THE EDGE REAL ESTATE INVESTMENT FORUM 2019by Sr Foo Gee Jen, Managing Director of CBRE | WTW

16TH NOVEMBER 2019

The Golden Question

When will the

market improve?

CBRE | WTW The Edge REIF 2019

THE EDGE REIF 2019

DATA SCIENTIST

The Future

of Analytics

THE EDGE REIF 2019

2019 THUS F A R …

• Slight improvement but sentiment still on the down side

• Activities on the ground seem to be slow amidst cautious and calculated approach

• Could bring about some opportunistic investments instead of development opportunities

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2016 2017 2018 1H 2016 1H 2017 1H 2018 1H 2019

Val

ue

(RM

Mil

.)

Vo

lum

e (N

o.

of

Un

its)

Malaysia's Property Market

Volume Value

Year-on-year:

Volume +6.9%

1H 2019: 160,170 units

1H 2018: 149,889 units

Value +0.8%

1H 2019: RM68.3 billion

1H 2018: RM67.7 billion

THE EDGE REIF 2019

• Bright spot of Malaysia’s property

market

• Logistics and warehousing

complement Malaysia’s potential as

distribution hub

LANDED RESIDENTIAL

• More township developments along the

northern and southern corridors of KV

• Primarily sought after by upgraders and

young families

• Good quality schemes likely to be

better performing residential segment as

evident in the southern KV

HIGH-RISE RESIDENTIAL

• Developers toning down on super

high-end products recently

• Opportunities may appear in the

upscale primary market and

distressed assets in secondary

market

INDUSTRIAL

• Increasing affluent tourist arrivals

• Visit Malaysia Year 2020 is a highlight

• More entrance of midscale hotel brands

• Top malls expected to retain their

performance

• Rental review shall be nominal

RETAIL

• Influx until 2021 pressures occupancy and rental

• Incentives announced in Budget 2020 to attract

Fortune 500 and unicorns - boost demand for high

quality offices

MARKET

SITUATIONS

IN 2019 AND

2020

PURPOSE-BUILT OFFICE

HOTEL

THE EDGE REIF 2019

R ETR O S PECT O N R ES I D ENT I A L MA R K ET

0.00

10,000.00

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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Val

ue

(RM

Mil

.)

Vo

lum

e (N

o.

of

Un

its)

Volume Value

1995 - 2007

RPGT

0 - 30%

2007 - 2009

RPGT

Exemption Period

2010 - 2011

RPGT

Flat rate 5%

2012

RPGT

5 - 10%

2013

RPGT

10 - 15%

2014

RPGT

15 - 30%

2015

RPGT, GST

6%

DIBS No DIBS

2018 - Present

SST, RPGT

5 - 30%

THE EDGE REIF 2019

R EA L I TY CHECK O N R ES I D ENT I AL MA R K ET

OUTGOING DRIVER

• RM13.4 bn sales as of 3Q

2019 – equivalent to a

quarter’s worth of

residential transaction

• Need more organic

demand in the absence of

HOC in 2020 and beyond

ACROSS THE BOARD

• Almost even spread

across the price board

as of 1H 2019

• Developers need tp

match the demand for

any products including

the affordable segment

STABILITY RESTORED

• Adjustment by

developers – lesser new

launches on the super

high-end products

• Healthy demand

OPPORTUNITIES

• Resultant of the property

hype during 2010 –

2014 period

• Potential for good buy of

distressed assets

HOC 2019 OVERHANG HIGH-END SUB-SALE

THE EDGE REIF 2019

R ECENT H I GHL I GHTS …

M O R E A G I L E D E V E L O P E R S

THE EDGE REIF 2019

R ECENT HIGHL IGHTS…

I N F R A S T R U C T U R E I N T H E P I P E L I N E

2020 2021

DASH

Damansara – Shah Alam

SUKE

Sungai Besi – Alam Damai

– Cheras – Kajang – Ulu

Kelang

2022 2024

SKVE

Serdang – Kinrara –

Putrajaya

MRT 2

Sungai Buloh – Serdang

– Putrajaya

WEST COAST EXPRESSWAY (WCE)

Banting – Taiping –

Sabak Bernam

LRT 3

Bandar Utama – Johan

Setia, Klang

EAST COAST RAIL LINK (ECRL)

Kota Bharu – Kemaman

– Kiantan – Helebu – Port

Klang

THE EDGE REIF 2019

NAT IONAL TRANSPORT POL ICY 2019- 2030

FOCUS ON R A I L & PUBL IC TR ANSPOR T

• KL population spend an average of 10% of their disposable

income on transportation compared with only 4% in Tokyo and

Hong Kong.

• traffic jams in the greater KV are costing Malaysia 1.1% to 2.2%

in GDP every year, approximately RM6,144 per person per year.

• additional capacity on the existing KTM Komuter and intercity rail

services which have the potential to be utilised,

• use of big data analysis to manage transportation as well as to

encourage a centralised payment system to improve ease of

usage on public transportation.

THE EDGE REIF 2019

6 Cs OF CONCER NS

China-US

Trade War

• Slower global trade and GDP growth

forecasted by the IMF and World Bank

Credit

Access

• Prudent lending by banks,

more scrutiny on applicants

Consumption

Confidence

• Labour market generally stable but

wage growth may be selective

Commodity

Prices

• Wobbly palm oil and crude oil prices

Cost of

Living

• Big ticket items may not be

priority

Corridors of

Power

• Policy gerrymandering, policy

clarity still lacking

THE EDGE REIF 2019

3 Cs OF OPT IM ISM

Corporate Governance

• FDI picked up again in 1H 2019

• Continuous investments into

infrastructure, education and

technological advancement• More education on corporate

governance and elimination of

unhealthy business-government

engagements

• Public sector governance with

focus on improving efficiency and

transparency

• Corruption Perception Index 2018:

Malaysia moved up to 61st

globally,

3rd

among ASEAN

• Doing Business 2020 Report:

Malaysia moved up to12th

from 15th

• Improve the ease of doing business

and future-proof the labour force

THE EDGE REIF 2019

O NE L A S T C…

be Cognisant, Clever and Cultivated

As a BUYER…

• Make informed

decision

• Buy within your

capacity

As am INVESTOR…

• Stick to the

fundamentals… yield

and growth

• Avoid herd behaviour

THANK YOU