Knight Frank Malaysia, the global property consultancy, recently launched their latest research report, Real Estate Highlights for 2nd Half of 2017. The report looks into the market performance across the various property mix – Residential, Office and Retail; and highlights the trends and outlook in key markets of Malaysia, namely Kuala Lumpur, Klang Valley, Penang, Johor Bahru and Kota Kinabalu.

Sarkunan Subramaniam, Managing Director of Knight Frank Malaysia says, "The property market remained weak in 2H2017 with oversupplied position in the main sub-sectors such as high-end residential, office and retail. Amid flagging demand ahead of the upcoming general election, overall market performance is expected to remain lacklustre going into 1H2018."

"The second half of 2017 continued to see developers shifting their focus to the middle-income and affordable housing segments to cater to a wider target catchment amid challenges in the high-end market. As for the tenant-favoured office market, there is mounting pressures on occupancy and rental levels as the increasing high supply pipeline continue to overshadow low absorption. Meanwhile, despite the current challenges in the retail industry, the mid to longer term prospect remains positive as more retailers embrace the concept of ‘clicks and mortar’ amid the e-commerce boom while owners and mall operators continue to undertake asset enhancement initiatives to reposition their assets in the changing retail landscape."

"On a separate note, while the recent property freeze may provide a breather to the oversupplied markets, it is not expected to correct the oversupply situation in the short to medium term. The property market will continue to self-correct as it looks to find its equilibrium."

Highlights for 2H2017

Kuala Lumpur High-End Condominium Market

• Secondary market pricing and rental remained flat during the review period.
• Despite the weak market sentiment, sequels to selected projects were launched at higher pricing but with more discounts.
• More developers diversifying their target market to other overseas countries / territories such as Singapore, Indonesia, Hong Kong and Taiwan following China’s capital control.
• The 50% tax exemption on rental income amounting up to RM2,000 a month as announced under Budget 2018, may improve demand for this category of investment properties.
   

Kuala Lumpur & Beyond Kuala Lumpur (Selangor) Office Markets

• The office market continues to self-correct as increasing supply shadows low absorption.
• Negative absorption of KL office space following downsizing and consolidation of the O&G and its related sectors.
• Demand for MSC certified space however remains resilient.

Klang Valley Retail Market

• Recent completion of circa 0.78 million sq ft NLA of retail space brings Klang Valley’s cumulative supply to 57.4 million sq ft per capita, analysed at circa 7 sq ft per person, one of the highest in the region.
• Growing e-commerce market sees more retailers embarking on ‘click and mortar’ concepts.
   

Penang Property Market

• During 2H2017, the office-sector continues to remain relatively healthy with both occupancy rates and rentals holding steady.
• The condominium sub-sector is still consolidating whilst the retail sub-sector is expected to face further challenges with additional incoming supply poised to come into the market in 2019.

Johor Bahru Property Market

• Some developers are postponing new residential project launches whilst clearing existing stocks by offering attractive discounts and incentives.
• Notable developments and catalytic projects in other sectors such as the Coastal Highway Southern Link (CHSL), Pengerang Integrated Petroleum Complex (PIPC) and Golf Course in Desaru Coast are expected to help support the growth in residential, commercial and retail sub-sectors in Iskandar Malaysia and Johor, in general.

Kota Kinabalu Property Market

• The high supply pipeline of residential properties, particularly high-rise units from recently completed and soon to be completed projects is expected to exert pressures on the capital and rental market.
• There is no new incoming supply of purpose-built office, and the market has plateaued with overall occupancy hovering at a healthy level.

Click here to download the Knight Frank report: Malaysia Real Estate Highlights for 2nd Half of 2017

For further information about the Malaysia property market, please phone or email Ms Judy Ong, Executive Director, Research and Consultancy, Knight Frank Malaysia or Ms Seline Soo, Marketing & Communications Manager, Knight Frank Malaysia via the contact details below

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