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SoHo price drop ahead? SoHo price drop ahead?
Share this on WhatsAppMarket analysts warn that the current oversupply of upmarket strata properties could result in a dip in value this year. In... SoHo price drop ahead?
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Market analysts warn that the current oversupply of upmarket strata properties could result in a dip in value this year. In particular, the large incoming supply of Small-office Home-office (SoHo) and Small-office Virtual-office (SoVo) units could see the prices of such units fall by at least 10 per cent.

Among the prominent property experts pointing out this outcome is consultancy firm CBRE | WTW, which said in a recent market report that high-end stratified properties in areas such as Johor Bahru, KL and Kota Kinabalu might see a 10 per cent to 15 per cent price correction.

However, C H Williams Talhar & Wong Sdn Bhd (WTW) managing director Foo Gee Jen believes landed properties would fare better and any price reduction expected would not go beyond the 10 per cent mark.

Market watchers say that this trend can already be observed in the subsale market, where the price gap between asking prices and transacted prices are beginning to narrow down.

 SoHos in KL, Johor Bahru and Kota Kinabalu could see a price drop of up to 15 per cent due to a large incoming supply.

SoHos in KL, Johor Bahru and Kota Kinabalu could see a price drop of up to 15 per cent due to a large incoming supply.

“Many SoHo and SoVo projects in the Klang Valley have a very low occupancy rate of less than 50 per cent. It will take about three to four years for the market to absorb the supply,” Foo said at  at the launch of its Asia Pacific Real Estate Market Outlook 2017: Malaysia report.

He said the situation in Johor Bahru was slightly better as the city is undergoing a transformational period and more multinational companies are looking in to set up their offices in Iskandar Malaysia, capitalising on the lower operational cost.

However, there could be challenges with projects such as Forest City, a mega development by Chinese developer Country Garden, as it may face a low occupancy rate despite the high sales take-up. This is because many of the buyers are foreign and may treat these units as holiday homes.

“It may have an occupancy rate that will be lower than the industry average of 70 per cent. Most of the buyers may just treat it as a holiday home or just for investment,” Foo said.

Property 360 Online

Property 360 Online is a news portal focused on major issues, views and major market movements in the Malaysian real estate sector.

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