THE OVERHANG SITUATION IN THE PROPERTY MARKET
by Lim Lay Ying
Property Times, New Straits Times
25th December 2004

See also, Museums: A Catalyst for Growth and Property Round-Up for 2004/2005

(A) RESIDENTIAL

1. Completed Properties

The following table provides a summary of the overhang stock of completed residential units in the country.

Summary of Property Overhang in Residential Sector (Completed with CF)
Q3 2003 – Q2 2004
Source : Property Market Status Report, 4Q03 – 2Q04

The overhang situation in the country’s residential sector as at mid this year, reflects the following trends:-

• An INCREASING TREND was noted for residential overhang from Q3 2003 to Q2 2004, where it gradually increased from Q3 2003 (7,647 units) to Q2 2004 (11,199 units), with a total growth rate of 46.4%
• As at Q2 2004, there were a total of 11,199 units of completed but unsold residential units in the country, with a total value of RM1.47 billion. Of these units, 90% (10,095 units) had remained unsold in the market for more than 24 months.
• Compared with the previous quarter, the overhang in Q2 2004 registered a marginal increase of 8.2% and 3.5% in the volumes and values respectively.
• Johor was reported as having the highest number of unsold units (3,175 units – 28.4%), followed by Selangor (1,771 units – 15.8%), Melaka (1,189 units – 10.6%), Kedah (1,149 units – 10.3%), and Perak (1,189 units – 10.0%). Kelantan was reported as having the least number of overhang, with 26 units only.
• By type, the bulk was formed by terraced units and condominiums/apartments, registering 45.8% (1-storey : 2,140 units; 2-3 storey : 2,994 units) and 23.8% (2,662 units) respectively. These overhang stock were skewed to units costing:-
  • 2-3 storey terraced units : 78.1% from RM100,001 – RM200,000 (2,338 units)
  • 1-storey terraced units : 63.9% from RM50,001 – RM100,000 (1,367 units)
  • Condominiums/apartments : 59.2% from RM50,001 – RM150,000 (1,577 units)
  Note: Selangor had the most number of unsold condominiums/apartments (716 units – 26.9%), followed by Johor (673 units – 25.3%).

2. Under Construction

For uncompleted properties, the following table summarises the number of the unsold residential units:-

Summary of Unsold Properties In Residential Sector (Launched & Under Construction)
Q3 2003 – Q2 2004
Source : Property Market Status Report, 4Q03 – 2Q04

The unsold residential properties that were still under construction as at mid 2004 are elaborated as follows:-

• As at Q2 2004, 57,931 units in various stages of construction were reported unsold, a mere increase of 7.7% from the previous quarter. Of these units, 40.8% (23, 610 units) had remained unsold in the market for more than 24 months.
• About 66.0% (38,244 units) were those costing RM150,000 or less.
• Selangor had the most number (16,714 units – 28.9%), followed by Johor (14,847 units – 25.6%). Note that the number of unsold units doubled in Kelantan (1Q04 : 507; 2Q04 : 1,043) – the highest growth recorded as compared with other states.
• By type, terraced units and condominiums/apartments each formed 45.1% (1-storey : 10,213 units; 2-3 storey : 15,919 units) and 27.9% (16,183 units) respectively. These overhang stock were skewed to units costing:-
  • 2-3 storey terraced units : 85.0% from RM100,001 and above (13,536 units)
  • Condominiums/apartments : 83.7% from RM50,001 – RM200,000 (13,552 units)
  • 1-storey terraced units : 70.4% from RM50,001 – RM100,000 (7,189 units)

3. Newly Launched

The following table displays the summary of newly launched residential properties, which have yet to commence construction:-

Summary of Unsold Properties In Residential Sector (Launched, but Not Constructed)
Q3 2003 – Q2 2004
Source : Property Market Status Report, 4Q03 – 2Q04

The unsold newly launched residential properties are analysed further as follows:-

• As at Q2 2004, 17,582 units remained unsold for more than 9 months after their launch, at an increased rate of 16.4% from the previous quarter. This is mainly due to the significant increase in unsold low-costs flats in Petaling Jaya, Selangor D. E.
• Of the total unsold units, close to half (8,709 units – 49.5%) had remained unsold for more than 24 months. By price range, the total unsold units were:-
• • 55.9% from RM100,000 and below (9,832 units)
  • 28.3% from RM100,001 – RM200,000 (4,971 units)
• Selangor had the highest number (5,278 units – 30.0%), followed by Johor (4,025 units – 22.9%), and Negeri Sembilan (2,554 units – 14.5%).
• By type, terraced units formed the largest bulk with 26.1% (1-storey : 1,766 units [10.0%]; 2-3 storey : 2,830 units [16.1%]), followed by condominiums/apartments (3,670 units – 20.9%) and detached units (3,580 units – 20.4%).
  
  Note : : The bulk of the unsold condominiums/apartments were located in Kuala Lumpur (1,258 units – 34.3%), skewing to units costing RM150,001 – RM200,000 (746 units – 59.3%).

B. RETAIL SHOPS

1. Completed Properties

The following table provides a summary of the overhang stock of completed retail shops in the country.

Summary of Property Overhang In Retail Shops Sector (Completed with CF)
Q3 2003 – Q2 2004
Source : Property Market Status Report, 4Q03 – 2Q04

The overhang situation in the country’s retail shops sector as at mid this year, reflects the following trends:-

• As at Q2 2004, there were a total of 2,941 units of completed but unsold shops in the country, with a total value of RM666.44 million. Of these units, 98.7% (2,903 units) had remained unsold in the market for more than 24 months.
• Compared with the previous quarter, the overhang in Q2 2004 registered a significant increase of 41.9% and 50.7% in the volumes and values respectively.
• Again, Johor was reported as having the highest number of unsold units (1,486 units – 50.5%), followed by Negeri Sembilan (369 units – 12.5%).
• By type, the bulk was formed by 4-4ฝ storey shops (1,268 units – 43.1%), followed by 2-2ฝ storey shops (577 units – 19.6%). These overhang were skewed to units costing RM250,000 or less, where:-
  • 79.7% (1,011 units) from the unsold 4-4ฝ storey shops
  • 64.0% (369 units) from the unsold 2-2ฝ storey shops

2. Under Construction

For uncompleted properties, the following table summarises the number of the unsold retail shops:-

Summary of Unsold Properties In Retail Shops Sector (Launched & Under Construction)
Q3 2003 – Q2 2004
Source : Property Market Status Report, 4Q03 – 2Q04

The unsold retail shops that were still under construction as at mid 2004 are elaborated as follows:-

• As at Q2 2004, 4,266 units in various stages of construction were reported unsold, decreasing slightly by 0.8% from Q1 2004. Of these units, 54.2% (2,314 units) had remained unsold for more than 24 months.
• 93.7% (3,997 units) were those costing RM500,000 and below.
• Nearly half (2,159 units – 50.6%) of the unsold units in the country came from Johor, followed by Selangor (569 units – 13.3%).
• By type, the bulk was contributed mainly by 2-2ฝ storey shops (2,078 units – 48.7%), followed by 3-3ฝ storey shops (808 units – 18.9%).

3. Newly Launched

The following table displays the summary of newly launched retail shops, which have yet to commence construction :-

Summary of Unsold Properties In Retail Shops Sector (Launched, but Not Constructed)
Q3 2003 – Q2 2004
Source : Property Market Status Report, 4Q03 – 2Q04

The unsold newly launched retail shops are analysed further as follows:-

• As at Q2 2004, 888 newly-launched units have yet to be sold – a significant increase of 34.1% from Q1 2004. The stock came mainly due to increases in Melaka (238.5%), Negeri Sembilan (118.8%), Kelantan (76.9%) and Pulau Pinang (37.5%).
• Of the unsold units, 55.6% (494 units) had remained unsold for more than 24 months. Further, most of the unsold units (560 units – 63.1%) were priced RM250,000 and below.
• Negeri Sembilan had the highest number (151 units – 17.0%), followed by Selangor (138 units – 15.5%).
• By type, 48.6% (432 units) of the unsold units were 2-2 ฝ storey shops, of which 61.3% (265 units) were those units costing RM250,000 or less.

C. INDUSTRIAL

1. Completed Properties

The following table provides a summary of the overhang stock of completed industrial units in the country.

Summary of Property Overhang In Industrial Sector (Completed with CF)
Q3 2003 – Q2 2004
Source : Property Market Status Report, 4Q03 – 2Q04

The overhang situation in the country’s industrial sector as at mid this year, reflects the following trends:-

• Overall, the movement in industrial overhang was somewhat gradual. As at Q2 2004, there were a total of 671 units of completed but unsold industrial units in the country, with a total value of RM270.93 million. Almost all unsold units (665 units – 99.1%) had remained in the market for more than 24 months.
• Compared with the previous quarter, the overhang in Q2 2004 registered a minimal reduction of 1.3% and 0.7% in volume and value respectively.
• The 671 unsold units were in the price range of:-
  • 44.9% from RM250,000 and below (301 units)
  • 32.3% from RM250,001 – RM500,000 (217 units)
• Once more, Johor was reported having the highest number of unsold units (180 units – 26.8%), followed by Pulau Pinang (141 units – 21.0%) and Negeri Sembilan (114 units – 17.0%).
• By type, the bulk was mainly formed by terraced industrial units (407 units – 60.6%), followed by semi-detached units (154 units – 23.0%) and flatted factories (100 units – 14.9%).

2. Under Construction

For uncompleted industrial properties, the following table summarises the number of the unsold industrial units:-

Summary of Unsold Properties In Industrial Sector (Launched & Under Construction)
Q3 2003 – Q2 2004
Source : Property Market Status Report, 4Q03 – 2Q04

The unsold industrial properties that were still under construction as at mid 2004 are elaborated as follows:-

• As at Q2 2004, the number of unsold industrial units increased marginally by 2.1% compared to the previous quarter (1Q04 : 437; 2Q04 : 446). Of these units, 90.6% (404 units) had remained unsold for more than 24 months.
• Almost two-thirds (301 units – 67.5%) were those costing RM250,000 and below.
• Terraced factories continued to formed the bulk, representing 76.9% (343 units) of the total unsold units.
• More than half of the unsold units came from Selangor (249 units – 55.8%), particularly in the districts of Klang and Kuala Langat. All these units are the terraced type and had remained unsold for more than 24 months.

3. Newly Launched

The following table displays the summary of newly launched industrial properties, which have yet to commence construction:-

Summary of Unsold Properties In Industrial Sector (Launched, but Not Constructed)
Q3 2003 – Q2 2004
Source : Property Market Status Report, 4Q03 – 2Q04

The unsold newly launched industrial properties are analysed further as follows:-

• As at Q2 2004, there were a total of 496 unsold units, a marginal decrease of 5.2% from Q1 2004. Of these units, nearly all (95.2% – 472 units) had remained unsold in the market for more than 24 months.
• 68.1% (338 units) were priced RM250,000 and below.
• Melaka had the highest number (232 units – 46.8%), followed by Negeri Sembilan (112 units – 22.6%).
• By type, detached units formed 55.8% (277 units), of which 80.61% (183 units) were priced RM250,000 or less.

D. PURPOSE-BUILT OFFICES

• As at Q2 2004, there was a total of 26.10 million sq. ft. of vacant office space in the country, representing 23.3% of the total supply of 112.10 million sq. ft.
• Compared with the previous quarter, the vacancy rate fell slightly by 0.3% (1Q04 : 23.6%). Overall, most states experienced improved occupancy, except for Perak and Sabah.
• Kuala Lumpur is the primary provider, supplying about 58.75 million sq. ft. or 52.4% of the total office space in Malaysia.
  • With no new additional supply of office space as at Q2 2004, Kuala Lumpur enjoyed stable demand with vacancy rate falling slightly by 0.2%, i.e. from 21.4% in Q1 2004 to 21.2% in Q4 2004.

SHOPPING COMPLEXES

• Meanwhile, the total vacant space in shopping complexes amounted to about 15.29 million sq. ft. in Q2 2004, a marginal increase of 0.78% over the previous quarter (1Q04 : about 15.17 million sq. ft). As a result, the vacancy rate rose negligibly by 0.1%, i.e. from 20.5% in Q1 2004 to 20.6% in Q2 2004.
• Generally, most states experienced stable occupancy rates in Q2 2004. The increase in vacancy rates were observed in Kuala Lumpur, Johor, Negeri Sembilan, Melaka, Sabah and Sarawak, of which Putrajaya and Pahang registered a higher rate of increase by 15.7% and 9.8% respectively.
• Kuala Lumpur and Selangor contribute the highest in supply of retail space in Malaysia, with about 19.28 million sq. ft. (25.9%) and 16.41 million sq. ft (22.1%) respectively.