Property market growth to taper off in 2012, says expert

From The Malaysian Insider

By Lee Wei Lian February 10, 2012

KUALA LUMPUR, Feb 10 — The property market will still see growth this year but at a slower pace than 2011 due to dampened sentiment, said CH Williams Talhar & Wong.

The property consultancy said buyers were now more knowledgeable and picky, and were less inclined to follow the crowd. Also, sentiment among speculators would have been affected by measures such as mortgage value caps for third loans and more punitive real property gains taxes for early disposals.

“We will see further growth but at a very much lower pace,” said Foo Gee Jen, managing director of CH Williams Talhar & Wong, at a briefing on the outlook for the property sector this year.

Foo said that he saw the market growing at about 10 per cent in value overall this year, compared with an estimated 11 per cent last year, while transaction volume growth was likely to dip below 10 per cent.

The office and high-end condominium sectors, meanwhile, are expected to experience a glut situation.

Luxury condominiums are expected to see a huge influx of up to 50 per cent of existing supply — some 13,716 units — coming onto the market over the next five years, which would put pressure on yields.

Foo said occupancy rates and rentals for condos would see a downtrend in 2012.

“This year is a buyer’s market for condos,” he said. “Once the new supply is completed, the landlords will have to accept lower rentals or sell at lower prices.”

Foo added that yields for office rentals had decreased to 6.2 per cent last year and were likely to decline further, to six per cent or below this year.

“We see overall rent stability in 2012, but 2013 and 2014 will be challenging for landlords,” he said.

According to Foo, take-up for landed residential sectors was “generally healthy” last year, with the house price index for houses increasing 11.4 and 9.6 per cent for KL and Selangor, respectively.

The retail sector was also expected to grow more slowly, with six new developments to be completed in 2012 bringing another 2.7 million sq ft of retail space to the Klang Valley.

While popular malls in the city were experiencing full occupancy, the conditions were tougher for those outside.

Rental for ground floor retails shops in prime areas in central KL ranged from RM40 to RM55 per sq ft, and ranged from RM12 to RM32 per sq ft for those in outer areas.

Foo said the tightening measures on the property sector in China and Singapore was a good move for the region.

“It’s (the tightening measures) are healthy for whole region,” he said. “Because if a bubble bursts, there could be a domino effect in the region.”