PETALING JAYA: Low demand and oversupply of high-rise residential units may see rental rates drop by as much as 30 per cent over the next two years, The Malaysian Reserve reported.
Axis REIT Managers Berhad’s Siva Shanker said thousands of newly-completed units were expected to come on stream simultaneously in 2017 and 2018, causing a further strain on the market.
He added however, that such a spike in the rental market will be shortlived, and the return to market equilibrium will occur in line with economic sentiments.
“Many of these unit owners cannot afford any losses as they have to pay mortgages and they have no choice but to put up their units for rent,” he said in explaining how a rental war was expected to start as buyers would compete to get tenants, the financial daily reported.
Rents would drop by as much as 30 per cent from the projected rental return of two to three years ago, Siva said.
Malaysia’s property sector had been booming in the last five years. An increase in demand and high returns had prompted developers to build high-end, high-rise units.
However, the country’s economic downturn had rattled the property market. Since last year, property sales have decreased, battering the share prices of public-listed developers.
The number of expatriates leaving the country after being retrenched, has also left many high-rise residential units unoccupied.
In a research report on the property sector, real estate agency Knight Frank Malaysia revealed that property owners were willing to compromise on lower rents to secure and retain tenants due to job cuts from low oil prices.
Siva said despite all the talk of foreigners swooping in to buy properties in Malaysia, the local property scene was driven by domestic consumption.