PETALING JAYA (May 14): Property consultancy Savills Malaysia expects housing prices to firm up in 2019, with real estate developers only able to increase supply by early 2020, following renewed confidence in the market from the new government’s promise of clean and fair governance.

“However, there will be a period of adjustment and consolidation required to clear existing stock before we see much evidence of price increases.

“In short, particularly in Greater KL and Penang, there has never been a better time to buy,” said the consultancy in a statement today.

The Pakatan Harapan administration’s promise to abolish the goods and services tax (GST) will augur well for groceries, F&B and mass prestige fashion brands, opined Savills Malaysia deputy executive chairman Allan Soo.

“We see the likelihood that retail turnover will pick up in areas where GST is lifted from merchandise, and not replaced by a sales tax. We hope that luxury goods will fall into that category, making Malaysia a major tourist shopping destination,” said the consultancy.

However, the abolition of GST is not expected to have any meaningful impact on the office market, said its chairman Datuk Christopher Boyd.

While it will still take time for the office market to digest the 16.9 million sq ft targeted for completion in 2020, in the short term, the clarity provided by the conclusion of the elections will prompt upgraders to invest in new premises, resulting in an absorption of more than the 1.9 million sq ft taken up in Greater KL last year.

“In the medium term, we anticipate that new office take-up will increase in tandem with a growing economy and more foreign direct investment,” said Savills Malaysia.

The industrial sector will likewise benefit from more foreign direct industrial investment owing to renewed market confidence, said managing director Datuk Paul Khong.

“Coupled with surging domestic consumption, the prospects for the industrial and logistics markets are very positive. Look out for rising industrial rents that have lagged behind recent strong increases in industrial land values. Good news for REITs and other funds that are focused on this market sector,” he added.

The conclusion of the elections is also expected to boost domestic and foreign investment into commercial investment properties.

“Malaysia has extremely liberal policies related to foreign investment in commercial property and can offer attractive yields. The prospects of appreciation in the ringgit and strong economic growth will now make Malaysia an outstanding regional investment opportunity.”

Savills said the overall outlook for Malaysia appears to be promising, “as the new government sets to work to address some of the institutional problems that have held back Malaysia’s long-term prospects and deterred foreign investment”.