Malaysia Quarter 4, 2010 - Citibank Malaysia · • The Overnight Policy Rate (OPR) has remained at...
4
• The Malaysian economy continued to register growth in Q3 2010, but at a lower rate of 5.3% after a growth of 8.9% in Q2 2010. This is due to lower external demand for Malaysian goods and services. • The residential sector saw more launches as confidence in the economic recovery improved. However the new ruling in November which imposes a margin of finance of 70% on the purchase of a third home will have some negative impact on high end home sales. Economic Overview • Malaysia’s economy registered slower growth of 5.3% year-on-year (YOY) in Q3 2010, after a 8.9% and 10.1% growth in Q2 and Q1 2010 respectively (Figure 1). Overall, the average growth for the first three quarters of 2010 is 8.1%, compared to the contraction of 3.8% over the same period in 2009. According to Bank Negara Malaysia (BNM), the growth in Q3 2010 was driven by expansion in domestic demand although there was slower growth in external demand. Malaysia Market Overview $ 12 10 8 D 4 2 0 -2 -4 2D 28 Q4 08 GDP growth (YOY) Source: Department of Statistics Malaysia, Bank Negara Malaysia, DTZ Research Figure 1 Unemployment rate Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 • In Q3 2010, most sectors maintained their positive growth with the manufacturing and service sectors continuing to be the drivers, expanding by 7.5% and 5.4% YOY respectively. The only sector that contracted was mining & quarrying due to a decline in the production of crude oil and condensate. • The Malaysian Institute of Economic Research (MIER) has forecasted the economic growth for 2010 to be 6.5%. PROPERTY INSIGHTS Quarter 4, 2010 Trends & Updates
Transcript of Malaysia Quarter 4, 2010 - Citibank Malaysia · • The Overnight Policy Rate (OPR) has remained at...
• TheMalaysianeconomycontinuedtoregistergrowthinQ32010,butatalowerrateof5.3%afteragrowthof8.9%inQ22010.ThisisduetolowerexternaldemandforMalaysiangoodsandservices.
• Theresidentialsectorsawmorelaunchesasconfidenceintheeconomicrecoveryimproved.HoweverthenewrulinginNovemberwhichimposesamarginoffinanceof70%onthepurchaseofathirdhomewillhavesomenegativeimpactonhighendhomesales.
Economic Overview
• Malaysia’seconomyregisteredslowergrowthof5.3%year-on-year(YOY)inQ32010,aftera8.9%and10.1%growthinQ2andQ12010respectively(Figure1).Overall,theaveragegrowthforthefirstthreequartersof2010is8.1%,comparedtothecontractionof3.8%overthesameperiodin2009.AccordingtoBankNegaraMalaysia(BNM),thegrowthinQ32010wasdrivenbyexpansionindomesticdemandalthoughtherewasslowergrowthinexternaldemand.
Malaysia
Market Overview
$12108D420
-2-4
2D28
Q4 08
GDP growth (YOY)
Source: Department of Statistics Malaysia, Bank Negara Malaysia, DTZ Research
Figure 1
Unemployment rate
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
• InQ32010,mostsectorsmaintainedtheirpositivegrowthwiththemanufacturingandservicesectorscontinuingtobethedrivers,expandingby7.5%and5.4%YOYrespectively.Theonlysectorthatcontractedwasmining&quarryingduetoadeclineintheproductionofcrudeoilandcondensate.
• TheMalaysianInstituteofEconomicResearch(MIER)hasforecastedtheeconomicgrowthfor2010tobe6.5%.
PROPERTY INSIGHTS
Quarter 4, 2010
Trends & Updates
• Withtherecentreductioninsubsidiesinpetrolandcertainfooditems,inflationislikelytoincreasenextyearalthoughtheimprovingstrengthoftheRinggitwillmoderatepricesofimportedgoods.Theinflationrateisexpectedtobebetween2%-2.5%forthewholeyear.
• ForeignDirectInvestmentfortheyearuptoSeptemberhasimprovedwithatotalofRM17.1bncomparedtoRM5bnforthewholeof2009.
• TheOvernightPolicyRate(OPR)hasremainedat2.75%sinceAugust2010andBankNegarawillcontinuetopursueanaccommodativemonetarypolicytakingintoconsiderationtheinflationandexchangerates,aswellasexternalconditions.
• TheEconomicTransformationPlan(ETP)willcommencewithnineEntryPointProjectsofRM30bnwithanother53projectsinvariousstagesofimplementation.
• ThecountryhasstrengtheneditspositionasaglobalhubforIslamicfinancewithtwonewconditionalmegaIslamicbanklicencesissuedaspartofthefinancialliberalizationplan.
• Theeconomyisexpectedtoslowdownnextyearinlinetheglobaltrend.Barringuncertainties,itisexpectedtogrowatarateofbetween5%-6%assumingthattheforthcomingGeneralElectiondoesnotcreatepoliticaluncertaintiesamongsttheinvestors.
Residential Market
• Theresidentialmarketcontinuestoseeactivenewlaunchesandpreviewsofhigh-endcondominiumsintheestablishedneighbourhoodssuchasKLCC,JalanAmpangandUThantarea.SomeoftheseprojectsareMSuites,Dedaun,Vipod,andQuartro.
• Topushsales,developersarenowsellingsmallerunitsinlinewithmarketdemand,especiallyaimingattheinvestmentsegmentofthemarketwhichisstillrelativelystrong.
• CapitalvaluesarestableinmostlocationswithanaverageofRM599persqft,butrentalratescontinuetoexperiencedeteriorationasnewcompletionaddcompetitivepressureonexistingprojects(Figure2).
• Amongsttheexpectedcompletionsin2011include1Sentul,ClearwaterResidencesandKiara3(Table1)and2011willseearound5,610unitsofcondominiumsbeingcompleted(Figure3).
Table 1
Upcoming high end condominiums in Kuala Lumpur in 2011
Project Units1 Sentul 284
Clearwater Residences 108
Kiara 3 160
Kiara 9 192
Sunway Palazzio (Block A) 80Source: DTZ Research
Source: DTZ Research
Figure 2
6
4
3
2
1
0
700
600
500
400
300
200
100
0
Capital values (LHS) Rents (RHS)
2004
2005
2006
2007
2008
2009
Q1
10
Q2
10
Q3
10
Q4
10
• ThelatestlaunchesatKLCCareatashadebelowtheRM1,000persqftmarkbutunitsatthemoreestablishedMarcResidenceswererecentlyachievingaboutRM1,400persqftwithaguaranteedreturnof6%fortwoyearsfromthedeveloper.Averagerentsforprimecondominiumsdeclinedbyabout2%fromthepreviousquartertoRM3.58persqftpermonth.
• Inresponsetoconcernsofapropertybubble,BankNegarainNovemberreducedtheloantovalueratioforthethirdresidentialpropertyfrom80%-90%to70%.Thiswillhavesomenegativeimpactonthehigh-endsegmentwherebuyingactivitieshavebeenconcentrated.
• Withconcernonthepricingofhomesgoingbeyondtheaffordabilityofmosthouseholds,theGovernmentintendstoputmoreeffortinprovidingsubsidizedhousingunderthe10thMalaysiaPlan,especiallyinurbanlocations.TheNationalEconomicAdvisoryCouncilhassuggestedthatmorelowcostaccommodationforleaseshouldbeprovidedforthelowest40%ofthepopulation.
• Prospectsfornextyearremainpositiveastheeconomyisexpectedtomaintaingrowth,albeitataslowerpacethan2010,andtheproposedinvestmentsannouncedundertheEconomicTransformationPlangetunderway.
Source: DTZ Research
Figure 3
5,0004,5004,0003,5003,0002,5002,0001,5001,000
5000
2011 2012 Post 2012
City centre Outside city centre
This research report has been prepared by DTZ Research for distribution to Citibank customers.
GENERAL DISCLOSURE
Disclaimer - DTZ Research
This report should not be relied upon as a basis for entering into transactions without seeking specific, qualified, professional advice. Whilst facts have been rigorously checked, DTZ can take no responsibility for any damage or loss su�ered as a result of any inadvertent inaccuracy within this report. Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited to DTZ .
© DTZ January 2011
Disclaimer - Citibank
The market data and information herein contained (“Information”) is the product or service of a third party not affiliated to CITIBANK NA, CITIGROUP INC OR ITS AFFILIATES. None of the Information represent the opinion of, counsel from, recommendation or endorsement by CITIBANK NA, CITIGROUP INC OR ITS AFFILIATES, OFFICERS, EMPLOYEES OR AGENTS.
You may not use the Information for any unlawful purpose or any purpose not expressly permitted hereby. Reproduction of the Information in any form is prohibited.
NO WARRANTY
The Information is provided “as is”, without warranty of any kind, it has not been independently verified by CITIBANK NA, CITIGROUP INC OR ITS AFFILIATES, OFFICERS, EMPLOYEES OR AGENTS and use of the Information is at your sole risk. CITIBANK NA, CITIGROUP INC OR ITS AFFILIATES, OFFICERS, EMPLOYEES OR AGENTS shall not be liable and expressly disclaim liability for any error or omission in the content of the Information, or for any actions taken by you or any third party, in reliance thereon. The Information is not guaranteed to be error-free, or to be relied upon for investment purposes, and CITIBANK NA, CITIGROUP INC OR ITS AFFILIATES, OFFICERS, EMPLOYEES OR AGENTS make no representation or warranty as to the accuracy, truth, adequacy, timeliness or completeness, fitness for purpose, title, non infringement of third party rights or continued availability of the Information.
LIMITATION OF LIABILITY
IN NO EVENT SHALL CITIBANK NA, CITIGROUP INC OR ITS AFFILIATES, OFFICERS, EMPLOYEES OR AGENTS, BE LIABLE FOR ANY LOSS OR DAMAGE OF ANY KIND WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES, OR DAMAGES FOR LOSS OF PROFITS, BUSINESS INTERRUPTION, AND ANY AND ALL FORMS OF LOSS OR DAMAGE, REGARDLESS OF THE FORM OF ACTION OR THE BASIS OF THE CLAIM, WHETHER OR NOT FORESEEABLE ) ARISING OUT OF THE USE OF THE INFORMATION (PROVIDED IN ANY MEDIUM), EVEN IF ANY OF CITIBANK NA, CITIGROUP INC OR ITS AFFILIATES, OFFICERS, EMPLOYEES OR AGENTS, HAS BEEN ADVISED OF THE POSSIBILITY
COUNTRY SPECIFIC
MALAYSIA
© 2010 CITIBANK
CITIBANK IS A REGISTERED SERVICE MARK OF CITIGROUP INC.
CITIBANK BERHAD. CO REG. NO. 297089-M
OF SUCH LOSS OR DAMAGE.
