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Lately, there have been several publications highlighting demand and supply imbalances in the domestic property market, such as the National Property Information Centre’s (NAPIC’s) January 2019 report on its data for the third quarter of 2018.

According to NAPIC’s report, the number of unsold homes in Malaysia has reached a new high of 30,115 units, amounting to RM19.54 bil. This figure represents unsold homes completed nine months from issuance of the Certificate of Completion and Compliance (CCC), and excludes residential properties built on commercial land like serviced apartments, small office home office (SoHo) units and so on.

Making better metrics for Malaysia

For another perspective, a property consulting firm also published on 19 Feb 2019 that at the end of the third quarter of 2018, Malaysia's overhang stood at 43,219 units worth RM29.47 bil, including serviced apartments and SoHo units.

The above statistics represent just the property overhang, and not larger market supply factors. In addition, they only relate to developer stock, and do not cover units already sold to individuals or companies. The real ratio that represents the supply and demand situation should be the residential vacancy rate (RVR).

Residential vacancy rates can help developers and authorities gauge demand in an area.

RVR is the percentage of all units in a particular market that are unoccupied during a particular time. Unfortunately, we don’t have information on RVR in Malaysia, and I believe it is timely for NAPIC to provide information on the rate, instead of just overhang figures.

Vacancy rate is calculated by multiplying the number of vacant units by 100 then dividing that by the total number of units in a building or development. NAPIC should provide RVR figures on a national, state, city or locational basis, just like other developed countries such as the USA, Singapore, Australia and so on.

Informed decision-making for a healthier market

Such information will help developers, banks, property consultants, home buyers and investors to make informed decisions by better understanding the current demand and supply situation. When it comes to RVR, figures above 7% are considered high, at which point it would be alarming for the market to keep on supplying incoming units.

RVR figures can be calculated from utilities usage data from residential units.

In contrast, low vacancy rates generally mean that the real estate market performance of an area is good. They are an indication that strong rental demand for real estate units exists in a given area or development. Once we have RVR figures for a number of years, we will able to analyse the prevailing market situation and trends better in terms of demand and supply.

RVR information can be obtained from utility companies such as Tenaga Nasional Bhd, which can provide data on units with zero usage of utilities on a monthly basis. NAPIC should compile and publish such information on a quarterly basis for the public to analyse.

For a better Malaysia, we should start providing more information in a timely fashion so that industry stakeholders can react accordingly. Thank you.

Prepared by Metro Homes Realty Bhd executive director and Malaysia Institute of Professional Estate Agents and Consultants (MIPEAC) deputy president See Kok Loong.

Disclaimer: this article is merely See Kok Loong’s personal view/opinion. It does not represent the stand of the firm or the association. This disclaimer informs readers that the views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author’s organisation, committee or any other group or individual.

The information contained herein is not intended to be a source of advice or credit analysis with respect to the material presented, and the information and/or documents contained in this article do not constitute investment advice.

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Noted that Malaysia still need a bit of catch up in securing data for better inform decisions for real estate interested parties.