Even while Dubai is still mired in a crisis after the collapse of its property market last November, most markets that have succumbed to the global financial crisis are bottoming out and are on a recovery mode.
Despite the more positive outlook, industry players should not lose sight of the patches of “quick sands” that will easily negate any progress made if one is not careful.
Among the possible pitfalls that will happen include a relapse in the global economy if it falters from its recovery path that will send property prices on another downward spiral like what has happened in London, Singapore and Hong Kong.
Despite having shown a gradual recovery since the second half of 2009, the global economy continues to be filled with uncertainties this year.
There is still the possibility of a double dip or another round of correction before we can claim the worst is over.
Although Malaysia’s property market is also showing signs of recovery and there are more buyers looking for good property to buy, there are some outstanding issues that are still plaguing the market.
Firstly, there is still a mismatch between demand and supply of both landed residences and high-end condominiums in some parts of the country.
That explains why there are properties that have been completed in some townships that are still unsold and are languishing.
Most of these projects are located in rather secluded places that are not easily accessible and were built without prior market diligence and feasibility studies to gauge their feasibility.
Usually projects that are located in well planned or mature and vibrant neighbourhoods with ready facilities including schools, colleges, markets, shops and good road connectivity will have many ready buyers.
Developers that are affected by poor take-up for their property should, wherever possible, make as much effort to “redeem” their projects by introducing more value added features and facilities to them.
Hopefully, the extension of the light rail transit network to other parts of the Klang Valley will give a new lease of life to these projects.
Another area with higher supply of properties than demand at this juncture is the Kuala Lumpur City Centre (KLCC) vicinity.
This year alone, there will easily be another 1,200 new condominiums that will be completed.
Last year, about 2,000 units came onstream and not all have been sold yet.
Many of the units are still relatively large residences of more than 2,000 up to 7,600 sq ft whereas research has shown that there is a greater demand for smaller units of between 1,000 to 2,000 sq ft, especially among first time home buyers.
Instead of catering just to the super high-end clients, it will be worthwhile for developers to re-size their units and build more smaller units to make them more affordable for the buyers.
At average prices of RM900 to RM1,100 per sq ft, most of these smaller units will already have price tags of close to RM1mil or more.
Another challenge that will be faced by the market is the possibility of rising entry cost for buyers once developers decide to end their housing financing facilities.
Although a growing number of Malaysians have become savvy property buyers and own multiple properties, many are still dependent on the low entry cost offered by the developers and the banks in the past one year to make their first purchase.
Efforts to promote stronger buying interest among local buyers should be continued as they form the bulk of property purchases.
Malaysians are also known for having a longer term outlook and will not just liquidate their positions in a hurry like some of the foreign buyers.
Should the housing packages be ended, developers can help ease the burden of buyers by absorbing the cost of transactions including stamp duties and legal fees, among others, for houses priced below RM500,000.
Deputy news editor Angie Ng sees the need for closer consultation and collaboration between the various stakeholders of the property fraternity to offer their views on project planning and designs that will promote greater unity and kinship among Malaysians.
By The Star (by Angie Ng)
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