The Dragon is here and the best is yet to come
BRICKS AND MORTAR By TEH LIP KIM
COME midnight tomorrow, as we usher in the
Year of the Dragon, most
of us will not help but stop to wonder what the next 12 “moons” of the
lunar calendar have in store for us.
The Dragon the fifth and
incidentally the only mythical animal of the 12 animal signs in the
Chinese zodiac is a symbol of power and good fortune.
Those born
under this sign are considered to be dynamic, flamboyant, colourful and
vibrant. People born under the sign of the Dragon include historical
figures Joan of Arc and
Martin Luther King Jr, author
Pearl S. Buck and
artiste John Lennon.
This year is the year of the Water Dragon and astrologers believe will be a year of many opportunities for growth and expansion.
But
astrology aside, what exactly can we expect in the year ahead for the
property sector? If one is to listen to the rumblings on the ground, it
sounds like it's a mixed bag up ahead.
Built quality:
A worker inspects a dragon lantern decoration made from recycled
materials and energy-saving LED lights at a temple in Jenjarom,
Selangor. The Chinese year of the Dragon ushers mixed feelings about the
property sector but with the right design concept like this
environment-conscious dragon lantern, homebuyers will still make that
commitment. -AFP
For many in the business from those
who are building and selling or just analysing its investment climate
there still is room for growth in the Malaysian property market, at
least in the next few years.
Initiatives by the government, such
as the proposed high-speed rail link from
Kuala Lumpur to Johor Baru and
the MRT project, are expected to give the property sector a boost.
Areas
that currently are not nearly as easily accessible will soon be easily
reached by rail or MRT, and this will certainly be a boost for the value
of property in these areas.
Take a look at the route for the
first phase of the MRT between Sungai Buluh and Kajang and you will see
that major residential centres will soon be linked by rail to popular
commercial and entertainment centres.
Of course the finer details such as where all the stations will eventually be located are still being worked out.
On
the other hand, some players in the property market are painting a
rather gloomier picture, citing conditions in Europe and the
United
States as reasons for caution. The
European debt crisis does not seem
any closer to resolution and, some analysts fear, export driven
economies such as China, Brazil and Malaysia, are not likely to come off
the turmoil unscathed.
Across the Atlantic, the US economy is,
as some economists there put it, “still messed-up”. In Japan, hit by the
mega earthquake and tsunami of 2011, the economy is still experiencing
long-term problems that are considered even worse than that in the
United States.
Back home, some players in the property market are
expecting a more moderate growth in 2012. In some areas, there may even
be a price correction, going by what these people are saying.
According
to them, commercial properties as well as high-end residential units
are likely to be most susceptible to a market downturn. These are the
first to be hit when confidence in the market ebbs.
Nevertheless,
there is a bright spot of sorts in the midst of this gloomy outlook. A
bubble is unlikely in the Malaysian property market.
So what do
we think? Do we see a boom or bust, or something in between? Predicting
what will come is a game of chance. Who really knows what the future
holds for us anyway?
On the other hand, we can always analyse our
own experience in the preceding 12 months to find hope in the
corresponding period ahead.
As we have seen, Malaysian property
prices are still among the lowest in the
Southeast Asian region. As I
wrote in this column sometime last year, Kuala Lumpur is only the sixth
most expensive city in this region to invest in property, behind
Singapore, Phnom Penh, Bangkok, Jakarta and Manila.
That means
there still is room for upward price movement. Of course other factors
will come into play. As most property investors will tell you, location
is a prime consideration.
Areas that are well served by public
transportation facilities will certainly be preferred over those that
are not and, logically, will command higher demand and thus fetch higher
prices.
Entry price is, of course, another factor. Take a look
around you and you will see that many new launches, even in the Klang
Valley, have remained unsold. These mostly luxury homes have
unfortunately been priced way above most investors' affordability.
At RM3mil to RM4mil a unit, even for landed property, landing a buyer is a tall order.
Of
course this does not mean that million-ringgit homes are no longer in
demand. Our experience shows that anything priced between RM1mil and
RM1.75mil, and in the right location can still find buyers.
At
that price, such properties still meet the needs of those who purchase
with the intention to occupy as well as those who hope to see their
property appreciate in value. At the same time, the repayment amount is
still within the means of a fair number of
Malaysians, especially those
in their 30s or 40s and who are already fairly established in their
careers.
For instance if a couple were to purchase a home at
RM1.75mil, they are likely to be able to get a loan of up to 80% of the
cost of the property or about RM1.4mil.
At an interest rate of
4.35% (BLR-2.25%) for a repayment period of 20 years, their monthly
repayment amounts to RM8,744 a sum that a fair number of working couples
can afford.
The right designs and concepts also add to the value
of such properties. Many property purchasers today do not have the time
and some not even the inclination to fuss over how to spruce up an
apartment before moving in.
To meet their needs, developers also
provide many fixtures and appliances so one can move in with just
clothes and perhaps a new bed.
Overall, I think there still is
room for growth in the Malaysian property sector. There will certainly
be many more new launches whatever the doomsayers say. At the right
price, in the right location and with the right design concept,
homebuyers will still make that commitment.
Our economy is
expected to grow about 5% or more and unemployment is at a low 3%. The
outlook remains positive, as reflected in the stock market.
So if
you are still looking to invest in property, the Year of the Dragon may
be as good as any year to make that commitment. Remember, it is
supposed to be a year when there will be many opportunities for growth
and expansion.
Teh Lip Kim is the MD of SDB Properties Sdn
Bhd, a lifestyle property company. Bouquets and brickbats are welcomed.
Send by email to md@sdb.com.my