KUALA LUMPUR: The overall property market will still see growth this year, supported by the nation’s demographic growth but will continue to face challenges across all sectors.
“For landed residential properties, there will still be growth but the alarming part is you can see a lot of red flags in every location from Sabah and Sarawak to Peninsular Malaysia. High-rise is the one area of concern, especially in the Klang Valley where SoHo and SoVo units have very low occupancy,” said CBRE-WTW managing director Foo Gee Jen.
Speaking to reporters at the launch of CBRE-WTW Asia Pacific Real Estate Market Outlook 2019 report today, Foo said the high-end residential market will see a price correction this year while the success of the Home Ownership Campaign, which will be rolled out in March, will depend on how marketable the unsold homes are.
“There may be some take-up out of those units but we’ll wait and see if it (the campaign) translates to actual sales,” he added.
Over in Iskandar Malaysia, the vacancy rate of the high-rise residential market is expected to exceed 50% for the first time, said CBRE-WTW Johor Bahru director Tan Ka Leong.
He said prices and rental rates are expected to fall this year, making it a buyers’ and tenants’ market. A total of 10,500 units of new supply is expected to enter the market this year.
In the office sector, Tan observed a shift towards purpose built offices from conventional shop offices, with professional firms like Ernst & Young and KPMG moving out of their old premises to new offices in Medini.
He said the vacancy rate of offices in Iskandar Malaysia will increase to 35% this year from 26% while some 928,450 sq ft of new space is expected to be completed this year.
Meanwhile, Foo said the advancement of technology will be a challenge for the retail sector, with landlords already offering shorter term tenancies.
“Tenants are getting really restless and going into month-to-month tenancy. They will not sign long term tenancy anymore, as it will be a lot more flexible to move as they wish, depending on the market,” he said.
He said some tenants also opt for “turnover rental”, whereby they pay as they earn instead of a fixed rental. He said landlords have been offering such options to secure tenants but noted that the top five malls continue to perform well.
CBRE-WTW Kuala Lumpur director Ungku Mohd Iskandar said the Klang Valley retail market is less favourable this year, due to the impact of shorter term tenancies on sustainability of malls and the impact of e-commerce.
“Increasing popularity of online shopping could shift the role of retail space to display purpose, thereby shrinking space take-up. Established online retailers could also seek physical space for expansion,” he said.
Amid the challenging outlook, Foo said the industrial sector seems to be a bright spot, having dominated the top 20 property transactions recorded last year.
“Large tracts of land are opening up with accessibility of highways such as West Coast Expressway, where even before completion there has been announcement of about 300 acres of land in Kota Seri Langat,” he said.
Another bright spot is the tourism market in Sabah, with the Pan Borneo Highway being a catalyst. Foo said the tourism market will change and open up opportunities for more world-class resort hotels.
