Q4 2017 Real Estate Times Malaysia

Retail sector was undergoing stress test

Key Highlights:

  • Malaysia’s economy expanded by 6.2% y-o-y in Q3 2017 (Q2 2017: 5.8% y-o-y).
  • Unemployment rate remains unchanged at 3.4% in Q3 2017.
  • Headline inflation, measured by the annual change in the Consumer Price Index (CPI), moderated to 3.8% in Q3 (Q2 2017: 4.0%).
  • The Consumer Sentiment Index declined to 77.1 in Q3 from 80.7 in Q2 2017.
  • In 2017 the Ringgit appreciated by 9.2%, to RM4.08 per US dollar.
  • Investment sales declined by 52% q-o-q to RM800m in Q4, but investment sales in 2017 increased by 7.0% y-o-y.
  • Improved economic growth boost sentiments but a pending general election expected to be held in early 2018 will affect investment sales in H1 2018.
  • The total office stock amounted to 81.7 million sq ft, with 2.3 million sq ft completed by end 2017.
  • Average occupancy rate of office space declined to 80.4% from 81.4% in Q3 as weaker market conditions persisted despite a recovery in economic growth and oil prices. On a y-o-y basis, the occupancy rate trended downwards from 82.3% in Q4 2016.
  • Retail sales contracted 1.1% in Q3 2017, swayed from projections of 2.9% and 4.0% by the Malaysia Retailers Association (MRA) and Retail Group Malaysia (RGM), respectively.
  • Malaysia Retailers Association (MRA) forecasted a 3.8% growth for the final quarter of 2017.
  • In Q4 2017, three residential projects with a total of 1,432 high-end condominium units were completed, two of which are in the city-centre.
  • Of the 9,693 units that were initially expected to complete throughout the year, only 5,315 units (or 55%) from 11 high-end residential projects were completed. Some 6,176 units of high-end condominiums are expected to come on board throughout 2018, with 51% of the upcoming supply coming from the city centre (Figure 9).

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