Prices bottoming out

JPPH says although the sales of residential units have improved in the first two months of the year, the property overhang situation remains

KAJANG: Residential property transactions improved in the first two months of this year, but data released by the Valuation and Property Services Department (JPPH) showed that the overhang situation is still overwhelming.

JPPH’s valuation and property services director-general Nordin Daharom said that transactions have improved by 4% in the first two months of the year compared with the same period a year ago.

The JPPH data showed that the property market remained weak despite some green shoots, supporting recent reports from Bank Negara which noted that market conditions remained challenging.

“The market is still soft, but things are improving following the strong economic growth in 2017,” Nordin told reporters after the launch of the Property Market Report 2017 here yesterday.

The volume of overhang in the residential segment grew by 67.2% to 24,738 units but value grew by 82.8% to RM15.64bil, higher than the previous year.

“The overhang remains, but the take-up rate of new launches is improving. Therefore, the prospects for 2018 will be better than 2017,” he said.

Last November, Bank Negara said that the number of unsold residential properties was at a dec- ade-high, with a majority of the units in the RM250,000 and above price range.

Nordin expected the residential segment to stabilise this year, fuelled by the favourable economic conditions and steady demand for residential properties.

The country’s economy grew 5.9% last year, the strongest since 2010, driven by domestic demand and strong export performance.

According to the JPPH property market report, the overall property sector recorded 311,824 transactions worth RM139.84bil in 2017, down by 2.7% in volume and 3.8% in value compared with 2016.

Residential property continued to support the overall sector with a 62.4% market share, followed by agriculture property with a 22.5% share.

The residential property market recorded 194,684 transactions worth RM68.47bil in 2017, which were 4.1% lower in volume compared with 2016, but they increased by a marginal 4.4% in value.

By price range, demand continued to be in the RM200,000 and below price points, accounting for nearly 45% of the residential market volume.

Last year saw 77,570 units of new launches, higher than those recorded in 2015 (58,411 units) and 2016 (52,713 units).

Kuala Lumpur recorded the highest number of launches in the country with more than 22,000 units. Its sales performance was at a low 19.5%, followed by Selangor with 13,522 units and Johor, 7,926 units.

Nordin said the drop in transactions and volumes in 2017 were not as drastic as those recorded in recent years.

“Even though there was a decrease in transactions and volumes last year, it wasn’t as bad as in 2015 which was in the double-digit range. Last year, it was just 3.8%.”

Nordin also expected the outlook for the retail property sub-segment of the commercial property segment to remain challenging this year.

“The situation is changing. Shopping trends are changing. Retail outlets will need to change the way they do business. More people are going online and malls need to adapt,” he said.

According to the property market report, the commercial property segment continued to decline but at a modest rate. There were 22,162 transactions recorded worth RM25.44bil in 2017, down by 6.7% in volume and 29.2% in value compared with 2016.

The retail sub-segment’s performance was stable at 81.3% in 2017 compared with 81.4% in 2016, recording an annual take-up of more than 6.78 million sq ft.

Kuala Lumpur, Selangor, Johor and Penang saw a significant takeup rate as their newly completed shopping complexes secured commendable occupancy.

Johor was leading with nearly 2.82 million sq ft followed by Selangor (1.17 million sq ft), Kuala Lumpur (1.01 million sq ft) and Penang (778,833 sq ft).

Kuala Lumpur experienced a marginal decline in occupancy rate to 85.3% (2016: 86.8%). The occupancy rate in Johor and Penang improved 79.9% (2016: 73%) and 72.6% (2016: 69.9%), while Selangor stabilised at 85.4%.

The purpose-built office building segment recorded a slightly better performance last year than in 2016. The overall occupancy rate stood at 83.3% (2016: 82.3%) with a high take-up of more than 8.29 million sq ft (2016: 3.07 million sq ft).

Kuala Lumpur ranked first with more than 4.09 million sq ft, followed by Selangor (1.84 million sq ft), Sabah (935,437 sq ft) and Putrajaya (719,621 sq ft), supported by the high occupancy rate in the newly completed buildings.

The take-up rate of new launches is improving. Therefore, the prospects for 2018 will be better than 2017. Nordin Daharom