KUALA LUMPUR: Malaysia's property overhang can be minimised if developers consider building homes closer to workplaces, schools, commercial centres and public transportation, industry specialists said.
Some specialists also believe that wealthy foreign purchasers could help ease the glut, especially for properties worth RM500,000 and above that still account for a big chunk of unsold units.
"Don't allow developers to build properties where there are no job possibilities, schools, malls or public transit as there will be no demand and this will add to the overhang issue," Knight Frank Malaysia executive director Amy Wong said.
Malaysia's overall overhang situation improved in the first half of 2022 (1H2022), with a drop of 7.5 per cent to 34,092 units from 2H2021 in terms of volume, and a drop of 4.6 per cent to RM21.73 billion in terms of value, according to the National Property Information Centre's (Napic) semi-annual report.
Despite the marginal improvement, the volume remains high when compared to the pre-pandemic phase.
Wong suggested conducting a thorough analysis of the overhang.
She advised examining areas with high overhang numbers as well as types of properties that were not selling and coming up with a strategy to lower the numbers.
"There should be a targeted policy to make it work (in reducing the numbers)," Wong said at a virtual panel discussion with PropertyGuru Malaysia, DataSense and MKH Bhd.
The 1H2022 Napic statistics for overhang units were still high compared to around 2014, said Dr. Foo Chee Hung, manager of product research and development at MKH.
"The lowest overhang, according to the past history of data from Napic, occurred about 2014 or 2015. The overhang was about 15,000 at the time. These are completed but unsold stocks.
"Today, the figures have more than doubled. As a developer, we want to build and sell because we don't want to hold inventory. hence why we are concentrating on developing affordable properties," he said.
Foo said the majority of people deemed the high overhang statistics as an unhealthy signal for the real estate industry.
He said developers should conduct their due diligence and research the market before choosing where to build.
"We need to look into the issue a little more, to decide whether there is a problem. Moving forward, I believe some of these projects should be made more appealing to draw purchasers," he said.
According to Dr. Lee Nai Jia, head of real estate intelligence at DataSense, there was still a significant overhang in properties priced at RM500,000 and above.
"If a neighbourhood is far from their place of employment and public transport, people won't stay there. One of the things I'd want to see, especially in urban areas, is more attention paid to transportation," he said.
Sheldon Fernandez, country manager (Malaysia) of PropertyGuru.com.my and iProperty.com.my, said as the overhang units in the high-end segment took up the largest market share, targeting wealthy foreign purchasers could further help decrease the volume of unsold units in Malaysia.