Demand for luxury homes seen to be flattish this year

PETALING JAYA: Demand for houses priced around Rm1mil has dropped and is expected to be flattish throughout this year, a reflection of real estate transaction volumes across the Asia-pacific, an online survey in Malaysia and a Hong Kong-based report show.

External uncertainties, the general election factor on the local front and a general wariness about a possible bubble in the Malaysian market had dampened the market, said iproperty Group chief executive officer Shaun Di Gregoria.

“We are seeing a reduction in volume for the top-end market. Rental is also expected to come off a bit for the top end,” he said after launching the result of an online survey at iproperty.com.my conducted from Dec 5, 2011 to Jan 19, 2012 involving 3,459 respondents.

The findings are supported by telephone interviews with two property agents.

Despite that, Di Gregorio said, Malaysians were expected to continue to be upbeat about the property market, with interest seen mostly in properties priced between RM400,000 and RM500,000.

The survey revealed that 35.7% of the respondents considered themselves property buyers while 26.2% identified themselves as property owners.

This is part of the first cross-market online property survey conducted by the iproperty Group covering Singapore, Indonesia, Hong Kong and Malaysia that attracted about 8,500 respondents.

Di Gregorio said although various measures had been taken by the authorities to discourage speculation, the Malaysian property market continued to be friendly to buyers.

He said Malaysia was the number one destination for Singaporeans as property prices here were still affordable to them.

“Yield in Singapore and Hong Kong is low because of the high capital cost there. The United States and Europe have their own challenges, so South-east Asia will increase in popularity, with Malaysia being a good market to be in throughout this year. There is positive sentiment to invest here,” he said.

About 40% of the Singaporean respondents said Malaysia was their preferred destination, followed by Australia (19.4%).

Meanwhile, about 40% of Malaysians considered Australia as their preferred overseas property investment destination, 19.8% liked Singapore and 13.7% chose the United Kingdom.

While iproperty Group paints a positive picture of the local property market, 58.6% of those who responded to the survey in Malaysia believed there is a property bubble in this country versus 53.85% of those who responded in Singapore.

On a larger scale, the drop in transaction volume is also reflected in the Asia-pacific. A quarterly report by the Asia Pacific Real Estate Association (APREA) and Real Capital Analytics said there was a 32% drop in real estate transaction in the Asia-pacific year-on-year to US$85.3 bil as at Dec 31, 2011.

“It moderated by as much as 18% since the end of the third quarter last year,” APREA said in a statement.

“Concerns over the eurozone debt crisis contributed to the moderation in the fourth quarter. A strong performance by Singapore helped mitigate the declines in other countries,” said APREA chief executive officer Peter Mitchell.

The decline was seen across all industry segments. Transactions in hotels fell 23%, commercial property 20%, land 17%, and apartments 8%. Stripping out land transactions, Japan led in regional sales volume, accounting for 22% of the fourth-quarter sales. This was followed by Australia with 17% and Singapore, 16%.

“Transactions in the region are continuing to be dominated by domestic players,” Mitchell said.