Positive prospects ahead for property


The property sector is preparing for a major uplift in domestic and foreign interests for commercial property investments following the formation of the new government.

The present ruling coalition is set to address institutional problems as well as deterred foreign investments.

Savills (M) Sdn Bhd in a statement said institutional investors, particularly overseas investors, dislike uncertainties.

“Malaysia has extremely liberal policies related to foreign investment in commercial property and can offer attractive yields.

“The prospects of appreciation in the ringgit and strong economic growth will now make Malaysia an outstanding regional investment opportunity,” it said.

According to Savills, the renewed confidence in the market will encourage buyers who have been holding back, although, there will be a period of adjustment and consolidation required, to clear existing stock before significant evidence of price increase can be experienced.

“We generally foresee that the prices will firm up in 2019, and it will be early 2020 before developers can respond by stepping up supply.

“There has never been a better time to buy, particularly in Greater Kuala Lumpur (KL) and Penang,” Savills said.

The value of unsold units that have been completed in KL and Selangor rose 44% in 2017, while the number of unsold houses in Selangor rose 108% to 5,200 units.

Savills MD Datuk Paul Khong said the renewed market confidence will boost direct foreign industrial investments, coupled with the surging domestic consumption as the prospects for the industrial and logistics market seem very positive.

“Look out for rising industrial rents which have lagged behind recent strong increases in industrial land values. Good news for real estate investment trusts and other funds, which are focused on this market sector,” he added.

Commenting on the retail sector, Savills deputy executive chairman Allan Soo said the groceries, food and beverage, along with mass prestige fashion brands will see positive impact from the lifting of the Goods and Services Tax (GST).

“While the market is likely to remain well supplied in Greater KL, the likelihood of a retail turnover will pick up in areas where GST is lifted from merchandise, and not replaced by a sales tax.

“We hope luxury goods will fall into that category. That will place Malaysia as a major tourist shopping destination,” he added.

Despite the positive ongoing sentiment, Savills chairman Datuk Christopher Boyd does not think the abolition of the GST will have any impact on office rentals.

Boyd said the oil and gas players make up 33% of the office market in KL city centre and the new government does not have much influence on the low global crude oil prices.

“While it will still take some time to absorb the 16.9 million sq ft of new space, which will be completed by 2020 — in the short term, we anticipate that with the uncertainties of the elections behind us, more potential upgrades will see their way clear to invest in a move to new premises.

“This could lead to an absorption of more than the 1.9 million sq ft we saw in Greater KL last year.

In the medium term, we anticipate the take-up rate of new office space will increase, in tandem with a growing economy and more foreign direct investment,” Boyd said.