Penang property sector still resilient despite pandemic
The Penang property market is expected to remain resilient despite the crippling effects of the Covid-19 pandemic.
Property consultant firm Raine & Horne International Zaki + Partners Sdn Bhd foresees the 2021 market outlook to fare better.
This is due to stricter physical-distancing practices, which will entice businesses to progress on their digital applications and boost online property transactions above 2020 levels.
Its senior partner, Michael Geh Thuan Peng, said that residential properties in hotspots, along with transport hubs, will likely maintain their value.
“We do not foresee the widespread auction of homes despite the downtrends,” he said.
Geh urged budding investors not to be put off by negativity, made worse by poor market sentiments due to the virus-hit economy.
The first half of 2020 saw a 30% decline in the number of residential property transactions in Malaysia.
The number of transactions dropped from 168,482 units worth RM72.88 billion in the second half of 2019 to 115,476 units worth RM46.94 billion in the first half of 2020 – the lowest number recorded in a half-year between 2014 and 2020.
The number of transactions in the primary market was at an all-time low in the first half of 2020, with 14,789 transactions valued at RM5.59 billion compared with 20,300 transactions valued at RM8.07 billion in the second half of 2019.
Meanwhile, the number of transactions in the commercial sector for the first half of 2020 dropped to only 8,118 units valued at RM8.51 billion, almost 35% of the transactions in the second half of 2019.
Only 1,980 transactions valued at RM5.41 billion were recorded for industrial properties in the first half of 2020, a decline of 40% compared with 3,123 transactions valued at RM7.83 billion in the second half of 2019.
But not all’s gloomy, as Geh expects last year’s third and fourth quarter figures (Q3 and Q4) to be on an upward trend.
What contributed to this bullish outlook was the migration of investors and real estate agents onto online platforms in order to conduct their transactions and viewing of new innovative start-ups.
“There is a change in preference from high to low-density living; thus, suburban and semi-rural settings are trendy among investors and homebuyers in the current climate,” he said.
Geh pointed out that among the lessons learnt from the pandemic include the importance of having a long-term economic recovery plan to ensure sustainable growth and increase investor confidence.
He also said that transaction numbers did not depend only on the primary property market, but also the secondary market, where its ratio to the primary market is typically around 80:20.
“In other words, most property transactions are all from the secondary market. This is why when we want to look at the property market, we cannot just rely on overhang numbers – because overhang numbers are for completed properties which are still unsold and not classified as part of the secondary market.
“If we look at the latest numbers from 2018 and 2019, we see a pattern. Q3 an Q4 transactions usually rise, while the Q1 and Q2 transactions are usually on a downtrend.”
Hence, Geh said that the property market would recover and consolidate in view of its importance to the general economy, adding that a thriving property sector would contribute to domestic consumption.
Source: TheVibes.com
