Savills Malaysia cautioned that 2022 might not get any easier for the local real estate sector as the current economic conditions remained muted.

Group managing director Datuk Sr Paul Khong said new opportunities could still be aplenty in these rapidly evolving markets, and the real estate sector should continue to capture the pent-up demand in the market.

“2021 has been an equally challenging year compared to 2020. First, we had more than three months of lockdown, and now at the start of 2022, Malaysia and the rest of the world are still plagued with Covid-19,” he said in a statement today.

Nonetheless, he said strong improvements in market activities were sighted as all economic sectors were gradually opening in the fourth quarter of 2021 with standard operating procedures (SOPs) in place.

“Businesses hope the high vaccination levels across the country will hasten the recovery. Booster shots have been administered across the board,” he said.

“We are confident with the new year unfolding, albeit all the uncertainties, the global economy will remain high in 2022 despite the evolution of the pandemic.”

Meanwhile, he said infrastructure continued to be a key economic driver and expected the government to continue expediting the kick-off of the Mass Rail Transit Line 3 (MRT3) 3 project in greater Kuala Lumpur.

“This will spur the growth of construction projects and unlock values around the MRT station locations.

“We also look forward to completing MRT 2 and the Light Rail Transit III (LRT 3) in 2023, where construction works have been delayed due to the Movement Control Order (MCO) restrictions in 2020/2021.”

Khong is hopeful to see the residential activities improve in 2022 despite transaction prices being expected to remain soft.

“Since the Home Ownership Campaign (HOC) benefits would cease to be carried through to 2022, we saw some stronger activities to the closure of the year.”

These ‘discounts’ given to the various residential properties provided opportunities for many genuine homebuyers to own their first home and for upgraders to move to a better unit.

He said Bank Negara Malaysia might increase the Overnight Policy Rate (OPR) in 2022 to combat inflation.

“However, the interest rate at the moment is expected to remain favourable. 2022 will continue to be challenging in continuation from 2021 as there is not much given in the 2022 Budget except for real property gains tax (RPGT) reverting to 0 per cent and 5.0 per cent for both individuals and companies respectively.”

Executive director Marcus Chia said the removal of RPGT for residential property in the sixth year of ownership might help secondary property sales in 2022.

“We expect with the ending of the moratorium in early 2022, more distressed auctions will be appearing. This will create more pressure on property prices.”

He said residential sales volume is also expected to increase in 2022, but property prices will remain relatively stable.

“Innovative developers will continue to drive sales with new marketing packages in place of HOC 2021.”

Savills Malaysia also expects more companies to continue to relocate to newer office spaces given the flight-to-quality perspective this year.

“They will also continue to relook at the angle of workspace optimisation impacted by the hybrid arrangements of both working-from-home (WFH) and working-from-office (WFO).

“Old office buildings will be challenged to retain their tenants, and many will undertake major refurbishments or potentially be repurposed to other usages.”

Chong said flexible work arrangements (FWA) will continue, with slow but sure trends towards partial office occupation, making the co-working spaces relevant.”

Nevertheless, he said the office market is a tenant’s market as demand lags way behind supply, resulting in high vacancy rates.

“We expect close to about 10 million sq ft in new supply entering the Greater KL in the next two to three years.”

Director (industrial agency) Kevin Goh said industrial and logistics, as predicted by Savills in 2021, might continue its uptrend and growth into 2022.

“This asset class is still the all-time favourite for 2022. This is because we now look at new warehouses equipped with state-of-the-art technology in warehousing,” he said.

Goh said there is a strong demand for warehouse space by e-commerce players, citing that there will be some new relocation exercises coming thru after the current flooding events during the recent year-end.

“We also expect to see more deals flowing through in 2022,” he added.

Director (retail services) Murli Menon said the response seen after the reopening of retail malls had boosted the confidence of the entire retail sector.

“It also reaffirmed the fact that brick and mortar retail will never die but at the right balance between online and offline channels with both supporting each other and in-driving traffic.”

Source: NewStraitsTimes, January 4, 2022