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Knight Frank: Cautious optimism for residential market in 1Q2022, landed residential development in demand

PETALING JAYA (Jan 6): The residential market performance remains cautiously optimistic for 2022 with growing demand for landed residential development, according to Knight Frank Malaysia. 

As for the secondary market, it is on an uneven recovery as policies and incentives from the government are focusing towards the primary market. 

In a statement, Sarkunan Subramaniam, managing director of Knight Frank Malaysia, noted that improving sales and the reduction of property overhang can be attributed to the Home Ownership Campaign (HOC).

“In 3Q2021, the volume of transactions of high-rise residential properties in Kuala Lumpur showed an upward trend, soaring 25.5% on the quarter albeit registering lower transacted value, likely supported by gradual easing of restrictions and reopening of sales galleries,” he said. 

Commenting on the residential market performance for Kuala Lumpur, Subramanian shares that there is only one notable completion in Kuala Lumpur’s high-end condominium market which is the Ascott Residence. 

The limited launches and completion are due to the delayed construction works, project delivery and completion of real estate transactions caused by the pandemic.

Landed residential development in demand

Additionally, the limited new launches are also due to demand coming from outside the hustle and bustle of the city area in Kuala Lumpur.

“The Covid-19 pandemic has fuelled demand for residential properties especially landed housing in established and upcoming suburbs with good connectivity where prices are more affordable and competitive,” noted Keith Ooi, deputy managing director of Knight Frank Malaysia.  

In Johor Bahru as well, Debbie Choy, director of Knight Frank Johor, has stated that the landed residential developments continue to be resilient against high-rise residential developments as there are demand

She adds that developers expanding their land bank are focused on searching sites suitable for landed residential developments. 

“Developers expanding their land banks are also more focused on the search for suitable locations, with larger sites for landed residential developments and we anticipate more landed home launches in the near future.”

Kota Kinabalu saw increased of overhang figure

Kota Kinabalu’s overhang figure has increased from 267 units in 3Q2021 to 1,205 units for the residential sub-sector, with 97% mostly coming from the condominium and apartment segment. 

“This is mainly due to the influx of completed units under newer phases of launched projects,” said Alexel Chen, executive director of Knight Frank Sabah, in a statement, adding that the reduction of the overhang figure in the primary market will be slower due to the challenging times. 

However, Chen is optimistic on the secondary market especially for good location and suitably priced properties in the landed segment as it has continued to gain interest among homebuyers due to limited launches over the years. 

Optimistic outlook with government support in Penang

Moving on to Penang, the residential secondary market has improved as it posted higher volume and value of property transactions in 3Q2021 and will continue to see the same result in the future backed by the state’s government commitment to ease homeownership. 

“With the Penang State government’s commitment to increase homeownership with plans for a range of affordable homes in various strategic locations together with the Penang HOC being extended until the end of June 2022 couple with the enforcement of mandatory installation of fibre optic telecommunications infrastructure for all new developments, we expect to see further improvements in the state’s residential property market,” said Mark Saw, executive director of Knight Frank Penang.

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