COVID-19, Property Heartbeat Paused?

Amid the Covid-19 outbreak, the question many investors are asking is: “How will the market be affected?”


A week before political turmoil hit the country in late February, a property talk in a popular Mont Kiara mall attracted at least 30 investors. It didn’t seem that these investors were perturbed at all by the poor sentiments following news of the Covid-19 outbreak. Few were wearing face masks.
Even more astounding was that on the day of the alleged coup, a re-launch of landed houses in Tanjung Malim attracted a turnout of 90 people, some of whom came as far as Port Dickson. All the single-storey units were sold out with only 30 1½ storeys remaining.
This appears to confirm what a property expert observed: “Bargain hunters are still out there but they are waiting for the market to correct downwards further to catch a better price.”
As to how the market will perform in the coming weeks and months, much depends on how the political crisis is resolved and how long and severe the virus outbreak persists.
Factors that might help in hastening a rebound are lower interest rates (the Central Bank just announced a 25-basis points reduction in the Overnight Policy Rate) and the spillover effects from the recently announced stimulus package for affected industries.
Comparing with the previous SARS outbreak, the impact of Covid-19 is likely to be worse due to its prolonged and globalised nature, and its higher rate of infection and death. But the question remains: how low can the property market go as it’s already breached several price support levels?
What do experts and stakeholders in the property market think? We talk to a few…

Dr Foo Chee Hung – Principal Reseacher, MHK Bhd

“In my opinion, the impact on tourism, services, and manufacturing is significant, but is rather limited on the housing industry. This is because the property market slowdown that we are facing now has started since 2015, marked by the mismatch of house prices and affordability, overhang in properties, cautious consumer sentiment, difficult access to property financing, as well as the weakened ringgit against other major currencies.
If the 18-year property cycle principle is followed, the country’s property market entered into the recovery phase in 2001 following the Asian financial crisis in 1997. By 2009, the market embarked on the explosive phase. Property prices started to escalate significantly until 2015, when the recession phase kicked in. The recession phase was supposed to end in 2019, when the market will then be entering into another phase of recovery. However, due to the unforeseen Covid-19 outbreak, the recession phase may be prolonged and the recovery may likely delay for another one year.
While some developers such as SP Setia and Platinum Victory have cancelled their CNY Open House in the early stage of the virus outbreak (most likely in the first week of February 2020), the launching seems to resume back on schedule, following the release of clearer infection prevention guidelines, both internationally and nationally. In other words, show must go on!
Having said that, the nature of developers is not homogeneous. There are different types of developers adopting different kinds of business model. While those who are involved largely in property investment and leisure (operating hotels and resorts) may be affected, as well as those focusing on high-end housing segment; most developers whose main revenue is generated from property development will receive limited impact, especially those who are building mass housing targeted at local buyers.
In fact, more and more developers are venturing into these mid-income and affordable housing segments. Moving forward, the fast-growing pace of affordable housing construction can potentially cause saturation in the affordable housing market segment, leading to the market cannibalization between new supplies and the existing stock. Hence, the government needs to wisely monitor any implementation of new-builds (such as the mega development in Bandar Malaysia), so as to avoid the mismatch of housing supply to the overall housing needs in the country.
New economic initiatives and catalysts will have to kick in in order to revitalize the housing industry. In fact, through The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), developers have suggested several initiatives such as reconsidering the appropriateness of RPGT, extending the HOC, stabilizing the prices of cement and other construction materials, incentivizing the use of IBS, reviewing the Bumi quota, and lowering the foreign buyers’ threshold.”

Tan Hwa Chuan – Land Developer and Investor

“The period from December – February every year is normally very quiet as most people are on holiday. So even without the virus outbreak, transactions are slow during this period. Consumer sentiment is cautious so it’s not just the property market but the whole economy that’s affected.
But I believe from April onwards, the virus outbreak will diminish and more interest will be sparked around June, at the start of the 2nd half. That’s because when summer comes, there is less appearance of the virus.
That’s 6 months of pent-up demand (Jan – June) where people have the money but the transactions are not there because of poor sentiments. For all ready investors, they will start to invest in June.
During these 6 months, there will be zero buyers from China. No agent will fly to China, Hong Kong or even Singapore. But because of the pent-up demand, the activities will come back. For the next 4 months, our strategy is to keep calling people who have the intention to buy.
For developers who have existing bridging loans or term loans, there will be a lot of restructurings coming up. There will be good deals and fire sales coming up which will benefit those who are cash-rich.”

Only the real investors are still in the market and they are waiting for the market to correct downwards further to catch a better price.

Christopher Chan, Associate Director of Hartamas Real Estate (M) Sdn Bhd and former Board of Director of the Malaysian Institute of Estate Agents (MIEA)


“On the local secondary property market scene, the impact is also limited as most of the buyers in this market consist of locals; moreover, overseas property buyers from Hong Kong and  China would usually buy into new projects from the developers.”


Faizul Ridzuan – CEO of Far Capital Sdn Bhd


“Fewer Mainland Chinese buyers will be coming in while Mainland Chinese developers who depend on supplies and labour from China will struggle. KLCC properties will be impacted.”


Recovery may likely be delayed for another one year.

Ahyat Ishak – Property Expert, Entrepreneur & Speaker

“I haven’t seen many launches since the start of 2020. But the property industry has begun to slow down anyway in 2020 because of the overextended Home Ownership Campaign (HOC). 2020 started without HOC; Chinese New Year started early so nothing much was happening. So, I don’t think the virus is the reason nothing exciting is happening. It just dampened further the overall bad mood.
The sector that’s impacted the most is tourism-related property. Hotels have lost about 40% of their revenue but small-time homestays and guesthouses are also losing out too. People are not travelling or not going to malls as much.
So real money in pocket is gone and everyone is up to their nose paying the mortgages, etc. The number of buyers from China is not big so its overall impact on the property market is not big. Enquiries from Hong Kong have increased including for MM2H programme, but not sure how much of that was translated into actual sales. But with the virus, it’s come to a standstill.
The government certainly needs to rescue the property market but rescue from what? The problem is we have inherited a staggering amount of mess from the previous cycle and the unsold inventories are getting worse this year. Developers are still continuing to build, while some projects are under planning. So, the virus is not a problem that needs to be solved for the property market. It just makes the situation worse as it’s not helping with buyer sentiments.
Who’s then left to buy?
Most Malaysians are already max-ed out and can’t get financing anymore. Genuine buyers are cash-strapped while many young people are not in a position to buy property due to stagnant income growth or unemployment.
Only the real investors are still in the market and they are waiting for the market to correct downwards further to catch a better price. More auctions are being conducted, but many of the properties are going into their third or fourth rounds and no one is picking up. A lot of properties are breaking their support levels, e.g. certain areas in Subang Jaya.
Developers have already spent money on land, so they have to build and sell but the market is very soft. The market is beaten down and with more negative news, it doesn’t seem to be a happy story this year. The bigger impact however is on the wider economy. All the banks are saying they will give moratoriums to borrowers.
To summarise, there is a glimmer of hope for the property industry; there are still many bargain hunters out there but investors are not coming in in a big way.”

Chia Swee How – Real Estate Tax Leader of Deloitte Malaysia

“Currently, there’s no official data on the impact of the virus outbreak on the commercial real estate sector in Malaysia. Based on observation, commercial real estate owners (e.g. malls) may be affected, from a rental income/cash flow perspective. This is mainly due to the retail sector’s direct impact arising from a decline in inbound tourists. On the domestic front, Malaysians are also spending less time eating out, shopping in malls, retail outlets, etc.
As for the construction sector, the virus outbreak would have an impact on Chinese construction sites/projects and construction projects that require the importation of materials from China. We do not foresee stoppages of construction for now, unless projects rely heavily on workers from China (workers may be withheld/quarantined in China), but again, the overall impact largely depends on the spread and duration of the virus outbreak.”

Brian Koh – Executive Director of Nawawi Tie Leung

“I believe the outbreak will just have a short-term impact on sentiment. But if it persists longer, the economic impact will erode buying capacity especially for those in the tourism industry and related sectors which are directly affected such as retail, logistics and airlines. In short, buyers’ sentiments are already low pre-outbreak and this is making them more worried.
In terms of construction and buyers, developers from China who rely mostly on supply of materials and labour from China would be most affected while both local and foreign developers whose buyers come mainly from Hong Kong, China and Taiwan would be most affected. The solution for them would be to diversify their source of materials supply and buyers.”

Dato’ Joseph Lim Heng Ee – Founder of Insight Think Tank Sdn. Bhd (, developer and manufacturer

“Some developers in Malaysia have definitely delayed their property launches. Those who have proceeded have already pre-launched before the outbreak. During this February season, I hardly see any new project launching while those who have launched beforehand, are continuing with their promotional activities.
I believe most developers will try to delay their launches. Those in the high-end market will be badly affected as this market depends very much on buyers from China and Hong Kong. These investors have delayed their trip to Malaysia, though Hong Kongers are still coming here but their numbers have significantly reduced and most who come have already bought their properties here.
The developers affected most are those whose work is still in progress but these developers form a small number. For my own projects as a developer, this year is designated our year of planning where we focus on planning activities such as project planning and design. We plan to launch next year.
Manufacturers are the ones who are affected a lot. Those exporting to China like us saw about 70% of our exports delayed. Meanwhile, those who import materials from China will also see delays in production.
As to how the government can help, it could cut down fees on property transactions such as Sale & Purchase Agreement fees and stamp duties. Other than that, I don’t think the government can help much.
A few bankers I have talked to have said their banks will be giving a 6-month cooling period to pay back instalments. They can also arrange to pay interest only during this period and postpone paying the principal amount later. As for delays in ongoing projects due to the supply chain disruption, I don’t think buyers would accept that as a reason for delay.
With the current political turmoil, times are doubly tough. Most foreign investors take into account the political situation, there are too many rumours in the market, so there won’t be big investments coming in.
The market mood is very bad. I believe it will take at least 6 months to recover i.e. after the 3rd quarter.

The virus outbreak is not a problem that needs to be solved for the property market.

Forest City’s Spokesperson

“Forest City’s facilities and businesses, such as its hotel chain which includes Phoenix International Marina and Golf Hotel, The Legacy and Classic golf courses; International school Shattuck St. Mary Forest City, sales gallery, IBS Plant and other commercial outlets are all operating as per usual despite the COVID-19 outbreak. Therefore, Country Garden Real Estate Sdn Bhd (the company) does not foresee any disruption to work resources.
We have also advised all staff returning from other parts of China to self-quarantine for 14 days upon their return to Malaysia.
Currently, we are monitoring two employee groups with regards to self-quarantine: those who have completed self- quarantine and have started reporting to work and the other is those who are still completing the 14-day self-quarantine. To date, all employees are in good health and have not shown any symptoms of infection.
The company which has approximately 1,500 employees, of which 80% are Malaysians, runs its business as usual, with precautionary measures.”

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