Homebuyers to continue to face financing difficulties with banks holding out loans in Malaysia, says Knight Frank
Knight Frank Malaysia, the global property consultancy,has launched its latest research report, Real Estate Highlights for 2nd Half of 2016 which looks into the market performance across the various property mix – Residential, Office and Retail; and highlights the trends and outlook in the four key markets in Malaysia, including Kuala Lumpur, Klang Valley, Penang, Johor Bahru and Kota Kinabalu.
Sarkunan Subramaniam, Managing Director, Knight Frank Malaysia says, “2016 was a challenging year with both high-end condominium and office market subdued. This year, homebuyers will continue to face financing difficulties with banks holding out loans. Loan interest rates may rise and this will affect investor’s returns. Office rents will be under pressure but there will be several notable sales of office buildings at lower than expected prices compared to the past year. The increase in office supply will make it a tenant’s market.
Going forward in 2017, the hotel and logistic sectors are foreseen to do better, as investors look for better yields in this sector to diversify their portfolio. At the tail end of 2017, the market is expected to pick-up after the national election and as the dust settles, business will be running as usual.”
Highlights for 2H2016;
Kuala Lumpur High End Condominium Market
-Despite the subdued market, there were noticeably more launches and previews in the second half of 2016.
-The rental market in locations with high supply pipeline and a weak leasing market undergoes correction as owners and investors compete for the same pool of tenants.
Kuala Lumpur & Beyond Kuala Lumpur (Selangor) Office Markets
-More fitted office space available for sub-let as restructuring of oil & gas related companies continues.
-Newly operational Phase 1 of the MRT Line 1 boosts demand for good grade office space along its route.
Klang Valley Retail Market
-Second half 2016 welcomed the opening of an upscale retail mall and lifestyle cum neighbourhood malls despite growing headwinds in the local retail scene.
-Retail sales growth to remain weak going forward as consumers grapple with rising cost of living and lower disposable income amid a weak job market and growing economic uncertainties.
Penang Property Market
-The Penang state government recently announced an increase in development density to 128 units per acre, up from the current 87 units per acre, in order to provide more affordable housing in the state. To take effect only next year, units built under this new guideline must not be less than 900 sq ft. Prices are being fine-tuned at the moment.
Johor Bahru Property Market
-Johor manufacturing sector attracted total proposed capital investment of RM18 billion in 2016, the highest in the country.
-As of 3Q2016, Iskandar Malaysia recorded cumulative investments of RM218.84 billion, an 18% increase (RM33.5 billion) year-on-year.
Kota Kinabalu Property Market
-Department of Urban Wellbeing, Housing and Local Government as well as developers have launched initiatives to improve conditions of the property market.
-Market sentiment shows that consumers are still fairly confident in established developers.