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Malaysia – Knight Frank Malaysia launches the latest research report, Real Estate Highlights 2^nd Half of 2020 today which highlights the property trends and outlook in key markets of Malaysia.

Residential

The residential market showed slight recovery post Movement Control Order (MCO) with selected developers reporting improved bookings supported by the low interest rate environment and pent-up demand. The reintroduction of the Home Ownership Campaign (HOC) in June coupled with several stimulus packages as well as the initiatives tabled under Budget 2021 offered a ray of hope for the sluggish residential market. However, the recent spike of COVID-19 cases leading to the reimplementation of MCO till 26 January 2021, will likely derail market recovery in the short term.

Sarkunan Subramaniam, Managing Director of Knight Frank Malaysia, says, “The performance of the residential market is very much dependent on how the economy moves forward. The anticipated commercial rollout of the COVID-19 vaccine by 1H2021 will certainly boost the hopes for the country’s economic recovery and lift overall consumer sentiment. However, the current ongoing political uncertainties amid the worsening COVID-19 crisis, has led property buyers as well as developers to rethink their future plans and strategies. The residential market is expected to remain challenging in the first half of 2021.”

Retail & Hospitality

The hospitality and retail industries continue to face disruptions and challenges amid the unprecedented crisis. Initiatives taken to flatten the COVID-19 curve with the country being placed under various phases of Movement Control Order (MCO) since March 2020 coupled with travel restrictions and closure of international borders have severely impacted both industries, resulting in the temporary and permanent closures of selected retail outlets and hotels nationwide. Transactional activity remains lacklustre as investor confidence and sentiment continue to be undermined by the pandemic.

Keith Ooi, Knight Frank Malaysia’s newly appointed Deputy Managing Director, says, “2020 will always be remembered as a disruptive year, and the third wave of infections in selected key cities have weakened the recovery momentum in the retail industry. For continued success, retailers and stakeholders are expected to embrace new retailing dimensions by keeping pace with changes in consumer behaviour, patterns and market dynamics. With COVID-19 remaining as a key concern heading into 2021, occupancies and rents for the retail sector are expected to decline moderately in the coming year. However, we anticipate that values of prime grade retail assets should remain relatively stable despite the rental decline, given their more resilient tenant and lease profiles, and the fact that yields will be buffered by the existing low interest rate environment.”

James Buckley, Executive Director of Capital Markets, Knight Frank Malaysia, says, “The hospitality sector has had an incredibly challenging 2020. We are optimistic that as the vaccine is rolled out globally and borders are reopened, international tourists will begin to return in 2H2021, but it is likely to take some time to recover to pre-pandemic levels. Shrewd investors who are confident in their analysis and recognise the market cycle will see this period as an opportunity to acquire quality prime assets which will retain value. In 2021, we expect some good quality prime assets to trade.”

Sabah’s tourism and hospitality industry witnessed a slight pickup in activity following commencement of the recovery MCO phase in June, supported by improved domestic visitor arrivals and joint efforts by the relevant authorities and operators. However, the resurgence of COVID-19 cases which led to the re-imposition of travel restrictions under the conditional MCO phase in October; had once again dampened the situation. Moving forward, the full recovery of Sabah’s tourism and hospitality industry will be subjected to the reopening of international borders, amongst others.

Alexel Chen, Executive Director of Knight Frank Sabah, comments “The tourism and hospitality industry has not been faring well in the face of pandemic but we expect a silver lining after the storm, a redirection of Chinese tourists will lead the way due to on-going geopolitical tensions between China and several western nations.”