However another local Malaysian paper The Malay Mail took a survey of first-time and multiple home buyers'

reasons for not buying property inMalaysia under the article "Real Estate Blues." The survey uncovered 36% consumers believe properties are too expensive while another 33% lack the capital to purchase properties. Another interesting finding in the survey is that one-third will wait until after the Malaysian General Election. Some complaints by home-buyers include "homes are snatched up by unscrupulous property agents who then resold them at exorbitant prices." One cannot help but wonder whether the Malaysian properties have more speculators than legitimate home-buyers. Any market having more speculators than legitimate buyers are foretold to collapse. Meanwhile Malaysia-based Genting Group paid $236 million for Miami Herald's headquarters in May citingFlorida's growing population, tourism, and nonstop flights from Asia to Miami. If Malaysians are investing in overseas real estate especially in the United States then it is time to reevaluate the current status of real estate climate within Malaysia. Economic Analysis In 2010 the Malaysian Government revealed three major development initiatives including the New Economic Model, the 10th Malaysian Plan, and the Economic Transformation Programme (ETP). The ETP alone will cost $444 Billion USD with 60% coming from the private sector. These initiatives seek to achieve an average of 6% GDP growth per year over the next ten years. Majority of these plans are dependent on political push to achieve the expected goals which will only be revealed after the General Election. The FTSE Bursa Malaysia KLCI Index consisting of the 30 largest companies in Malaysia hit an all-time high above 1500 in 2008. Now three years later the index is still hovering around the same region. In 2010 Malaysia registered stronger-thanexpected real Gross Domestic Product (GDP) growth of 7.2% according to the International Monetary Fund.Malaysia is expected to grow slower at 5.2% in 2011 according to the Malaysian Institute of Economic Research (MIER). While Research and Markets a leading source on market data expects Malaysia to grow 4.9% in 2011 and 4.2% in 2012. The downward projections of real GDP between 2010 and 2012 could lead Malaysia into a recession.

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The three main economic risks affecting the Malaysian Economy are inflation, weakening export growth, and the budget deficit. The Malaysian Government is committed to reducing the fiscal deficit to 5.4% of GDP this year compared to 5.6% in 2010. The weakening export growth is affected by two major factors including the decline of the global economic recovery and the appreciation of the ringgit against the US Dollar. The inflation rate was 2.3% in 2010 as the Bank Negara Malaysia raised their Overnight Policy Rate (OPR) three times last year (March, May, and July 2010) to curb inflation and is currently adopting a neutral stance. However inflation has peaked to 3.8% in June 2011 driven by high electricity and gas prices as reported by MIER. Another reason for rising inflation is due to the unemployment rate which decreased between 2009 and 2010 from 3.6% to 3.3%. As more people become employed, prices for necessities tend to rise. While inflationary pressures are rising, the Bank Negara Malaysia may hike the Overnight Policy Rate (OPR) currently at 3% by 25 basis points later this year and another 25 basis points next year. Property Analysis Residential property prices rose slower this year compared to the first quarter of 2010 according to the Valuation and Property Services Department. This is mainly caused by slower exports due to the appreciating ringgit and slower economic growth caused by rising inflation. According to the 2011 Property Market Report, the office sector is becoming a competitive market which will largely depend on the success of the Malaysian Government implementing their ETP initiative. Luxury condominiums in Kuala Lumpur city centre indicated a slight decline due to sluggish demand and increased supply in 2010. While service apartments accommodating guests on business trips to Kuala Lumpur have falling occupancy rates. The occupancy rate between 2009 and 2010 declined from 70.7% to 64.6% and it is expected to fall further when faced with large incoming supply which stands around 19,000 units by the end of 2013. Examining Rental Yields

One of the prime attractions of owning property is receiving passive income however the gross rental yields have fallen over the past year. The Global Property Guide reported 120sq.m condominiums has a better yield ranging between 5% and 7% compared to a bungalow which has lower yields just over 4%. Last year the same 120sq.m condominiums averaged over 8%. The decline could be attributed to disadvantage of owning rental property. The rental income tax is a flat rate of 26% for nonresidents receiving Malaysian-sourced income. There is also a Real Property Gains Tax of 5% for nonresidents holding Malaysian property for less than five years. Nonresidents looking to invest in properties become unattractive and difficult with these two deterrents. Malaysiais a pro-tenant rental market even if the law is pro-landlord due to the inefficient, costly, and slow court system. Recovering unpaid rents is a major problem as there is no specific landlord or tenant law in Malaysia. Owning property in Malaysia for the basis of rental income becomes expensive and a hassle when rental income tax is high and the rental market are unregulated. Malaysian Real Estate Realization New supply of offices, luxury condominiums, and serviced apartments will affect supply over the next three years. As these projects near completion, the supply will inflict downward pressure on occupancies and rental prices. Prices tend to increase when there is limited supply. Certain areas in Malaysia should be immune to falling prices due to limited land like Penang and prime areas will continue to grow as communities saturate their existing supply. The current Malaysian real estate market may be riding on last year's real GDP growth of 7.2%, which is expected to decline over the next two years. Many Malaysians and foreign investors would rather wait until after the General Election which is due no later than March 2013 to assess whether it would be best to purchase properties. The results of the election will determine whether the 2010 development initiatives will progress forward to upgrade existing infrastructure such as roads, ports, and airports or create a slowdown which will also have an affect on the real estate markets. The disadvantages are now outweighing the advantages of owning property in Malaysia. The appreciating ringgit has slowed the demand for exports and has made properties more expensive for foreign investors. While rising inflation pushes commodity prices higher and squeezing profit margins, the declining rental yields has made owning properties a bit risky with the high rental income tax diminishing their returns. As property prices are rising beyond fundamentals, an abrupt shift in home buyers' optimism, rising costs of ownership and borrowing could cause significant price corrections downward.

Read more: http://www.articlesbase.com/real-estate-articles/malaysia-real-estate-market-2012-boom-or-bust5137863.html#ixzz1X4jtziKj Under Creative Commons License: Attribution No Derivatives

The world economy continues to be led by developing Asia, with advanced nations lagging behind. Developed economies are slowly recovering with little price pressures. In contrast, developing Asia remains robust with strong domestic demand and rising inflationary pressures. The recent disaster in Japan is felt by numerous countries, particularly through the manufacturing chain. With the end of the U.S. quantitative easing in Jun-11, the global economy will be influenced by the European debt crisis and volatile commodity prices. Major currencies will likely consolidate against the U.S. dollar, while emerging currencies to appreciate further.. In Malaysia, the 1Q11 GDP growth recorded a healthy 4.6 percent year-on-year, with private (6.7 percent) and public (6.1 percent) consumption offsetting a larger drag from net exports (24.2 percent). By sector, services (5.9 percent) and manufacturing (5.4 percent) were the main growth drivers. Economic growth momentum will probably moderate in 2Q11 on supply disruptions from the Japan disaster, pullback in commodity prices, rising cost-push inflation, and higher debt servicing burden. Rebound is expected in 2H11 due to the reconstruction of Japan

and implementation of ETP projects. Hence, 2011 GDP growth will reach 5.2 percent year-onyear, before propelling higher to 5.5 percent in 2012 Reflecting the ongoing uncertainties in global and regional economic outlook, the in-house Consumer Sentiments Index (CSI) declined slightly to 107.9 points in 2Q11, while the Business Conditions Index (BCI) edged up marginally to 114.0 points. Retail Trade Index (RTI) and Tourism Market Index (TMI) followed the trend exhibited by BCI to 124.8 points and 125.4 points, respectively. Conversely, Automotive Industry Index (AII), CEO Index, and Residential Property Index (RPI) moved lower to 120.8 points, 111.9 points, and 128.0 points, respectively. Overall CPI increased 3.3 percent year-on-year in May-11 and is likely to peak at 3.8 percent by Jun-11 due to recent hikes on electricity tariffs (average 7.12 percent) and gas prices (28.0 percent). During 2H11, inflation will probably be around 3.5 percent with upside risks from indirect second round effects. Consequently, MIER expects another hike in the OPR by 25bp. CPI will average 3.3 percent in 2012 prompting further hikes in OPR to 3.50 percent. Recent foreign exchange liberalization measures will be neutral on the performance of ringgit since higher direct investment abroad will be offset by inflows from more trade finance and easier borrowing rules from nonresident related companies. Thus, RM/USD is projected to average around 3.00 in 2011. Improving macroeconomic fundamentals will see an average RM/USD of 2.95 in 2012.

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Tuesday, May 24, 2011

Malaysia Property Market ROI by States in 2010

When you buy a property, the first thing that come to you mind will mostly likely to be What is my potential return of investment (ROI)? However you know that no one can guarantee you the exact ROI. What you really can do is the study the past history or so called track record. What do you think of the property capital gain in Malaysia for all the states? Lets see
Malaysian State Average Transaction Value (RM) 2010 House Price Increase (%) 25.3 -27.2 17.1 17.4 -11.6 12.3

Kuala Lumpur Putrajaya Pulau Pinang Sabah Labuan Johor

488,522 310,625 265,078 222,698 204,852 166,802

Sarawak Pahang Melaka Kedah Negeri Sembilan Perlis Perak Kelantan Terengganu

142,927 127,159 127,081 122,772 116,808

7.9 8.4 4.4 -5.2 -2.4

106,562 94,764 82,337 74,056

7.6 3.3 39.5 7.7

Source: NAPIC, 10MP, RAM Economics This table concludes few things as in general:

The most expensive houses in Malaysia is at KL. Well, I thought is Penang but Penang is not even at the second price. So, can I say Penang property is still considered cheap as compared to KL and Putrajaya? The cheapest houses in Malaysia is at Terengganu and followed by Kelantan. Well, this is not a surprise to me. Want cheap house? Go to Terengganu! The highest ROI of property investment in Malaysia is at Kelantan! Wow, again my impression is either KL or Penang. Another Blogger (i.e. Kris) told me is Sabah which is kind of surprise to me too. It has the same capital gain (i.e. 17%) with Penang. The lowest ROI of property investment in Malaysia is at Putrajaya! Who say property sure make money? Look at Putrajaya, Labuan, Kedah and Perlis. They have ve ROI. Im surprise that Kedah is 5.2% or perhaps I should said Im sad to hear the news. Hopefully this doesnt apply to my property in Kedah.

Discussion

Having said so, this data is only for 2010 and if you look at it for long term (e.g. 10 years), the property price should appreciate around 3% to 4% (based on my personal observation), not as much as you think and due to the compound interest you should see the capital gain is around 30% for 10 years or since year 2000. The property price went up crazy in the past 2 years (i.e 2009 and 2010) was due to the severe stock market crash of 2008 and therefore investors switched their focus to the property market (safest investment vehicle). So what is next? One high possibility is the property market may be stable down for the coming years as now the investors are switching back to stock market. What do you think?

Hi there, I'm not even sure if this is the correct thread to be posting this question in but if it is, do help. I am a 25 y/o executive intent on having my own place (my aim is for a studio apartment.) by 2012 and I'm thinking I would only be able to afford a place which is between RM150, 000 to RM250, 000. Situation: Don't see myself getting a car so the place has to be close to public transport. Location: If there're any options in KL (I doubt it, I'd should be so lucky). Otherwise somewhere in PJ would be nice. Any ideas which project i can set my goals on? Also, I should be posting a lot of questions on financing and stuff like that in due course since I know bollocks about these things. If only they had bothered to teach us important things like these in school.