Malaysia's property market will take three years to recover from its current slump,
the slowest revival in more than two decades, reflecting the reach of the worldwide
financial crisis, Regroup Associates Sdn Bhd said.
"In the past four weeks, I've been staring at an abyss," said Allan Soo, managing
director and founder of Regroup, a Kuala Lumpur-based property consultant and home
seller. "What's changed is the global recession."
A worldwide slowdown has sparked real-estate slumps from the UK to Singapore, causing
Malaysian developers such as Magna Prima Bhd to scale back projects. Values of luxury
homes in Kuala Lumpur, where prices surged to a record last year, may fall as an
oversupply looms, according to Soo, who declined to give a specific forecast.
Malaysia's property market took about a year to recover from the 1997-98 Asian financial
crisis, Soo said. The rebound from the latest slump may start in 2010 and take as
long as the recovery from the 1985 recession, Soo said.
Compared with 2007, interest from prospective buyers has dried up, Soo said in an
interview in Kuala Lumpur last Thursday.
"Inquiries would come in right
after we put up a sign board on properties," Soo
said. "Now, there's none."
Home prices will come under further pressure as the number of high-end apartments
in Kuala Lumpur doubles to more
then 30,000 in the next three years, according to
Regroup.
Economic growth in Malaysia in 2009 is expected to slow to 3.5 per cent from about
five per cent this year, according to the government's estimates. Still, losses
for homeowners may be capped because most bought properties in 2006 before the peak
for less than RM1,000 a square foot, Soo said. The entry of foreigners last year
pushed prices to more than RM2,000, he added.
Signs of fewer home purchases have already emerged. Bank loans approved for Malaysian
home purchases in October fell to its lowest since February, according to Bank Negara
Malaysia.
SP Setia Bhd, Malaysia's largest developer, expects a 22 per cent decline in property
sales to RM1.1 billion in fiscal 2009, Citigroup Inc said last Thursday. SP Setia's
officials couldn't be reached in their office last Friday for a comment. The Kuala
Lumpur Property Index has slumped 51 per cent this year, outpacing the main index's
40 per cent slide.
Magna Prima said last month it cut the projected revenue from its biggest property
development in northern Kuala Lumpur by almost half. - Bloomberg