With the new government promising clean and fair governance, Savills Malaysia expects the conclusion of the 14th general elections (GE14) to boost demand for properties across the board as confidence in the property market returns, reported New Straits Times.
“We would like to reiterate that 2018 will be significant for the Malaysian property market. However, the second quarter of the year would be relatively quiet for property transactions, with the onset of the Ramadan fasting month,” said Datuk Christopher Boyd, Executive Chairman at Savills Malaysia.
He noted that while prices are expected to firm up next year, it will only be in early-2020 before developers can respond by raising supply.
“In short, particularly in Greater KL and Penang, there has never been a better time to buy.”
In 2017, the value of unsold homes that were completed in Selangor and Kuala Lumpur rose 44 percent, while the number of unsold houses in Selangor soared 108 percent to 5,200 units.
Over at the office market arena, although more potential upgraders are expected to invest in new premises in the near term, it would still take some time before the market can absorb the 16.9 million sq ft of new office that are set to be completed in 2020, said Boyd.
“In the medium term, we expect the new office take-up to increase in tandem with a growing economy and more foreign direct investments (FDIs).”
Earlier in March, Boyd revealed at the Savills Malaysia Breakfast Forum that the existing stock of office space within the Klang Valley is higher than that in Bangkok and Singapore at around 120 million sq ft.
Currently, office buildings in the Klang Valley have a vacancy rate of between 20 and 25 percent, and is expected to hover at about 25 percent until the surplus space is absorbed by around 2021/2022.
Boyd explained that while he does not expect the removal of the goods and services tax (GST) to affect office rentals, it will have a positive effect on the retail sector.
“While the market is likely to remain well-supplied in Greater KL, we see the likelihood the retail turnover picking up in areas where GST is lifted from merchandise, and not replaced by a sales tax,” he said.
“We hope luxury goods will fall under this category, making Malaysia a tourist shopping destination.”
Meanwhile, the renewed market confidence is expected to boost foreign direct investments, said Datuk Paul Khong, managing director at Savills Malaysia.
And with rising domestic consumption, real estate investment trusts and other funds focused on the industrial and logistics market will be in for some good news as the sector faces positive prospects.
“Look out for rising industrial rents which have lagged behind recent strong increases in industrial land values,” Khong said.
He noted that institutional investors, especially foreign investors, dislike uncertainty.
Image sourced from EveryDollar
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