Rentals expected to grow moderately with lower demand

Whither goes: Contrasting views given on the state of the property market in Malaysia despite the fact that the economy posted better than expected growth in the first three quarters.

There seems to be a great divide among property professionals as to the state of the market.

Early this week, a valuer commented on a news portal that a crash is imminent “after the Chinese New Year in February or later”.

More than a week ago, property consultancy JLL Property Services (M) Sdn Bhd, which only focuses on top grade office space and residentials, said in a breakfast talk “Malaysia Real Estate Market – A bright future ahead?” that Malaysia remains the most attractive residential market in South-East Asia.

JLL Malaysia country head Y.Y. Lau said: “The residential market is set to stabilise and improve. The decrease in supply in Kuala Lumpur’s prime area and improvement in the economy is expected to pull capital values up for residential properties in prime areas.”

JLL’s research and consultancy associate director Veena Loh said residential rentals are expected to grow “more moderately, given reduced tenant demand”.

Early this week, valuer Ernest Cheong suggested Malaysian consumers should not commit themselves to buying a house because “prices will fall from RM500,000 to RM300,000”.

So there is Cheong who is telling buyers to hold their horses, and JLL’s team, who is brimming with optimism.

The divergence of views came at about the same time as the launch of the Property Market Report First Half 2017 by the Valuation and Property Services Department on Nov 13.

Granted that these figures are a few months late, they give concrete evidence as to the state of the market five months ago.

Although the Malaysian economy posted a better than expected growth of 5.6% in the first quarter of 2017 and a higher growth of 5.8% in the second quarter, these positive numbers have not filtered down to the property market.

According to the latest report, the property market “has yet to make a comeback”.

There is a relationship between these economic indicators and the property sector. If the economy is good, generally the property sector should be also. This does not seem to be the case however.

According to an industrial source, the third quarter numbers are “not that good” either.