Although the crisis started out as a US sub-prime loan problem, the speed and magnitude with which it unfolded to decimate and wash out the wealth and achievements of so many countries, citizens and conglomerates, show that the world is growing smaller by the day and we are more inter-related than we care to admit.
What we are in today is a big global village, where all citizens, irrespective of their country of origin, are beholden to each other for better or for worse. To stem the rising greed and materialism that have contributed to much of the world’s ills today, the people, governments and businesses should strive to uphold their best virtues and responsibilities to ensure a better world.
The fallout from the crisis is certainly a rude awakening for all. Faced with so much uncertainties brought on by the crisis, individuals have to alter their plans, lifestyles and spending habits, including postponing buying decisions and settling for more affordable choices.
Likewise, governments should also be prepared to fine-tune and be flexible with their policies so that it is easier for the people and businesses to cope with the difficult times.
Although some may say that Malaysia has been spared the full brunt of the crisis compared with their more “developed” counterparts in the West, and things are not as bad as the last Asian financial crisis, business owners are not taking any chances and are preparing for the worst.
Their plans to expand market share and to improve their order books and sales have to be put on hold, at least until there are more certainties and confidence showing up in the economy and market.
What matters most – there is a strong and sustainable rebound in consumer confidence, which largely depends on the state of the US economy. Take the local property industry for instance. Developers were doing relatively well with strong take-up for their projects until the US financial crisis unfolded in the middle of last year, thus putting a stop to the party.
Kuala Lumpur was on the verge of seeing some “really expensive” residences, with price tags of up to RM30mil each, being unveiled when the crisis knocked off these plans from the drawing boards. Fans of these super-luxury residences will have some waiting to do before these products will be back in the market.
Many of the developers have to defer their project launches while some opted to tweak and redesign their products to offer more affordable products.
After almost three quarters of sluggish market and poor sales, it looks like things will not improve very much for the property fraternity until the other economic sectors, including the manufacturing and services sectors, start to show stronger signs of a rebound.
The crisis also highlights the fact that property development is a highly cyclical business and industry players should equip themselves with all the skills and know-how to survive any market conditions.
Besides having the right products in the right locations for sale, property development is also about good cashflow management. Developers need to be financially strong to ride out any cyclical “hiccups” as the deferment or slowdown of projects means substantial holding cost.
Luckily, our developers have learnt their lesson well from the last regional crisis and many have healthy gearing ratios after having pared down their borrowings.
Given the right market conditions, most of the developers will be able to spring back quite easily and start strutting their stuff again. A number of them are already making plans to launch greenfield township projects.
● Deputy news editor Angie Ng hopes the lessons will be well learnt and industry players will take the current lull in the market to learn new skills and add more value to the country’s living environment
By The Star (by Angie Ng)
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