Rahim & Co International Sdn Bhd executive chairman Tan Sri Dr Abdul Rahim Abdul Rahman said property developers should have been cautious and done more research before launching new housing projects. NSTP/AZHAR RAMLI

Rahim & Co International Sdn Bhd said property developers should have been cautious and done more research before they embarked on new housing projects in the country.

Executive chairman Tan Sri Abdul Rahim Abdul Rahman said there should have been more research on the demand, pricing and cost structure.

Some developers launched landed and high-rise residential units at prices that most Malaysians couldn't afford to buy, contributing to property overhang. Properties remained unaffordable as wages were not moving upward or keeping up with prices.

At a media briefing yesterday, Abdul Rahim said there are 50,008 residential overhang units worth RM34 billion in the country as in the third quarter of last year (3Q2019), including serviced apartments and Small Office Home Offices.

He said, property overhang in Malaysia has been on an upward trend but he expects the situation may improve as developers continue to give discounts and other incentives.

"We should not be overly concerned to the extent of having to set up a special body just to acquire these units given that developers are now reducing their prices,” he said.

On the overall property market, he expects it may improve this year, but moderately, thanks to government initiatives presented in Budget 2020.

In October 2019, the government presented several strategies to improve the property market like promoting access to housing with key propositions being Rent-To-Own (RTO) collaborations with financial institutions, lowering threshold prices of overhang high-rise units for foreign buyers, and revising the real property gains tax to 1 January 2013.

Abdul Rahim said residential property outside of Klang Valley should see growth in transaction volume.

Rahim & Co's Property Market Review 2019/2020 launched yesterday showed that Perlis, Melaka, Terengganu, Pahang, Sabah, and Sarawak, delivered double-digit growth in transaction volume in the first half of 2019 (1H2019) compared with a year earlier.

Incoming office supply is a concern

The total supply of office space in Malaysia currently stands at 237.9 million square feet, the report showed.

There’s 237.9 million square feet of office space in the country. NSTP

The occupancy rate for offices has relatively maintained at 82.4 per cent as at 1H2019, but the wave of incoming office space in millions of square feet calls for concern especially within Klang Valley whose occupancy rate goes at a lower 79 per cent.

"As the next wave of office buildings are starting to come online, relocations and tougher competition are happening with old and new tenants finding themselves at an advantage of competitive rates and attractive package deals.

"The wider train network and TOD (transit-oriented developments) formations also pave wider roads to decentralisation and thus distributing concentration of business hubs across different parts of Klang Valley," said Abdul Rahim.

More malls, more risk

Abdul Rahim said retail malls remain at the risk of oversupply with new malls still entering the market year by year.

According to the report, the retail occupancy rate in 2018 averaged at 81.2 per cent and as in 3Q2019, it dropped to 79.5 per cent.

Klang Valley's retail space recorded a drop from 84.3 per cent in 2018 to 83.2 per cent in 3Q2019.

"Retail malls continue to re-engineer themselves to maintain their relevance amidst a growing e-commerce market. Rather than being just a place to purchase goods, shopping malls have become a place of physical socialisation and experiential interaction. More focus is placed on service products and consumable goods such as food and beverages, leisure entertainment and ‘instagramable’ décor," said Abdul Rahim.