Property market expected to remain subdued

Potential investors continue to adopt the ‘wait-and-see’ approach


The property market is expected to remain subdued as potential investors continue to adopt the “wait-and-see” approach, based on Knight Frank Malaysia’s latest report — Real Estate Highlights for the first-half of 2017 (1H17).

Knight Frank MD Sarkunan Subramaniam said despite the general slowdown in 1H17, the recent rebound in the country’s economy, the strengthening of the ringgit and stable employment market signal hope for recovery in the high-end condominium market.

“While in the office sector, the quality of office stock continues to be upgraded to cater to the requirements of large corporates and multinational companies,” he said in a statement yesterday.

With the increase of supply and competition, Sarkunan, nonetheless, said malls are facing challenges in sustainability in the retail segment.

“Operators are refurbishing, rebranding and repositioning their malls to improve footfall.

“Fashion, as well as food and beverage-related trades are no longer the key to increase footfall. Shopping centres are starting to promote experiences instead of products,” he added.

The head of the consulting firm maintains that Malaysia would remain as an attractive investment destination in the future, with its stable property market and relatively lowentry prices offering reasonable returns.

Knight Frank’s report looked into the market performance across various property mix — residential, office and retail.

It also highlighted the trends and outlook in various cities of Malaysia, namely Kuala Lumpur (KL), the Klang Valley, Penang, Johor Baru and Kota Kinabalu in Sabah.

For 1H17, KL recorded lower volume and value of transactions in the condominium/ apartment segment, with 1,247 transacted units valued at RM975 mi l l ion in the first-quarter of 2017 (1Q17) — 12.2% and 5.9% lower than in the previous quarter (4Q16: 1,420 units valued at RM1.04 billion).

By 2H17, about eight projects totalling 2,979 units are slated for completion, five of which include hotel branded/managed projects — The Ritz-Carlton Residences (288 units); Four Seasons Place (242 units); Tribeca Bukit Bintang (318 units); The Ruma Residences (199 units) and The Establishment (521 units).

As of 1H17, the cumulative supply of purpose-built office space in KL and Selangor stood at approximately 9.2 milion sq m.

The overall occupancy rate for KL City continued its decline at 80.7% (2H16: 82.8%). As for the decentralised office locations in the KL Fringe and Selangor, the overall occupancy rates remained fairly stable at 90.9% (2H16: 91.6%) and 77.8% in 1H17 (2H16: 78.6%).

The ratio of approvals to applications for residential property purchases for 1Q17 was lower at 40.4% (4Q16:44.3%).

The beginning of the year also saw a marginal increase in the total outstanding/ non-performing loans in the housing sector to RM5.54 billion (4Q16: RM5.41 billion).

Meanwhile, Malaysian retail sales, which expanded by 1.7% in 2016 continue to retreat, recording a 1.2% contraction in 1Q17.

The cumulative supply of retail space in the Klang Valley stood at 5.26 million sq m as of end-1H17, following the completion of the MyTown Shopping Centre.