This article first appeared in The Edge Financial Daily on October 4, 2017

KUALA LUMPUR: UEM Sunrise Bhd expects Malaysia’s property market, particularly within the premium segment, to recover from the second half of next year (2H18) on improving income growth and a better mix of real estate products.

“We are hoping to see recovery of the property market from 2H18,” said its managing director Anwar Syahrin Abdul Ajib. “We are still seeing demand for premium property products.

“The market is there provided it is at the right location with [a] strong value proposition,” he told reporters on the sidelines of the Khazanah Megatrends Forum 2017 yesterday.

Describing the current property market as “cautious”, Anwar Syahrin said this is evident by consumers weighing their options very carefully to purchase big-ticket items.

Referring to the upcoming Budget 2018, he said UEM Sunrise hopes the government will address the issue of high building material costs following the implementation of the goods and services tax in April 2016.

“Basically, property developers are asking for anything that can drive real estate development cost down,” he said.

On affordable housing, Anwar Syahrin said “it has always been an issue”.

“The issue of affordable housing ties back to land cost. The price of a house is always driven by the land price, and that is always a tricky issue as land acquisition cost is high,” he said.

Bank Negara Malaysia in its 2016 annual report described houses in Kuala Lumpur, Terengganu, Penang and Sabah as “severely unaffordable”. The central bank said houses in most states were generally unaffordable for households earning the median income.

According to a study by Khazanah Research Institute published in 2015, there were warning signs that housing affordability in Malaysia, particularly for lower-income households, would worsen if left unchecked.