KUALA LUMPUR: The property market in Malaysia is expected to remain flat this year as the outlook continues to be challenging, according to real estate services firm CBRE|WTW.

However, a flat market is still considered healthy for the sector, CBRE|WTW managing director Foo Gee Jen said.

“The property market has remained flattish since 2014, but this is healthy. It has been achieving good growth for a few years. To expect this kind of growth every year is actually not sustainable.

“The market needs to have a correction, so moving sideways is not a bad thing,” he said at the firm’s 2017 Asia Pacific real estate market outlook briefing yesterday.

Foo said uncertainties and concerns over large market supply remained unabated, adding that the landed residential property market within the Klang Valley was anticipated to observe more launches within the affordable price range this year.

He emphasised that government plans, with primary focus on the low-medium group, is likely to observe more affordable developments.

“Supply remained resilient with greater activity especially in the larger cities in 2016. Other government plans to increase low-medium cost and affordable housing units will also ease the current shortage of such housing.”

Citing data, Foo said units within the RM250,000 to RM500,000 range remained high in demand.

However, he added that stringent loan requirements and increasing property prices had affected demand.

On the residential high-rise segment, Foo said the rental market for condominiums in central Kuala Lumpur would compress further due to the increasing supply.

“We see the gap between asking and transacted prices narrowing,” he said, adding that high-rise residential developments trended towards high-end developments with higher transaction volume observed for units priced RM500,000 and above in 2016.

“Developers are still pushing for more high-end units,” he said.

Foo said the total number of luxury condominiums in Kuala Lumpur amounted to 37,824 units as at end-2016.

“Upscale condominiums ranging between RM1,001 and RM1,500 per sq ft are expected to see the highest growth averaging 4,000 units per year, accounting for 23% of total condominiums by 2019.”

Separately, Foo said the office sub-segment was expected to sustain interest from foreign investors.

“It is made more attractive by the weak ringgit and slower growth in the European countries, China and the US,” he said, adding that Kuala Lumpur was still the primary choice for local and multinational companies in 2016.

Foo added that stiff competition was expected to intensify within the local retail sector due to ongoing construction of retail malls.

He said malls with an estimated net lettable area of 5.93 million sq ft were expected to be completed by the end of this year.

“It won’t be healthy as there are too many retail outlets and many tenants are already working based on a turnover-rental basis.”

Foo said the large, top city malls in the Klang Valley would continue to thrive at the expense of smaller suburban ones.

“These large malls have an established, steady mix of tenants that will help sustain them,” he said.