As the number of completed unsold properties in Malaysia rise further, developers may be forced to slash prices in order to sell these real estates, claimed reporter M. Shanmugam.
Citing figures from Bank Negara Malaysia (BNM), the expert noted that the total number of unsold properties have reached 130,690 units in Q1 2017. This is an alarming figure as the average number of such units was under 80,000 on average in the past few years.
These comprised completed and incomplete landed houses, serviced apartments, high-rise condominiums and apartments, as well as SOVO units, SOHO units, offices and retail space.
Of the 130,690 unsold units, unsold completed residential properties accounted for 20,876 units. Of this, houses costing under RM500,000 made up the majority, while 34 percent are priced over RM500,000.
The units struggled to find a buyer due to their bad location, high price or the purchaser wanted a different type of dwelling like landed houses.
As such, Shanmugam thinks that most of the properties to be sold at a bargain are those situated in places far away from major urban centres and those costing above RM500,000.
“So, it is not that dream double-storey terrace house in Petaling Jaya, Penang or Johor Bahru that is going to be put on fire sale.”
Property developers are also expected to reduce prices of office and retail space due to a huge amount of incoming supply.
According to the central bank, 140 shopping malls are expected to be completed by 2021 in Klang Valley, Johor Bahru and Penang.
This is expected to worsen the market situation as rents of existing retail premises are already declining, while the deluge of supply would lead to higher vacancy levels.
Meanwhile, the vacancy rate of office space in Klang Valley is worrying as it is projected to hit 38 percent by 2021 as 38 million sq ft of office space is expected to enter the market by then. This not only exceeds the regional average of 6.6 percent but also Malaysia’s average vacancy level of 18 percent.
The positive side is that the country’s gross domestic product (GDP) is expanding well at 6.3 percent mainly due to the export sector, according to BNM’s latest statistics, added Shanmugam.
This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email editorialteam@propertyguru.com.my
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