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#GE14: Investors and the Battle for Malaysia

In just a matter of hours, Malaysia will enter what could be the biggest tussle for leadership yet — the 14th General Election. Image credit: Asian Business Software Solutions

In just a matter of hours, Malaysia will enter what could be the biggest tussle for leadership yet: the 14th General Election (#GE14).

Once again, the incumbent government faces a serious onslaught (its most critical since Independence, perhaps) as factions from the Opposition unite to mount a formidable challenge for rulership of the land. As the latter’s weapon of warfare looms in the shape of 92-year-old former Prime Minister, Tun Dr Mahathir Mohamad; the former continues to push its promises of cash and stability-in-the-status-quo to the masses.

The rising costs of living hogs the spotlight this #GE14, but yet another issue coming to a head as voters go to the polls tomorrow, is the lack of affordable housing, especially for middle class urbanites known as the M40 (ostensibly because they form part of the middle 40 percentile). This is an issue most pronounced in the bustling urban constituencies of Kuala Lumpur, Selangor and Johor Bahru. 

Bank Negara in its quarterly bulletin in Feb 2018, noted that homes had become “seriously unaffordable” in 2016 by international standards. The local media has also reported extensively on the lacklustre performance of the Malaysian property market and now, with the spectre of the general election looming ahead, contesting parties have pledged to tackle housing affordability as part of their election manifestos.

Not only is the M40 watching for the change(s) that could come with the #GE14; investors are paying close attention, too.

Currently, investors are adopting a wait-and-see approach. Wealthy Malaysian investors are diversifying their money into real estate opportunities across residential and commercial properties both at home and overseas, as well as assets such as bonds and gold in light of a more cautious market and the upcoming general election. The general sentiment is that investments into local property could pick up after the election once the dust settles and new policies are put into place.

Be that as it may, Knight Frank’s latest Wealth Report Attitudes Survey 2018 reveals that 43% of its Malaysian clients have plans to invest in properties overseas, going forward, with the top five overseas destinations being Australia, United Kingdom, Singapore, New Zealand and the United States. Interestingly, Malaysia tops the survey, followed by Hong Kong (40%), China (37%) and Singapore (30%).

The rising interest in overseas properties investment is not surprising, given the favourable returns that investors get (our portfolio of property investments can offer up to 10% nett returns for 10 years!).

“With the current property glut and wait-and-see approach adopted by investors, it is certainly a driver to continue investing abroad,” says Knight Frank Asia Pacific head of research, Nicholas Holt.

In a recent article in The Malaysian Reserve, Henry Butcher Real Estate Sdn Bhd COO Tang Chee Meng said that speculators and investors have been deterred by a host of issues including oversupply in certain locations, cooling measures by the government and cap on loan margins. The reduced interest from developers, he added, had resulted in more sluggish take-up rates for developers, thus contributing to the increase in the overhang statistics.

Stagnating rental growth rates have also clouded the local property market. And, with new developments moving at such a rapid rate, the rental market is hard pressed to keep up.

After tomorrow, the next few months will be crucial. The nation will be watching to see if promises are kept and if manifestos on bread-and-butter and housing issues will take effect in reality.

To all Malaysians traveling to cast their votes this #GE14, CSI Prop wishes you a safe journey. Selamat Mengundi.

By Vivienne Pal

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CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

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