Apr 19, 2020
Kuala Lumpur, 19 April :
The Covid-19 pandemic has forced businesses to close temporarily (some permanently) while all industries, with the worst hit being the tourism-related ones, have experienced supply disruptions, production cuts and termination of orders. This will lead to companies adopting pay cuts and retrenchments to stay afloat.
Property developers will be hard put to come up with the right strategies to address the significant changes in market conditions. This may lead to developers holding back on new launches while dropping prices to push sales.
Some small and medium enterprises (SMEs) will find it hard to sustain their businesses and may have to resort to pay cuts or even retrenchments.
This will have some impact on the residential property market in the form of reduced demand and increase in loan defaults, although the moratorium announced by Bank Negara will be of some help.
It is hoped that the government will be able to come up with a comprehensive plan and effective strategies to nurse the economy back to health so that the negative impact can be minimised and shortened.
Local buyers appear to have adopted a wait-and-see attitude as they are worried about the economy slowdown and oversupply situation.
Foreign buyers are also holding back on investing owing to the political uncertainty and confusion over whether the proposed reduction in the minimum price threshold (for foreign purchases of high-rise property, specifically condominiums and apartment in urban areas, from RM1 million to RM600,000) announced in Budget 2020 would be implemented.
The government can continue with the stamp duty exemptions offered during the HOC last year as well as relax lending criteria by the banks.
The government can also consider offering certain incentives to developers such as discounts on statutory contributions or deferred payment schemes to help them ride out the current difficult times.
There will be opportunities available in the auction market as more properties are foreclosed because of defaults by borrowers.
On the primary market, developers will be forced to offer attractive sales packages. This will be a good time for investors to buy their dream homes at a lower price.
- Henry Butcher (M) Sdn Bhd chief operating officer Tang Chee Meng
Full Stories : https://www.theedgemarkets.com/article/cover-story-property-market-outlook-and-opportunities-times-uncertainty