Property sector may face oversupply next year

From left: Ho Chin Soon, Valuation and Property Services Department director-general Datuk Abdullah Thalith Md Thani and Raine & Horne International Zaki and Partners Sdn Bhd executive director Lim Lian Hong at the press conference

KUALA LUMPUR: The property sector may experience an oversupply next year due to a burst of launches from developers that have been held back since the start of the global economic crisis.

Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector, Malaysia (PEPS) president James Wong said developers would need to come up with “creative ways” to maximise sales.

“Because there will be a lot of launches next year, there will be a lot of supply, and the success of the take-up rates will depend on the marketing strategies of the developers,” he told a press conference on the 3rd Malaysian Property Summit 2010 yesterday.

Ho Chin Soon Research Sdn Bhd director Ho Chin Soon concurred, adding that there would be a pent-up from buyers that had been eager to get into the housing market.

“A lot of developers I have spoken to are preparing to launch in 2010. After over a year of waiting (since the global economic downturn hit), the public is hungry!” he said.

Wong said property transactions for 2010 were expected to be better than 2009, adding that the residential sector would see the biggest growth.

“With the recovery of the economy in 2010, the property market will also experience a slow, steady recovery. The residential sector has been quite resilient and should experience faster growth next year.”

Wong added that the secondary market for upmarket condominiums would remain soft until the second half of 2010 because of existing oversupply and new launches.

“However, the secondary market for landed residential property remains firm,” he said, adding that the average occupancy of high-end condominiums within the KLCC area was about 60%, with yields hovering at 5% to 6%.

Wong also said the shopping complex and office building sectors would face “some oversupply.”

“Many office building projects started two to three years ago are nearing completion and therefore are facing occupancy problems as companies are postponing decisions to relocate to bigger and more expensive premises.

“Hence the take-up rate of new Grade A office buildings in Kuala lumpur remains slow. Office rents will come down as more supplies (completed units) come in (to the market) by end-2010,” he said, adding that the hotels and industrial sectors should remain flat next year.

Wong said the hotel occupancy rate in Kuala Lumpur in the third quarter of 2009 was 66%, with average room rates reported at RM277.

“Owing to competition, many hotels are undergoing rebranding and refurbishment exercises,” he said.

PEPS will be organising the 3rd Malaysian Property Summit 2010 on Jan 26, 2010 at the Sime Darby Convention Centre.

By The Star (by Eugene Mahalingam)