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Sunday, September 25, 2022

Steady residential property sector and positive 1H property market data trends, Malaysia


Market spurred by latent demand post pandemic


“Residential property transaction volume and values are up year-on year in 1H22.” Datuk Siders Sittampalam >>
SINCE the resumption of economic activities and reopening of international borders, the residential property market has seen a pick-up in activity.

According to the National Property Information Centre (Napic), the residential property sector recorded 116,178 transactions worth Rm45.62bil in the first half of 2022 (1H22), which was an increase of 26.3% in volume and 32.2% in value year-on-year.

However, in light of prevailing uncertainties such as the upcoming Budget 2023, potential 15th General Election and macroeconomic headwinds, can the steady trend so far be sustained for the remainder of 2022?

PPC International managing director Datuk Siders Sittampalam says it’s “anyone’s guess” how the local residential property market will fare for the remainder of this year.

“With plenty going on such as the looming elections and global economic uncertainty, it could have an indirect effect on the property market,” he tells Starbizweek.

Still, Siders says the residential sub-sector has been off to a good start this year.

“Residential property transaction volume and values are up year-onyear in 1H22 and it’s been the highest increase since 2016.

“This can be attributed to latent demand, post pandemic. Many that held back purchases in the market are now back again (since January 2022),” he says.

Siders adds that loan approvals have also picked up, adding however that approval rates are still below pre-pandemic levels.

He also points out that the increase in interest rates so far this year has not had an impact on the market (in terms of demand).

“Going forward, I believe that volume and values should sustain, just like how they were in the first half of this year. It will be steady, barring unforeseen factors, be it domestically or externally.”

According to Napic, the property market performance recorded a rebound in 1H22, a reflection of normalising economic activity as the country moved towards endemicity.

“With the positive projection on economic growth by Bank Negara (at between 5.3% and 6.3% in 2022), supported by the implementation of various government initiatives and assistance, the property market performance is expected to be on track.”

Meanwhile, CBRE|WTW in its property market performance for 1H22, believes that moving forward, transactional activities should remain resilient in locations with good accessibility and comprehensive amenities.

“Developers are anticipated to remain prudent, focusing on established townships and mature locations. In addition, upcoming launches would see a shift towards more sustainable elements to meet buyers’ shift for cost-efficient and eco-friendly homes.”

As at the first quarter of 2022, CBRE|WTW says the Klang Valley landed residential sector remained encouraging.

“Average transacted prices rose 6.8% year-on-year while transacted volume increased 11.2% year-onyear (more than 9,100 units), but was less than the 10,000 units transacted in the fourth quarter of 2021.”

CBRE|WTW says new launches picked up slightly in the second quarter, despite developers maintaining a cautious approach.

“Landed launches continue to perform well and launch prices of terraced houses remained between RM500,000 and RM800,000, except for some priced above the Rm1mil mark in the City of Elmina, Setia Eco Templer and KL East.”

Meanwhile, locations such as Klang Valley South, such as Sepang, Salak Tinggi and Kuala Langat remain the hotspots, says CBRE|WTW.

It says these locations recorded consistent growth, encouraged by industrialisation and good road accessibility.

“Several areas located in the north of Klang Valley are also hotspots of new launches, typically in Rawang, Puncak Alam and Sungai Buloh.”

As for high-rise residential units, Siders says a market study needs to be conducted to ease the oversupply of such properties.

“Comparatively, landed properties tend to do well as there’s always demand,” he says.

Siders also believes that the government could consider bringing back the Home Ownership Campaign (HOC) to spur the market.

To help drive the sector, the government introduced the HOC in June 2020 under the Penjana initiative.

The campaign ended on Dec 31, 2021. Many industry observers and property players believed that the HOC was a huge help to the market and urged the government to extend the campaign period into 2022.

Meanwhile, CBRE|WTW says additional measures are still required to improve market activities for the high-rise residential sub-sector.

“The waiver of stamp duty should continue. A continual increase of the overnight policy rate (OPR) is expected in 2H22 amid the global high-cost environment.

“Since project launches have been limited, competition would also not intensify, with prices remaining stagnant. The cost of borrowing may further impact demand and prices if there is an additional OPR hike 2H22.”

CBRE|WTW adds that the upcoming launch of Mass Rapid Transit 3 may benefit property valuers along the route, including an increase in project launches, particularly in Mont Kiara.

“Moving forward, developers may shift focus to offerings emphasising exclusivity and low-density living with better facilities.”

CBRE|WTW says the existing supply of high-rise residential units stood at 68,555 units in 1H22, whilst 219,398 units are in the pipeline for completion by 2024.

“The bulk of incoming supply will be in central Kuala Lumpur, namely the golden triangle area (30%).”

On market activity, CBRE|WTW says both the average transacted value and asking rents are stable at RM779 per sq ft and RM3.80 per sq ft, respectively, supported by the increased interest from homebuyers and renters.

“The average occupancy rate also increased slightly to 64% due to improved market conditions. Following that, project launches have been limited and the focus is still on the sales of ongoing projects.

“Nonetheless, two transit-oriented development projects were launched in 1H22 in Pudu and Bukit Damansara, with unit sizes ranging from 480 sq ft to 1,080 sq ft priced from RM360,000 and units sized from 1,001 sq ft priced from Rm1.8mil and above.”

According to Napic, Penang, Kuala Lumpur, Johor and Selangor formed about 47% of the total national residential volume in 1H22.

“More than 10,000 units of new launches were recorded, down by 66.7% against 31,687 units in 1H21.”

Against 2H21, the new launches were lower by 13.3% (2H21: 12,173 units),” it says.

“Sales performance for new launches stood at 20.3%, slightly lower than 1H21 (20.6%) and 2H21 (28.1%).”

According to Napic, Johor recorded the highest number of new launches in the country, capturing nearly 23.8% (2,509 units) of the national total with sales performance at 31.8%.

Sabah recorded the second highest number (1,335 units, 12.7% share) with sales performance at 10.6%. This was followed by Perak (1,317 units, 12.5% share) with sales performance at 19.4%.

Terraced houses dominated the new launches. Single storey (2,047 units) and two-to-three storey (5,150 units) together contributed 68.2% of the total units with sales performance at 22%, followed by condominium / apartment units at 19% share (2,009 units) with sales performance at 12.4%. 

  • By eu.ene MAHALIN.AM


Positive 1H property market data trends


THE recently released property market data for the first half of 2022 (1H22) by the National Property Information Centre (Napic) showed that the Malaysian property market has found a firmer footing over the review period.

On a half-yearly basis, while transaction volume and value surged to a new record high of 188,002 units worth Rm84.4bil, what was most revealing is that the overhang market trend has finally eased, while future and planned supply was reduced.

For the past four years, this column has been calling for stricter measures to control the market’s oversupply situation and for property developers to be more mindful of the market’s overhang status.

The data for the 1H22 shows that finally, some sanity has set in. 

Having said that, as far as prices are concerned, the Malaysian House Price Index (HPI), as seen in Figure 1, continues to show a declining trend with the growth in the 1H22, slowing down to just 0.5% year-on-year (y-o-y), dragged by a 2.5% y-o-y drop in Penang HPI, and in terms of segment, detached homes and high-rises continue to dictate the downtrend with a 2.3% and 0.5% y-o-y drop respectively.

An improved picture

For property overhang, this column aggregates the supply in the residential segment and takes the data from both service apartments and the Soho sub-segment to gauge the market’s overall residential overhang status.

After all, it is the combination of the three that is the real market supply in the residential market segment as shown in Figure 2. 

In total, the residential overhang eased to 59,321 units valued at Rm42.59bil.

Although compared with a year ago, the number of overhang units and value increased by 3.8% and 2.5% respectively, the overhang situation for the residential segment improved as both the number of units and value dropped by 6.5% and 4.4% respectively compared with six months ago.

Nevertheless, the overhang situation within the high-rise segment (which includes residential high rise, commercial service apartments, and Soho units) remains elevated.

For the 1H22 period, Napic data showed that the overhang data is now at a new record high of 45,502 units against 44,800 units as at end of 2021.

Only in terms of value, the 1H22 figure is relatively flat at Rm33.22bil against Rm33.32bil six months ago.

Overall, this translates to 76.7% of the overall market overhang in volume and almost 78% of the total value.

The overhang situation within the high-rise segment has indeed increased as more than three out of four unsold properties are highrise units.

A steep drop

Figure 2 also shows the property market’s unsold units that are under construction.

From here, one would note that the 1H22 data showed a total of 108,826 units remained unsold valued at Rm60.95bil, down by 12.5% and 9.6% compared with a year ago, and lower by 9.7% and 6.4% when measured against the market’s position six months ago.

With the lower overhang and those under construction, overall, the market saw total unsold properties down to 168,147 units worth some Rm103.54bil.

Compared to a year ago, when the figure was 181,460 units worth Rm108.93bil, the data for 1H22 saw a drop of 7.3% in volume and 4.9% in value respectively.

When compared with the 183.918 units worth Rm109.69bil as at end of 2021, the 1H22 data showed a reduction of 6.4% in volume and 8.6% in value respectively.

For the residential segment by state, the key overhang is located in Kuala Lumpur and the states of Selangor, Johor, and Penang as they account for 59% of total overhang units worth some Rm16.2bil, which translates to 74.5% of the total overhang value in the residential segment.

In terms of price points, properties marketed at above RM500,000 account for 43.4% of the market’s overhang.

For service apartments, Johor, Selangor, and Kuala Lumpur are key geographical areas with the most overhang with a total of 96.8% of the segment’s overhang in terms of units and 97.5% in terms of value.

Johor alone accounts for 68% of the segment’s total number of units and nearly 69% of the segment’s total value at Rm13.34bil.

Interestingly, in terms of the number of units, 89% of service apartment overhang in Malaysia are priced at RM500,000 and above, valued at Rm18.36bil, and they represent 95% of the total service apartment overhang valued at Rm19.32bil. As this column has repeatedly highlighted in the past that Malaysia has a serious overhang issue, we are now finally seeing some light at the end of the tunnel as the market has now seen a drop in future supply.

For easy reference, the data in Figure 3 for future supply includes starts, incoming supply, planned supply, and planned new supply. 

Overall, other than a 34% jump in purpose-built office space to 2.59 million sq m, all other segments are seeing a downtrend in future supply with a reduction in the total number of units by between 8.1% for the industrial segment to as much as 26.2% in future hotel room supplies. The residential, service apartments and the Soho segment saw a reduction of 16.3% in the total number of units to 1.196mil units from 1.430mil units six months ago.

As a percentage of total in-stock, the future supply is lower by between 0.8 percentage points (pps) for the industrial segment to 21.1 pps for the residential segment.

A word of caution though. Despite the reduction in future supplies, the incoming supply for both the service apartment segment and Soho remains significant at 104.4% and 92.8% respectively.

Despite the positives, the property market remains challenging as we are still saddled with a high overhang as well as incoming supply. While the positives are there based on the 1H22 data, it is not time to pop the champagne just yet as it will still take a while (three to five years) for a more positive trend to emerge.

Overall, the Malaysian property market is still up against a massive over-supply situation and prices too are not expected to improve much, as evident from the flattish growth or worse, negative, in the Malaysian HPI.

Given the higher borrowing cost with an increase in the overnight policy rate, homebuyers are expected to remain cautious.   



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Friday, September 23, 2022

Chinese apps gain popularity globally


Though it takes a long time to develop a brand in foreign markets, Chinese companies are good at research and development, meaning products can quickly be technology-driven and meet local needs 

- Fang Han,

From the world's top short video application TikTok to the biggest fast-fashion app Shein and emerging music-video app StarMaker, a rising number of mobile apps developed by Chinese companies are influencing people's daily lives across the globe.

A new report published by market consultancy iResearch showed that the overseas revenue of China's entertainment apps grew 204 per cent year-on-year in 2021.

In addition, a report from US search giant Google said that the downloads of apps made by Chinese developers among the world's top 1,000 applications nearly doubled over the past decade, from 8 per cent to 14 per cent.

Industry experts said this demonstrated Chinese companies' strong innovative capabilities, but they also face challenges amid rising geopolitical tensions.

"Chinese companies are playing a bigger role in global mobile app innovation, thanks to the rapid development of the digital economy. The momentum of digital consumption and 5G commercialisation promoted the continuous innovation and iterative upgrading of digital technologies, thus driving the huge innovative vitality of app developers," said Wang Peng, a researcher at the Beijing Academy of Social Sciences.

"The Chinese government has also been making great efforts in driving digital innovation and encouraging companies to deeply integrate digital technologies with the real economy," Wang added.

Wang also said that such efforts have led to the development of a group of industry leaders that are able to leverage their innovative ability to contribute to global industrial development.

The iResearch report noted that Chinese gaming apps continued to be the major revenue driver of the nation's apps overseas, but social networking apps have also displayed growth momentum over the past year.

The United States, Japan and South Korea were the main overseas sources of income for Chinese apps. 

Notably, downloads of Chinese apps also increased in Africa, the Middle East and Southeast Asia last year, among which the African market was the most prominent, with a total growth rate of 18.9 per cent year-on-year. StarMaker, a karaoke video app enabling users to create and share music videos, quickly went viral in 102 countries and regions, where it has become one of the best-selling music apps.

"The global market is promising for Chinese companies. 

'Though it takes a long time to develop a brand in foreign markets, Chinese companies are good at research and development, meaning products can quickly be technology-driven and meet local needs," said Fang Han, CEO of Kunlun, the developer of StarMaker.

"After success in one market, we are also able to quickly spread this to other countries," Fang said, adding that the company has a dominant position in markets in Southeast Asia, Africa and the Middle East.

Small developers from China are also warming up the global mobile app market. US tech company Apple Inc said that more than 5 million third-party developers in its iOS app ecosystem are from China, up from 4.4 million a year ago, and they have increasingly become a major force in the global app economy.

However, Huang Leping, head of technology, media and telecommunications at Huatai Securities, said that many challenges remain for Chinese companies in going global, especially as many countries have tightened up their data protection policies.

"In the past, companies have been able to build a set of algorithms in China and offer services in foreign markets, where the data can be interconnected. 

'But in the future, companies may need to build supporting facilities in various countries to do that, which will greatly increase their operating costs and risks," Huang said.- China Daily/Ann

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Thursday, September 22, 2022

United Nations General Assembly (UNGA) should be an opportunity for unity, not a battleground for confrontation: Global Times editorial

UN Secretary-General Antonio Guterres addresses the 77th session of the United Nations General Assembly at UN headquarters in New York City on September 20, 2022. Photo: AFP

UN Secretary-General Antonio Guterres addresses the 77th session of the United Nations General Assembly at UN headquarters in New York City on September 20, 2022. Photo: AFP


The general debate of the 77th session of the United Nations General Assembly (UNGA 77) is currently under way. This is the first entire in-person meeting at the UN headquarters since the outbreak of the COVID-19 pandemic. The meeting is being held when the world is severely divided. It hence should be an opportunity for all parties to strengthen communication, bridge divergences, and join hands to cope with global challenges, while being cautious of certain countries' attempt to turn the general assembly into a tool to create division, and escalate conflicts and confrontation.

In his opening remarks, UN Secretary-General Antonio Guterres warned that progress made on coping with challenges is being held hostage to geopolitical tensions. "Our world is in peril - and paralyzed … No cooperation. No dialogue. No collective problem solving. But the reality is that we live in a world where the logic of cooperation and dialogue is the only path forward," he stressed. Guterres' warning is both a description of the status quo and a concern about the current situation of the UN. However, to what extent can such warning be translated into actions by some key countries remains a big question to be answered.

Several media reports mentioned that this week's UNGA 77 general debate will be dominated by the struggle between the US and its allies on the one side, and Russia on the other, over the Ukraine crisis. The US and its allies are committed to launching a campaign to "isolate Russia." In addition to carry on strong condemnations against Russia, they are ganging up to pressure neutral countries. It is reported that the Russian side will discuss not to allow the US and the West to launch a hybrid war in Ukraine. Many developing countries and aid groups worry that the diplomatic conflict over Ukraine will undermine a key opportunity to address famine, the climate crisis and other issues of concern.

Amid the interwoven changes and chaos of the world, the UN is also undergoing a test about profound differences. Will it let itself be kidnapped by some forces and turned into a tool for targeting specific countries, and promoting group politics and the so-called alliances of values? Or will it hold on to promoting democracy in international relations, adhering to comprehensive concepts of development and security, and uniting the vast number of countries to solve common problems via genuine multilateralism? The history of the development of the UN indicates that these two forces have always had a tug-of-war. Whether the forces of solidarity and cooperation that focus on the future of mankind can overcome the forces of division and confrontation that rest on geopolitical logic will affect UN's role and hundreds of millions of people around the world in the future.

There is one thing that cannot be denied: Although the UN General Assembly general debates have been filled with lots of conflicts and confrontations, the UN remains the core of global governance nowadays and is in a key position to address a range of challenges, and the UN Security Council remains the core of the global system of collective security. It is for this very reason that the international community generally places high hopes on the UN system as a prioritized platform for pursuing a better vision of the world. Under such circumstances, how the UN can build consensus and promote unity requires courage and wisdom, and moreover, new ideas.

In this process, it's significant whether the major powers choose dialogue and cooperation, or division and confrontation. It's learned from the lessons of World War I and II that the rule of "great power unanimity" has become the main operating rule of the UN mechanism. Especially in the current situation where the Russia-Ukraine conflict is escalating and humanitarian disaster is imminent, major powers should take the initiative to safeguard UN's authority and leave an "emergency channel" for diplomatic settlement of disputes through UN mechanisms, rather than instrumentalizing and ideologizing the organization and using geopolitical interests to kidnap it, making the complicated problem even more difficult to solve. This is a moral obligation, and a responsibility as well.

In the statements that have been made during the meeting, representatives of many countries have mentioned "solidarity," showing that the problem has been noticed. However, there are divergences on the path to solve them. At the moment, we need to practice authentic multilateralism and work together to uphold the principles of the UN Charter. We suggest that the representatives of the participating countries carefully read the "Position Paper of the People's Republic of China For the 77th Session of the United Nations General Assembly," which gives a "Chinese proposal" for the current period of turbulent changes, a proposal for building common security and achieving common development.

There lies the desire to pursue an integrated and common view of security, instead of a unilateral view of security dominated by a single power, behind the strong calls at this session from developing countries to focus on famine and climate crisis while preventing the Russia-Ukraine conflict from monopolizing all the attention. We believe that the measure of whether a session of the UNGA is worthwhile should be whether the world is more fractured or less fractured afterward, and if there is more cooperation or less after the session. There could also be identification of responsibility for this. 

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