The property sector in Malaysia could see an oversupply next year due to a burst of launches from developers that have been held back since the start of the global economic crisis, it is claimed.
Developers will need to come up with creative ways of maximising sales if they are to avoid prices falling, according to the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector (PEPS).
Its president James Wong said that there will be a lot of launches next year and while there might be an initial demand from pent up buyers that could trail off.
Wong said that property transactions for 2010 were expected to be better than 2009, adding that the residential sector would see the biggest growth. With the recovery of the economy in 2010, the property market will also experience a slow, steady recovery, he predicted.
The residential sector has been quite resilient and should experience faster growth next year, but Wong added that the secondary market for upmarket condominiums would remain soft until the second half of 2010 because of existing oversupply and new launches.
However, the secondary market for landed residential property remains firm, he said, adding that the average occupancy of high-end condominiums within the KLCC area was about 60%, with yields hovering at 5% to 6%.
Wong also said the shopping complex and office building sectors would face some oversupply. ‘Many office building projects started two to three years ago are nearing completion and therefore are facing occupancy problems as companies are postponing decisions to relocate to bigger and more expensive premises,’ he added.
Office rents will come down as more supply hits the market by the end of 2010, he said, adding that the hotels and industrial sectors should remain flat next year. The hotel occupancy rate in Kuala Lumpur in the third quarter of 2009 was 66%.