KUALA LUMPUR (Jan 11): The property market, which was subdued last year, is expected to see moderate growth in 2022, in tandem with expected recovery of the global economy, said CBRE | WTW Group Managing Director, Foo Gee Jen during the media launch of the real estate consultancy’s 2022 Market Outlook Report at the Malaysia International Trade and Exhibition Centre on Tuesday (Jan 11) morning.
“This year, the plus point is the strong CPO [crude palm oil] pricing that will [drive growth and spending on property]. CPO prices have risen to its historical high to RM5,000,” he said.
“There are also expectations for a slight adjustment on OPR [overnight policy rate] that will alleviate the pressure on high inflation… steel prices have gone up almost 300%. Property prices would eventually go up this year, not so much because of the strong demand or speculation, but driven by cost push. We believe the low interest rate regime will be able to support the housing mortgage market,” he added.
In terms of opportunities this year, Foo noted that sectors such as data centres, workers’ accommodation, retirement living, health and wellness living and last mile delivery centres are areas to look at.
Nonetheless, he noted that roadblocks that may derail the expected growth are political instability, supply chain disruptions, supply constriction, inflated shipping and logistics costs, rising cost of raw materials, higher energy cost and commodity prices, weak domestic currency, and shortage of labour.
Speaking on the Klang Valley market, Director Tan Ka Leong said the expected incoming supply of retail and office space may pose challenges to these two sectors. “The purpose-built office sector in the Klang Valley has a cumulative supply of 119 million sq ft and this year, another 2.9 million sq ft are expected to enter the market. Occupancy rates currently are holding at just below 80%.
“In the retail sector, we are expecting slightly more than three million sq ft of space to enter the market,” he revealed.
In the industrial sector, Tan noted that this year will see only 0.5 million sq ft enter the market and highlighted that the true demand for industrial and logistics space trends towards built-to-suit developments. “Market players should pay attention and carefully study what the demand is before developing industrial properties. Otherwise, this may create an imbalance in the market in terms of demand and supply in the foreseeable two to three years. Based on our survey, there is potentially another five million sq ft of logistics and warehouse space that will enter the market in 2024,” he cautioned.
Meanwhile, Tan said opportunities in the Klang Valley market is in repurposing, repositioning and restrategising to unlock the value of old and underperforming properties.
In Iskandar Malaysia, Director Jonathan Lo said there is hope for recovery of the retail and tourism sectors this year if the vaccination travel lane (VTL) continues to progress. He also expected momentum for active land banking to continue this year.
“Domestic tourism has potential to improve further, particularly in nature-focused areas. For example, there has been continued positive performance for beach resorts like Desaru, which have maintained a good level of activity and occupancy,” he says.
According to him, Johor’s industrial sector is expected to have an upward trend in 2022 with the sector back to operating at full capacity. The landed residential sector is also expected to see positive recovery, but the high-rise residential supply glut will take some time to resolve. Johor’s retail and hotel sectors are expected to be stable, Lo notes.
“The government has announced various incentives under Johor Budget 2022 to revive the retail and tourism industry,” he added.
Meanwhile, the performance for the purpose-built office sector is likely to be sluggish in 2022 and flexible lease arrangements ought to be provided to meet changes of working styles, said Lo.