Saturday, 14 November 2015

Immigration & education drive property prices; Secondary property sales may take lead

Immigration and education are two drivers of property prices in cities in the next 10 years to 2024, said property consultancy Knight Frank International.


Its Asia-Pacific reaearch director Nicholas Holt said up to 76,000 Ultra High Net Worth Individuals (UHNWI) from China have immigrated the last 10 years - the highest - while up to 72% of Malaysia’s UHNWI send their children abroad, the highest. (See graphics below).


The cities include London, New York, Hong Kong and Singapore.

Holt was presenting his Wealth Report 2015 updated till third quarter 2015 at the 25th National Real Estate Convention in Kuala Lumpur.

He defined UHNWIs as those with US$30mil and above in investible income excluding their primary residence.

In an Attitudes Survey involving 600 advisors of UHNWIs by Knight Frank, the advisors - bankers included - said about 10% of their Malaysia’s ultra-high net worth clients were considering changing their domicile in the earlier part of this year.

“This compares with an overall 12% in Asia who are considering changing domicile,” said Holt.

Data show drop in primary market transactions

SUBANG JAYA: The ongoing slowdown in the local property sector could see transactions in the secondary property market overtaking that of the primary market.

Citing data from the National Property Information Centre (Napic), PPC International Sdn Bhd managing director Datuk Siders Sittampalam said the economic slowdown has affected transactions in the primary property market this year.

"Siders: ‘Total volume of transactions in the primary market has dropped, and this has also resulted in values dropping. >>

“Total volume of transactions in the primary market has dropped, and this has also resulted in values dropping.

“As such, there will come a time when the secondary market will lead the primary market,” he said at a press conference after the launch of the 25th National Real Estate Convention (NREC) 2015 yesterday.

Siders said it was difficult to provide a specific timeline on when he expected transactions in the secondary market to exceed that of the primary market.

“In terms of value, the primary market will find it harder to match the secondary market due to rising land and building costs,” he said.

Siders said he expected transactions in the primary market to improve once cooling measures imposed on the local property sector have been relaxed.

“Once the economy picks up and Bank Negara backs off on its cooling measures, the primary market will pick up again.”

He also said a drastic hike in interest rates will have an impact on the property sector.

“Over the last few years, the property market had been steadily growing due to various measures such as the developers interest bearing scheme (DIBS). Because of these measures, pricing in the market has been distorted.

“Now, when people have committed to their loans, especially youths and first time buyers, and there is a sudden hike in interest rates, there will be a dip in the market.

“Loans go bad and many properties will go under the hammer. This will not be a healthy market.” Siders said he was hopeful that any interest rate hike by the central bank would be a “sustainable increase.”

Bank Negara maintained its overnight policy rate in September at 3.25%.

The NREC was organised by the Royal Institution of Surveyors Malaysia and the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector, Malaysia.

The event highlighted major concerns for the future of the real estate industry in Malaysia during the current economic period.

BY EUGENE MAHALINGAM

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