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INSPIRING CREATIVE AND INNOVATIVE MINDS

THE SIGNIFICANCE OF RESIDENTIAL PROPERTY IN MALAYSIAN PROPERTY SECTOR Muhammad Najib Mohamed Razali Hishamuddin Mohd Ali. Department of Property Management Faculty of Geoinformation Science and Engineering UNIVERSITI TEKNOLOGI MALAYSIA Email : hishamuddin@utm.my; mnajibmr@utm.my.

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INSPIRING CREATIVE AND INNOVATIVE MINDS

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  1. THE SIGNIFICANCE OF RESIDENTIAL PROPERTY IN MALAYSIAN PROPERTY SECTORMuhammad Najib Mohamed RazaliHishamuddin Mohd Ali Department of Property ManagementFaculty of Geoinformation Science and EngineeringUNIVERSITI TEKNOLOGI MALAYSIAEmail : hishamuddin@utm.my; mnajibmr@utm.my INSPIRING CREATIVE AND INNOVATIVE MINDS

  2. The Content • Introduction • Methodology • Findings • Conclusions INSPIRING CREATIVE AND INNOVATIVE MINDS

  3. Introduction • Residential property in Malaysia constitutes more than 50 per cent of the total number of property transactions. • Furthermore, residential property market in Malaysia has been experiencing rapid growth due to the growth of population and economic since 1990. INSPIRING CREATIVE AND INNOVATIVE MINDS

  4. Introduction Table 1: Economic and Financial Profile of Malaysia: 2008 INSPIRING CREATIVE AND INNOVATIVE MINDS

  5. Introduction Table 1: Economic and Financial Profile of Malaysia: 2008 (cont’d) INSPIRING CREATIVE AND INNOVATIVE MINDS

  6. Introduction Table 1: Economic and Financial Profile of Malaysia: 2008 (cont’d) Source: WEF (2008), RCA (2008), Transparency International (2008), CIA (2008) and JLL (2008) INSPIRING CREATIVE AND INNOVATIVE MINDS

  7. Introduction Table 2: JLL Global Real Estate Transparency Index: 2008 Source: WEF (2008), RCA (2008), Transparency International (2008), CIA (2008) and JLL (2008) INSPIRING CREATIVE AND INNOVATIVE MINDS

  8. Methodology • Data were obtained mainly from National Property Information Centre (NAPIC), Ministry of Finance Malaysia from 1999 to 2008. The Malaysian property sectors assessed were: • total property • residential property types : terraced, high rise, detached, semi detached • residential property size • residential property main area : All state INSPIRING CREATIVE AND INNOVATIVE MINDS

  9. Methodology • Annual return and risk level analysis as well as correlation analysis were carried out to assess the performance for residential property in Malaysia for the period 1999 to 2008. Rank correlation analysis was also used to compare annual return index and risk level index of each performance analysis namely: • Property sector performance • Residential property sector performance • Property sector performance: state INSPIRING CREATIVE AND INNOVATIVE MINDS

  10. Methodology Table 3: Property Sector Performance in Malaysia 2001-2008 *Value in USD Million Source: National Property Information Centre (2008) INSPIRING CREATIVE AND INNOVATIVE MINDS

  11. Methodology Figure 1: Sector Performance in Malaysia: 2001- 2008 INSPIRING CREATIVE AND INNOVATIVE MINDS

  12. Methodology Figure 2: Residential Property Performance: 2001-2008 INSPIRING CREATIVE AND INNOVATIVE MINDS

  13. Findings Table 4: Property Sector Performance 1999- 2008: Risk Adjusted INSPIRING CREATIVE AND INNOVATIVE MINDS

  14. Findings Table 5: Residential Property Performance Analysis 1999- 2008 INSPIRING CREATIVE AND INNOVATIVE MINDS

  15. Findings Table 6: Residential Property Performance: State INSPIRING CREATIVE AND INNOVATIVE MINDS

  16. Findings Table 7: Residential Type Correlation Matrix: 1999 - 2008 INSPIRING CREATIVE AND INNOVATIVE MINDS

  17. Findings Table 8: Correlation Matrix between States in Malaysia INSPIRING CREATIVE AND INNOVATIVE MINDS

  18. Findings Table 8: Correlation Matrix between States in Malaysia INSPIRING CREATIVE AND INNOVATIVE MINDS

  19. Findings Table 9: Correlation Matrix for Property Sector Performance in Malaysia * Significant correlation (p < 5 per cent) INSPIRING CREATIVE AND INNOVATIVE MINDS

  20. Findings Table 10: Rank Correlation 1999 - 2008 INSPIRING CREATIVE AND INNOVATIVE MINDS

  21. Conclusions • The analyses in this paper have shown residential property make a significant contribution to property market sector in Malaysia. From the year 2001 to 2008, it gives more than 48% of value of total property market property market value with 51% average market. While commercial property have seen good performance with average 18% growth over 1999 to 2008 periods. INSPIRING CREATIVE AND INNOVATIVE MINDS

  22. Conclusions • From a diversification context, it has shown that residential property give benefits to certain property sector; commercial and land development land. In term of residential property type, terrace house made known as the most favourite type of housing project among investors. This is shown by the highest annual return and most importantly among the lowest risk level. The analysis also analyse the residential property sector performance among each states in Malaysia. This will give importance guideline for investors to decide the location to invest specifically on residential property. Additionally, comparison has been made between annual return and risk level index to examine the correlation between these two indexes. It has shown only residential property performance have correlation in these two indexes. INSPIRING CREATIVE AND INNOVATIVE MINDS

  23. Conclusions • Finally, given the various point of view type of analyses of residential property market in Malaysia, residential property in Malaysia is believe will continue to give a significant contribution to property sector. As demographic in Malaysia have seen positive growth over the year, it will give better impact to residential property. Given the importance of residential property in Malaysia, there are further research issues need to be considered. First, the house price analysis over the same period for each type of houses. Secondly, it can be narrowed to each state of Malaysia and compare to other type of property portfolio. Risk adjusted performance analysis technique also could be use in further research to assess in depth significance analysis on residential property in Malaysia. INSPIRING CREATIVE AND INNOVATIVE MINDS

  24. Thank you!Muhammad Najib Mohamed RazaliHishamuddin Mohd Ali Department of Property ManagementFaculty of Geoinformation Science and EngineeringUNIVERSITI TEKNOLOGI MALAYSIAEmail : hishamuddin@utm.my ; mnajibmr@utm.my Ph: +607-5530880 / +6019-7176463 INSPIRING CREATIVE AND INNOVATIVE MINDS

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