Malaysia Real Estate Take Five...

Below is some of the latest statistics compiled by Kuwait Finance House Research. For those who wish to invest in Malaysia's real estate properties but taken aback by the recent political uncertainties, this information could possibly help.

Malaysia’s population is expected to increase from 27.17 million in 2007 to 28.96 million in 2010. The median age of Malaysians is 27.4 years. In 2007, a total of 63.4% of the total population consist of those in the working age group of between 15 and 64. The Government expects that 63.8% of the population would be living in urban areas, resulting in a higher demand for more houses, schools and employment.

In recent years, the proportion of total potential buyers grew from 36.9% in 2002 to 39.1% in 2007, underpinned by an increase in the age groups of between 40-49 and 50-59 at a 5-year CAGR (Compound Annual Growth Rate) of 2.7% and 5.4%, respectively, in 2007. The 40-59 age group is likely to be more affluent than the younger age groups and also more likely to buy higher-end property and own more than one property for investment purpose or for their children.

The average lending rates continue to fall to as low as 6.27% in January 2008 as compared to 6.57% in January 2007, suggesting that banks are still competing for quality mortgage home loans. However, if the impact of the world economy worsens, the non-performing loans (NPL) for residential property may edge upwards, in particular for properties held for investments. purposes.

According to the research, real estate property prices are expected to widen between mass market and high-end residences given the spillover effects of petrodollar inflows on property demand in Malaysia as prices are relatively cheap compared to regional properties.

However, given the physical supply coming onstream in 2008 and 2009, the growth in rentals and capital value is expected to ease by the end of 2008.