Residential property overhang to moderate slightly: Rahim & Co

KUALA LUMPUR (Nov 13): The residential property supply overhang will likely moderate a little next year due to slower growth in supply, says Rahim & Co.

Its International Director of Research Sulaiman Akhmady Mohd Salleh said concurrently, prices in this segment are also seen stabilising as the industry consolidates.

“Some control is still needed to protect the market. However, I think the market should be more responsive to the needs of financiers,“ he said at the Rahim & Co Seminar 2018 themed “The Malaysian Property Market: Where Are We Heading Post-GE 14?”

In his presentation, he said less than 30 per cent of new launches are priced below RM250,000, one of the factors contributing to the rising overhang numbers.

In 2017, 27 per cent of launches were below RM250,000, improving slightly to 29 per cent in the first half of 2018.

However, in Kuala Lumpur, Selangor and Penang, 100 per cent of new launches were priced above RM250,000.

Value-wise, he said residential prices in Kuala Lumpur dropped 8.8 per cent with volume declining 1.2 per cent in the first half of 2018 compared with the same period of 2017.

In Selangor, transaction volume eased 0.3 per cent with the price increasing by 1.7 per cent.

He expressed hope the Government would come up with firmer policies backed up by more stringent implementation to address the affordability issue.

“The market is swaying towards the affordable market segment. Creative products within the affordable segment are going to be well received,” he said.

National Property Information Centre (NAPIC) Director Md Badrul Hisham Awang said despite the many properties launched between RM100,000 and RM400,000, they are not meeting the demand.

As for the office market, Savills Malaysia Executive Chairman Datuk Christopher Boyd said 20 million square feet of supply is scheduled for completion by 2022, led by Kuala Lumpur with 9.7 million square feet being completed over the next three to four years.

Absorption has lagged over the past two years, he said, noting that absorption in 2017 was half of the space in 2013/2014.

Meanwhile, AREA Management Sdn Bhd Executive Chairman Datuk George Stewart LaBrooy said industrial REIT yields will be higher at 7 per cent and above with long leases and stable revenues.

The long-term outlook for the sector will be bright, he said, adding construction activity in the industrial segment is expected to be moderate amidst the softening property market. As at end-June 2018, there were 40,134 existing industrial units with an incoming supply of another 1,087 units and a planned supply of 1,576 units.

Source: TheEdgeMarkets