Closer Look At 11 MP (Malaysia Plan)

Malaysia’s housing market has been rather quiet in Q1 2014 as transaction volume fell by 6.2% to 88,600 transactions compared to the 94,500 in Q4 2014. Transaction value fell by RM 100 million from RM 38.6 billion during the same period. Compared to Q1 2014, the transaction value fell by some 3.8%.

The above figures should come as no surprise with the tightening bank lending and the implementation of the GST which have both dampened buying interest.

Many investors were hoping that the 11 th Malaysia Plan would have some good news to boost the dismal market conditions. However, the unveiled plan is focused more on developing the transport infrastructure, close the gap between urban and rural divide, and accelerate the country’s economic development.

Location is one of the most important considerations for many people when choosing a property and ease of access is the hallmark of good location. The MRT system outlined in the Greater KL plan under the 10th Malaysia Plan is coming along nicely and has already led to development in previously neglected locales around the Klang Valley.

That being said, the corresponding increase in land prices is something few developers would want to see but have to deal with nevertheless, and this is why developers have to adopt a more long-term position to edge out ahead in this landscape.

In addition, the government also planned to build some 606,000 units of affordable housing and 95% of residential areas will have broadband access. There are also plans to develop four key cities and five economic corridors across the country.

Despite the government’s plan for building more affordable housing to address the issue of young Malaysians struggling to own a roof over their heads, the issue is not one that private developers enjoy tackling. There is a very real balancing act between cost of construction, construction location and selling prices mandated by the government, and more dialogues are needed to sort out these issues.

Finally, while the fear that Iskandar Johor Bahru Malaysia is facing an oversupply issue might have taken some luster off the southern gateway; there is little doubt that the outlook is still generally positive. Despite general impression that the Iskandar region is dominated only by investors from Singapore and China, the fact is that the region has attracted investors from other western countries such as Italy and Germany.

All in all, although there are no policies focused directly on the real estate market, the market generally agrees that improvements in the transportation system and overall economic growth are going to indirectly contribute positively to the real estate sector. O