PROPERTY GURU. 13TH FEBRUARY: Rahim & Co expects Malaysia’s property market to be stable in 2023, with a gradual recovery forecasted despite cautious sentiments due to the anticipated economic headwinds.
Meanwhile, the COVID-19 pandemic has sparked demand for residential auction properties since prices are usually lower than the market value.
1. Property market set for gradual recovery
Rahim & Co expects Malaysia’s property market to be stable in 2023, with a gradual recovery forecasted despite cautious sentiments due to the anticipated economic headwinds.
Tan Sri Abdul Rahim Abdul Rahman, Executive Chairman of Rahim & Co, revealed that the company is cautiously optimistic of the market’s prospects for this year after transaction activities last year proved that the property market is resilient.
“We are cautiously optimistic on this year’s prospects, with policies and strategic development roadmaps in place, as well as the potential catalytic impact of major infrastructure developments,” he said at the launch of Rahim & Co’s Property Market Review 2022/2023.
Sulaiman Akhmady Mohd Saheh, Director of Research at Rahim & Co, noted that the residential sector continued to register positive growth in transaction performance last year. In fact, the sector accounted for 61.8% of total transaction volume nationwide in 2022.
2. More buyers turn to residential auction
The COVID-19 pandemic has sparked demand for residential auction properties since prices are usually lower than the market value.
“The auction property starts at a reserve price that is generally 10% to 15% below market. Successful bidders get a bigger house with the same budget as a smaller house outside an auction,” said Knight Frank Property Hub MD Benjamin Tee.
He noted that the auction segment now involves new unoccupied housing units – which were unlikely to go under the hammer pre-pandemic.
Residential auction bidders are mostly end users who are looking to acquire homes for private use.
Many of the buyers are young adults who are highly informed and well-educated to research via the auction property list.
3. Secure 75% approval of owners to rent out apartment for short-stays
An apartment unit within a strata scheme in Kuala Lumpur can only be rented out for short-term accommodation if three-quarters of the unit owners has consented to it at their annual general meeting (AGM).
According to Zainuddin Muhamad, Chief Assistant Director of Kuala Lumpur Commissioner of Buildings (COB), owners with unpaid maintenance fees are allowed to attend the meeting and express their opinion but will not be allowed to vote.
“Currently, the COB is not empowered to decide whether a high-rise unit can be rented out for short periods,” he said.
“Such matters, including stay duration, must be deliberated and agreed upon by the owners during an AGM.”
Zainuddin revealed that they had advised owners to set a reasonable number of occupants that would be allowed in a unit.
The management body should also collect a security deposit of RM5,000 or more from owners who plan to rent out their apartment.
“This is to cover any damage to shared facilities caused by the visitors,” said Zainnuddin.
4. Construction sector rebounds 8.8% in 2022
Malaysia’s construction sector has rebounded by 8.8% in 2022, following two years of decline, said the Department of Statistics Malaysia (DoSM).
This comes as all sub-sectors registered an increase during the year, with special trade activities and non-residential buildings posting double-digit growths of 19.6% and 18.7%, respectively.
DoSM Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin noted that the civil engineering sector recorded an increase of 2.7% and 3.4% for the residential building sector, reported Bernama.
Mohd Uzir noted that the construction sector continued its strong performance in Q4 2022, with the value of work done increasing 15.7% to RM32 billion, after expanding 23.2% in Q3 2022.
However, the total value of construction work done for the whole of 2022 amounted to RM121.9 billion, which is lower than the RM146.4 billion recorded during the pre-pandemic period in 2019.
5. A call to reintroduce old initiatives
Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) has urged the government to reintroduce old initiatives, such as the home ownership campaign and the Malaysia My Second Home (MM2H) programme, to provide the property market a much-needed boost.
PEPS President Subramaniam Arumugam noted that with global inflation as well as a possible recession, there had been concerns about cost of living, affordability, rising interest rates and the Russia-Ukraine war.
“As such, the government’s move to strengthen political stability with accommodative policies, strict enforcement and good corporate governance will be fundamental for improving consumer and investor confidence in the country,” said Subramaniam.
He added that property overhang remains a concern and has led many industry players to adopt a cautious stance, which could push the cost of property upwards.
6. Expat suggests improvements to MM2H programme
An expat who has been living in Malaysia for the last 12 years under the Malaysia My Second Home (MM2H) programme has suggested several improvements to the MM2H programme.
These include allowing participants to buy a home priced at more than RM750,000 and reducing income requirements from RM40,000 to between RM10,000 and 15,000.
Hash Kapadia, who is from UK, also suggested setting up a quota system or imposing a maximum number of people to be accepted from one country, keeping the programme diverse and multicultural.
Notably, the Government unveiled new conditions for the MM2H programme in August 2021, which include applicants having permanent savings of at least RM1 million and at least RM1.5 million in liquid assets.
The changes have been opposed by various parties, including Johor’s Sultan Ibrahim Sultan Iskandar saying that the new conditions could ward off investors and dent Malaysia’s revenues.
“It is really sad that what was a good programme was canned. People made life-changing decisions to make wonderful Malaysia their only home but the loss of trust resulted in a lot of nice foreign retirees leaving for new pastures,” said Hash.