What is in store for Malaysia’s property market in 2017

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The property market basically function like all the other business trades — simple fundamentals of demand and supply. However, a country’s economy against the global’s economy as well as its political scene will affect the property market.

Malaysia is still going through political instability and the global economy still isn’t looking too bullish from last year. What can be expected of the property market in Malaysia? There have been a couple of reports earlier this year and we intend to sum it up here.

According to Malay Mail Online, the local property market in 2017 will continue to be subdued this year. Research arm of property consulting firm Rahim & Co. said, “The property market is expected to remain subdued for a period of 12 to 18 months”.

The Malaysian property market saw a decrease in sales last year and will continue as such this year. It will be a buyer’s markets as there will be a period of adjustment and price consolidation to bridge the gap between prices demanded by the sellers and home seekers.

Global property consultancy Knight Frank Malaysia‘s managing director Sarkunan Subramaniam told Malay Mail Online that he is optimistic that the property market will bounce back at the end of 2017 despite the market’s falling demands to purchase properties amid sluggish economy.

Putrajaya has also intended to increase the stamp duty rates for real estate worth more than RM1million, which will come into effect in 2018. This action could be a double-edged sword for the market. It may help boost sales of properties this year and force developers to build cheaper in the future.

“Whilst this announcement is expected to further dampen the high end condominium segment in 2018, it may boost sales of million ringgit homes before 2018.

“Post 2018, more developers may price their products below the RM1million threshold, offering smaller built-up and lesser furnishing,” he says.

On the up side, it may be a positive year for Klang Valley according to WTW 2017 Malaysia Real Estate Market Outlook. This area might benefit from new infrastructures – HSR, MRT and LRT additional lines and stations, new highways and expressways.

However, Rahim & Co. did expressed concerns that there may be an oversupply in the commercial sector. This is backed by the latest Malaysia Commercial Real Estate Investment Sentiment Survey (CREISS) 2017 conducted by Knight Frank Malaysia. The survey is based on the sentiments of industry players.

According to The Star, this oversupply will continue to apply pressure on occupancy rates and rental yields. However, over half of those polled said they intend to continue investment in the retail and office sectors this year.

“Despite the challenging operating environment, the respondents have expressed their interest in exploring investment opportunities in various regions.

“Sabah and Penang were voted as the highly attractive regions for hotel and leisure investment, likely attributed to their strong tourism market,” says Subramaniam in the statement.

From the survey, the interest in investing in the hotel and leisure sectors is very apparent with its leap from 65% last year to 93% in 2017.

In the coming months leading to 2018 will be interesting to watch. While some might find their prospects bleak but there is hope. All we can do is hope and invest when the timing is right.

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