CBRE | WTW has launched their report on Jan 7 titled “Market Outlook 2022: Creating Resilience” which provides an insight on the market performance and market outlook for 2022,
For the Klang Valley region, the report has noted that the market performance in 2021 had been subdued by the pandemic. Yet, during the downtime, property developers have used the time to increase their assets while other sectors within the property market look to reinvent themselves in order to survive the challenging times.
“The overall Klang Valley property market is being transformed with new trends, adaptation and repurposing of buildings,” according to the report by CBRE | WTW titled “Creating Resilience.”
On the residential sector market outlook, recovery will be dependent on local homebuyers. In addition, there will be various opportunities in the affordable homes market as developers have expressed focus on the segment. The report also stated that the transaction for residential properties has increased year-on-year (y-o-y), in the first nine months of 2021 despite the economy being hampered with transaction in volume increased by 11% and transaction in value increased by 25%.
These transactions were led by two-storey and three-storey terraced houses as well as condominiums and apartments.
For the upcoming supply, the report shows that there are 185,000 high-rise residential units for the total planned supply in the region. 49,000 units are in the pipeline for landed residentials, of which are mostly located in the south of Klang Valley.
These new supplies are most likely to be from townships of Serenia City, Sepang and the Bandar Rimbayu, Shah Alam. Meanwhile, the East Coast Rail Line (ECRL) northern alignment will also help spur new developments to the north of Klang Valley.
In the interim, during the various Movement Control Order (MCO), while construction activities and property launches were being halted, property developers have used this time as an opportunity to increase their land banks.
“Big developers have been acquiring land with good connectivity, to expand existing projects and also new ones. This marks an optimistic market outlook. Such activities were conducted by UEM Sunrise Bhd, Scientex Park Sdn Bhd and Sunway Berhad,” adding that such activities will remain to be exercised in 2022 as well.
The office sector for the Klang Valley region has become a tenant’s market as landlords are focusing on retaining their tenants. Their strategies have included cost-cutting, asset enhancement and leasing strategies to appeal and retain their tenants.
Meanwhile, some office buildings are also incorporating wellness, health and safety measures with the use of technology while also venturing into green buildings as Environmental, Social and Governance (ESG) awareness among office tenants increases.
The office sector is also undergoing a workspace revolution as some Multinational Corporations (MNCs) have decided to make work-from-home a permanent setting.
Therefore, while office buildings owners and landlords are looking for ways to entice their tenants, this lacklustre of the office market is expected to continue said CBRE | WTW in the report.
For the retail section, improvement in the sales growth and consumer sentiment has been observed to which CBRE | WTW predicts a positive outlook in 2022.
“Retail sales recorded 3.4% in 2Q2021 y-o-y, followed by 27.8% in 3Q2021,” stated in the report.
In supporting the retail sector, the government has allocated RM250 million for Shop Malaysia Online Campaign and Go e-Commerce initiatives.
As the pandemic has altered the way consumers shop, convenience has become the new demand factor. To fulfil this new demand, shopping malls are now offering online shopping while also facilitating online platforms to create a seamless shopping experience virtually while cashless payment methods are increasingly becoming the new norm.
For its outlook, CBRE | WTW stated that tenant retention and lease flexibility will be the key to the survival of the mall. The report added that neighbourhood malls are seeing better days due to its convenience of access for nearby residents in the neighbourhood.
The hotel segment is on a partial recovery as the hospitality and F&B industry took on a reinventing journey to stay afloat, says CBRE | WTW.
According to their report, the average occupancy rate was 21% in the third quarter of 2021 while the average room rate (ARR) was RM164. The ARR in the same quarter of 2020 was RM151.
The current cumulative supply stands at 60,105 rooms with 2,851 rooms planned for completion in 2022 currently under construction. There are 10 hotels with 3,242 rooms in the pipeline with the majority of them being luxury hotels.
On the hotel segment's future outlook, the industry being heavily dependent on the tourism industry will be focusing on the domestic travellers as foreign arrivals are still not reaching the pre-pandemic level. With government initiatives to revive the tourism industry, hoteliers will foresee a partial recovery while also offering attractive room packages for domestic tourists as one of the strategies to entice them.
No doubt that the pandemic has definitely pushed the growth of e-commerce. The industrial sector seems to emerge as a spotlight in the property sector during the challenging times as demand for warehouses, last-mile delivery and regional logistics increased.
Therefore, CBRE | WTW foresees that this segment will also remain active in 2022.
According to the report, RM107.5 billion of investment was reported from January to June 2021. 58% of the investment is foreign investment while the manufacturing sector has 367 projects worth RM66.9 billion.
Acquisition activities of industrial lands have also been observed in the Northern Klang, Shah Alam and Kuala Langat areas which indicated that there is a rise in demand along the West Coast Expressway (WCE).
Additionally, the report also stated that about 1.31 million sq ft of warehouse space are currently under construction and noted that the rise of warehousing supply may not lead to oversupply as it is located in high-demand locations.
Noting high-demand locations for industrial properties, Northern Shah Alam has topped the list due to its good connectivity, proximity to business facilities and land availability at reasonable prices and rentals.
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