Market to consolidate in 2014.1

THE EDGE WEEKLY ISSUE#995

THE WEEK OF DECEMBER 30, 2013 – JANUARY 5, 2014

City & Country Section

LOCAL CONSULTANTS’ POLL: By THE CITY & COUNTRY TEAM

JAMES WONG
MANAGING DIRECTOR
VPC ALLIANCE MALAYSIA

Outlook

In 2014, we expect consolidation in the property market.  We foresee interest rates going up and continued tightening of credit, which will impact property market activities.  Another factor is the glut and oversupply in many property subsectors.

We expect to see more affordable homes and properties near the proposed MRT and LRT extension lines will continue to be popular.  The landed residential sector is expected to stay resilient with stable growth, especially property within gated and guarded communities.  Sales of residential property to foreigners will be slow due to new measures.  Condominium transactions will slow down with a possible price correction.

There will be an oversupply of office space, especially in the city centre.  New offices include 26 office towers in Tun Razak Exchange, 12 blocks of boutique offices in KL Eco City and the 118-storey office block called Warisan Merdeka.  This could result in downward pressure on the occupancy rates and rentals.  Older office buildings will be challenged as tenants relocate to newer buildings with similar rates.  The oversupply will also put other developers who own small parcels in the city at a disadvantage.

It will be a challenging year for retailers due to consumers’ lower purchasing power due to the recent petrol price hike, proposed assessment rate hike in KL, and continuation of subsidy reductions for fuel, sugar, electricity and other items and locals flying by budget airlines to shop in the neighbouring countries. 

Hotspots within the Klang Valley are affordable homes, especially high-rise with small built-ups, within 1-5KM of LRT extensions or proposed MRT lines; landed properties in gated and guarded communities in Petaling Jaya, Klang, Puchong, Desa Park City, Sungai Besi, Sungai Buloh, Shah Alam, Subang Jaya, Kajang, Rawang and Gombak; and student accommodation in Cyberjaya, Semenyih, Subang Jaya, Seri Kembangan and Petaling Jaya.

In Penang, commercial hotspots include Tanjung Tokong, Tanjung Bungah and Bayan Baru, while residential hotspots include Batu Feringghi, Tanjung Bungah, Tanjung Tokong, Pulau Tikus, Batu Maung, Balik Pulau, Sungai Nibong, Bukit Mertajam, Nibong Tebal, Simpang Empat and Sungai Jawi.  In Johor, Iskandar Malaysia will continue to be hot.

Wish list

• The government to review the proposed annual assessment hike in KL;
• More affordable homes to be launched in KL, especially near or along the proposed MRT lines and LRT extensions;
• Implement a law to enable en-bloc sale of old buildings for redevelopment like in Singapore, and compel the minority owners to sell their units to the en-bloc buyer;
• Introduce more prefabricated housing systems to fast-track the construction of affordable housing; and
• Plan and implement an integrated public transport system for Greater Kuala Lumpur to get 50% of the public to use public transport by 2025.