Word of caution on M'sian property from SCCI-BT forum

Singapore

INVESTORS should think twice before investing in Malaysia's property market this year, given the impending abundant supply of units and lacklustre occupancy rates there.

This word of caution came from Getty Goh, director at property research firm Ascendant Assets, who was speaking at the 13th Singapore Chinese Chamber of Commerce and Industry-Business Times (SCCCI-BT) Business Outlook Forum on Friday.

Be it for the residential, industrial or commercial sector, units currently under construction and those due for construction are aplenty in Malaysia, Mr Goh said, citing the Malaysian federal government's data as at Q2 2014.

A case in point is Johor - Iskandar Malaysia is expecting more than 300,000 new residential units, he said. According to the data, about 30,000 shop units and 5,000 industrial units are also on the cards in the state.

"Bear in mind that a lot more supply is coming," Mr Goh said.

On top of the impending supply, vacancy rates in Malaysia's commercial market are also a cause for concern. Many states have less-than-ideal occupancy rates for their commercial buildings. Putrajaya, for one, has almost 50 per cent of its purpose-built offices left vacant.

"Let's hope that the businesses can come in in time," he said of the seemingly slow take-up of the commercial units, especially with more supply on the horizon.

Granted, the overall occupancy rate in Malaysia has gone up compared with last year - "but not by much", Mr Goh said.

"As a result, there could be a problem with rental in the future," he added.

Moreover, the million-ringgit resale market in Johor in particular does not look to be "as vibrant as we would like it right now", Mr Goh said.

Hence, in light of the situation across the Causeway, Mr Goh feels it probably will not make sense for property investors to diversify into the Malaysian market, at least for now. He noted that Iskandar's long-term view is to achieve full maturity by 2025.

However, he gave the go-ahead for those who want to buy property in Malaysia for their own use, because large-space units in Singapore are likely going at a premium as compared with those in Malaysia.

"There could be opportunities for industrialists. However, if you're going there purely to grow your money, you may want to think twice," he warned.

As for Singapore's property market outlook for the year, Mr Goh told participants to mentally prepare themselves for prices to fall further.

Echoing this sentiment was Kelvin Tay, regional chief investment officer, Southern APAC, at UBS.

"On a short-term basis, there seems to be no catalyst for the property market," he said.

Mr Tay also painted a rather grim picture of Singapore's economy for 2015. He reckoned that Singapore's exports and consumption levels are not likely to improve, while cost levels are not going down.

"The only improvement that will come is from the lower petrol and electricity prices," he said.

Similarly, Roger Tan, CEO of Voyage Research, also had a less-than-rosy outlook for the Singapore economy this year.

And with the Gross Domestic Product's (GDP) influence on Singapore's stock prices, Mr Tan expects Singapore stocks to remain weak in 2015.

He and Mr Tay also agreed that the market would be volatile in the coming months.

Mr Tan's five Singapore stock picks for the year are First Reit, Metal Component Engineering, Zhongmin Baihui, Q&M Dental, and IHC.

IHC and Q&M are medical companies and, in volatile times, such companies "offer good value and stability, although they may not come cheap", he said.

The forum was moderated by BT Associate Editor Vikram Khanna and sponsored by UBS.