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Tuesday, October 30, 2007

Residential property investment: Is there more upside?


PETALING JAYA: The party has just begun. This seems to be the common sentiment shared by some respected members of the property industry at The Edge Investment Forum on Real Estate 2007 last Saturday when asked if there was any more upside to residential property investment in Malaysia.

The panel discussion on whether Malaysian real estate is underpriced, comprising Datuk Richard Fong, executive vice chairman of Glomac Bhd and current Fiabci Malaysia president; Lai Voon Hon, president and CEO of Ireka Development Management and Previndran Singhe, CEO of Zerin Properties all agreed that the Malaysian property market has at least another five good years. They also concurred that the exemption of the Real Property Gains Tax (RPGT) has also helped boost the market.

Moderated by Kumar Tharmalingam, the panel discussed three issues, namely: property prices in the region and whether there was any more upside for Malaysia; how long the party will last; and their three hot property locations.

Glomac’s Fong kicked off the discussion by comparing prices of luxury highrises with Singapore’s market, saying that our prices were “dirt-cheap” as it costs eight to 10 times more for luxury homes in Singapore. He added that Malaysian properties offered world-class standards as many developers used foreign architects to design their projects.

“The foreigners are buying because it is so cheap. There is no downside. We can only go up,” he said. Fong picked KLCC, Bangsar/Damansara Heights and the Hartamas/Mont’Kiara area as his hotspots.

From left: Previndran, Fong, Kumar and Lai. Photo by Kenny Yap

Meanwhile, Ireka’s Lai said several factors are driving Malaysia’s current property market. Among them are the capital values we offer, rental yields and capital gain. He quoted some examples of Ireka’s projects in the Mont’Kiara vicinity stating that they enjoyed between 18% to 23% return of equity per annum.

Lai felt there was still room for yield compression and that foreigners are confident investing in Malaysia. “Development costs are going up and don’t expect them to go any cheaper. Our prices are at rock bottom already,” he said.

His hot three locations were KLCC, Mont’Kiara and the Jalan U Thant/Embassy Row area in KL. Lai also pointed out three other locations to watch, namely Langkawi, Sabah and the east coast.

The crowd during break time at The Edge Investment Forum on Real Estate 2007. Photo by Kenny Yap

Zerin Properties’ Previndran concurred with Lai on Sabah. “One of the latest properties called Kudat Riviera was launched in the UK only and is sold out,” shared Previndran. He said Malaysia was attracting a lot of foreign interest because of our political stability and real estate transparency.

“The only reason Singapore is hotter right now is because our transactions take longer to process,” said Previndran, adding that KL could be the next property play after Singapore.

Previndran picked KLCC, Mont’Kiara and Ampang Hilir as his Klang Valley hotspots. His other hot locations include Penang and the Iskandar Development Region (IDR).

The other speakers at the forum were Allan Soo, managing director of Regroup Associates; Ang Kok Heng, chief investment officer of Phillip Capital Management Sdn Bhd; Ho Chin Soon, director of Ho Chin Soon Research Sdn Bhd; Datuk Michael Yam, managing director of Sunrise Bhd and Datuk Alan Tong, chairman of Bukit Kiara Properties Sdn Bhd.

Close to 500 people thronged the forum held at The Eastin Hotel in Petaling Jaya to listen to the speakers. The inaugural event was organised by The Edge.

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