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Uneven recovery in residential sub-markets


10 kualiti yang ada pada kejiranan yang baik
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6 JANUARY, KUALA LUMPUR –Two years into the COVID-19 pandemic, ‘new normal’ normalcy has been restored in the country following success of the National Immunisation Programme. Supported by the four-phase National Recovery Plan (NRP), which was unveiled in mid-June 2021, there was gradual reopening of economic and social activites with relaxation of interstate and international travel for vaccinated residents effective 11 October 2021 as Malaysia restarts its economy.

According to Knight Frank Malaysia’s Real Estate Highlights 2nd half of 2021 (“REH”) which features the findings of property market performance across Klang Valley, Penang, Johor Bahru and Kota Kinabalu, there were generally fewer completions and launches in 2H2021 as the strict containment measures to curb the spread of COVID-19 infections delayed construction works, project delivery and completion of real estate transactions.

Sarkunan Subramaniam – Managing Director of Knight Frank Malaysia highlighted “during the review period, there was only one notable completion in Kuala Lumpur’s high-end condominium market (Ascott Residence – 199 units), bringing the cumulative supply to 66,128 units.”

Subramaniam continues, “the Home Ownership Campaign (HOC) which has just ended, had been beneficial for first-time homebuyers as well as developers – improving sales and reducing property overhang. In 3Q2021, the volume of transactions of high-rise residential properties (including serviced apartments) in Kuala Lumpur showed upward trend, soaring 25.5% on the quarter albeit registering lower transacted value (Source: NAPIC), likely supported by gradual easing of restrictions and reopening of sales galleries.”


The prohibition of physical property viewings and other sales activities (including closure of sales galleries) during the prolonged phases of lockdown had impacted housing sales. In the primary market, there has been a shift towards virtual viewings / tours with online sales on the rise as more developers embrace digital marketing. Physical property viewing, however, is still preferred for most sub-sale homes.

The pandemic has also spurred demand for properties away from the hustle and bustle of the city as is evidenced by zero new launches within KL City during this review period.

Keith Ooi – Deputy Managing Director of Knight Frank Malaysia says “the COVID-19 pandemic has fuelled demand for residential properties especially landed housing in established and upcoming suburbs with good connectivity where prices are more affordable and competitive. With the potential shift to hybrid work arrangements post-pandemic, homebuyers are seeking ideal living spaces which are larger with higher emphasis on functionality and comfort.

“With the government’s focus more skewed towards the primary market in terms of incentives and policies, the momentum in Kuala Lumpur’s secondary market remained flattish. During the review period, the overall average transacted price in Kuala Lumpur’s high-end residential sector remained relatively stable with a slight decrease of circa 0.6%” shared Keith.

Figure 1: Average Transacted Prices of Selected Existing High-End Condominiums 1H2021 and 2H2021

The pricing for prime housing, particularly landed residential properties, are expected to gradually rise throughout 2022 as the property market is widely expected to start recovering on the back of a more positive outlook” Keith added.

Kelvin Yip – Associate Director of Residential Market, Knight Frank Malaysia highlighted “the average asking prices for selected high-end high-rise schemes in KL City, Ampang Hilir / U-Thant and Bangsar were marginally lower while in the sub-markets of Damansara Heights and Kenny Hills, they remained in the positive territory. Meanwhile, the average transacted price in Mont’ Kiara continued to hold steady.”

Debbie Choy – Director of Knight Frank Johor shared “there is mixed performance in Johor Bahru’s residential market when comparing high-rise residential developments and landed residential developments. The trend and demand for landed residential homes continue to remain resilient. Developers expanding their land banks are also more focused on the search for suitable locations, with larger sites for landed residential developments and we anticipate more landed home launches in the near future. As for the secondary market, the asking prices of selected high-rise residential projects in the city and fringe areas of Johor Bahru as well as Iskandar Puteri area were slightly lower when compared to the previous period (1H2021).

Moving forward, activity in the rental market is expected to pick up following the gradual reopening of the country’s borders – easing both short and long-term visits by business travellers and investors, starting with the Vaccinated Travel Lane (VTL) between Singapore and Malaysia where the mandatory quarantine rules are exempted.

Alexel Chen – Executive Director of Knight Frank Sabah shared “the overhang figure for all residential sub-sector in Kota Kinabalu, registered at 1,205 units during the review period, has risen significantly when compared to the corresponding period (3Q2020: 267 units). The condominium/apartment segment contributed circa 97% of the overhang units, mainly due to the influx of completed units under newer phases of launched projects. In the primary market, we anticipate slower market absorption rate for overhang high-rise products given the more cautious market sentiments during this trying time.

However, in the sub-sale market, well-located and suitably priced residential products particularly landed residential homes continue to garner interest from genuine homebuyers due to limited new launches in recent years. Moving forward, we anticipate property launches will not be held off indefinitely. Instead, when market conditions are more conducive – creating ‘pent-up’ demand, new supply will be gradually released”.

“The residential sub-sector in Penang has improved, posting higher volume and value of property transactions as of 3Q2021. With the Penang State Government’s commitment to increase homeownership with plans for a range of affordable homes in various strategic locations together with the Penang Home Ownership Campaign (HOC) being extended until the end of June 2022 coupled with the enforcement of mandatory installation of fibre optic telecommunication infrastructure for all new developments, we expect to see further improvements in the state’s residential property market” added Mark Saw – Executive Director of Knight Frank Penang.


The overall outlook for the residential property market remains cautiously optimistic moving into the last quarter of 2021 and the first quarter of 2022 – backed by proper product positioning and various property-related incentives / initiatives under the multiple stimulus packages; the recently concluded Home Ownership Campaign (HOC) as well as developer-led marketing campaigns, low-interest-rate environment, etc.

Keith added “the abolishment of the Real Property Gains Tax (RPGT) for property disposals in the sixth and subsequent years of ownership is long-awaited. This augurs well especially for long-term property owners who wish to dispose of their existing properties for purposes of an upgrade as well as for empty nesters looking to downsize. The exemption of the tax penalty is expected to boost activity, especially in the secondary market.

We believe the residential market will continue to self-correct amid challenges brought on by the COVID-19 pandemic. In the short- to mid-term, more direct measures, however, may be required to revitalise and sustain the slow growth momentum of the property sector as the emergence of new COVID variants continues to pose downside risks, Keith concluded.

To find out more about REH 2H 2021, click here

Disclaimer: The information is provided for general information only. Malaysia Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.

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