Mega infrastructure developments to drive property market

The continuation of mega infrastructure developments will create multiplier effects benefiting many sectors, including real estate.

Under Budget 2021, the government has allocated RM15 billion to revive and ensure the continuity of several mega projects. They include the Mass Rapid Transit Line 3 (MRT3) in Klang Valley, Rapid Transit System from Johor Bahru to Woodlands (Singapore), and the Pan Borneo Highway across Sabah and Sarawak.

In addition to the infrastructure projects, the development of the Kwasa Damansara township in Selangor will create over 100,000 jobs and have about 10,000 affordable houses.

Kwasa Land by the Employees Provident Fund is a massive township bordering Kota Damansara and Sungai Buloh with a gross development value of RM50 billion.

PropertyGuru Malaysia country manager Sheldon Fernandez said apart from the infrastructure projects and the Kwasa Land township development, the conducive interest rate environment will encourage homeownership.

The Monetary Policy Committee (MPC) of Bank Negara Malaysia kept the Overnight Policy Rate (OPR) at 1.75 per cent in its most recent review in November, citing significant improvement in economic activity during the third quarter of 2020.

“Lower OPR allows buyers to lock in lower interest rates favourable to current financial standings, especially those finding it difficult to fork out higher monthly loan repayments,” Fernandez said in a statement.

Fernandez said the other driving forces for the property market that will spur buyers’ interest include the Home Ownership Campaign (HOC) and affordable housing for the lower-income (B40) segment.

He said the reintroduction of the government-initiated HOC, which offers a number of incentives has proved to be an effective measure to boost the market.

Further, the government’s focus on affordable housing in the coming year will incentivise homeownership among the B40 segment, Fernandez said.

“This measure will allow private developers to focus more on free-market housing while allowing the government to take the responsibility to provide more cohesive housing for the rakyat,” he said.

According to the PropertyGuru Malaysia Consumer Sentiment Study, 57 per cent of the respondents said they intend to own a home by the end of 2021, while one in six respondents plan to postpone their purchasing plans indefinitely.

The most preferred property type to purchase is a double-storey terraced home, a single-storey terraced house, and an apartment.

Fernandez said with many Malaysians aspiring to own their own home next year, incentives to enhance the macroeconomic environment, measures by the government and property developers as well as uptake of digitalisation within the property industry will help facilitate the uptake.

He said the current market condition with a historically low-interest rate, property developers’ aggressive promotions, heightened competition among property sellers and incentives under the HOC programme makes it a favourable timing for homebuyers to look for bargain deals.

“However, the prevailing economic climate continues to suggest that caution should be a prime factor in any decision-making process, specifically due to job and income uncertainties. Purchasers must not only consider the cost of owning a property but also whether they can afford it while managing other expenses.

“A buy is advisable for those who are on the sound financial footing and are confident about the future security of income. Those in this position will find themselves spoilt for choice in the current buyer’s market,” he said.

Fernandez said that overall, the economy is expected to improve in 2021 and the property market will follow suit, but the recovery is expected to be gradual and bumpy due to the on-going Covid-19 pandemic.

He believes that the situation is likely to improve significantly in the second half of 2021, especially with the promise of a vaccine on the horizon.

“In an improved economic and public health climate, strong existing demand for homeownership will likely be unlocked and we will see healthy growth in property transactional activity,” he said.

Source: NST