Malaysian residential market stable, but concerns grow over commercial properties

Changes in the demographic structure of the market and a constant drive of supply and demand are causing positive expectations that the Malaysian property scene will maintain its upward momentum. It was reported yesterday by the Malaysian Reserve, that according to Datuk Ng Seng Liong, the former president of the REHDA of Malaysia, statistics released last year by the National Property Information Centre show that residential property transactions were the highest they had been for five years.

“This was also attributed to the increase in affordability level and supported by the ease in borrowing and attractive loan packages offered by the financial institutions,” he said. He explained that during last year, the demand for residential properties priced at less than MYR150,000 (US$48,355) remained strong and contributed to 54 percent of the total 145,785 transactions made that year. This total amount sees a 12.6 percent increase on the 129,441 transactions which took place.

In regards to commercial property however, the principle of Ernest Cheong PTL Sdn Bhd, Dr Ernest Cheong, voiced concerns that throughout the Klang Valley, there is an oversupply of residential property, with a take-up rate for offices which will be ready for sale this year standing at less than 50 percent. Cheong opined that the Malaysian property consultancy community is practically unanimous in their views on the supply and demand situation in the country concerning commercial properties.

“It appears that the Malaysian corporate including the public and private sectors are bullish on the development of commercial properties in the Klang Valley into the 2020. I am fearful for the future of the commercial property market in Malaysia,” he said. He went on to say that the only way to address the issue of oversupply in the sector is to either stop building commercial properties, or create a demand in order to absorb the excess supply.