_Malaysia Real Estate Highlights, 1st Half 2017 – Residential sector update

Kuala Lumpur 

• The residential market remained subdued with lesser market activity as developers scaled back on new property launches. During the period under review, potential buyers and investors continued to adopt the ‘wait-and-see’ approach. Amid a weak market sentiment, Wilayah Persekutuan Kuala Lumpur (WPKL) recorded lower volume and value of transactions in the condominium / apartment segment with 1,247 transacted units valued at RM975.88 million in 1Q2017, 12.2% and 5.9% lower than the previous quarter. 
• Secondary pricing in selected locations remained flat while rentals continued to be under pressure. Asking rentals in selected older schemes in the localities of KL City, Damansara Heights, Bangsar and Mont’ Kiara remain under pressure. Despite the soft market, asking prices continue to remain relatively stable although vendors are more flexible in negotiations. 
• China’s capital control over international monetary transfers continue to impact projects targeting buyers from mainland China. This is expected to further dampen the weak high-end condominium market which is undergoing self-correction amid widening gap between supply and demand. 
• Developers continue to tweak their marketing strategies to sustain earnings through “stock clearing” of completed and on-going projects. Developers are also seizing opportunities in this soft market to increase their land banks in strategic Klang Valley locations such as those along the rail transportation routes for transit oriented developments (TOD) and affordable cum mass housing projects. 

Penang

• The latest figures released by the National Property Information Centre (NAPIC) showed that the total volume of transactions for all sectors in Penang State contracted 16.6% in 1Q2017 versus 4Q2016 as against a drop of 6.1% compared to 1Q2016. 
• Asking rents for condominiums are noted to be stable compared to 2H2016. For larger sized units in Tanjong Bungah, asking rents generally range from RM1.10 per sq ft to RM2.00 per sq ft per month whilst the upper band of asking rents are also noted to be stable, ranging from RM2.10 per sq ft to RM2.60 per sq ft per month. 

Johor 

• As of 1Q2017, total cumulative committed investment in Iskandar Malaysia stands at RM227.67 billion. 
• The residential sector continues to remain dominant in 1Q2017, accounting for 63.1% of the total transactions in Johor, although the transaction volume was 6.8% lower y-o-y. 
• Johor Bahru was the most active district with 49.5% share in transaction volume followed by districts of Bahu Pahat and Kluang with 10% and 8.6% share respectively. Terraced houses accounted for 61% of total residential transactions, the most popular property type. 

Kota Kinabalu

• The residential segment has constantly been the dominant sub-sector in Sabah. As of 1Q2017, this sub-sector accounted for approximately 60% of the total volume of transactions and circa 49% of the total value of transactions in the state. 
• The slowdown in market activity in Kota Kinabalu looks set to continue in 2017 as it will take some time for the market to fully absorb the incoming units of high rise residential projects.
• High rise residential units make up 34% of total residential stock currently and this is expected to further increase with major influx of units in the pipeline.

Read the full report on Malaysia Real Estate Highlights – 1H2017