Last year was a challenging year for the property market, especially with both high-end condominiums and offices witnessing remarkably subdued activity.
In its summary of market highlight for the second half of 2016 and the outlook for the current year, global property firm Knight Frank Malaysia (KFM) said homebuyers will likely continue to face financing difficulties with banks holding out loans.
“Loan interest rates may rise and this will affect investor’s returns. Office rents will be under pressure but there will be several notable sales of office buildings at lower than expected prices compared to the past year,” said KFM managing director Sarkunan Subramaniam.
Sarkunan added that the increase in office supply will see the market shift towards being a tenant’s market.
This summary was made from the company’s Real Estate Highlights for 2nd Half of 2016 report, which was released earlier this year. The report looks at market performances across the property mix – including residential, office and retail – to determine highlights the trends and outlook in the four key markets in Malaysia. These are Kuala Lumpur/Klang Valley, Penang, Johor Bahru and Kota Kinabalu.
Going forward in 2017, Sarkunan said the hotel and logistic sectors are foreseen to do better, as investors look for better yields in this sector to diversify their portfolio.
“A silver lining can be expected at the tail end of 2017, as the market is expected to pick-up after the national election, and as the dust settles, business will be running as usual,” he said.
Here are some key highlights from the report worth noting:
KL High-End Condominium Market
- Despite the subdued market, there were noticeably more launches and previews in the second half of 2016.
- The rental market in locations with high supply pipeline and a weak leasing market undergoes correction as owners and investors compete for the same pool of tenants.
KL & Beyond KL (Selangor) Office Markets
- More fitted office space available for sub-let as restructuring of oil & gas related companies continues.
- Newly operational Phase 1 of the MRT Line 1 boosts demand for good grade office space along its route.
Klang Valley Retail Market
- Second half 2016 welcomed the opening of an upscale retail mall and lifestyle cum neighbourhood malls despite growing headwinds in the local retail scene.
- Retail sales growth to remain weak going forward as consumers grapple with rising cost of living and lower disposable income amid a weak job market and growing economic uncertainties.
Penang Property Market
- The state government recently announced an increase in development density to 128 units per acre, up from the current 87 units per acre, in order to provide more affordable housing in the state. To take effect only next year, units built under this new guideline must not be less than 900 sq ft. Prices are being fine-tuned at the moment.
Johor Bahru Property Market
- Johor manufacturing sector attracted total proposed capital investment of RM18 billion in 2016, the highest in the country.
- As of 3Q2016, Iskandar Malaysia recorded cumulative investments of RM218.84 billion, an 18% increase (RM33.5 billion) year-on-year.
Kota Kinabalu Property Market
- Department of Urban Wellbeing, Housing and Local Government as well as developers have launched initiatives to improve conditions of the property market.
- Market sentiment shows that consumers are still fairly confident in established developers