Data gathered from NAPIC showed that Kedah's property market for the first nine months of 2021 registered a decline of 16.6 per cent in volume but rose 17.4 per cent in value when compared to the same period in 2020. This is largely due to the strict MCO imposed state-wide until the end of August where property developers, estate agents and bank officers were also impacted and only able to return to the office to fully operate from September 1, 2021. The compounded effect has been exhausting and detrimental to the property market in Kedah after experiencing the negative setback right from the first half of 2021 and looking to do worse in the second half.

Due to the lengthy lockdowns, many of the small and medium sized developers have temporarily suspended their planning submissions in 2020 and 2021. Although the self-imposed suspension may seem counter-productive, the positive side to this is that it may help to avert a potential oversupply situation in the various sub-sectors of the market like residential, commercial/office, retail, hospitality and industrial. The bright side out of this conundrum is Kedah's overhang property numbers is likely to not increase as significantly in 2022 because of the lack of new submissions. But for developers to continue business, they are likely to look at clearing existing stocks from the previous launches with some sporadic new launches taking place over the course of 2022.

To reignite sentiments in the state, the new airport in Kulim located in Sidam Kiri near Kuala Ketil and about 12km from Sungai Petani will stand as one of the rays of hope in 2022 with potential multiplier effects to all other economic sub-sectors in the state. It is also expected to generate robust activities in the commercial/office, retail, industrial and hospitality markets.

Factors to watch in 2022

•The Economic Prosperity Thrust under the Kedah State Development Plan 2035 (KEDAH 2035) will guide the economic roadmap of the state including attracting foreign direct investments.

•The new airport in Kulim located in Sidam Kiri near Kuala Ketil and about 12km from Sungai Petani will have potential multiplier effects to all other economic sub-sectors in the state when completed.

Bright spots in 2022

•The current 1.75 per cent low overnight policy rate (OPR).

•The new airport in Kulim sited on 1,700-ha has the propensity to raise economic activities in Kedah and create 20,000 jobs.

Outlook for 2022

•The residential sub-sector is expected to improve in 2022.

•Kedah's commercial market is anticipated to be steady in 2022 with a possibility of improvement.

•The industrial sub-sector is looking at a steady pace with recovery potential in 2022.

Residential overview and outlook

When comparing the residential sub-sector's volume of transactions for the first nine months in Kedah, the trend has been declining since 2019. The volume of transactions had in fact gone down by five per cent from 2019 to 2020 and a further 11.7 per cent from 2020 to 2021, reflecting the forecast made for 2021. However, it should be noted that the value of transactions has gone on the opposite direction since 2019 albeit rising at a slower rate, recording a slight improvement of five per cent from 2019 to 2021, owing to the higher price tags of properties being transacted. Single and double storey terrace houses were the most transacted type of residences.

Towards Q4 2021, there were visible signs of increased activities in the residential market and this heightened trend is expected to continue into 2022 as property buyers are looking to lock in present day values in the light of the rising inflation impacting costs of construction materials, labour etc. With mounting market pressures, Kedah's residential sub-sector is expected to improve in 2022 although not back to the pre-pandemic levels as experienced before 2020.

Commercial overview and outlook

Like the residential market, the volume of Kedah's commercial sub-sector also registered declines in the first nine months of 2021 against the same period in 2020 and 2019, going down by 22 per cent from 2019 to 2020 but declining slower at 0.7 per cent from 2020 to 2021.

The value of transactions however threw in some surprises with a giant leap of 321 per cent in the first nine months of 2021 compared to the corresponding period in 2020 after a 20 per cent negative growth over the same period from 2019 to 2020. The stark contrast from RM237.5 million to RM1 billion is due to a shopping mall in Kota Setar which was transacted at a value of RM750 million. The most popular range of commercial properties remained in the RM500,001 to RM1 million price bracket.

Action on the ground for the commercial sub-sector depends largely on the recovery of the market from Covid-19. If and when the pandemic is fully contained and eradicated, Kedah's commercial market can expect to chalk up some robust activities in 2022 along with the recent improvements seen in the retail sub-sector. And speaking of retail, Kedah's retail sub-sector has had better days than in 2021 with consumers fearing the infectious virus and made the conscious effort to limit their visits to the stores outside. This has led to a subdued atmosphere in the retail malls and outlets which consequently impacted the well-being of Kedah's hospitality sub-sector throughout the year with only Langkawi making headlines by championing the country as hosting the first domestic travel bubble from September 16, 2021.

For investors keen to take a look at Kedah's commercial market, it is worth noting that the retail sub-sector has a slight edge over the hospitality sector although they are tightly intertwined to serve the general retail and tourism markets.

Overall, Kedah's commercial market can expect to hold steady with some possibility of an uptick in 2022, and improving from there to pre-pandemic levels in the coming years.

Industrial overview and outlook

There was a downtrend in the volume and value of industrial transactions in Kedah, declining by 27 per cent and 32 per cent respectively in the first nine months of 2021 compared to the same period in 2020. Before this, the negative trend had also impacted the sub-sector where the volume and value eroded by three per cent and 40 per cent over the same period in 2019 to 2020.

The rather surprising negative trend have certainly dampened the market atmosphere given the encouraging prospects from several large-scale projects which may act as catalysts such as the Rubber Industrial Park (or known as The Kedah Rubber City), Sidam Logistics, Aerospace, and Manufacturing Hub (SLAM), Kedah Science and Technology Park (KSTP) located in the Bukit Kayu Hitam SBEZ, just to name a few. It appears that the positive vibes generated from these projects have not resulted in any substantial traction to push the market.

Nevertheless, the majority of the industrial transactions in 2021 continued to be above the RM1 million range, a trend spotted since 2018. In terms of property type, the market in 2021 was led by the vacant industrial plots followed by terrace factories/warehouses and detached factories. Areas which had the highest transactional numbers were in Kota Setar, Kuala Muda and Kulim.

Perhaps influenced by the market setback, Kedah's industrial properties has not experienced innovative adoptions like those seen in Klang Valley with manufacturing, storage and distribution continuing as the primary functions of the industrial units.

Despite the gloomy market in 2021, Kedah received RM43.6 billion in foreign direct investments (FDI) early on in the first quarter of 2021. Then later in the year, the state also announced its anticipation to receive at least RM10 billion annually in FDI from 2022 onwards as part of the state's vision to encourage take-up at the many industrial facilities that Kedah has such as the Kulim Hi-Tech Park (KHTP), the Special Boundary Economy Zone (SBEZ) in Bukit Kayu Hitam, the Kedah Rubber City (KRC) and existing industrial areas in Gurun, Bukit Selambau and Sungai Petani. The Kulim Technology Park Corporation (KTPC) industrial area will also undergo a 695 acres expansion to meet demand from the investors and is projected to create 15,000 new jobs.

2021 saw the state concluding the year with a total of RM43.6 billion in FDI as it continued attracting new investments to the state after the announcement made for the first quarter of 2021. Out of this total, RM42.5 billion have been channelled into the manufacturing sector and RM1.1 billion in the services sector and key industries such as renewable energy by Risen Solar Technology Sdn Bhd. Other big investments include from Syarikat Munzing Malaysia Sdn Bhd with RM55 million and Syarikat SP Mega Mineral Sdn Bhd with RM29 million.

Perhaps, if the depressing days of Covid-19 can be totally over in 2022 with the virus being brought under control or in the best-case scenario, almost wiped out altogether, Kedah's industrial sub-sector can benefit from all the promises that the state has rolled out to the market. If and when this materialises, Kedah's industrial sub-sector can look forward to a steady pace of recovery in 2022 from the drop experienced in the preceding two years. - Story courtesy of Henry Butcher Malaysia