Budget 2020: Real Estate Industry Expects Focus on Growth
Real estate industry leaders IQI Global and Juwai.com expects Budget 2020 to be people-centric, growth-focused and confidence driven.
According to Shan Saeed, chief economist for IQI Global, which has more than 6,000 real estate agents in Malaysia, Southeast Asia, and the rest of the world, “This is the second budget the government of the day will be delivered since they came into power in 2018. “With threats of a global recession knocking on the doors of many advanced economies, the trade war disrupting exports, the rising cost of living, and income supplements for B40 households, this is perhaps the most important budget in several years.
“The real test for Budget 2020 will be how the government addresses these vital issues while also maintaining fiscal discipline.
“With a prudent economic strategy, we forecast a GDP growth of between 4.4 and 4.9 per cent in 2020.
“Price inflation should remain stable under two per cent and the budget deficit should remain manageable.
“We hope the government will continue to maintain prudent monetary policy, propel the current good economic trajectory, and bolster business sentiment at the macro-level.” He added, “We also hope that the government will propose structural reforms to pass on the benefits of economic growth to the public in general. Establishing a stronger balance sheet, solid fiscal side, and healthy current account surplus should be on the government’s agenda.” Adding on, he said that general theme should be to maintain solid macro fundamentals that will keep Malaysia on the radar of global investors in the long run.
“We expect the discount rate to hover around 2.5 to three per cent in 2020.”
When asked about the wish list on the property market, Saeed said the government should do more to ensure the creation of affordable housing in places where people want to live.
“The data shows that a significant number of unsold units are priced affordably, but too often they are located out of the city centre. Malaysia has a growing urban population. Our young adults want to buy a home in established areas that are well connected to public transportation,” explained Saeed.
According to data from National Property Information Centre’s (NAPIC) First-Half Property Market Report, the number of overhang residential units priced from RM200,001 to RM300,000 were at 7,328 units, followed by units priced at RM300,001 to RM400,001 at 5,731 units.
Applauding the Government’s call to want to sell the unsold residential units priced above RM1 million to foreigners, Juwai.com’s Executive Chairman said, “This is a good move. There is a steady increase in demand from mainland Chinese Hong Kong Chinese buyers wanting to invest in property in Malaysia.
“Our data shows that Malaysia is the number-one destination for buyers from Hong Kong. Data from NAPIC has shown that there are 4,213 unsold units priced above RM1 million, accounting for 12.8 per cent of unsold supply.”
Chmiel also added that Malaysia is especially appealing to buyers in Hong Kong that are looking at retiring or even sending their children for education. “The Malaysia My Second Home Program, affordable standards of living, high quality of life, medical facilities and accessible educational institutions, all contribute to the country’s appeal.”
Aside from the protests, The Global Real Estate Bubble Index for 2018 has revealed that Hong Kong had the world’s most overvalued housing sector.
“That real estate prices in Hong Kong are astronomical. A 250 square foot apartment in Hong Kong costs RM3 million, which makes Malaysia property a bargain in comparison,” shared Chmiel.
“Buyers from mainland China purchased RM9.5 billion worth of Malaysian residential and commercial properties last year,” Chmiel said. “More than four-fifths of the investment was in the residential sector.”
“These buyers are a wealthy group of buyers eager to seek out opportunities across Asia. By buying in Malaysia they create local economic growth and jobs for Malaysians. They would open businesses, pay local taxes and fees, spend money in local stores and restaurants, and boost the tourism industry. It is all very good for Malaysia. If we can showcase these properties for them to purchase and have a faster approval process on the scheme, the number of overhang properties can be reduced,” shared Chmiel.