Update on Property Market

Saw this news article.

Property market to remain subdued in 2007
By Alfean Hardy, 15 Nov 2006 6:33 PM

The property market will continued to be subdued in 2007 with landed properties remaining as a driver, according to CH Williams Talhar & Wong Sdn Bhd’s annual chief executive officer opinion survey.

Some interesting comments.

“Sales have slowed but there are certain niches that are selling well but the general mood is that some others will feel a slowdown. The level of sales are also slower and it takes longer time to sell than before,” he said.

“Year in, year out there has been optimism, it’s just that optimism will be less in comparison with the previous year. Overall, the market will still grow but it’s just that the percentage will be lower,” Goh said at a media briefing in Kuala Lumpur on Nov 15.

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Goh said while confidence in condominium prices had fallen, Malaysians continue to look for traditionally popular landed properties like bungalows, terrace and semi-detached houses and that this remained a major driver for growth in the property sector.

“It’s always been residential as it represents 60% to two-thirds of the market and it will continue to drive the market. But in terms of value it may be otherwise, as one office block can cost hundreds of millions.

“Compared to last year, 60% of the respondents expect condominium prices to fall and the level of confidence is less and that’s why it’s subdued. The buying interest for terrace link remains high to moderately high.

“It also depends on the market, though. If you look outside of Kuala Lumpur, the market is more focussed on landed property and the demand for condominiums and apartments are different. Here, it’s more acceptable,” he added.

To a question on the impact of the property market with the Kuala Lumpur Composite Index trading above the 1,000-point level, Goh said the historical trend would be to see a jump in the number of properties being snapped up but not immediately.

“Historically, there’s a lag about a year. People who make gains want to translate this into something more tangible,” he added.

Meanwhile, Goh said the lacklustre performance of the Malaysian real estate investment trusts (REITs) sector, were due to the uncertain growth prospects, the quality of the property and rising interest rates.

“If you look at all the REITs, apart from Axis REITs, the prices are below the IPO (initial public offering) prices,” he said.

Goh said apart from the quality of the assets, another factor was that the Malaysian retail investor still needed to be educated on how REITs operate, as they were trading the REITs like regular shares on the stock market.