Malaysia Property Market 2012/2013

Generally, property prices in Malaysia have appreciated dramatically between 20%-100% beyond the affordability of most people giving rise to much discontent in the last few years especially in the state of Kuala Lumpur and Penang. Low interest rates, high liquidity, high labour costs as well as compliance costs and inflation which leads to rise in building material costs are some of the major elements that contribute to this surge in prices. Is Malaysia experiencing a 'property bubble'? It is a question yet to be answered.

It is a true fact that Malaysia property market has been doing well in the past couple of years. However, the Malaysian Government intervention has taken place recently. Malaysia Government is trying to 'cool' the local property market and prevent the property prices from rising further by introducing several 'cooling' measures.

Property

Under the Central Bank's new lending guidelines which took effect on 1 January 2012, loans are now approved based on net income rather than gross income. The volume of loan applications for residential properties declined by 3 percent year-on-year in August 2012, leading to a decline by 12.7 percent in loan approvals, according to OSK Research. This trend is said to be an indicative of the residential property market cooling following tightening measures by Central Bank. However, it is not rational to conclude that the demand for local property has been decreased based solely on this single data as the loan volume might actually remains relatively constant; it is probably just means that people are still able to borrow, just that they have to apply to a few more different banks nowadays compared to last time.

Malaysia Property Market 2012/2013

Under Budget 2013, the real property gains tax (RPGT) rate for properties sold within two years was increased by 10 percent to 15 percent while the rate for properties sold within three to five years was raised from 5 percent to 10 percent. This second year of hike in RPGT acts as a very first step to contain the issue of rising property prices although it is less likely to have an impact in curbing excessive property market speculation, according to property analysts.

The various minimum limits for foreign purchases imposed by the Government for different states also aim to protect the interests of local Malaysians. For instance, the minimum limit for foreign purchases of all properties is RM1 million in Penang while landed properties is in higher limit which is RM2 million starting from 1st of July 2012. However, the limits are considered low for foreigners who are cash rich. The developers will most probably rising the property prices in order to target and attract these potential foreign buyers. Besides, these foreign purchase transactions constitute only 2.26% in the year of 2011 in Penang. Thus, there is a big question arises as to whether these limitations will be effective enough to control speculation in Penang properties that is continuously driving up in prices.

It is believed that the property prices in Malaysia will continue to rise, but at a slower pace in the coming months and will continue to rise in the coming year of 2013 because the local buying interest will remains strong due to increasing affordability, the local buyers see homes as hedge against inflation and have no other options in alternative investments. Additionally, the cooling measures taken by the Government is said to be not good and effective enough to prevent property prices from rising further. Besides, there are many foreign buyers who are very interested in buying Malaysia property. For illustration, there is a lot of interest from Singaporean in buying Johor Bahru property. The Malaysia property market is expected to grow despite rising property prices in the near future.

Malaysia Property Market 2012/2013

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Determining Commercial Property Market Value

Here in the United States, "fair market value" on any item is determined by what a buyer is willing to pay a seller for the item. Simply put, if I have a stick of gum, and I offer it to you for ten cents, and you want to purchase it for ten cents, then the fair market value of the stick of gum is ten cents.

While real estate also has a fair market value, it is a bit harder to determine because of all the factors which go into the valuation. A property, unlike the simple stick of gum in the above example, has multiple aspects for a seller and buyer to put different valuations on. Introduce a lender into the picture, and then you have a third option on valuation to deal with as well.

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Determining commercial property market value is different than determining market value for a residential property. In a residential valuation you can simply look at other recent comparable sales in the area, of similar homes and lot sizes, and determine about what a property is worth at any given time. The issue you will find with commercial property is that they tend to be one-of-a-kind properties, and you may not be able to find many local comparable sales in recent times.

Determining Commercial Property Market Value

One major difference between residential and commercial properties is their location and their use. If you own a large lot inside of the city limits, with a huge warehouse store built on it, with a 10 year lease to a big box store, then you have a very valuable property. If you have the same lot size, with the same store on it, same lease, but it is located 30 miles from the only local town where most people in the area live, then you have a lesser valued property. Location, also known as market area, is more important in commercial real estate because businesses need to be near to their workers and to their customers as well.

Another consideration when looking at market value of a commercial property is the availability of similar properties on the market. By looking at as many properties as possible, you can start to get an idea of what different properties are selling for in your local area. This gives you some leverage to point out differences and better negotiate the price you are willing to pay. This will also give you some idea of how difficult it will be to find a tenant for your property.

If you are tying to determine the market value of a piece of commercial real estate, one of the factors you should always consider is how well other properties in the area are renting and what they are renting for. You will need the rental income to cover your investment funding as well as your day to day costs of owning the property. If you purchase a property at an agreed upon price, will the rents support the costs? What if your property sits vacant for a month or two? These are things you need to think about prior to purchase.

When trying to determine commercial property market value there are many factors which come into play. The biggest being the market area, local property costs, rental income potential, and the property condition itself. By determining what you are willing to pay for a property, and having a professional commercial real estate market analysis completed for you, you can avoid many of the mistakes new commercial property investors make.

Determining Commercial Property Market Value

The KISCL program, http://www.kiscl.com uses the resources of seasoned real estate pros to help you determine commercial property market value [http://www.kiscl.com/whatsnew_sitemap.php] and much more. The commercial market is strong and a great way to increase your bottom line. Learn how to quickly develop realistic financing options.