As cliché as it may sound, there are only three words to describe the property market now in layman terms: Uncertainty, Uncertainty, Uncertainty! And, this is not just an industry specific issue but one which affects the whole of our nation’s progress despite more relaxations to the lockdown that are forthcoming.
Threat of Triple Beasts
While no one has a crystal ball to foresee the impact of a prolonged lockdown that has besieged our nation, one thing for sure is that “apprehension” is at an all-time high especially among genuine buyers for three major reasons:
1) Covid-19 Situation:
Malaysia has one of the highest vaccination rates in the world today. This may be a silver lining for many looking forward to resume their normal lives. However, the risk of further outbreaks by other variants such as Delta Plus, Kappa and Lambda are real. We cannot afford another wave with the high daily death rates that have taken a toll on our healthcare system; not to mention the toll the pandemic has had on an already weakened economy.
When this health crisis abates, market recovery can take its due process. At the moment though, it is all about survival.
2) Small and Medium-sized Enterprises (SMEs) – Survival & Unemployment:
Our business community has undergone the worst since the last recession. And, the current crisis has been unprecedented,bwiping out many local businesses after the month-to-month lockdown in the capital being announced indefinitely, with no end in sight until recently. While some businesses can resume operations and therefore revive jobs in the market, property demand may still take a much longer time to build up as the overall market is cautious about the outlook, while the focus on livelihood is a real concern.
3) Political Instability:
Despite countries fighting off their worst ever battle against an invisible enemy, the white elephant in the room has to be our very own political drama. What the nations of the world need is a stable Government now — and yet, we have just witnessed our third Prime Minister sworn in within a span of three years!
Without any clear and strong leadership to steer us away from the dark hole that has sinked the nation and drowned the voices of the rakyat, we may only see more activities post-election which can happen anytime between now and the year 2023 as investors stay away from unchartered climate of ambiguities.
Foreigners To Bid Adieu
There is the much-awaited announcement to revive the MM2H (Malaysia My Second Home) Visa programme which was shelved since 2020 when a change of Government took place amidst the bleak tourism market which is very much welcome news.
However, the revised criterias are seen to be much more stringent with a higher threshold for offshore income and local deposit requirements. This does not bode well even for existing Visa holders not to mention attracting foreign funds for asset acquisitions. On the flip side, existing MM2H recipients who cannot meet these requirements will likely dispose their asset here (at a discount because of excessive supply) and leave. We may even end up with more unsold high-end properties in the sub-sale market!
What the country needs right now is to ease these policies and make it less restrictive for foreigners to contribute to our Gross Domestic Product (GDP) as a means to stimulate the local property market, not otherwise. With similar yet attractive immigration policies in the region such as the SRRV programmes from the Philippines and the Thailand Elite visa, Malaysia will definitely not be the preferred destination for those who are considering South East Asia as their residential base.
Technological Adoptions
As the current digital transformation in our daily norms, hastened by the pandemic is shaping how we work and live, the property sector is also subject to such disruptions although the brick and-mortar industry requires more time for innovation and adoption. Every stakeholder from valuers, builders to sales agents, bankers and even lawyers and buyers themselves will have to learn, unlearn and relearn to embrace and accustom themselves to new ways of transactions with immersive experiences.
As these behavioural changes take place, we will see a shift of culture and the rise of property technology in the real estate industry which will be unveiled in the months and years to come.
