Socio-Economic Research Centre executive director Lee Heng Guie.
KUALA LUMPUR: Renting a place to stay or a house could become more mainstream among the population, moving forward, in line with developments that are seen in other parts of the world.
This could happen following several macro developments in Malaysia on falling birth rates, a present level of high home ownership, the trend towards smaller families among married individuals, increased number of adults choosing to stay single or marry later and affordability.
These recent developments were heard at the real estate forum titled “Form to Future” organised by UEM Sunrise
in Kuala Lumpur yesterday.
But Knight Frank Malaysia’s executive director for research and consultancy Amy Wong said while renting can become more popular among people in the main cities such as Kuala Lumpur, she believes owning a home will still be the main choice for people in the smaller second-tier cities such as Ipoh, Kuantan or Melaka.
“Home ownership is at an all-time high at 76% but the other 24% may be waiting to inherit. But then also what is critical if it is about inheritance is to develop homes that can sustain through the generations.
“So this means developing good quality homes and not disposable homes,” Wong told StarBiz on the sidelines of the forum yesterday.
“I think the trend towards renting will be in the main cities such as Kuala Lumpur. But in the other second-tier cities, it will still be very much about home ownership.
“But because we are living in the city, we may feel it is a rental market but this is also because we have so many investors who own units. If there is no robust rental market, then it would leave us with empty units which is another problem,” she added.
Earlier in the forum, Urbanmetry’s founder and chief executive officer Koh Cha-Ly said this is a pertinent question to grasp following the ageing population trend society is moving towards.
“One thing about the ageing population in Malaysia is that of the 76% or so home ownership levels, what will happen to these (owned) houses when these people are not around anymore?
“We are looking at the largest generation in Malaysia that will inherit a home in the next 10 to 20 years and it is going to be the largest number of people who will be born with a house,” Koh said.
“They will either inherit it from their parents or inherit land. And honing in further, what will happen to these homes if everybody buys a new house or vice versa?
“This is one question that the industry should start thinking of. It is not unprecedented. If you look at other ageing countries such as Japan, Europe or South Korea, they all have this problem and solutions have already been found,” Koh added.
She also highlighted that the people who would inherit a home will likely refurbish or renovate it themselves and with the advent of artificial intelligence, the barriers of entry to home development in terms of knowledge of knowing what to do or where to get the approvals or source the relevant materials will be lowered.
“To a certain extent, it is no longer a competition about if I can build a house at a cheaper price per sq ft.
“This is not enough for the tech-savvy younger buyer because the generation which will inherit land or a house has a chance of outcompeting in terms of price per sq ft construction,” Koh said.
Commenting on this, executive director of Socio-Economic Research Centre and veteran economist Lee Heng Guie said with the high home ownership rates, it is likely the younger generation may already not feel a need to own a home anymore.
“They may think otherwise since they can’t afford it. So they might opt to rent a house or room instead.
“Malaysia’s population growth is 1.1% and with declining fertility rates, there are concerns that this will have an impact on productivity and labour force participation which will impact housing demand along with the ageing population. Aged-care facilities and community living will be in demand here moving forward,” Lee said.
Meanwhile, Bursa Malaysia’s director of the origination and listing division Leong See Meng suggested that given these developments, property developers should not just rely on incomes from property development as it can be quite lumpy.
“To iron out the lumpiness, perhaps for the overhang units, they can be converted to rental housing or rental housing with an exit such as rent-to-own programmes.
“There is no harm in doing this, and if you come to Bursa Malaysia you can always do a secondary issuance, rights issue or private placement to fund this to take up the overhang units,” Leong said at the forum.
“Over time, this can also be a robust business to be translated to a rental housing real estate investment trust or REIT, for example.
“And if it happens, it will be the first in the country – not only for the sponsoring developer but also for Bursa Malaysia. This can potentially be replicated and is sustainable as well, moving forward,” Leong added.
Commenting further on this, Pelaburan Hartanah Bhd’s chief investment officer Norani Mustapha said at the forum that this was a global megatrend that had not reached Malaysian shores.
In Tokyo, New York City and London, people can’t afford to buy houses or flats and they’re mostly renting.
“And institutional investors are actually going in where they actually own the block and get a property manager to let out the space to whoever is interested,” Noraini said.
