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  • 1. Malaysia Economy and Property Market: 2014 Economic Outlook and Upcoming Property Hotspots “Today we shouldn’t look at tomorrow but at a tomorrow that is 10 years from today” REI Group of Companies - Presentation by Dr. Daniele Gambero “Connecting the …… dots between economy, demographic trends and current-new property hotspots”
  • 2. DISCLAIMER AND COPYWRITE To the best of our knowledge, all information included here falls under the fair use or public domain guidelines of copyright laws. We strive for accuracy but cannot be held responsible for any errors in information featured in the slides or incorrect attributions. REI Group of Companies uses reasonable efforts to include accurate and up to date information however REI Group of Companies makes no warranties or representations as to its accuracy. REI Group of Companies assumes no liability or responsibility for any errors or omissions in the content. The quotes, articles, news and views are not necessarily representative of the views of REI Group of Companies and its directors and Management. This Presentation has been shared for personal use and knowledge ONLY. Any inappropriate use will be prosecuted according to the law and any total or partial use of this presentation for public viewing or publishing must be pre-authorized in writing by REI Group of Companies.
  • 3. …………What we do - CONSULTANCY Strategic Marketing Property Market Surveys Property Market Reporting Property Market Analysis Branding Creative Gambero Property Market Intelligence (Gambero PMI) - access updated information & data on both Regional & Local economic indicators - latest information on future market trends in property development - insights on developers information, new forthcoming hotspots and proposed infrastructures
  • 4. AGENDA Globalization and the Malaysian Economic Performance Malaysian Demographics now and future Market Sustainability Strategically Sustainable Location Strategically Sustainable Locations: the Future Gold Mines
  • 5. Malaysian Economic and Property Market Performance: 2013 Outlook
  • 6. Malaysian Economic and Property Market Performance: 2013 -2014 Outlook ……. Are we in the bricks?
  • 7. GLOBAL & MALAYSIAN ECONOMY - FACT FILE USA EU JAPAN AUSTRALIA UK MALAYSIA 2.10% -0.90% 0.90% 0.55% 0.63% 4.70% 101.60% 90.60% 218% 21% 92% 54.80% Gov deficit as % of GDP -8.50% -3.7% -9.2% -3.1% -6.3% -4% Balance of current acc -440 USD Bil 25.9 USD Bil 60 USD Bil -57 USD Bil Inflation 1.5% 1.10% 1.10% 2.20% 2.70% 2.50% Unemployment 7.20% 12% 4.10% 5.60% 7.70% 3.10% Business confidence 56 -1 12 12 7 115.2 consumer confidence 73 -14 45.2 108 -18 125.3 GDP Growth Gov debt as % of GDP -93.5 USD Bil 18.6 USD Bil
  • 8. GLOBAL & MALAYSIAN ECONOMY - FACT FILE Balance of current account world map
  • 9. GLOBAL & MALAYSIAN ECONOMY - FACT FILE Balance of current account world map
  • 10. MALAYSIAN DEMOGRAPHIC - FACT FILE +3.6 M +1.6 M +6 M +2.6 M
  • 11. MALAYSIAN MIGRATION FLOWS - FACT FILE Malaysian Migration Flow Urban to Rural Areas 22,000,000.00 21,000,000.00 20,000,000.00 19,000,000.00 18,000,000.00 17,000,000.00 16,000,000.00 15,000,000.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 MALAYSIAN FLOW Source: World Bank Statistics 2012: 72.5% of the Malaysian population lives in urban areas 2012: 21,000,000 Malaysians live in urban areas 3.5% growth every year
  • 12. MALAYSIAN WEALTH DISTRIBUTION - FACT FILE FEW CONSIDERATION ON MALAYSIANS WEALTH: Malaysian average per capita income (2012) – Source IMF USD10,304 per year = RM3,000 (per month) Malaysian Wealth Distribution Lowest 20% - 5% Highest 20% - 40% = Median 60% share 55% 18,000,000
  • 13. MALAYSIAN PROPERTY MARKET SUSTAINABILITY How House Price Index and Per Capita income index are strictly correlated, what is this comparison showing? House - Income trend House price index Income statistics 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 100.0 101.1 103.5 107.5 112.4 115.0 117.2 123.1 128.6 130.5 138.8 151.2 167.2 178.4 213.0 232.1 238.2 244.2 250.0 260.8 271.5 282.2 294.6 307.0 330.0 352.9 375.8 House price index growth 2000 – 2012 = +67% Median income growth 2000 – 2012 = +175%
  • 14. MALAYSIAN PROPERTY MARKET SUSTAINABILITY How House Price Index and Per Capita income index are strictly correlated, what is this comparison showing? House - Income trend House price index Income statistics 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 100.0 101.1 103.5 107.5 112.4 115.0 117.2 123.1 128.6 130.5 138.8 151.2 167.2 178.4 213.0 232.1 238.2 244.2 250.0 260.8 271.5 282.2 294.6 307.0 330.0 352.9 375.8 Median income +175% House price index +67%
  • 15. MALAYSIAN PROPERTY MARKET SUSTAINABILITY
  • 16. MALAYSIAN BUDGET 2014 - SUSTAINABILITY STRENGTHENING ECONOMIC RESILIENCE ACCELERATING TRANSFORMATION Today we shouldn’t look at tomorrow but at a tomorrow that is 10 years from today
  • 17. MALAYSIAN BUDGET 2014 – POSITIVE SIDE ATTRACT MORE DOMESTIC AND FOREIGNER INVESTMENT - 70% of the World Islamic Capital Transaction are done in Malaysia - Promotion of Malaysia as a Market for Social Responsible Investment (SRI) - 2014 Visit Malaysia Year and 2015 Year of Festival (Tourism) - Kuala Lumpur already 4th world wide as Preferred Tourist Destination for Shopping after New York, Tokyo and London - Jan – July 2013 25 million Tourists / Jan – July 2014 28 million Tourists
  • 18. MALAYSIAN BUDGET 2014 – POSITIVE SIDE ATTRACT MORE DOMESTIC AND FOREIGNER INVESTMENT - 70% of the World Islamic Capital Transaction are done in Malaysia - Promotion of Malaysia as a Market for Social Responsible Investment (SRI) - 2014 Visit Malaysia Year and 2015 Year of Festival (Tourism) - Kuala Lumpur already 4th world wide as Preferred Tourist Destination for Shopping after New York, Tokyo and London - Jan – July 2013 25 million Tourists / Jan – July 2014 28 million Tourists
  • 19. MALAYSIAN BUDGET 2014 - MOBILITY ONGOING INFRASTRUCTURE PROJECTS - Second link to Penang Island Extension of LRT line 1 and 2 MRT Line 1 MRT Line 2 Various Klang Valley’s highways and expressways - HSR - Kuantan Port
  • 20. MALAYSIAN BUDGET 2014 - MOBILITY ONGOING INFRASTRUCTURE PROJECTS
  • 21. MALAYSIAN BUDGET 2014 - MOBILITY ONGOING INFRASTRUCTURE PROJECTS
  • 22. MALAYSIAN BUDGET 2014 - MOBILITY NEW INFRASTRUCTURE HIGHWAYS AND DOUBLE TRACKING ROADS West Coast Expressway Banting-Taiping 250 km
  • 23. MALAYSIAN BUDGET 2014 - MOBILITY NEW INFRASTRUCTURE HIGHWAYS AND DOUBLE TRACKING ROADS Double tracking JB – Gemas existing road 175 km
  • 24. MALAYSIAN BUDGET 2014 - MOBILITY NEW INFRASTRUCTURE HIGHWAYS AND DOUBLE TRACKING ROADS Double tracking Ipoh-Padang Besar existing road 250 km
  • 25. MALAYSIAN BUDGET 2014 – EAST COAST CORRIDOR NEW INFRASTRUCTURES AND O&G INVESTMENT Kerteh - New integrated petrochemical complex Gebeng - New integrated petrochemical complex RM2.3 Bil for Kuantan port expansion as East Gate of Malaysia
  • 26. MALAYSIAN BUDGET 2014 – GST IMPLEMENTATION GST WILL BE IMPLEMENTED EFFECTIVE APRIL 1st , 2015 GST RATE HAS BEEN FIXED AT: 6% - Not imposed on basic food items - Not imposed on piped water and first 200 units of electricity (domestic use) - Not imposed on Services provided by the Government - Not imposed on transportation services: bus, train, LRT, taxi, highway toll - Not imposed on education and health services - NOT IMPOSED ON SALE AND PURCHASE AND RENTAL OF RESIDENTIAL PROPERTIES
  • 27. MALAYSIAN BUDGET 2014 PROPERTY MARKET SUSTAINABILITY RPGT REVISION EFFECTIVE JANUARY 1st, 2014
  • 28. MALAYSIAN BUDGET 2014 PROPERTY MARKET SUSTAINABILITY RPGT: HOW IT WORKS? THIS IS WHY RPGT WILL NOT AFFECT THE PROPERTY MARKET BUT ONLY PENALIZE UNSCRUPULOUS SPECULATORS. Year 1 Year 2 Year 3 Year 4 Under construction Under construction Under construction Delivery Vacant Poss. RPGT @ 30% RPGT @ 30% RPGT @ 30% RPGT @ 20% CURRENT LOCK-IN PERIOD IMPOSED BY BANKS ON CONVENTIONAL FINANCING Year 5 Year 6 RPGT @ 15% RPGT @ 0% ACTUAL HOLDING PERIOD CAN SELL WITH NO TAX
  • 29. MALAYSIAN BUDGET 2014 PROPERTY MARKET SUSTAINABILITY MINIMUM PURCHASING VALUE FOR FOREIGNERS RAISED TO RM1,000,000.00 - Properties priced RM900,000 and below will be not at all affected by this new regulation. - The only properties which values might be pushed up by developers to attract possible foreigner purchasers are the ones priced RM900/950,000 and above - In Iskandar Malaysia, considered to be the hottest Property Market in Malaysia for foreigners, less than 8% of the transactions in 2013 have been actually done by foreigner purchasers.
  • 30. MALAYSIAN BUDGET 2014 PROPERTY MARKET SUSTAINABILITY BUDGET 2014 – PROHIBITION TO OFFER DIBS PROHIBIT DEVELOPERS FROM IMPLEMENTING PROJECTS THAT HAVE FEATURES OF DIBS. FINANCIAL INSTITUTIONS ARE PROHIBITED FROM PROVIDING FINAL FUNDING FOR PROJECTS INVOLVED WITH DIBS HOUSING PRICES DIBS COST FOR DEVELOPERS REPRESENTS ROUGHLY A 5/5.5% OF THE HOUSE VALUE, CONSEQUENTLY PRICES OF PROPERTIES SHOULD DROP A GOOD 4 TO 5% SINCE JANURAY 1st 2014… UNLESS CREATIVE DEVELOPERS WILL COME OUT WITH….
  • 31. MALAYSIAN BUDGET 2014 PROPERTY MARKET SUSTAINABILITY HOUSING PRICES DIBS: BUDGET 2014 “PROHIBITING” ITS USE THEN DIRS = DEVELOPER INTEREST REFUND SCHEME OR DISS = DEVELOPER INTEREST SUBSIDY SCHEME OR ICS = INTEREST CAPITALIZATION SCHEME OR 3% TO 4% CASH BACK TO PURCHASERS DURING CONSTRUCTION
  • 32. MALAYSIAN BUDGET 2014 PROPERTY MARKET SUSTAINABILITY THEN THE WORST HAPPENED….
  • 33. MALAYSIAN BUDGET 2014 – SUSTAINABILITY AND THE LOW AND MEDIUM INCOME GROUP IMPLEMENTED SINCE JANUARY 1st, 2014 NOVEMBER 15TH, 2013 Increased transparency in property sale prices with clear display of all the benefits and incentives offered such as: • free legal fees, stamp duty, sales agreements cash rebates and freebies
  • 34. MALAYSIAN BUDGET 2014 – SUSTAINABILITY HOW DOES “TRANSPARENCY” APPLY?
  • 35. MALAYSIAN BUDGET 2014 – SUSTAINABILITY DREAMLAND CONDOMINIUM SPECIAL OFFER 950 sq ft Unit 2+1 bedroom ONLY 399,000 INCLUSIVE OF VALUE 10% LOW DEPOSIT 39,900 3% YEARLY CASH BACK DURING CONSTRUCTION: 399,000 * 3% = 11,970 * 3 years 35,910 SPA FREE (being developer to request the buyer to accept his SPA lawyer this makes sense to be left for free and it has always been offered) FREE LOAN AGREEMENT AND S&D FREE 4,763 KITCHEN CABINET INCLUDED 8,000 3 AIRCON + 2 WATER HEATER INLUDED 6,000 CLEAN HOUSE VALUE 304,427
  • 36. MALAYSIAN BUDGET 2014 – SUSTAINABILITY SPA VALUE NET VALUE AFTER DEDUCTION OF FREEBIES - LTV 399,000 304,427 MARGIN OF FINANCING = 90% 359,100 273,984
  • 37. MALAYSIAN BUDGET 2014 – SUSTAINABILITY SPA VALUE 399,000 10% deposit credit note SPA VALUE 399,000 10% deposit given for FREEEE (39,900) Loan approved 273,984 Differential amount to BE PAID 85,116 39,900 (39,900) Cash out Free-free-not so-free 0 54,673
  • 38. MALAYSIAN BUDGET 2014 – “The Aftermath” EFFECT OF THIS MOVE House prices will re-adjust in the short term to more reasonable Values! EXPECTED VALUES ADJUSTMENT +2% and -5 to 6%
  • 39. MALAYSIAN PROPERTY MARKET SUSTAINABILITY
  • 40. MALAYSIAN PROPERTY MARKET SUSTAINABILITY Penang: the 8th destination worldwide to retire. Ipoh: retirement homes and health tourism Kota Baru: the Northern Educational Hub with 15 Local and International Universities already working to establish a northern campus Kuantan: the new commercial port, the already committed investment from Chinese, European and American Multinational Corporation Klang Valley: the Northern, Southern and Western Corridor and the Megaprojects Iskandar Malaysia: the most Strategically Sustainable Location in the region (SEA)
  • 41. KLANG VALLEY AND THE SOUTHERN CORRIDOR
  • 42. KLANG VALLEY AND THE SOUTHERN CORRIDOR
  • 43. KLANG VALLEY AND THE SOUTHERN CORRIDOR
  • 44. KLANG VALLEY AND THE SOUTHERN CORRIDOR The return of Cyberjaya: boundaries
  • 45. KLANG VALLEY AND THE SOUTHERN CORRIDOR The return of Cyberjaya: undeveloped land (Yellow)
  • 46. KLANG VALLEY AND THE SOUTHERN CORRIDOR The return of Cyberjaya: ongoing/completed development (Blu)
  • 47. KLANG VALLEY AND THE WESTERN CORRIDOR LRT 3
  • 48. KLANG VALLEY AND THE WESTERN CORRIDOR
  • 49. KLANG VALLEY AND THE WESTERN CORRIDOR Damansara – Shah Alam (DASH) highway alignment
  • 50. KLANG VALLEY AND THE WESTERN CORRIDOR
  • 51. MALAYSIAN PROPERTY MARKET ISKANDAR MALAYSIA THE MOST STRATEGICALLY SUSTAINABLE LOCATION OF THE REGION (SEA)
  • 52. MALAYSIA’S PROPERTY MARKET MOST EXCITING LOCATION
  • 53. MALAYSIA’S PROPERTY MARKET MOST EXCITING LOCATION
  • 54. MALAYSIA’S PROPERTY MARKET MOST EXCITING LOCATION
  • 55. Malaysian Property Market – 2013 Outlook Iskandar Malaysia – Expressways
  • 56. Malaysian Property Market – 2013 Outlook Iskandar Malaysia - Interchanges
  • 57. Malaysian Property Market – 2013 Outlook Iskandar Malaysia – KTM, MRT, LRT …..
  • 58. Malaysian Property Market – 2013 Outlook Iskandar Malaysia
  • 59. Malaysian Property Market – 2013 Outlook Iskandar Malaysia
  • 60. Malaysian Property Market – 2013 Outlook Iskandar Malaysia
  • 61. Malaysian Property Market – 2013 Outlook Iskandar Malaysia
  • 62. Malaysian Property Market – 2013 Outlook Iskandar Malaysia
  • 63. Malaysian Property Market – 2013 Outlook Iskandar Malaysia Sustainability
  • 64. Malaysian Property Market – 2013 Outlook Iskandar Malaysia Sustainability
  • 65. Malaysian Property Market – 2013 Outlook Iskandar Malaysia Sustainability
  • 66. Malaysian Property Market – 2013 Outlook Iskandar Malaysia Sustainability
  • 67. Malaysian Property Market – 2013 Outlook Iskandar Malaysia – Committed investment
  • 68. Malaysian Property Market – 2013 Outlook Iskandar Malaysia – Committed investment
  • 69. Malaysian Property Market – 2013 Outlook Iskandar
  • 70. Malaysian Property Market – 2013 Outlook Iskandar
  • 71. Malaysian Property Market – 2013 Outlook Iskandar
  • 72. MALAYSIAN WEALTH DISTRIBUTION - FACT FILE FEW CONSIDERATION ON MALAYSIANS WEALTH: Malaysian average per capita income (2012) – Source IMF USD10,304 per year = RM3,000 (per month) Malaysian Wealth Distribution Lowest 20% - 5% Highest 20% - 40% = Median 60% share 55% 18,000,000
  • 73. ISKANDAR MALAYSIA STRATEGIC SUSTAINABILITY Red color – High-end areas (overpriced at the moment) / Green color – Affordable areas RM60 psf and below
  • 74. Thank you Facebook Daniele Gambero www.facebook.com/daniele.gambero.3 For questions and further information, please email to: daniele.g@reigroup.com.my Or long into: www.reigroup.com.my and www.facebook.com/REIGroupMY

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