This article first appeared in The Edge Financial Daily, on March 10, 2016.

KUALA LUMPUR: Property developers, which have seen property sales slow down due to cooling measures, can see no light at the end of the tunnel this year.

Real Estate and Housing Developers’ Association (Rehda) president Datuk Seri Fateh Iskandar Mohamed Mansor said developers remain pessimistic about any near-term rebound for 2016 and have slowed new project launches. According to Rehda’s latest property industry survey for the second half of 2015 (2H15), 60% of the 159 respondents across Peninsular Malaysia said they are pessimistic about the 1H16 outlook, while 28% are neutral.

“About 80% of respondents anticipate sales below 50% within six months of launch in 1H16,” Fateh Iskandar told a news conference to reveal the survey findings yesterday.

Despite rising cost of doing business, developers also do not expect property prices to increase as they are likely to absorb the rising cost to boost sales.

Already, 86% of respondents said they have absorbed the goods and services tax, leaving 14% who said they have passed on the increase to house buyers.

Later at a property forum hosted by Rehda, Malaysian Institute of Estate Agents president Erick Kho expects the market to bottom out at the end of 2016.

However, Savills (Malaysia) Sdn Bhd executive chairman Christopher Boyd doesn’t see the market improve in 2H16 as it will take some time for developers to clear their inventory of unsold units.

Khazanah Research Institute managing director Datuk Charon Wardini Mokhzani concurred, saying a rebound in 2016 is unlikely as macroeconomic situation is expected to get worse over the next 12 months.

Rehda deputy president Datuk Soam Heng Choon, who was moderator at the forum, said although the market has slowed down, it is not heading towards a crash as developers have at the same time scaled down their plans for new launches.

He is of the view that the market will improve after the last batch of developer interest-bearing scheme properties come into the secondary resale market next year.

Meanwhile, Boyd expects top-end high-rise properties to be hit the hardest this year, while noting that industrial properties in the Klang Valley, Johor and Penang performed well last year.

He added that industrial real estate investment trusts are worth considering as there will be cost-push upward pressure in industrial rental rates in the next two to three years.

Geographically, he believes that areas nearby the Tun Razak Exchange projects have yet to reflect their future potential increase in value and Batu Kawan in mainland Penang will be the next focus of development.

Rehda’s property industry survey is a half-yearly survey conducted to gauge the property market performance and the industry outlook as well as to find out the challenges faced by members.

The survey also highlighted fewer projects and units launched in 2H15 compared with 1H15. The number of residential units launched shrank from 10,550 in 1H15 to 9,607 in 2H15, while commercial units recorded a slight increase from 279 in 1H15 to 331 in 2H15.

The survey also revealed that the number of first-time buyers increased from 36% in 1H15 to 47% in 2H15, while clients purchasing for investment purpose fell from 23% in 1H15 to 13% in 2H15.

A total of 62% of respondents reported unsold units, mainly from Selangor, Johor and Pahang.

Fateh Iskandar said first-time buyers’ inaccessibility to end-financing and loan rejection were  the top reason for unsold units, followed by unreleased bumiputera lots and low demand or interest.

“Our statistics show that developers are launching more affordable properties, but provision of affordable housing remains a challenge with increased overall cost of doing business, regulatory burden, high land price and cross subsidies from higher-end products,” said Fateh Iskandar.