The unsold under construction and not constructed also succumbed to an increase of 29.3% and 44.7% to 64,077 units (2015: 49,568 units) and 11,622 units (2015: 8,082 units) respectively. Selangor, Johor and Pulau Pinang held more than half of these unsold under construction units, which predominantly made up of double-storey terrace and apartment/condominium priced RM500,000 and above. As for the unsold not constructed, Kuala Lumpur (27.2%) and Pulau Pinang (25.1%) held the most, which were mainly apartment/ condominium units.
Prices of residential property continued to hold despite the slowdown. The Malaysian House Price Index continued its moderating trend. As at 04 2016, the Malaysian All House Price Index stood at 243.3 points (at base year 2000), up by 5.5% on annual basis. The responsible lending measures by the Central Bank has shown positive outcome in ensuring sustainable price growth in years to come. On quarterly movements, the growth has shown negative contraction of 0.7% in Q4 2016.
In Kuala Lumpur, the residential rental market portrayed mixed movements. Residential which are within the vicinity of Light Rail Transit (LRT) and Mass Rapid Transit (MRT) routes as well as higher learning institutions experienced rental gains whilst those in older neighbourhood saw downward rental. Similar upward trend was seen in Selangor where schemes located along the Mass Rapid Transit (MRT) routes have the advantage of fetching higher rental.
In Johor, rentals of residential property firmed up. Terraced houses located nearby higher learning institutions served with good accessibility charted rental growth whilst demand for the limited double storey low-cost terraced houses in Johor Bahru drove up rental. Up north, Pulau Pinang rental market was generally stable with positive movements recorded in selected area, particularly those in strategic locations nearby commercial centres and industrial area served with efficient connectivity.
Transaction There were 23,745 transactions worth RM35.94 billion recorded, down by 25.3% in volume but value increased by 36.1% as several prominent sales were recorded in the year involving office buildings, shopping complexes and hotels. All states recorded lacklustre performance.
Transaction Twenty-one office buildings transactions worth RM2.46 billion were recorded in the review period; 12 of which dated 2016 whilst others were prior years’ transfers (seven dated 2015 and two dated 2014). Kuala Lumpur recorded the highest number of transactions with ten buildings.
Amongst the prominent ones included those which sales agreements dated 2015 but concluded in 2016. These were The lntegra Tower at Jalan Tun Razak, NU Tower at Jalan Tun Sambanthan, Prudential Building at Jalan Sultan Ismail and RHB Centre at Jalan Tun Razak. Other states which recorded office buildings transactions were Kedah and Labuan with one each and Melaka, Perak, Pulau Pinang, Selangor with two each.
Occupancy and Space Availability
The office sub-sector continued to moderate from 83.7% in 2015 to 82.3%. Nevertheless, the annual takeup stood at nearly 230,000 s.m. with the highest takeup recorded in Selangor and Putrajaya.
States that are dominated by Government buildings mostly secured more than 90.0% occupancy rate.
Kuala Lumpur the main supplier of new space, saw a decline in occupancy rate to 77.9% (2015: 81.2%) due to the ample new space that came on stream, exceeding 320,000 s.m. Despite the positive take-up, Selangor too saw its occupancy declined slightly to 75.5% (2015: 75.7%) as new entrants penetrate the market.
ln Kuala Lumpur, Petronas Twin Towers led the rental market at premium range of RM97 to RM 154 p.s.m. lntegra Tower, Menara Shell, GTower KL and Menara Prestige also secured premium rental. In Selangor, rentals of office buildings were generally stable with those adjacent or within city transit hub such as in Petaling Jaya/Damansara locality have the advantage of obtaining higher rental exceeding RM100 p.s.m.
OUTLOOK IN 2017
2016 conundrums are expected to reverberate onto 2017. It would be expected that the property market would take a breather in the next couple of years before it could make a comeback.
Nevertheless, the 4.2% GDP growth indicated economy was still growing despite the challenging global and domestic environment and should post a silver lining to the property market. nApart from that, the decision by Bank Negara Malaysia to maintain the Overnight Policy Rate (OPR) at 3% would ensure that monetary policy is accommodative and supportive of economic activity at large and property industry.
The allocation of RM2.1 billion for infrastructure and socioeconomic development in the five economic corridors, namely, Iskandar Malaysia, Northern Corridor Economic Region (NCER), East Coast Economic Region (ECER), Sabah Development Corridor (SDC) and Sarawak Corridor of Renewable Energy (SCORE) would help support property market activity.
The operation of MRT Sungai Buloh – Kajang MRT line (Phase 1) in December 2016 and July 2017 (Phase 2) would enhance accessibility and improve marketability of areas along the line routes. The signing of MoU between Malaysia and Singapore for the High-Speed Rail (HSR) project marked a historical milestone for the country.
The HSR which is expected to pass through six transit locations namely Putrajaya, Seremban, Ayer Keroh, Muar, Batu Pahat and lskandar Puteri, will cut the travel time between Kuala Lumpur and Singapore to 90 minutes. Another major game-changer is the East Coast Rail Link (ECRL), which runs from Port Klang across Pahang, Kelantan and Terengganu, is expected to improve connectivity from 12-hour journey by road to a four-hour one by rail. Both rail projects would change the economic landscape of the adjacent vicinity and entail better prospects for the property market.
Residential Property Sub-sector
As the leading sub-sector in property market, the focus is mainly concentrated on the residential segment, particularly on the affordability housing. Various incentives have been announced in Budget 2017 which would support the residential sub-sector.
MyDeposit Scheme, which was launched in April 2016, saw more than 6,200 applications. Of which, nearly 2,800 applications have been approved and as at end- 2016, nearly RM14 million has been disbursed to 523 successful applicants. The MyDeposit Scheme has been allocated with a fund of RM200 million under the purview of Ministry of Housing and Urban Well Being. From 1st January 2017 to 31st December 2018, Stamp Duty exemption is raised to 100% but is limited to first homes priced up to RM300,000. This measure would not only support first time home buyers but also the residential sector provided more homes within the price range are offered in the market.
For the primary market, new launches are expected to be soft in the coming year as developers and households’ confidence alike need to be restored. On that note, developers should take a step back, reflect and review the products that they plan to launch. With the right product and pricing, the issue on low sales performance could be better managed.
The property market would have to endure another challenging year in 2017. With the implementation of various property-related incentives and accommodative monetary policies, the performance of the property sector would sustain.