Clearing stock. Good for oversupply situation I think?

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You know, people often commented that the year end sale in Hong Kong or Singapore is always better than the one in Malaysia. Actually, I do agree even if not for all items lah. One major reason? They lack the space necessary to store inventory, especially from the previous season(s). The stock for the new season is coming and they must make space for it. Space is a huge premium there and even land prices in Malaysia are not increasing by single digit per year yeah…. Anyway, in Hong Kong, Even a nano flat may cost RM2 million in Hong Kong… Okay, perhaps for the Singaporean retailers, they can keep their old stocks in JB? I hope not though because the cost of transporting to and fro is not a clever decision to make. What about property oversupply? That one which everyone is so worried will crash the market? 🙂 Here’s an earlier So much demand, then why oversupply? In brief, it’s not the oversupply that will crash the market.

Coming back to the oversupply situation, specifically in JB, Malaysia. It seems that the developers are now postponing their new launches until they have cleared their existing stocks. According to Knight Frank Malaysia, how they are doing this is by offering attractive discounts and incentives, including absorbing legal fees, stamp duties and providing furnishing in some projects. The full article in EdgeProp.my here.  Knight Frank added, “Instead of holding landbank, developers are gradually releasing their products amid in smaller numbers and offer reasonable prices and attractive sales package to attract potential buyers.”

The below are Tables from the EdgeProp.my article:

Knight Frank also shared a few notable and catalytic projects such as the recently opened Coastal Highway Southern Link which will improve connectivity to the Second Link and its surrounding areas, thus attracting more investments. Besides that, there is also the The Pengerang Integrated Petroleum Complex (PIPC) which is expected to contribute about RM8.3 billion to the nation’s gross income by 2020 and will be fully completed in 1Q19. For the tourism part, the recent opening of the Golf-Course in Desaru Coast near Bandar Penawar will attract more visitors from the Asia Pacific region too. On an overall basis, as at Q3 2017, the total cumulative committed investment in Iskandar Malaysia stood at RM244.46 billion of which 61 percent are domestic investment and the remainder from overseas. Here’s the article for your reference. 

Total oversupply units are currently over 130,000 throughout the whole Malaysia. As Johor is considered a top property destination, any effort in reduction of the existing stock is good news. Perhaps we will start to hear the same news from KL and Selangor too? Perhaps more actions would be taken in the direction that Bank Negara is advocating? Happy following.

written on 29 Jan 2018

Next suggested article: Iskandar’s BRT? 90% coverage, 51km and operating in 2021

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