Thursday 28 Mar 2024
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PETALING JAYA (Feb 1): The most positive scenario for the overall Malaysian property market in 2021 would be a slightly better performance than last year due to the start of the vaccination programme that would help in controlling the Covid-19 pandemic, according to Henry Butcher Real Estate chief operating oficer (COO) Tang Chee Meng.

In presenting Henry Butcher Malaysia’s annual report on the review and outlook for the Malaysian property market in 2021 titled “HB Perspective 2021”, Tang also noted that the recent spike in Covid-19 cases and the subsequent moves by the government to curb the spread of the pandemic may delay the industry recovery to next year.

“Overall, the property market in 2021 is expected to be flat or record a slightly better performance than 2020 as the start of the vaccination programme in the country would help in controlling the Covid-19 pandemic and start the economy on a recovery path. However, with the recent rise in infections and the implementation of the movement control order (MCO) 2.0 and the declaration of emergency, the hoped-for recovery may be delayed until 2022,” he said.

According to the report, the overall situation for the residential sector is expected to continue to be challenging as the pandemic has yet to be brought under control, and the political situation in the country is still full of uncertainties. The MCO 2.0 has affected businesses and dampened investors’ and consumers’ confidence, and this will delay the recovery of the market if the MCO is prolonged.

Landed residential properties will remain in demand, and the huge overhang of high-rise residences, especially serviced apartments, will make this segment of the market more challenging.

“The positive thing to look out for is the roll-out of the Covid-19 vaccination programme, expected to commence after receipt of the first batch of vaccines expected by end-February. Once herd immunity is developed, the economy and consequently the property market will be able to stage a sustained recovery. Furthermore, buyers may take advantage of the current low interest rates to buy their dream homes and housing developers are expected to intensify their marketing efforts to push sales before the HOC 2020 (the Home Ownership Campaign) ends in June,” it stated.

It believes that foreign investors will also return to the market once international borders are lifted. As most developers have added digital marketing tools and technology to their marketing arsenal due to the pandemic, this move is expected to help them in the long run to reach out beyond the local market.

Other than the digital initiatives, the report added that developers had also made other changes, such as focusing their attention on affordable homes priced under RM500,000 each, which will continue to be the main focus in 2021.

Developers will also likely place more emphasis on details of home design that involve private workplaces and Internet connectivity due to a surge in the work-from-home trend.

“The commencement and completion of various major infrastructure projects such as the East Klang Valley Expressway (scheduled for completion in the third quarter of 2021 [3Q21]), the Rapid Transit System as well as the Kulai Iskandar Data Exchange projects in Johor, the East Coast Rail Link and Pan Borneo Highway in East Malaysia will boost demand for properties located near the interchanges of the highways or within the vicinity of the developments,” it said.

Henry Butcher Malaysia founding partner and director Long Tian Chek expressed his hope that the government will extend the HOC and continue to come up with additional measures to help the property industry tide through this difficult period and stage a sustainable recovery.

As for the office sector, offices in the Klang Valley already experienced some downward pressure on occupancy and rental rates prior to the pandemic due to substantial new supply coming on to the market over the past few years. 

The oversupply situation was exacerbated by the adverse impact of the pandemic and ensuing lockdowns on the economy imposed by the government. The spike in work-from-home practices, business closures and the poor business outlook led to companies deferring expansion plans and worsened the oversupply problem.

HB Perspective 2021 noted that there are several ongoing mega office projects, such as Merdeka 118 by Permodalan Nasional Bhd (PNB), and these will add substantially to supply of office spaces in Kuala Lumpur, putting additional pressure on overall occupancy and rental rates.

“The increase in vacancy rates of office buildings in the Klang Valley may, however, lead to some developers shelving or deferring their office developments, and this will ease the pressure on the oversupply situation,” it added.

“The office market in smaller towns like Ipoh, Kota Baru and Kuala Terengganu is, however, fairly stable due to limited supply of purpose-built office buildings and no or very little new supply coming onto the market.”

The retail sector has also seen challenges as many retailers are unable to sustain operations during this difficult period, and they took the opportunity to close unprofitable outlets, downsize or stopped operating completely. These retailers included established names like Robinsons and Tangs.

The report expects the retail sector in the Klang Valley to continue to see a shake-out where poorly designed malls and those in inferior locations will be forced to close or be converted to some other alternative uses. 

In 2020, a total of eight new shopping centres and two mall extensions were opened in the Klang Valley, putting an additional net floor area of more than 2.7 million sq ft into existing supply. New shopping centres will face challenges in filling up space, and some may defer opening if they are unable to open at a satisfactory level of occupancy.

“New malls with foreign retailers making their debut in Malaysia will offer shoppers new choices and different shopping experiences, which will help to draw customers. Some of the new retailers/restaurants opening in Kuala Lumpur are Taco Bell (Cyberjaya), Tom Ford (KLCC), Five Guys (Genting Highlands), David Rocco (Suria KLCC) and Don Don Donki (Lot 10),” it added.

Another badly-hit sector during the period is the hospitality and leisure sector as foreign tourists are not allowed into the country, and domestic tourism is also prohibited due to restrictions on inter-district and interstate travel.

Many hotels have either implemented a cost-cutting or retrenchment exercise or closed down completely. More than 200 hotel and tourism operators had shut down operations since March 2020, the report said.

“The cancellation of Visit Malaysia Year 2020 dealt a huge blow to the tourism industry. Until international borders are reopened and domestic travel restrictions are removed or at least relaxed, the hospitality sector is expected to continue to go through very tough times and will unlikely be able to see any sustained recovery in 2021,” it said.

While the industrial sector is also affected by the pandemic, some sub-sectors such as manufacturers of gloves, face masks, personal protective equipment (PPE) equipment, health equipment and products have benefitted from an increase in demand for such products. 

Warehousing and logistics service providers also benefited from the e-commerce boom experienced during the lockdowns. The industrial property sector is expected to see a recovery in 2021.

“Despite registering a decline in the volume and value of transactions, the industrial property sector is the best performing of all the property sectors. With the start of vaccination programmes in many countries, the pandemic may be brought under control, and this will spark a revival of the global economy and benefit major exporting nations like Malaysia,” the report stated.

Edited ByErlynda Jacqui Chan
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