Calm Before The Storm

After years of stagnation, economic recovery is casting some shoots of light on Malaysia’s property industry. Nevertheless, real progress will have to wait until after this year’s general election.

- George Styllis

Malaysia is on course for a big 2018; one that will decide the fate of politics for the next few years, and possibly business too. As incumbent Prime Minister Najib Razak, dogged by financial scandals and at risk of losing some of his rural support base, limbers up against Mahathir Mohamad, a former prime minister bent on making a glorious comeback at 92 years old, the country’s property industry is gripped in suspense.

“Nothing’s moving, of course. Everyone’s anticipating [the outcome of the election],” says Amy Wong, director of research and consultancy at realtor Savills.

For an industry that has been in the doldrums for the past few years and struggling to adjust to a new rhythm of market forces, inertia is the last thing it needs; although the lull has bought time for reflection. Indeed, some optimism can now even be detected among the foreboding voices as the economy sticks to its path of solid growth and China flexes its economic muscle.

For three years now slow sales have become the new normal amid low affordability and large incoming supply. The luxury market, especially, has felt the pinch, with only the bravest developers bothering to launch new projects in the current climate. In fact, following a warning by Bank Negara Malaysia that there is an oversupply of property due to aggressive launches in recent years, the government implemented a freeze on luxury developments on last November in an effort to stabilise the market. But some experts believes this will not go far enough to shrink the gross oversupply.

“We believe the tightening measure, if implemented, will do little to resolve the grave issue of supply glut in the near term given that newly delivered properties have progressively entered the market,” AllianceDBS Research analyst Quah He Wei wrote in a January update.