PETALING JAYA: More Malaysian developers are confident that next year will see better conditions for the property market despite the lower number of launches and sales in the first half of 2021 (1H21).
Out of the 180 respondents in the Property Industry Survey 1H2021 and Market Outlook 2H2021/1H2022 released on Oct 21, 22% and 25% were optimistic about the domestic economic environment and business prospects respectively, for the industry next year.
Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Soam Heng Choon said this compared to only 6% who were optimistic about the domestic economic environment and 7% optimistic about business prospects for 2H21.
For 2H21, a total of 15,076 units are expected to be launched, of which 9,319 units are strata residential units and 5,549 are landed residential units, according to the survey conducted by Rehda.
“89% of respondents with future launches anticipate their sales performance for the first six months to be 50% or below. Terengganu, Perak, Kedah/Perlis and Negeri Sembilan planned to launch residential units within the RM250,001 – RM500,000 price range, while Selangor, Kuala Lumpur and Penang are launching residential units within the RM500,001 – RM700,000 price range,” said Rehda in a press statement.
The presentation was conducted by Soam and Rehda deputy president deputy president Datuk Tong Nguen Khoong.
“Respondents are mostly pessimistic towards the outlook for 2H 2021 but are hopeful for brighter days in 1H 2022. The respondents hoped that herd immunity would help accelerate the property market recovery and at the same time looked forward to campaigns such as the extension of HOC to assist home buyers,” said the statement.
Despite a largely gloomy view for the market in 2H 2021, the increased optimism for the economic and business outlook as well as property industry outlook was encouraging.
Property launched thus far
In total, 11,601 units were launched in the period under review, of which 98.5% or 11,422 units were residential, according to Soam.
In comparison, 2H 2020 saw 12,640 units launched, of which 12,628 were residential property. Most of the new launches were apartment and condominium property comprising 3,955 units. The majority were built in Puchong and Klang, while two to three-storey terrace houses were the second highest with 3,142 units, followed by serviced apartments (1,156 units). In terms of the price range, most were between RM250,001 and RM500,000.
Soam said the total sales performance decreased to 39% in 1H 2021 compared to 45% in 2H 2020. In the first half of the year, a total of 4,540 units, of which 4,405 were residential property, were launched compared to the corresponding period of 2020’s 5,742 units.
The top three performers by type were two to three-storey terrace houses at 2,312 units, single-storey terrace houses (601 units) as well as apartment and condominium units (503). Most are located in Shah Alam and Klang, with first-time purchasers being the majority of buyers, mainly for the purpose of self-dwelling, followed by buying for family members and for investment, he said.
In 1H 2021, 82% of respondents reported having less than 30% of unsold residential units, with 43% of those units priced between RM250,001 and RM700,000 (2H 2020: 51%).
A total of 58% of the respondents reported that they have unsold completed residential units over the last one to three years, with end-financing loan rejection, unreleased Bumiputera units and mismatched pricing cited as the top three reasons, said Soam.
Respondents experiencing end-financing issues stood at 88%, mainly because of ineligibility due to buyers’ income.
Meanwhile, more respondents experienced an increase in the cost of doing business compared to the previous period under review. In 1H 2021, the increase was 72% as compared to 51% in 2H 2020. The respondents saw a 17% increase in the overall cost.
Material and labour cost topped the list of factors affecting developers’ cash flow within the period under review, followed by compliance cost and financing cost.