Malaysian economy and Property market
Prepared by
JS Valuers Research & Consultancy Sdn Bhd
What is the impact of petrol price increases?
Will people still purchase property?
UNCERTAINTIES
Will the property market crash?
On the Agenda• Lets talk about economy
• Understanding the demographic trend
• The property trend
• Conclude by discussing on the Market outlook
Malaysian economy
The Malaysian economy
• Overview of Malaysian economy
The Malaysian economy
• Economic risks
– Balancing works by Bank Negara Malaysia– US economic recession– Continuing fuel price increases– Private consumption; change of people
lifestyle– Political risks on FDIs, market sentiments,
etc.
Moving forward… 2008• GDP growth at 5% to 6% in 2008• Fuel prices will remain high• High inflations, e.g. 6% to as high
as 9%• Volatile share markets• Potential BLR adjustments• Reduced purchasing power• Cautious market sentiments
Demographic trend…State District Area
(sq. km)Total Density
(people/sq. km.)
K Lumpur Kuala Lumpur 243 1,556.2 6,502.0
Selangor Petaling 487 1,412.2 2,971.0
Selangor Ulu Langat 829 1,055.3 1,309.0
Selangor Klang 627 776.9 1,265.0
Selangor Gombak 652 634.9 995.0
Selangor Kuala Langat 858 226.0 269.0
Selangor Kuala Selangor 1,178 187.1 162.0
Selangor Ulu Selangor 1,746 180.2 106.0
Selangor Sepang (incl Putrajaya) 605 133.9 228.0
Selangor Sabak Bernam 997 129.5 132.0
Demographic trend…
Kuala LumpurTotal-1.56 milDensity-6,502 pskm
PetalingTotal-1.41 milDensity-2,971 pskm
Hulu LangatTotal-1.06 milDensity-1,309 pskm
KlangTotal-0.777 milDensity-1,265 pskm
GombakTotal-0.64 milDensity-995 pskm
Kuala LangatTotal-0.23 milDensity-269 pskm
Kuala SelangorTotal-0.19 milDensity-162 pskm
SepangTotal-0.14 milDensity-228 pskm
Hulu SelangorTotal-0.18 milDensity-106 pskm
Sabak BernamTotal-0.13 milDensity-132 pskm
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007RM 0
RM 5,000
RM 10,000
RM 15,000
RM 20,000
RM 25,000
RM 30,000
RM 35,000
RM 40,000
RM 45,000
Total (No.) Total (RM)
Property sector• Property transactions in Kuala Lumpur and Selangor from 1996 to 2007
Recession Slowdown
Low interest rates
Which is the hot sector?
Commercial9%
Development5%
Others0%
Residential64%
Agricultural19%
Industrial3%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007RM 0
RM 5,000
RM 10,000
RM 15,000
RM 20,000
RM 25,000
Total (No.) Total (RM mil)
Residential sector• Transactions of residential properties in Kuala Lumpur and Selangor from 1996 to 2006
Recession Slowdown
All sectors Affordable High end
Low interest rates
Residential sector–Hot spots
KLCC, Ampang, Bukit Tunku
Mont Kiara, Bangsar,Sri Hartamas
DamansaraPetaling Jaya Utara
Cheras
Petaling Jaya Selatan,Subang Jaya
Puchong
Shah Alam
Potential impact - General
• Costlier traveling cost• Higher inflation – chain reactions• Impending higher cost of borrowings,
e.g. increase of BLR• Lower economic growth• Reduced private consumption• Political uncertainties
Potential impact – Property Market
• Consolidation & market correction…– Fewer new launches– Adjustments between cost & market price
• More negative list projects• Improved demand for residences near to
city centre and town• Public transportations… increasing
important consideration• Higher risks of projects being abandoned
Life finds a wayThe market has
survived the worst
Thank youQ & A
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