Contributed by Alan Poon
alanpoon.official@gmail.com
As we welcome the start of Q2 for the year, many economic analysts and property experts would have already realised that their predictions on both the financial and real estate markets respectively, made since the onset of the new year, have changed.
Similarly, for property developers with ambitious forecasts and everyone who was looking forward positively in anticipation of another year of recovery for the real estate market, hopes were dashed.
Over the recent months, a series of unfortunate international to domestic events lobbed off one positive expectation after another.
2020: A perfect storm
No one can forget how positively we started the year in 2020 when just days before the Lunar New Year, the world was alerted by the unexpected Covid-19 outbreak in Wuhan, amidst the US-China trade war.
As the Chinese welcomed the arrival of spring towards the end of January with a mass exodus back to their home city, a population of 11 million were suddenly locked down in an unprecedented move by the Chinese government. China was applauded worldwide later for its swift action to contain the spread of the virus, now codenamed Covid19 by the World Health Organisation.
This was due to signs that this virus is highly contagious and possibly can turn into an outbreak of pandemic proportion. Many countries who derived income from the tourism sector mainly by the Chinese tourists’ footfall, were directly hampered. Not to mention, the US-China Trade war since 2019 was already a dampener to the global trade economy.
Hopes dashed
All these incidences dashed the hopes of a route to full economic recovery. From big corporations to small business owners, it was like a black swan had swooped down to paralyse a large chunk of the supply chain since China is the world’s largest exporter of commodities and technology.
With no vaccine in sight and the outbreak worsening, this is an unprecedented crisis on a global scale. Although Malaysia is doing better in terms of containing the epidemic, it is not spared the effect. The nation’s aviation, hospitality and retail industries were severely hit. Coupled with the sudden political crisis and change of government which had clouded many business activities and eroded investors’ confidence, things were pretty gloomy. Just as people thought that things couldn’t worsen, oil prices experienced their biggest plunge since the 1991 Gulf War (under US$30 per barrel). Amidst such uncertainties, many foreign investors held back and that further weakening the Ringgit to an all-time low of RM4.40 to US$1 since April 2017.
The real estate market cannot escape the same fate since it is a cyclical industry, having its own supply and demand factors. Already in the slowdown phase, the partial lockdown has had a more significant effect on many property-related businesses and landlords.
Nobody wishes to see a further slide, but it does look pretty much that the dominos are falling one by one, with nothing in place to stop it.
With the perfect storm closing in, it appears that the world is tethering closer to the brink of a full-blown global recession.
Crisis or opportunity
The adage, ‘fortune favours the bold and courageous’, carries weight when the business community charters through unknown territories during times of crisis.
For example, Mr DIY stores took no time in reinforcing their branding by giving away free face masks at their outlets as a public service to raise awareness and contribute to the community.
Similarly, AirAsia launched an unlimited flight pass to specific destinations, in a move rarely seen in the aviation industry, to counter the fear of travelling at the time.
On the real estate front, many office and retail spaces in the commercial sector are still visibly unoccupied as oversupply from incoming projects adds to the current overhang.
Meanwhile, the hospitality sector also sees hoteliers faced with high room cancellations and getting less than favourable occupancy. Not to forget that they already cried foul to the disruption caused by short-stay operators in the country.
With business profits taking a nosedive and people tightening their belts, is there a solution in sight at the end of the tunnel? Is there an opportunity that one can spot and venture into despite all the odds and challenges stacked against them?
In every crisis, a calm mind, coupled with logical and rational thinking, might see an opportunity ahead. Perhaps another way could be found to revive the unoccupied spaces to boost up the real estate industry again. And the wellness industry may be the way forward to revive the real estate sector. Part 2 of Rise of the wellness real estate can be read at URL: https://www.starproperty.my/news/117232/rise-of-the-wellness-real-estate-market-part-2.
SuperiorWealth Resources Sdn Bhd founder and CEO Dr Alan Poon is an award-winning international speaker, entrepreneur and author of the three “Good Tenant, Great Tenant” books series on tenant management.
Disclaimer
This article is intended to convey general information only. It does not constitute advice for your specific needs. This article cannot disclose all of the risks and other factors necessary to evaluate a particular situation.
Any interested party should study each situation carefully. You should seek and obtain independent professional advice for your specific needs and situation.
