The Malaysian property market is predicted to grow slowly for 2011 due to high supply and speculation activities, CH Williams Talhar & Wong (WTW) managing director Foo Gee Jen revealed at a press conference held on Wednesday, Mar 16.
The real estate services company estimates that the market will grow between 10% and 15% compared to a growth of 20% and 25% last year.
"Property prices cannot exceed three times of GDP [gross domestic product]," Foo said. The GDP growth in 2010 was 7.2% while the forecast in 2011 is about 6%.
In the residential sector, Foo explained that the 70% loan-to-value ratio cap for the third house loan did put the brakes on speculative buying and this has contributed to the slowing momentum for 2011 compared to what was experienced in 2010.
Nonetheless, WTW's report forecasts that the residential market particularly landed properties, will grow from between 10% and 15%.
The retail market, Foo says will feature steady growth for 2011 with new supply of about 3.418 million sq ft this year adding to current supply of 40.4 million sq ft. "Occupancy rates for most retail buildings are average of 85%, although those in KL city area is as close to 90%," said Foo.
As for the office sector, new office supply will put pressure on owners of older buildings compared to new ones. "About 7.8 million sq ft of new office supply will come on stream in 2011," Foo said. "But about 800,000 sq ft will be taken out of the market due to refurbishment or demolition exercise to build a new building."
With regards to the Mass Rapid Transit (MRT) line project, Foo believes that Sungai Buloh and Gombak will benefit with increase in property values and prices that is scheduled for completion in 2016.