Malaysia's real estate investment market was subdued in the first half of 2015 (1H 2015), and things are not expected to look up anytime soon with property consultant Knight Frank Malaysia projecting a "cautious" market outlook for both KL City high-end condominium and office market.
Its managing director Sarkunan Subramaniam said in a statement in conjunction with the launch of its Malaysia Real Estate Highlights for 1H 2015 report, that in the short to medium term, KL City high-end condominium market is one of caution, with lower sales volume and modest/limited price growth anticipated.
"Office market outlook is cautious with lower net absorption as plans for expansion and relocation are put on hold," he added.
Moving forward, he said the Klang Valley retail market is expected to face further dilution with the scheduled completion of 13 new shopping malls by 2H 2015 and early 2016.
The report found that the real estate investment market was affected by performance of the ringgit, which is at a 16 year low, China's stock market downturn, Greek crisis, rising costs of living and the Malaysian political debacle.
"All these have had a collective contagion effect on sentiments and people are cautious," he added, noting that the Malaysia Real Estate Highlights for 1H 2015 report looks into the market performance in various property mix, such as residential, office, retail and industry.
The report also highlights the trends and outlook in the four key markets in Malaysia, including Kuala Lumpur, Klang Valley, Penang, Johor Baru and Kota Kinabalu.
Sarkunan noted that the effective demand for residential is squeezed by lack of bank financing, while commercial investment is diluted by impending supply.
However, he said the fundamentals are still solid, as the demand for good quality residences for owner occupation and investment are strong, provided pricing is seen to be discounted to previous highs, as well as good reputation of the developer.
Sarkunan said the occupational demand for quality offices are good, with multinationals rationalizing their footprint and moving to better space albeit at competitive rents.
"For the market to take a quantum leap from the current direction, some good change in the local scene is required to return investor confidence to the economy," he added.
For the first half period, the residential market saw a softening of demand in the high end condominium segment, in which developers with niche high end residential projects in KL City review products, pricing and marketing strategies in a challenging market with lacklustre demand impacted by a general slowdown in the economy, tight lending guidelines and weaker job market.
Meanwhile, Sarkunan said during the same period, the tenant-favoured office market continued to remain resilient, amid high supply, whereby the local retail industry saw a slower pace growth, amid dampened consumer sentiment due to rising cost of living and a slowing economy.
However, Sarkunan said the retail sector will continue to see the entry of new international brands, as well as the expansion of existing brands and outlets, especially at prime shopping centres in Klang Valley, despite the subdued market. - By The Star
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