Sunday, January 19, 2014

Residential Property Segment to Slow Down in 2014

PETALING JAYA (Jan 17, 2014): The recent measures taken by the government to cool the property market is expected to have a short-term impact on investments in the sector in Malaysia but the US Federal Reserve Board's move towards tapering of the quantitative easing (QE) programme this year may have a larger implication, DTZ Research said.

"The start of the tapering of QE measures in the US will have several implications for investors in Malaysia, affecting interest ratea, liquidity and possibly foreign exchange rates," the property services company said in a statement yesterday.

"How this pans out remains to be seen as its overall impact on entry yield will determine if the market remains attractive for major investors, given the pending softness of certain market sectors due to new completions," it added.

DTZ said 2013 was a slower year with lower investment volume of RM1.87 billion, a 73% decline compared to 2012.

"Activity was affected by the 13th general election in May as investors held back their investments due to increased political uncertainty over the outcome of the closely-fought election," it said.

DTZ said the last quarter of 2013 saw an uptick in the value of deals at RM342.2 million against a paltry RM65.6 million in the previous quarter.

It predicted that the residential property market will soften further and slow down in 2014 as a result of the recent cooling measures announced, such as the raising of real property gains tax (RPGT), removal of the developer interest bearing scheme (DIBS), stricter bank lending guidelines as well as new price thresholds for foreign ownership.

However, DTZ expects more residential property launches this year.

"The abundant new supply expected in the next three years (average of 5,477 units a year) is expected to continue to exert downward pressure on rental values, especially in the city centre. It remains to be seen if capital values will be affected if speculative investors were to offload their units when they are completed," it said.

DTZ noted that the average prices of high-end condominiums generally increased in 2013. "The average capital value increased marginally by 2% quarter-on-quarter and 11.3% year-on-year in Q4 to RM746 per sq ft," it added.

On office space, DTZ foresees the pressure to secure higher occupancy at new office buildings to continue this year, especially if the funding rate rises.

"This pressure is not likely to abate in the short to medium term and as such the office market is forecast to remain challenging in 2014 and beyond," it said.

In 2013, the office market continued to be overshadowed by high pipeline supply but occupancy rate remained unchanged at 85% for the whole year.

"The increasing competition for office tenants has not resulted in any significant impact on rental level," it said.
On the retail sector, DTZ projected growth to be slower at 6%.

"Moving forward, it is expected that 2014 will be a challenging year for both retailers and consumers in view of the rising cost of living and lower purchasing power of Malaysian households," it said.


No comments:

Post a Comment