Find out what’s happening in the property investment arena both in the UK and internationally
Time To Buy Malaysia Property
November 2, 2009Article by Ray Withers
The time to get into Malaysia property is now. According to the World Bank financial report on East Asia, the downturn in the Malaysian economy bottomed in the 1st quarter of 2009 and the rebound began in the second quarter. The report said:
“Economic activity showed signs of improvement in the second quarter of 2009. In seasonally adjusted terms, consumption, fixed investment, and exports all expanded. The services sector also improved. Conditions in the electrical and electronics (E&E) industry, which accounted for an important part of the contraction, improved in line with these general developments. Aggregate capital utilization increased as well, and so did consumer and business confidence.”
The Malaysia property market has always been predominantly driven by domestic demand, with increasing residential demand from emigrating Britons in recent years. Both of these will see an increase when the Malaysian economy is back into sustained and strong growth territory.
The time to buy is now because once the economy starts to grow demand will increase in the commercial sectors (office and retail), which will spur demand for rental accommodation in the residential sectors (luxury and affordable). Rents will rise and prices will begin to rise also. This price growth will be assisted by growth in the cost of construction, including materials and labour (wages).
According to the World Bank, foreign direct investment in Malaysia has already begun to increase (reading between the lines of course). According to the report, FDI plummeting in the second half of 2008 caused the balance of payments to drop from a surplus of $4billion, to a deficit of $38 billion. This has subsequently been reduced to $15billion as investment outflows have slowed throughout this year.
The Malaysian government is now forecasting positive growth for the third quarter, revising previous forecasts when they said that growth would only resume in the final quarter. The World Bank says this year will finish with GDP 2.3% smaller, but will grow by 4.1% in 2010.
According to the World Bank, exports have been growing at an average of 4% since April, compared to a year-on year fall of 31% in the January to July period. This is mainly because of increased demand from the US, while demand from the EU and Japan has remained weak the report said.
One must expect that this positive growth will continue, especially given the World Bank’s growth forecast for next year, which is among the most positive seen so far. Thus demand for residential property, which has already seen growth in recent months will continue and prices will begin to rise — soon returning to the sustainable average growth of 10% per year on.