RCEP: Good for property market?

12 experts weigh in on RCEP’s impact on the property market in Malaysia.

Dr Daniele Gambero, Co-founder, CEO and Propenomist @ Propenomy

For the past several years, ASEAN has been experiencing a strong and consistent growth, well above the developed economies and the world averages. ASEAN, with its more than 700 million population, is among the 5 biggest economies of the world and since its inception has been regarded as one of the most exciting markets of the future. The RCEP Agreement, a new trade and economic “preferred partnership” agreement now includes China, South Korea, Japan, Australia and New Zealand.
Recently signed, the RCEP agreement, which will only be fully enforced within the next two years, will definitely speed up growth in the region.

Malaysia, which in terms of development and per-capita income, comes third after Singapore and Brunei, has the great advantage of being high up on several rankings.

From ease of doing business to education, health and medical services, infrastructure and much more, Malaysia stands above our regional peers and is more competitive compared to the more developed Singapore and Brunei in terms of costing.
I am expecting a surge in demand for properties from foreigners from the 5 “new partner countries” within the next 4 to 5 years; and this will bring in a healthy demand for highly priced residential dwellings in KL, Iskandar Malaysia and Penang, as the first three destinations.
By 2030, we should see a much wider demand covering areas such as East Malaysia (Kota Kinabalu, Kuching and Bintulu) and West Malaysia’s east coast mostly in the surrounding areas of Kuantan. All these could be boosted and proceed faster if the government initiates higher demand through MM2H revision, easier immigration procedures and revised foreign threshold.
Please find a score card below for ASEAN which gives more than one valid reason for foreigners to choose Malaysia first.

Brian Koh,
Executive Director (Investment),
Nawawi Tie
Leung Real Estate Consultants Sdn Bhd

RCEP mainly focuses on facilitating cross border trade and investment via removal of tariffs, standardisation of rules and practices, and investment guarantees, etc, so impacts will be more indirect, from business growths arising from these initiatives.
Any impact will again be more longer-term than immediate especially for the property sector. There are also structural changes expected on how we work and shop that potentially require less space, so for commercial segments, they a re not likely to benefit as much given the countervailing factors. The logistics and industrial sectors are likely to be the main beneficiaries from this in the immediate and longer term.
In terms of investment, Malaysia needs to upgrade its playbook to be more competitive to attract more FD investments. This has been well debated, and it’s acknowledged that we have lots of structural weaknesses that need to be addressed in the long term. This will need both money and political will, besides time.
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KL See, Executive Director of Metro Homes Realty Berhad

RCEP’s direct impact would be on industrial properties whereby we expect higher demand for industrial properties for manufacturing as well as for logistics purpose to export to the regional market. This is because most of the goods will be at low or zero tariff within RCEP region. It is the next economic growth area because of the population and also total GDP.
There’s a caveat though – with the lower price of goods in Malaysia, the inflation rate is lower but businesses are facing greater competition and Malaysians must be ready to compete within the economic region.
For residential and commercial, the effect would be slower because it would have to wait until after the manufacturing investment comes in which would then create new demand for the commercial and residential sectors.



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

The most significant impact would be the more direct investments coming from Japan and South Korea. Although they are already here, the RCEP may bring more of them here to set up businesses or factories, hence this would indirectly stimulate our high-end property market. But again, it would also depend on the outcome of a general election (if it happens). A stronger government would bring in more Foreign Direct Investments (FDI). Right now, all the foreign investors are observing and are not taking any action. This can be seen from the many foreign enquiries on our industrial parks but no actual (or very little) investment is coming in.



Datuk Ar Ezumi Harzani Ismail,
President, Pertubuhan Akitek Malaysia (PAM)

Among other things, RCEP focuses on promoting economic and financial cooperation through gradual elimination of tariffs on selected goods among members. RCEP will only go into effect 60 days after 6 ASEAN members and 3 non-ASEAN members ratify the agreement at their own country level. This is expected to take some time.
Nevertheless, by looking at the intention of the agreement itself together with its star puller, the ‘Rules of Origin’, the price of goods is expected to reduce over time. It is good to see that construction materials are among the goods where the tariffs will gradually reduce. The progressive reduction depends on each country and how they schedule their commitment. China’s commitment to ASEAN members, for example, is highly encouraging since many ta riffs will be reduced to zero as soon as enforced instead of gradually reducing.
Obviously, this will have a positive impact on the construction industry and subsequently affect the price of property. What we have to keep in mind is when RCEP will actually go into force.

Agnes Wong, Managing Partner, Syarikat Ong Group

The only way for Malaysia to succeed in the RCEP era is to be more efficient and competitive. If the RCEP undertakes a zonal approach, such as super corridor or industrial park, then properties in the surrounding area would benefit. Unless there is zoning initiated, there would be little change to the property status quo. On the other hand, if they zone up areas, hopefully there is a balance and the idea is not oversold.
Whether Malaysia is ready or not, it cannot get any worse (with the RCEP) because we a re in a world of collaboration. But, we have got to have or find our edge or competitive advantage, otherwise we will be wiped out either by the pandemic or the competition!


Ahyat Ishak,
Property Expert,
Entrepreneur and Speaker

RCEP is crucial for the economy at the macro level and I don’t see this as having very direct impact on the property market. If it can rescue our economy, it bodes well for the property market because people need a good economy to repay instalments for housing.



Hong Onn,
Hong Onn Enlightens

The effects on our economy from RCEP would only be known beginning 2022 and 2023 because such trade agreements take time to filter down to the individual countries’ economies. I believe Malaysia is poised to compete and at the same time benefit from RCEP as the whole region would see growth spearheaded by China.



Faizul Ridzuan,
Far Capital Sdn Bhd

There will be very minimal impact from RCEP in 2021 but we may see some impact from 2022.




Group MD,
Cottage by the Sea @ Frangipani

RCEP is good for this region and is an encouraging development. The travel bubble would be a good start.


Shaharuddin Saaid, Executive Director, Malaysian Association of Hotel Owners

There isn’t much information related to tourism, but if there is trade and economic cooperation with so many countries, that would surely enhance business including tourism. But then Covid-19 is still a stumbling block. If the situation improves however, priority should be to ease travel restrictions including making it safe and cheap. This would stimulate more travels for business and leisure.



Sr Michael Geh,
Senior Partner, Raine & Horne Malaysia; Immediate Past President of FIABCI Malaysia

RCEP will bring stimulus and sustainability to the market in 2021. The property market has already shown a V-curve recovery in terms of transactional activity as at June 2020. This recovery will roll into 2021 especially for industrial property (logistics and warehousing near airports, major ports and highway exits points).
However, Indonesia will emerge as strong competitor due to the opening up of the Indonesian property market where foreign buyers will be allowed to purchase homes in their own name. The suspension of Malaysia’s successful MM2H programme is a great setback for the Malaysia n property market.

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