Property industry stakeholders should focus on rental market: CBRE-WTW

KUALA LUMPUR: With affordability being a challenge, property industry stakeholders should look towards the rental market, said CBRE-WTW managing director Foo Gee Jen.

“Income and house price mismatch requires long-term correction in the market and in the economy as a whole. Renting takes up lower financial commitment and presents as an easier and immediate access to accommodation,” he said.

Some of the rental schemes that Foo suggested include build-to-rent, rent-to-own, co-living and retirement living.

Speaking at the Sales and Marketing Conference organised by Rehda Institute today, Foo said renting can address underutilisation of property as vacant units or aged properties could be transformed for rental use. Vacant commercial units and shop offices could also be converted into residential use.

“Renting is a sensible option in a soft market as rental yield becomes more attractive when capital gain is slow in a fatigue market,” Foo said.

As housing demand rapidly grows in tandem with urbanisation and population growth, putting up more houses for rent is a quicker response.

Based on population growth rate of 1.3% on population of 32 million as of 2017, the annual growth in population is estimated at 390,000.

Assuming an average household size of four, Malaysia would need 97,500 units of new houses per year. Last year, 94,198 units were completed.

Coupled with the mismatch in demand and supply caused by mismatches in price/income, location and product, Foo said, it is time to “do something out of the box” and turn towards renting.

“It could be time to move away from the Asian mindset on home ownership as the absence of home ownership does not imply welfare deprivation,” he said, adding that priority is to have shelter over one’s head, be it rented or owned.

However, he said the current laws in Malaysia are pro-tenant and should be reviewed to ensure further protection for landlords.

A comprehensive regulatory framework would protect both tenants and landlords to address challenges of property maintenance, tenants’ obligations, risks of rent default and other related concerns.

Foo said an example of a check-and-balance system or third party intermediary would be Australia’s Rental Bonds Office.

Other matters to look into are reducing red tape and speeding up the planning process, extra density allowance, tax incentives, public-private partnership on land release as well as transparent and supportive planning.