Staying Long on Malaysia Property Market

In this Aug 2013 interview, Christopher Boyd, Executive Chairman, CB Richard Ellis Malaysia discusses the following questions:

- Having come from the Regroup fold and then signing an affiliate agreement with the global property consultancy CBRE in 2009 to tap on some strategic affiliations -- how has this partnership lived up to expectations?

- As a full-service consultancy CBRE performs the whole gamut: strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting.
How is the firm coping with being full-suite?

- And from the standpoint of staying full-suite despite the industry not always accommodating it?
HR / qualified personnel?

- Looking at the CBRE group revenue breakdown as a whole, it seems that Property, Facilities & Project Management and Leasing services are the primary growth drivers.
Does CBRE Malaysia’s revenue percentage mirror this too?
If not, how different is it?

- Commercial property - status update - oil and gas sector healthy - supply-demand issues - trends - city / Golden Triangle exodus - Section 13 revival - flight to quality (efficient building, continuous power, flexible a/c, vertical ducts, MSC status) - chasm between new and old buildings in re Green/MSC compliant -

- With household debt near regional highs and property mortgages comprising half of this debt do you share the widespread view that speculation needs to be reined in?

- The Central Bank has weighed in heavily to cap speculation.
What is your view as regards its timing and the efficacy of its measures?

- Is there a risk of too much intervention, which could 'cramp' growth?

- Couldn't restrictions on DIBS be circumvented by developers simply via other promotional tools?

- Will rising interest rates globally, and locally, have a major –ve impact on the local property market?

- Budget 2014 will be released in October, do you expect any policy announcements targeted at the property sector?
Expectations?

- Housing affordability is gradually slipping in M’sia, with National Property Information Centre data showing house prices in Malaysia have outpaced median household income growth by 1-4% across the four main property markets since 2009
What’s the best way to address this problem?

- Your view of govt-sponsored programmes like PRIMA and ‘My First Home Scheme’?
What of private sector solutions?

- From an investment perspective, which segment (residential, office, retail) are you most positive on?
And which geography?

- Retail continues to be resilient -- and mall development and refurbishment appears to continue unabated .. ?
True / false?

- What’s the health of the sale / leaseback market looking like right now?

- All the big boys: Sime Darby, SP Setia, IJM Land, even smaller niche players like E&O and Selangor Dredging -- they have or will soon launch projects abroad, with the UK and Australia being particular favourites.
Will foreign property purchases continue to attract interest?

- Indeed, from an investment standpoint, buying a second property in an industrious, well-planned, well-managed, surplus- and resource-rich nation, with an educated workforce and high savings rate is seen as a good hedge to a local portfolio.
In this context, the UK, Australia, SIngapore and HK are popular choices.
Do shed some light on how many Malaysians have taken this route?

- UK developers seeking foreign equity - aversion of UK bank capital to real estate - seizing the opportunity

- In 2010, your Johor colleague Wee Soon Chit (Director of CBRE (Johor) said that he feels that the Johor property market has a long way to catch up with the Kuala Lumpur (KL) property market but Iskandar Malaysia will play a critical role in closing the gap.
Has that gap been closed?

- Country Garden - China developers

- Values have skyrocketed in Nusajaya.
But with tapering fears and liquidity outflows, many are now concerned of a slowdown, especially among indebted nations like Malaysia -- is Johor a bubble that is about to burst?

- There have been concerns expressed about oversupply risks to Iskandar – particularly in the high-end condo segment
- Is oversupply a real threat? Or are these worries overblown?
- Is there really a secondary rental market for high-end condo’s in Iskandar?

- Do you fear widespread defaults among JB property speculators