Prices for residential properties, particularly new launches, will rise in the future due to the steep rise in building material prices, which is inadvertently increasing construction costs, says Sarkunan Subramaniam, group managing director, Knight Frank Malaysia.
Sarkunan believes that this, combined with higher borrowing costs as a result of recent increases in the overnight policy rate (OPR) from 1.75 per cent to 2 per cent and then to 2.25 per cent, will dampen interest in the property market in some way.
He anticipates further increases in OPR in the near future.
Nonetheless, he expects a recovery in the residential property market in the second half of 2022 as a result of other economic stimuli implemented this year.
Although the Home Ownership Campaign (HOC) had expired on December 31, 2021, Sarkunan believes that the recently announced 100 per cent stamp duty exemption for first-time homeowners of properties priced RM500,000 and below through the Keluarga Malaysia Home Ownership Initiative (i-MILIKI) will help propel recovery.
He said that after the HOC, more developers are expected to launch appealing campaigns to boost sales of unsold inventories and new property products.
"It is essential to foster resilience in real estate portfolios, especially to anticipate risk and minimise the disruption from all corners. The growing awareness and adoption of environmental, social, and governance (ESG) frameworks in the residential market will help drive the value of sustainable real estate into the future," Sarkunan said.
He believes that developers should remain innovative in responding to headwinds by focusing more on design optimization and value engineering.
New project launches will generally be focused on the M40 market in the future, following pent-up demand from limited residential launches in recent years, as well as a gradual recovery in the overall economy, he said.
Knight Frank Malaysia recently published Real Estate Highlights 1st Half of 2022, which includes property market performance findings from Klang Valley, Penang, Johor Bahru, and Kota Kinabalu.
Transactional activity in the secondary market has increased across the localities under consideration, according to Judy Ong, the firm's senior executive director of research and consultancy.
"Going forward, the overall rental market is expected to gradually improve as a result of the country reopening international borders to international travel and economic growth rallying the job market," Ong said.
According to Benjamin Tee, managing director of Knight Frank Property Hub, the number of project completions for 2H2022 will be significantly higher (impending supply of roughly 5,303 units versus 1H2022: circa 2,786 units), which is likely due to earlier construction delays impacted by the various phases of containment measures.
Mark Saw, executive director of Knight Frank Penang, said the residential sub-sector in Penang showed promising signs of recovery, registering higher annual volume and value of property transactions as of 1Q2022 when compared to the previous year's corresponding quarter, with notable announcements related to the high-end residential segment, such as the acquisition of 20 apartment units within Muze Condominium at the Penang International Commercial City (PICC).
Meanwhile, in Johor, the high-rise residential segment remains unimpressive, with low demand.
According to Tan Lih Ru, associate director of Knight Frank Johor, only one notable project was launched in 1H2022, Optimus Medini in Medini.
In the secondary market, asking prices for selected high-rise residential projects in Johor Bahru city remained stable, while asking prices in the outskirts and Iskandar Puteri was generally higher.
"This is because market sentiment has improved since the reopening of the Singapore-Malaysia border in April," Tan explained.
According to Alexel Chen, executive director of Knight Frank Sabah, the performance of the residential sub-sector in Kota Kinabalu is gradually improving, buoyed by the progressive roll-out of project launches and improved buyer sentiment as business and economic activities return to normal.
Selected launches have been rescheduled, and some planned projects are being revised to better meet evolving market trends and challenges, he said.