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| Property sector needs a boost [ 10/01/2003 ] |
A FURTHER decline in rental values in the office and retail sub-sectors and increasing construction cost in the property sector are among the trends expected this year, according to a survey by international property consultancy C.H. Williams Talhar and Wong (WTW).
''Despite the various efforts made over the past few years to boost the economy, the results of the chief executive officers (CEO) Opinion Survey Property Sector 2003 suggest that the property market could be in dire need of solutions,'' WTW deputy managing director Goh Tian Sui told reporters at a presentation on the results in Kuala Lumpur yesterday.
The survey was conducted in September last year, prior to the bombing of the Indonesian resort island of Bali. It covered 112 businesses and professions related to the property sector and the objective was to ascertain the views of CEOs on the prevailing market conditions and their expectations for 2003.
The representative sample comprised property developers and owners (40%), financial institutions (9%), construction companies (16), building material manufacturers (2%), consultants (16%) and infrastructure and utility and government agencies (17%).
While 40% of the participants have their main area of business in the Klang Valley, 14% is from the northern region of the peninsula, 12% from the southern region, 10% from the east coast states and 24% from east Malaysia. Over 19% of the respondents are from public-listed companies.
Goh said the survey revealed that 73% of CEOs favoured government regulation in the property sector, compared with 54% last year, while 27% believed that supply and demand should be left to market forces.
''However, there are many CEOs who continue to have a positive outlook for this year, expecting a general increase in capital values in the conventional housing sub-sector, especially in landed properties in good locations. Most respondents believe that capital values of conventional houses will increase and about 30% of them consider the rise to be more than 10%,'' he said.
The survey showed that rental values were expected to be stable, but rental rates in offices and retail could decline. About 6% of the respondents think that retail rentals would drop by more than 20%.
Cost of construction this year is expected to increase, especially labour costs and 46% of respondents expect labour costs to increase by more than 10%.
For this year, a larger percentage of the respondents expect the property market to improve slightly, compared with last year, barring unforeseen circumstances in the global environment.
Many of the respondents also expect the economic growth rate of the country to be not more than 5%.
Respondents generally consider the stock market scenarios, current level of economic growth and the current level of income as the main factors that would have a major effect on property market performance.
On the overall demand and supply, most respondents expect no significant change in the current scenario from last year.
However, the general demand for conventional and low-cost houses is considered by most as likely to remain higher compared with other sub-sectors.
Interestingly, the survey revealed that foreign interest in retail for this year had taken top ranking from interest in condominiums.
''But Malaysian investors still prefer the residential sector as in 2001 and 2002,'' said Goh.
Source : The Star 10/1/2003
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