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“Connecting the …… dots between economy, demographic trends and current-new property hotspots” REI Group of Companies - Presentation by Dr. Daniele Gambero
“Today we shouldn’t look at tomorrow but at a tomorrow that is 10 years from today”
Malaysia Economy and Property Market: 2014 Economic Outlook
and Upcoming Property Hotspots
DISCLAIMER AND COPYWRITE To the best of our knowledge, all information included here falls under the fair use or public domain guidelines of copyright laws. We strive for accuracy but cannot be held responsible for any errors in information featured in the slides or incorrect attributions. REI Group of Companies uses reasonable efforts to include accurate and up to date information however REI Group of Companies makes no warranties or representations as to its accuracy. REI Group of Companies assumes no liability or responsibility for any errors or omissions in the content. The quotes, articles, news and views are not necessarily representative of the views of REI Group of Companies and its directors and Management. This Presentation has been shared for personal use and knowledge ONLY. Any inappropriate use will be prosecuted according to the law and any total or partial use of this presentation for public viewing or publishing must be pre-authorized in writing by REI Group of Companies.
CONSULTANCY - Strategic Marketing - Property Market Surveys - Property Market Reporting - Property Market Analysis - Branding - Creative
- latest information on future
market trends in property development
- insights on developers information, new forthcoming hotspots and proposed infrastructures
Gambero Property Market Intelligence (Gambero PMI) - access updated information & data on both Regional
& Local economic indicators
…………What we do
AGENDA
Globalization and the Malaysian Economic Performance
Malaysian Demographics now and future
Market Sustainability
Strategically Sustainable Location
Strategically Sustainable Locations: the Future Gold Mines
Malaysian Economic and Property Market Performance: 2013 Outlook
Malaysian Economic and Property Market Performance: 2013 -2014 Outlook ……. Are we in the bricks?
GLOBAL & MALAYSIAN ECONOMY - FACT FILE
USA EU JAPAN AUSTRALIA UK MALAYSIA
GDP Growth 2.10% -0.90% 0.90% 0.55% 0.63% 4.70%
Gov debt as % of GDP 101.60% 90.60% 218% 21% 92% 54.80%
Gov deficit as % of GDP -8.50% -3.7% -9.2% -3.1% -6.3% -4%
Balance of current acc -440 USD Bil 25.9 USD Bil 60 USD Bil -57 USD Bil -93.5 USD Bil 18.6 USD Bil
Inflation 1.5% 1.10% 1.10% 2.20% 2.70% 2.50%
Unemployment 7.20% 12% 4.10% 5.60% 7.70% 3.10%
Business confidence 56 -1 12 12 7 115.2
consumer confidence 73 -14 45.2 108 -18 125.3
GLOBAL & MALAYSIAN ECONOMY - FACT FILE Balance of current account world map
GLOBAL & MALAYSIAN ECONOMY - FACT FILE Balance of current account world map
MALAYSIAN DEMOGRAPHIC - FACT FILE
+1.6 M
+3.6 M
+2.6 M
+6 M
MALAYSIAN MIGRATION FLOWS - FACT FILE
2012: 21,000,000 Malaysians live in urban areas 3.5% growth every year
2012: 72.5% of the Malaysian population lives in urban areas
15,000,000.00
16,000,000.00
17,000,000.00
18,000,000.00
19,000,000.00
20,000,000.00
21,000,000.00
22,000,000.00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
MALAYSIAN FLOW
Malaysian Migration Flow Urban to Rural Areas
Source: World Bank Statistics
FEW CONSIDERATION ON MALAYSIANS WEALTH:
Malaysian average per capita income (2012) – Source IMF
USD10,304 per year = RM3,000 (per month)
Malaysian Wealth Distribution
Lowest 20% - 5% Highest 20% - 40%
=
Median 60% share 55%
MALAYSIAN WEALTH DISTRIBUTION - FACT FILE
18,000,000
MALAYSIAN PROPERTY MARKET SUSTAINABILITY
House - Income trend 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
House price index 100.0 101.1 103.5 107.5 112.4 115.0 117.2 123.1 128.6 130.5 138.8 151.2 167.2 178.4
Income statistics 213.0 232.1 238.2 244.2 250.0 260.8 271.5 282.2 294.6 307.0 330.0 352.9 375.8
How House Price Index and Per Capita income index are strictly correlated,
what is this comparison showing?
House price index growth 2000 – 2012 = +67%
Median income growth 2000 – 2012 = +175%
MALAYSIAN PROPERTY MARKET SUSTAINABILITY
House - Income trend 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
House price index 100.0 101.1 103.5 107.5 112.4 115.0 117.2 123.1 128.6 130.5 138.8 151.2 167.2 178.4
Income statistics 213.0 232.1 238.2 244.2 250.0 260.8 271.5 282.2 294.6 307.0 330.0 352.9 375.8
How House Price Index and Per Capita income index are strictly correlated,
what is this comparison showing?
House price index +67%
Median income +175%
MALAYSIAN PROPERTY MARKET SUSTAINABILITY
MALAYSIAN BUDGET 2014 - SUSTAINABILITY
STRENGTHENING ECONOMIC RESILIENCE ACCELERATING TRANSFORMATION
Today we shouldn’t look at tomorrow but at a tomorrow that is 10 years from today
MALAYSIAN BUDGET 2014 – POSITIVE SIDE
ATTRACT MORE DOMESTIC AND FOREIGNER INVESTMENT - 70% of the World Islamic Capital Transaction are done in Malaysia
- Promotion of Malaysia as a Market for Social Responsible Investment (SRI)
- 2014 Visit Malaysia Year and 2015 Year of Festival (Tourism)
- Kuala Lumpur already 4th world wide as Preferred Tourist Destination for
Shopping after New York, Tokyo and London
- Jan – July 2013 25 million Tourists / Jan – July 2014 28 million Tourists
MALAYSIAN BUDGET 2014 – POSITIVE SIDE
ATTRACT MORE DOMESTIC AND FOREIGNER INVESTMENT - 70% of the World Islamic Capital Transaction are done in Malaysia
- Promotion of Malaysia as a Market for Social Responsible Investment (SRI)
- 2014 Visit Malaysia Year and 2015 Year of Festival (Tourism)
- Kuala Lumpur already 4th world wide as Preferred Tourist Destination for
Shopping after New York, Tokyo and London
- Jan – July 2013 25 million Tourists / Jan – July 2014 28 million Tourists
MALAYSIAN BUDGET 2014 - MOBILITY
ONGOING INFRASTRUCTURE PROJECTS
- Second link to Penang Island - Extension of LRT line 1 and 2 - MRT Line 1 - MRT Line 2 - Various Klang Valley’s highways and
expressways - HSR - Kuantan Port
MALAYSIAN BUDGET 2014 - MOBILITY
ONGOING INFRASTRUCTURE PROJECTS
MALAYSIAN BUDGET 2014 - MOBILITY
ONGOING INFRASTRUCTURE PROJECTS
MALAYSIAN BUDGET 2014 - MOBILITY
NEW INFRASTRUCTURE HIGHWAYS AND DOUBLE TRACKING ROADS
West Coast Expressway Banting-Taiping 250 km
MALAYSIAN BUDGET 2014 - MOBILITY
NEW INFRASTRUCTURE HIGHWAYS AND DOUBLE TRACKING ROADS
Double tracking JB – Gemas existing road 175 km
MALAYSIAN BUDGET 2014 - MOBILITY
NEW INFRASTRUCTURE HIGHWAYS AND DOUBLE TRACKING ROADS
Double tracking Ipoh-Padang Besar existing road 250 km
MALAYSIAN BUDGET 2014 – EAST COAST CORRIDOR NEW INFRASTRUCTURES AND O&G INVESTMENT
Kerteh - New integrated petrochemical complex
Gebeng - New integrated petrochemical complex
RM2.3 Bil for Kuantan port expansion as East Gate of Malaysia
MALAYSIAN BUDGET 2014 – GST IMPLEMENTATION
GST WILL BE IMPLEMENTED EFFECTIVE APRIL 1st , 2015 GST RATE HAS BEEN FIXED AT: 6%
- Not imposed on basic food items
- Not imposed on piped water and first 200 units of electricity (domestic use)
- Not imposed on Services provided by the Government
- Not imposed on transportation services: bus, train, LRT, taxi, highway toll
- Not imposed on education and health services - NOT IMPOSED ON SALE AND PURCHASE AND RENTAL OF RESIDENTIAL
PROPERTIES
MALAYSIAN BUDGET 2014 PROPERTY MARKET SUSTAINABILITY
RPGT REVISION EFFECTIVE JANUARY 1st, 2014
MALAYSIAN BUDGET 2014 PROPERTY MARKET SUSTAINABILITY
RPGT: HOW IT WORKS?
THIS IS WHY RPGT WILL NOT AFFECT THE PROPERTY MARKET BUT
ONLY PENALIZE UNSCRUPULOUS SPECULATORS.
CAN SELL
WITH NO TAXACTUAL HOLDING PERIOD
CURRENT LOCK-IN PERIOD IMPOSED BY BANKS
ON CONVENTIONAL FINANCING
Under
construction
Delivery
Vacant Poss.
RPGT @
20%
RPGT @
15%
RPGT @
0%
RPGT @
30%
RPGT @
30%
RPGT @
30%
Year 1 Year 6
Under
construction
Year 2 Year 3
Under
construction
Year 4 Year 5
MALAYSIAN BUDGET 2014 PROPERTY MARKET SUSTAINABILITY
MINIMUM PURCHASING VALUE FOR FOREIGNERS RAISED TO RM1,000,000.00
- Properties priced RM900,000 and below will be not at all affected by this new regulation.
- The only properties which values might be pushed up by developers to attract possible foreigner purchasers are the ones priced RM900/950,000 and above
- In Iskandar Malaysia, considered to be the hottest Property Market in Malaysia for foreigners, less than 8% of the transactions in 2013 have been actually done by foreigner purchasers.
MALAYSIAN BUDGET 2014 PROPERTY MARKET SUSTAINABILITY
BUDGET 2014 – PROHIBITION TO OFFER DIBS PROHIBIT DEVELOPERS FROM IMPLEMENTING PROJECTS THAT HAVE FEATURES OF
DIBS. FINANCIAL INSTITUTIONS ARE PROHIBITED FROM PROVIDING FINAL FUNDING FOR PROJECTS INVOLVED WITH DIBS
HOUSING PRICES DIBS COST FOR DEVELOPERS REPRESENTS ROUGHLY A 5/5.5% OF THE HOUSE VALUE,
CONSEQUENTLY PRICES OF PROPERTIES SHOULD DROP A GOOD 4 TO 5% SINCE JANURAY 1st 2014…
UNLESS CREATIVE DEVELOPERS WILL COME OUT WITH….
MALAYSIAN BUDGET 2014 PROPERTY MARKET SUSTAINABILITY
HOUSING PRICES DIBS: BUDGET 2014 “PROHIBITING” ITS USE
THEN
DIRS = DEVELOPER INTEREST REFUND SCHEME
OR
DISS = DEVELOPER INTEREST SUBSIDY SCHEME
OR
ICS = INTEREST CAPITALIZATION SCHEME
OR
3% TO 4% CASH BACK TO PURCHASERS DURING CONSTRUCTION
MALAYSIAN BUDGET 2014 PROPERTY MARKET SUSTAINABILITY
THEN THE WORST HAPPENED….
MALAYSIAN BUDGET 2014 – SUSTAINABILITY AND THE LOW AND MEDIUM INCOME GROUP
IMPLEMENTED SINCE JANUARY 1st, 2014
Increased transparency in property sale prices with clear display of all the benefits and incentives offered such as: • free legal fees, stamp duty, sales agreements
cash rebates and freebies
NOVEMBER 15TH, 2013
MALAYSIAN BUDGET 2014 – SUSTAINABILITY HOW DOES “TRANSPARENCY” APPLY?
MALAYSIAN BUDGET 2014 – SUSTAINABILITY 950 sq ft Unit
2+1 bedroom
ONLY
399,000
DREAMLAND CONDOMINIUM SPECIAL OFFER
10% LOW DEPOSIT 39,900
3% YEARLY CASH BACK DURING CONSTRUCTION:
399,000 * 3% = 11,970 * 3 years35,910
SPA FREE (being developer to request the buyer to
accept his SPA lawyer this makes sense to be left
for free and it has always been offered)
FREE
LOAN AGREEMENT AND S&D FREE 4,763
KITCHEN CABINET INCLUDED 8,000
3 AIRCON + 2 WATER HEATER INLUDED 6,000
CLEAN HOUSE VALUE 304,427
INCLUSIVE OF VALUE
MALAYSIAN BUDGET 2014 – SUSTAINABILITY
SPA VALUE
399,000
MARGIN OF FINANCING = 90%
359,100
NET VALUE
AFTER
DEDUCTION OF
FREEBIES - LTV
304,427
273,984
MALAYSIAN BUDGET 2014 – SUSTAINABILITY
10% deposit 39,900
credit note (39,900)
Cash out 0
SPA VALUE 399,000
Free-free-not
so-free54,673
Loan approved 273,984
SPA VALUE 399,000
10% deposit
given for FREEEE(39,900)
Differential
amount to BE
PAID
85,116
EFFECT OF THIS MOVE House prices will re-adjust in the short term
to more reasonable Values!
EXPECTED VALUES
ADJUSTMENT +2% and
-5 to 6%
MALAYSIAN BUDGET 2014 – “The Aftermath”
MALAYSIAN PROPERTY MARKET SUSTAINABILITY
MALAYSIAN PROPERTY MARKET SUSTAINABILITY
Kuantan: the new commercial port, the already committed investment from Chinese, European and American Multinational Corporation
Kota Baru: the Northern Educational Hub with 15 Local and International Universities already working to establish a northern campus
Penang: the 8th destination worldwide to retire.
Ipoh: retirement homes and health tourism
Klang Valley: the Northern, Southern and Western Corridor and the Megaprojects
Iskandar Malaysia: the most Strategically Sustainable Location in the region (SEA)
KLANG VALLEY AND THE SOUTHERN CORRIDOR
KLANG VALLEY AND THE SOUTHERN CORRIDOR
KLANG VALLEY AND THE SOUTHERN CORRIDOR
KLANG VALLEY AND THE SOUTHERN CORRIDOR The return of Cyberjaya: boundaries
KLANG VALLEY AND THE SOUTHERN CORRIDOR The return of Cyberjaya: undeveloped land (Yellow)
KLANG VALLEY AND THE SOUTHERN CORRIDOR The return of Cyberjaya: ongoing/completed development (Blu)
LRT 3
KLANG VALLEY AND THE WESTERN CORRIDOR
KLANG VALLEY AND THE WESTERN CORRIDOR
Damansara – Shah Alam (DASH) highway alignment
KLANG VALLEY AND THE WESTERN CORRIDOR
KLANG VALLEY AND THE WESTERN CORRIDOR
MALAYSIAN PROPERTY MARKET
ISKANDAR MALAYSIA
THE MOST STRATEGICALLY SUSTAINABLE LOCATION
OF THE REGION (SEA)
MALAYSIA’S PROPERTY MARKET MOST EXCITING LOCATION
MALAYSIA’S PROPERTY MARKET MOST EXCITING LOCATION
MALAYSIA’S PROPERTY MARKET MOST EXCITING LOCATION
Malaysian Property Market – 2013 Outlook Iskandar Malaysia – Expressways
Malaysian Property Market – 2013 Outlook Iskandar Malaysia - Interchanges
Malaysian Property Market – 2013 Outlook Iskandar Malaysia – KTM, MRT, LRT …..
Malaysian Property Market – 2013 Outlook Iskandar Malaysia
Malaysian Property Market – 2013 Outlook Iskandar Malaysia
Malaysian Property Market – 2013 Outlook Iskandar Malaysia
Malaysian Property Market – 2013 Outlook Iskandar Malaysia
Malaysian Property Market – 2013 Outlook Iskandar Malaysia
Malaysian Property Market – 2013 Outlook Iskandar Malaysia Sustainability
Malaysian Property Market – 2013 Outlook Iskandar Malaysia Sustainability
Malaysian Property Market – 2013 Outlook Iskandar Malaysia Sustainability
Malaysian Property Market – 2013 Outlook Iskandar Malaysia Sustainability
Malaysian Property Market – 2013 Outlook Iskandar Malaysia – Committed investment
Malaysian Property Market – 2013 Outlook Iskandar Malaysia – Committed investment
Malaysian Property Market – 2013 Outlook Iskandar
Malaysian Property Market – 2013 Outlook Iskandar
Malaysian Property Market – 2013 Outlook Iskandar
FEW CONSIDERATION ON MALAYSIANS WEALTH:
Malaysian average per capita income (2012) – Source IMF
USD10,304 per year = RM3,000 (per month)
Malaysian Wealth Distribution
Lowest 20% - 5% Highest 20% - 40%
=
Median 60% share 55%
MALAYSIAN WEALTH DISTRIBUTION - FACT FILE
18,000,000
ISKANDAR MALAYSIA STRATEGIC SUSTAINABILITY Red color – High-end areas (overpriced at the moment) / Green color – Affordable areas RM60 psf and below
Thank you
For questions and further information, please email to: [email protected]
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