Property market expected to stay level next year

KUALA LUMPUR: The Malaysian property market next year is expected to remain subdued with little growth in prices, according to the Malaysian Institute of Estate Agents (MIEA).

“I think we all agree that next year, prices are not going to go up but we don’t see prices coming down either,” MIEA president Nixon Paul told reporters on Dec 12.
He said sales in the residential secondary market may be held back due to the difference in expectations between buyer and seller prices.

“Some buyers expect to buy at fire sale prices because of the misconception that there is an oversupply situation in the residential property market in Malaysia. On the other hand, a number of owners are holding on to their properties until they can sell at par or above market price,” said Paul.

This situation is echoed by Reapfield Properties Group chief executive Gerard Kho. Based on the agency’s experience this year, the volume growth in residential transactions has been slower at about 5%, compared with between 10% and 15% per annum in the previous years.

“In 2012, buyers have felt no urgency to purchase as asking prices are not close to the market value. When asking prices have been priced close to market value, the properties are transacted within a short period of time,” said Kho.

The office market is forecast to remain healthy in 2013 with the recent shift towards green and MSC-status buildings set to continue, said YY Lau of YY Property Solutions.

“There is also a growing trend of companies moving into office spaces built in integrated developments which include hotels and shopping malls. Parking availability is also a very important factor,” said Lau.

Despite the concern of an oversupply situation in Kuala Lumpur’s central business district (CBD) which may well contribute to a slow rental market here next year, Lau said there is hardly any oversupply of office space in the city fringes and suburbs such as KL Sentral, Petaling Jaya, Shah Alam and Damansara.

She said rental rates for Grade A offices in the CBD area will decrease a little next year, especially for existing tenants, but rates for new tenants may still be higher. As at the third quarter this year, Lau revealed the average rental for CBD office spaces is at RM7.45 psf while the average for fringe areas is from RM4.57 psf.

For shophouses, principal realtor of GDS Properties Govin Bala said this segment is projected to do well in 2013 as prices are being driven upwards by end users and investors. With prices of shophouses rising, it has become increasingly difficult for the average businessman to buy a unit. This means more businessmen will be renting premises rather than owning them.

In the industrial property market, Hectares & Stratas managing partner Stephen Tew said there has been a strong demand for industrial property, especially in the Klang Valley and Penang, which is expected to continue into 2013. The demand could be due to a lack of supply as there have been no large planned industrial parks in the Klang Valley and Penang in recent times on a lack of space. The last industrial estates developed in Selangor were the Kota Kemuning and Berjaya Industrial Parks, launched 20 years ago.


This article first appeared in The Edge Financial Daily, on Dec 14, 2012.