PETALING JAYA: The property market remains resilient despite of the challenging economic environment, according to observers.

Rahim & Co Research director Sulaiman Saheh said although the number of launches and sales performance of developers have been declining, there were projects that were performing well due to the nature of the product, concept, location and marketing strategies.

“Market fundamental is still resilient and the market has the holding power, in spite of some expectations of rising unit sales,” he said during a presentation at the Rahim & Co property research seminar recently. He said affordability is still a major concern.

“The market is leaning towards the affordable market segment. Creative products within the affordable segment are going to be well-received,” he said, adding that there is still demand but the buyers were hindered by end-financing woes.

“We expect a rationalisation of high-end and branded residences as the global economy remains challenging,” said Sulaiman.

According to Knight Frank in a report on the local real estate market, the outlook for the high-end condominium segment remains lacklustre, impacted by weak sentiment as potential buyers and investors continue to adopt a “wait-and-see” approach. “With the widening gap between supply and demand as well as mismatch in product pricing and affordability in the domestic market, more developers are expanding their target catchment by marketing overseas as the weak ringgit translates into attractive pricing and low-entry level for foreigners.”

It said the challenging property market environment had led to more strategies with developers adopting “push marketing” to boost sales of selected projects and improve revenue.

Meanwhile, Knight Frank said the office market in the Klang Valley is expected to remain subdued and face downward pressure.

“Amid the mismatch between supply and demand, office vacancies are expected to trend upwards due to a strong supply pipeline and lacklustre absorption as more firms cut workforce or freeze hiring to consolidate business operations.

“Owners of newly-completed office buildings which have yet to achieve significant occupancies may offer more competitive rental package to secure tenants while those of secondary office buildings are expected to be more flexible in negotiations to retain existing tenants.”

According to Axis REIT Managers Bhd head of investments and Malaysian Institute of Estate Agents immediate past president Siva Shanker, some 5.8 million sq ft of office space is expected to come onstream in the Klang Valley in the second half of 2016.

He said the market would “start to level out” by 2018 or 2019 and start peaking by 2020 or 2021.

“With additional office space expected to be completed by end-2016 in addition to the still available space in the Klang Valley, the general market will continue to be a tenant’s market.

“Landlords or building owners have become more aggressive in marketing to attract tenants,” Siva said at Rahim & Co’s property research seminar recently.

Knight Frank added that good grade and dual-compliant office space in good location, however, is expected to remain resilient.

As for the retail market, Knight Frank said the projected sales growth for 2016 had been revised downwards from 4% to 3.5% following the weak performance last year.

“Consumer spending remains a key challenge in the retail industry with many continuing to hold back on purchases due to growing concerns about rising cost of living and the weaker job prospects.

“Moving forward, the uncertainties following the recent Brexit referendum are expected to further weigh down market sentiments globally and this will not augur well for the local retail industry. With the scheduled completion of some 3.36 million sq ft of new retail space in the second half of 2016, competition in the retail market will heighten.”