Property market outlook - Part 2

WHILE last week we published views on the global outlook, this week we explore the market in various regions as well as the local scene.

It's a new year and looking at how the property market and our local currency fared in 2016, many are sceptical. With that, we have compiled views and comments from various industry specialists and market professionals for a better idea of what can be expected in the Year of the Rooster.

Regional overview

According to JLL's forecast for 2017 delivered by its global capital markets research director, David Green-Morgan, the amount of capital targeting real estate across the world will remain constant, with volumes expected to exceed slightly. However, political and market uncertainty will likely perpetuate into the year.

Green-Morgan shares that performance in two of the region's biggest markets, Australia and Japan, was down by 17% and 1% respectively, with China recording a 19% increase.

Over in the UK, it was a rollercoaster with Brexit, which saw a decline in currency terms and overall volume, yet the English managed to battle it out and end the year with just a 11% drop. Outperformers for the year were Germany (up by 11%) and Central and Eastern Europe (up by 70%) – notably Poland and the Czech Republic.

In the Americas, the market ended 9% lower than the previous year with Canada slightly outperforming the rest of the region by ending the year just 3% below its figures for 2015.

Local landscape

According to property experts at a forum conducted by PropertyGuru, as rising living costs and smaller income growth are still concerns that are being carried into the new year, these will likely cause affordability issues and high loan application rejection rates to persist, which will, if not already, lead to falling property prices. Moreover, with oversupply in some segments of high-rise residences – this will likely cause a drop in the selling price of property, especially for those who do not have holding power and may need to liquidate their properties.

With many in the oil and gas and banking industries who have been given the pink slip (especially foreigners/expats), renters will be spoiled for choice, even more, as the number of vacant leased homes/properties increase, causing landlords to drop rates. Then again, depending on which "side of the fence you're on", there will be losers and gainers unless one has had the foresight and considered a long-term investment plan beforehand.

Hotspots and mantle plumes

The effect from rejected bank loans and those needing to cash out on their properties will most likely see a rise in the number of rentals, especially those situated in strategic locations, facilitated with good public transportation or located in easily connected/accessible areas.

Areas to take note of are the Transit Oriented Developments (TODs) – property development projects that are connected or located in close proximity to MRT, LRT or monorail stations. And with Prasarana's seven additional TOD projects (in Selangor alone) expected to be completed within the next four years, plus construction of the High Speed Rail scheduled in 2018, not forgetting the MRT line that will soon connect the north and south sectors of Greater Kuala Lumpur – the property scene here is expected to be bustling.

Bane for some, boon for others Ultimately, the general consensus on the property outlook for 2017 is interesting. Apart from all the excitement that will come about from the above mentioned, as prices slump, more so with the Selangor Housing and Property Board (LPHS) implementing a price cap on Sohos, Sofos and Sovos, plus serviced apartments –the local market will become even more attractive to foreigners (considering the fate of our currency).

Our neighbours in Singapore are expected to have a field day buying their second/third homes, weekend getaway haunts or properties for investment. As it is, word has it that the Chinese and Indonesians, apart from other foreign nationals have already secured their property purchases and looking to invest in more. Bottomline – tenants and landlords will have "their days" and cash-rich investors are expected to be the biggest beneficiaries, bargain hunting and negotiating for the best rock-bottom deals in the most advantageous locations.

Follow our column next week on a more in-depth outlook of our local property market.

Comments and views from the public

>> With the amendment to the Stamp and Strata Title Act, there will be fundamental changes to the way property dealings are done.

>> It is a good time for developers with strong and stable standing, as well as foreigners looking to purchase/invest in Malaysian properties.

>> Optimistic view on 2017 especially with a few known deals signed between China and Malaysia, which will influence and set off a chain of events.

>> A lot of good deals are expected with the fine-tuning of primary markets and competitive sub-sales.

>> Make use of the many government and public/private house-owning schemes made available like PR1MA for example.

>> A good time to hone your negotiation skills to get the best property deals.

>> For the local buyer with cash, it's your market; for the local seller, best lease/rent to the foreigner.

>> The market is expected to be soft and challenging, looking at the slow economic growth and high cost of living.

>> Expect a subdued market on the whole but anticipate more sales activity from mid-year on, especially in commercial and investment properties.

>> Looking at the global economic uncertainty and the weak ringgit, it's going to be a challenging year for property developers. A renters market with the increase in vacated leases/rentals and a buyers' market for those who are able to negotiate good deals.