Challenges aplenty in 2021

Asian Property Review talks to 11 experts on how the property market will perform in 2021.

Agnes Wong, Managing Partner, Syarikat Ong Group

For the outlook, I will discuss from 3 points of view:

a. Developer
  1. The first thing that developers must do is to resolve the overhang issue. They must work with the government to clear the overhang. Otherwise, the situation might get worse giving rise to social issues and town planning difficulties. Secondly, abandoned projects should be revived. Budget 2021 fortunately provides incentives for both developers or white knights and buyers in this regard. Thirdly, developers must start innovating in order to move away from depending on too many workers (especially foreign). Budget 2021 provides tax incentives for adopting integrated building system (IBS).
  2. With innovation, the cost of construction can be lowered and buildings can even be built taller with smarter features. By going into 3D printing, for example, developers can print to specifications even for huge developments, thus doing away with certain human intervention. The cost savings will give developers room for profitability while at the same time, lowering prices to cater for demand.
  3. The property industry needs the support of foreigners, thus MM2H should be revised to make it easier for foreigners to come. In any international city, especially capital city, the presence of an international community is crucial for its growth and attractiveness to potential foreign investors. Malaysia needs FDIs to grow and prosper. They would not compete with locals as their target properties are serviced apartments, SOHOs and higher end properties. We appear to have overvalued our attractiveness at the moment.A lot still need to be done to attract foreign investors. Except for Penang, we are not anywhere near the world’s most livable city status. Only when we are in that category do we consider penalties like vacancy tax. Cities like Melbourne can levy that due to its status as the most livable city in the world, and much sought-after by international investors. The government needs to do more to market Malaysia. It needs to have long-term plans and benchmark against other attractive cities like Melbourne, Singapore, London or even Perth. It needs to drive the positioning of our country in order for the property industry to tap on it.
  4. Developers need to come up with new types of property to cater to new demand from buyers with different mindsets, for example, an extra room to work from home as WFH is becoming the norm now. The office space has moved into everyone’s home. So, repurposing, resizing, and relocating all become important now for survival. Urban farming facilities, a bigger kitchen, and space for home entertaining and working, are what more and more buyers are looking for these days since movement is still restricted due to the continuing pandemic. Equipment for the kitchen and office were selling like hot cakes during the MCO as people start working and cooking at home. Even legal agreements can be signed remotely without stepping into a lawyer’s office. Even court hearings have gone online. These are expected to continue even after the pandemic ends.
b. Landlord

As many businesses a re struggling to survive, commercial property landlords need to be flexible in the rental arrangement to retain tenants. Examples include 50% rental discount for 18 months. Otherwise, good tena nts might just relocate to newer and better premises offerring the same rental.

Landlords with cashflow issues have to decide whether to cut loss and play to win another day, or continue to hold but allow for flexible arrangement. Whoever has cash will win. So, you may sell at a loss but then you can use the proceeds to reinvest in below market value properties.

c. Buyer/Investor

Access to loans and affordability will be major issues. But even more importantly, a new generation is coming into the scene – the Millennials with their mobile and Instagrammable lifestyle. Everything is short-term for them including employment, workplace, etc. Will they go for long-term mortgages? They a re more interested in the infrastructure available such as speed of the Wi Fi and futuristic tools than whether the land tenure is freehold or leasehold.

Eventful year

2021 will be a very happening year where many people will have to make hard decisions and undergo transitions in their lifestyle. The virus will never go away, so we need to have an effective vaccine. But what if this is not realized especially with a mutating virus?

For Subscriber Only

Subscribe Now

or Login to read the full content

0 Comment