PETALING JAYA (Jan 12): The overall property market has been depressed by shrinking demand and oversupply across the residential and commercial property sectors, said industry experts.
The commercial property market was more challenging last year than the previous year with the retail property segment feeling the impact more than the office segment due to the rising cost of living and prudent spending by consumers, Knight Frank Malaysia Sdn Bhd managing director Sarkunan Subramaniam told EdgeProp.my.
“The overall outlook for 2018 is expected to remain relatively similar to 2017 although the improving oil and gas sector may provide a breather for the office market moving forward.
“Greater growth in the digital economy coupled with the rising popularity of co-working and serviced office segments augur well for the commercial office sector,” he added.
Sarkunan will be giving his views on the Klang Valley office market at the upcoming 11th Malaysian Property Summit organised by The Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS).
The summit will be held on Jan 23 at the Sime Darby Convention Centre in Kuala Lumpur. EdgeProp.my is the media partner.
The summit also features Savills (Malaysia) Sdn Bhd deputy executive chairman Allan Soo, KGV Property Consultants Sdn Bhd executive director Samuel Tan, Valuation and Property Services Department (JPPH) director-general Nordin Daharom, PEPS president and CBRE|WTW managing director Foo Gee Jen, PPC International Penang Sdn Bhd executive director Mark Saw, TRX City Sdn Bhd CEO Datuk Azmar Talib and MCA Belt and Road Centre deputy executive chairman Datuk Joseph Lim.
Savills’ Soo, who will be focusing on the retail property segment and the impact of e-commerce at the summit, also foresees tough days ahead for the commercial property sector.
However, he noted that there is a silver lining in that new fashion and F&B tenants have been and are coming into the Malaysian market including from Dubai, China and Bangkok, while co-working space companies have come into the Klang Valley to take up large office spaces last year.
“2018 will be another year of consolidation amidst further increase in supply in both the retail and office sectors. Retail supply will go past last year’s 62 million sq ft or 8 sq ft per capita.
“But there will be new retailers seeking to establish themselves in Malaysia. The prospect of a robust market in the future will increase as retailers treat Malaysia as a critical point in their regional expansion,” Soo said.
Meanwhile, he added that office space rental will weaken as the oil and gas sector continues to be challenging while the financial sector is shedding jobs. However, some demand for office space in the Klang Valley may come from those who are attracted to the Tun Razak Exchange development and the buildings along the mass rapid transit route.
In Johor, the property market in the southern region is expected to see a greater influx of serviced apartments in the next 12 to 24 months, according to KGV Property Consultants’ Tan who will be sharing about Johor’s outlook at the summit.
“Moving forward, more serviced apartments that are currently under construction are expected to be completed in 2018 or 2019. This will add pressure to the already oversupplied market,” he said, adding that market forces will have to take their course to find a balance.
“In the lesser locations, prices and rentals may have to decline while in the better locations and properties with better designs and concepts, the prices will still be sustainable,” Tan opined.
In order to tackle the issue of oversupply of high-rise residential properties in the state, owners could opt for home-sharing businesses while developers could convert their buildings into hotels, he suggested.
This story first appeared in EdgeProp.my pullout on Jan 12, 2018. Download EdgeProp.my pullout here for free.