1. THE NATURE OF THE PROPERTY MARKET ANDDEVELOPMENT IN MALAYSIA1.1Discuss the nature of the property market in Malaysia The nature of the propertymarket and development will have some implications to the market research.Naturally, understanding the impacts of these natures will help propertyconsultants to input useful information into project analysis.
(Kamarudin, et al.,2010). The overall property priceis affected by supply and demand in the property market. The increase inpopulation and the economic growth of an area will generate the demand forproperty market. The demands for a property are usually increases from the highemployment rate, low Overnight Policy Rate (OPR), as well as safety andsecurity of the developed area. Currently, the high liquidity in the financialsystem and low interest rates charged has encouraged the citizens to borrowfrom the financial sector to purchase properties which is mainly residentialhouses and cars.
Since 2008, the household in Malaysia with the ratio of debt payments todisposable personal income jumped to 47.8% which is RM581.3 billion in 2010.Bank played major roles in financing the property investment. Fixityof location is the first characteristics of the property market in Malaysia.
The strategic location which includes a well-developed infrastructure, commercialproperty, education will surely increase the demand for the property and thuswill increase the price of the property. A consultant must ensure that thegiven development have the potential to have high return from the investmentinput. A property development which is sited on a good location has theadvantages of minimizes the time travelled and thus reduces fuel consumptionwhich directly reduce the transportation fees and hazards to the surroundings. Propertydevelopment has attracted attentions on many fields or arenas.
It is oftenconsidered as a domain for remote protagonists for ambitious and inappropriateforms of construction (Drane, 2013). InMalaysia, the high-end residential properties are highly impacted due to it isnot affordable by most Malaysians especially the younger generation who juststarted working in the industry for few years. Therefore, the developers aimedat developing the property within the affordable range of the youngster whichis below RM500, 000.00. The demand for property above RM500,000.00 are mostlyfrom the high income household, foreigners from Singapore, China, UnitedKingdom, etc who wishes to have a villa in Malaysia. The monthly instalment forthe property is preferably not exceeding 30% of the household income. If overcommitting in the repayment, it is very easy to get into financial trouble suchas bankruptcy.
However,stability of the property is also the nature of the property. A carefulinvestigation can give some thread to the proposed project while the prospectof appreciation in value is beyond the control of any property developers. Amarket research is important and should be implemented by the marketingdepartment. Brief information on initial cost, growth in selling price of theproperty, types of ownership, length of holding period, and rental income isessential should be taken into consideration during the feasibility study. Furthermore,the property market is higher value than other consumer goods, normally peopleneed to do lots of investigation and research when making the decision to purchasea property, so it is not easy to promote these product. Property marketing is achallenging task to the developer as it is not easy to secure the demand.Demand variance is often caused by inappropriate pricing, resulting in thecreation of unaffordable products for the perspective buyers. Product price isone of the prospective causes for marketing breakdown for the project.
Nevertheless, experience has shown that properties sold within affordable rangeof prices are easier to sell and have better chances of securing demand. Thisdoes mean that property products should always be sold at lower price. Realproperty gain tax (RPGT) is also an issue as it imposed a huge amount of taxpayment. The RGPT is increased by 5% in budget 2013 to control the speculationas it only imposed to the individuals who sold out the property and is chargedon a percentage basis of the profit earned.
As of 2014, an amended RPGT isannounced during the budget 2014 as follow: Figure1.1 shows the RPGT 2014 Besidesthat, the recent Klang Valley MRT project will increase the penetration ratefor public transport. The development in infrastructure encourages thesurrounding property value to increase tremendously. According to the research conductedthe property price hike up 5%-10% mainly for the resale and rental market.
Thiswill encourage the developers to have new residential project to sustain thedemand of people. Most house hunters may want to seek at residential houseslocated within 1km radius from the MRT station hence it is a good idea toconstruct a high-rise residential project such as service apartment andcondominium. Figure 1.2 shows the MRT