Hence we have a general undertone that is still one of restrain and uncertainty. The lowered wealth effect from equity markets heightens the defensive nature of investors.
This has obviously put a damper on Malaysia's property market, taking some shine away from its robustness last year, not least because of the slew of attractive measures to boost the sector.
The fluid political landscape in Malaysia does little to lift the cloud for investors, most of whom are evidently adopting a wait and see approach.
But interestingly, economists say that during times of inflationary pressures, real estate in fact offers a good hedge against inflation. (Inflation hedging is when the real return of an asset is independent of the rate of inflation. Generally, an asset is a complete hedge against inflation when its nominal return changes in a one-to-one relationship with inflation).
Citi Research expects, that over the long run, property rents and asset values to rise in line with inflation, but more likely with nominal gross domestic product.thestar22mei2008
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