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Lessons from property downturn
Residential sector leads in recovery
favourable ,interest rates an credit
THE local residential property market is gradually recovering while the commercial and industrial segments are not likrly to see
some
improvement in the latter part of next year.
The lessons to be learnt from the
recent property downturn are numerous: For developers, they would
need
to avoid the "joining_ the bandwagon" syndrome which had led them to
overbuild certain types of properties. They would also need to refrain from
overpricing their properties and sacrificing quality for quantity and
slip‑shod work during boom times.
Financial institutions, which are an
important link in the construction and property chain also need to avoid
bankrolling sectors which have a property glut.
Property developers who tended to
overbuild or locate their projects in non‑strategic locations burnt their
fingers in the recent downturn. After they were, hit, badly, they lamented that
they had little information on locations.
To avoid disaster from an overbuild
situation, the authorities have set up the National Property Information Centre
aimed at providng a bigger picture
to those involved in the industry.
The
recent sales campaigns for residential properties have produced tangible
results. The upshot of these efforts is the recovery of
residential sector.
Analysts
say that the residential sector has benefited greatly from
the prevalence of lower
interest rates, more flexible credit and a
greater willingness among banks to offer attractive loan packages.
Housing
Developers Association of Malaysia (HDA) president Datuk Eddy Chen said:
"Prices of properties are still attractive, banks are offering good
packages. As people begin to realise this, they will buy."
During
the' second Home Ownership Campaign alone, some 15,335 units of properties worth
RM2.404 billion were sold, reflecting good response following the attractive
packages offered.
The fair, held between Oct 29 and Dec
7, helped to stimulate property sales as it offered discounts, attractive loan
rates, fast loan approvals, waiver of the stamp duty and withdrawals from the
Employees Provident Fund.
The large number, of transactions
concluded at the campaigns also demonstrated the need for affordable pricing as
well as reasonable loan rates.
Besides the campaigns, the property
market also received a boost through the perks contained ,in the Budget 2000
tabled on Oct 29.
If there were to be no changes to the
2000 Budget to be re‑tabled in February, demand for housing is expected to
rise when conditions in the Treasury Housing Loan Scheme for government
employees are relaxed.
HDA's Chen felt that with these
incentives, government employees could account for a big chunk of the housing
demand next year.
Chen said new property launches
nowadays would usually see between 80 per cent and 85 per cent take up within
one or two weeks with the balance sold in about three months.
On
the commercial and industrial sectors, Chen said there‑were still surplus
stocks to be disposed of.
He said HDA would ask Bank Negara
Malaysia to relax the guidelines for the development of residential properties
above RM250,000 that were viable and strategically located.
Early this year, Bank Negara ruled that
banking institutions should not finance the development of residential
properties and shophouses where the individual unit costs more than RM250,000
each.
Financial institutions are also not
allowed to provide financing to develop hotels, resorts, office buildings, golf
courses, clubs and shopping complexes.
BNM said the guidelines were introduced
to limit the construction of properties above RM250,000 to clear the current
backlog of such properties. – Bernama NST
Monday December 27 1999 Business