Marginal growth for residential market

Property supply Klang Valley

PETALING JAYA: The Malaysian residential property market is expected to record marginal growth in terms of values and transactions in 2021, on the back of continued government incentives and rollout of the Covid-19 vaccine.

CBRE|WTW managing director Foo Gee Jen said growth this year would also be fuelled by the low-base effect as a result of the Covid-19 pandemic in 2020.

“We will be starting from a lower base. As a result, we do expect to see slight growth in terms of values and transactions in 2021, ” he told a virtual press conference following the launch of the CBRE|WTW Market Outlook 2021 report yesterday.

Nevertheless, Foo said the reintroduction of the Home Ownership Campaign (HOC), coupled with several stimulus packages as well as the initiatives tabled under Budget 2021, would help to spur the residential sector.

“The HOC will provide much needed relief in a challenging market and support purchasing.”

The government reintroduced the HOC in June last year under the Short-Term Economic Recovery Plan (Penjana).

Foo noted that the government had also announced the real property gains tax (RGPT) exemption for Malaysians for the disposal of up to three properties between June 1,2020 and Dec 31,2021.

“The RPGT exemption will provide an opportunity for homeowners to upgrade. Urbanisation will be happening, but at a slower rate.”

Foo said there could be negative repercussions on the local residential sector if the HOC is not extended into the second half of 2021.

“The HOC will have a huge impact. The political uncertainty will also affect the investment climate.

“The state of emergency until Aug 1 can be viewed as a blessing in disguise, as priority is given to dealing with the pandemic.”

He added that the vaccine rollout will be “the light at the end of the tunnel.”

“Everyone just needs to be patient, perhaps for at least another year before things will start to pick up, ” Foo said, adding that the residential overhang will likely “cloud the market” for two more years.

“Pricing may go sideways for mid and affordably-priced homes. Developers will also need to be content with building products for the local market, rather than foreigners. Developments in good locations should continue to do well.”

Additionally, Foo did not expect a significant increase in demand for affordable homes this year.

“There is already an oversupply of affordable homes as we speak. The main issue is that there is a mismatch in location.”

He pointed out that many affordable homes were built over the years under PR1MA, adding that many of them were located in areas without proper accessibility or surrounding amenities.

“Any affordable homes built must relate to accessibility and basic infrastructure.

“As long as the houses continue to be built in less-than-ideal locations, I don’t think the demand for affordable homes will continue to grow.”

Additionally, Foo said properties, especially landed residential in good locations, would continue to command steady values this year.

Foo added that the cancellation of the Kuala Lumpur-Singapore High-Speed Rail (HSR) project would have some impact on the local property sector.

“Developments with planned routes and stations along the HSR line will be negatively impacted. Nevertheless, perhaps this is a project that can be revisited later in the future.”

Foo said a complete economic lockdown could have dire consequences on the local property market.

“The real estate market is dependent on economic activity. A total stop will cut down a lot of financial flow to the rakyat and that will delay decision-making towards buying big ticket items, such as property.”

Meanwhile, the CBRE|WTW Market Outlook 2021 report said a shift in preferences for home layouts and flexible options may result in a change of residential layouts in the future.

“Homebuyers will continue to have strong bargaining power, given the various options to choose from the primary, secondary and auction markets, with the latter two having lower price tags.

“Additionally, a price opportunity may emerge for developers’ units (completed but remained unsold) where buyers could still buy completed units at the initial launch prices, versus newly-launched units.”

It added that the overall luxury high-rise residential sector remained cautious with the current Covid-19 situation.

“Properties priced at luxury and premium levels (RM1,500 per sq ft and above) are expected to have slower take-up than lower priced properties in the upscale and standard range (RM700 per sq ft to RM1,499 per sq ft) as this pricing is more accessible to the general house buyer.”

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