1. Savills Malaysia group managing director Datuk Paul Khong (pix)
Infrastructure continues to be a key economic driver
> The government will continue to expedite the kick-off of the MRT 3 project in Greater KL. This will spur the growth of construction projects and unlock values around the MRT station locations.
> We also look forward to completing MRT 2 and LRT 3 in 2023 where construction works have been delayed due to the MCO restrictions in 2020/21.
Residential market still remains a buyer market
> We hope to see the residential activities improve in 2022 despite transaction prices expected to remain soft.
> Since the Home Ownership Campaign (HOC) benefits would cease to be carried through to 2022, we saw some stronger activities to the closure of the year. These “discounts” given to the various types of residential properties provided opportunities for many genuine homebuyers to own their first home and/or for upgraders to move to a better unit.
> Bank Negara Malaysia may increase the overnight policy rate (OPR) in 2022 to combat inflation, however, the interest rate at the moment is expected to remain favourable. 2022 will continue to be challenging in continuation from 2021 as there is not much given in Budget 2022 except for RPGT reverting back to 0% and 5% for both individuals and companies respectively.
The office leasing is to be reactivated in 2022
> We expect more companies to continue to relocate to newer office spaces in the view of the flight-to-quality perspective. They will also continue to relook at the angle of workspace optimisation impacted by the hybrid arrangements of both working-from-home and working-from-office.
> Old office buildings will be challenged to retain their tenants and many will undertake major refurbishments or potentially be repurposed to other usages.
> Flexible work arrangements will continue, with slow but sure trends towards partial office occupation, making the co-working spaces relevant.
> Nevertheless, the office market is a tenant’s market as demand still lags way behind supply, resulting in high vacancy rates.
> We are expecting close to about 10 million sq ft in new supply entering the Greater KL in the next two to three years.
The momentum in e-commerce continues to push up demand for industrial real estate
> The pandemic has left companies no choice but adapt to omnichannel and online sales strategies. This has further led to the increased demand for warehouses.
> We expect the pent-up need for high-quality (with latest automation) warehouse facilities to positively impact rental growth in 2022.
> In addition, geographical diversification begins to take effect as more companies seek to expand and get closer to customers, thereby bringing up land value in the near term.
2022 is not getting any easier for the local real estate sector and the current economic conditions moving into the new year remains much the same. Nevertheless, new opportunities are still aplenty in these changing markets and the real estate sector will just have to continue to capture the pent-up demand in the market with developers working harder with more innovative strategies to drive up property sales into 2022.
2. Deputy managing director & head of capital markets Nabeel Hussain
> We have seen transactions – both completed and interest – pick up in the last few months.
We expect to see continued activity, as concerns about the pandemic have mostly been “priced in” so to speak, and investors realise that the new normal is here to stay – at least for the foreseeable future.
> Not surprisingly, those sectors that are most pandemic-proof, i.e. logistics and data centres, continue to attract the most interests. On the other hand, the sectors most affected by the pandemic such as hospitality and retail are most likely to trade at discounts to what would have even expected two years ago.
> The rationalisation drives undertaken by GLCs since GE14 will continue, albeit at a slower pace than initially desired, as there remains an ask-bid gap between sellers and buyers.
3. Executive director Marcus Chia
> The removal of RPGT for residential property in the 6th year of ownership onwards may help secondary property sales in 2022.
> We expect with the ending of the moratorium in early 2022, more distressed auctions will be appearing. This will create more pressure on property prices.
> Residential sales volume is expected to inch up in 2022 but property prices will remain relatively stable.
> Innovative developers will continue to drive sales with new marketing packages in place of HOC 2021.
4. Industrial agency director Kevin Goh
> Industrial & logistics, as predicted by Savills in 2021, will continue its uptrend and growth into 2022.
> This asset class is still the all-time favourite for 2022.
> We now look at new warehouses equipped with state-of-the-art technology in warehousing.
> There is strong demand for warehouse space by e-commerce players.
> There will be some new relocation exercises coming through after the current flooding events. We also expect to see more deals flowing through in 2022.
5. Retail services director Murli Menon
> Having gone through perhaps the worst period for retail, the market is set to bounce back and recover the losses in 2022.
> The response seen after the reopening of retail malls has boosted the confidence of the entire retail sector and it has also reaffirmed the fact that brick & mortar retail will never die but at the right balance between online and offline channels with both supporting each other and in- driving traffic.
> Nothing can beat the actual shopping experience, be it for F&B or non-F&B as clearly demonstrated by the surge of shoppers and customers back into the stores upon reopening of retail in Q4 2021.
> New wave of retail entrepreneurs – another consequence of the lockdown is this new breed of retailers or rejuvenated and reformatted existing retailers coming into the market with fresh offerings in terms of product and services and infusing a breath of fresh air and new ideas in retailing and retail experience.
> Collaborations across retail brands and retail concepts. We expect to see more as brands and retailers realise the importance of working together to reach out to a broader audience as well as to be able to offer enhanced service and experience by combining resources as well as product offerings. Creative and collaborative commercial terms between landlords and retailers – a shift from the conventional rental structures towards a more participative and profit-sharing approach.
