‘RECOVERY CONTINUING BUT AT SLOWER PACE’

Overall rental market also expected to remain positive, says Knight Frank

THE recovery in the residential property sector is continuing, albeit at a slower pace, due to the higher borrowing costs and growing inflationary pressure, said Knight Frank Malaysia.

According to its Real Estate Highlights for the second half of last year, the recovery was followed by an increase in office leasing activity and a rebound in the retail industry.

“Last year, most of the world came out of intermittent Covid19 lockdowns, and we entered a year of rising interest rates, geopolitical uncertainty, supply chain disruptions, and record inflation rates,” said Knight Frank Malaysia group managing director Keith Ooi.

“The performance of the property market sector is in tandem with robust economic recovery, as Bank Negara Malaysia expects full-year growth to exceed its forecast of seven per cent.”

It said Malaysia’s retail industry had rebounded strongly with higher footfall supporting retail sales growth, although the growth momentum was dampened by concerns over rising living costs and a weaker economic outlook.

Knight Frank has revised its full-year retail sales growth forecast to 41.6 per cent, following the impressive 96 per cent jump in the third quarter.

It said during the review period, Bank Negara had increased the Overnight Policy Rate thrice — by 25 basis points each — in response to rising inflationary pressures, adding that this had an impact on borrowing costs and was expected to affect purchasing decisions by house buyers.

Knight Frank Malaysia senior executive director (research and consultancy) Judy Ong said the pricing of high-end condominiums in the secondary market trended positively due to the normalisation of economic activities, coupled with reopening of the country’s international borders and return of expatriates.

“The overall rental market is expected to remain positive, with new completions featuring upgraded features attracting higher rents than older schemes.”

Knight Frank Malaysia executive director (research and consultancy) Amy Wong said with shifting shopping patterns and evolving e-commerce landscape in the age of digitalisation, retailers and mall operators were increasingly leveraging flagship and specialty stores to increase sales and improve engagement.

She said the local retail sector was expected to remain favourable, supported by steady domestic demand.