Waiting with bated breath
By Joseph Wong firstname.lastname@example.org
While the full details of the reintroduced Home Ownership Campaign (HOC) have yet to be revealed, nearly everyone who is linked to the property industry is remaining hopeful. The residential market showed signs that it had bottomed out late last year, but the onset of the Covid-19 pandemic earlier this year continues to bring much uncertainty.
The pandemic, having affected a weakened economy via the subsequent movement control order (MCO) periods, have derailed the recovery momentum. With severe disruptions to the economy leading to rising unemployment, potential buyers and investors have delayed making big-ticket purchases.
“During the first half of the year, the central areas of Kuala Lumpur saw fewer residential project launches and lower level of transactional activity. “Still, against this backdrop, we observed active bookings of rightly positioned residential products of reputable developers in the city fringes and popular or upcoming suburbs,” said international real estate consultancy Knight Frank Malaysia managing director Sarkunan Subramaniam.
“The reintroduction of the Home Ownership Campaign featuring stamp duty exemptions and the uplifting of the margin of financing limit for the third housing loan onwards for property valued at RM600,000 as well as Real Property Gains Tax (RPGT) exemption unveiled in the short-term Economic Recovery Plan (Penjana) will help to stimulate the property market,” he said.
The campaign, fondly dubbed as HOC2, is expected to provide additional support to homeownership as well as encourage the sales of unsold properties in the market. In conjunction with this campaign, StarProperty is releasing a special pullout on Sept 18 to address the key highlights and concerns regarding the HOC.
Meanwhile, many developers have taken a step back to relook their products in light of the HOC and Penjana Plan. For example, in Kota Kinabalu, Knight Frank Sabah executive director Alexel Chen observed that some developers are now shifting the focus to quality and well-priced residential products in both landed and high-rise at mature and growing residential areas.
“In Malaysia where the homeownership rate remains relatively high, there are still genuine homebuyers in the market awaiting for the right residential products,” he said. Sarkunan added that the central bank had cut the Overnight Policy Rate (OPR) thrice during the first half of the year with a further 25 basis points reduction to 1.75% should help speed the economic recovery.
“The lower monthly loan repayments coupled with the automatic loan moratorium for six months from April 1 will provide some financial relief to households amid the current crisis. Also, with lower monthly repayment sum, borrowers who failed to obtain a loan due to the restriction of one third Debt Service Ratio (DSR) rule, may now have higher chances of securing financing,” he added.
In the face of the Covid-19 pandemic, a sub-sector that is remaining resilient is the industrial real estate market, said Knight Frank Malaysia executive director for capital markets Allan Sim. The much-lauded efforts by the government in providing generous tax incentives for foreign manufacturers under the Penjana Plan will help to position Malaysia as a strong contender to attract more relocations and shoring of overseas manufacturing operations to Malaysia, he said.
This is timely given the on-going major restructuring of global supply chains arising from the aftermath of the pandemic, as well as the ongoing US-China trade war. “Moving forward, the outlook for Malaysia’s industrial property market is looking favourable as we expect to see more active enquiries led by manufacturers looking to take advantage of the tax incentives as well as international e-commerce operators riding on the surge of demand for their services amid consumers’ shift towards digital channels and online shopping. “We also foresee more international e-commerce operators considering Malaysia as an important regional distribution hub within their network,” Sim concluded.