However, that is not to say that there aren’t any opportunities to be tapped in a soft property market. At the launch of Rahim & Co’s 2020/2021 market review earlier this week, Rahim & Co real estate agency chief executive officer Siva Shanker said the recent spike in Covid-19 cases has pushed all hopes of a strong market recovery to 2022, at best.
“Any projection of a recovery for 2021 was made last year, when there was no way of knowing that daily cases would surge to between 3,000 and 4,000 cases a day. “Because of the high numbers, we are still in the thick of the pandemic and any projection for a recovery in 2021 will be pushed to 2022.”
CBRE|WTW managing director Foo Gee Jen, at the launch of the CBRE|WTW Market Outlook 2021 report earlier this week, said that while there might not be strong growth for the coming years, one can however still look forward to gradually restoring normalcy and regaining certainty in 2021. “The pandemic will not vanish overnight, so I think we will still be dancing Tango with the pandemic in 2021, where a step forward of opening up the economy will be accompanied by another step backward of movement control if the cases surge.
“All said, I am confident we will make positive progress in the year ahead. I am hopeful that a macro-economic recovery will be forthcoming and the pandemic will be better-contained with vaccines coming into play.” In light of the current pandemic, Foo says there will likely be plenty of adjustments to be made in the market this year. “We see price and product alignments to the demand and preference of the local market.
“We see space re-adaptation, where there will be more diversification of space functionality to help boost occupancy. “There will also be more change in demand segmentation, where there will be more focus and increasing significance within the local market.” With the pandemic, Foo sees more parties investing in technology. “This will translate into productivity gains to compensate for physical and mobility restraints. We also see rising demand for industrial spaces, mainly attributed to the thriving e-commerce sector and the leveraging of local skilled labour, as progressive industrial advancement reduces the reliance on foreign workers.”
Foo believes that the industrial sector will continue to be the bright spot in Malaysia’s property market, with regional logistics and warehousing being one of the primary prospects in the long term. Commenting on the Johor property market, CBRE|WTW director Jonathan Lo says the banned cross-border travel could see some Malaysians returning to Malaysia. “This will create opportunities for Iskandar Malaysia to recruit experienced personnel.” He adds that the Rapid Transit System (RTS) will also have a positive impact on Iskandar Malaysia.
“The RTS construction has kick-started construction and will start passenger services by end-2026. It will create an economic spill-over effect on various sectors, like revitalising Johor Baru City Centre and integrating all parts of Iskandar Malaysia. “It will also help complement existing and up-coming transportation networks, promote population growth, as well as improve the demand for residential properties.”
Commenting on the Penang market, CBRE|WTW director Peh Seng Yee says the reintroduction of the nationwide Home Ownership Campaign (HOC) will help to spur sales within the local residential property sector. “It is a good opportunity for buyers to enter the market, as many developers will be offering incentives.” He adds that the weakened ringgit will also attract foreign investors. The HOC kicked off in January 2019 to address the overhang problem in the country.
The campaign, which was initially intended for six months, was extended for a full year. The HOC proved successful, having generated sales totalling RM23.2bil in 2019, surpassing the government’s initial target of RM17bil. The government reintroduced the HOC in June last year under the Short-Term Economic Recovery Plan (Penjana). Meanwhile, the CBRE|WTW Market Outlook 2021 report says market activities are expected to rebound with the eventual lifting of the movement control order.
“The recovery will extend to 2021 or possibly longer, as the end of the pandemic is still uncertain.” It adds that more incentives have been offered in securing sales, thus providing opportunities for investors searching for a good buy. “Under the prevailing market, prospective purchasers have the opportunity to negotiate further for more discounts, in addition to the existing incentives offered.”
In view of the land scarcity on Penang Island, CBRE|WTW in its market report points out that more proposals for reclamation, rehabilitation and redevelopment projects are expected. The report points out that PLB Engineering Bhd has signed a conditional joint development agreement with the Penang Development Corp to rehabilitate and redevelop the 84 acres of landfill at Jelutong.
“The RM1bil project is estimated to complete over 15 years.” The report adds further that the Penang state government had called for requests for proposals to reclaim and develop 150 acres of land along the coast from the QueensbayMall roundabout to the second Penang bridge. “Themed as the ‘Linear Waterfront’, this project will have four oblong-shaped strips of reclaimed land attached to the coast of Penang Island, which will comprise waterfront resorts, hotels, restaurants, and medical, commercial and mixed development components.
“The implementation of the proposals are expected to create more opportunities in the Penang property market, ” the report says. Meanwhile, on a regional level, Savills Asia Pacific research head Simon Smith says in a recent note that there is now hope for a brighter future in the Asia-Pacific region, on the assumption that a widely available vaccine will be distributed this year.
“We expect to see softened containment measures and fewer border restrictions and a return in cross-border property investment. “In the near term, low interest rates are likely to persist and will continue to support real estate, while substantial unallocated funds in the region suggest that deal making will be competitive, ” he says.