Many businesses and lives were devastated by the Covid-19 pandemic that swept nations by surprise. Innocent lives were lost, livelihoods and once-thriving businesses were either scaled-down or wound-up. Unlike the past, this devastation covered almost all sectors of the economy in varying degrees of severity.
The property development and construction sectors were not spared. The credit crunch, tight cash flow and mounting unsold stocks were telling signs of what loomed ahead. Lack of internal and external trajectory forces had somehow delayed the recovery process.
Malaysia, onwards to recovery
When will the economy recovers is anyone’s guess. However, credit should be given to the government and front liners alike. We are hopeful the initiatives introduced would lead to a speedy recovery – both in terms of health & safety and the economy.
In June, the Prime Minister had unveiled the “Pelan Jana Semula Ekonomi Negara” (PENJANA) and reintroduced the Home Ownership Campaign (HOC). From 1st June 2020 eligible home buyers can enjoy stamp duty exemption, exemption of real property gains tax (RPGT), and higher margin of financing for purchase of a third property. The PENJANA initiatives had since attracted the interest of home buyers.
The Budget 2021 further reinforced the government’s commitments to revive the economy. The recent announced people-centric housing budget is targeted at the B40 and M40 segments of the population. These segments are by far under tapped. The allocations bode well for the property and construction sectors.
The much-anticipated revival of the high-speed rail to Singapore and MRT3 further strengthens the government’s resolve to revive the economy. These mega projects once implemented will generate tremendous economic activities at all levels including the support industries. More jobs will be created, more money will be in circulation and ultimately more businesses will be revived and new businesses opened. The renewed enthusiasm in the local economy is what that is needed to encourage spending. The virtuous cycle of spending leads to economic expansion.
Embracing the new normal
Amid the additional health and safety precautions to adhere to, it would be interesting to see how industries adapt and change – a testament to our innovative and creative nature.
Fajarbaru Builder Group is at a strategic vantage point here, being involved in a myriad of infrastructure and property development projects in Malaysia as well as property development projects in Australia. It provides us a much-needed bird’s eye view of the construction sector and property market which is vital in assessing the pulse of economic activity in the country and region.
If the MCO and CMCO periods are any indicators, it is that digital transformation will continue being an integral part of everyday work. We have seen the use of digital capabilities completely revolutionize the education, consulting, logistics and retail sectors over these past few months.
Within residential real estate, there would likely be increased investment in digital products which can be deployed to hold virtual open houses and showings. The introduction of augmented and virtual reality could be a gamechanger as well and when combined with omnichannel marketing, could make it easier for prospective home buyers to purchase their desired home. The establishment of digital marketplace are approaches that are becoming even more important in the era of lockdowns due to the pandemic in avoiding physical and proximity contact.
Similarly, within the construction sector where working from home is not quite the norm, the adoption of a fully digital infrastructure can come in other ways. The use of digital technology and automation will be the main driver in the digitalisation of the construction industry. Engineers could deploy 4D and 5D simulation to plan projects and optimize schedules. Contractors can shift to online channels to monitor employee wellbeing, manage construction material and maintain cash flow. Building Information Modelling (BIM) systems that manage information on a construction project throughout its life cycle and enables the project team to plan, design, construct and manage buildings and infrastructure can be deployed more efficiently. Other digital elements used during the Covid-19 phase are drone technology which allows project team to view and inspect the site without being physically present.
Moving forward, as we continue to innovate and introduce new technology, there would be an increase in R&D spending. Beyond that, the future is quite literally anything we make of it. For example, the designing of standardized building systems could see certain parts of construction being automated. Further investments in such technology would also mean we slowly shed our dependence on foreign unskilled labour and move towards skilled and autonomous machine inspired labour.
There are plenty of reasons to remain positive, thanks to strong fundamentals. The market is also expected to rebound in the following year. As such, the “new normal” signals an exciting journey ahead.
It is clear from the fallout of the pandemic that we are in this together. As world leaders work to formulate a cogent response to the outbreak, we must all do our part to ensure life continues as normal as possible.
We sink or swim together, and business continuity is largely dependent on this.