Property transactions to dip 5%-10% in 2017

Izzat RatnaFriday, February 17, 2017

The real estate market’s overall transaction volume is expected to dip further between 5% and 10% in 2017, with a backdrop of buying pressure due to a mismatch of supply and demand.

Rahim & Co International Sdn Bhd EC Tan Sri Abdul Rahim Abdul Rahman said the overall transaction volume had always been around 90%.

However, the figure dropped to about 70% in 2016, an indication that the market is expected to remain subdued for the next 12 to 18 months. He said the high-end luxury segment within the above RM5 million bracket in the Kuala Lumpur City Centre area would incur another 5% to 10% drop in rentals and selling prices, while the middle-range products priced below RM2 million would remain flat.

Abdul Rahim pointed out that the affordable segment priced below RM500,000 will continue to see pressure from buyers throughout 2017.

“According to Perbadanan PR1MA Malaysia, there are about two to three million buyers on the waiting list for houses in this segment, which shows insufficient supply to match the increasing demand,” he told reporters at a media briefing yesterday.

On the commercial side, Abdul Rahim said there is an overbuilding of office spaces and shopping malls, particularly in the Klang Valley area and there is worry that these spaces may not be occupied, as the occupancy rate currently stands below 80%.

“The market is expected to see another 557, 418 sq m of retail supplies, which will eventually flood the market and create a glut.

“Most shopping malls with poor location and management may see a significant decrease in traffic due to the oversupply,” he said.

The head of the consulting firm said the gross domestic product is only expected to grow at 4.3% this year, compared to the initial forecast of 5% that will further dampen the market.

Abdul Rahim said foreign investors, particularly China, may be the key factor to help stabilise the market in the next two years, as the depreciation of the ringgit is encouraging more foreign players to enter the country.

“Investments from overseas would help the market to recover, which is why the government is encouraging them to enter the market. Based on historical facts, there is a 10-year cycle in the property market, whereby every 10 years, there is a dip for about two to three years before the market picks up again.”

Save as Draft By Editor: 
Show this story in slider: 
Set as main story 1: 
Set as main story 2: 
Set as main story 3: