“If the economy continues to be gloomy, the property market will likely be slow and soft,” Valuation and Property Services Department (JPPH) director-general Datuk Faizan Abdul Rahman tells the TheEdgeProperty.com.
According to Faizan, the property market hinges on market sentiment.
“The economy, politics, and even the recent Brexit in UK have an indirect impact on sentiment. It is also among the reasons that caused the drop in transactions in all property sectors in the first quarter of 2016,” Faizan says.
Based on 1Q2016 data, the overall market performance had softened in 1Q2016. Both volume and value of transactions recorded double-digit contraction against 1Q and 4Q2015.
With the exception of the agricultural sub-sector, all other sub-subsectors were on the downtrend.
“The residential sub-sector, which has been contributing the lion’s share of the market, influenced the overall performance. The residential market for the major states (Kuala Lumpur, Johor, Selangor and Penang) recorded a decline in transaction volume of between 16.7% and 24.4%. In tandem with the market slowdown, residential overhang increased by 8.4% from end-2015, says Faizan.
Hence, he believes the current market is a typical buyers’ market.
“Buyers have more choices now. They can afford to spend a little more time to find the best deal. We have also seen many affordable housing projects launched to cater to buyers’ interest,” Faizan adds.
As for the office market, it is even more subdued.
“In the first half of 2016, there were fewer oil and gas players in the office market — they have been very important to the office market in the past five years,” says Savills Malaysia executive chairman Christopher Boyd on the Kuala Lumpur office market. Generally, he says the KL office market is still soft and slow-moving, lacking in big transactions.
“It could be good news or it could be bad news that we haven’t seen any big movement on the charts so far this year,” he says.
However, he expects a slight improvement in 2017 due to the limited supply ahead.
“There will be less supply (of offices) in 2017 so the current stagnant situation may improve. Nevertheless, more supply is coming on stream in 2018, many which offer modern and green designs.
“No one can foresee what will happen two years from now. It depends on the overall economic situation,” he adds.
Credit Rachel Chew, TheEdgeProperty.com