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Post GE14 Impact on Properties


The 14th General Election (GE) has come and gone. And, with the dust having settled alongside the overwhelming excitement of which party would win, industry players are now waiting in anticipation as to the changes that would now envelop the nation – given the formation of the new Government under veteran politician Prime Minister Tun Dr. Mahathir Mohamad with Pakatan Harapan’s promise to do away with the unpopular Goods & Services Tax (GST) among others. Property Insight analyses the impact pertaining to the property industry by seeking viewpoints from the experts

The dust has finally settled after the most epic 14th General Election (GE) that had everyone sitting on the edge of their seats (or beds for that matter – given the high level of excitement and anticipation of the pending results that ran into the wee hours of the morning) which had almost an entire nation sitting up in anxious expectation as to what the final outcome and results would be.

The unmistakable and palpable sense of euphoria that ensued with Pakatan Harapan’s overwhelming victory heralding in a new Government made history. And with that, Tun Dr. Mahathir Mohamad made history not only as Prime Minister of Malaysia for the second time – but also as the world’s oldest Prime Minister at 92 years old! Now, with renewed hopes and fresh expectations riding high on the winds of change, what can the real estate industry expect with the announcement of plans for the abolishment of the Goods & Services Tax (GST) and a host of other initiatives?

We asked the expert opinions of key industry specialists as follow:-


The property market has been on a decline since 2012. Furthermore, it continued its decline well into 2017. All indications were that the decline concerning the property market was slowing down and that we would see some improvements in 2018.

A report by Jabatan Penilaian & Perkhidmatan Harta (JPPH) indicated that the volume of sales in January and February had improved by 4%, denoting the earliest indication of an improving market situation. Due to heavy speculation on the upcoming GE, the market went into a slowdown mode, preferring to adopt a “wait and see” attitude.


All indications were that 2018 would be a better year for the property market than 2017. With the GE around the corner, the market waited with bated breath to see the outcome.

Two scenarios were possible:-

If Scenario 1 had happened, the business community would have heaved a sigh of relief and gone on their merry way. They may or may not have liked the result but they would have been glad that the uncertainty was over, the long battle finished, with things beginning to settle down. The market then would have started improving gradually over 2H18.

If Scenario 2 had happened, there would be initial apprehension at the result. The business community would now be facing a brand new entity in all its dealings. This uncertainty would have resulted in a “wait and see” attitude extending beyond the elections. But the apprehension would have settled in the short term and the market would have started its upward climb, although far more hesitantly.

No one saw the third possibility. The unimaginable scenario whereby Pakatan Harapan would win with such a resounding victory. Barisan Nasional now remains a mere shadow of its former self while Pakatan Harapan is on a high and the feel good factor and euphoria amongst Malaysians is overwhelming.

I predict that this overwhelming feel-good factor will shortly spillover into the market. This will start turning into increased sales – not just for the property market but also can be seen translated in the pick up of the retail market.

I believe the upward climb will begin to gain momentum in 2018 and will continue its spike as Pakatan Harapan gets down to the business of running the country and cleaning house.

2018 would certainly register a significant improvement over 2017 – both in terms of volume of sales and total value.

With the abolishment of the GST from June 1, 2018 – the market will be further boosted. There will be more disposable income in the market and this should translate into more sales in all sectors of the market. The property market will also be a big recipient of this, with sales of commercial and industrial properties no longer attracting any GST. Hence, sales should improve.

I believe this is the light at the end of the tunnel that we have been waiting for, for such a long time. The results of the election has given everybody hope and this new hope will translate into improvements in the property market.

It is also encouraging that the new Government has placed much emphasis on affordable housing.

It is my ernest hope that the new Government gets the affordable housing issue right as this has been bandied about for so many years already, and with so little results to show for it. This is not a difficult thing to do and all it requires is an iron political will coupled by a sense of fair play and justice.

It is also time that the Government engages the relevant stakeholders before making policy decisions on property matters. There are many qualified people around with many years of experience and they have much to contribute.



All properties except for the residential units will see an immediate positive impact by June 1 when GST is zerorised and there is no requirement to pay for GST on any property transactions.

Buyers who have been holding back their property purchases in the current quarter will move forward in their buys and will see more transactions moving into 3Q18.

We have seen residential developer, Hillcrest Gardens such as the Kuok Group dropping their prices in its Hillcrest Heights project by 3% immediately in view of this GST savings in construction costs. This is a tax savings passed back to the purchasers. It is thus a good time to slowly start to venture and explore investing in properties again as the feel good factor is also returning.

As forecasted earlier, we expect the property market to firm up well by 2019 and it is a good time to start to venture and explore going into property investment again.

There Has Never Been A Better Time To Buy

Savills Malaysia would like to reiterate that 2018 will be significant for the Malaysian property market, particularly with the new Government’s promise of clean and fair governance. We anticipate the markets to have a knee-jerk reaction this week, with Q218 set to be relatively quiet for property transactions with the onset of the Ramadhan fasting month. However, the outlook for Malaysia appears to be promising as the new Government gets ready to work to address some of the institutional problems that have held back Malaysia’s long-term prospects and deterred foreign investment.

Residential Market

The value of unsold units that have been completed in Kuala Lumpur and Selangor rose by 44% in 2017. In the same year, the number of unsold houses in Selangor rose by 108% to 5,200 units.

We anticipate that renewed confidence in the market will encourage buyers who have been holding back. However, there will be a period of adjustment and consolidation required to clear existing stock before we see much evidence of price increases. Generally, we foresee that prices will firm up in 2019, and it will be early 2020 before developers can respond by stepping up supply. In short, particularly in Greater KL and Penang, there has never been a better time to buy.

Office Space

Sadly, not even the new Government has much influence on low global crude oil prices – and oil and gas players make up 33% of the office market in the Kuala Lumpur city center. While it will still take some time to absorb the 16.9 million sq ft of new space to be completed by 2020 – in the short term, we anticipate that with the uncertainties of the elections behind us, more potential upgraders will see their way clearer to invest in a move to new premises. This could lead to an absorption of more than the 1.9 million sq ft we saw in Greater KL last year. In the medium term, we anticipate that the new office take-up will increase in tandem with a growing economy and more foreign direct investment. Datuk Christopher Boyd, Chairman of Savills Malaysia does not think that the abolition of GST will have any meaningful impact on office rentals.

Retail Sector

While the market is likely to remain well supplied in Greater KL, we see the likelihood that retail turnover will pick up in areas where GST is lifted from merchandise, and not replaced by a sales tax. We hope that luxury goods will fall into that category, making Malaysia a major tourist shopping destination.

Mr Allan Soo, Deputy Executive Chairman of Savills Malaysia opines that the groceries, food and beverage as well as mass prestige fashion brands will see positive impact from the lifting of the GST.

Industrial Sector

Datuk Paul Khong, Managing Director of Savills Malaysia believes that renewed market confidence will boost foreign direct industrial investment. Coupled with surging domestic consumption, the prospects for the industrial and logistics market are very positive.

Also, look out for rising industrial rents which have lagged behind recent strong increases in industrial land values. There’s good news for REITS and other funds which are focused on this market sector.

The Investment Market

Institutional investors, particularly overseas investors, dislike uncertainty. With the GE14 behind us, we are preparing for a major uplift in domestic and foreign interest in commercial investment properties. Malaysia has extremely liberal policies related to foreign investment in commercial properties and can offer attractive yields. The prospects of appreciation in the Ringgit and strong economic growth will now make Malaysia an outstanding regional investment opportunity (hub).


Transitioning to A New Malaysia

We observe that personalities play a more dominant role than ideology in Malaysia with members moving among political parties. We also observe that we are transitioning into a New Malaysia where race-based politics is slowly giving way to a political system of developed countries, as seen in a more liberal ideology supporting social equality or left wing and a conservative and generally traditional or right wing government that favours market forces and accepts social hierarchy as an outcome.

Pakatan Harapan is more like a left wing Government. It has diverse talent and as a coalition of differing ideologies, there are people in these parties that can be tapped into to formulate good policies. As long as all parties are able to see what is in the best interest of the “rakyat”, the coalition can work towards a pragmatic solution.

Struggles of the new generation

If we take a snapshot in time, Malaysia is also at the demographic window where the proportion of working age group is prominent. The bulk of the Malaysian population (61%) constitute Gen Z and Millennials. Some of the biggest struggles of this new generation are the challenges of house ownership which constitutes the largest segment of their income.

An interesting workplace, career progression, opportunities and meritocracy are likely to be on their wish list. Those who have made it are likely to be in the Gen X and Baby Boomers constituting 29% of the population. In another two elections away, most of the Gen X would have retired and the Baby Boomers would have become the silent generation.

The voice of Gen Z and the Millennials will then make themselves heard. If what they are struggling with today is not fulfilled, we should not be too surprised if they vote for change again. The difference between the haves and have-nots could widen if capitalism is left unfettered or if the Government-linked enterprises crowd out the small players.

In all likelihood, if the Gen X and Baby Boomers are not living with their parents, they would be renting and paying for their daily expenses under a higher inflationary environment than their parents. According to i-Money, 86% of Millennials in Malaysia rate the cost of living as their top three biggest concerns. Only 35% of Millennials are able to own a property according to a study done by HSBC’s “First Beyond the Bricks”. Without parental support, renting a very small new home is now the norm for the newly wedded generation.

The internet has become an “educational experience” for them and they are more exposed to local and international news than the Baby Boomers. Yet, they are also physically more isolated and may end up seeking social groupings through a chat group.

According to the Internet Users Survey 2017 by Malaysian Communications and Multimedia Commission, internet users in the country have increased to 24.5 million people last year which means nearly everyone in the country is connected online.

This compares to only 2.5 million people in 2006. Moreover, Malaysian internet users are amongst the most avid and socially engaged in the world. According to findings from Kantar TNS’s Connected Life study, over three fifths (62%) of internet users in Malaysia access social media networks daily as compared to 42% globally whilst 52% use instant messaging everyday.

Hence, the expectations for governance, transparency, fast answers and solutions are much higher for the new Government than in the earlier generations where the Government knows all and were revered and believed to do the right thing. Now, we have a new generation who is watching their leaders closely and they are not afraid of change. They respond to peer pressure via these internet forums, chat groups and facebook, etc. and as voters, can be persuaded to change when they are given credible information.

The new electorate will be well-informed (or mis-informed depending on their sources) through the numerous information channels now available. Decision-making may eventually move towards consensus rather than being reliant on existing personalities, especially given that positions of power can only be for two terms.

While campaigning in ceramahs have been a very important part of past elections in Malaysia, campaigning in the future will have to be more sophisticated to attract the attention of voters. Consistency is what voters are watching in the leaders that they have elected. While no leader is free from mistakes, how the mistakes can be rectified and are clearly explained and communicated to the public is to be expected and can be forgiven.


In a sense, it may have been easier to win the GE14 as the different parties were united by a common goal to save Malaysia from the excesses of kleptocracy. To win the next election, the new Government should focus their efforts in addressing the needs of these future voters.

Pakatan Harapan needs to harness its talent to steer it through its next challenge and find the most basic and unifying stand amongst the coalition which Malaysians voted for and that would comprise good governance, pragmatism in favour of ideology, sound ethics and principles, a corruption-free Government which will creatively find a means to bridge the divide between the haves and have-nots in economic, political and social terms.

The need for opportunities, career progression and meritocracy amongst the struggling new generation of Millennials and Gen Y and Z need to be addressed to attract and retain local talent in order for the nation to grow and prosper. This is not just a new Government but the beginning of a New Malaysia.


What’s Going To Happen After GE14?

Looking at the current status, what our new Government doing is RECOVERING our Government’s financial strength and the overall economic system in Malaysia. Besides solving the national debt and the living cost problems, as what I have observed so far, one of the directions our new Government is headed for will be focusing on attracting “Mutualistic” Investment instead of “Parasitic” Investment.

Parasitic Investment is a form of investment in which one party gets all the benefit while the other party suffers lost. Some of the previous mega projects initiated by our previous Government that is in Joint Ventures (JVs) with other companies are not showing a long term benefit to our people. In fact, the JV partners gain all the benefits. As of now, we need more mutualistic and genuine investors to help us in the overall infrastructure development.

By cancelling off those projects that are from “Parasitic Investors”, we are now sacrificing our short term pain for long term gain. We may not be seeing a huge development process in the near future – but this is the time that we are filling the gap of “over-developed” issues.

And…. What about zero GST implementation? What will be its impact to the property market?

Building cost and material cost will now not be charged with the 6% GST and it is expected that the overall building cost will be lowered down. However, there won’t be any significant price drop in the short term as some of the building materials which were purchased previously have already been charged 6% GST.

It is a smart move to stimulate the market, some developers have already lowered the price by around 2% – 3% in response to this 0% rate GST implementation. This implementation is encouraging those wait-and-see purchasers to take action now, especially those concerning buyers of commercial titled properties.

The decision to zerorise GST not only brings down business cost but also improves the ease of doing business in Malaysia. Hence, it would boost more money flowing into the market.

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