Residential property prices... How will it go?

According to an article in The Edge, Swhengtee International Sdn Bhd founder and president Gavin Tee said that residential property prices would see corrections this year; property prices may soften for certain products in certain locations, having escalated too fast last year.

Some people asked me for my opinion and in my view, I would quite agree with Mr Gavin Tee. However, I dont see the corrections as a major issue when you are making investments in property - especially residential properties. In terms of property appreciations and prices, there is no straight line upwards; it is always a staggard growth - and it just depends on how steep the line is. =)

...and so... the graph/line would look like this. Staggard upward movement. =)

In my view, I believe that the line is correct, but there will be some changes to the line. Let us zoom in a bit and I'll show you the difference... I believe that there will be a minor correction, which would somewhat be forgotten within a short period of time. After the correction is what matters... In the coming 24-30 months, I believe that the property prices would still go upwards, but slow down a bit (not so steep part of the line...).

How the market will behave after the slight correction.

It will still go up, but not as rapidly as before. In my opinion, property prices, in particular to residential ones are expected to go up at least 10% within this year itself, and steadily grow in the months after that. Being in the construction industry, I have additional 'insider information' of this potential rise; for a start, prices of building materials ranging from steel, cement, concrete, timber and so on have all gone up quite a bit. Apart from this, land costs and values have also gone up tremendously. It has come to the time that developers are unable to keep to the previous market prices, hence a natural increase of prices.

Prices of land, especially in matured neighbourhoods such as Petaling Jaya, the KLCC vicinity as well as various areas in Cheras, Kepong and Kota Damansara have been competitively and aggressively snapped up by developers. This sudden competition have resulted in higher land prices, pushing it way beyond the previous 20-25% (of the Gross Development Value) figures. Today, land costs accounts for almost 30%, and in some cases as high as even 40% of GDV values, resulting in a more expensive end product.

The Icon City PJ by Mah Sing

However, despite this, various developers are still developing properties around, and not giving up. I like the recently launched Icon City PJ by Mah Sing - it has quite an innovative design and layout, a futuristic look and importantly, the quantum of the property prices are not extravagantly priced.

As we go forward from here, I believe that the investors and future owners of properties would be looking at new innovations and ideas from the developers; and the developers have to work and think double hard in order to capture the investors' hearts. =)

The Glomac Damansara, by Glomac.

Another project that has caught my eye is the Glomac Damansara. It is a mixed development, with over 1.6 million sq ft of space, comprising shops offices, office blocks, apartments, as well as a Grade A office tower too. I believe this project would sell very well - do bear in mind that the *new* MRT would run near here, and there is a station nearby too.

So, in all, I would like to summarize that... yes, there will be a minor correction of the property prices in the months to come. But dont worry - I believe that the market will pick itself up and stabilize after that.

Just one thing that you need to think about though for investors.... for that, come back to my blog next week and you'll see it. =)

Residential property prices... How will it go?

According to an article in The Edge, Swhengtee International Sdn Bhd founder and president Gavin Tee said that residential property prices would see corrections this year; property prices may soften for certain products in certain locations, having escalated too fast last year.

Some people asked me for my opinion and in my view, I would quite agree with Mr Gavin Tee. However, I dont see the corrections as a major issue when you are making investments in property - especially residential properties. In terms of property appreciations and prices, there is no straight line upwards; it is always a staggard growth - and it just depends on how steep the line is. =)

...and so... the graph/line would look like this. Staggard upward movement. =)

In my view, I believe that the line is correct, but there will be some changes to the line. Let us zoom in a bit and I'll show you the difference... I believe that there will be a minor correction, which would somewhat be forgotten within a short period of time. After the correction is what matters... In the coming 24-30 months, I believe that the property prices would still go upwards, but slow down a bit (not so steep part of the line...).

How the market will behave after the slight correction.

It will still go up, but not as rapidly as before. In my opinion, property prices, in particular to residential ones are expected to go up at least 10% within this year itself, and steadily grow in the months after that. Being in the construction industry, I have additional 'insider information' of this potential rise; for a start, prices of building materials ranging from steel, cement, concrete, timber and so on have all gone up quite a bit. Apart from this, land costs and values have also gone up tremendously. It has come to the time that developers are unable to keep to the previous market prices, hence a natural increase of prices.

Prices of land, especially in matured neighbourhoods such as Petaling Jaya, the KLCC vicinity as well as various areas in Cheras, Kepong and Kota Damansara have been competitively and aggressively snapped up by developers. This sudden competition have resulted in higher land prices, pushing it way beyond the previous 20-25% (of the Gross Development Value) figures. Today, land costs accounts for almost 30%, and in some cases as high as even 40% of GDV values, resulting in a more expensive end product.

The Icon City PJ by Mah Sing

However, despite this, various developers are still developing properties around, and not giving up. I like the recently launched Icon City PJ by Mah Sing - it has quite an innovative design and layout, a futuristic look and importantly, the quantum of the property prices are not extravagantly priced.

As we go forward from here, I believe that the investors and future owners of properties would be looking at new innovations and ideas from the developers; and the developers have to work and think double hard in order to capture the investors' hearts. =)

The Glomac Damansara, by Glomac.

Another project that has caught my eye is the Glomac Damansara. It is a mixed development, with over 1.6 million sq ft of space, comprising shops offices, office blocks, apartments, as well as a Grade A office tower too. I believe this project would sell very well - do bear in mind that the *new* MRT would run near here, and there is a station nearby too.

So, in all, I would like to summarize that... yes, there will be a minor correction of the property prices in the months to come. But dont worry - I believe that the market will pick itself up and stabilize after that.

Just one thing that you need to think about though for investors.... for that, come back to my blog next week and you'll see it. =)

Ringgit at 13-year high!!!

THE ringgit closed at a new 13-year high against the US dollar yesterday at 2.9920/9945 from last Friday's closing of 3.0050/0064, dealers said. A dealer said demand for the ringgit was robust in line with Asian currencies on speculation that central banks in the region would raise interest rates to cool inflation.

The ringgit also rose against the Singapore dollar to 2.4254/4280 from 2.4355/4384 on Friday and also against the Japanese yen to 3.6461/6514 from 3.6652/6691 previously. The ringgit was stronger against the British pound at 4.9446/9499 from last Friday's 4.9638/9687 as well as against the euro at 4.3665/3711 from 4.3762/3821 previously.

I guess it is a good time to go travel, isnt it?

Ringgit at 13-year high!!!

THE ringgit closed at a new 13-year high against the US dollar yesterday at 2.9920/9945 from last Friday's closing of 3.0050/0064, dealers said. A dealer said demand for the ringgit was robust in line with Asian currencies on speculation that central banks in the region would raise interest rates to cool inflation.

The ringgit also rose against the Singapore dollar to 2.4254/4280 from 2.4355/4384 on Friday and also against the Japanese yen to 3.6461/6514 from 3.6652/6691 previously. The ringgit was stronger against the British pound at 4.9446/9499 from last Friday's 4.9638/9687 as well as against the euro at 4.3665/3711 from 4.3762/3821 previously.

I guess it is a good time to go travel, isnt it?

The Global Equity Markets.

Here are some extracts from a research article that I read today. =)

The End of the US Correction?

The S&P500 pulled back to 1,295 pts last Monday, within our 1,283-1,295 target range, before staging a strong rally towards the end of the week. This could be the start of the minor wave iii rally. However, we see signs of consolidation, at least in the first half of this week. But we would only turn bearish if the index broke below its mid-Mar low of 1,249. Otherwise, we continue to expect a major peak for the US equity market sometime between end-May and end-Jun. Pattern-wise, we see a potential bullish reverse “head & shoulder” formation with the neckline at 1,338pts and a target of 1,435pts on breakout of the neckline.

Asia's resurgence to continue in May 2011...

The MSCI Asia ex-Japan (MAxJ) corrected until midweek before rebounding to close strong at the week’s end. The strength of the rally at the end of last week is probably an indication of further upside for Asian stockmarkets over the next few weeks. This view is supported by MAxJ’s recent bullish weekly MACD “golden cross” confirmation and the breakout of the weekly RSI above its resistance trendline. However, we expect consolidation first for Asian equity markets this week as part of the rebuilding of support.

Weakness in Dollar Index continues...

Weakness in the Dollar Index continued last week, with the index reaching as low as 73.7pts. Until we see signs of a rebound in the Dollar Index, commodity prices could continue to rally in the face of weakness of the US$. However, a breakout above the 75 level would indicate the end of the Dollar Index’s downtrend from the Nov 10 peak.

The Global Equity Markets.

Here are some extracts from a research article that I read today. =)

The End of the US Correction?

The S&P500 pulled back to 1,295 pts last Monday, within our 1,283-1,295 target range, before staging a strong rally towards the end of the week. This could be the start of the minor wave iii rally. However, we see signs of consolidation, at least in the first half of this week. But we would only turn bearish if the index broke below its mid-Mar low of 1,249. Otherwise, we continue to expect a major peak for the US equity market sometime between end-May and end-Jun. Pattern-wise, we see a potential bullish reverse “head & shoulder” formation with the neckline at 1,338pts and a target of 1,435pts on breakout of the neckline.

Asia's resurgence to continue in May 2011...

The MSCI Asia ex-Japan (MAxJ) corrected until midweek before rebounding to close strong at the week’s end. The strength of the rally at the end of last week is probably an indication of further upside for Asian stockmarkets over the next few weeks. This view is supported by MAxJ’s recent bullish weekly MACD “golden cross” confirmation and the breakout of the weekly RSI above its resistance trendline. However, we expect consolidation first for Asian equity markets this week as part of the rebuilding of support.

Weakness in Dollar Index continues...

Weakness in the Dollar Index continued last week, with the index reaching as low as 73.7pts. Until we see signs of a rebound in the Dollar Index, commodity prices could continue to rally in the face of weakness of the US$. However, a breakout above the 75 level would indicate the end of the Dollar Index’s downtrend from the Nov 10 peak.

The Week in Review.

Barisan Nasional's strong results at the Sarawak state elections was one of the reasons to cheer - hence pushing the local Bursa up this week. For the week, the KLCI index was up about 0.8 points, which is about 0.05% to close at 1,522.75 points. However, the KLCI underperformed as compared to its peers in the region for the week up to Thursday. The average daily trading value also declined to RM 1.55billion (about 11%), a dismal 22% below the three-month average of RM 2 billion.

I believe that the KLCI would be hovering at a support level of 1,500+ even if the market corrects further. I trust that the trend remains upwards for the various Asian equity markets, especially for the rest of April and into May 2011, to rebound from its March 2011 lows.

Looking at the immediate 1-2 weeks ahead, I believe the trend would show a slight correction, with the index testing the 1,500 mark or slightly lower.

In the past week, rubber prices declined, due to major inflations in China, raising speculations that interest rates will be increased - hence lowering demand for rubber. Despite the current situation in Japan, the local new vehicle sales surged to an all-time high of 63,265 units in March. While Japan considers major reconstruction, I think the demand for steel will very likely fall this year as all its major carmakers/manufacturers are slashing productions.

Further to that - I got sources that the Government is seriously considering a mega-merger between Proton and Perodua. What can we see out of it? A mega auto player in the region?

The Week in Review.

Barisan Nasional's strong results at the Sarawak state elections was one of the reasons to cheer - hence pushing the local Bursa up this week. For the week, the KLCI index was up about 0.8 points, which is about 0.05% to close at 1,522.75 points. However, the KLCI underperformed as compared to its peers in the region for the week up to Thursday. The average daily trading value also declined to RM 1.55billion (about 11%), a dismal 22% below the three-month average of RM 2 billion.

I believe that the KLCI would be hovering at a support level of 1,500+ even if the market corrects further. I trust that the trend remains upwards for the various Asian equity markets, especially for the rest of April and into May 2011, to rebound from its March 2011 lows.

Looking at the immediate 1-2 weeks ahead, I believe the trend would show a slight correction, with the index testing the 1,500 mark or slightly lower.

In the past week, rubber prices declined, due to major inflations in China, raising speculations that interest rates will be increased - hence lowering demand for rubber. Despite the current situation in Japan, the local new vehicle sales surged to an all-time high of 63,265 units in March. While Japan considers major reconstruction, I think the demand for steel will very likely fall this year as all its major carmakers/manufacturers are slashing productions.

Further to that - I got sources that the Government is seriously considering a mega-merger between Proton and Perodua. What can we see out of it? A mega auto player in the region?