“When inflation comes in, people like you and me will ask for a salary increase. During Pak lah’s (former Prime Minister Tun Abdullah Ahmad Badawi) time, there was a (widespread) salary increase. When that goes up, landlords know they can ask for higher rentals,” he said.
Ho said inflationary pressures were directly related to rising oil prices.
“When oil prices go up, inflationary pressures kick in. Asking (rental) prices will be determined by inflation rather than (by) demand,” Ho said at a press conference on the 3rd Malaysian Property Summit 2010 yesterday.
With the improving economic climate, crude oil price is expected to increase.
He said the Government had already “subtly” increased petrol prices when it introduced the RON 95-grade fuel earlier this year.
RON 95 fuel is priced at RM1.80, five sen higher than that of RON 92 (which has been discontinued) while the price of RON97 went up to RM2.05 from RM1.80.
“The Government already gave a signal that petrol prices is going up by introducing the RON 95 fuel. My fear is that next year, the Goverment may not be able to sustain the rising oil prices (and reduce subsidies),” said Ho.
At press time, crude oil price was at US$73.83 a barrel on the Nymex.
James Wong ... Asking prices (for Grade A offices) currently stand at RM7 per sq ft
Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector, Malaysia (PEPS) president James Wong said rental prices for Grade A offices peaked at RM8 per sq ft in the third quarter of 2008 prior to the global downturn.
“Asking prices (for Grade A offices) currently stand at RM7 per sq ft. For upmarket condominiums, it used to be between RM3.50 and RM5 but that has somehow stabilised.
“For new completed condominiums, if they are hungry for tenants, the landlords may reduce rental prices,” he said, adding that rentals of shopping malls were unaffected by the economic slowdown.
“During the crisis, many tenants asked to have their rates reduced but there was no reduction. For malls like KLCC and Pavilion, the landlords were also able to replace their tenants quickly,” he said.
On another note, the Valuation and Property Services Department director-general Datuk Abdullah Thalith Md Thani said the Government’s proposal to reimpose the real property gains tax (RPGT) at 5% effective Jan 1 was unlikely to have a major impact on the local property sector.
“The property sector will be determined by the health of the economy. The RPGT will only have an impact on the seller and not the buyer,” he said, adding that 5% was a small amount.
Wong said the imposition of the RPGT would have a positive effect.
“Without the RPGT, a seller could over and under-declare the real value of his property,” he reckoned.
By The Star (by Eugene Mahalingam)
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