Oversupply of real estate in Malaysia short-term situation

Updated: Tuesday February 25, 2014 MYT 7:06:24 AM

Oversupply of real estate in Malaysia short-term situation

KUALA LUMPUR: The oversupply of real estate in the country is only a short-term situation, which will clear over time, says Malaysian Institute of Estate Agentspresident Siva Shanker.

As long as the local economy is healthy and not in a tailspin, the property market will withstand the pressures of speculation and the curbs imposed by Budget 2014, he said.

“Mont Kiara (excluding the surrounding Segambut areas) has in the last 20 years built an estimated 20,000 units. Iskandar Malaysia, on the other hand, has built some 40,000 units in the last three years. All this has created a lot of pressure on supply and the market has already adjusted by staying away,” he told a press conference.

“In the short term, this oversupply will continue to run its course. Many units that will be placed in the market won’t sell. But in the second half following this period of consolidation, people will come to terms with the market, so 2015 will see an upturn in the property sector, which will continue into 2016. Even in the medium term, much of the oversupply will sort itself out,” Siva said.

He added that the country’s relatively low exposure to the “international economic ups and downs” compared with Singapore was an advantage to Malaysia.

“There’s also the trickle down effect from large infrastructure projects as more industries benefit from them,” he said.

Siva said buyers were not keen on the secondary market although it made up 80% to 85% of the local property market transactions in the last three years, but as high-rise property prices surged, buyers would be forced to look elsewhere for more affordable landed property – and it will be found in the secondary market.

Siva forecast that property prices around the KLCC area will reach RM5,000 per sq ft within the next three to five years. “As it is, Four Seasons Place in Ampang is going at RM3,500 per sq ft.

“They realise that there are better deals in the secondary market. A very clear third strata will form now, which are properties that were completed in the last two years but flipped into the market. Those properties will face the most selling and renting pressure because they were purchased for sale on the day of completion.” – By CHERYL POO

 

 

 

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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