Vaccination injects confidence in property market

As the country begins the journey towards achieving herd immunity, higher consumer confidence is expected

by S BIRRUNTHA / pic by TMR FILE

THE ongoing National Covid-19 Immunisation Programme has provided much-needed optimism on the growth of the local property market this year.

iProperty.com.my GM Shylendra Nathan said although the recovery will not be as fast as many would expect, it will boost the property market’s recovery in the first half of 2021 (1H21).

“As our country begins the journey towards achieving herd immunity, we expect to see higher consumer confidence in the property market,” he said in a virtual media briefing yesterday.

iProperty.com.my unveiled the 2020 Portal Demand Analytics (Rental Market) yesterday, which included an overview of the residential rental property demand using the property website’s user visits.

The analysis also demonstrated data on residential property listings in Malaysia, focusing on Kuala Lumpur, Selangor, Penang and Johor.

It covered four types of properties namely terrace houses, condominiums, apartments and serviced apartments.

Nathan said 2020 was a year that favoured tenants more than landlords, as a result of the entrance of newly completed projects in an already crowded market.

He said landlords had to drive down their rental rates as they competed to attract a limited pool of financially stable tenants.

“Indeed, tenants are now in a better position to negotiate prices and this has been reflected in slight drops in median asking rent prices and rental yields.

“Although the lower Overnight Policy Rate has reduced monthly loan instalments for property owners, the bigger drop in rental income is currently offsetting the lower financing cost advantage,” Nathan said.

He added that the results of the rental market analysis showed most Malaysians were more inclined to rent in 2020 due to the impact caused by Covid-19.

He said user visits to iProperty.com.my increased during the pandemic, as many property seekers have shifted to digital platforms to find properties.

“In February 2021, iProperty.com. my recorded the highest number of monthly visitors with 10 million visitors compared to the same period last year before the Movement Control Order was implemented.

“Apart from recording a year-on-year (YoY) increase of 51%, it also saw an increase in the number of inquiries on properties through its platform by 20.4%,” he said.

Nathan said the rental visitorship to the website increased as users opted to rent due to uncertainties caused by the virus. He said although rental visitorship grew, the increase in rental property listings outpaced it, causing the national rental demand figure to decline to 12.6%.

He said overall, the rental yield for terraced houses stood at 3.3% in 2H20 compared to 3.4% in 1H20. In 1H20, the median asking rent for condominiums was RM1,800 compared to RM1,900, and RM1,600 compared to RM1,700 for serviced residences.

Nathan said the demand for residential rental properties in Kuala Lumpur (KL) declined 7.7% YoY for all building types, due to the lower rental demand for the apartment segment caused by unemployment in the capital city.

“Overall, the rental yield for terraced houses in KL was at 3% compared to 3.2% in 1H20, while condominiums was at 4.1% compared to 4.3% in 1H20.

“Meanwhile, in Selangor, the demand for rental properties declined 10.3% YoY in 2020 for all types of buildings. However, terrace houses recorded an increase in demand of 2.8%, making Selangor the only state in Malaysia to see positive growth in 2020.

“This can be attributed to renters moving to suburban areas seeking spacious living spaces in Bangi, Rawang, Kajang and Cyberjaya,” he added.

As for Penang, Nathan said the rental demand figure for the state declined 18.3% in 2020, as its economy was affected by the pandemic.

However, he said the situation improved during the year-end holiday period, providing much-needed businesses for hotels and short-term accommodations.

One positive finding in Penang was the continued rental demand for apartments and flats in the industrial areas of the state including Sungai Dua, Bayan Baru, Bukit Jambul and Prai as workers look for affordable accommodations, he added.

In the case of Johor property market, Nathan said being the state with the most unsold properties in Malaysia, the residential rental property market remained sluggish as newly completed units remained idle. This resulting in a decline in demand rate by 27.8% YoY for all building types.

He added that Pengerang was the most in-demand area for rental in Johor, due to its role as the southern oil and gas hub.

“However, we found that the closure of the border between Singapore and Malaysia has impacted the rental market in Johor Baru.

“Nevertheless, the expected completion of the rapid transit system project in 2026 looks to improve Johor’s residential rental property demand,” he said.