Overhang properties in Malaysia include a significant number of residential units priced between RM500,001 and RM700,000, making up the second largest group at 15%, according to CBRE | WTW Malaysia group managing director Tan Ka Leong. He shared this surprising finding during a presentation at the CEO Series 2023 (Economy & Business Forum), organized by Rehda Institute.
Tan emphasized the need for developers to conduct more in-depth market analysis when planning the pricing of their products, as the statistics indicate that this particular price bracket may not be as easily sellable as previously thought. However, he also noted that the overhang situation has seen an overall reduction in the number of units in 3Q2023, with a 22% decrease year-on-year from 3Q2022.
Regarding office space usage in the Klang Valley, Tan mentioned that occupancy rates have declined from 83.2% in 2017 to 78.9% in 2023. However, office usage is expected to increase in the coming year as companies refine their hybrid working policies. Newer, green-certified buildings in prime locations are in demand, while older office buildings are being repurposed for different uses, such as hotels or aged care facilities.
Analyzing the residential property market trends, Tan pointed out that between 2018 and 3Q2023, the compound annual growth rate (CAGR) of residential properties in the Klang Valley has increased by 5%. Interestingly, non-landed properties have outperformed landed properties, with a CAGR of 8% compared to 2%. Factors such as land scarcity and affordability are leading residents to opt for non-landed housing options.
In terms of the construction sector, Lee Heng Guie, executive director of the Socio-Economic Research Centre (SERC), projected a growth of 6.8% for the industry in the next year. He highlighted various strategic infrastructure spending projects that are expected to support this growth, including the East Coast Rail Link (ECRL), the Johor Bahru-Singapore Rapid Transit System, and the Pan Borneo Sabah Highway. Additionally, plans for a Johor-Singapore Special Economic Zone are set to be initiated, contributing to increased activity in the construction and property sectors in 2024.