Malaysia needs to produce more houses to achieve 20/20 by 2020

KL to rank 20th Most Competitive and 20th Most Livable City by 2020

AS I walked the streets in Melbourne, people are either taking pleasure in their daily activities or catching up with their friends. More importantly, they are enjoying an abundance of economic and lifestyle opportunities, supported by their affordable housing prices and convenient transportation. It comes as no surprise that the city has been ranked as the world most livable city by The Economist for years.

Melbourne tops the list as the most livable location, according to a survey of 140 cities conducted by the Economist Intelligence Unit (EIU).

For Malaysians, the good news is, Kuala Lumpur ranked second in South-East Asia after Singapore on the same list, while the challenging part is we were at No. 77 in the world ranking, according to the survey last year.

In terms of competitiveness, the World Economic Forum (WEF) has ranked Malaysia as the 24th most competitive nation among 148 countries in its Global Competitiveness Report 2013-2014. Under the Economic Transformation Programme (ETP), the Government aspires to elevate Kuala Lumpur to be the top 20 most economically dynamic cities and top 20 most livable cities by 2020.

To realise these goals, we need to gear up our efforts in building both the hard and soft infrastructure of the country. And if we are to be a truly developed nation, one of the most critical criteria is to have more homes, as the nation’s housing needs must first be addressed to ensure quality living.

Let’s take a look at how developed nations house their people. Take Australia as an example, where four of its cities, i.e. Melbourne, Adelaide, Sydney and Perth, ranked in the top 10 most livable cities as measured by the Global Liveability Survey in 2012. Australia has a population of around 22 million living in 9.1 million homes, according to its census in 2011, which means their average person per household is 2.5.

Another developed nation in Europe, United Kingdom, has a population of 62.7 million people and number of homes is approximately 25 million, which also works out to have an average of 2.5 persons per household.

In Malaysia, while our population is about 28 million, we only have about 4.6 million homes, according to National Property Information Centre. This is equal to 6.08 persons per household. For us to catch up with Australia and United Kingdom which have an average of 2.5 persons in a household, we would require a total of 11.3 million homes in our country, which is a 250% increase from what we have currently!

However, at our current housing production of about 100,000 homes a year, it would take us 67 years to catch up with the benchmark displayed by these developed nations, assuming there is no additional increase in population.

The statistic above paints a picture of the fundamental required for a developed nation. As a developing nation, the Government and the relevant private sectors need to find ways to grow the number of homes in Malaysia. We are in need of more housing especially when the Government aims to move our country towards developed nation, and to grow the population of Greater KL from 6 million people to 10 million by the year 2020, which would put further pressure on the housing market in urban areas.

Currently, production has not been able to keep up with demand and this has pushed up housing prices. Having ample supply is the only long-term sustainable way to keep housing affordable. The Government needs to streamline the delivery system to increase the number of homes built every year, instead of stifling the supply which also include the cooling off measures which may eventually lead to higher prices due to inadequate supply.

Imagine if we are having 11.6 million houses today instead of 4.6 million, our house prices would be more affordable due to ample supply. The bottom line is we need more houses, especially affordable houses. It will help in the long run if the authorities can find ways to encourage housing supply, and this include putting off cooling measures on the property industry which only work in the short run as shared in my last article “Cooling Off Measures Choke Supply”.

More production of houses will make prices more affordable. And, if the Government can further support the housing needs with infrastructure including having a good public transportation system, the aspirations of making Kuala Lumpur the top 20 most livable and most competitive cities in the world can become a reality by 2020.

FOOD FOR THOUGHT BY ALAN HONG KOK MAU
FIABCI Asia Pacific chairman DATUK ALAN TONG has over 50 years of experience in property development. He was FIABCI World president in 2005/06 and was named Property Man of The Year 2010. He is also the group chairman of Bukit Kiara Properties.

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Substantial inflows and outflows of investments expected for this year

GEORGE TOWN: Despite the global economic crisis, property investments coming into the country and going to overseas this year are expected to increase substantially.

The recently introduced 10% stamp duty for foreigners buying properties in Singapore has increased the attraction of Malaysia as a property investment destination.

Property investments flowing to Melbourne, Australia, are expected to increase between 15% to 18% this year from RM125mil in 2011, thanks to new housing loans for the Australian market recently introduced by Malayan Banking Bhd (Maybank).

Property Talk International Sdn Bhd managing director Steven Cheah said that foreigners showing interest in Malaysian properties had increased significantly this year, compared with the last three years, due to the recent 10% stamp duty introduced in Singapore for foreigners buying homes.

“The other reason is that Kuala Lumpur still remain as one of the few South-East Asian cities with attractive property prices.

“Compared to Jakarta, the price for a prime residential in Kuala Lumpur is about 15% lower.

“The buyers are from Indonesia and China and they show preference for Iskandar, Johor Baru and Kuala Lumpur.

“Indonesians prefer Iskandar because it is close to Singapore,” he said.

The Indonesians and China buyers generally go for properties priced between RM600,000 to RM1.5mil in Iskandar and Kuala Lumpur, while in Penang they go for RM1mil above homes, according to Cheah.

The additional direct flights from Jakarta to Penang by Air Asia had also fueled the interest from Indonesia for Malaysian properties, Cheah added.

This year, Property Talk expects to sell about RM55mil worth of properties located in Johor, Kuala Lumpur, and Penang, compared with over RM20mil achieved for 2011.

“Over the past three months, we have sold over RM25mil worth of properties, comprising 35 residential homes located in Kuala Lumpur and Iskandar, Johor Baru.

“We expect to sell another RM30mil worth of properties, comprising 30 to 40 homes, from Iskandar, Kuala Lumpur, and Penang via three more property exhibitions in Jakarta jointly organised by Malaysia Property Inc and private developers before the year ends,” he said.

An aerial view of Melbourne. Property investments flowing to the Australia’s city are expected to increase between 15% to 18% this year.

 

On investments from Malaysia to Australia, Cheah said the loan interest from Maybank was between 4% to 5% per annum compared with 5.7% to 6% per annum by Australian banks.

“This is why we can expect more Malaysians to take up the loan to invest in Melbourne, Australia this year,” Cheah said, adding that the Maybank housing loan was for Melbourne only.

According to Cheah, Melbourne is the top investment destination for Malaysian property investment funds.

“This is because many Malaysians have relatives who have migrated to Melbourne, where you can find a variety of Malaysian food restaurants.

“According to the latest research from Australian Property Monitors (APM), over the last five years, Melbourne has been the standout performer among the major capital cities for house price growth, with prices increasing almost 30% in just 15 months,” he added.

Meanwhile, Henry Butcher Marketing Sdn Bhd chief operating officer Tang Chee Meng said Henry Butcher had recently set up a property show gallery in Beijing, following the imposition of the 10% stamp duty by the Singapore government for foreigners buying properties in Singapore.

“The gallery, set up two to three months ago, showcases residential properties from Klang Valley, Malacca, and Penang.

“Investors from China are big time property purchasers in Singapore.

“With the 10% stamp duty introduced, Malaysian developers are now trying to attract them over.

“We still need to do a lot of education work in China to promote Malaysia as a property destination, as the awareness is still lacking,” he said.

Tang added there were many enquiries from China investors to buy vacant land to develop residential projects in Malaysia.

“We hope they will undertake development in Malaysia and promote the properties in China.

“This will help to increase more awareness for Malaysian properties in China,” he said.

According to Tang, the global financial crisis which erupted in 2008 and 2009 saw foreign interest for local properties dropped significantly. ”In 2010, we see a return of foreign interest, but the volume and value of property transactions involving foreigners still have not not recovered to anywhere near its peak prior to 2008.

“We believe the pace of investment from overseas will remain flat against last year.

“Besides tapping into traditional sources like Singapore, Hong Kong and Indonesia, Malaysian developers are moving into markets such as South Korea and China.

“China is a vast market and if Malaysian developers are able to educate the investors on the attraction of Malaysian real estate, we may see a surge in foreign interest,” Tang added.

Henry Butcher Marketing director for international marketing Jazmine Goh meanwhile said the global economic crisis had created favourable conditions and opportunities for Malaysians to invest in overseas real estate.

“The economic slowdown in Britain has caused property prices to plunge and coupled with the drop in the value of the pound sterling against the ringgit, properties in the United Kingdom have become more affordable and within reach of middle income Malaysians.

“The mortgage defaults in the United States have also resulted in a lot of opportunities to pick up properties foreclosed by the banks at a fraction of the original price.

“Of course, the fear of the prolonged debt woes in Europe has at the same time resulted in a more cautious attitude being adopted by investors,” Goh said.

The popular investment destinations for Malaysians are Australia, mainly Melbourne and to a lesser extent, Sydney, Perth, Brisbane and Gold Coast as well as London, and Singapore, and more recently, the United States, according to Goh.

By DAVID TAN davidtan@thestar.com.my