KUALA LUMPUR: Despite a slowdown in the world economy and the US subprime crisis, the real estate market in Malaysia remains positive. This was the consensus reached by speakers at The Edge Investment Forum on Real Estate 2008: What’s Hot; What’s Not held last Saturday. One of the reasons given was that Malaysia’s economic fundamentals are strong with the economy decoupled from the US, hence the country should not be adversely affected by what’s happening overseas.

Zerin Properties CEO Previndran Singhe said rising cost of construction has pushed property prices up but Malaysia is far from being overpriced. “The market is still driven by locals. We have a strong domestic consumption and there is an explosion of wealth in East Asia. Malaysia is seeing investors from not only from the Arabs but from the Indian subcontinent as well as China,” he added.

Previndran, who presented the country’s market outlook for 2008, said Malaysia has a few more good years to go and that the recent 12th general election results are also a “fantastic feel-good factor”.

Ho Chin Soon Research director Ho Chin Soon affirmed the fact that locals and foreigners alike are still actively buying land. According to Ho, most of the activity is in the Klang Valley with areas like the Golden Triangle seeing a lot of lands changing hands.

“Our research shows that not only Arabs are buying but the Koreans and Singaporeans as well,” said Ho.

“When a developer buys land, he buys into the future. Take YTL Group’s recent purchase of a piece of land on Jalan Stonor for RM2,000 psf. This shows that the optimism is there,” he added.

Ho’s topic was on who’s buying land and where? He also addressed the issue of whether the hotspots that he mentioned at the inaugural The Edge Investment Forum on Real Estate 2007 held in October last year were still hot. Ho maintained that Petaling Jaya remained as the locational centre of gravity with properties in the first tier and second tier radius from this centre still being in the hot spot.

On whether one should invest in commercial or residential real estate, regional president of Fiabci (International Real Estate Federation) Asia-Pacific Kumar Tharmalingam said that it would be entirely up to the individual. “Both have its strengths and weaknesses. On paper, commercial real estate is a better option although landed property is a better investment for the next generation.”

Kumar felt that Asia, including Malaysia, still showed much promise as it is the only continent that does not have a housing bubble yet. In conclusion, he said that as values escalate due to inflation and scarcity of land, those who are looking to invest in property should consider investments through partnerships or by private equity. “This allows potential investors to jointly purchase prime commercial real estate as a group, with an investment time frame to exit when the yields and the capital values have improved.”

The forum also addressed the issue of property investments overseas, its rewards and pitfalls. This was presented by Robert Ang, managing director of Savills Rahim & Co. Ang said that there were several reasons that Malaysians bought properties overseas. One of them is that many are getting more affluent and sending their children for further education overseas. “There is definitely a growing market here,” he said. Other reasons included the rich looking to diversify their portfolio and those looking for capital protection.

On the pitfalls of overseas investments, Ang said that investors should pay close attention to exchange rates and follow conventional wisdom when it came to observing property cycles. “Local knowledge of the country you are buying in to is also important. One should always look out for changes in official policies as this would affect your investments,” he added.

The forum also included a panel discussion on the real estate success story of Kuala Lumpur City Centre (KLCC). Three developers, represented by their chiefs, gave an overall perspective of the market in KLCC. They were Datuk FD Iskandar Mohd Mansor, group managing director of Glomac Bhd; Datuk Jagan Sabapathy, CEO of Bandar Raya Developments Bhd; and Datuk Chan Sau Lai, executive chairman of Beneton Properties Group. It was moderated by Datuk Richard Fong, president of Fiabci Malaysian chapter and group executive vice-president of Glomac Bhd.

FD Iskandar said that Malaysia finally had a focal point in KLCC but felt that the country was not being “sold properly” to attract foreign investments. He suggested that the government put emphasis on making KLCC an Islamic financial hub and that the promotion of the Malaysia My Second Home programme be placed under the Prime Minister’s Department rather than the Tourism Ministry.

Jagan affirmed the fact that KLCC has indeed put Malaysia on the map. “What we’re seeing happening with prices in the KLCC is real, it is not hype. Land is being bought up very quickly and I see it (prices) going nowhere but up,” he added.

Chan, who was responsible for Stonor Park, the first high-end condominium in the KLCC area, said that this was the place to be in today. He foresees that as land prices escalate, developers will have no other choice but to shrink the sizes of properties being offered.

Fong closed the discussion with a conclusion that KLCC is still hot and that those looking to invest should still do so.

The Edge Investment Forum on Real Estate 2008: What’s Hot; What’s Not was held for the second year running. It is organised by The Edge and presented by United Overseas Bank. The forum was supported by SP Setia Bhd, ranked No 1 in The Edge Top Property Developers Awards for three consecutive years from 2005. A more detailed report on the forum will be published in City & Country in The Edge business weekly next week.

[From left: Fong, Kumar, Chan, Christopher Hahn of Rahim & Co, Ang, Jagan, FD Iskandar, SP Setia Bhd COO Datuk Voon Tin Yow, Ho, UOB Malaysia CEO Chan Kok Seong, Previndran, The Edge editor-in-chief Ho Kay Tat and The Edge executive editor Au Foong Yee.]

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