Knight Frank: Tenants’ market here to stay amid growing commercial glut
The oversupply in office spaces in Malaysia’s capital and satellite cities is expected to worsen this year amid weak demand for commercial properties, according to Knight Frank Malaysia. The firm’s data showed 7.6 million square feet of new office space will be added to existing stock this year alone, even as the overall take-up rate has been on the decline since 2015. Kuala Lumpur has the highest gap between occupancy and supply of purpose-built offices, with over 1.5 million square metre of space not taken up in 2017. Other states with notably low occupancy rates were Selangor, Johor and Penang. The completion of the Tun Razak Exchange is also set to worsen the oversupply should demand remain soft. (Malay Mail Online)

Kedah sees residential stock surplus for the first time
Kedah has experienced the first overhang status in history with 3,554 units of unsold stocks recorded in 1Q17 to 3Q17, says Valuation and Property Services Department director general Nordin Daharom. “This is a new phenomenon, which has never happened before—indicating that is a large mismatch between pricing points and location,” he said. Commenting on the market’s outlook for 2018, Nordin said the property market is expected to remain soft, but is supported by policies initiated by Bank Negara Malaysia (BNM) to help contain price escalation. Among two other stats with the highest unsold residential units were Selangor and Johor. (The Malaysian Reserve)

Developers made RM1.3bil profit despite lower 2017 sales
The total transaction value for residential properties in Malaysia rose 2.6% to RM49.8 billion, or a RM1.3 billion gross profit, despite a drop in sales volume last year, indicating profit for developers despite their lower sales. Data by the Valuation and Property Services Department (JPPH) showed transaction volume dropped 6.1% between January and September 2017 compared to the same period in 2016. The increase in sales value meant some developers profited from the inflation of house prices even as the number of sales dropped. Property prices in major urban centres nationwide shot up almost threefold for the last six years due to excessive speculation made possible by easy credit. (Malay Mail Online)

PPA1M houses under construction in Putrajaya (Photo from PERI Malaysia)

Construction of affordable housing in Klang Valley far below target
The affordable housing project in Klang Valley is lagging far behind its 606,000 units target under the 11th Malaysia Plan (11MP), with only about 45,000 units of the homes completed currently. In November last year, the government said it had completed the construction of a total of 255,341 affordable homes since 2013, which was far from reaching its target of 1.1 million units by the end of this year. Several ways that could be reflected in affordable housing policy including: providing more incentives for private developers, co-sharing infrastructure costs, centralising policy-making and delivery of affordable housing to eliminate hidden costs, simplifying application procedures and creating a one-stop data centre to provide information on the market. (The Sun Daily)

IJM Corp targets RM1.6bil in property sales
IJM Corp Bhd is targeting RM1.6 billion in property sales for the year ending March 21 2018. Its CEO and managing director Datuk Soam Heng Choon said this was higher than its total property sales in the preceding financial year, which was RM1.4 billion. “We do see some challenges in making the buyer getting the right financing margin, in the lower end market. That said, we are doing very well with our township sales in Seremban and Cheras,” he said. The group’s property division current unbilled sales amounted to RM1.9 billion as of September 2017. It is also in the final stages of joining Maybank Islamic Bhd’s rent to own (RTO) scheme, HouzKEY. (NST Online)

SkyWorld to launch RM2bil worth of projects in 2018
SkyWorld Development Group is set to launch projects with a GDV of RM2 billion this year. Its founder and managing director Datuk Ng Thien Phing said the projects, comprising affordable houses, high-end residential and commercial properties, would be launched in the first half of this year, namely Sky Meridien, The Hub, Sky Awani 3 and The Valleys. (The Edge Markets)

REITs to see earnings impact from higher borrowings
Analysts are expecting REITs to have potential earnings impact of 0.2% to 2.1% from higher borrowing costs. Acorrding to MIDF Research, the market is expecting a 25bps increase in the overnight policy rate (OPR) this Thursday. REITs with higher floating rate loans are more likely to be affected by the increase in interest rate. The research arm gathered that REIT managers were working on converting part of their floating rate loans to fixed rate loans to mitigate the risk of potentially higher interest costs. (The Borneo Post)

National Cost of Living Action Council first meeting in February
The first meeting of National Cost of Living Action Council is expected to take place next month. During the 2017 Umno General Assembly, Prime Minister Datuk Seri Najib Razak announced the upcoming formation of the National Cost of Living Action Council, to address issues involving cost of living. The ministry would shortlist industry players, experts and professionals to be included as members in the council to ensure every decision made in facing the challenges of the rising cost of living could be implemented for long-term goals. The council includes five clusters namely education, housing, transport, utility; and food and beverages. (Bernama)

Raffles Place business district in Singapore

Singapore office rents rising twice as fast as Hong Kong
Singapore office rents are set to post the biggest gains among Asian cities as an increase in demand runs into moderating supply. Office rents in all major Asian cities, with the exception of Tokyo, are set to rise over the next two years, according to forecasts from Cushman & Wakefield Inc. Singapore will lead the pack, with rents forecast to surge 25%, more than double the 12% growth forecast in Hong Kong’s central business district. “Conditions haven’t looked this good since the spurt in the aftermath of the financial crisis,” said Sigrid Zialcita, managing director for Asia Pacific research at Cushman. (The Straits Times)