How will property fare in 2014?

The year 2013 was a bad one for gold. Bond market is risky and equities are volatile. Real estate investment trusts (REITs) are subdued compared with 2012 and 2013.

Fixed deposits are hovering about 3% while inflation rate is expected to increase to 3.4% for the first nine months this year from 2.1% in the same period last year. Tangible physical properties may be, will they remain as good a hedge against inflation has many have hoped? Here are some anaecdotes from property consultants.

Das Gupta
Stocker Roberts & Gupta Sdn Bhd valuer

Bangsar, Damansara Heights and landed units will be little affected in the event of an economic downturn but the peripheral areas like Rawang, Meru and Semenyih are not expected to have the great increases in price anymore.

Datuk Steward Labrooy
Axis Reit Managers Bhd CEO

Consider industrial properties. Entry cost is lower by comparison. You pay less for buildings and land and tenancy is long term compared with residential/commercial properties. But buy with roads, gas, broadband, water and electricity supply.

Veena Loh
Malaysian Property Inc general manager

Penang will not be so hot this year, KL will be better while Iskandar Malaysia will very good in the very, very long term.

Local and foreign buyers will take a wait-and-see attitude in the first half year of 2014.

Elvin Fernandez
Khong & Jaafar managing director

For many, houses and shophouses will remain a perennial favourite. Interest rates may go up this year. I don’t think there will be a drastic fall in property prices, more likely a fall in volume which makes it difficult for developers and increases competition in the housing industry.

Do not compare the Malaysian market with Singapore’s. We may appear cheap and Singapore expensive but every city has an unseen hand that fixes the rent in the market so it is wrong to say we are cheap. Do not make country-to-country comparison. Prices is determined by rental. Our office rent is about RM7 per sq ft while Singapore’s office rent is more than RM25 per sq ft (S$10 to S$15 psf).

Rent is a function of profitability of a company.

During an external shock, weaknesses in the sector is exposed.

Today, globally, we are getting more and more skittish (about that situation). There has been a small tapering in December, 2013. How that is going to work out as far as the money outflow from the region is concerned is a big question. This is an external event but it will impact on the property, bonds and equities market. The opacity is real.

Siva Shanker
Malaysian Institute of Estate Agents president

The measures instituted by the government may result in short-term pain but this is good for the sector in the long-term.

When people are rushing to sell, that’s the time to buy. There are many who bought in Cyberjaya who are now rushing to sell. This will continue throughout 2014.

Property is not a short-term play and vary your portfolio. Location is no longer everything. Things have changed. Pricing, affordability and concept are factors to be considered in addition to location.

The condo market is slow and will consolidate. If you have invested in a commercial or industrial property, you will be shielded and I don’t mean serviced apartments disguised as a commercial unit.

Young people who bought into shoebox-sized units have not done themselves a favour, unless they plan to stay there.

They may have problems renting the unit out.

James Wong
VPC Alliance Malaysia Sdn Bhd managing director

The commercial property market is affected by the oversupply in the office market and the slower take-up rate expected in 2014. For Kuala Lumpur, the new assessment hike and increased electricity tariff will reduce the rental income and yields of office buildings, making it even harder for them to be sold because of lower yields. Hence, we expect fewer office buildings transactions in 2014.

Likewise, for the retail shopping market, there is also an oversupply.

With inflation and the hikes in electricity, petrol, toll charges without a proportionate increase in wages, consumer spending for luxurious and non-essential goods will be affected.

Retailers experience lower sales turnover during the year-end festive holidays and this trend will is expected to continue during the year. However, shopping malls in city centres will do better this year.

Paul Khong
CB Richard Ellis Malaysia executive director

In the Klang Valley housing market, Damansara Heights, Desa Park City, Hartamas, Bandar Utama, Mutiara Damansara and Bangsar would be the evergreen locations which cannot go wrong. However, landed properties in these locations are at a premium. MRT will continue to attract investors/purchasers and properties around the stations will obviously benefit. Gated and guarded projects within the landed segments will continue to excel in good areas. Commercial markets will continue to trade reasonably well and the shophouses/shopoffices segments in good locations will still see appreciation this year, especially those with good rental returns and secured tenancies.