02 December 2013

The Property Market in 2014 and beyond.

I had a brief discussion with some of the top guys of the construction industry, and some of the council members of the Master Builders Association Malaysia (MBAM) on the possibility of setting up the MBAM Youth Chapter. Well, we started sharing some thoughts on the construction industry, and its future, the 2nd generations involved... and well, the story of continuity. Unlike the property development industry, the construction industry is a less-glamorous industry - in fact, statistics will show you that most people today have preferred to go into property - more than anything else, and more than its closest peer - the construction industry. 

The Star had an article last week on the complex market of property - one which highlighted that the biggest property players started off doing something else. Well, we do know that Mah Sing started off as a plastic manufacturer. S P Setia started off as a contractor. IOI Corp capitalized on their plantation landbank and entered property as well. Well, take all those - and then take the list of the up and coming, up and rising property developers - then you'll find a spectrum of developers who started off doing something else - and the list continues on and on... 

Myself at Hong Kong last week - the HK property market is stronger than ever before.

Anyways, that was just a prelude to one of my next upcoming posts... today's post will be on something more exciting, and interesting... and a question to ask, the next time you meet a guy from the property industry... I have been asked on this many many times... and more so more recently... 

Where is the Property Market heading to in 2014, and beyond?

Well... to those people who knows me better, they know that I would not reply the question above with just a one liner. However, to most of whom I am not close to, I usually only reply one word - UPWARDS

I prefer to use examples to explain my opinions... and later I will list down some interesting projects, coupled with a few of my own - to showcase to you - where the market will head in 2014, and where it will head later... to put it in a better context, I reckon that there will be a slight knee-jerk reaction from now til 1st quarter 2014, due to some of the uncertainties faced post-Budget 2014. However, Malaysians being Malaysians, and the Malaysian market being how it is all this while... we know the markets will remain strong. 

I am a firm believer that the market will adjust itself - after all, when the going gets tough, the tough gets going. For those who are worried about an increase in RPGT, I guess you need not worry... if you had to sell your property at RM 1.5 million to make a good gain, the most likely scenario now - with the increase in RPGT - is that you would end up selling your property at RM 1.6 million, or higher. This has been the case all this while, and I do not see our property markets slowing down in any manner just because RPGT has been increased. 

However, the banks have been tightening their approvals, so your loan approval chances may drop a little - but be rest assured that our markets are strong and resilient enough - and big enough to brave through all this. 

So... do you think the property market will crash in 2014?

Crash??? I think the last thing to happen to our Malaysian property market is that the market will crash. With our current prices still amongst the lowest in the region, the Malaysian market, well, especially the KL segment remains very strong, and very attractive to international investors, especially those from China, Taiwan and our neighbours Singapore.

Take some of these projects... and ask yourself again...

The Star Residences and Star Boulevard.

Developed along this 4 acre plot at Jalan Yap Kwan Seng, the RM2.2bil development is the latest project by the ex-Bolton Berhad, now Symphony Life and UM Land. From initial reports, the development will consist of three blocks of fully-fitted condominiums will each comprise four types – 1-bedroom, 1+1-bedroom, 3 bedrooms and 4 bedrooms – with Tower 1 averaging 650 sq ft, and the subsequent towers averaging 750 sq ft - and the highest tower will be 57 storeys, comprising 557 units. Indicative starting prices would be RM1,500psf upwards!!!

The Mines Wellness City. Go read about the RM 11 bil project here

The First Mansion.

Well, this little project seems rather unknown. In fact, not much is known, except that it is developed by the Masteron group; it is located somewhere within the Petaling Street vicinity, has about 292 units, managed by Singapore's Far East Hospitality... and will be launched at RM 2,500psf!!!

Do you think Property Prices are OVERPRICED already???

Seriously, overpriced??? Nope, not at all. Well, affordability is always another question, but overpriced is not the case here. If you take into the account how some foreign labour costs has increased over 100% in the last couple of years, how material prices has shot up averagely between 40-60%, and how local authority charges have varied here and there between back then and now... you'll find that developers are probably still making the same percentage, even though prices have shot up by over 50%. 

Well, it has been quite a lot to read up on now for a Monday morning isnt it? 

Let me excite you a bit with some of my current masterpieces... 

The Dang Wangi LRT Station Redevelopment. 

It was codenamed as The Bank - but as per latest talks with Prasarana, we might just coin up a new name and branding; one that suits and fits the bill of a transit oriented development. Well, for this project, I have been finetuning the sizes and layouts - and based on latest plans, we are looking at a fully-fitted unit going at about RM 1,600 psf upwards. 

The Galleria, Jalan Ampang. 

Well, I am not going to say much of this project... lets just say, this project is targetted for launch towards the of 2014... There may yet be some variations to the design above, possibly to make it taller, making space for some expansion... and one thing on many minds now is the Circle Line. =) Well... all that, would be for you to think about.... and continue guessing.... 

Thats about all for now; have a good December. =)


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