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The current rate of economic growth is considered by most to be more relevant in making property investment considerations outweighing levels of employment and income that were major factors in the previous year.
Over two-thirds of the survey respondents continue to express caution with regard to the surplus supply of condominiums/apartments in 2006. This is a reiteration of concerns highlighted over the last few years regarding non-landed residences.
THE 2006 BUDGET
The 2006 Malaysian Budget was tabled in Parliament in September 2005. Almost 80% of the respondents believe that the Budget will have a positive effect on general economic growth.
Following the announcement of the 2006 Budget, more respondents (60%) believe that it has had a positive effect on the demand for real estate investment compared to the previous year (54%).
On 21 st July 2005, Malaysia removed its currency peg to the US Dollar (which was imposed in September 1998) for a managed float which took effect immediately.
The Ringgit flotation came simultaneously with the dismantling of the Yuan peg and has sparked optimism that economic growth, both global and domestic, will be given a major boost.
52% of respondents feel that this move will positively affect the Malaysian property sector in 2006 citing the following reasons :
- cheaper cost of imported plant, machinery and building materials
- foreign investors confidence will be boosted
41% of respondents feel that this move will have no effect on the Malaysian property sector in 2006 citing the following reason:
- the managed float has seen limited fluctuations
(previously known as Property Trust Funds in Malaysia) Property trust funds were initially introduced in Malaysia with the listing of Arab Malaysian First Property Trust Fund (now known as AmFirst Property Trust) in 1989. Malaysia has currently 4 listed trusts.
Identifying the possible reasons for the lackluster performance/growth of REITs in Malaysia
- Immature market
- Investor education & publicity
- Quality of properties
Most important considerations when debating between REITs and property investment
- Quality of properties
- Tenant profile
- Market timing
- Lease agreements
Main considerations for investing in REITs as opposed to direct property investment
- Liquidity
- Tax considerations
- Opportunity to invest in good quality properties
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