‘LOWER PRICES TO CLEAR OVERHANG’
Allow prospective buyers to negotiate good deal from developers, says CBRE WTW chief
REDUCING prices is the only way to clear the property overhang in Malaysia, said CBRE WTW managing director Foo Gee Jen.
As at end of last year, there were about 35,000 overhang residential properties and nearly 20,000 for serviced apartment/SoHo/SoVo commercial properties.
“In the Klang Valley, if there are no major corrections in serviced apartment/SoHo/SoVo prices, it could take five years to clear them (the overhang units).
“While for residential units, (although) there are still hopes for prices to go up, it would probably take two years to clear,” said Foo at the launch of CBRE WTW’s real estate outlook 2020 report, here, yesterday.
He added that this was possible if the country’s economy continued to grow healthily without going into recession.
According to the report, the residential overhang in the Klang Valley rose 5.1 per cent year-on-year to 12,007 units in the third quarter of last year.
Close to one-third of the overhang units comprised residential properties priced between RM200,000 and RM500,000.
Meanwhile, the Home Ownership Campaign (HOC) that was launched in January last year did not help much in clearing up the overhang, said Foo.
“There were about 35,000 overhang units as of Dec 31. Only 2,000 units had been cleared, even though the government statistics showed over RM20 billion worth of properties were sold during the HOC.”
This meant that those units sold comprised mostly newly-launched units rather than the overhang ones, he said.
Last week, Housing and Local Government Minister Zuraida Kamaruddin said the HOC recorded RM23.2 billion in sales last year, surpassing the government’s initial target of RM17 billion.
The campaign managed to clear 31,415 residential units built by federal and state governments as well as private builders, she added.
To overcome the overhang situation, Foo suggested Malaysians emulate European industry players’ practice, such as in London where buyers could bargain with developers over the prices at showrooms and even in the primary market.
“This has never happened in Malaysia,” he said, adding that Malaysian consumers should have the rights to bargain the prices down.
Asked if the government should restrict or control new launches, Foo said: “Everything... is on a supply-demand basis and the market should decide it. Housing is a basic necessity and I don’t think the government should put too much control in it. Let the market decide.”
Foo expects 2020 to be very flattish for the local property sector.
“Growth for the landed residential segment may remain flat at about five per cent,” he said, adding that there could also be a big correction in high-rise property prices.