S’wak’s property market to experience softer times ahead
KUCHING: In the near-term, investment appetite in Sarawak is expected to remain weak which may affect business sentiment and revenue, including halt of property purchases, CBRE Group and WTW observed in a report on Malaysia’s real estate market outlook for 2021.
In its ‘Restart the uneven recovery’ report, CBRE-WTW Research pointed out that the unconducive socio-economic climate caused by the current health and political uncertainty are likely to cause purchasers to continue adopting a wait-andsee a itude in terms of property commitments.
“Property overhang will become more evident as take-up rates slow down further. Pricing may be compromised further and decline, if poor demand persists,” it said.
“Owing to the high degree of volatility surrounding the local economic recovery and current oversupply of property units particularly in the highrise residential and commercial sector, the full impact on the real estate market is still unclear,” it added.
It also pointed out that the decline in business activities have directly affected the commercial and retail property sector, as businesses vacate shop and office units, affecting both occupancies and rentals.
In total, CBRE-WTW Research noted that Sarawak’s property sector recorded 7,483 transactions worth RM2.26 billion in the first half of 2020 (1H20), a decline of 36.8 per cent in volume and 35.5 per cent in value compared with 1H19.
Nevertheless, it pointed out that Sarawak’s residential subsector continues to be the most active sector, contributing 43.3 per cent in total transactions followed by agricultural (39 per cent) although the former recorded a double-digit decline for volume (down 34.7 per cent) and value (down 30.4 per cent) year-on-year (y-o-y).
It also noted that construction and completions activities in Sarawak remain high, with unsold under-construction units up 8.6 per cent compared with 2H19 whilst completions increased by 200 per cent compared with 1H19.
Despite the slew of major projects lined up for Sarawak, CBRE-WTW Research said the projected GDP growth for the state of 5.5 to six per cent for 2020 envisaged earlier last year, might not be realised.
“The recent fluctuations and any drop in commodity prices particularly in crude and palm oil would have a significant impact on the revenue and economic growth of Sarawak which is commodity and resource-based.
“Big ticket items like property purchase have taken a backseat amidst more crucial bread and bu er issues at the moment. As such, the property market is generally experiencing so er times,” it projected.
In the near to medium term, it expected domestic consumption to be frugal while investment appetite is expected to remain weak for the short to medium term but optimistic in the long run.
“2021 will be a buyer’s market, as buyers will be flooded with plentiful of options at a ractive prices and good bargains. The period will also be beneficial for genuine buyers and investors with capability, grasping the offered incentives,” CBRE-WTW Research forecast.
It noted that the Real Property Gains Tax (RPGT) and stamp duty exemption, the relief from quit rent and assessment payment, and lowering of cost of funds by lowering of the overnight policy rate (OPR) are some of the options introduced by the government to boost the property market.
The extension of the six-month loan moratorium by banks will also ease property related financial burdens. Developers are also currently willing to offer perks and a ractive sales packages such as discounts and freebies and participating in the Home Ownership Campaign (HOC) in order to reduce their unsold units.
“The HOC re-introduction, stamp duty, and RPGT exemption are seen to be spurring renewed interests in property purchases. The OPR and average lending rate (ALR) is now at a record low of 1.75 per cent since 3Q20.
“Additional cuts in OPR for the remainder of the year have not been ruled out, in a bid to encourage spending and inject more liquidity into the market,” it added.