KUALA LUMPUR: Malaysian property market is expected to remain weak in the first half of this year amid flagging demand ahead of the upcoming general election, an independent property consultant said.
Knight Frank Malaysia, a unit of London-based Knight Frank LLP, said the property market is expected to continue its lacklustre momentum from the second half of last year which as the performance was derailed by oversupplied position in the main sub-sectors such as high-end residential, office and retail.
“The second half of 2017 continued to see developers shifting their focus to the middle-income and affordable housing segments to cater to a wider target catchment amid challenges in the high-end market,” managing director Sarkunan Subramaniam said.
He said there was also mounting pressures on occupancy and rental levels for tenant-favoured office market as the increasing high supply pipeline continued to overshadow low absorption.
It said that more developers diversified their target market to other countries/ overseas territories such as Singapore, Indonesia, Hong Kong and Taiwan following China’s capital control.
It added that the 50% tax exemption on rental income amounting up to RM2,000 a month as announced under Budget 2018 might also improved demand for this category of investment properties.
The report said office market for Kuala Lumpur and Selangor continued to self-correct as increasing supply shadowed low absorption.
“Negative absorption of Kuala Lumpur office space following downsizing and consolidation of the oil and gas and its related sectors,” it said.
However, it said the demand for Multimedia Super Corridor certified space remained resilient.
The report also highlighted the expansion of net lettable area (NLA) of retail spaces in the Klang Valley by approximately 72,464 square metres brought the cumulative supply to approximately 5.33 million square metres, or about 0.65 square metre per person, as one of the highest in the region.
On Penang’s property market, the report said the state’s office market remained relatively healthy with both occupancy rates and rentals holding steady.
