2018 property transactions? Sales up moderately, value up by single digit pct

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I met this prominent property expert just a week ago in Penang. In our conversation, he reminded me that the Malaysian property market is certainly considered healthy even if nowhere near spectacular. It is far away from ‘about to crash’ situation. He is Raine & Horne Malaysia senior partner Michael Geh. He was quoted in an article in TheStar too. Please read the full article here.  He was sharing his projection for the industrial units numbers. He based his projection on the National Property Information Centre’s (Napic) third-quarter 2017 report. The industrial units in the country increased by about 33% or 1,639 units in the third quarter versus 1,224 units in the second quarter. When compared to a year before, the increase is about 18% from 1,320 units. He said, “This shows that there is still investment coming in for industrial properties. The value of industrial properties transacted in the third quarter increased slightly by about 1% to RM2.62bil from RM2.6bil in the second quarter.”

He shared that the the industrial unit sales are now happening for units with smaller built-up areas and this explains the the reason for the decline in the value of transactions. Michael shared that the interest for industrial properties should continue in 2018 but the strong double-digit percentage increase in transactions in the third quarter may not repeat. He shared that the country had an overhang of RM1.18bil worth of industrial properties, at about 900 units, at the end of 2016. One reason for this number is also because industrial properties recorded the lowest number of transactions for 2016 since 2010. He added, “There would be pressure on pricing due to the overhang, which would take some time to clear. This is why we are projecting a moderate growth for sales.” He said the Digital Free Trade Zone (DFTZ) would help as it is scheduled to complete in 2025 and the hub will handle up to RM300bil worth of goods in the Asean region. Full article in TheStar here. 

Where business confidence is concerned, this is one recent article in TheStar. “Business confidence among Asian companies rose in October-December to the highest in almost seven years due to robust consumption and global trade, a Thomson Reuters/INSEAD survey showed. The index for Malaysia weakened to 64 from 75 as respondents expressed concern about consumer sentiment. A reading above 50 indicates a positive outlook.” Meanwhile the consumer confidence remain stable for Q3 2017. The recent article in TheStar quoting Nielsen here.  “The Malaysian consumer confidence remain stable in the third quarter (Q3) of 2017 with an index score of 93 percentage points (pp) – down one point compared to Q2 2017, according to the latest Global Survey of Consumer Confidence and Spending Intentions released recently by Nielsen.”

Okay, it’s quite clear. We have oversupply for both the residential and industrial units. Both would definitely take some time to clear but as we can see from all the projections thus far, there are no signs of a crash coming up. What’s your feeling about 2018 then? Consumer sentiment actually starts from all of us. Let’s hope it’s a positive 2018 ahead. Positive sentiment will slowly come back by then.

written on 26 Dec 2017

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