Rahim & Co International Sdn Bhd officially released their
annual publication ‘Rahim & Co Research – Property Market Review 2019/2020’ today. It is a
nationwide coverage of the property market in key sectors: residential, retail, office, hotel and
industrial. During the press conference, Rahim & Co’s Executive Chairman – YBhg Tan Sri Dato’ (Dr)
Abdul Rahim Abdul Rahman, Director of Valuation Services – Sr Chee Kok Thim, CEO of Estate
Agency – Mr Siva Shanker, Director of Petaling Jaya Office – Sr Choy Yue Kwong and Director of
Research – Sr Sulaiman Saheh, highlighted significant issues related to the property market as well
as Rahim & Co’s prospect for this year.
For the year 2019, GDP growth is projected to be between 4.6% and 4.7% as opined by
various bodies and the government in view of moderate business confidence as the US-China trade
tensions show signs of cooling down. This is further backed up with stronger improvements in
transactional activities for the major sectors: residential, commercial and industrial. However for
2020, GDP projection has taken a more conservative approach with most estimating between 4.3%
to 4.5%.
In terms of property market activities, JPPH statistics showed the market to have taken an
upward turn with a positive growth of 6.4% year-on-year as at third quarter of 2019, an
improvement from 2018's 0.6% growth, after a continuous fall since 2015. Value of transactions held
steady with a growth of 2.1%, bringing 3Q2019’s overall number of 243,358 transactions to be worth
RM102.9 billion. In reflecting back on the past decade, market downturn was at its worst between
2013 to 2017 with percentage drops ranging between 6% to 12% for Malaysia’s total market
activities. When comparing this bleak period to 2019’s evidently positive number, there is
substantial hope for the property market to be back on track towards a recovery albeit at a
moderate pace.
Being the largest market sector, the existing supply of residential units for Malaysia stood at
approximately 5.69 million units by 3Q2019 after an increase of more than 142,000 units year-onyear. But of these numbers, unsold units remain a hot issue with the latest statistics as at 3Q2019
revealing a total of 31,092 residential overhang units worth RM18.96 billion. However, looking at the
overall dwelling-type properties which includes serviced apartments and SOHO units to the pure
residential units, the total overhang number amounts to 50,008 overhang units worth RM34.0 billion
sitting idle in the market across Malaysia. Amongst all states, Johor holds the highest count of
overhang units at 18,517 units followed by Selangor at 7,226 units and Kuala Lumpur at 5,170 units.
In an effort to spur the property market whilst reducing the overhang burden, the Housing
Ownership Campaign (HOC) 2019 ran for the whole year and had resulted in 31,415 housing units
worth RM23.3 billion sold, as stated by the Housing and Local Government Minister. This includes
the sales of new launches as well as units at various stages of construction including unsold
overhang units. We hope a similar measure will implemented in 2020 on top of the proposed
incentives introduced in Budget 2020 to continue spurring the market.
In October 2019, the government had presented Budget 2020 and one of their strategies is
to promote access to housing with key propositions being Rent To Own (RTO) collaborations with
financial institutions, lowering threshold prices of overhang high-rise units for foreign buyers, the
extension of Bank Simpanan Nasional’s Youth Housing Scheme till end 2021, and, in response to
their unpopular take of the RPGT revision back in Budget 2019, the base year for asset acquisition
was revised to be taken at 1 January 2013.
On the commercial segment, total supply of office space in Malaysia currently stands at
237.9 million sq.ft. Although on the national level, occupancy rate for offices has relatively
maintained at 82.4% as at 1H2019, the wave of incoming office space sized in millions of square feet
calls for concern especially within Klang Valley whose occupancy rate go at a lower 79%. As the next
wave of office buildings are starting to come online, relocations and tougher competition are
happening with old and new tenants finding themselves at an advantage of competitive rates and
attractive package deals. The wider train network and TOD formations also pave wider roads to
decentralization and thus distributing concentration of business hubs across different parts of Klang
Valley
Similarly, retail malls remain at the risk of oversupply with new malls still entering the
market year by year. In 2018, Malaysian retail occupancy rate averaged at 81.2% and as at 3Q2019,
it dropped to 79.5%. Klang Valley's retail space recorded a drop from 84.3% in 2018 to 83.2% in
3Q2019. Retail malls continue to re-engineer themselves to maintain their relevance amidst a
growing e-commerce market. Rather than being just a place to purchase goods, shopping malls have
become a place of physical socialisation and experiential interaction. More focus is placed on service
products and consumable goods such as Food & Beverages (F&B), leisure entertainment and
‘instagramable’ décor.
In the industrial sector, increased interest was seen following the improving trend in 2018.
Total industrial transactions nationwide up to 3Q2019 was 4,706 units, a growth of 15.3%,
amounting to RM10.2 billion in total value. The resumption of several mega infrastructure projects
that had previously been put on hold for cost-revision purposes is also a positive factor that could
have impacted the industrial sector at large. The likes of the East Coast Rail Link (ECRL), West Coast
Expressway and the Pan Borneo Highway will enhance the linkage between key industrial hubs. With
technology moving on to the next level, its pivotal role in the industrial sector brings expectation for
the said sector to progress forward especially within the logistics segment. Industrial Revolution (IR)
4.0 will continue to shape the property industry into the next decade.
On the whole, 2019 numbers came through stronger than previous years with more robust
growth in market activities for all major sectors but the commercial sector's occupancy rates are still
under pressure. We foresee 2020 to be further a moderate improvement following 2019’s pace, but
the market is expected to remain fragile. Despite the ups and downs of 2019, we have high hopes
for the country to pull through and continue our journey towards becoming a better and progressive
nation.
About Rahim & Co
Established in 1976, Rahim & Co has grown to become one of the largest real estate consultancies in Malaysia, with 22 offices nationwide and a workforce of over 400 people. With a national network servicing every state in Malaysia, Rahim & Co provides expert localised services and 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 property investors, developers, owners and occupiers through a comprehensive range of professional property services.
Established in 1976, Rahim & Co has grown to become one of the largest real estate consultancies in Malaysia, with 22 offices nationwide and a workforce of over 400 people. With a national network servicing every state in Malaysia, Rahim & Co provides expert localised services and 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 property investors, developers, owners and occupiers through a comprehensive range of professional property services.
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