PETALING JAYA (Jan 6): There were fewer completions and launches in Malaysia in the second half of 2021 (2H2021) as the strict containment measures to curb the spread of Covid-19 delayed construction works, project delivery and completion of real estate transactions, according to Knight Frank Malaysia’s Real Estate Highlights 2H2021 report released on Jan 6, which features the findings of property market performance across Klang Valley, Penang, Johor Baru and Kota Kinabalu.
Knight Frank Malaysia managing director Sarkunan Subramaniam said there was only one notable completion in Kuala Lumpur’s high-end condominium market — Ascott Residence (199 units) — during the review period, bringing the cumulative supply to 66,128 units.
The Home Ownership Campaign (HOC) had been beneficial for first-time homebuyers and developers, which helped to improve sales and reduce property overhang. “According to the National Property Information Centre, the volume of transactions of high-rise residential properties, including serviced apartments in Kuala Lumpur, saw an upward trend in 3Q2021 (third quarter of 2021), soaring 25.5% on the quarter albeit registering lower transacted value. This is likely supported by the gradual easing of restrictions and reopening of sales galleries,” he said.
In the residential sector, the prohibition of physical property viewings and other sales activities, including closure of sales galleries during the prolonged phases of lockdown, had affected housing sales.
The report stated that there has been a shift towards virtual viewings/tours in the primary market with online sales on the rise, as more developers embrace digital marketing. Physical property viewing, however, is still preferred for most of the sub-sale homes. The pandemic has also spurred demand for properties away from the hustle and bustle of the city as is evidenced by zero new launches within KL City during the review period.
“The pandemic has fuelled demand for residential properties, especially landed housing in established and upcoming suburbs with good connectivity, where prices are more affordable and competitive. With the potential shift to hybrid work arrangements post-pandemic, homebuyers are seeking ideal living spaces that are larger with higher emphasis on functionality and comfort,” said Knight Frank deputy managing director Keith Ooi.
With the government’s focus more skewed towards the primary market in terms of incentives and policies, Ooi said the momentum in Kuala Lumpur’s secondary market remained flattish. During the review period, the overall average transacted price in Kuala Lumpur’s high-end residential sector remained relatively stable with a slight decrease of about 0.6%.
“The pricing for prime housing, particularly landed residential properties, are anticipated to gradually increase in 2022 as the property market is expected to start recovering on the back of a more positive outlook,” he added.
Knight Frank associate director of residential market Kelvin Yip noted that the average asking prices for selected high-end high-rise schemes in KL City, Ampang Hilir/U-Thant and Bangsar were marginally lower, while the sub-markets of Damansara Heights and Kenny Hills remained in the positive territory. The average transacted price in Mont’Kiara continued to hold steady.
In Johor, Knight Frank Johor director Debbie Choy opined that there is mixed performance in Johor Baru’s residential market when comparing high-rise residential developments and landed residential developments. “The trend and demand for landed residential homes continue to remain resilient. Developers expanding their land banks are also more focused on the search for suitable locations, with larger sites for landed residential developments. Thus, we anticipate more landed home launches in the near future.”
“As for the secondary market, the asking prices of selected high-rise residential projects in the city and fringe areas of Johor Baru and Iskandar Puteri were slightly lower as compared with the previous period of 1H2021,” she added.
Moving forward, Choy said activity in the rental market is expected to pick up following the gradual reopening of the country's borders which will ease both short- and long-term visits by business travellers and investors, starting with the Vaccinated Travel Lane between Singapore and Malaysia where mandatory quarantine rules are exempted.
Meanwhile, the overhang figure for all residential sub-sector in Kota Kinabalu stood at 1,205 units during the review period and has risen significantly as compared with the corresponding period of 3Q2020 at 267 units. “The condominium/apartment segment contributed about 97% of the overhang units, mainly due to the influx of completed units under newer phases of launched projects. In the primary market, we anticipate a slower market absorption rate for overhang high-rise products as a result of more cautious market sentiments during this trying time,” said Knight Frank Sabah executive director Alexel Chen.
“In the sub-sale market, however, well-located and suitably priced residential products, particularly landed residential homes continue to garner interest from genuine homebuyers due to limited new launches in recent years. Moving forward, we anticipate property launches will not be held off indefinitely. Instead, when market conditions are more conducive, new supply will be gradually released,” said Chen.
Knight Frank Penang executive director Mark Saw said the residential sub-sector in Penang has improved, posting higher volume and value of property transactions as at 3Q2021. “With the Penang state government’s commitment to increase homeownership with plans for affordable homes in various strategic locations as well as the Penang HOC that was extended until the end of June this year, we expect to see further improvements in the state’s residential property market. The mandatory installation of fibre optic telecommunication infrastructure for all new projects is also a plus factor, going forward.”
The overall outlook for the residential property market remains cautiously optimistic moving into the last quarter of 2021 and 1Q2022, backed by proper product positioning and various property-related incentives/initiatives under the multiple stimulus packages; the recently concluded HOC as well as developer-led marketing campaigns and low-interest-rate environment.
Ooi added: “The abolishment of the real property gains tax (RPGT) for property disposals in the sixth and subsequent years of ownership is long-awaited. This augurs well for long-term property owners who wish to dispose of their existing properties to upgrade and for empty nesters looking to downsize. The exemption of the tax penalty is expected to boost activity, especially in the secondary market.”
“Consequently, we believe the residential market will continue to self-correct amid challenges brought on by the pandemic. In the short to mid term, more direct measures, however, may be required to revitalise and sustain the slow growth momentum of the property sector, as the emergence of new Covid variants continues to pose downside risks,” Ooi concluded.