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Allstones predicts a challenging 2013 for property market

KH Sim

KUCHING: Property developer, Allstones Group Asia Sdn Bhd (Allstones) foresees 2013 to be yet another challenging year as affordability and supply as potential factors that will impact Malaysia’s property market.

According to a statement yesterday, “We have observed several trends in 2012 that have impacted the local property market. Key issues include the need to provide affordable housing, the increasing supply of commercial properties and the escalating property prices.

“Other notable points include the increase in Real Properties Gains Tax (RPGT) rates and stricter conditions on end financing.”

Allstones chairman, KH Sim explained that the market had always been affected by varying issues that were not just limited to supply and demand. Other factors that affect the market including the new ruling on loans given out on the basis of net incomes.

Sim noted that the ruling would take into consideration existing property loans servicing by the borrowers, thus making it harder for speculators to obtain cheap and easy credits.

“That being said, despite all the factors working against the property market, Malaysia was still listed as the ninth hottest property market in 2012 by CNBC which demonstrates a relatively positive market,” the chairman pointed out.

He added further that the residential market should maintain its momentum in the coming year as landed property continued to command premium and faster sales rates while reasonably priced condominiums and serviced apartment would draw interest in key cities.

Apart from pricing, Sim opined that home buyers would also take into account factors such as  affordability, location and proximity to transport, given the increasing traffic congestions.

“We do not see house prices increasing or new launches decreasing in price in 2013. Home buyers could expect similar priced home products with added values such as DIBS, free furnishings, rental guarantees, free legal and/or service charges to offset the steep prices.”

With many pending projects deliveries in 2013 and 2014, the company expected this to be a stressful period as speculators would find it difficult to procure tenants or sub-sale buyers when this supply comes into already a saturated secondary market.

Commenting on the oversupply of commercial and office properties within the Klang Valley, Sim said, “With several new commercial areas planned within KL city centre entering the 2013 to 2014 scene, this property market segment is at risk of being further dampened.

“With approximately 20.7 million square feet of new office space available within the next three years, the supply rate is expanding faster than demand and such projects will cannibalise the existing market. The take-up rate of this sector depends on economic growth and the influx of foreign direct investments (FDIs).”

Allstones also believed that the RPGT rate changes to be effective from January 1, 2013 would have little to no effected on the local property market.

“If this increase in RPGT rates was to curb speculation, this is not a high enough deterrent as speculators flip the property between one to three years. If the main intention was to curb speculation so as to preserve the property market, the RPGT quantum should be set at a more substantial figure.”

If speculators make a higher profit by flipping, the new RPGT rate would not deters but only create a negative environment for the overall market, according to Allstones.

Moving forward, Allstones urged the nation to progress together in ensuring that the country remained attractive by addressing factors such as corporate governance, corruption, crime rates and infrastructure improvements.

“We would like to see Projek Perumahan 1Malaysia (PR1MA) housing located adjacent to the My Rapid Transit stations to cater to middle to low income groups as they are natural customers of public transport. KTM should also be encouraged to put up PR1MA housing adjacent to its station,” it added.

Given the challenges, Allstones believe that it remained in a solid position having recently completed its commercial development, Plaza Taragon Kelana.

“As for 2013, we are in the process of finalising its plans for a launch and hopes to make an announcement soon,” the statement added further.