KUALA LUMPUR, Jan 18 – Property investment would continue to be relatively more popular than other forms of investments in this country for 2017, said property consultancy firm, CBRE|WTW.
Its Managing Director, Foo Gee Jen, said this was mainly because the return on investment from the property sector was higher, at about 5.2%, compared to returns from bonds, stock market and mutual funds of about 2-3%.
“However, our take for the property market this year will be another flattish period weighed down mostly by low commodity prices and continued slow economic growth in major countries and political uncertainties,” he said at the presentation of the 2017 Asia-Pacific Real Estate Market Outlook here today.
He said there would be a rise in demand for affordable housing below RM400,000 and the property market is also expected to cool down and stabilise with prices to be more realistic, he said.
Foo said the growth areas would likely focus on good transportation connectivity and with a strong demographic forces and residential properties would also continue to be supported.
“Among the transportation connectivity are High-Speed Rail (HSR) KL-Singapore, Mass Rapid Transit (MRT) Line I and II, Light Rail Transit 3 and West Coast Expressway,” he said.
He said the proposed HSR, East Coast Rail (KL-Tumpat, MRT 2 & 3, Gemas-JB rail, Singapore MTR (extension to Johor Bahru), Seremban-Port Dickson and Pan Borneo Highway would also open more opportunities for new growth centres and spur economy activities along its path.
On another note, he said, there are growing expectations that property prices would drop further in 2017 as well as an increase in the vacancy rates.
“The inability of the emerging young working population to buy homes due to the rate of house price increase and tighter lending rules are probably the most pressing matters facing the country,” said Foo.
He said this year would be a challenging one for developers due to rising construction costs on weak Ringgit, which included higher crude oil price, increased electric tariff and labour shortage.
“In the short term, investors and developers should focus on taking calculated risks where the market is strong, pursuing development in strong, supply-constrained markets and bidding on strategic long-hold assets that are most likely to be able to withstand a downturn,” Foo said.
He added that for retail sales, growth remain buoyant despite softening consumer spending and rising cost of living. While 2017 will continue to be a challenging year, Malaysia’s economy in 2017 will remain stable with GDP growth forecasted at about 4.2%.