Window of opportunity in residential market despite pandemic

THE property market performance across the Klang Valley, Penang, Johor Bahru and Kota Kinabalu has shown signs of opportunity despite the COVID-19 pandemic and movement restrictions, according to Knight Frank Malaysia’s Real Estate Highlights 1st half of 2021 report.

Knight Frank Malaysia managing director Sarkunan Subramaniam has observed that the residential market will continue to self-correct amid challenges brought on by the pandemic.

“There were fewer completions and launches in 1H 2021 as the strict containment measures delay construction works, project delivery and completion of real estate transactions. In the secondary market, no property viewing and on-site surveys have been allowed since June,” he said.

During the review period, the high-end condominium market in Kuala Lumpur continues to undergo price correction due to weaker demand despite rising inventory, both existing and newly-built.

Similarly, in the tenant-led market, rentals remain under pressure due to weaker leasing demand.

To uplift the residential market, several key property-related policies and incentives have been announced under the various stimulus packages such as the extension of the Home Ownership Campaign (HOC) until Dec 31, 2021 as part of the PEMERKASA+ Package and the reintroduction of the six -month moratorium on bank loans for all individuals and SMEs under the PEMULIH Package.

Other accommodating policies include the current record low-interest-rate environment with OPR remaining at 1.75%, the exemption of Real Property Gains Tax (RPGT) for up to three residential properties for Malaysian individuals until the end of 2021 and the uplift of a 70% margin of financing limit for the third housing loan onwards during the HOC period.

“Looking ahead, there is a window of opportunity as the deployment of vaccines is accelerated to allow the gradual reopening of more economic sectors under the National Recovery Plan.

“The resumption and commencement of new mega-developments, supported by improved infrastructure, will boost economic activities and also aid in the recovery of the property market,” said Subramaniam.

On a positive note, the report acknowledged that the HOC has been successful in reducing the property overhand with an estimated 34,354 residential units worth RM25.65 bil sold from June 1, 2020 to Feb 28, 2021.

Meanwhile, the pandemic has also fuelled demand for residential properties especially new landed housing outside the city, especially in established and upcoming suburbs with good connectivity where prices are more affordable and competitive.

“With the potential shift to hybrid work arrangements post-pandemic, buyers are seeking ideal living spaces with a higher emphasis on functionality and comfort,” said the report. – July 19, 2021

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