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26 May 2017
REAL ESTATE MARKET OUTLOOK 2017
REAL ESTATE MARKET OUTLOOK 2017

REAL ESTATE MARKET OUTLOOK 2017

Property Overview

Regional Reviews

The sentiment in most states have turned more cautious moving from 2015 to 2016.

The landed residential sector maintained its resilience but market softness was more evident as prices climb ever higher. There was greater activity especially in the larger cities but prices and occupancy rates were hitting resistance. 

The purpose-built office sector remains under-developed while the shopoffice sector remained active but on a downtrend as the number of vacant units and even more upper levels remained untenanted. 

The retail sector was mixed with many regions and states stable but a drop in prices and occupancy is expected especially in East Malaysia. 

The hotel and tourism sector remains upbeat as tourist arrivals are still in large numbers and the global and domestic market continues to expand strongly. The tourism factor is one of the main catalysts for the property market in Perak especially for places like Taiping, Ipoh and Manjung. Ipoh caters to tourists with its distinctive food destinations and tourism events such as the Ipoh International Waiters Race, Vintage Ride 2016, Ipoh Kreative, etc. The upcoming tourist attraction, Movie Animation Park Studios (MAPS) in Meru, is expected to see a higher tourist count as the early bird tickets have already been sold out. 

The other bright spot in the market is the industrial sector as foreign investments remain keen and active.

 

Northen Region (Sector Overview)

Landed Residential

 

In Alor Setar, there is more demand and preference for landed residential properties. Developers are putting in greater effort to meet market preferences for features such as gated and guarded communities, landscaped gardens and open space. 2-storey terraced houses in Alor Setar were transacted at RM385,000 per unit, and Kubang Pasu and Sungai Petani at RM250,000 – RM350,000 per unit.

Likewise in Ipoh, the market preference for landed residential properties is stronger compared to stratified residential properties. Developers are creative in differentiating their development schemes by different accommodation styles, offering features such as security, prestige, eco-friendly properties and unusual designs, amenities together with scenic views.

 

High Rise Residential

In Perak, high-rise residential is less preferred compared to landed properties. However, stratified properties in the town/city centre areas i.e. Ipoh, is gaining acceptance as these areas offer more working opportunities and therefore attracts those who searching for convenience in terms of accommodation.

 

Northern Region : Purpose Built Office & Shopoffice

For commercial development, there has been no new purpose built office development and the existing office buildings are mostly occupied by the public sector especially in Sungai Petani and Alor Setar. Overall, the shopoffice were more preferred compared to purpose built office as it was cheaper for most of the business to operate in conventional shopoffice. 

Year 2016 has been a stable year for purpose built office and shopoffice market and it is expected to be soften in 2017.

In Ipoh, prospective buyers and SMEs prefer shop offices more than purpose built office, thus creating a minimal to stagnant demand for purpose built offices in the Ipoh market in 2016. Purpose-built offices in Ipoh are also tenanted mostly by government departments and big corporations, which show low occupancy rates on this type of property. 

Shop offices are more preferred by SME business owners and also investors. For typical hot spots in the town areas, the yield for shop offices is still higher which sustains the strong demand for shop offices. Other than that, capital appreciation in several areas such as Ipoh and Manjung contributes to the massive supply of shop offices in both property markets.

 

Northern Region : Retail

Retail supply still exceeds demand in Alor Setar and Ipoh market as majority of the retailers still prefer business in shop offices as crowd pulling may be fulfilled by having proper marketing strategies. Still, a healthy occupancy rate of about is seen across the existing retail centres in this region.

 

Northern Region : Hotel

The Langkawi Development Authority (LADA) has launched the next development phase which is known as Langkawi Tourism Blueprint between 2016 and 2020 in order to transform Langkawi Island to a low carbon island. The expansion of Langkawi International Airport is already in progress to receive more passengers. The hotel market in Kedah especially in Langkawi is slightly more bullish compared to other areas in Kedah.

For hoteliers, big players such as Pullman Hotel and Novotel are entering the Perak market by hitting on Ipoh town centre and Taiping. With such entries in the market, hoteliers have predicted lucrative hotel investment returns in the Perak region. Perak will be having another Visit Perak 2017 event which will focus on promoting fascinating tourist spots and activities in the Perak region. Hoteliers will further benefit from the tourism events as more budget hotels are seen in the Ipoh and Manjung areas in the recent years. The latest completed hotel in Ipoh is the Container Hotel Ipoh, one of the popular hotels in Ipoh with cheap rates and good recommendations, launched in early 2016. Further entries of hoteliers were mostly budget hotels around Ipoh, Manjung and Taiping area with the two exceptions of the Pullman Hotel and Novotel in Ipoh and Taiping, respectively. 

According to a New Straits Times article, Perak maintained its position as the most popular domestic tourist destination for 4 years consecutively. Ipoh also managed to secure a sixth spot in the top 10 best Asian destinations to visit on Lonely Planet, the largest travel guide book publisher in the world. This will encourage more domestic and international tourists to Perak and contribute to a better economy.

 

Northen Region : Industrial

The industrial market in Alor Setar was stable over the last twelve months. There was no new launch of industrial projects announced as a number of existing industrial space remained vacant, reflecting a slow market. However, there were a few foreign companies invested in manufacturing businesses in Kedah, primarily automotive investments in Gurun. Beijing Auto International Corporation (BAIC) from China joint ventured with a local company, Amber Dual Sdn Bhd to develop an electric vehicle manufacturing plant in Gurun. The second automotive investment was also in Gurun, which is by a China-based company, Go Automobile Manufacturing Sdn Bhd.

The investments totaled RM250 million is allocated to construct the second manufacturing plant for manufacturing of energy efficient vehicles (EEVs) on a 5.2 ha of site. 

The state government has also inked a memorandum of understanding (MoU) with Qingdao Lu Hai Feng Investment Co. Ltd to develop the Kedah Integrated Fisheries Terminal project with an initial investment of RM1 billion to transform Kuala Kedah into the first Seafood Industrial Park with a Domestic and International Fishery Terminal. In November 2015, German firm Osram announced a EUR 1 billion (RM4.66 billion) investment in Kulim Hi-Tech Park, the LED plant to be the world’s largest and latest production facility is slated for operation by end 2017. The market is expected to remain firm in 2016 and likely improve should the government promote this segment accordingly. 

Ipoh’s industrial market is stable with positive growth in terms of rental and pricing as transactions of industrial properties have shown minor increment in year 2016. One of the latest industry property pricing movements was seen in Gopeng Industrial area whereby the transaction price has slightly increased even though most of the properties are vacant.