News Room - Business/Economics

Posted on 23 Dec 2009

Economic recovery will boost property market in 2010

Improvement in the economy will help the property market to experience a slow steady recovery next year, according to the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector (PEPS).

 

Its president James Wong said the local property market had continued to contract in the first quarter of 2009, but recovered slightly in the seocnd quarter this year and then levelled again in the third quarter.

 

“Our property market is not recovering as fast as Singapore and Indonesia but viewed in perspective, our initial drop at end of 2008 was less severe at 10 to 15 per cent as compared to 25 to 30 per cent for the two countries,” he told reporters at a media briefing on the upcoming 13th Malaysian Property Summit 2010.

 

“Thus, Singapore and Indonesia have subsequently staged a higher percentage rate of recovery, whereas the recovery of Malaysia showed a lower rate,” he said.

 

According to Wong, the residential sector has been “quite resilient” and should see a faster growth in 2010, especially when existing surplus housing stocks have not risen.

 

“Many developers postponed or scaled back their projects in the first half of 2009. Thus, the take-up rate has improved, assisted also by the easy home loan package of only five to 10 per cent deposit,” he said.

 

Wong said prices for the upmarket condominium segment have also recovered slightly as compared to the 30 per cent drop it experienced, especially in the KLCC area, during the height of the global financial meltdown in the last quarter of 2008.

 

The secondary market for upmarket condominium will remain soft until the second half of next year due to existing oversupply and new launches although the secondary market for landed residential property remained firm, he said.

 

Wong expects the office building sector to also face some oversupply. This, he said, would cause office rent to come down as more supply come in by end of next year, and especially when more firms are postponing decisions to relocate to bigger and more expensive premises.

 

“Generally, the grade A office rent is coming down. Its take-up rate in Kuala Lumpur remains slow with new office buildings such as G Tower, UOA Bangsar, The Icon@Tun Razak and Menara Perak,” he said.

 

As for the hotel segment, Wong said consumer spending has not dropped alarmingly and most major shopping malls reported that consumer traffic was still high, with occupancy levels high and demand for prime retail space remaining strong.

 

“Overall occupancy rate in the Klang Valley is about 84 per cent,” he said. Wong said the hotel and industrial sectors are expected to remain flat next year although the upmarket hotel segment was getting exciting with the likes of the Four Seasons, Grand Hyatt, Raffles and St Regis opening in the near future.

 

“Owing to competition, many hotels are undergoing rebranding and refurbishment exercises,” he said. He added that the hotel occupancy rate in Kuala Lumpur in the third quarter this year was 66 per cent with the average room rate at RM277. — Bernama