Landed property priced below RM750,000 and township developments in Klang Valley are more appealing to home buyers due to the excellent infrastructure and amenities, according to Jones Lang Wootton (JLW).
The Pulai district in Johor remains the preferred location due to the proximity of catalytic projects.
The firm said that new launches in Penang would be within Seberang Perai rather than Penang Island due to limited landbank, while the Batu Kawan locality is also gaining popularity.
JLW was a panellist at the 14th virtual CGS-CIMB Malaysia Corporate Day event held here last week.
The topic, "Malaysia Property Outlook 2022", was moderated by CGS-CIMB analyst Ngo Siew Teng.
The event hosted 687 institutional investors and featured eight expert speakers who touched on a wide range of subjects, including economics, politics, and the outlook for the semiconductor, retail, property and healthcare sectors.
In a strategy note by CGS-CIMB, a key takeaway from the extensive track sessions and corporate briefings is a cautiously optimistic outlook about Malaysia's growth.
JLW highlighted that new residential landed property launches in Klang Valley (average 5,000 units per annum) and Johor Bahru (2,000 units), while Penang saw an all-time high of launches in 2021 since 2015 with >2,000 units launched versus 1,000 units in 2019.
Most launches were in Sepang, Selangor and Seberang Perai, Penang due to large landbank, and Pulai, Johor due to catalytic developments in the nearby Iskandar region.
In terms of sales rate for Klang Valley's landed properties, it was stable at c.70 per cent in 2021 as most of the new properties were priced below RM750,000 and the number of unsold units (
The sales rate for landed properties in Penang was 60 per cent to 70 per cent historically, even when new launches increased significantly in 2021 as most of its recent launches were priced below RM300,000, and unsold units remained below 1,500 units in the fourth quarter of 2021.
In Johor Bahru, the sales rate of landed properties hovered at 20 per cent to 40 per cent in 2019-2021 due to high unsold units (>6,000 units from 2019-2021) and limited interest from foreigners, despite lower new launches.
The prices of landed residential properties in Klang Valley held up well in 2020-2021 despite the Covid-19 pandemic given the fiscal incentives, loan moratorium and low-interest-rate environment, which reduced the risk of property fire sales.
Condominium prices and rents to remain under pressure
According to the CGS-CIMB note, JLW believes that significant incoming supply will put downward pressure on condominium prices and rentals in Klang Valley.
The condominium market in Johor Bahru would need to be repositioned in order to appeal to foreign buyers again. Condominium prices in Penang, on the other hand, should remain stable due to fewer new launches and developers being more cautious in launching new projects.
JLW highlighted that in 2020-2021, new launches of condominiums in the Klang Valley (40,000 units, Penang: c.8,000 units) due to Covid-19 outbreak and increasing property overhang.
Meanwhile, new launches in Johor Bahru were relatively flat from 1,000 to 2,000 units per annum in 2017-2021 after the exceptionally high number of units launched in 2016 (c.7,500 units) by the foreign developers.
The fewer new launches in the past two years and the reintroduction of the Home Ownership Campaign (HOC) have helped reduce the unsold condominium units in Klang Valley and Penang.
Condominium overhang in Johor did not improve as 75 per cent of the unsold units fell within the five-star (high-end) category, which targets foreigners.
Within the 2019-2021 HOC period, 67 per cent of new condominium launches in the Klang Valley were under the HOC category, while only 32 per cent and 36 per cent of the new projects in Johor Bahru and Penang were under HOC as both regions had more affordable launches priced below RM300,000 which were not covered under HOC.
Klang Valley's high-end (five-star) condominium price per sq ft dropped by 10 per cent to 15 per cent in 2020-2021 versus 2019 due to large quantities of unsold units.
Johor Bahru's high-end (five-star) condominium price declined eight per cent to11 per cent, but three-star category condominium price held up well; prices of five-star and three-star category condominiums in Penang were stable due to good take-up for affordable units/well-located five-star projects and limited new launches due to scarcity of landbank.