No rush to buy properties overseas

Article taken from the Edge...

KUALA LUMPUR: Malaysians are not rushing into buying properties overseas as they prefer to keep cash during the economic crisis, property consultants said.

“Local buyers are very prudent. I think they are not rushing into buying properties unless they see a significant drop (in prices) or they have the need, such as buying property for their children who are studying abroad,” president of the Association of Valuers & Property Consultants in Private Practice Malaysia (PEPs) James Wong told The Edge Financial Daily.

He added that buyers were adopting a cautious approach, going for alternative investments, as they did not know how much further property prices would drop.

“The return is low. Rental has dropped and there are no tenants in some areas,” Wong said.

He added that many Malaysians had invested in condominiums and apartments overseas, especially in  Singapore, Hong Kong, the United Kingdom and Australia, before the economic crisis.

“If Malaysians were to buy property overseas, most probably they will go for properties in London as the prices there have gone down a lot,”  Wong said, adding that the pound sterling had also depreciated significantly.

According to news reports, foreign investors such as those from Hong Kong, have joined the property bargain-hunting in London.

The reports said property prices in London had dropped 20% from their 2007 peak, and another 10% drop was expected before recovery took place, with newly built properties in secondary locations likely to be the most affected.

London last week lost its ranking as the world’s most expensive city for offices in 2008, supplanted by Hong Kong and Tokyo for the first time in nine years.

On the local front, Wong said foreign investors were not looking at Malaysian properties as prices have yet to see a major correction.

“Property prices in Malaysia have not come down a lot. Previously, investors normally invest in prime areas such as KLCC, but as the rental goes down in tandem with the slower economy, they are not really interested,” he added.

City Valuers & Consultants Sdn Bhd’s general manager CY Lim shared a similar view. He said rentals and property prices in prime areas in the country had been very much affected.

“Investors have also suffered in other markets and the market is quite weak now. The rental will go down when the economy is not doing well and prime areas will see the greatest impact,” he added.

Nevertheless, Savills Rahim & Co Real Estate Agents’ managing director Robert Ang said there are always buyers looking for investment opportunities in property, despite the economic woes.

“Be it local buyers going overseas or foreign buyers coming into Malaysia, they always have the interest in buying properties and are constantly looking out for them. Foreign developers are also coming to Malaysia,” he said.