PETALING JAYA: The overhang in the property sector could be worse than previously thought, as most of the data presented on the matter does not reflect the oversupply of serviced apartments, said Rahim & Co International Sdn Bhd real estate CEO Siva Shanker.
“Almost every sector is seeing a huge oversupply, and the residential sector seems to have the biggest oversupply situation.
“We have this overhang of about 39,000 units but net overhang for the sector is underdeclared as it does not take into consideration serviced apartments, which brings the number to over 50,000,” Siva said at a panel session at the Rehda Annual Property Developer Conference CEO Series today.
He added that office space is already oversupplied with more incoming supply and take-up rates not being able to match the new supply, and warned that second and third tier malls are in danger of emptying.
Siva noted that the government’s measures to address this concern such as the introduction of the Home Ownership Campaign, banks being more loan friendly and developers slowing the number of property launches down were having some positive effects, but it appeared to be “too little, too late”.
“Perhaps there were too many cooling measures thrown in from 2013 onwards, and so we might be paying the price for that now.”
Rehda Malaysia president Datuk Soam Heng Choon said there is an urgent need to address the issues plaguing the industry.
“The industry continues to be confronted with numerous challenges like increases in cost, compulsory provision of social and affordable housing, unsold units and financing challenges which are hindering the growth of the industry.
“There is an urgent need to examine each of these elements closely and find solutions to ensure sustainability and enhance competitiveness. Sustaining a healthy growth rate for the housing industry is imperative as the sector does not only create domestic demand but also because any turbulence in the housing market will be transmitted to about 140 related upstream and downstream subsectors,” he said in his opening keynote address.
On the outlook for the property market, Siva said that until the political elephant in the room is addressed, there would not be any concrete improvement.
“There is a lot of pent-up demand, even though the residential market seems a little bit quiet, but if you look at the industrial market, it is as close to equilibrium as possible.
“My opinion is that there could be a lot more deals happening, but people are holding on to their money until they get a clear sign of which direction Malaysia is going to take,” he said during the question-and-answer session of the panel session.
World Bank lead economist for Malaysia Richard Record, however, said a stronger year is seen for 2020, compared with 2019.
“All the evidence points to Malaysia’s potential growth, demographics, positioning and comparative advantages presenting a more positive growth path compared to any other markets,” he added.