Rahim & Co International Sdn Bhd expects the number of overhang properties in Malaysia to remain high this year based on prices, locations and income level.
Rahim & Co’s Research Director Sulaiman Saheh noted that three states – namely, Kuala Lumpur, Selangor and Johor – posted the highest numbers of overhang properties at 7,800 units, 8,700 units and 33,000 units, respectively.
Perak and Penang also registered higher overhang figures at about 4,000 units each, reported Bernama.
Sulaiman expects properties located in the city or urban areas to witness a strong demand, possibly lowering the number of overhang properties if prices were adjusted.
“What we see right now is that developers are giving more discounts on top of the Home Ownership Campaign (HOC) which is due to end on May 31,” he said at the release of the company’s Property Market Review 2020/2021.
“Overall, we still think that overhang numbers are unlikely to drop or significantly drop in 2021; it could be stabilising but it is expected to stay high not just because of the movement control order.”
Meanwhile, Siva Shanker, CEO of Real Estate Agency at Rahim & Co, expects the availability of COVID-19 vaccine to help reduce the overhang situation.
“I agree with Sulaiman saying that the overhang will not reduce much because we have so much overhang numbers, but we can expect the residential market to recover slightly and perhaps move upwards a little bit on the back of a successful vaccine programme and renewed sentiments,” he said as quoted by Bernama.
Rahim & Co’s Petaling Jaya Office Director Choy Yue Kwong said the property overhang issue can be resolved by conducting an in-depth study on its root cause.
“Adding a layer of complexity to this completed-yet-unsold units number is the improvement seen in unsold units that are under-construction or yet-to-be-constructed,” he said as quoted by Bernama.
“Part of the solution includes a more informed-decision for project planning and approvals through independent market studies as well as a robust and transparent data system for the market.”
Sulaiman described 2020 as a year of accelerated readjustment, technology adoption and a test on perseverance.
“Yet positive resilience and determination remained beneath the surface and in times of movement relief, demand came through as proof that the market is still there despite lockdowns and standard operating procedures,” he said as quoted by Bernama.
But given the recent resurgence in COVID-19 cases and the reimplementation of lockdowns, he expects the property market’s recovery to be further delayed to 2022.