Outlook of a few major property markets in Malaysia by CBRE / WTW

I have a small Whatsapp group of a few colleagues who love to talk about property. One of them has invested only in Klang and he recently asked this question. ‘Anybody buying any property in 2017?’ He said he is still looking but not sure if he should buy or not. He is what I would call ‘cautiously optimistic.’ Haha. Perhaps he can read a report by CBRE / WTW which looked at the Klang Valley, Penang, Johor, Sabah and Sarawak. It should give him a little guidance on what’s the potential like. Bad news may mean great to buy while great news may mean opportunity to buy is shrinking? The full article in thesundaily is here. 

ACCORDING to the CBRE / WTW 2017 Real Estate Market Outlook report, the property market dipped further

in Q3 2016. It revealed that transaction activity dropped; agricultural land remained the second most active, after residential properties; the commercial sector fell to third place; followed by development land. City wise, Selangor made it as the most active, followed by Johor. Additionally, the National Property Information Centre (Napic) reported that 57% of residential property transactions in Q3 2016 were priced below RM250,000 while 43% were recorded between RM250,001 and RM1 million.

In the article based on CBRE / WTW 2017 Real Estate Market outlook report, it showed that the property market dipped further in Q3 2016. (This is similar to what UTAR research revealed as well. Article here:  UTAR research: It’s time to start buying your home)  Selangor remains the most active followed by Johor. For Klang Valley, there are no signs of improvement for 2017. (Oh dear….)  Major reason is because of the many condominiums nearing completion even as the economy slowing down.  In other words, potentially a huge oversupply. A positive note would be the tourist arrivals and there are also interest from foreign investors for our local industrial projects, especially industrial parks.

Penang also showed a downtrend for 2016 when compared to 2015. According to Napic’s data, property transactions dropped across residential,commercial and industrial sectors. A few reasons were mentioned for this slowdown. High loan application rejections, smaller growth in income, rising living costs, negative sentiments after the budget 2017 announcements, depreciating ringgit and other global political occurrences. (Yes, I think Trump is one of the major reasons here)   

Johor’s property market is dependent on Iskandar Malaysia.  The largest contributors from investments into Iskandar would be coming from retail/mixed development, followed by manufacturing, then residential. 2016 was an exciting year for the office sector because there were four office building transactions valued at RM1.24 billion. In fact, rentals for purpose-built offices set a new benchmark in Iskandar Puteri. Overall however, Johor experienced a general slowdown,especially in residential sub-sectors. Thus developers are focusing on offering more affordable products.  (I agree totally. Seriously, not many Johoreans can afford high-end condos or exclusive gated and guarded developments. Developments cannot only depend on foreigners lah)

Sabah’s property market is generally quiet with a slowdown in transaction activities. There were however fewer property launches in 2016 versus 2015. There were a lot more launches of new mid-market segment condominiums. (Yes, I bought one of it last year)

I love Kuching. One day in future, I hope to own a small place there because I think Kuching is developing. Just like all other property markets, Sarawak also saw fewer launches. A positive note is that properties in prime and attractive locations were reported to be still in demand despite the softer market.  There is also a potential for more affordable housing developments because the Sarawak Planning Authority has approved the development density there from eight to 10 units for landed housing and 24 to 30 units for stratified housing. Bintulu and Mukah will spearhead growth in Sarawak due to the implementation of mega projects.  Happy reading and following.

written on 16 Feb 2017

Next suggested article:   Fewer launches, better deals or the other way around?

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