Page 16 - Malaysia Builders Directory 2019/2020
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Nevertheless, the country’s residential overhang situation persisted. Last year, the glut in the residential sub-sector rose 30.6% to 32,313 units valued at RM19.86 billion, from 24,738 units worth RM15.64 billion in 2017. Among the states, the highest increase was seen in Kuala Lumpur, where overhang units almost tripled to 2,769 last year from 929 in 2017. Perak placed second with a 136% increase to 5,367 units in 2018, from 2,276 the previous year. Surprisingly, Penang managed to buck the trend, with residential overhang units declining 11% to 3,502 units from 3,916 in 2017.
The overhang situation can be eased if developers stop building the same products and offer alternative asset classes. Another strategy is to create more demand, such as the government’s Home Ownership Campaign (which ran from January to June 2019) and stamp duties exemption on residential units priced between RM300,000 and RM1 million.
The report also highlighted that house prices continued to see a steady increase. The Malaysian House Price Index in 2018 stood at 193.3 points, up by 3.1 points from 2017. House prices in Johor and Selangor were higher by 5.6% and 3.3% respectively over the course of the period. By type, the terrace house price index continued to record the highest increase.
The commercial property sub-sector recorded a significant increase in market activity last year with 23,936 transactions valued at RM29.51 billion, increasing 8.0% in volume and 16.0% in value. Selangor led market activities with 5,431 transactions (22.7%), followed by Kuala Lumpur with 4,079 transactions (17%), Johor (3,504: 14.6%) and Penang (1,304: 5.4%).
Shop sub-sector transactions dominated 54% of commercial property transactions and 36.4% of the total value, recording
a positive movement of 5.0% in volume and 11.5% in value compared with 2017 (12,310 transactions worth RM9.63 billion). However, the shop overhang situation recorded an increase of 11.2% to 5,055 units valued at RM4.08 billion. On the outlook for this sub-sector, Knight Frank Malaysia in its 2019 Malaysia Commercial Real Estate Investment Sentiment Survey says that favourable factors affecting commercial real estate investment sentiment are strong influx of foreign direct investments in the manufacturing sector and the rapid adoption of Industry 4.0.
Separately, 29 office buildings were transacted in 2018, valued at RM1.19 billion. Kuala Lumpur recorded eight transactions and Selangor recorded seven. Other transactions include five in Sabah, four in Penang and one each in Johor, Perak, Sarawak, Labuan and Putrajaya. Knight Frank Malaysia says developers will be building less office, retail and hotel properties in 2019. While pockets of opportunities may still be present in selected office sub-markets, the overall outlook is gloomy in 2019 with the majority of respondents expecting occupancy and rental rates to fall. There is no immediate catalyst to address the growing mismatch in supply and demand.
The retail sub-sector saw a decrease in average occupancy rate to 79.3% from 81.3% in 2017, due to negative take-up in several states, especially Selangor and Pahang. Malaysian Association for Shopping and High-Rise Complex Management past president Richard Chan says the decline was due to the entrance of new malls that had been under-performing, causing the sub-sector to be weighed down. Analysts expect the retail local retail sector to remain stable in the second quarter of 2019, underpinned by the festive seasons which will spur spending.

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