Amid a pandemic-stricken economy, ‘affordable property’ loses its meaning

IT’S fair to say that Malaysia’s property sector has been struggling these past few years, and with the recent developments surrounding COVID-19, things truly went from bad to worse.

In 2019, the residential sector was plagued with issues of unaffordability and overhang stock from previous years which called for the Government to step in and solve the problem.

Although measures were put in place to bring down real estate prices, there was this challenge of matching income to the prices. At the end of the day, even properties that are marked as ‘affordable’ were not as affordable as people think.

A report by PropertyGuru Malaysia on the overall property asking price found that in 1Q 2021, property value went down by 0.84% quarter-on-quarter (qoq) and 1.79% year-on-year (yoy) “due to buyers’ apprehension”.

Be that as it may – in the grand scheme of things – the reduction is not that much.

The commercial sector also faced its own set of problems in adapting to ‘new’ trends that were happening in 2019 which seemed to have threatened the traditional purposes of such spaces.

Retail mall operators as well as the retailers were forced to accept the e-commerce boom as consumers shifted to online buying. This pushed the demand for a different sort of office space to accommodate a more non-conventional need.

Fast forward to 2021, amid a pandemic-stricken market with travel restriction being implemented via movement control orders (MCOs), the commercial property sector has languished tremendously.

When the no-dine-in rule was put in place, food and beverage (F&B) operators have struggled to keep the lights of their businesses on by relying on just the revenue from takeaway meals which is inadequate to even offset the wages of their staff or cover the leasing of their premises.

Again, retailers are forced to change and adapt to a ‘newer’ way of doing business, but on a faster time frame. Customers are not going to wait for F&B providers to play catch up with the times, especially with numerous lockdowns being enforced throughout the country to contain the absurdly high number of COVID-19 cases.

That in mind, some F&B joints have already evolved to take on a more hybrid approach of using a cloud kitchen concept where they only allow take-aways or deliveries without the need of having to prepare chairs and tables in their stores.

With the COVID-19 seem to claim a more permanent place in the world, it seems that retailers – not just F&B businesses – would have to come up with new ways of surviving amid digitalisation, social distancing and prolonged periodical lockdowns. – Aug 17, 2021

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