MIEA predicts residential real estate transactions will be at the center of 2H2021
The Malaysian Institute of Real Estate Agents (MIEA) predicts that land housing will be the focus of real estate transactions in 2H2021, according to its chairman Chan Ai Cheng.
âIt’s interesting to note that real estate professionals who focus on the commercial real estate market have also entered into the same deal. And agents who focus on the industrial sector continue to cling to this sector, âshe said during the presentation of the survey on the sentiment of real estate professionals on the performance of the Malaysian real estate market. – Preview at 1H2021 and outlook for 2H2021.
Commissioned by MIEA, the survey was carried out by the Center for Entrepreneurial Sustainability, Universiti Tunku Abdul Rahman, to study the performance of the Malaysian real estate market, based on the sentiment of real estate professionals.
Chan noted that although officers were not allowed to operate during the full lockdown introduced in late May, they were given the green light to operate on August 26.
She added that the MIEA would follow strict rules during visits and ensure that all members who make visits are fully immunized.
Regarding the outlook for the primary market, Chan said, âIt is foreseeable that developers will likely adjust property prices for new launches in the second half of 2021 to reflect the market situation. The majority [of the respondents] believe that developers are unlikely to announce new projects to launch in 2H2021. “
As for the outlook for the secondary market, respondents are not optimistic about the market’s performance in 2H2021. Most believe that the real estate market will take some time to recover. The loan moratorium introduced under Pemulih, which takes effect from July to December 2021, has eased the pressure on property owners to pay their monthly installments.
Chan said that while the loan moratorium is a temporary measure, it has certainly helped stabilize the secondary real estate market.
At the same time, MIEA also plans to engage more with stakeholders on measures to stimulate the market. It will submit a proposal for a roadmap for the revival of the real estate sector for the consideration of the Ministry of Finance.
âWe have set up a real estate recovery task force to review it. We have also been working on a 2022 budget proposal, although it is still in the preliminary stages, âChan said.
âWe also hope that the government will engage more with stakeholders. We are happy to share our comments and suggestions. With the right government stimulus for the sector, we are confident the market will recover. “
Although the market is moderate, Chan said there were some bright spots in 2H2021. She estimated that the historically low interest rate had been the main factor influencing the performance of the residential real estate market as the recovery of Covid-19 ranked first for the commercial and industrial sectors.
The survey also identified key hot spots in 2H2021. âDue to the limitation of data from other states, we have succeeded [to zoom into] Selangor, Penang, Johor, Sabah region (Wilayah) and Sarawak region (Wilayah).
According to the survey, the main hot spots in the real estate market in 2H2021 in terms of real estate transactions in Peninsular Malaysia are Petaling (17%), Cheras (14%) and Shah Alam (14%) in Selangor; Johor Baru (39%), Skudai (25%) and Mount Austin (23%) in Johor; and Bayan Lepas (32%), Tanjung Tokong (29%) and George Town (26%) in Penang.
Meanwhile, in Sabah and Sarawak, the main hot spots are Kota Samarahan (32%), Northbank (18%), Batu Kawa (14%), Kuching (14%) and Stutong (14%) in Sarawak; and Penampang (32%), Kota Kinabalu (23%) and Luyang (23%) in Sabah.
Soft market at 1H2021
According to the MIEA survey, the real estate market has been strongly impacted by the Covid-19 pandemic.
In 1H2021, the overall drop in real estate supply indicates that developers are slowing down launches or delaying the delivery of vacant possession of their projects. Real estate supply data is based on supply release (number of newly completed units) by developers and new launches.
According to Chan, respondents indicated that there was a general decrease in the volume of transactions, especially in commercial (66%) and high-rise residential (53%) units. She added that there was a general perception of lower selling prices on the primary market.
âOn the residential front, this is due to the Home Ownership Campaign (HOC) projects, where there is a mandatory 10% discount on selling prices,â she said.
âIn addition, generally on the primary market, developers offer promotional packages to attract buyers, make their project more attractive and facilitate ownership by buyers; therefore, the data is not surprising.
At the same time, the industrial sector and the residential real estate sub-segment were the most resilient in 1H2021. “[In terms of] secondary market performance in 1H2021, 47% of respondents indicated âstayâ or âincreaseâ real estate prices for the industry, and 36% of respondents indicated âstayâ or âincreaseâ unit prices residential land, as opposed to commercial and high-rise residential, with only 31% and 21% respectively, âChan said.
“Landholdings have repeatedly proven to be very stable and resilient to all market conditions, even in these times of pandemic,” she said. âThe secondary properties are different from the main properties; the visit is somehow required because the condition of each property is different from the others, even in the same locality. With the increase in daily infection rates from April, this affected viewings and, as a result, the volume of transactions. “
Compared to primary market prices, secondary market prices appear to have declined by a higher percentage, Chan noted. She explained that since the prices of secondary properties are based on the price quoted by the sellers, it would appear that they are now more realistic and that they have adjusted their selling prices to be more competitive.
âUsually, a fall in the price of real estate leads to a higher volume of transactions, but this is not the case according to the results of the survey. There are two ways of looking at this. First, secondary property prices are holding up; and second, buyers are careful before making purchases. Among the many other factors affecting buyer confidence besides the Covid-19 pandemic are the economy, job security and government stability, âshe said.
She also highlighted the movements of the rental market during 1H2021.
“The general trend [in the rental market] indicates a drop in rent. For commercial properties, as businesses are hit hard by the effects of the pandemic, landlords are forced to either cut rents or leave the unit vacant if the tenant defaults, âshe said.
âFor residential properties, a huge proportion of the rent reduction is motivated by compassionate grounds, in order to promote healthy landlord-tenant relationships.â