Rahim & Co International Sdn Bhd officially released their
annual publication ‘Rahim & Co Research – Property Market Review 2018/2019’ today. It is a
nationwide coverage of the property market in key sectors: residential, retail, office, hotel and
industrial. The press conference highlighted significant issues related to the property market as well
as Rahim & Co’s prospect for this year.
As expected by Malaysian Institute of Economic Research (MIER) on GDP growth to be of
between 4.7% and 4.8% in the 4th quarter of 2018, the number has indeed accelerated to 4.7% from
4.4% in the 3rd quarter. This is in spite of the prolonged trade war between the United States and
China and proves Malaysia to be holding up against uncertainties and tension on the economic front.
However, Malaysia’s property market has yet to taken an overall upward turn in movement but the
decline in transactional activities have softened even more than the previous year, demonstrating the
downtrend pace to continue decelerating.
As evidence of recovery being much underway, JPPH statistics have revealed 1H 2018 to have
a lower decline than 1H 2017, with only experiencing a much smaller drop of 2.4% in transaction
volume and 0.1% in transaction value; transaction activities as at 1H 2018 coming up at 149,889
transactions worth RM67.74 billion. Looking three years back, the falling trend has significantly
softened since the period of 1H 2015/1H 2016 where percentage in drop was as high as 12% to 16%
in both volume and value. This bodes well for 2019 to possibly produce positive movements for a
change – albeit being insignificant. Further on as at third quarter, the softening pace was even more
pronounced with total transaction volume drop slowing down to -0.3% whilst value to -1.4%. Total
volume and value of property transactions as at the third quarter of 2018 were at 228,867 transactions
with a total value of RM100.85 billion.
Being the largest market sector, the existing supply of residential units for Malaysia stood at
approximately 5.51 million units of which Selangor came on top amongst all states with 1.52 million
homes. Johor follows up with almost 800,000 homes, boasting a rather large number even in
comparison to Kuala Lumpur whom held 476,628 homes. But of these numbers, unsold units remain
a hot issue with the latest statistics as at 3Q2018 revealing a total of 43,219 overhang units worth
RM29.47 billion sitting idle in the market across Malaysia – this including serviced apartments and
SOHO units. Amongst all states, Johor holds the highest count of overhang units at 13,767 units
followed by Selangor at 7,233 units and Kuala Lumpur at 5,114 units. Buyers lament on these units to
be out of their reach – both financially and conveniently, thus making the purchase a hardship on top
of having difficulty in securing housing loans. With these vacant units remaining unoccupied, the
situation may take an even more unmanageable turn should nothing be done to ease this hanging
burden as Malaysia will also be expecting an incoming supply of close to half a million new homes that
are already under construction.
Budget 2019 had revealed several initiatives and measures proposed to counter this ongoing
problem to housing ownership. To mention a few: a RM1 billion in funding by the Central Bank of
Malaysia (BNM) for first-time buyers earning below RM2,300, exemption of stamp duty charges for
first-time buyers of homes valued RM300,001 to RM1 million, and an allocation of RM1.5 billion to
build and complete affordable homes under the various government schemes. Though we applaud
for the effort and priority given, it remains to be seen if it is sufficient to alleviate the problem. Though
formulation and improvement of new and existing programmes are important, it is the execution of
these proposed efforts that are key to the success of addressing the provision of sufficient,
appropriate and proper affordable homes to the market.
On to the commercial segment, the incoming wave of new office spaces sized in millions calls
for concern of how the market will adjust to it. As with seeing newer, better equipped and
technologically enhanced spaces entering the market, relocations are expected to happen even more
as tenants find themselves having the advantage of competitive rates and attractive package deals.
Decentralization enabled by the expansion of highways and railway lines have also added on to the
benefit of relocating to avoid congestion and limited space. Rental rates for these older buildings are
seen to be dipping in effort to maintain tenancy whilst Grade A buildings remain stable due to their
up-to-date facilities and modern facades. A new sub-market of the office sector is also making
headway known as co-working spaces and are seen as new forms of tenants filling up vacant office
spaces via flexible and more affordable packages.
Similarly, retail malls are also at the risk of oversupply with new malls soon to come into the
market in the future. Though previously e-commerce has been deemed as a threat to the brick-andmortar of malls, it seems to not be the case as Malaysia’s overall occupancy rates are holding up above
80% despite the increase in space over the past few years. Instead, mall operators are realizing that
rather than being at risk of closure out of irrelevancy, the retail experience has now taken an evolution
to being an entertainment and social experience. Non-shopping elements such as Food & Beverage
(F&B), leisure entertainment and customer services continue to be irreplaceable by e-commerce. In
keeping up with the latest trend in technology, malls are able to retain their relevancy amidst the ever
growing world of online shopping and social media.
In the industrial sector, we see the rise of e-commerce triggering the rise of business in
logistics where warehouses are now in demand to keep up with consumer demand, making them a
viable option for investment. Developments seem to be in favour of industrial parks whereby investors
are pulled in through well-provided facilities and services. The manufacturing industry too is not left
behind with the revolutionary changes brought upon with the next phase named Industry 4.0 with AI
being the core in operations.
On the whole, mixed results observed in Malaysia’s property market reflects the market to be
in its adjusting phase to the current economic and political climate. As we enter 2019, we foresee the
new year to be a period of further stagnation with continued hope and anticipation of improvements
with the introduction of new policies and incentives aimed at the property market such as the National
Housing Policy (NHP) 2.0 and Property Crowdfunding platform. Collectively, the continuation of the
wait-and-see sentiment and the persisting struggle of buyers securing housing loans contributed to
the market’s stagnation and the rising of inventory levels.
About Rahim & Co
Established in 1976, Rahim & Co has grown to become one of the largest real estate consultancy firms
in Malaysia, with 20 offices nationwide and a workforce of 400 people. With a national network
servicing every state in Malaysia, Rahim & Co provides expert localised services and accurate real
estate advice. Our people combine entrepreneurial spirit and a deep understanding of the property
sectors with the highest standards of client care. We service the needs of the investor, owners and
occupiers offering transactional advice, property management, consultancy and asset management expertise.
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