1. Malaysia Economy and Property Market:
2014 Economic Outlook
and
Upcoming Property Hotspots
“Today we shouldn’t look at tomorrow but
at a tomorrow that is 10 years from today”
REI Group of Companies - Presentation by Dr. Daniele Gambero
“Connecting the …… dots between economy, demographic trends and current-new property hotspots”
2. DISCLAIMER AND COPYWRITE
To the best of our knowledge, all information included here falls under the fair use or
public domain guidelines of copyright laws. We strive for accuracy but cannot be
held responsible for any errors in information featured in the slides or incorrect
attributions. REI Group of Companies uses reasonable efforts to include accurate and
up to date information however REI Group of Companies makes no warranties or
representations as to its accuracy. REI Group of Companies assumes no liability or
responsibility for any errors or omissions in the content. The quotes, articles, news
and views are not necessarily representative of the views of REI Group of Companies
and its directors and Management.
This Presentation has been shared for personal use and knowledge ONLY. Any
inappropriate use will be prosecuted according to the law and any total or partial use
of this presentation for public viewing or publishing must be pre-authorized in
writing by REI Group of Companies.
3. …………What we do
-
CONSULTANCY
Strategic Marketing
Property Market Surveys
Property Market Reporting
Property Market Analysis
Branding
Creative
Gambero Property Market Intelligence (Gambero PMI)
- access updated information & data on both Regional
& Local economic indicators
- latest information on future
market trends in property
development
- insights on developers
information, new forthcoming
hotspots and proposed
infrastructures
4.
5.
6. AGENDA
Globalization and the Malaysian Economic Performance
Malaysian Demographics now and future
Market Sustainability
Strategically Sustainable Location
Strategically Sustainable Locations: the Future Gold Mines
8. Malaysian Economic and Property Market Performance:
2013 -2014 Outlook ……. Are we in the bricks?
9. GLOBAL & MALAYSIAN ECONOMY - FACT FILE
USA
EU
JAPAN
AUSTRALIA
UK
MALAYSIA
2.10%
-0.90%
0.90%
0.55%
0.63%
4.70%
101.60%
90.60%
218%
21%
92%
54.80%
Gov deficit as % of GDP
-8.50%
-3.7%
-9.2%
-3.1%
-6.3%
-4%
Balance of current acc
-440 USD Bil
25.9 USD Bil
60 USD Bil
-57 USD Bil
Inflation
1.5%
1.10%
1.10%
2.20%
2.70%
2.50%
Unemployment
7.20%
12%
4.10%
5.60%
7.70%
3.10%
Business confidence
56
-1
12
12
7
115.2
consumer confidence
73
-14
45.2
108
-18
125.3
GDP Growth
Gov debt as % of GDP
-93.5 USD Bil 18.6 USD Bil
10. GLOBAL & MALAYSIAN ECONOMY - FACT FILE
Balance of current account world map
11. GLOBAL & MALAYSIAN ECONOMY - FACT FILE
Balance of current account world map
13. MALAYSIAN MIGRATION FLOWS - FACT FILE
Malaysian Migration Flow Urban to Rural Areas
22,000,000.00
21,000,000.00
20,000,000.00
19,000,000.00
18,000,000.00
17,000,000.00
16,000,000.00
15,000,000.00
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
MALAYSIAN FLOW
Source: World Bank Statistics
2012: 72.5% of the Malaysian population lives in urban areas
2012: 21,000,000 Malaysians live in urban areas 3.5% growth every year
14. MALAYSIAN WEALTH DISTRIBUTION - FACT FILE
FEW CONSIDERATION ON MALAYSIANS WEALTH:
Malaysian average per capita income (2012) – Source IMF
USD10,304 per year = RM3,000 (per month)
Malaysian Wealth Distribution
Lowest 20% - 5%
Highest 20% - 40%
=
Median 60% share 55%
18,000,000
15. MALAYSIAN PROPERTY MARKET SUSTAINABILITY
How House Price Index and Per Capita income index are strictly correlated,
what is this comparison showing?
House - Income trend
House price index
Income statistics
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
100.0 101.1 103.5 107.5 112.4 115.0 117.2 123.1 128.6 130.5 138.8 151.2 167.2 178.4
213.0 232.1 238.2 244.2 250.0 260.8 271.5 282.2 294.6 307.0 330.0 352.9 375.8
House price index growth 2000 – 2012 = +67%
Median income growth 2000 – 2012 = +175%
16. MALAYSIAN PROPERTY MARKET SUSTAINABILITY
How House Price Index and Per Capita income index are strictly correlated,
what is this comparison showing?
House - Income trend
House price index
Income statistics
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
100.0 101.1 103.5 107.5 112.4 115.0 117.2 123.1 128.6 130.5 138.8 151.2 167.2 178.4
213.0 232.1 238.2 244.2 250.0 260.8 271.5 282.2 294.6 307.0 330.0 352.9 375.8
Median income +175%
House price index +67%
18. MALAYSIAN BUDGET 2014 - SUSTAINABILITY
STRENGTHENING ECONOMIC RESILIENCE
ACCELERATING TRANSFORMATION
Today we shouldn’t look at tomorrow but
at a tomorrow that is 10 years from today
19. MALAYSIAN BUDGET 2014 – POSITIVE SIDE
ATTRACT MORE DOMESTIC AND FOREIGNER INVESTMENT
-
70% of the World Islamic Capital Transaction are done in Malaysia
-
Promotion of Malaysia as a Market for Social Responsible Investment (SRI)
-
2014 Visit Malaysia Year and 2015 Year of Festival (Tourism)
-
Kuala Lumpur already 4th world wide as Preferred Tourist Destination for
Shopping after New York, Tokyo and London
-
Jan – July 2013 25 million Tourists / Jan – July 2014 28 million Tourists
20. MALAYSIAN BUDGET 2014 – POSITIVE SIDE
ATTRACT MORE DOMESTIC AND FOREIGNER INVESTMENT
-
70% of the World Islamic Capital Transaction are done in Malaysia
-
Promotion of Malaysia as a Market for Social Responsible Investment (SRI)
-
2014 Visit Malaysia Year and 2015 Year of Festival (Tourism)
-
Kuala Lumpur already 4th world wide as Preferred Tourist Destination for
Shopping after New York, Tokyo and London
-
Jan – July 2013 25 million Tourists / Jan – July 2014 28 million Tourists
21. MALAYSIAN BUDGET 2014 - MOBILITY
ONGOING INFRASTRUCTURE PROJECTS
-
Second link to Penang Island
Extension of LRT line 1 and 2
MRT Line 1
MRT Line 2
Various Klang Valley’s highways and
expressways
- HSR
- Kuantan Port
24. MALAYSIAN BUDGET 2014 - MOBILITY
NEW INFRASTRUCTURE HIGHWAYS AND DOUBLE TRACKING ROADS
West Coast Expressway Banting-Taiping 250 km
25. MALAYSIAN BUDGET 2014 - MOBILITY
NEW INFRASTRUCTURE HIGHWAYS AND DOUBLE TRACKING ROADS
Double tracking JB – Gemas existing road 175 km
26. MALAYSIAN BUDGET 2014 - MOBILITY
NEW INFRASTRUCTURE HIGHWAYS AND DOUBLE TRACKING ROADS
Double tracking Ipoh-Padang Besar existing road 250 km
27. MALAYSIAN BUDGET 2014 – EAST COAST CORRIDOR
NEW INFRASTRUCTURES AND O&G INVESTMENT
Kerteh - New integrated petrochemical complex
Gebeng - New integrated petrochemical complex
RM2.3 Bil for Kuantan port expansion as East Gate of Malaysia
28. MALAYSIAN BUDGET 2014 – GST IMPLEMENTATION
GST WILL BE IMPLEMENTED EFFECTIVE APRIL 1st , 2015
GST RATE HAS BEEN FIXED AT: 6%
-
Not imposed on basic food items
-
Not imposed on piped water and first 200 units of electricity (domestic use)
-
Not imposed on Services provided by the Government
-
Not imposed on transportation services: bus, train, LRT, taxi, highway toll
-
Not imposed on education and health services
-
NOT IMPOSED ON SALE AND PURCHASE AND RENTAL OF RESIDENTIAL
PROPERTIES
30. MALAYSIAN BUDGET 2014
PROPERTY MARKET SUSTAINABILITY
RPGT: HOW IT WORKS?
THIS IS WHY RPGT WILL NOT AFFECT THE PROPERTY MARKET BUT
ONLY PENALIZE UNSCRUPULOUS SPECULATORS.
Year 1
Year 2
Year 3
Year 4
Under
construction
Under
construction
Under
construction
Delivery
Vacant Poss.
RPGT @
30%
RPGT @
30%
RPGT @
30%
RPGT @
20%
CURRENT LOCK-IN PERIOD IMPOSED BY BANKS
ON CONVENTIONAL FINANCING
Year 5
Year 6
RPGT @
15%
RPGT @
0%
ACTUAL HOLDING PERIOD
CAN SELL
WITH NO TAX
31. MALAYSIAN BUDGET 2014
PROPERTY MARKET SUSTAINABILITY
MINIMUM PURCHASING VALUE FOR FOREIGNERS RAISED TO
RM1,000,000.00
-
Properties priced RM900,000 and below will be not at all affected by this new
regulation.
-
The only properties which values might be pushed up by developers to attract
possible foreigner purchasers are the ones priced RM900/950,000 and above
-
In Iskandar Malaysia, considered to be the hottest Property Market in Malaysia
for foreigners, less than 8% of the transactions in 2013 have been actually done
by foreigner purchasers.
32. MALAYSIAN BUDGET 2014
PROPERTY MARKET SUSTAINABILITY
BUDGET 2014 – PROHIBITION TO OFFER DIBS
PROHIBIT DEVELOPERS FROM IMPLEMENTING PROJECTS THAT HAVE FEATURES OF
DIBS. FINANCIAL INSTITUTIONS ARE PROHIBITED FROM PROVIDING FINAL FUNDING
FOR PROJECTS INVOLVED WITH DIBS
HOUSING PRICES
DIBS COST FOR DEVELOPERS REPRESENTS ROUGHLY A 5/5.5% OF THE HOUSE VALUE,
CONSEQUENTLY PRICES OF PROPERTIES SHOULD DROP A GOOD 4 TO 5% SINCE
JANURAY 1st 2014…
UNLESS CREATIVE DEVELOPERS WILL COME OUT WITH….
33. MALAYSIAN BUDGET 2014
PROPERTY MARKET SUSTAINABILITY
HOUSING PRICES
DIBS: BUDGET 2014 “PROHIBITING” ITS USE
THEN
DIRS = DEVELOPER INTEREST REFUND SCHEME
OR
DISS = DEVELOPER INTEREST SUBSIDY SCHEME
OR
ICS = INTEREST CAPITALIZATION SCHEME
OR
3% TO 4% CASH BACK TO PURCHASERS DURING CONSTRUCTION
35. MALAYSIAN BUDGET 2014 – SUSTAINABILITY
AND THE LOW AND MEDIUM INCOME GROUP
IMPLEMENTED SINCE JANUARY 1st, 2014
NOVEMBER 15TH, 2013
Increased transparency in property sale prices
with clear display of all the benefits and
incentives offered such as:
• free legal fees, stamp duty, sales agreements
cash rebates and freebies
37. MALAYSIAN BUDGET 2014 – SUSTAINABILITY
DREAMLAND CONDOMINIUM SPECIAL OFFER
950 sq ft Unit
2+1 bedroom
ONLY
399,000
INCLUSIVE OF
VALUE
10% LOW DEPOSIT
39,900
3% YEARLY CASH BACK DURING CONSTRUCTION:
399,000 * 3% = 11,970 * 3 years
35,910
SPA FREE (being developer to request the buyer to
accept his SPA lawyer this makes sense to be left
for free and it has always been offered)
FREE
LOAN AGREEMENT AND S&D FREE
4,763
KITCHEN CABINET INCLUDED
8,000
3 AIRCON + 2 WATER HEATER INLUDED
6,000
CLEAN HOUSE VALUE
304,427
38. MALAYSIAN BUDGET 2014 – SUSTAINABILITY
SPA VALUE
NET VALUE
AFTER
DEDUCTION OF
FREEBIES - LTV
399,000
304,427
MARGIN OF FINANCING = 90%
359,100
273,984
39. MALAYSIAN BUDGET 2014 – SUSTAINABILITY
SPA VALUE
399,000
10% deposit
credit note
SPA VALUE
399,000
10% deposit
given for FREEEE
(39,900)
Loan approved
273,984
Differential
amount to BE
PAID
85,116
39,900
(39,900)
Cash out
Free-free-not
so-free
0
54,673
40. MALAYSIAN BUDGET 2014 – “The Aftermath”
EFFECT OF THIS MOVE
House prices will re-adjust in the short term
to more reasonable
Values!
EXPECTED VALUES
ADJUSTMENT
+2%
and
-5 to 6%
42. MALAYSIAN PROPERTY MARKET SUSTAINABILITY
Penang: the 8th destination
worldwide to retire.
Ipoh: retirement homes
and health tourism
Kota Baru: the Northern Educational
Hub with 15 Local and International
Universities already working to
establish a northern campus
Kuantan: the new commercial port, the
already committed investment from
Chinese, European and American
Multinational Corporation
Klang Valley: the Northern,
Southern and Western
Corridor and the Megaprojects
Iskandar Malaysia: the most Strategically
Sustainable Location in the region (SEA)
74. MALAYSIAN WEALTH DISTRIBUTION - FACT FILE
FEW CONSIDERATION ON MALAYSIANS WEALTH:
Malaysian average per capita income (2012) – Source IMF
USD10,304 per year = RM3,000 (per month)
Malaysian Wealth Distribution
Lowest 20% - 5%
Highest 20% - 40%
=
Median 60% share 55%
18,000,000
75. ISKANDAR MALAYSIA STRATEGIC SUSTAINABILITY
Red color – High-end areas (overpriced at the moment) / Green color – Affordable areas RM60 psf and below
