PETALING JAYA (Jan 4): After the equally challenging years of 2020 and 2021, Savills Malaysia Group Managing Director Datuk Paul Khong said the global economy will remain high in 2022 despite the evolution of the Covid-19 pandemic.
In a statement on Tuesday (Jan 4), Savills Malaysia shared its top property predictions in 2022 with comments by Khong, Savills Malaysia Deputy Managing Director and Head of Capital Markets Nabeel Hussain, Savills Malaysia Executive Director Marcus Chia, Savills Malaysia Director of Industrial Agency Kevin Goh and Savills Malaysia Director of Retail Services Murli Menon.
Khong opined that infrastructure continues to be a key economic driver, with the government continuing to expedite the kick-off of the MRT 3 project in Greater KL, which will spur the growth of construction projects and unlock values around the station locations. The completions of MRT 2 and LRT 3, which construction works were delayed due to the Movement Control Order restrictions in 2020 and 2021, are expected in 2023.
As for the residential segment, he said it remains a buyers’ market, which Savills Malaysia hoped to see improve in 2022 despite transaction prices expected to remain soft.
“Since the Home Ownership Campaign (HOC) benefits would cease to be carried through to 2022, we saw some stronger activities during the closure of the year. These ‘discounts’ given to the various types of residential properties provided opportunities for many genuine homebuyers to own their first home and/or for upgraders to move to a better unit.
“Bank Negara Malaysia may increase the overnight policy rate in 2022 to combat inflation, however, the interest rate at the moment is expected to remain favourable. 2022 will continue to be challenging in continuation from 2021 as there is not much given in the Budget 2022 except for the real property gains tax (RPGT) reverting back to 0% and 5% for both individuals and companies respectively,” he added.
Chia also opined that the removal of the RPGT for residential property in the sixth year of ownership onwards may help secondary property sales in 2022. In place of HOC 2021, developers will continue to drive sales with new marketing packages, he added.
“We expect with the ending of the moratorium in early 2022, more distressed auctions will be appearing. This will create more pressure on property prices… Residential sales volume are expected to inch up in 2022 but property prices will remain relatively stable,” said Chia.
Nabeel said both the completed and interest transactions have seen a pick up over the last few months.
“We expect to see continued activity, as concerns about the pandemic have mostly been ‘priced in’ so to speak, and investors realise that the new normal is here to stay, at least for the foreseeable future,” Nabeel added.
Office leasing to be reactivated, retail market to bounce back in 2022
Khong stated that more companies are expected to relocate to newer office spaces in view of the flight-to-quality perspective and that there will be a continued relook at the angle of workspace optimisation due to the hybrid arrangements (working from home and working from office).
He said flexible work arrangements will continue, with “slow but sure trends toward partial office occupation, making the co-working spaces relevant”.
However, the office sector is a tenants’ market and demand still lags behind supply, resulting in high vacancy rates. Old office buildings will experience challenges to retain tenants, and many will undertake major refurbishments or potentially be repurposed to other usages.
“We are expecting close to about 10 million sq ft in new supply entering Greater KL in the next two to three years,” Khong revealed.
In regards to the retail market, Menon opined that it is set to bounce back and recover the losses in 2022.
“The response seen after the reopening of retail malls has boosted the confidence of the entire retail sector and it has also reaffirmed the fact that bricks & mortar retail will never die but at the right balance between online and offline channels can support each other and drive traffic,” he said, adding that the physical shopping experience cannot be beaten.
Menon said there will be a new wave of retail entrepreneurs who are either new or “rejuvenated and reformatted existing retailers” coming into the market with new ideas in retailing and retail experience.
He also commented that brands and retailers are expected to collaborate more to reach out to a broader audience and offer enhanced services and experience by combining resources and product offerings.
“Creative and collaborative commercial terms between landlords and retailers, there will be a shift from the conventional rental structures towards a more participative and profit-sharing approach,” Menon added.
Nabeel commented that the hospitality and retail sectors are examples of the sectors most affected by the pandemic. “[These sectors] are most likely to trade at discounts to what would have even been expected two years ago”.
“The rationalisation drives undertaken by GLCs (government-linked companies) since GE14 will continue, albeit at a slower pace than initially desired, as there remains an ask-bid gap between sellers and buyers.” Nabeel added.
E-commerce pushes up demand for industrial real estate
The pandemic has forced companies to adapt to omnichannel and online sales strategies, which in turn led to the increased demand for warehouses, said Khong.
“We expect the pent-up need for high-quality (with latest automation) warehouse facilities will positively impact rental growth in 2022. In addition, geographical diversification begins to take effect as more companies seek to expand and get closer to customers, thereby bringing up land value in the near term,” Khong added.
Goh stated that as predicted by Savills in 2021, industrial and logistics will continue its uptrend and growth into 2022, with an expectation of more deals flowing through.
“We now look at new warehouses equipped with state-of-the-art technology in warehousing [and] there is a strong demand for warehouse space by e-commerce players,” Goh said, adding that relocation exercises will be expected after the recent flooding events.
Edited by Racheal Lee
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