KUALA LUMPUR: The property market in 2018 will be flat and stable while waiting for consumers’ wait-and-see attitude to warm up, according to Rahim & Co International Property Consultants.
Its research director, Sulaiman Akhmady Mohd Saheh, said he did not expect the market this year to be much worse off than in 2017, but it was too early to state the market had bottomed out.
He said many consumers were hoping the results of the coming general election would give a firmer direction for the nation and hence re-igniting the momentum in the property sector.
Sulaiman said this at the presentation of the consultancy’s annual Property Market Review 2017/2018.
He said the residential sector is expected to see more projects in 2018 within the affordable range defined by prices of up to RM500,000 in the Klang Valley and lower in other less urbanised states.
“Competition is expected to intensify with many developers shifting their focus within this segment as products within the price bracket of RM250,000 to RM500,000 are performing well.
“Although being affordably priced, many of these units have smaller built-up areas but are canvassed with modern concepts such as integrated developments and Transit-Oriented-Developments (TOD) which are well received by homebuyers,” he said.
The high-end residential category, meanwhile, remains flat with actual transactional prices down 10% in the past 18 to 24 months, or approximately 15% to 20% lower than the original asking prices in the secondary market.
Rent-to-Own (RTO) schemes are slowly being adopted to help homebuyers in purchasing their homes which also help ease pressure on developers facing unsold units.
“A total 20,304 newly completed units of residential properties or overhang units were left unsold as at 3rd quarter 2017 (43% more than the 3rd quarter 2016 figure of 14,193 units).
“This situation brings concerns on how the market is going to absorb the oversupply of housing units while buyers face the affordability dilemma,” said Sulaiman.
In the office sector, he said oversupply concerns continue to lurk as Klang Valley’s supply reached 131 million square feet.
With another 18 to 20 million square feet estimated to enter the market in the next few years, occupancy rate and effective rental rates will continue to face pressure.
“Leasing activities in general continue to move at a slow pace but office spaces in well-connected integrated developments reap benefits from movement of corporate tenants seeking more favourable facilities.
“The key for Klang Valley’s office market sustainability is not to rely on organic expansion of existing tenants but to bring in new international firms and MNCs (multinational corporations) to set up offices here.
“The role and collective efforts by bodies such as InvestKL, MIDA and MITI and other agencies in both private and public sectors would be crucial along with more attractive incentives to seduce new players to set up their offices here,” he said.
In the retail category, a similar picture is seen against the backdrop of passive consumer spending.
In 2017, there were 69.8 million square feet of retail space in Klang Valley with an average occupancy rate of 85.2%.
Another 18.2 million square feet are expected to become available over the next four years, adding further pressure on retail mall owners.
Sulaiman said the growing emergence of e-commerce and mobile shopping trends also posed a threat to physical retail malls.
“This has forced mall operators to re-strategise their buildings as not only a place to shop, but also a venue of experience and entertainment as well,” he added.