Oversupply of real estate in Malaysia short-term situation
February 28, 2014 Leave a comment
Updated: Tuesday February 25, 2014 MYT 7:06:24 AM
Oversupply of real estate in Malaysia short-term situation
KUALA LUMPUR: The oversupply of real estate in the country is only a short-term situation, which will clear over time, says Malaysian Institute of Estate Agentspresident Siva Shanker.
As long as the local economy is healthy and not in a tailspin, the property market will withstand the pressures of speculation and the curbs imposed by Budget 2014, he said.
“Mont Kiara (excluding the surrounding Segambut areas) has in the last 20 years built an estimated 20,000 units. Iskandar Malaysia, on the other hand, has built some 40,000 units in the last three years. All this has created a lot of pressure on supply and the market has already adjusted by staying away,” he told a press conference.
“In the short term, this oversupply will continue to run its course. Many units that will be placed in the market won’t sell. But in the second half following this period of consolidation, people will come to terms with the market, so 2015 will see an upturn in the property sector, which will continue into 2016. Even in the medium term, much of the oversupply will sort itself out,” Siva said.
He added that the country’s relatively low exposure to the “international economic ups and downs” compared with Singapore was an advantage to Malaysia.
“There’s also the trickle down effect from large infrastructure projects as more industries benefit from them,” he said.
Siva said buyers were not keen on the secondary market although it made up 80% to 85% of the local property market transactions in the last three years, but as high-rise property prices surged, buyers would be forced to look elsewhere for more affordable landed property – and it will be found in the secondary market.
Siva forecast that property prices around the KLCC area will reach RM5,000 per sq ft within the next three to five years. “As it is, Four Seasons Place in Ampang is going at RM3,500 per sq ft.
“They realise that there are better deals in the secondary market. A very clear third strata will form now, which are properties that were completed in the last two years but flipped into the market. Those properties will face the most selling and renting pressure because they were purchased for sale on the day of completion.” – By CHERYL POO
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