New govt policies spell short-term pain for long-term gains

PETALING JAYA: The new government’s policies will have some negative impact on the economy and the property market in the short term but will bring long-term gains for the country, if implemented properly.

Although the measures taken by Pakatan Harapan will certainly have some negative impact, they are deemed necessary to help resolve the current economic situation, said Henry Butcher Malaysia in the June 2018 issue of its Herald bulletin.

“With greater transparency and efficiency and more determined measures to eradicate corrupt practices, investors will feel more reassured and in the longer term, the country will be in a better position to attract more and larger foreign investments.

“As the wise has always said, we need to bear with the short-term pain for long-term gains,” it said.

Some of the measures that will impact the property market include the removal of GST, scrapping or postponement of the HSR and MRT3 as well as the freeze on transactions involving the transfer of land owned by the DBKL.

When it was announced by the previous government, the HSR was touted as a game changer with enormous economic benefits, including attracting more Singaporeans to invest in properties and spending more across the Causeway.

The HSR, which was expected to bring about rapid development of the areas surrounding HSR stations, was also the key selling point of the Bandar Malaysia project located on the old airport site in Sungai Besi.

“With the scrapping or postponement of the HSR, the anticipated economic benefits that will be accorded to the areas surrounding the stations as well as Bandar Malaysia will no longer materialise and developers who have bought land in these areas as well as property investors who have invested in properties close by these areas, will find that the hoped-for appreciation in values and development opportunities may not materialise,” said Henry Butcher.

It said that Bandar Malaysia in particular, will not be able to command the same level of excitement and interest although it should still be able to succeed by virtue of its location, which is not too far from the city centre, provided it is thoughtfully replanned, designed and developed.

For property developers who made the HSR and MRT3 a selling point for their projects, the cancellation or postponement will mean that the developers’ claims cannot be fulfilled now, placing them in a difficult position vis-a-vis buyers who have purchased properties in their projects based on the promise and attraction of HSR and MRT3.

According to Henry Butcher, the shelving of MRT3 for the time being, will provide the government an opportunity to assess the effectiveness of Line 1 and Line 2.

Based on the current ridership of between 130,000 and 140,000 per day, the two lines are underutilised compared with the projected 250,000 ridership daily.

“Perhaps when the country is financially more stable and when Lines 1 and 2 have achieved close to their maximum capacity, Line 3 can be revived provided studies show that it is the most cost-effective solution to Greater Klang Valley’s public transportation woes,” it said.

Meanwhile, the Federal Territories Director of Lands and Mines Office Kuala Lumpur froze all transactions involving the transfer of land owned by DBKL since May 10, due to various reports lodged on the alleged suspicious nature of these transactions.

As some of these projects have already been launched with buyers having signed the sale and purchase agreements, the freeze has created some uncertainty about the future of the projects.

In its manifesto, Pakatan Harapan also promised to provide one million affordable homes within 10 years and combine all the agencies involved in building affordable homes under one central body for better coordination and control.

Henry Butcher said this is good news for the lower to middle income groups as they can now look forward to owning their own homes.

“Thus far, the various agencies entrusted by the previous administration like PR1MA have not met their KPIs in building and delivering affordable homes within the right price range and in the right locations, and as such have not really been able to effectively meet the people’s aspirations in owning homes,” it said. – by Eva Yeong