From the mountain tops of Genting Highlands and Cameron Highlands to the dense rainforest of Taman Negara, the sandy beach at Cherating, and also the touristy island of Pulau Tioman, Pahang is not short of an international audience when it comes to tourism. With each segment of tourists looking for a different kind of experience, one could say Pahang has it almost at its feet, except maybe the glitzy lights and congested atmosphere like that of Kuala Lumpur, but that would be a different kind of tourism madness altogether. As the turbulent times have dictated the pace of Malaysia's economy, and it got worse when the Covid-19 pandemic did not dissipate after the several permutations of the Movement Control Order (MCO) imposed since 18 March 2020, Pahang's property market was not spared either although some potential might emerge over the course of time when the mega projects go beyond groundbreaking ceremonies to actually delivering promises as planned.
Residential - review 2020
Over in the property market, the residential sub-sector in Pahang has remained soft in 2020 despite the cautious optimism towards the nation's projected gradual economic recovery with the resumption of market activity under the Recovery MCO and the proposed stimuli such as the PRIHATIN, PENJANA, and more recently PERMAI. Overall, the volume and value of residential property transactions were down by 11.8 per cent and 17.4 per cent respectively in the first nine months of 2020 compared to the same period in 2019. The figures for 2019 were also higher than those recorded in 2018 and this could be due to the boost given to home sales under the Home Ownership Campaign (HOC) 2019. It is worthy to note that most of the transactions in Pahang have come from between RM100,001 to RM300,000.
Like most Malaysian property buyers, the majority of purchasers in Pahang still prefer landed over high-rise residences. And in realising this trend, the Pahang State Government has boldly decided not to build more affordable housing comprising flats or apartments for the market anymore.
Sales of high-rise residential units in the Bentong district for example which is situated closer to hotspots such as Genting Highlands and Cameron Highlands have also taken a step back in 2020 in view of the travel distance limitations and inter-state travel ban under MCO. Over the course of the year, these mobility restrictions have curtailed any liberty to travel whenever a rise in numbers of infectious cases was reported, more so when clusters were discovered that led to the imposition of barb-wire fencing under Enhanced MCO (EMCO). The random and alternating occurrence between MCO and EMCO has made it inconvenient and as such, a significant fall in the number of visitors has been felt throughout the year.
Residential outlook 2021
Performance of the residential sub-sector in Pahang will remain subdued in the first half of 2021 as the economic uncertainty coupled with the lingering Covid-19 pandemic will affect investor confidence and result in consumers putting off purchasers of big-ticket items. Developers in the state will also remain cautious on any future project launching and would likely do so only if they have a better grasp of the market, and are more confident of getting a good response.
Office & industrial review and outlook
The office market in Pahang remained stable in 2020 as there is a limited supply of purpose-built office (PBO) buildings in the state. Even in the capital city of Kuantan, there are only three mid-rise (15-20 storeys) PBOs serving the office market, they are Menara Zenith, Komplek Teruntum, and Wisma CDO. Other PBOs or low-rise office buildings (5-12 storeys) are Menara HSBC, Menara CIMB and Bangunan BSN. The average office rental rates are between RM2.00 to RM3.00 per sq ft whilst occupancy is between 50 per cent to 70 per cent except for owner-occupied buildings such as HSBC, CIMB, and BSN which hovers higher around 80 per cent.
Like the residential sub-sector, the industrial sub-sector in Pahang was also subdued in 2020 as the volume of transactions in the first nine months of 2020 declined by 41 per cent while the value of the transactions came down by 53 per cent. The drastic drop was due to the Covid-19 pandemic which affected production as well as investors' confidence.
With the downturn also in the oil and gas sector, popular heavy industrial areas such as Gebeng have not seen any new development activities of late. The slowed market movement was however given a lifeline through the e-commerce boom which raised warehousing activities to meet the demands of online shopping. Such factors are lending weight to the otherwise lacklustre industrial subsector. New mega projects such as the East Coast Rail Link (ECRL) and the Kuantan Port are however welcomed components to the state as they will form the all-important backbone connectivity for the industrial and logistics sectors. In the medium to long term, the Kuantan International Industrial Park will also be developed near to the existing Kuantan Port and this will spruce up potential industrial and manufacturing activities for Pahang.
As to how the market will perform in 2021, the office market is expected to remain stable due to the limited supply of PBOs in the state. Activities in the industrial sub-sector on the other hand may pick up as the development of ECRL and the expansion of Kuantan Port could attract more investments into Pahang especially in the logistics sector. The development of the Malaysia-China Kuantan Industrial Park (MCKIP) is also expected to further attract companies from China including those from Malaysia as well as other parts of the world to consider setting up their manufacturing and logistics operations.
Factors to watch in 2021
● A prolonged pandemic would put further downward pressure on house prices especially for high-rise properties near touristy areas like the Cameron Highlands and Genting Highlands.
● Low-interest rates may boost demand for housing, especially for landed houses.
Bright spots for 2021
● Encouragement of investment especially in infrastructure development in Kuantan would spur economic growth and improve investors' confidence.
● Manufacturing and logistics companies may be more inclined to invest in the state as the ECRL will create a transit-oriented hub and the expansion of Kuantan Port will enable more cargo and vessels to dock at the port. - Henry Butcher Malaysia