Malaysia: Real estate oversupply seen short-term situation

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KLCCThe oversupply of real estate in Malaysia is only “a short-term situation which will clear over time,” says Malaysian Institute of Estate Agents president Siva Shanker, according to a report by The Star.

As long as the local economy is healthy and not in a tailspin, the property market will withstand the pressures of speculation and the curbs imposed by Budget 2014, he said.

“Mont Kiara (excluding the surrounding Segambut areas) has in the last 20 years built an estimated 20,000 units. Iskandar Malaysia, on the other hand, has built some 40,000 units in the last three years. All this has created a lot of pressure on supply and the market has already adjusted by staying away,” he told a press conference.

“In the short term, this oversupply will continue to run its course. Many units that will be placed in the market won’t sell. But in the second half following this period of consolidation, people will come to terms with the market, so 2015 will see an upturn in the property sector, which will continue into 2016. Even in the medium term, much of the oversupply will sort itself out,” Siva said.

He added that the country’s relatively low exposure to the “international economic ups and downs” compared with Singapore was an advantage to Malaysia.

Siva said buyers were not keen on the secondary market although it made up 80 to 85 per cent of the local property market transactions in the last three years, but as high-rise property prices surged, buyers would be forced to look elsewhere for more affordable landed property – and it will be found in the secondary market.

Siva forecast that property prices around the Kuala Lumpur City Center area will reach 5,000 ringgit ($1,515) per square feet within the next three to five years.

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Reading Time: 1 minute

The oversupply of real estate in Malaysia is only “a short-term situation which will clear over time,” says Malaysian Institute of Estate Agents president Siva Shanker, according to a report by The Star.

Reading Time: 1 minute

KLCCThe oversupply of real estate in Malaysia is only “a short-term situation which will clear over time,” says Malaysian Institute of Estate Agents president Siva Shanker, according to a report by The Star.

As long as the local economy is healthy and not in a tailspin, the property market will withstand the pressures of speculation and the curbs imposed by Budget 2014, he said.

“Mont Kiara (excluding the surrounding Segambut areas) has in the last 20 years built an estimated 20,000 units. Iskandar Malaysia, on the other hand, has built some 40,000 units in the last three years. All this has created a lot of pressure on supply and the market has already adjusted by staying away,” he told a press conference.

“In the short term, this oversupply will continue to run its course. Many units that will be placed in the market won’t sell. But in the second half following this period of consolidation, people will come to terms with the market, so 2015 will see an upturn in the property sector, which will continue into 2016. Even in the medium term, much of the oversupply will sort itself out,” Siva said.

He added that the country’s relatively low exposure to the “international economic ups and downs” compared with Singapore was an advantage to Malaysia.

Siva said buyers were not keen on the secondary market although it made up 80 to 85 per cent of the local property market transactions in the last three years, but as high-rise property prices surged, buyers would be forced to look elsewhere for more affordable landed property – and it will be found in the secondary market.

Siva forecast that property prices around the Kuala Lumpur City Center area will reach 5,000 ringgit ($1,515) per square feet within the next three to five years.

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