Shift in retail shopping signifies potential shifts in property preference
By Joseph Wong
For the second quarter of 2022, Malaysia’s national economy recorded a growth of 8.9% while the retail industry recorded an all-time high growth rate of 62.5% in retail sales. This latest quarterly result was far beyond the market expectation.
According to the Malaysia Retailers Association (MRA) and Malaysia Retail Chain Association (MRCA), this very promising result was attributed to three main factors, namely the Hari Raya festival, the relaxation of Covid-19 standard operating procedures (SOPs) as well as the forced closures of many retail shops in May and June last year.
Hari Raya Aidilfitri, which was celebrated nationwide on May 3 and 4, accelerated the pace of recovery of Malaysia's retail industry. For the first time since covid-19 pandemic, all retail sub-sectors achieved positive growth rates during the second quarter of 2022. These latest quarterly results far exceeded market expectations.
While the market is portraying a positive outlook, the recent consumer spendings also revealed an interesting trend that will inadvertently have an impact on the property industry. Apart from the obvious return of shopping malls’ health, the children and baby products sub-sector recorded a big jump in the retail business with a 65% growth in sales during the second three-month period.
This signifies a growth in the younger population, which was highlighted in the StarProperty August Pullout. To recap, Juwai IQI Group Co-Founder and CEO Kashif Ansari predicted a new baby boom for 2022.
“During the pandemic, the birth rate actually fell. The uncertainty caused people to postpone having children. That is mostly behind us now. The year 2022 could be the beginning of a new baby boom in Malaysia,” he said.
“It’s too soon to have official statistics bearing this out but we hear anecdotally from our clients that many young families are having children now and in the next year,” he said.
That there is a sharp increase in the purchase of children and baby products is a clear indication of an increased birth rate. The most recent demographic data from the Statistics Department (DOSM) confirmed this trend.
It showed that there were 110,858 live births in the second quarter of 2022, an increase of 0.2% from the 110,657 births reported in the second quarter of 2021. In a statement released by DOSM, it stated that during the second quarter of 2022, male newborns accounted for 56,801 births and female babies for 54,057.
Selangor had the most live births at 22,017 or 19.9%, while Labuan had the fewest at 413 births, according to the report.
While retailers selling children and baby products are anticipating their businesses to accelerate further with a growth rate of 132.8% in Q3 this year, property developers should also take note of this new shift in the population. It has been noted that there is an increase in the demand for more family-oriented homes.
Increase in property transactions
According to the National Property Information Centre (Napic), Q1 2022 saw a sharp increase in the volume of transactions for homes priced from RM300,000 and above, indicating that house buyers might now be looking for bigger units. Homes priced between RM800,001 and RM900,000 had the biggest jump of 34.4% in Q1 2022 when compared to the corresponding period of Q1 2021. Similarly, the highest value of transactions was also for properties within this price range at 34.3% for the same period.
The volume of transactions for properties ranging from RM900,001 to RM1mil came in second at 24.1% in Q1 2022 when compared to the corresponding period of Q1 2021 while properties ranging from RM700,001 to RM800,000 was third at 20.2% for the same period.
DOSM also pointed out that a total of 46,772 deaths were reported in the second quarter of 2022, down from 50,230 in the same period the previous year. It also stated that 655 deaths, or 1.4% of all deaths in the second quarter of 2022, were linked to Covid-19.
The population of Malaysia was predicted to be 32.7 million in the second quarter of 2022, up 0.2% from the second quarter of 2021 when it was 32.6 million, according to DOSM. Selangor, Johor, and Sabah were the three states with the biggest populations, accounting for 21.6%, 12.3% and 10.4%, respectively, of the total.
Another shift expected
During the second quarter of this year, the pharmacy sub-sector reported an encouraging growth rate of 31.5%, as compared to the same period a year ago, according to the MRA and MRCA figures. At the same time, the personal care sub-sector advanced with a growth rate of 79.8% during the second 3-month period of this year.
Two significant trends can be derived from this trend - one, the aged population is on the increase and two, the general population is now more aware of the benefits of taking better care of their health and wellness.
Moreover, with Malaysia’s ageing population to hit 5.6 million by 2035, there are spin-offs to be made when tapping into local wellness tourism. Certainly, there is a bright future for residential developments if they follow the universal trend, catering to an increasingly ageing population.
But what is even more interesting is that a substantial number who are also into wellness real estate is the younger generation, who have embraced a healthier living lifestyle.
“Healthcare is a very specialised industry and some developers are already participating in this sector. Other developers may consider entering this market, perhaps through strategic tie-ups with healthcare providers,” said Real Estate and Housing Developers Association (Rehda) acting president Datuk NK Tong.
He added that the 2021-2025 Malaysia Healthcare Travel Industry Blueprint is a very healthy development as Malaysia continues to open up in line with the post-pandemic recovery, which will inadvertently trigger more health and wellness property projects.