Local real estate firms are finding it difficult to compete following China's increased participation in the property development market.

Industry players at the Property Guru 2017 Outlook Forum today said Chinese firms were given many incentives which local companies do not enjoy.

Citing the Iskandar Malaysia region as an example, Real Estate and Housing Developers Association (Rehda) Fateh Iskandar Mohd Mansor said developers from China were given generous tax rebates.

"Like it or not, China is the big boy today... But at the same time, it is not right to let foreign investors come and enjoy various incentives.

"Please be fair to us," said Fateh Iskandar. "At the end of the day we are an open market. We want foreign investments. If we don't accept it, our neighbours will. It is a delicate balance."

Based on Rehda's records, Johor had recorded a steady growth of between 7,000 to 8,000 units built annually, he said. However, this figure jumped to 39,000 in 2015.

'Sensitive topic'

Jones Lang Wootton executive director Prem Kumar said that foreign property developers coming in to Malaysia should be supportive of the local economy.

Citing ongoing projects in Johor, he quipped that investors from China is a "very sensitive" topic at this present moment.

"They are literally creating a market of their own.

"They have a potential market that is not necessarily supportive of the Malaysian economy," he said, in reference to the involvement of Chinese firms with various high-rise projects.

He said such companies have the resources to invest in large scale projects that were out of reach for local developers.

Compounding matters further were market uncertainties due to the lack of a clear national housing policy, said Prem Kumar.

"Costs have been escalating over the years and the state-government is not totally helping.

"If we have foreign competition in the market, that would make things worse," he said.

Market should remain stagnant

Recently, Bloomberg reported that Country Garden's Forest City's project is the biggest of about 60 projects in Iskandar Malaysia, estimated to add more than half-a-million homes upon completion.

According to the report, some of the companies had flown in potential buyers from China, prompting low-cost carrier AirAsia Bhd to start direct flights connecting Johor Baru with the southern Chinese city of Guangzhou.

It was reported that the influx has contributed to a drop of almost one-third in the value of residential sales in the state last year, with some developers offering discounts of 20 percent or more.

On the overall outlook for Malaysia's property market next year, the panelist agreed that prices are expected to remain stagnant with no marked increase or downward trend.

The rental market, however, is expected to grow with more available units and higher demand.

Also on the panel were Khazanah Research Institute managing director Charon Mokhzani and Property Guru Malaysia country director Sheldon Fernandez.