Flat growth seen for Klang Valley property market

KUALA LUMPUR (12 Jan): The demand and price of high-rise residential property is expected to remain flat in the next two to three years owing to mismatch between supply and demand, according to international property consultants C H Williams Talhar & Wong Sdn Bhd (WTW).

“We have far too many small units, or what we call, shoebox units, in the market. I always believe those (shoebox units) are not what the end user really wanted. Until all existing units are filled up, the high-rise residential market will remain flat. And, that will probably take more than one or two years,” said WTW managing director Foo Gee Jen (pictured, right) during the launch of WTW Property Market 2016 report.

According to the report, Kuala Lumpur has 36,252 existing luxury high-rise residential units in 2015. Out of the number, about 75% were shoebox units, with built-up areas of between 400 sq ft and 600 sq ft.

“We are concerned about the future supply now, where we will see an increase of 37.2% of new high-rise units injected into the market. By 2017, we will have 49,752 high-rise residential units in Kuala Lumpur,” Foo shared.

He foresees the incoming supply -- about 13,500 units -- in the next two years will exert more pressure on occupancy rate. “Rental rate will remain competitive to the advantage of tenant.”

The same situation is likely to be happen to Penang’s high-rise residential market this year, said WTW Penang director Peh Seng Yee.

Peh said Penang’s high-rise residential market is likely to experience slow growth and transaction activities are expected to slow down, owing to more affordable flats and apartments being launched and under construction.

“A spike in the existing supply is expected within the next three to five years,” said Peh.

Meanwhile, Peh has a brighter outlook on the purpose-built office and shop-office, retail and hotel segment.

“Office buildings still have healthy demand, while the retail market is likely to stay healthy with both occupancy and rental remaining firm. Same goes for the hotel market, which expected to remain healthy, underpinned by local as well as foreign tourists,” Peh remarked.

In Johor Bahru, the retail market is expected to remain steady until SouthKey Megamall is completed in two to three years, which is expected to create a more challenging market.

“Overall, the property market in Johor Bahru remains flat and slow, except for the landed residential and office segment, especially in prime location suchs as Medini and Iskanda Puteri area,” said WTW Johor director Tan Ka Leong.

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