Sunday, May 10, 2009

Return of the REITS? Malaysian market poised for innovation

Cityscape Asia to throw the spotlight on policy settings in regional property markets

Suntec, Singapore. 19-21 May 2009

With Malaysian REITS down but not out in the face of an economic downturn the Malyasian Government has bolstered this popular investment class with a 2009 Budget allowing REITs to open their investor register to up to 70% foreign ownership.

With some M-REITS being 10-45% off their 2007 peaks the move has been welcomed by the sector says Elvin Fernandez, a Malaysian property valuer and Managing Director of the Khong & Jaafar Group of Companies who is a speaker at the upcoming Cityscape Asia conference in Singapore on May 19-21.

“The incentive is ‘right on the button’ as it was awaited by REIT managers and the market for the industry to leap into a period of sustained higher growth and hopefully stake a claim as a regional centre for the REIT industry,” Mr Fernandez said.

While political uncertainty and rising unemployment has impacted market confidence in Malaysia, some key indicators remain sound. Prime office real estate is still generating yields in the region of 7-8%, while the residential market, although currently subdued, is supported by the youthful country’s extremely high rate of new household formation who demand about 80,000 units of houses from the primary market per year, according to Mr Fernandez.

“For Malaysia as a whole, the key relationship between house price increases and income increases has also been tracking in unison over the past 12 years, suggesting a basis for reasonable price support in the market,” Mr Fernandez said.

Malaysian house prices increased at a compounding annual rate of 5.09% over the 12 year period, while household income was up by 5.14% per year over the same period.

“With property (from construction and services) directly contributing some 6.5% of Malaysia’s economy, but impacting as many as 140 other industries and services indirectly, the health of the property sector is a matter of national importance and this explains the Government’s helping hand to the REIT sector,” Mr Fernandez says.

A strong contingent of Malaysian developers is also showing at the Cityscape Asia exhibition to be held at the Suntec Convention Centre. Confirmed exhibitors include Mah Sing Group, EPAD, RS Capital, East Ledang, Danga Bay, Mulpha, NASA TTDI, Camko City, and a number of developers from the Iskandar Development Region which is backing up its successful foray at Cityscape Abu Dhabi with the opportunity to access South East Asian and Chinese investment at the Singapore event. They will also come together during the exclusive Cityscape Asia Investors & Developers Networking Reception to forge international relationships and discuss business and investment issues.

The role of other regional Governments will also be under the spotlight at Cityscape Asia.

The Singapore Government pleasantly surprised the local property sector with a 40% rebate on property taxes in its January 2009 stimulation package, while the Vietnam Parliament is debating changes that could increase sales volumes to overseas based Vietnamese by as much as 1000% per year from September 2009.

In Jakarta, major Government-backed infrastructure projects such as a Monorail, MRT and Airport link are boosting the property sector while stronger regulations for property valuation have improved transparency in debt finance and capital markets over the past few months.

Cityscape Asia
Cityscape Asia - part of the world's largest business-to-business real estate event brand - is an annual exhibition and conference focusing on all aspects of the real estate development cycle. The three day event will run from 19 – 21 May 2009 at the Singapore International Convention and Exhibition Centre (Suntec Singapore).

Top deal-makers from leading developers, banks, institutional investors and investment authorities, as well as senior officers from the foremost private equity funds and investment advisory firms, will gather at Cityscape Asia to discuss the key issues and investment opportunities.

Conference highlights include: surviving the global financial crisis; the future for real estate funds; Asian REITS; markets to invest in for long-term growth and returns; country spotlights in trouble times; the Asian retail decade; and green investments.

Cityscape Asia is an extension of the phenomenally successful Cityscape Dubai exhibition, organised by IIR Middle East, which also include Abu Dhabi, India, Saudi Arabia, Russia, USA and Latin America.

UK-based Scala Land Group is a Gold Sponsor at Cityscape Asia. Scala Land Group presents overseas investors with alternative opportunities to buy land in the UK. CNN is the international broadcast partner.

No comments: