Real estate has traditionally been viewed as a safe investment asset with powerful inflation hedging capability compared to other assets such as stocks and bonds. However, the current pandemic-induced economic weakness is testing such a perception.

This is because the rampant house price growth since the coronavirus outbreak has put the residential property market at risk as when the housing bubble bursts, the likely ensuing panic sale will cause a drastic fall in prices, leading to the crash of the housing market, which can have detrimental effects on the entire economy.

Thus, it is imperative for real estate investors and would-be house buyers to understand the hedging abilities of Malaysian housing properties against inflation, so as to minimise their exposure to such risks in their portfolio.

Perhaps a simple descriptive statistic in nature focusing on correlation analysis of the annual data series of residential real estate returns and inflation rate can shed light on the asset’s inflation-hedging capability.

A perfect inflation hedge would have a correlation close to +1.00, indicating that both the tested variables increase proportionally at the same time; a correlation of -1.00 would indicate the exact opposite.

In general, a correlation of +0.22 is found throughout the period of 1990-2020. While this is rather low to qualify for a perfect inflation hedge, a positive correlation should indicate that returns gain from property investment will counterbalance, at least partially, a rise in inflation.

By applying the rolling window approach to investigate the behavioural changes in correlation throughout the studied period – where the time series are examined with a smaller five-year-interval perspective in order to control for the possible structural changes in the economy, and this period is then moved one year forward at a time – one can find that correlation is not only increasingly positive, but even reaches to its highest ever level at +0.86 around 2020 (chart).

This shows that while house prices have been moderating in recent years, a fall in inflation with a larger pace has, instead, led to an increasing synchronised trend between investment returns and inflation, making real estate a rather good hedge against inflation, albeit imperfect. From here, one can expect that real returns from real estate are not adversely affected by inflation.

Even if it does not perform as a complete hedge, with house prices growing much higher than inflation in the long run, coupled with its instant responses in the short run during inflationary pressure, housing could still be a valuable investment asset.

Having said that, the traits of real estate investments described above are powerful only if there is no oversupply in the market. This is because housing markets are more susceptible to supply excesses. Even if inflation is high and may push up house prices, an oversupply of houses in the local markets will inevitably bring down prices, as power shifts to tenants who can negotiate favourable terms no matter what the inflation environment might be.

– This article is contributed by MKH Bhd manager of product research and development Dr Foo Chee Hung.

Source: TheSunDaily.my

A proposed GBS Cybercentre by Penang Development Corporation and waterfront mixed development at Bayan Lepas. Strategically located at the coastal area of Free Industrial Zone 4, just a stone’s throw away from Penang Second Bridge. It is aimed to bring business and leisure together with “live, work & play” concept, where it will be a convenient place to live, a suitable place to work, and an exciting place to enjoy.

The GBS Cybercentre will comprise three 12-storey office blocks, featuring a total of 66,960sqm office area. However, now it is only in its conceptual stage.

This project was showcased as part of Penang’s GBS landscape during the recent Expo 2020 Dubai.

Proposed location:

DISCLAIMER: This article is solely based on research done using publicly available data. This is not an advertisement. Any claim, statistic, quote or other representation about a project or service should be verified with the developer, provider, or party in question.

More Malaysian millennials are beginning to dip their toes into the property market and become prospective buyers. With their limited budget, only affordable properties are within their grasp. Horror stories of impulse buys and hidden costs aside, are high maintenance fees scaring them off.

With tight budgets, millennials generally prioritise pricing for their starter home, therefore, a high maintenance fee is a big no-no. While many prospective buyers understand the necessity of a maintenance fee, safety and security are the primary reasons they are willing to pay a maintenance fee.

“It is important when it is well maintained, it provides a better and safer place. However, the cooperation in paying it from all the owners is important too,” said a counsellor who wished to be identified as Amber.

While it is true that more millennials are buying property as their jobs stabilise, their willingness to pay for high maintenance fees vary. And depending on the type of property they are seeking, the affordability range is also wide.

According to Khazanah Research Institute (KRI), the price range for an affordable home for 46% of the country’s residential properties range from RM100,000 to RM400,000.

Most look for the lowest maintenance fees as this is a monthly expenditure but this amount has a positive correlation to the number and type of amenities they would like to have.

“They like it but can they actually afford to buy it?” Rahim and Co International Sdn Bhd research director Sulaiman Saheh pointed out in the recent 30th National Real Estate Convention.

Millennials are known to have a strong preference for lifestyle-oriented property, but millennial respondents who were asked about their preference are looking for cleanliness, distance to their workplace and the feel of the area.

Sulaiman similarly noted that young working adults prioritise convenience more than older generations, preferring property that is transit-oriented and in a good location, being close to their workplaces or in urban environments.

Facilities such as a swimming pool and gymnasium are considered luxury expenses to young buyers. They would rather rent and leave the maintenance fee to the owner.

The general sentiment is that they should save up for their ideal property, instead of making a rash purchase.

Unaffordable housing is making people choose between saving and renting, noted Sulaiman.

Being in the working stage of their lives, millennials are forced to think economically. They are beginning to prioritise location and convenience over luxury and special features.

When asked if they were willing to budge on paying more maintenance fees for additional features, the answer is a resounding: No.

Naturally, those who have access to a larger income are more willing to pay for higher maintenance fees. These millennials buy to invest and are more willing to spend more.

“Usually people around my age who own or plan to buy are either funded by their parents or they are planning to marry,” said line producer Koh Xin Yu.

Others are hoping for the government to offer more subsidies and developers to offer more discounts before they commit to buying, she said.

Source: StarProperty.my

A newly proposed freehold mixed development by Lestari Duta Sdn. Bhd. (a subsidiary of Ideal Property Group) at Bertam in Northern Seberang Perai. Located on 467 acres of land along Jalan Tun Hamdan Seikh Tahir, adjacent to Eco Residence @ Bertam Perdana 5 housing scheme by Bertam Properties and Mekarsari by Hunza Group. It is just a stone’s throw away from Setia Fontaines integrated development by S P Setia, about 5km away from Bertam Toll Plaza.

The initial phase of this development comprises 48 units of 3-storey semi-detached and 8 units of 5-storey detached factories. It will follow by another 49 industrial plots in the second phase.

This project is still pending approval. More details to be available upon official launch.

Project Name: (to be confirmed)
Location : Bertam
Property Type : Industrial
Built-up Size: (to be confirmed)
Total Units: 48 (semi-detached factory), 8 (detached factory)
Indicative Price: (to be confirmed)
Developer : Lestari Duta Sdn. Bhd.

Seeing the rubbish-ridden beaches in her hometown prompted 10-year-old Siti Zulaikha Hazrul to take part in a clean-up programme at Pantai Bersih, Penang.

The Year Four pupil from Sekolah Sri Impian, in Taman Guar Perahu, said she was shocked to find plastic bottles and containers as well as food wrappers strewn along the beach.

“It is sad to see so much rubbish on the beaches which I used to visit every week with my family.

“So when my uncle invited my sister and me to accompany them, I was the first to say yes,” she said.

Siti Zulaikha and her sister Siti Nursyafiqah Hazrul, 13, along with their uncle and aunt, were among 60 participants of the beach clean-up programme organised by Penang Youth Development Corporation (PYDC).

The programme, which aims to raise environmental awareness, especially among youngsters, was co-organised by Seberang Prai City Council (MBSP), Malaysian Youth Council, Junior Chamber International Butterworth Chapter and Lions of Bukit Mertajam.

MBSP employees, fondly known as Wira Oren, also took part in the beach clean-up.

Siti Zulaikha’s uncle Khairol Annwar, 36, said he hoped the programme would expose his nieces to volunteer work and instil awareness of the importance of protecting the environment.

“I have been a volunteer since my school days. I think this programme is good so I brought my nieces along,” he said.

Khairol hopes the girls will learn the importance of cleanliness and protecting the beaches not just at Pantai Bersih but other places too.

Penang youth and sports committee chairman Soon Lip Chee said the involvement of youth and children in such programmes was important as it could instil in them a sense of belonging.

“By participating in such programmes, they can learn how to love the environment and ensure a clean beach,” he said in his speech.

He called on the public to keep Pantai Bersih clean so that everyone could enjoy spending their weekends there with loved ones.

Meanwhile, Seberang Prai mayor Datuk Azhar Arshad congratulated PYDC and Soon for coming up with the programme and he hoped that more of such activities would be conducted in Seberang Prai.

“It is a healthy and good collaboration, and the youths who participate in the programme will learn how to appreciate the environment,” he said.

Source: TheStar.com.my