Our ongoing battle with the Covid-19 pandemic has lasted much longer than expected. Unfortunately though, no one knows when this battle will end.
The struggle is real – and the Covid-19 fatigue is starting to affect the lives of many. The strain for survival is being felt in all economic sectors, one of it in particular being the property market.
A significant reflection of this is the levelling down of the rental rate for residential properties, especially in expatriate preferred locations.
This is attributed to a much smaller number of relocations to Malaysia and expatriates moving back to their home country in view of travel restrictions. These considerations have driven down the cyclical demands by at least 10% to 20% and have greatly impacted the rental revenue of these mid to high end properties.
On the other hand, properties below the RM3,000 rental per month band seem to be faring quite well. With the current market uncertainty and also employment insecurity, more Malaysians are opting to rent for now than committing to purchasing their new home.
For seasoned investors with strong holding power, they would do well to seek this opportunity to enhance their property portfolio.
Stocks are in abundance and it is now a buyer’s market. Also, many Small and Medium-Sized Enterprise (SME) owners are cashing out in hopes to fund the survival of their businesses. Meanwhile, some are disposing their properties to fill income gaps and more units are being auctioned from defaulted mortgages.
It is disheartening to learn how some young, naïve investors were influenced by unscrupulous self-proclaimed property gurus to over-commit on properties – stretching their minimal capital beyond the threshold.
They are now caught in a financial turmoil. Many have turned to their parents for help, eroding or have even wiped out their hard-earned retirement funds.
The unnecessary financial burden and emotional insecurity is uncalled for, while no one knows for sure how soon the market will rebound.
However, all is not bleak in the property market. This is because demand for industrial and commercial properties have been increasing steadily over the last few months.
This augurs well in terms of the change in purchasing and consumption patterns. With the massive surge of online purchase, demand for decentralised warehousing and logistics hub have emerged.
Consumer expectation for quicker and error-free delivery is also soaring by the day. Thus, E-commerce owners are investing in large open spaces for digitalised logistics arrangements powered by artificial intelligence (AI).
Pick-up and drop-off points are mushrooming and drone delivery will be the future norm. All these will only create greater supply pressure for decentralised properties.
Likewise, with more stringent travel restrictions and the reluctance to travel far, consumers are fulfilling their grocery and food & beverage (F&B) needs within a smaller radius.
The growth of independent grocers as well as small-scale eateries have been apparent over the last few months. Restaurants used to prefer the more easily accessible road level units but with a higher adoption of food delivery option, eateries are now taking up the more rental-friendly first and second floor units.
Customer access is no longer a top priority and shop lot units amidst housing areas are now enjoying a renewed lifespan.
The property investment market is still very robust but the key is knowing how to master the game. A good knowledge in consumption pattern and having the right investment strategy is crucial.