There are signs of recovery in the Malaysian property sector. And the fact that the Overnight Policy Rate (OPR) is set to increase again later this year to the same level as pre-Covid, we should see a sense of normalcy returning soon.
Smart Investor got in touch with Joanna Ling, CEO of PE Holdings, to find out more about the property industry.
Joanna Ling: Covid changed the industry significantly. Due to the low-interest rate environment and the work-from-home phenomenon, it created an unprecedented need for people to have their own property.
Post-covid, we have seen enthusiasm dampen and return to normal pre-covid levels. The rising inflation environment has affected spending power, and buyers are more price sensitive.
SI: What are the different approaches to selling property as compared to previously?
JL: Social media has become an indispensable tool in selling property since Covid when show units were rendered useless. Therefore, technology that helps developers showcase their products online became valuable. There are even developers selling property on Tik Tok!
SI: How does the increase in OPR affect the property market?
JL: Every time Bank Negara Malaysia announces an increase in interest rates, sales would temporarily halt for a while but inevitably increase again. The truth is that interest rates are right back where they were before Covid, and Malaysia is very fortunate that interest rates have not increased at a crazy rate like some other countries.
SI: What is the market outlook for property in the short-term (6 months), medium-term (1-3 years) and long-term (5-10 years)?
JL: In the short term, property prices in Malaysia will likely remain the same but you will see more affordable products coming into the market such as smaller units and affordable housing schemes. In the medium term, should interest rates continue to rise, property prices would likely adjust slightly lower in areas of lower demand.
However, Malaysia is a place which has shown continuous growth thus over the long term capital appreciation should steadily increase.
SI: What do you mean by sustainable development?
JL: Sustainable developments in my definition means properties that minimises negative environmental impacts and enhances the way one lives.
SI: What initiatives have you implemented or will be implemented in future projects?
JL: All our developments are designed with sustainability in mind. Our shopping mall Design Village Outlet Mall, is designed to embrace shopping within a park. Extensive landscaping has been utilised to lower ambient temperature, even the air-conditioning is a more environmentally friendly VRV system, and we are in the process of installing solar panels in the car park.
Our latest residential development Anggun in Batu Kawan Penang, is built to Green Building Index standards. We have installed a smart rubbish disposal system. This vacuum system transports the rubbish to a central depository that removes all water and compacts the rubbish into easily disposable blocks that will eliminate smells and wastewater and ultimately result in a cleaner, healthier, more pleasant living environment.
SI: What are some of the benefits/impacts of sustainable development?
JL: When done right, the benefits of a sustainable development should ripple and positively affect the developer, the buyer, the community, and the environment. It is an investment into the right way to live while thinking of one’s surroundings and other stakeholders.
Ultimately the most immediate effect to the buyer is that the development will be a more comfortable environment to live in the long term.
SI: Does embracing ESG will cause a hike in the price of the property?
JL: It will in the short term because the elements that go into sustainable development are, for now, much more expensive than conventional construction methods. For example, the smart rubbish system costs millions more than conventional disposal methods. But it results in a way of living that is cleaner, healthier, and ultimately more cost-effective as it will be energy efficient.
Eventually when the markets come to expect to live better and nouveau construction elements such as double glazed glass and sustainable construction and materials, the price of these elements will come down or all developments will embrace these methods and prices will balance out.
SI: Is the co-living concept accepted by Malaysians? What are the benefits?
JL: Co-living has been around in rural Malaysia for a long time. In Sabah and Sarawak, the indigenous tribes live in long houses, a perfect example of successful co-living. Each family has their own private quarters, but all other activities, such as eating, cooking and socialises, are all done in communal areas within longhouses.
The co-living concept in this day and age refers to urban dwelling to save space and cost in high density areas. The benefits are that it is more affordable and provides a social community that looks out for each other, much like the rural concept of ‘kampung’ community.
SI: Who is the target audience for co-living? And why do they choose co-living?
JL: In this modern format, the target audience for co-living is very much young millennials early in their careers who want to live near where they work in urban high-density areas. As young people starting out in anew city, co-living is a good way to meet new people and have a community while saving money on rent by sacrificing space.
SI: Do you think the market for co-living concepts will increase in the near future? Why is that so?
JL: Co-living will become more common as land becomes scarce and it gets more and more expensive in city centres. In high-density cities such as Hong Kong and Singapore, where rents for apartments have soared, more and more apartment blocks have been converted to co-living spaces. This satisfies the tenant by offering smaller space at a lower rent and generating a higher yield for the landlord.
In the UK, where rents are expensive, houses are converted into HMOs (houses of multiple occupancy), a version of co-living. However, rents in Malaysia remain low and thus reasonably affordable, so it may be a while before the co-living concept catches on. We will just see smaller studio or one-bedroom units in the immediate term.
