Mah Sing all out to woo HK property buyers

Mah Sing chief executive officer Datuk Ho Hon Sang(pic) said there is “renewed interest” from Hong Kong investors for Malaysian properties for their second home or retirement.

KUALA LUMPUR: As Malaysia’s housing overhang continues to increase and Hong Kong’s violent anti-government protests prolong, Malaysian developers are making a beeline for Hong Kong.

Mah Sing Group became the latest to join the line of Malaysian developers heading there. It “flew a team” over to promote projects in Penang, the Klang Valley and Johor.

Mah Sing chief executive officer Datuk Ho Hon Sang said there is “renewed interest” from Hong Kong investors for Malaysian properties for their second home or retirement.

Others who have sought for opportunities in the city state included SP Setia group, ParkCity Property Holdings Sdn Bhd with Singapore-based CapitaLand group. SP Setia participated in an event together with Tourism Malaysia, Penang Adventist Hospital, Prince of Wales Island International School in Penang, Malaysia My Second Home or MM2H and a legal firm in Hong Kong recently.

Among the earlier ones to seek his fortune there, Tan Sri Desmond Lim Siew Choon saw trickling interest of about 10 formalised sales a week ballooning to between 50 and 60 in June when pockets of violence erupted.

Lim is developing Pavilion Damansara Heights privately via private entity Impian Ekspresi Sdn Bhd in a joint-venture with Canada Pension Plan Investment Board.

About 50% of his latest and third block of serviced apartments of 500 units have been sold, a third to Hong Kong buyers, a source said. Mah Sing is promoting eight high-rise residentials and its factory and industrial units i-Parc, in Tanjung Pelepas, Johor.

“We believe that the Malaysian market is appealing to Hong Kong buyers due to our political and cultural stability.

“The timing is right for us to focus more on Hong Kong, ” Ho said.

Singapore-based property consultancy Savills’ research and consultancy executive director Alan Cheong said: “If someone whacks a beehive hard, you would expect the bees to disperse. Some would go explore Malaysia, some to Thailand, some to Singapore and so on. But each new potential hive has its appeal.”

Singapore may appeal to those who already have gotten employment or have relatives here, ” Cheong said.

Socio-Economic Research Centre (SERC) executive director Lee Heng Guie said it is timely for Malaysia to review the foreign purchases policy in view of the significant inflows of funds from China and Hong Kong seeking property investments in several ASEAN countries.

“In Budget 2020, the Government can consider to review the minimum thresholds for foreign ownership of properties as well as the state levy for foreign property purchase. The weak ringgit also provides an opportune time for foreigners to buy Malaysian properties, ” Lee said in an email.

“The persistent overhang in residential and commercial properties require urgent attention and prompt policy intervention, ” Lee said.

He said the persistent overhang will have a reverberating effect on the economy given that it is a sub-sector of the construction sector.

“A protracted consolidation and over-adjustment in the property sector would drag down overall construction sector, ” he said.

He added that the already softening property market needs policy impetus to reinvigorate it.

Lee said in 1Q 2019, total overhang of residential properties remained high. It rose by 30.7% to a new record of 32, 936 units valued at RM20bil (versus 25, 193 units or RM15.7bill in 1Q 2018), Lee said.

For commercial properties, the number of overhang units increased by 25.5% from 4, 361 units in 1Q 2018 to 5, 472 units in 1Q 2019, ringgit value jumped 42.9% to RM4.5bil from RM3.2bil 1Q 2018.

Growth in Malaysia’s House Price Index (HPI) has slowed for six consecutive years, from 13.4% in 2012 to 3.1% in 2018 (6.5% in 2017). In 1Q 2019, house price index eased further to 1.3%.

Lee said since 2012, the construction sector growth had continued its downward trend, with the annual growth rate decelerating sharply to 4.2% in 2018 and 0.4% in the first half-year of 2019 from an average annual growth of 11.4% per annum in 2014-2018.

The subdued growth in construction output in recent quarters was weighed by the tapering of infrastructure projects, including a large petrochemical project, which continued to dampen growth in the civil engineering sub-sector, while both residential and non-residential sub-sector remained weak amid the oversupply of residential and commercial properties, which had contracted in 2018 and in 1H 2019.