One reason is because they have to be responsible to the buyers who have decided to buy and they need to complete the home within 36 months from the Sale and Purchase Agreement (SPA) date.

Second reason may be due to the fact that some of these developers are cash-rich companies and could afford to complete the projects and then to continue selling the units. There are many such examples today, especially developers who continue to generate huge cash flows from their non property development business.

Third reason is maybe they know that they could finish selling as they continue building. Some buyers are only confident to buy when they see the project is about to complete versus one whole piece of empty land without any construction activities. Strange but true, many people are worried that what they buy may not happen… Well, there’s one developer which has just reported a quarterly net profit which was 6.3 times higher than its previous corresponding quarter.

Article in thesundaily.my
    Eco World Development Group posted a net profit of RM81.5 million for its fourth quarter ended Oct 31 2019. This is 6.3 times higher than the net profit of RM12.8 million recorded in the previous corresponding quarter. The revenue is 96.5% higher at RM906.5 million versus RM461.4 million last year.

In a statement, the group attributed the positive performance to higher percentage of completion and higher sales secured by ongoing projects of the group’s subsidiaries such as Eco Majestic, Eco Forest, Eco Sanctuary and Eco Sky in the Klang Valley, Eco Botanic, Eco Spring, Eco Summer, Eco Business Park I, Eco Business Park II, Eco Tropics and Eco Business Park III in Iskandar Malaysia and Eco Meadows in Penang.

EcoWorld Malaysia president and CEO Datuk Chang Khim Wah said, “Team Eco World’s agility in adapting to changes in the marketplace to overcome the many challenges of the past two years has enabled us to substantially strengthen our balance sheet. This is evidenced in the growth of our net assets per share to RM1.54 and reduction in net gearing to 0.70 times.”  Please do read the full
Article in thesundaily.my

There are three things we could do. Perhaps we could visit some of their developments to understand why it has been selling well. Perhaps we could look at buying its shares which are publicly listed. We do need to hold yeah. Movements are not likely to be a lot after results have been announced unless there are some further announcements. Lastly, we could also use the result and compare it to other listed developers and then look at the PE ratio and then identify which ones are worth buying. By the way, we should also look at the yearly results and not just rely on one quarterly result as the benchmark too. Happy understanding.

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Property market Malaysia may ‘look’ slow but it’s trending positively still

Want to look at some property market Malaysia numbers?

Many times, we say too many things. Sometimes, just let the numbers show the numbers. Below are some of the charts from Henry Butcher’s Malaysia Property Outlook 2021. A very comprehensive report.
Here’s their full press release
 and you can download the
 full report here.
 As for selected slides to look at some positive signs for the market, do refer below yeah. Every slide will have a short explanation of my thoughts too.

Volume of Residential Transactions in Malaysia

We can see that on a Q3 basis, 2020 was the year where the residential property transaction is showing an increasing trend versus 2019 and 2018. This could be explained with the fact that in both 2018 and 2019, the volume of residential property transactions actually increased in Q4 for both years. It would be good to have the data for Q4 2020 soon in order for us to see if a comparison of a yearly basis would also show an increase too.

The total transactions for 2018 showed a small increase versus 2017.  Then, it continued in 2019 where again the total number showed another slight increase versus 2018. In other words, this trend of positive increase started in 2018, continued in 2019 and now we will wait for 2020 number.

Value of Residential Transactions in Malaysia

This is a very good chart. It is showing an adjustment in the average property price downwards for Q3 2020. The number of transactions actually went up but the value of transactions went down. The market is adjusting itself where people are buying lower priced properties. Some may also say this showed that the property price is going down but if we look at the actual change in % which is small, this is more like people buying cheaper new / primary properties instead.

Supply and Occupancy of Retail Malls in Malaysia

On an overall basis, the actual occupancy as at Q3 2018 was 79.1%. The occupancy as at Q3 2019 was 82.2% while the occupancy as at Q3 2020 was 77.4%. Looking deeper, the actual occupancy for 2020 vs 2019 was a marginal change of 0.08% (10,770 sqm). This is 13,048,640 (as at Q3 2020) sqm versus 13,059,410 sqm (as at Q3 2019). This drop in total occupancy may have been caused by effects from the COVID-19 and if Q4 2020 showed a similar trend, then I think this fall is much smaller than what everyone may have perceived from the many negative reports we read everyday.

Conclusion

This has got nothing to do with whether one should buy or sell or if one should focus on any particular area. There are also no links within this article to any property which we could buy as well. kopiandproperty.com is not a developer or a real estate agent yeah. The above is just my thoughts after looking through the charts. Everyone would definitely have their own views too. What I wanted to say is that if our perception thus far (affected by all media) has been that the residential market is in such a bad condition that it is about to collapse, then the charts above did not show those signs. This may be why
waiting for that perfect property price to fall may take some time more.
Happy hunting if property is your target for 2021.

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Property Market Malaysia. Latest updates. Part 2.

This would be part 2 of the Property Market Malaysia update.

MHPI: Point and Annual Changes in Major States 2010 – 2020

As usual, property owners want property prices to continue moving up and will gladly debate with anyone who wants them to sell lower… Meanwhile the potential buyers are always hoping for prices to keep falling or that occasional sudden huge drop in prices which they could take advantage of. Well, if we draw a line across 10 years or 20 years, then the line will show an uptrend even if it fell by double digit percentage points within one year in 1998.

Beyond just national average, let’s go deeper

Well, what about we look into the 4 major market places versus just the national average? Which among these are best performing really? Kuala Lumpur, Selangor, Johor and Penang. The latest chart from NAPIC as follows: KL, Selangor and Penang has turned NEGATIVE in 2020. Beyond this and also the occasional one year hiccup however, it has always been a positive number for all these four property markets yeah.

Beyond just states, look into years

Look closely and we do realise that perhaps the prices really ran too far away from its fundamental during 2011, 2012, 2013 and even 2014 because the increase in home prices were double digits every year! Salary increments were definitely not able to follow this kind of increase yeah.

Latest Numbers about the state of hotels (which has been hit hard thus far by COVID-19)

There are many hotels, especially the famous ones which has announced their closure due to COVID-19. (By the way, the problem may have started earlier for some of them and it definitely did not start with COVID-19). Please do look at the actual occupancy rates in 2019 when there were no COVID-19. We are certainly not talking about 80 or 90 percent occupancy yeah. The average was close to 60 percent for the whole of Malaysia but the highest was Pahang with 79 percent and even Kuala Lumpur is merely hovering above 60 percent.

My favourite state (I go there twice every year at least), Melaka is at 52 percent. Then, when we look at 2020, the total average has dropped to 31.6 percent. Oh Dear… Kuala Lumpur has dropped to just 26.7 percent. If you ask any hotels, occupancy of 31.6 percent is NOT enough to continue operations yeah. However, please note that this is average number. If it’s 31.6 percent, this also meant that there are hotels which are below this number and there are those which are higher too.

My Vietnamese friend is staying in a quarantine hotel in KL city centre and she told me that many of the room options offered were already taken. Perhaps this is also how some of these hotels are doing their best to survive… Quarantine hotel is a lifeline. Meanwhile all of them are waiting for the tourism sector to restart.
Here’s that first travel bubble starting next week. Not Malaysia yeah. Read here.

Here are all the infrastructure projects

Usually, a good infrastructure project will be a catalyst to the developments. Here are all of them. Many have been delayed because of COVID-19 as well but generally, we can see the completion dates to be within 2021. A significant one which will link more places into Selangor and vice-versa would be the West Coast Expressway (WCE).

Beyond expressways, the ones I am looking forward to would be the MRT 2 (Putrajaya line) and LRT 3. I think these are the real catalysts because connectivity between more different places would always mean more choices. It does not always have to be the usual choices anymore. Happy choosing yeah.

For Part 1 of the Malaysia property updates, do read it here yeah:
An update of the property market Malaysia. Update via charts
.

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Property market Malaysia to recover in 2022?

By the way, just another reminder. There are no links within this article to buy any property or sign up for any course yeah. This is kopiandproperty.com  I have been writing since 2013 and is not part of any developer or real estate agency or even mortgage brokers. This is why when people messaged me about a certain property to buy, my answer is either a short one (if I do not know you) or a long one but with lots of questions (if I know you).

Both answers have no recommendation on that particular property. Remember, one man’s meat may be another’s poison. Besides the same property purchased by two different people may have two totally different ending too. Please remember this in your property investment journey. Okay, now let’s listen to someone whom I love to have coffee with because of his vast knowledge and experience in the property market.

Let’s learn from Henry Butcher Real Estate Chief Operating Officer Tang Chee Meng on what he sees as signs of property market recovery

Article in nst.com.my
   The Henry Butcher Malaysia group is cautiously optimistic that the Malaysian property market will show firmer signs of recovery in 2022.

One main reason is because of achievement of over 79 percent vaccination rate and transitioning to the provision of booster vaccines which will boost overall confidence and economic activity

Tang Chee Meng, chief operating officer of Henry Butcher Real Estate said, “The political situation in the country will continue to be uncertain until the 15th General Election (GE15) is completed. In the meantime, investors will adopt a more cautious stance.”

Lower unemployment will boost confidence and residential market in 2022. Tang also shared a lot more details. Read it here:
Article in nst.com.my

Recovery does not mean property prices will be rising indiscriminately

For anyone who thinks that property recovery means rising property prices, do think again. Property prices will rise when people have more money to spend and demand is increasing at a faster pace than supply of properties. It will also rise because demand for property in a certain area may exceed the supply and thus buyers would have to pay higher to move in.

Property prices of not so popular areas will then just follow these popular areas if there’s no oversupply. This is why property market recovery does not mean property prices will rise suddenly. Anyone hoping for quick profits should go for other type of investments instead.

If one is buying a home, then once due diligence is done and the home meets most of the expectations at an affordable price, then it is a go ahead. Waiting to buy just like me?
Here’s an article for you. I am always waiting for the perfect property to buy
 Until then, happy viewing. Remember to wear mask and take care.

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Property market Malaysia. Recover soon or recover later?

Property industry Malaysia. Recover soon or recover later?

During the media briefing on Rehda’s Property Industry Survey 1H2022 and Market Outlook 2H2022 and 1H2023, Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk N K Tong said that Malaysia’s real estate industry is unlikely to recover to its pre-pandemic level in the next three to five years. You can read the full article here:
Article in theedgemarkets

He says this about Malaysia’s economy and the property market, “Meanwhile, the country’s economic recovery would depend on when the world’s economy returns to normal, which I think will take some time … Most likely not in the next three to five years given the challenging market situation such as the current inflation wave.”

With regards to controlling inflation, he said that Bank Negara Malaysia has no choice but to increase the OPR (overnight policy rate). However, the central bank is [raising the OPR] gradually and more slowly than some Western countries, so local homebuyers will not feel a significant impact immediately. In fact, our interest rate is still relatively low [compared to others] in the region.  He also shared a lot of under information on the launches by developers too. One slide is as below:

You can read the full article here:
Article in theedgemarkets

What does it mean if our property market will not recover to pre-pandemic level so soon?

If it’s not recovering so soon, we can take the gloom and doom view. Means the property we own may not have much movements in price. It also meant that because developers are not launching, it meant that there are lesser choices for everyone. The above chart showed that 48% of all developers are NOT launching any properties yeah. So, we only have choices from the remaining 52% developers who has new launches.

Alternatively, we can also look at the potential point of view. It means we still have some time to decide before buying. So, does not need to be forced to buy.  It also meant that there is a possibility that supply of new properties may face shortages if somehow demand for new properties suddenly increase. (even if potential buyers could still choose to buy from secondary market) Just need to remember that if developers are delaying their launches, the completion of new properties will be longer too for these unlaunched properties.

Whichever view we take is, take the appropriate action yeah. If property is not a good investment because of this announcement, then find other investments and do it.  It’s not spending away the funds yeah. However, if you think this is an opportunity, then start viewing and deciding. Not just say and then do nothing about it. By the way, most of us love to talk and dream and debate. The only issue is most people do not proceed to action.

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Property market Malaysia? 500,000 more homes to be built under 12MP. Wow. Info source:
Article in theedgemarkets.com

Demand and supply dictates that when supply is increased too much without corresponding demand, then the prices will fall so that more demand can be created. Well, please do not think too much. These new properties targeted at the B40 and the M40 will not be completed within the same year. It’s impossible. Let’s just think that it can be completed in maybe 5 years? Even this looks extremely daunting because 5 years means every year 100,000 homes have to be built.

Do you know how many units of homes do we we actually already have? Well, high-rise wise, there’s already close to 1,000,000 units in 2020. Meanwhile 70% of all properties in Malaysia are landed and only 30% are high-rise units. Charts as below:

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Property Market Malaysia: Prices across all states. Which is highest and lowest?

There is little doubt really. The highest property price would have to be WP Kuala Lumpur as it is small and it has the world’s tallest twin towers building; Petronas Twin Towers. Every home which is nearby (within walking distance) and everyone with a spectacular view of the Petronas Twin Towers would have priced in the extra exclusivity into the property price.

Due to this, areas nearby these areas with exclusivity will tend to be higher too as it’s nearby these exclusive areas. We cannot run away yeah, city centre is usually where the highest prices are. That’s the major reason why people start moving further away. The further away from the city centre, the more affordable it becomes. So, it’s a choice of distance versus size too.

Property Market Malaysia: 75 Percentile Home Price in WP Kuala Lumpur?

The 75 Percentile price of properties in WP Kuala Lumpur is RM770,000. So, if you do own a property which is RM770,000 or higher, you are already owning a property which is top 25% priced in WP Kuala Lumpur. An extra pat on your shoulder if you achieved it by yourself either through corporate career life or entrepreneurship yeah.

By the way, as long as you own a property within WP Kuala Lumpur, the property price may just follow the inflation and you would still do just fine. Continue to enjoy the property ownership and all the nice places you could plus the accessibility provided by the Monorail, LRT and even the MRT too as your home is within the city centre.

The median price is RM480,000 and the mean price is RM654,253.  The reason why mean price is higher is simple. There are properties which are prices much higher than RM480,000. Thus, when they are added up and divided by the total number of properties, then the mean price will be higher than the median price.

Source: napic.jpph.gov.my

75 Percentile Home Price in Selangor?

Anyone who has a property which is RM615,000 or higher would already be owning a property which is priced within the top 25 percentile. Of course if we compare this property to the one in Kuala Lumpur, chances are one would be able to buy a bigger property too based on the price alone. In fact, go even further and suddenly RM615,000 could buy a much, much bigger landed property too. Probably a gated and guarded township double storey terraced home.

Working in KL and staying in Selangor? Sounds like a great plan to me. I mean for most working professional, this may just be the best arrangement.

Buy based on what you can afford

Higher prices do not mean better homes. Better homes do not mean bigger in size or nearer to office. Better homes mean this property you bought has brought you many great benefits. Perhaps it’s near to your children’s school. Perhaps it’s in the middle of you and your partner’s office.

Better homes also mean you do not worry every time of the month when the mortgage is due. Seriously, a better home cannot be one which causes you sleepless nights worrying about the mortgage payment. Just buy what you can afford. That’s the better home in every financial sense. As for dream home, acceptance is way more important than worrying about what others may think.

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Property Market Malaysia 1H 2021: Recovering or still discovering?

Property Market Malaysia: Recovering in-tandem with economy

I am not rich enough to buy properties in some advanced nations. I am not even sure if the banks would lend me the money if I were to do so. It’s okay, I do think property market Malaysia has a very long journey to go and this is perfectly fine for me. I do think property market Malaysia is doing well enough despite the pandemic but since I am just a blogger, let’s have those ‘authority’ tell you what they have announced after looking through the numbers yeah.

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Property market Malaysia 2018? Slowdown is slowing down.

Everytime someone prominent say anything about the property market of Malaysia, we should note it down. Slowdown is slowing down means the downtrend in the property market where transactions are concerned is really slowing down. In brief, still dropping but not that sharp a drop anymore, for 2018. This is the comment from property consultant Rahim & Co International Sdn Bhd.’s executive chairman, Tan Sri Abdul Rahim Abdul Rahman. It (property market) may even start expanding by 2020.  He said, “We do not expect the property market this year to be much worse off than in 2017. Expect it to be stable this year, and given another two years, it could pick up more.” He added, “Our economic fundamentals are good, oil prices have stabilised, our GDP has grown, investment from overseas are coming ….and we are politically stable, comparatively.”
This is the full article in iproperty.com.my

Tan Sri Abdul Rahim was launching Rahim &Co International’s annual publication, ‘Rahim & Co Research: Property Market Review 2017/2018 on 12th February 2018. The report says that the industrial sector is expected to see a rise in demand because of the demand from e-commerce segment meant it needed support from the many logistics and warehousing players. Developers are also shifting their focus to the affordable residential property category. These are properties within the price bracket of RM250,000 to RM500,000. These properties target the middle-income earners. Abdul Rahim gave an assessment and a suggestion. “The trouble with housing is, land is a state matter. It must be the state that has to initiate the affordable housing effort in certain states like Selangor and Penang.” He added, “Maybe the government should impose a land acquisition act, even on private land, in order to help build affordable homes at certain locations.” The report also commended the government’s cooling measures and responsible financing guidelines which have helped moderate the spiralling price growth in recent years to a more sustainable five per cent to 7.5 per cent. It may have also mitigated unwanted risks towards any non-performing loan issues.
Full article in iproperty.com.my here.

I am very supportive of
‘responsible lending’ policies.

If one could qualify / afford to buy a higher priced property, I think he will get his loan application approved. If one could not yet qualify, then there is nothing wrong to look at cheaper units. One can also look a little further. Last but not least, it is always possible to buy smaller and upgrade to bigger later on. Search all the property sites to know that there are still choices even for affordable ones below RM400,000. Buying a smaller unit and upgrading later is still a better mode of getting a home versus trying to apply for a loan which is beyond the person’s current pay (Debt service ratio) and thus could not be approved and kept complaining that banks are being unfair to them. I prefer banks to be able to continue lending and not start racking up non performing loans from those who are
really stretching themselves to the very end.

What if the person lost his job and found a job only 3 months later? Who will help him pay the mortgages in the meantime? Yes, slowdown slowing down means the opportunity to buy at a lower point is getting shorter. Not immediate though since Tan Sri Abdul Rahim is anticipating the market to expand again only in 2020. Happy believing.

written on 14 February 2018

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Improving property market? Unwanted properties still unwanted? Asking prices trend?

Earlier article showing that transactions wise, we may have turned the corner for the second year in 2019.
Property transactions are still going up
  However, not many I spoke to actually has read about this positive development apart from the usual prices too high, market very slow and economy already in trouble. Haha. About the economy, earlier article here:
2020 GDP predictions for Malaysia

Have you read many negative news about the property market? If you did, then you will read even more because what we love to read are what Facebook will be showing even more. Yes, they could track all of us easily these days. So, be selective in what you read because it may soon influence you in your actions. too As for positive news, there are a few occasionally here in kopiandproperty.com  yeah.

Today, let’s just listen to what Malaysian Institute of Estate Agents (MIEA) has to say with regards to the property market of Malaysia.

Article in edgemarkets.com
   Malaysian Institute of Estate Agents (MIEA) chief executive officer Soma Sundram Krishnasamy said this about the property market. “The signs are showing a stabilising market for the property sector where the first half (1H) of 2019 was better than 1H2018.  With the Home Ownership Campaign (HOC) initiated by the government, we are of the view that the sector is on a recovery mode but at a slower pace.”

Soma Sundram also said that the real challenge with selling the overhang is the location where these homes were built. As most of the houses are not in strategic places, it will provide additional problems to the targeted Bottom 40 (B40) income group.  He said, “We strongly advise that whatever product (houses) that developers and the government want to build for the B40, there must be a market and feasibility study including on the size, public amenities and services, environment and such.” Please refer to the full
Article in edgemarkets.com

I just wish that more people are able to look at the property market as per what it really is. People need a home and they need it at a price they could afford. As for what these potential buyers really want, it’s also very important for them to understand what they really need instead. Sorry yeah, waiting till those landed property owners willingly sell you their properties for the same prices they bought will never happen. Not even high-rise units in some mature locations too.

On a personal note, I hope I could save enough to get another property in 2021, maybe. Haha. Slow… and steady… but surely. Who knows, it may just be in JB…

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Property market Malaysia. Views from industry leaders.

I read
theedgemarkets.com nearly daily
 and they recently have a very good article featuring the views from many prominent property personalities in Malaysia about the state of the property market here in Malaysia. The title of the article is aptly titled, “Property market outlook and opportunities in
times of uncertainty.” (click to read full article yeah)
  It’s a long and informational article and below would be a short summary from some of their views.

KGV International Property Consultants Sdn Bhd executive director Samuel Tan
  A reduction in or suspension of stamp duty and Real Property Gains Tax (RGPT) would be welcomed to encourage property purchases. It would be a splendid idea to hold another Home Ownership Campaign (HOC) to clear unsold stocks this year.  There will be opportunities in the auction market where some properties are more than 50% lower than their original reserve prices. Developers will also be more willing to give more discounts and freebies, as they need to manage their cash flow well.

Henry Butcher (M) Sdn Bhd chief operating officer Tang Chee Meng
  Local buyers appear to have adopted a wait-and-see attitude as they are worried about the economy slowdown and oversupply situation. The government can continue with the stamp duty exemptions offered during the HOC last year as well as relax lending criteria by the banks.  On the primary market, developers will be forced to offer attractive sales packages. This will be a good time for investors to buy their dream homes at a lower price.

Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Soam Heng Choon
    For buyers, the government should look into extending the HOC so that stamp duty would be exempted. The RPGT and maximum loan-to-value ratio of 70%, which is imposed on borrowers with three or more outstanding housing loans, should be removed.  The extension of loan tenures up to 40 years or age 70 should be allowed for properties priced below RM500,000, instead of RM300,000.

PPC International Sdn Bhd managing director Datuk Siders Sittampalam
   Asking prices are expected to be 10% lower in the secondary market and foreign investment is likely to suffer as a consequence of the current situation. Real estate investment trusts (REITs) and office space will be impacted and declining footfall will hit shopping malls the hardest.  There will be a buyer’s market, as people with funds may pick and choose what they want. However, these buyers must be prepared to wait for capital appreciation.

Fiabci Malaysian Chapter president Michael Geh
   Despite the political instability and Covid-19 pandemic, buyers will be tempted by the low-interest loans to acquire properties.   As long as Malaysia has political stability, the property market will remain attractive as the legal and ownership laws are of Commonwealth standard and the country has relatively high living standards and low living costs.  To boost the country’s property market, the government should abolish the RPGT and continue to support first-time homebuyers by easing upfront payments.

There are always opportunities for investors who know what they want. For instance, a purchaser may be an upgrader who wants to buy his or her dream home to house three generations of the family, or a retiree who wishes to downsize or return to his or her hometown.

Rahim & Co International Sdn Bhd research director Sulaiman Saheh
   For investors who have been waiting for the right opportunity and have available funds, the lower prices and additional discounts are a good bargain, and low interest rates will help to reduce the burden of home financing.

Although investors and developers will relook at their risk appetite in selecting development projects, there is demand for affordable properties, notwithstanding the current change in consumer priorities.

As the property market is heterogeneous because of its location and socio-demographic idiosyncrasies, local owner-occupier markets in established and well-connected suburban areas are expected to remain stable.

These are just some of the views. For a full article as well as views from all the experts, please do read:
Article in theedgemarkets.com
   If you do not agree with all the views, it’s perfectly okay. What’s important is this. All of their views continue to contain positive views about the property market and that there are opportunities to be found yeah.  Especially now since we are considered to be still under a health crisis which has also turned into a economic crisis.

Let’s hope we recover soon. We can see that the views differ even among these property industry experts yeah. Happy reading and well, take all the appropriate actions yeah. Dreaming alone does not change anything yeah. If you like,
you can read a DREAM HOME article here as well.
 Stay at home and stay safe.

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Property Market Malaysia, Q3 2020 snapshot. Great overview!

I always love infographics as it tells a lot within one image. Here we have the Q3 2020 snapshot for property market Malaysia.
This article appeared in thestar.com.my
.
  I think they have a good and big team of writers and graphics people too. Good job guys. That infographic image is right at the bottom. Meanwhile, we look deeper into some of the items in the image here.

#1 – Total Overhang is 65,552 units.
Overhang is NOT the same as oversupply. Overhang means unit which has been completed and still unsold for 9 months. In other words, it has been handed over to buyers who purchased a unit and when these owners moved in, the developers may still have some unsold units.  This is why prices could not move much. Developers are still selling units they hold.

Oversupply, well that’s a very general term and may mean all units under construction, under planning etc. In some situations, the demand may be speculative and thus even if supply is very high, it may all still be sold… In slow situations, like a financial crisis for example, the supply may be way lower but the demand has also dropped tremendously because everyone who could buy is waiting…

#2 – 84.2% of all the overhang is residential and serviced apartment.
 This means 55,195 units are residential and serviced apartments. Anyway, the overhang number here when compared to the H1 residential transactions alone, it’s still considered okay. The H1 total residential transactions is over
75,000 units. (click here for details)
  It also goes to show that IF these overhang consists of all attractive properties at attractive prices, then it may no longer be in the statistics.

#3 – Service Apartments is a MAJOR issue in the overhang.

These are units which are typically bought for ‘homestay’ purpose versus own stay. In other words, when the demand for homestay is down because of COVID-19 pandemic, of course these units will still be in the market. Plus the fact that this was a very hot in demand property, thus many developers built a lot and this flooded the market. It may take some time more to clear. However, if the prices have fallen to a level which could be covered by rental, hey… that’s a great buying opportunity yeah.

#4 – Malaysian House Price Index (MHPI) is showing a price drop yeah.
 Please do look at the number very closely. Look at the % change. Despite all the talks about property prices dropping… actually, the MHPI continued to be positive all the way until Q3 2020 where the number is at NEGATIVE 1%. (or thereabouts). There’s no doubt that it has been trending downwards. Briefly, this meant that property prices were still RISING, though at a very low percentage.
Want to know why? Read this earlier article.

Image source:
http://www.thestar.com.my

Conclusion

A RM500,000 property with just a 1% up is RM5,000. Divided into 12 months, that’s an increase of RM417 per month yeah. Of course, it is also the same if the price is dropping by 1%. In 1998, property prices dropped by double digits. That was during a financial crisis. Since then, on a general basis, property prices have always been increasing by a percentage which is above the inflation rate. This is a very important factor to consider for everyone who has a property or thinking of buying a property. In the mean time, take care and stay safe. That COVID-19 is still around us…

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Property market is definitely not HOT in transactions, ok?

I find it misleading that there are still news articles these days saying that the property market is getting hot, just like the weather we have been suffering from lately. Sorry, I disagree until the numbers show firmly that the transactions are growing for a few quarters. The property market has become more sensible, read here:
In a slowing market, sanity returns. How true
  It is definitely nowhere near the HOT word. From my conversations with many more established property investors, 2016 is going to be another bland year. The only thing is the probability for it to slow further because of the world market. Not many countries are doing well, currently.

I do agree, that there are today much more interest with property investment, where awareness is concerned.
Property market is slowing. Agree. However, there are today more interested people
  Even if there are more interested parties, even if the property sites continue to be visited by ever more people and even if the organisers of property fairs tell you that they have higher attendance these days. Stay real. If property market is getting hot, why are there now ever more rebates, why are there ever more discounts and why are there ever more creative ways that the developers are trying to sell their properties?

Hope everyone is a little more clear that even though the property market is not hot, it’s not frozen either. Look at the number of transactions. Here:
Lower transactions and property value in 2016
 There are still people buying because they really needed a place to stay, needed to upgrade or even just because the father-in-law said, ‘you must buy a home before getting married.’ Yea, true for me many years ago. Haha. Read here:
Getting married? better with a home please

We should also be very savvy about it because if there’s a queue forming outside the developers office one week before the launch, do we believe they may still offer us special renovation packages or rebates etc?

Just as not all rebates are real as it may have been built into the price, it is also not true that everything is so expensive that we should just rent for life. Come on, even after evaluating for many years, my wife may not believe I am the best man for her but since she got married to me, she just have to make sure I perform to the best of my ability. 🙂  Property market is the same. It’s a forest out there and we need to evaluate carefully. Even among different type of hardwoods, there are lots of choices. Some may be more expensive simply because it looks better but both would last very long time. The question is, what kind of quality we need for what kind of price we are willing to pay. Decide, take action. Else, buy that second hand European sports car and enjoy overtaking everyone on the highway. Happy understanding.

written on 3 Apr 2016

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Property market to start picking up? Well…

Dear kopiandproperty.com readers, what year do you think the property market would soar again? Anyone here for 2017? What about 2018 or even 2019? Okay, for those who say 2020, I love you guys. I think you can start buying next year if you expect 2020 to be an awesome year. Haha. Anyway, according to a group of experts in the recent Asian Strategy & Leadership Institute, the answer may be between 2018 and 2019. Wow, I think we have seen these two predictions before right.

Anyway, there’s a
full article
 in thestar.com.my dated 1 Oct 2016. It’s a little long and thus here are some of the predictions stated by the experts in the industry. Interesting and good to take note of before we sign on the dotted lines perhaps.

2017 or 2018
 – Real Estate and Housing Developers’ Association Malaysia (Rehda) patron Datuk Jeffrey Ng Tiong Lip reckoned the residential sector should recover next year or in 2018.

2019
 – Property consultants Savills Malaysia managing director Allan Soo, who specialises in the retail malls, expects a 2019 recovery.

Depends…
 Office market specialist Jones Lang Wootton executive director Malathi Thevendre declined to make any predictions. “It all depends …,” she says.

Not much in the next 4-5 years
 – Kenanga Investment Bank Bhd equity research head Sarah Lim Fern Chieh expects house prices to be flattish or slightly weak depending on locations “over the next four to five years, if there are no major policy changes”.

Affordable is the theme
 – Andaman group managing director Datuk Seri Vincent Tiew says developers will be offering “more realistic pricing” from now onwards with location being a paramount factor.

Got any idea yet? If you haven’t, it meant you have not started viewing at all. Without viewing and
knowing the availability and the prices being offered,

let’s not even start speculating on when is the market going to recover. I had a good chat with
Stephen Soon
 of MNP Auctioneers who concurred with me that if slow times are not the best times to think about buying, when should be the best time? In his words, “Today, if we bring along our cheque book, it’s easier to negotiate for good deals.” Happy believing.

written on 13 Oct 2016

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Property market rebounding in Q3 2014. (That’s quite soon)

I read in The Star online today. (15 Feb) We have yet another prediction. 🙂   Depending on which report or news you read, the opinions are quite varied. Today, Siva Shanker, the MIEA President said that the cooling measures may have sent the market into a tailspin but Malaysians have a short memory and thus, by Q3, the market will rebound. Just few weeks ago, he was reported by The Star to have said that prices would only recover in 2016. If it is Q3 2013 versus 2016, it meant that the market will be recovering faster than thought. Do Malaysian investors have short memory? I think Malaysian investors are more on ‘herd mentality’. Not many understand what they are really buying. They buy because everyone else is buying and they are scared when every report paints a negative picture. Everyone kept forgetting that if majority can be right, then why are the minority holding the world’s wealth?

Hwang DBS reported that price increase would now moderate to just 3% per year. If this is true I like it. In fact I welcome this kind of growth instead of Malaysian property prices be ranked in the top 12 of real estate price increase. Actually, prices of property has to increase. The reason is, the cost of construction in terms of materials and labour is always rising year after year. Today, if you have any developer friend you will know that none of them would build if their gross margin is less than 30%. The reason being they may suddenly find themselves losing money if some units were unsold and their costs went up due to material costs going up. However, for any prices to rise 10% per year continuously is absurd. If this continues, every property would be unaffordable and bubble will not just build but will burst.

To understand some of the signs of bubble, you can read my article here:
How to spot property bubble
  I have first hand info about the slowing market because I have put up a property for sale and for the price which is very attractive during good times, people are now viewing and viewing and viewing instead of offering. As for the few who offered, their offer is ok but not something I wanted. I am still deliberating whether I should hold until Q2 or Q3. Perhaps I will decide the next month. Who knows, another prediction may come up saying that property transactions has started to inch upwards?

written on 15 Feb 2014

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Press Release: PropertyGuru- Property Market Poised To Recover in H2 2021

PropertyGuru: Property Market Poised To Recover in H2 2021

Favourable interest rate and incentive-rich environment encourages homeownership
Spillover effect from the continuation and revival of mega infrastructure developments
Anticipation of effective vaccine could reverse current sluggish consumer sentiment

Kuala Lumpur, 15 December
 –  2020 has been a challenging year for the Malaysia property market, as the country’s economy has been significantly impacted by the COVID-19 pandemic.

Malaysia’s Gross Domestic Product (GDP), which fell by a record low of 17.1% in the second quarter, declined by 2.7% in the third quarter. Bank Negara Malaysia (BNM), in its
statement dated August 2020
, has forecasted that GDP for the year to decline within the range of 3.5% and 5.5% in 2020.

The year 2020 also saw a significant decline in property transactions. According to
Bank Negara Malaysia (BNM) Financial Stability Review 1H 2020
, property transactions posted a decline of at least 25% for both volume and value. Nevertheless, the property market continued to show signs of resilience, as the transaction declines were less-than-anticipated, partly driven by various measures and initiatives from the government.

These measures and initiatives include the reintroduction of the Home Ownership Campaign (HOC), which includes Real Property Gains Tax (RPGT) exemption, stamp duty exemption, and the removal of the 70% margin of financing limit. Additionally, a six-month loan repayment moratorium that began in April has helped keep the lid on default rates.

PropertyGuru Malaysia, the country’s largest property website, in its recent
Property Market Outlook 2021
 Report opines that Malaysia’s economy will gradually improve next year. The property market is set to benefit from the economic recovery, albeit at a slower pace in the new normal.

“The property market is expected to improve in the second half of 2021, partly driven by an improved economic and public health climate.

“Strong existing demand for homeownership will likely be unlocked and we will see healthy growth in property transactional activity. However, the recovery is expected to be gradual as we acclimatise to a post-COVID reality,” said Sheldon Fernandez, Country Manager, PropertyGuru Malaysia.

He added that the promise of a vaccine being made to the public during the course of the year will bring welcome relief on this front which will further determine buyer behaviour in 2021.

2021: A Buyer’s Market

The current market condition with a historically low-interest rate, property developers’ aggressive promotions, heightened competition among property sellers and incentives under the HOC programme – makes it a favourable timing for homebuyers to look for bargain deals.

However, the prevailing economic climate continues to suggest that caution should be a prime factor in any decision-making process, specifically due to job and income uncertainties.

“Purchasers must not only consider the cost of owning a property but also whether they can afford it while managing other expenses.

“Overall, a buy is advisable for those who are on sound financial footing and are confident about the future security of income. Those in this position will find themselves spoilt for choice in the current buyer’s market,” added Fernandez.

Five Trends that Will Drive the Property Market in 2021

According to the
PropertyGuru Malaysia Consumer Sentiment Study
, 57% of respondents expressed their intention to own a home by the end of 2021, while 1 in 6 respondents plan to postpone their purchasing plans indefinitely.

“
With many Malaysians aspiring to own their own home next year, we have identified 5 key trends that will help facilitate the uptake. They range from incentives to enhance the macroeconomic environment, measures by the government and property developers as well as uptake of digitalisation within the property industry,” said Fernandez.

PropertyGuru has earmarked these key trends as driving forces for the property market. They are:

1. Conducive interest rates to encourage homeownership

The Monetary Policy Committee (MPC) of BNM kept the Overnight Policy Rate (OPR) at 1.75% in its most recent review in November, citing significant improvement in economic activity during Q3 2020.

Lower OPR allows buyers to lock in lower interest rates favourable to current financial standings, especially those finding it difficult to fork out higher monthly loan repayments.

2. Continuation of mega infrastructure developments to create multiplier effects

The Budget 2021, which was tabled at Parliament in November, has seen the Government allocated RM15 billion to revive and ensure the continuity of several mega projects, such as the Mass Rapid Transit Line 3 (MRT3) in Klang Valley, Rapid Transit System from Johor Bahru to Woodlands as well as Pan Borneo Highway across Sabah and Sarawak.

Additionally, the development for Kwasa Damansara, a massive township bordering Kota Damansara and Sungai Buloh with a gross development value of RM50 billion, will create more than 100,000 jobs and have about 10,000 affordable houses.

3. HOC continues to spur buyers’ interest

The reintroduction of the government-initiated campaign has proved to be an effective measure to boost the market, which offers a number of incentives to homebuyers, and is expected to remain in play for much of the first half of 2021.

4. Property Technology On the Rise

One positive outcome of a pandemic-challenged property industry is increased innovation and a greater focus on digital solutions. Key property players have accelerated the efforts to market products and engage with buyers through online initiatives. This bodes well with millennials who are well versed with e-commerce habits and make up a large segment of the house buying market.

PropertyGuru hosted the region’s first largest multi-country
virtual property expo
which brought together 300 developers over 10 countries on one platform.

Other game-changers include data solutions, whereby easy access to real-time property transaction data would help create greater transparency within the property ecosystem – for buyers, sellers, agents, developers and financiers. PropertyGuru leads the fore with the recent
acquisition of MyPropertyData.

5. Affordable housing for the B40 segment

The Budget 2021 revealed that the government will be focussing on affordable housing in the coming year, announcing several measures that will incentivise homeownership among the lower-income (B40) segment of the populace.

This measure will allow private developers to focus more on free-market housing while allowing the government to take the responsibility to provide more cohesive housing for the rakyat.

For the complete PropertyGuru Property Market Outlook 2021, kindly click
here
.

— End Of Press Release —

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Property market recovery in 2H 2021

What is property market recovery?

How do you define property market recovery? I personally define property market recovery as the time when property transactions show a rising trend every quarter and should be driven by first-time home owners versus most transactions by those who already own many properties. When the latter happens, let’s be savvy to the fact that landlords will soon become powerful again and rental would soon be controlled. This has happened in many property markets.

Hopefully, this dire situation does not happen in Malaysia and everyone who needs a home really do get a chance to buy a home they could afford. As for our very own property market, there is now a prediction that the outlook of the property market in the second half of 2021 is rosier versus the first half of 2021. Let’s read on about the comments from the Real Estate and Housing Developers’ Association (REHDA).

Article in thestar.com.my
  In a survey of 134 respondents by the Real Estate and Housing Developers’ Association (Rehda), it was revealed that 20% are optimistic about the property market and sales performance in the second half of 2021, compared with just 8% in the first half. The survey also showed that 26% are optimistic about residential sales growth in the second half of 2021, compared with just 8% in the first half.

Rehda president Datuk Soam Heng Choon said, “With more countries recovering from Covid, our trade will improve and this will boost our economy. When the broader economy recovers, the property market will, as well.” The survey also showed that developers in Kedah, Perlis, Negeri Sembilan, Pahang and Selangor planned to launch residential units within the RM250,001 to RM500,000 price range, whereas Johor, Penang and Wilayah Persekutuan aimed to offer units priced between RM500,001 and RM700,000. Please do read the comprehensive article here:
Article in thestar.com.my

It’s worth nothing that this is a survey by REHDA

Property market recovery depends on many factors and not just a survey of 134 respondents. However, I do agree with Rehda president Datuk Soam that if the economy recovers, then this will help boost the sales of properties. This is because people would feel more confident with the outlook of their job and will be more willing to plan a big purchase and a home is usually the most expensive item one would ever buy in their lifetime.

COVID-19 crisis is not a financial crisis unless badly managed

We just need to remember that COVID-19 is a crisis of sentiment and not a financial crisis.  Of course, if not managed well, then the crisis may turn into a financial one as well. As of now, based on the latest unemployment figures, it does point to the recovery of the economy in 2021 if compared to 2020. This is a good sign. So, if you also believe the property market will recover in second half of 2021, perhaps it’s a good time to start updating ourselves on what’s available in the property market and deciding on whether to buy or not to buy.

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Property market recovery only in 2020 / 2021

Should we be happy if the current lacklustre property market is expected to recover only in 2020 or 2021? Many may actually be hoping so because this would help salary increments to catch up with property price increases. You know, those complaints about property prices being WAY TOO HIGH? Or that due to it being so high, no one could afford to buy any property? Recent article:
Values still up even when transactions are down

 Some working professionals who bought a property one or two years back would need time to save up for their next property. This new downpayment savings could not and should not happen over a few weeks yeah, even if some people may tell you otherwise. According to RHB Research Institute property analyst Loong Kok Wen, the property market may recover only in 2020 or 2021.
Full article in TheStar here.

She shared that the recovery will happen when a fresh cycle starts again with a new wave of demand. According to her, current Ringgit’s strengthening and even a rebound in crude oil prices would not be enough to restore confidence in the property market.
(In my humble opinion, I think the current property market sentiment was NOT caused by the ringgit or even the oil prices. It was more probably caused by property prices which went up way too fast and too soon and starts to make every new launch become impossible to buy for the majority. This meant demand could NOT afford the supply. At the same time, Bank Negara Malaysia started cooling measures and one of it was to ensure banks lend responsibly and developers stop the Developers Interest Bearing Scheme. (DIBS). )
 She added, “With no prospects of near-term appreciation in property prices, potential investors are likely to stay out, while some genuine buyers may hold back on their purchases as they expect some correction in prices.”

In the same article, Loong also shared that projects in strategic locations with the right price would still be sellable. At the same time, transaction volumes would recover slightly even if price increase wise, it will be subdued. Developers continue to offer attractive discounts and rebates, and roll out affordable housing projects too.
The article in NST which has a few other views for reference here.

While Loong did not say where the strategic locations are, I would assume these would be locations where there are public transport accessibility. The reason is very simple. Those popular and mature areas would not be able to offer the ‘right price.’ It’s usually priced above most other areas already. If these properties are offered at the ‘right price,’ then it could not offer the ‘right size.’
Always a combination of size, area, price, affordability.
It may also be a location where the expressway is easily accessible too even if paying toll is not really welcomed. Higher prices would continue to alter acceptability of more of these ‘strategic’ areas as long as there are accessibility. This question, ‘For the same price, would we buy in less popular areas or more popular areas,’ does not exist. No one would choose to buy in less popular areas when everything else is the same. Happy selecting carefully.

written on 23 March 2018

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Property market recovery. Multiplier effect on over 140 industries says Mah Sing.

My close friend, a real estate agent will back to the sales gallery next week when she would have completed the 14-day from her 2nd dose of AstraZeneca Covid-19 vaccine. She has been waiting for this day (reopening of office) to come for months and is raring to go. She said that the developers have also started to discuss on the sales gallery reopening and the required SOPs etc.

Without the sales gallery reopening, nothing much happens even if the unit could be viewed by potential customers online via virtual videos for example. Not many people I know would sign on a RM500,000 property just after viewing a video, no matter how awesome the video was. The closure has to depend on whether the sales person could answer my question or not.

Article in nst.com.my
  Mah Sing Group Bhd Founder and group managing director Tan Sri Leong Hoy Kum said that the government should expedite the recovery of the property market. This is because the recovery of the property sector will have a significant multiplier effect on more than 140 industries.

He has a few suggestions for the property market recovery and they include reinstating maximum loan tenure to 40 years, referring to gross income rather than net-income for loan applications, higher debt service ratio, up to 100% margin of financing for first property to help the M40 and B40 groups in their property purchase.

He also would like to recommend the government to consider Developer Interest Bearing Scheme for first-time homebuyers too. As for the Home Ownership Campaign (HOC), it should be extended for an additional year. For even more of his recommendations, do read it here:
Article in nst.com.my

First-time home buyers also need MORE information, else easily influenced

Whenever I speak to first-time home buyer, I realise that many of them do not have any idea about property investment at all. Thus, they may be easily influenced by experienced sales people and may buy a property which they do not need and may get stuck later when the property is completed. We do not want the situation of too many transactions involving first-time home buyers who were buying without knowing enough.

Conservative is better for first-time home buyers

For the loan application approval, I am someone who prefers the bank to be stringent. Calculation can use gross salary if it makes better sense for some profession such as sales people. However, first-time home buyers should know that they need to buy a property which is within their salary affordability versus over-stretching just because they want to have the ‘perfect’ home. By the way, when their financial capability changes, that perfect home is no longer perfect. Property market recovery may be an opportunity too.

Home is definitely a necessity and the first home is important

Someone without a property will always be financially handicapped because they would have to pay rental forever. Rental keeps going up with inflation too. Someone with a property of their own stops paying for a property 30 years down the road. After that, they can do whatever with the monthly extra money they have. Meanwhile for the ones who rented, they have to ensure their investments from other types of investments could cover the rental easily. Happy understanding.

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Press Release: PropertyGuru – Gradual Property Market Recovery Expected in 2022, Positive Outlook Driven By Sustained Demand And Positive Transaction Prices

Overall median price for transacted properties in H1 2021 recorded an upward trend of 8.5%, the highest rise registered since H1 2016
Property activity continued to transpire on the back of greater embrace of digital transformation by property companies

Progressive policies, improved economic environment, and mega projects among key trends that will impact the Malaysian property sector in 2022

Kuala Lumpur, 8 December 2021
 – The Malaysian property market looks to be stabilising and is expected to observe a gradual recovery in the first half of 2022, according to PropertyGuru Malaysia’s Property Market Outlook Report 2022. This is in line with a general improved outlook for the Malaysian economy, which is anticipated to perform better next year.

The improved outlook is reflected in the recent PropertyGuru Malaysia Property Asking Price Index, which found that prices were back on an upward trend in Q3 2021, indicating that sentiments are improving in tandem with higher vaccination rates, the reopening of commercial activity, and a less restricted environment for consumers.

“As a rebound in the property sector is expected to trail behind more substantial national economic recovery, we will likely see gradual improvements in the market environment in the first half of the coming year, before it begins to pick up the pace in H2 2022,” said
Sheldon Fernandez, Country Manager, PropertyGuru Malaysia
.

H1 2021: Decline in number of transactions, but rise in median transacted prices

Research by PropertyGuru DataSense, the data analytics and solutions arm of PropertyGuru, found that property activity continued to transpire in Malaysia despite a very challenging environment, albeit at a much-reduced volume.

While the overall number of purchases dropped sharply during the H2 2020 to H1 2021 period, the overall median price for transacted properties actually moved upwards by 8.5% – the sharpest rise registered since H1 2016. The fact that median prices continued to rise while transaction volume dropped sharply indicated that buyers who purchased property during this period had solid financial footing and an appetite for higher-priced properties.

“The combination of low interest rates, depressed property prices, and an incentive-rich environment provided an opportune moment for buyers with the right means to jump into the market. Even at the height of restrictions, their ability to act on purchase decisions were aided by a greater embrace of digital transformation by property companies, which now enables an end-to-end purchasing process for consumers,” said Sheldon.

H1 2022: Opportune time to purchase property, but less ideal climate for sellers

PropertyGuru opined that it is a favourable timing for home seekers who are looking to take advantage of low prices while they are on an upward trend and benefit from prevailing low interest rates while they last. However, they are advised to consider the stability of their personal finances and job security before making a long-term financial commitment.

Sheldon added, “With prices trending in a positive direction in the final quarter of the year, and sentiments gradually, but steadily improving, it is highly likely more property purchasers will want to catch the potential upswing of market prices while the financial environment remains favourable. This is a momentum that is expected to pick up pace and spill over into 2022,” said Sheldon.

PropertyGuru also opined that the current climate is not ideal for those seeking to sell their property for a bigger profit, as sellers are facing competition from a glut of new and unoccupied properties which provided buyers with diverse options. However, should the market pick up pace by mid-2022, properties located in high-valued and centralised locales could see promising upticks in offer prices.

Property market trends in Malaysia for 2022

Moving forward, PropertyGuru foresees several trends that will impact the Malaysian property sector in 2022. Among them include:

Stabilised market will revive buyer interest:
Over the last two years, COVID-19 had influenced buyer behaviour and trends. With vaccination rates increasing, PropertyGuru expects consumer sentiment to gradually improve alongside an improved outlook on job security as the nation continues to recover. Positive price indicators captured in H2 2021 foresees a more stabilised market in the first quarter of 2022, despite issues surrounding pricing mismatch experienced by the property sector prior to the onset of the pandemic.

Improved economic environment for property seekers:
As businesses begin to reopen at full capacity in accordance with the National Recovery Plan, greater economic stability and improved job security for consumers will be seen in 2022, resulting in a more conducive environment for individuals to revive homeownership plans. The recent Budget 2022 announcement also saw the removal of
Real Property Gains Tax (RPGT) on homes that are sold on the sixth year onwards
, which will help to liberalise the market for investors and second home buyers.

Progressive policies for a changing landscape:
Following the Budget 2022 announcement, the government plans to invest RM2 billion in guarantees to banks via the
Guaranteed Credit Housing Scheme
, aimed at assisting those in the gig economy. Additionally, a further allocation of RM1.5 billion would be channelled towards housing programmes such as
Rumah Mesra Rakyat
and the maintenance of public housing units. This illustrates the beginning of more
progressive and inclusive approaches in financing and home ownership
.

Ongoing mega projects to enhance future prospects:
As mega projects in the country continue to progress, PropertyGuru foresees that this will
generate excitement in the property market and add value to residential, commercial, and retail segments
. This includes
important infrastructure
such as the
rollout of the Mass Rapid Transit Line 3, East Coast Rail Link, as well as the Johor Bahru-Singapore Rapid Transit System
.

Terraces remain the top choice
: Overall, terrace houses remain the most sought-after property type in the country, representing the largest volume of properties purchased by both first-home buyers and investors in H1 2021, according to research by PropertyGuru DataSense. The preference has been influenced by recent COVID-19 limitations as younger professionals are seeking more space to balance both lifestyle and work needs, especially since working from home is now becoming a long-term option, as reflected in the
PropertyGuru Malaysia Consumer Sentiment Study H2 2021
.

For further information on big property bets and macro trends that will impact the property sector in the next year, please visit the complete PropertyGuru Property Market Outlook 2022
here
.

— End Of Press Release —

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Property market recovery in H2 may drive up stock prices

Property market is not really ‘moving’ and this has affected many property counters. Many people are scared of stocks too:
Is stock market scary for many? It does seem so
 These days, many of the counters have been forgotten. The issue is simple. If the developers are not selling well, their profits would certainly be affected and when this happens, it should cap any stock price upside possibility. If we thinking about property stocks to buy instead of properties, we may want to listen to what CIMB Research is saying in a local media report today.

CIMB Research said its top pick is Eco World Development Group Bhd. Other counters it likes include UOA Development due to prospects of higher sales, LBS Bina Group Bhd for attractive dividend yield and stronger earnings. From Penang, there’s Eastern & Oriental Bhd for its Seri Tanjung Pinang (STP2) reclamation project which should re-rate its share price. On an overall basis, CIMB Research is maintaining an “overweight”call on the local property sector because, “not as dire as initially thought.”

After its meeting with analysts and fund managers, it said that property sector’s fundamentals are better than its initial perception. It said that the sector’s valuation is cheap as per majority of all the investors but currently, everyone is staying on the sidelines without any visible near-term catalysts for property sales. In brief, it meant that should the situation turns better, the property stocks may rise again. It said, “A turning point in property sales, in our view, would be a stronger driver of share prices than full-year sales performance.” Some notes worth reading and understanding:
Good notes for stock investing from an investment guru

For investors, it may be good to pay attention to all the launchings. Drop by and look at the sentiment. Most of the time, whatever we feel during the launching may be reflected in the results within the next few quarters. In other words, we can buy the counters earlier and keep for the potential upside. Stocks investment requires some efforts too. For property developers, it’s possible to know if they are doing well or not versus many other businesses. Happy investing.

written on 19 Apr 2016

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Property market recovery? Approved loans are up? Sustainable?

My new neighbour just moved in last month. My ex-neighbour moved out 7 months ago. My current place is under leasehold. What this meant is that my ex-neighbour managed to sell his home pretty quickly! Transactions for leasehold properties within Selangor may take up to 6 months. So, should we say the market is getting better because my ex-neighbour bought a new place and my new neighbour also bought a new place? Both are definitely earning enough to upgrade, right? I am staying put lah. Moving home is a huge headache and my wife hates it a lot. However, she supports my view that property investment is a good move. I just told a good friend during lunch that the property market seems to be getting better. The reason I say so is because I read a lot less negative property news in Facebook. (Haha…) I think it’s best for us to stay sober because the market recovery may not last.

That’s the view of MIDF Research in an article in
TheSunDaily.
  It said that even though the net approved loan for January 2017 year-on-year (y-o-y) is up 6% to RM8.72 billion, this is not a signal of a sustained recovery for the property market. It shared that this is because the actual approval rate is still at 40.5 percent. It said that the loan demand was still weak and in fact declined 1percent because the ringgit’s weakness affected consumer sentiment.  (Anyone who’s buying property in Malaysia, it’s best to know what we are really buying instead of whether ringgit is up or down. By the way, it’s mostly affected by the US$ and not due to sudden fundamental changes. Just look at the sudden rise in stock market to understand a bit more)  Here’s a recent article on it.
Anything overvalued is best skipped, stocks for example

MIDF said, “Note that the 6% improvement in applied loan was attributed to a 7% y-o-y increase in approval rate, which more than offset the 1% decline in demand.” Among the few key states, Penang grew the slowest; 3.4 percent, Selangor by 7.5 percent, Johor by 5.5 percent and Kuala Lumpur by 5.1 percent. All are up. The support for price growth should be better for Greater KL because of continuous urbanisation. According to the latest Property Market Report released by National Property Information Centre, Malaysia’s property market transaction value declined 6.3 percent quarter-on-quarter (q-o-q) to RM30.8 billion in Q3’2016. The lower transaction value is consistent with the fall in transaction volume by 8.5% q-o-q to 76,456 units. Article here:
Property transactions and price, both dropping. (Jan – Sept 2016)

MIDF also shared that based on the

drop in Malaysian Institute of Economic Research’s consumer sentiment index from 73.6 points in Q3 to 69.8 points in Q4, it is possible that consumers are expecting rising prices to intensify and any shopping is now conducted selectively.  (When we really believe that it’s getting worse, stop spending on everything unnecessary……) Happy believing.

written on 30 March 2017

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When everyone wants to rent instead of buying, what happens to the property market?

Wondering what will happen to the property market if it’s true that most people prefers to rent?

First thing is, demand for property will not be reduced. It will stay the same yeah. People renting meant people still need a place to rent. No one is saying that everyone likes to live under the bridge or along the walkway yeah. They say they need a place to rent…

It’s cleverer to look into how many people will be moving to the bigger cities; urbanisation and also intending to rent instead. Not everyone will prefer to rent the whole place because they may have budget concerns. So, we can always assume that every property may be rented out to three person instead. In other words, look at the new migration numbers into a city, divide by 3 and you will get an idea about the number of properties which will be needed.

Opportunities to buy if everyone prefers to rent

If everyone wants to rent, it meant that the opportunity to buy a property and rent it out to them is now widened. Instead of buying the overly expensive property, we can buy a decent sized one with 3 rooms and rent each room out separately. There’s also that opportunity to cater to another market; people who’s willing to rent a small room with just a bed instead.

So, the same property could then be rented to double or triple the number of people depending on the size and layout of the property. Just remember, the hassle of renting to ever more tenants will be bigger versus renting to just a couple for example.

If everyone prefers to rent, property developers still have to build yeah

Without an increasing number of new property supply, it will mean that as demand for rental property will start to push property prices up because of the limited supply of property versus the ever increasing demand for properties to rent. This is also the reason why in many advanced property markets, the tenants are always facing ever higher rents because the landlord could rent out their units at a higher price every year.

That’s a very sad story and yes, it happens. So, property developers must continue to build the type of properties which the buyer could buy so that they can continue renting out the unit.

The below poster tells why more people will continue to move to cities

Growth is slow at just 1.3% but… demand will continue.

The below poster says it all…

Happy deciding and yes, when everyone wants to rent, then I am the someone who prefers to buy instead.

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MIEA: 2021 PROPERTY MARKET REPORT GIVES SIGNS OF A RETURN OF CONFIDENCE IN THE PROPERTY MARKET

— start of media release by MIEA —

Rising House Price Index

The recently launched property market report shows strong recovery in 2021 over 2020 and gives signs of a return of confidence and envisages to an improved property market in 2022. More importantly the public must take heed of the fact that the house price index has seen a significant increase to RM320,000 compared to RM295,000 in 2020 said MIEA president Ms Chan Ai Cheng.

Increase transaction volume

The volume of transaction for 2021 rose by 1.5% to 300,497 units with a value of RM144.87 billion a 21.7% increase over the same period last year. Though the percentage increase of 1.5% may seem small it’s important as it signifies recovery. The last quarter of 2021 saw a sparked increase in the volume of transaction amounting to 99,462 units, which we believe could be largely due to the Home Ownership Campaign(HOC) incentives which ended in December 2021.

Residential Sector’s contribution

As in previous years the residential sector was the strongest contributed 66.2% with 198,812 transactions with a value of RM76.9 billion. Agriculture was second with 18.9% of the transaction. Commercial came in third contributing 7.5% with 22,428 transactions. This trend remained same as in previous years. The following states contributed slightly in excess of 50% of the total transaction namely Selangor 61,507, Perak 36,893, Johore 36,145 and Kedah with 25,077.

In 2021 a total of 43,860 new residential properties were launched comprising of 31,678[43.3%] Landed properties and 13,182 (25.9%) high rise. Only 39.3%of the units was sold, resulting in an overhang of 36,863 units which is the highest in the last 5years. This will be a great concern to developers as this effects cash flow. However, we need to caution buyers not to be overly alarmed by the rise in the overhang numbers as this may not be a reflection of how the property market is doing. Some properties are just not cleverly developed and hence there is poor demand and this has nothing to do with whether the market is doing well or not.

What’s the reason for overhang?

MIEA is of the view that the overhang is largely due to the lack of research resulting in the poor understanding on supply versus demand, mismatch on the type of properties price range that buyers are seeking in specific locations etc. Local authorities should perhaps put a pause on similar developments in vicinity of high overhang units to allow time for the market to absorb the units or to relook into the development composition before approvals are given to proceed. We feel it is time for the government through KPKT to intervene by adopting stricter guidelines or SOP towards building approvals at the state level to provide check & balance and not to waste resources which may run into billions.

There is a new trend where 15,332 [35.0%] units were in the less than RM300,000 price range category, 15,723 [35.8%] in the RM300,001- RM500,000 category, 11,875 units in the RM500,001 – RM1 million category and 930 units in the above RM1million categories. Interestingly 70.8% units were launched below the RM500,000 category which is in the affordable category and clearly shows a shift by property developers in developing affordable homes, heeding calls by the government.

Ms Chan request developers who are struggling with overhang units to work with Real Estate Agencies to help ease in the sale of these units especially small developers who normally use their own inhouse sales team to market. Appointing estate agents to help is a logical choice as they are trained and have the relevant experience. Be sure to only appoint those who are registered with the Board of Valuers, Appraisers, Estate Agents& Property Managers Malaysia (BOVAEP).

In conclusion Ms Chan said that Real Estate practitioners requires data to professionally represent the public at large and NAPIC data is important for the 30,000 real estate practitioners and requests that this data be made available for all practitioners on a timely basis and thanked JPPH for playing an important role in compiling and appreciative for releasing this year’s report early.

Property investment is not ‘simply buying’

As advised before always do your own research and let location specific and type specific data guide your decisions. Broad or generic comments takes the average and may not be reflective of the type of property or the location you have in mind to purchase and may misguide you. While it may seem like things are heading southward, you can be rest assured that properties well located are still fetching top prices and expressed that the public can look forward with confidence to buy and invest in properties given that values are already on the rise after a slump in the last two years. It’s never too late or early to enter the market. Importantly is always do your research.

—— the end —–

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End Image by
Alexandr Podvalny
 from
Pixabay

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Property Market Shift: Local and Oversea Investors’ Behaviours in the Aftermath of COVID-19

Dear all, see you this Saturday (6th March) at 3pm yeah. The Malaysian Property Virtual Talkshow 2021 with the title of Property Market Shift: Oversea Investors’ Behaviours in the Aftermath of COVID-19 will be happening and I am one of the two speakers. The other speaker is a super famous big brother in the real estate industry. If you think of overseas buyers, he would be the best person to call. He is Adrian Un, CEO of SkyBridge International.

Our moderator is none other than that famous speaker who shares numbers and numbers and numbers and loves Malaysia tremendously, Dr. Daniele Gambero. For this talk, he will be representing the Malaysia Proptech Association as he is the Deputy President. This live show (yes, it’s live and they did not give me the questions before this show. Oops…) will also be in fb.com/kopiandproperty at 3pm.  So, do watch the space and keep your time free. Have a cup of coffee, open a pack of chips and you are ready.

Happy dropping by and learning yeah.

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Singapore property market? Some not so good indicators.

Not many would believe that the Singaporean economy may not doing well in the next few years. Personally, I also do not believe this will happen. However, the threat is there. According to Dr. Chua Hak Bin, the head of emerging Asia economics at Bank of America Merrill Lynch, there is a possibility of Singapore entering into a period of stagnation over the next few years. He was speaking in Real Estate Developers’ Association of Singapore (Redas) property market seminar. He said that due to this stagnation, the property market is unlikely to stage a sudden rebound even if some of the cooling measures were relaxed now.

Some recent numbers do correspond to that possibility. Employment growth contracted for the first time since the 2008 global financial crisis (GFC), loans growth contracted as well and Singapore’s inflation plunged to the lowest in five years. Wait a minute. Isn’t inflation a bad thing? Since it is lowest, why is it not good? Actually inflation would normally rise in tandem with economic growth. The only catch is that it should be managed so that it rises slower than economic growth. However, if all indicators are down and so did inflation, this is definitely not a good sign for the economy.

According to Redas president Augustine Tan, “The build-up of the oversupply situation in the private residential market will not abate in the short term and recovery will not be a quick one.” In Singapore, the prices for private homes continue to decline for the seventh straight quarter. The number of new private residential units including executive condominiums are expected to be over 89,000 new units between 2015 to 2019. Other signs include a lower GDP growth, thus causing the economy to be less supportive of the property market. Population growth has slowed with foreigners finding it harder to obtain employment but birth rates in Singapore is way too low to support population growth. labour productivity growth has also been negative in the last four years and private investment has contracted over the past two years. Let’s hope everything would normalise in terms of demand and prices to remain low enough for new demand to increase organically. As for the cooling measures, I think the developers may have their wishes. With prices having fallen so many quarters, it may be worth letting go some of the controls. Happy hoping.

written on 20 July 2015

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Property market is slow is not true because…

Everyday, we see negative news about the
oversupply situation for the property market in Malaysia.
At the same time however, we also see news about how some launches of new developments were so successful that the phase being
launched was sold out within half a day!

Okay, most of the time, these are bookings. These bookings would still have to go through loan applications which meant that some may still not make it to a confirmed sale. As for loan applications, well, some say that it’s getting harder but some would still say it depends on the buyers’ themselves. I think it really depend on the buyer themselves. Many times, many of us try to overstretch ourselves too much into too many commitments that even the banks are worried for us.

I think the lending requirements should not be loosened.

My personal thoughts? The market is definitely not slowing down because there are far more Malaysians needing homes than there are for the ‘right supply’ of the type of property which we love.

Another reason why I say so? Well, how many times have we read about public listed companies who were not property developers venturing into becoming a property developer? Reported in
TheStar was another one, Boon Koon.
In brief, the development would be for some serviced apartments and retail lots with Aera Property Group Sdn Bhd (formerly known as Asthetik Property Group Sdn Bhd). There would be two blocks of 29 storeys and a total of 752 units of service apartments. There would be a 8-storey car park too. The land has a leasehold status. Estimated profits for Boon Koon is RM93.5 million while the completion date for the development is 2021. Total gross development value for this would be RM306 million. Who is Boon Koon?
Well here are some further readings in i3investor.com.
 Total market capitalisation is RM125 million which meant that this is not such a huge company. There are no average target price for this stock, indicating lacking of coverage by institutional funds.

This is quite a common piece of news and I think many more public listed companies would love to venture into something new, like property development. So, should we buy properties from these not typical property developer developers? I think it’s worth noting that many of the big property developer names we have today did not necessarily started as a property developer. Many would have started as a construction company first or even other core businesses. Those businesses would have provided them with sufficient funds to venture into something else, for their future. As usual if we intend to buy, then distance, size and location would be the usual three considerations. Of course, do think about
WHY instead of just the Where yeah..

Happy following if Petaling Jaya is a favourite spot for you. The development for Boon Koon’sfirst venture is within Petaling Jaya.

written on 30 June 2017

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Profits are down. A sign of time, perhaps.

If we want to understand how is the overall stock market doing in the U.S, we may want to refer to the DOW 500 or the S&P 500. It is considered a representation of the over 4,000 publicly listed companies there. Here in Malaysia, it would be our
FTSE Bursa Malaysia KLCI
, also known as the FBM
KLCI
. Please note that investing into a good stock matching what we want does NOT have to be one of the 30 stocks within the FBM KLCI.

I believe it is not possible to look into the state of the property industry if we do not see what’s happening with the few largest players in the industry. Today, we look at what has been announced by S P Setia for their Q1 2020 which ended on 31st March 2020. Movement Control Order (MCO) actually started on 18th March 2020 and has been extended till 9th June 2020 under a Conditional Movement Control Order (CMCO).

Article in focusmalaysia.com
    SP Setia Bhd’s net profit dipped 43.78% year-on-year (y-o-y) to RM56.12 mil for the first quarter ended March 31 from RM99.83 mil in 2019. This is said to be weighed down by the Movement Control Order (MCO) imposed to curb the Covid-19 pandemic.  S P Setia said that due to the MCO, it has closed sales offices, construction sites and social activities and this had disrupted its business operations.

For the period under review, revenue also shrank 18.76% y-o-y to RM702.66 mil from RM864.91 mil previously. As for its sales targets, S P Setia said it has revised its sales target for the financial year ending Dec 31, 2020 to RM3.8 bil from RM4.55 bil set earlier. President and CEO Datuk Khor Chap Jen said in addition to the sales of RM470 mil secured in 1Q20, the group also secured RM723 mil worth of bookings in the same period. He added, “During the extended conditional MCO period, the focus will be on the swift conversion of these bookings into sales.”  Please do refer to the full
Article in focusmalaysia.com

I have not bought any properties from S P Setia.  I also do not hold any of their shares currently. For those who wants to know what’s up or down and some details about S P Setia’s share price, do refer to the image below.  The source is google. Just type ‘S P Setia share price’

The lowest price it has ever dipped to within the past 12 months was 55 sen.  It is now at 76 sen. If everything else has remained as it is, the dividend yield would have been 1.32%.  In other words, we should be looking at this stock for that upside potential if the market recovers and less of it as a dividend stock. Where dividend % is concerned, there are many other companies offering a higher number.

The positive from this announcement is simple. The profits are STILL at RM56 million.  it’s not a loss.  Secondly, S P Setia has announced a reduction in their sales target for this financial year but the number is still in the billions; RM3.8 billion to be exact. This is not the sign of everyone running away from buying a property yeah. It’s also a sign that there is still confidence but perhaps not as rosy as when they first forecasted. Happy following.

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