Residential market to see slow uptick post-MCO

The outlook is supported by various stimulus provided by the govt and right product positioning

by FARA AISYAH

THE residential market is expected to see a slow uptick post-Movement Control Order (MCO).

Knight Frank Malaysia Sdn Bhd MD Sarkunan Subramaniam (picture) said the outlook is supported by various stimulus provided by the government including the reintroduction of the Home Ownership Campaign featuring stamp duty exemptions, among others.

“Developers may also reconsider their product positioning and marketing strategies including leveraging technologies and partnering e-commerce platforms to improve their sales moving forward,” he said in a statement yesterday.

Malaysia Real Estate Highlights for the first half of 2020 (1H20) by Knight Frank noted that there was only one notable completion of high-end condominium or residence projects in Kuala Lumpur (KL) during the period, namely Sky [email protected] (986 units).

The nationwide MCO had halted most construction activities before its gradual easing of restrictions, leading to the scheduled completion of projects including Agile Mont’ Kiara (813 units), Arte Mont’ Kiara (1,707 units) and TWY Mont’ Kiara (484 units), being pushed to 2H20. Another two projects — 8 Kia Peng (442 units) and Tower 2 @ Star Residences (482 units) — are also scheduled for completion by 2H20.

Collectively, Knight Frank said these five projects will add 3,928 units to the existing high-end residential stocks in KL.

Sarkunan said the short-term outlook for KL high-end condominium market remains cautious with windows of opportunities in the mid to longer term backed by right product positioning and various stimulus provided by the government.

“During 1H20, the central areas of KL saw fewer residential project launches and lower levels of transactional activity.

“Still, against this backdrop, we observed active bookings of rightly positioned residential products of reputable developers in city fringe and popular/upcoming suburbs,” Sarkunan added.

Sarkunan said borrowers who failed to obtain a loan due to the restriction of one-third debt service ratio rule, may now have higher chances of securing financing due to lower Overnight Policy Rate coupled with the six-month automatic loan moratorium.

As for the office markets in the Klang Valley, Knight Frank said co-working or flexible space may garner lesser interest as more clients are conducting virtual meetings in the immediate term preceding the lifting of the MCO.

However, once business confidence is restored post-MCO, demand for smaller office space is expected to increase.

Co-working or flexible space may be a good option for new occupiers and businesses looking to navigate in the near term before committing to a longer-term plan.

The cumulative supply of office space in the Klang Valley as of 1H20 stood at circa 108.8 million sq ft (10.11 million sq m) following the completion of Menara Hap Seng 3 in KL City and Sumurwang Tower @ i-City in Selangor with a combined net lettable area of circa 500,000 sq ft.

By the end of 2H20, another five office buildings are scheduled for completion including Menara TCM and Legasi Kampung Baru in KL, as well as Menara Star 2 (The Star Tower) @ Pacific Star, Block G of Empire City and Quill 9 Annex in Selangor.

Collectively, these buildings will increase the cumulative office supply by circa one million sq ft.

Knight Frank said the overall occupancy rate of purpose-built office space in KL continues to be under pressure and was at 69.8% in 1H20 from 70.5% in 2H19, due to the growing supply-demand mismatch and limited pool of tenants amid the unprecedented Covid-19 crisis.