Residential overhang up 10% if serviced apartments are included

PETALING JAYA (May 1): The absorption of commercial-titled residences, mainly serviced apartments and SoHos, is posing a challenge to the market as seen from the significant increase in the number of overhang units of this property type in 2019.

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Defined as units that have received their Certificate of Completion and Compliance but remained unsold for more than nine months after launch, the high number of overhang units has dampened the property sector in Malaysia in recent years.

Although the 2019 Property Market Report released by the Valuation and Property Services Department (JPPH) recently showed that the overhang in properties with residential titles had seen a reduction of 5% in volume and value to 30,664 units worth RM18.8 billion from the previous year, there was, however, an overhang of 19,020 serviced apartments and SoHo units worth RM15.9 billion in total, which was a 50% and 62% hike in volume and value from 2018.

Altogether, that would make 49,684 units worth RM34.7 billion in residential property (including serviced apartments/SoHoS) in the overall overhang in 2019. Compared with 2018, the total residential overhang in 2019 has increased 10.3% in volume and 17% in value.

By property type, residential formed the biggest share of the residential overhang at 62% or 30,664 units (worth RM18.8 billion) while serviced apartments took 34% (17,142 units worth RM15 billion) and SoHos 4% (1,878 units worth RM899 million).

Johor, Selangor and KL topped the list

By states, Johor had the highest number of residential overhang (including serviced apartments and SoHos) with a total of 18,337 units worth RM16.5 billion; followed by Selangor with 7,805 units worth close to RM5.4 billion.

Kuala Lumpur was next with 5,183 units worth RM5.8 billion in 2019 followed by Perak with a total of 5,024 properties worth RM1.5 billion. Penang was fifth highest with 3,422 units worth RM2.6 billion.

Meanwhile, Perlis has the least overhang residential units with only 33 units worth RM10 million.