Rahim & Co: The real estate market is gradually recovering

KUALA LUMPUR (January 27): Despite the disruption in the property market recovery that was expected in 2021, real estate advisory firm Rahim & Co International Sdn Bhd assessed the overall performance as stable and expects the segment is gradually straightening.

At the media launch Thursday, January 27, of Rahim & Co’s Property Market Review 2021/2022 report, its Executive Chairman Tan Sri Abdul Rahim Abdul Rahman said the market had shown glimpses of improvement between nationwide shutdowns in 2021.

“The [property market] the expected recovery in 2021 was disrupted due to the resurgence of Covid-19 cases and although the first six months of 2021 improved significantly, third quarter performance caused a slight setback which ultimately ended in a more moderate transaction performance over nine months.

“However, thanks to government stimulus measures, the performance of the real estate sector has remained stable. Nevertheless, the anticipated recovery of the real estate market to pre-Covid levels will take longer than initially expected,” Abdul Rahim said in his welcome speech.

He added that the company is cautiously optimistic about the outlook for 2022 while expecting the market to show a gradual recovery as the country has achieved high vaccination coverage, coupled with continued government support, accommodative policies. and progressive openings of international borders.

According to the report, the Malaysian property market saw a significant rebound in transactions in the 1st half of 2021 ahead of the full movement control order in the 3rd quarter of 2021.

“However, the overall nine-month performance still recorded a commendable total transaction value of RM98 billion, a notable increase of 21.4% in value year-on-year, but a slight decline of 1.8% by volume,” said the director of Rahim & Co. research shared by Sulaiman Saheh during his presentation of the report.

He attributed the performance to the pent-up demand effect and deferred transactional formalizations from previous quarters which had been delayed, as well as accommodative government policies, such as the extension of the home ownership campaign, the Real Estate Gains Tax (RPGT) exemption and other initiatives planned as part of Budget 2022.

Sulaiman also pointed out that challenges in commercial property leasing performance and leasing levels are expected to continue through 2022 as incoming supply continues despite demand still reeling from the pandemic.

“For example, purpose-built office space in the Klang Valley has seen its supply exceed 150 million total square feet of existing office space with more new buildings being completed in the near future. This has heightened the level of concern felt about the sustainability of this market capacity once assembled,” he said.

According to the report, office occupancy in Klang Valley is 72.1% in 1H2021 after a further decline of 3.3% from 75.4% recorded in 1H2020, while vacant space currently stands at 41.9 million square feet.

Meanwhile, the industrial sector continues to attract more attention than others at present.

“Considered as one of the most stable sectors performing in a pandemic environment, this is especially the case due to the logistics, warehousing and healthcare segment. This is further boosted by the overwhelming demand for e-commerce transactions which will continue to be in the limelight in the future.

“Given the relative slower pace of incoming supply, particularly for managed industrial parks with bespoke arrangements, investment in industrial property will be watched closely this year,” Sulaiman said.