MIEA anticipates landed residential transactions to be the focus in 2H2021

This article first appeared in City & Country, The Edge Malaysia Weekly, on September 6, 2021 - September 12, 2021.
In 1H2021, the overall decrease in property supply indicated that developers are holding back launches (Photo by The Edge)

In 1H2021, the overall decrease in property supply indicated that developers are holding back launches (Photo by The Edge)

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The Malaysian Institute of Estate Agents (MIEA) foresees landed residential units to be the focus in property transactions in 2H2021, according to its president Chan Ai Cheng.

“Interestingly, real estate professionals who are focusing on the commercial property market, also reached the same agreement. And agents who are focused on the industrial sector continue to hold fast to this sector,” she said in presenting the Real Estate Professionals Sentiment Survey on Malaysia Property Market Performance — Overview on 1H2021 & Outlook for 2H2021.

Commissioned by MIEA, the survey was carried out by the Centre for Entrepreneurial Sustainability, Universiti Tunku Abdul Rahman, to study the performance of the Malaysian property market, based on the sentiment of real estate professionals.

Chan noted that while agents were not allowed to operate during the full lockdown introduced at end-May, they received the green light to operate on Aug 26.

She added that MIEA would adhere to strict rules when conducting viewings, and ensure that all members who conduct viewings are fully vaccinated.

In terms of the outlook for the primary market, Chan said: “It is foreseeable that developers will likely adjust the property price for the new launches in the second half of 2021 to reflect the market situation. The majority [of the respondents] are of the opinion that developers are unlikely to announce new projects to be launched in 2H2021.”

Chan: It is foreseeable that developers will likely adjust the property price for the new launches in the second half of 2021 to reflect the market situation (Photo by MIEA)

As for the outlook for the secondary market, the respondents are not optimistic about the market’s performance in 2H2021. Most are of the view that the property market will take some time to recover. The loan moratorium introduced under Pemulih, which takes effect from July to December 2021, has eased the pressure on owners of properties in paying their monthly instalments.

Chan said although the loan mora-torium is a temporary measure, it had certainly helped to stabilise the secondary property market.

Meanwhile, MIEA also plans to engage further with stakeholders on measures to stimulate the market. It will be submitting a proposed road map for the recovery of the real estate sector for the consideration of the Ministry of Finance.

“We have established a Real Estate Recovery Task Force to look into it. We have also been working on a proposal for Budget 2022, although it is still in the preliminary stages,” Chan said.

“We also hope that the government will engage more with the stakeholders. We are happy to share our comments and suggestions. With the right government stimulus for the sector, we are confident that the market will recover.”

Although the market is subdued, Chan said there were some bright spots in 2H2021. She reckoned that the all-time low interest rate had been the main factor influencing the performance of the residential property market while recovery from Covid-19 ranked top for the commercial and industrial sectors.

The survey also identified key hot spots in 2H2021. “Due to the data limitation from other states, we managed [to zoom into] Selangor, Penang, Johor, Sabah region (Wilayah) and Sarawak region (Wilayah).”

According to the survey, the key hot spots for the property market in 2H2021 in terms of property transactions in Peninsular Malaysia are Petaling (17%), Cheras (14%) and Shah Alam (14%) in Selangor; Johor Baru (39%), Skudai (25%) and Mount Austin (23%) in Johor; and Bayan Lepas (32%), Tanjung Tokong (29%) and George Town (26%) in Penang.

Meanwhile, in Sabah and Sarawak, the key hot spots are Kota Samarahan (32%), Northbank (18%), Batu Kawa (14%), Kuching (14%) and Stutong (14%) in Sarawak; and Penampang (32%), Kota Kinabalu (23%) and Luyang (23%) in Sabah.

Soft market in 1H2021

According to the MIEA survey, the property market was significantly impacted by the Covid-19 pandemic.

In 1H2021, the overall decrease in property supply is an indication that developers are holding back launches or delaying delivery of vacant possession of their projects. The property supply data is based on the supply release (number of newly completed units) by developers and new launches.

According to Chan, the respondents indicated that there was a general decrease in the volume of transactions, especially in commercial (66%) and high-rise residential units (53%). She added that there was a general perception of a drop in selling prices in the primary market.

“On the residential front, this is due to the projects under the Home Ownership Campaign (HOC), where there is a mandatory 10% discount on selling prices,” she said.

“Also, generally in the primary market, developers offer promotional packages to attract buyers, make their project more attractive and make ownership easier for buyers; therefore, the data is not surprising.”

Meanwhile, the industrial sector and the landed residential property subsegment were the most resilient in 1H2021. “[In terms of] the performance of the secondary market in 1H2021, 47% of respondents indicated  ‘remain’ or ‘increase’ in property prices for industrial, and 36% of respondents indicated ‘remain’ or ‘increase’ in prices  for landed residential units, as opposed to commercial and high-rise residential, with only 31% and 21% respectively,” said Chan. 

“Landed properties have time and again proven themselves to be very stable and resilient through any market conditions even in these pandemic times,” she said. “Secondary properties are different from primary properties; viewing is in a way required as the condition of each property is different from others even in the same locality. With the daily infection rates increasing from April, this has affected viewings and, therefore, the volume of transactions.”

In comparison to prices in the primary market, those in the secondary market appear to have decreased by a higher percentage, Chan noted. She explained that as secondary properties are priced based on the price indicated by the sellers, it would appear that they are now more realistic and have adjusted their selling prices to be more competitive.

“Usually, a decrease in property price leads to a higher transaction volume but this isn’t the case from the survey findings. There are two ways of looking at this. First, secondary property prices are holding; and second, buyers are cautious before making purchases. Among the many other factors that affect buyers’ confidence besides the Covid-19 pandemic are the economy, job security and the stability of the government,” she said.

She also highlighted the movements in the rental market during 1H2021.

“The general trend [in the rental market] indicates a decrease in rent. For commercial properties, as businesses are badly hit by the effects of the pandemic, landlords are pressured to either reduce rents or have the place vacant if the tenant defaults,” she said.

“For residential properties, a huge proportion of the rent reduction is on compassionate grounds, to promote healthy landlord and tenant relationships.”