Record year for property transactions seen

Malaysia is likely to see a record year for property transactions and home price appreciation could accelerate, said CIMB Investment Bank Bhd.

In its latest report for the Malaysian property sector, the research house said it remained particularly bullish on residential properties as house prices were likely to trend higher and volumes would scale new highs.

“Developers benefited from the increase in transaction values and rising house prices in 2010 and will continue to do so in 2011,” it said.

According to the 2010 Property Market Report (PMR) published by C H Williams Talhar & Wong, property transactions last year rebounded from 2009's slump at 11% to 376,583, with transaction values rising 33% to a record RM107.44bil. Residential prices in all states also rose, gaining an average 6.7%, the quickest pace since the 1997/8 Asian Financial Crisis at 6.7%.

“While the authorities may fret about property bubbles and take measures to cool down the sector, history shows that such actions do not burst bubbles and merely slowed down the ascent of property prices and resulted in short term profit-taking on property stocks,” CIMB said, adding that it did not expect any major negative policies to be introduced for the property sector until after the general elections, widely expected to be held later this year or early next year. While CIMB maintained a bullish stance on residential property sector, it said prospects for commercial properties in the country did not look promising due to the significant new supply coming onstream.

In that regard, it said, “property investment companies would continue to be weighed down by soft rental rates stemming from relatively high vacancy rates and substantial new supply.”

The PMR showed weak demand and rising supply were already weighing down occupancy rates for commercial properties, particularly office spaces in the Klang Valley, last year. - By The Star