|Ho Chin Soon presenting his talk on "Property Market Outlook 2012 & Why You Should Buy NOW"at Star Property Fair 2011.|
Rapid speed transportation linking key growth areas of Malaysia will propel demand for properties in locations currently deemed less desirable or accessible.
Speaking on “Property market outlook 2012” and “Why you should buy now,” at the recent Star Property Fair in Kuala Lumpur, well-known map maker, research consultant and author Ho Chin Soon pointed out key indicators to detect locations where demand for properties would likely to go up.
The foreseeable and probable factors that could affect the property market next year, include:
-the proposed high speed rail link between Greater KL to the southern tip of the peninsula
-the proposed MRT link between Singapore and Malaysia
-the stock market
Ho highlighted the Entry Point Project (EPP) under the Economic Transformation Programme ( ETP) which will focus on new MRT lines and MRT stations.
With the completion of such transport facilities, residents will have access to almost every major development site of Greater KL where you are not able to enjoy for the time being.
The proposed MRT line will not just pass through major residential developments to your work place but will also be connected to major commercial and entertainment centres such as 1Utama shopping centre. However, such details have yet to be confirmed.
This development will be made possible when MRT Co, a government-linked company under the Ministry of Finance - overseeing the proposed MRT line - finalise details.
Citing from his book, Greater KL: The Rise of Bukit Bintang, Ho was optimistic of the further growth of Bukit Bintang, due in part to the proposed MRT stations to be built at:
Bukit Bintang-Pudu (West Bukit Bintang )
Pavilion (East Bukit Bintang)
and most importantly, an interchange station in the Kuala Lumpur International Financial district.
According to Ho, with a more convenient mode of transportation, property prices in those areas will be “healthy”.
Another key factor under the Entry Point Project is the reduction in travelling time to Singapore from Greater KL via the high-speed rail. Ho envisaged that with a train travelling up to 350km per hour, one would be able to reach Johor Baru in 70 minutes.
He said high speed rail transportation will be crucial in the development of a mega region comprising Greater KL, Iskandar Malaysia in Johor and Singapore. Such a region will have a combined population that could reach 20 million. Formerly known as the Iskandar Development Region and South Johor Economic Region, the Iskandar Malaysia site is the main southern development corridor in Johor.
With charts to illustrate cross-border traffic data, Ho pointed out that up to 126,000 vehicles cross the Johor-Singapore Causeway daily where 70% of them are Singapore-registered cars.
He highlighted the fact that Singaporeans own up to 40% of the properties being constructed in Iskandar Malaysia.
Malaysia will likely experience greater spillover effects from Singaporeans travelling here, especially when the proposed rapid transit system linking Tanjung Puteri in Johor Baru to Singapore commences operations in 2018.
Compound Annual Growth Rate
On determining property value, Ho said a useful tool would be the Compound Annual Growth Rate (CAGR) calculator, essentially to calculate the annual growth rate of an investment over a period of time.
Using the calculator and the housing price index spanning 10 years - provided by Valuation and Property Services Department - Ho concluded that the best Compound Annual Growth Rate last year was surprisingly registered in Sabah with 8.06% and not Kuala Lumpur, which only came in second place, with 4.75%.
The lowest growth rate tabulated was in Johor, with minus 0.2% due to an oversupply situation in the south which depressed property prices.
In Sabah and Sarawak, it was a different scenario because people there benefited from their respective state government policy that emphasised cultivating agricultural land that brought good returns. Another factor was due to the increase in palm oil prices, and astute Sabahans used the money to invest in property.
On the price levels for various types of property in Malaysia, Ho found that condominium prices were mostly flat and stable due to ample supply. But landed property prices continued to increase and if this situation continues in 2012 than a crash in landed property prices could likely occur.
Ho said property prices would normally be on the rise if the stock market was doing well and vice versa, citing the 1997 Asian Financial crisis as an example.
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