Property overhang may remain for another 2 to 3 yrs
www.theedgedaily.com 06/07/2001 By Michelle Kuan

The Real Estate and Housing Developers' Association Malaysia (Rehda) has warned that the current RM29 billion property overhang could remain for another two to three years if developers continue building.

"If the (sales) margin is not there, the current RM29 billion property overhang might stay for another two to three years," Rehda's president Datuk Eddy Chen Lok Loi said.

He is, however, optimistic that the oversupply in the market would be mopped up "soon", due to the Government's efforts in supporting the sector.

Although he declined to say when exactly he expects the market oversupply to be mopped up, he pointed out that it has decreased marginally in the last few months.

This was mainly due to the Government's efforts in helping to rejuvenate the market. In May, it had relaxed a ruling disallowing foreigners from buying properties costing more than RM250,000 to help the country weather the US economic slowdown. The exemptions apply across the board and include foreign buyers.

Chen said foreigners, however, still remain cautious about the change in the Government's policy and have adopted a "wait-and-see" attitude on property purchases.

He also said the prices of residential properties have bottomed out and are unlikely to decline further as property values have already adjusted to current market prices.

"If the property prices go down continuously, this will cause losses to the developers," Chen told reporters at a news conference on July 6.

He added that financial institutions should also assist developers in tackling the oversupply problem, given current market conditions, instead of turning down applications for bridging loans from developers.