REENA KAUR BHATT spoke to Tony Khoo Boon Chuan (TK), Chairman of Real Estate and Housing Developers Association Malaysia (REHDA) Perak branch and Michael H.K. Tan (MT), Director of Team Keris Berhad about the northern state’s growth, challenges and opportunities.
The number of residential property transactions in 2015 saw a growth of 5% as compared to the nation’s overall residential market performance, which saw a downturn of 4.6%.
What is your comment on the positive buying sentiment in Perak?
TK: The house prices in Perak are still generally within the affordable range. Purchasers with a budget of RM180,000 to RM280,000 will have no problem acquiring landed properties in most areas of Perak. On top of that, there is an influx of investments into Perak from foreign and domestic investors, creating business and job opportunities.
MT: The increased economic vibrancy, access to quality education and healthcare services as well international arrivals via air travel have contributed to the growth in the property sector in Perak. The third generation of Perakians coming into the workforce has resulted in the increase of properties being taken up, either for their own stay or investment purposes. Quite a few locals have bought new properties as an upgrade from their current homes as well.
Perak’s residential sub-sector recorded fewer completions in 2015, it dropped marginally by 3.4% whereas starts and new building plan approvals recorded an increase of 24% and 15.4%, respectively.
What is your take on Perak’s residential property market moving forward?
TK: The past year has seen the local economy experience a downturn due to global uncertainties and the property market is not spared from its negative impacts. The weakened demand and decelerated buyers confidence have led to greater circumspect on the part of industry players. They have to ensure that their products do not turn into holding costs due to the lower market absorption. Therefore, some developers will try to minimize their holding cost by extending their construction periods on the pretext of hoping to generate maximum sales in between.
MT: The decrease in recorded construction completions in 2015 is mainly due to the increase in high-rise developments in Perak; all which take a longer time to construct, resulting in a longer completion date. Consequently, the increase in the number of new building plan approvals is a sign of a confident and robust market which Perak has always enjoyed.
In the period 2011-2015, double-storey terrace houses recorded the following appreciation in prices:
Hilir Perak (Teluk Intan, Bagan Datoh, Hutan Melintang): 67%
Why do you think Hilir Perak and Taiping have surpassed Ipoh in terms of property capital appreciation?
TK: I personally feel that the demand for properties in both Hilir Perak and Taiping have exceeded the current market supply, thus it is only natural for the property prices there to appreciate at a higher rate as compared to Ipoh.
MT: As with any market, the demand and supply for a certain type of property and the buyers’ profile play an integral role in the appreciation of property prices. The prices of double-storey terrace houses in Hilir Perak and Taiping are climbing faster than their Ipoh counterparts as property purchasers in Ipoh have a bigger selection of properties to choose from such as apartments, condominiums and semi-D homes.
The state’s economic development corridor will focus on Southern Perak based on a master plan, encompassing Batang Padang and Hilir Perak Districts involving 450,000 hectares.
Upcoming/Proposed developments in Perak include:
• T-City: comprising a mixed development of a 172.5-hectare area in the Kinta and Kampar districts which will potentially see the materialisation of a Formula 2 Circuit, and automotive factory outlet, Street Malls and hotels.
• A new district, Daerah Mua’lim, in line with the rapid development of Tanjung Malim.
• There are plans to build a railway linking Kampar, Batu Gajah, Ipoh and Sungai Siput to facilitate inter – city movement.
• Proposed Green Asia Aerospace Technology Park in Seri Iskandar as an aerospace hub for 20 major companies and 60 small – medium industries, which would potentially open up 2,000 employment opportunities.
• Construction of the West-Coast Expressway, where 172km of the stretch will run through Perak.
How will all these projects impact the demand and supply of property development in the state? Do you foresee any challenges and/or opportunities?
TK: All these projects will definitely generate growth in terms of population and job opportunities if realised, hence increasing the demand for residential properties in the state. It should be noted, however, that it takes time for these projects to come into materialisation, hence, any significant boom in the property market will take a few years.
MT: These new commercial and infrastructural projects are a sign of the economic vibrancy of Perak and will definitely serve to act as catalysts for new property development opportunities.
Kampar and Seri Iskandar are two growing university townships in the state.
How has it altered the property landscape in these areas are there more higher learning institutions being set up in Perak in the near future?
TK: University Tunku Abdul Rahman and Universiti Teknologi Petronas have undoubtedly transformed the property and business landscape of Kampar and Seri Iskandar respectively. Moving forward, there are a few private universities and colleges that will be setting up their new branches/campuses in Ipoh. These include Quest International University Medical College in Meru and Segi College in Menglembu. The two new higher learning institutions will surely accelerate Ipoh’s property market besides bringing in related investments such as retail and Food & Beverage (F&B) into the surrounding areas.
PERAK was named “The Most Promising State for International Investment” during the 6th Middle East Business Leaders Awards in Dubai recently. (Dec 2015)
What makes Perak an investment-friendly state and is there potential for Perak to be a prime investment area like Iskandar Malaysia?
TK: The State Government has done a great job through ‘InvestPerak’ in boosting foreign investments and improving the economic structure and community development of the state in a holistic and orderly manner. Its ‘business-friendly’ approach has enabled for a balanced investment environment in Perak. The investment arm is going all out to promote Perak as an investment haven. Among the sectors being promoted include Halal industries, oil & gas downstream activities and medical & scientific devices.
An international survey (money.usnews.com) had listed Ipoh as one of the 9 most affordable places to retire in the world.
How can Perak capitalize on the Malaysia My Second Home Programme?
TK: Perak’s residential and commercial properties are still one of the most affordable and reasonably priced ones in the country. Most of the residential property prices in the state are 3 times lower than those in Kuala Lumpur. Most importantly, Ipoh has a balanced environment and a better quality of life – there are fewer traffic jams here and the cost of living is considerably cheaper; making it perfect for both families with young children and retirees.
More developers are taking note of Perak’s appeal and have ventured to establish their presence in the state. The growth in the state’s property and retail sector can be seen in the mushrooming of expensive food outlets, commercial centres and modern residential areas, including upmarket condominiums and exclusive landed properties in gated and guarded developments.
Penang is making strides towards improving its public rail transportation system, as highlighted in the Penang Transport Master Plan.
What do you think should be done to improve accessibility in the state? Is it high time that Perak has its own public rail transportation system?
TK: The state government has been making inroads in terms of infrastructure developments – the Electrified Double Track Rail Project connecting Ipoh and Padang Besar which came into operation last July was a welcome relief. However, we are still lacking in terms of intra-town accessibility. It would be great for Perak to have an integrated transportation system in the form of a mass rapid transit system. Also, a new airport in a strategic location to complement the existing Sultan Azlan Shah Airport will be a great idea. Strategic infrastructure investments will generate many downstream economic activities in areas that previously could be accessed only by state roads.
This article was first published in the iProperty.com Malaysia July 2016 Magazine. Get your copy from selected news stands or view the magazine online for free at www.iproperty.com.my/magazine. Better yet, order a discounted subscription by putting in your details in the form below!