LIVING BEYOND THE VALLEY

Transcription

1 LIVING BEYOND THE VALLEY 1

2 About us. Incorporated in 1982, Raine & Horne International Zaki + Partners Sdn. Bhd. is a firm of Chartered Surveyors and Registered Valuers. Our practice covers a wide range of services including property valuation, investment and project management, property management, real estate agency and property consultancy. The firm currently operates twelve (12) offices in Malaysia: Kuala Lumpur, Petaling Jaya, Subang Jaya, Kelang, Johor Bahru, Melaka, Ipoh, Seremban, Kuantan, Penang, Kota Kinabalu and Kuching. Since its inception and establishment, Raine & Horne International Zaki + Partners Sdn. Bhd. has enjoyed an outstanding and enviable reputation and success. The firm has received wide recognition from all quarters, nationally and internationally. Founded in 1883, Raine & Horne is one of the world s largest real estate organisations with offices and affiliates all over the world, including in the major cities of South East Asia, Europe, Canada, USA, Fiji, Australia, New Zealand, Japan and Africa. Raine & Horne International Zaki + Partners Sdn. Bhd. aims to provide our clients with quality professional service. Raine & Horne International Zaki + Partners Sdn. Bhd. is committed to the Quality Management System required by ISO 9001:2008 Standards. Our team comprises of highly qualified partners in various expertise which authorize us to offer broad ranges of services in: Professional Valuation Services Corporate Advisory Services Project Management Property Management & Maintenance Real Estate Agency Auctioning Market Research & Feasibility Studies Property Investment Consultancy Building Auditing Bio Asset Valuation Forensic Valuation 2

3 Contents Summary Overview Components of the Outer Valley...8 Basic Information...12 Residents Data...15 Property Market in Malaysia..20 Residential Market in Outer Valley...27 Residential Market in N. Sembilan...36 Residential Market in Melaka...38 Residential Market in Perak...40 References...42 Contact us.43 International Affiliations.44 3

4 Summary. Basic Information Mimicking the evolvement in some of the most advanced and populated major cities such as London and Tokyo; Klang Valley (Inner Valley) is in the midst of improving its transportation linkages and expanding outwards. Immediate states within the vicinity of the Inner Valley such as Negeri Sembilan, Melaka, and Perak will eventually become the next destination known as the Outer Valley. The Outer Valley only accounts for a small portion of Malaysia s land mass but is performing reasonably in tandem with the country in many different ways. They include productivity, healthcare, population size, concentration, urbanization, job opportunities, income, and property market. The Outer Valley s property value made up 15% of its GDP output for The amount of activity was higher in the area as well with greater percentile of property transactions per population. However, this rate of increment is diminishing slowly. Residents in Outer Valley preferred to dwell nearer to the centre of commercial activities of respective states. They include capital of respective states such as district of Seremban in Negeri Sembilan, Melaka Tengah in Melaka, and Kinta in Perak. On the other hand, Malaysia s population is aging slowly (but still in its early stages). Median age was 26.2 in Higher number of the population are leaving childhood and entering the workforce. This is the same for Outer Valley. As for ethnicity, the Outer Valley has a higher share of minorities than Malaysia as a whole. The LQ/H ratio which came in at 1.22 for Outer Valley has confirmed that there are no current shortages of houses in this area. However, the stock availability is not too high. An exception was noticed in the state of Negeri Sembilan which recorded a high LQ/H ratio when compared to the rest of the Outer Valley. The reading of 1.33 suggests that this area might be showing signs of excess residential properties. Property Market The property market is highly cyclical with a high correlation between volume and value. However, this trend was not observed in Value increased moderately, while volume dropped considerably. Average price per transaction had the best run in the 10 years being reviewed. Nonetheless, the residential sector was more resilient compared to the rest of the market. 4

5 Summary Residential sector made up the bulk of the total property market in Malaysia as well as Outer Valley. The combined residential number of transactions in the Outer Valley accounted for 21% of the total transactions of Malaysia. Turnover rate was fair at 3.64%, but has declined slightly in terms of YOY. While percentage of unsold new launches were at the lower range of the country s list. Within the vicinity of the Outer Valley, a slow trend was seen where the total weightage of commercial and agricultural markets were slowly shifting towards residential. The state of Perak held the majority of residential transactions in the Outer Valley due to its large land area. The recent YOY decline in transacted volume was somewhat evident in Perak (-7%). The entire Outer Valley was declining at a slower rate than the country. Unlike volume, Outer Valley s average price per transaction was increasing at a slower pace than Malaysia; led by Melaka in Q Outer Valley provides 17% of the total residential supply in Malaysia, which is quite comparable to the number of transactions (21%) as mentioned earlier. IS/ES and PS/ES ratios of the Outer Valley were slightly higher than the national average; in which Negeri Sembilan was higher, Melaka was comparable, and Perak was lower. YOY change for the area s IS/ES ratio was increasing slowly in tandem with the national average, whereas YOY change for PS/ES ratios of the Outer Valley was increasing faster than Malaysia. Negeri Sembilan was again seen moving at a faster rate and Perak slower than the Outer Valley. Distribution of transactions were quite even for all the price range in the Outer Valley. The highest share was captured by the price range of RM 0 50,000. Overall, the price range was skewed to the right, which put more emphasis on lower price range. Two of the most preferred house type in Outer Valley were 2 3 storey and single storey terrace houses. Almost all house types recorded positive YOY changes for average price per transaction and the rate of increment seemed to be stabilizing in the near term when compared to QOQ. The immense preference for terrace houses was symmetrical across the Outer Valley. While some weightage of strata properties was only present in Melaka. A growing number of transactions was witnessed within the price range of RM 400, ,000 for Negeri Sembilan and Melaka in Q In addition, gross rental yields for strata properties were higher than landed properties in the Outer Valley. 5

6 QOQ CHANGES (%) Summary Figure 1: Q QOQ changes of Outer Valley for Residential Volume and Average Price per Transaction (NAPIC, 2014) NEGERI SEMBILAN MELAKA PERAK TOTAL VOLUME AVERAGE PRICE PER TRANSACTION A summary of the current residential market in Outer Valley can be illustrated in the volume and price chart of Figure 1. In the most recent quarter of Q1 2014, Negeri Sembilan was in the spotlight with high volume and average price per transaction growth rates. Melaka was doing alright and Perak was experiencing declining transacted volume. The performance of Outer Valley as a whole was quite resilient. 6

7 Overview As the urbanization rate of major cities picked up in the 21 st century, more and more percentile of the population are relocating from rural to urban areas. This is especially more pronounced in emerging countries such as Malaysia. Evidence of such development is the ever increasing urbanization and density rate of the Klang Valley (Inner Valley). Such progress comes with its fair share of problems; for instance, congestion, high cost of living and other social ailments. Mimicking the evolvement in some of the most advanced and populated major cities such as London and Tokyo; Klang Valley is in the midst of improving its public transportation system to address the dreaded traffic problem. The improvement in such linkages has prompted residents to dwell further away from the city centre due to rising land cost and property prices. The issue of housing affordability has caught the headlines recently with policy makers actively formulating steps to address it. An increasing rate of development was already underway in the outskirts with townships springing up in areas as far as Rawang in the north and Sepang in the south of the Klang Valley. Envisioning the future of the Klang Valley (Inner Valley); there will be a time when borders of different states will blur while the Valley expands outwards. Immediate states within the vicinity of the Inner Valley such as Negeri Sembilan, Melaka, and Perak will eventually become the next destination known as the Outer Valley. 7

8 Components of the Outer Valley Vertical integration between the Inner and Outer Valley were already happening with the presence of North-South Highway (PLUS), Electric Train Service (ETS), and possibly High Speed Rail (HSR) from Singapore to KL with selected stops in the Outer Valley. Compared to the Inner Valley, the Outer Valley is fairly developed with basic infrastructures at place. However, the local public transportation system of the Outer Valley is underdeveloped. Another matter of concerned is the cost of daily commuting using the ETS and HSR. In order to successfully integrate the Inner and Outer Valley, the cost of traversing must be reduced. There is no current official designation of boundaries for the Outer Valley and groupings of selective areas could be highly subjective. For the purpose of studying the housing market, these selective areas are grouped according to the National Property Information Centre (NAPIC, 2014). They include: 1. Negeri Sembilan (Jelebu, Kuala Pilah, Port Dickson, Rembau, Seremban, Tampin, and Jempol) 2. Melaka (Alor Gajah, Jasin, and Melaka Tengah) 3. Perak (Batang Padang, Manjung, Kinta, Kerian, Kuala Kangsar, Larut dan Matang, Hilir Perak, Ulu Perak, Perak Tengah, and Kampar) 8

9 Components of the Outer Valley Figure 2: Map of Negeri Sembilan s districts (2010 Population and Weightage in brackets) (Department of Statistics Malaysia, 2014) ,608 (3%) 3. 61,308 (7%) ,490 (62%) 5. 43,791 (5%) 6. 29,595 (4%) 4. 57,506 (7%) ,073 (12%) TOTAL NEGERI SEMBILAN = 835,371: (24% OF OUTER VALLEY) 9

10 Components of the Outer Valley Figure 3: Map of Melaka s districts (2010 Population and Weightage in brackets) (Department of Statistics Malaysia, 2014) ,712 (22%) ,885 (61%) ,539 (17%) TOTAL MELAKA = 790,136: (22% OF OUTER VALLEY) 10

11 Components of the Outer Valley Figure 4: Map of Perak s districts (2010 Population and Weightage in bracket) (Department of Statistics Malaysia, 2014) ,464 (14%) 9. 60,547 (3%) ,359 (6%) ,504 (6%) ,113 (11%) ,816 (3%) ,861 (38%) 8. 90,313 (5%) ,867 (7%) ,143 (7%) TOTAL PERAK = 1,916,987: (54% OF OUTER VALLEY) 11

12 Basic Information Table 1: Depiction of Outer Valley and Malaysia (2012) (Department of Statistics Malaysia, 2014). DEPICTION N. SEMBILAN MELAKA PERAK TOTAL MALAYSIA % 1. AREA (KM 2 ) 6,657 1,652 21,022 29, , POPULATION (MILLION) AVERAGE ANNUAL POPULATION GROWTH RATE (%) TOTAL FERTILITY RATE LIFE EXPECTANCY (YEARS) GDP (A) GDP AT CONSTANT 2005 PRICES ( RM MILLION) 27,717 21,953 39,627 89, , (B) GDP PER CAPITA AT CURRENT PRICE (RM) 32,258 33,543 20,485 27,349 30, (C) GDP GROWTH RATE (%) EMPLOYMENT (A) LABOUR FORCE ('000) , , (B) PARTICIPATION RATES (%) (C) UNEMPLOYMENT RATE (%) According to table 1, it is worth noting that the current Outer Valley has a combined land area of 29,331 km 2, which is only 8.88% of the country s total land mass. The subsequent data of the area is almost proportional to its land size. The Outer Valley is home to about 15% of the country s total population, produces 11.88% of the country s GDP, and supplies 13.42% of Malaysia s total labour force. Average annual population growth rate and total fertility rate are -0.43% lower and 0.16% higher than the national readings, whereas life expectancy is -0.89% lower. This might suggest that family planning and healthcare are almost comparable to Malaysia. GDP growth rate of Outer Valley is 0.87% higher than average and GDP per capita recorded a sluggish % lower than the country s mean; dragged down by Perak. Such data illustrates the potential of Outer Valley to improve on its productivity and standards of living. Job opportunities are slightly lower in the Outer Valley than other parts of the nation with participation rate of -4.52% and unemployment rate of -0.51% lower than the national average; supported by Melaka s low unemployment rate. 12

13 Basic Information Table 2: Continuation of Economic Data (2013) (Department of Statistics Malaysia, 2014). DEPICTION N. SEMBILAN MELAKA PERAK TOTAL MALAYSIA % 1. GDP (NOMIMAL) (RM BILLION) PROPERTY MARKET VALUE (RM BILLION) PROPERTY MARKET VALUE/GDP (NOMINAL) (%) DENSITY (PER KM 2 ) (2010) URBANISATION RATE (%) (2010) Besides providing a fair share of the nation s GDP, the Outer Valley s property market is akin to its own pace of development. In 2013, the area s combined nominal GDP and property market value accounted for 11.88% and 11.99% of that of the nation; with its property market growth rate and prices increasing at a similar tempo with its GDP growth rate. Property market beyond the Valley made up a reasonable share of the local economy; ratio of property market value per GDP was 15.31%, which was 0.13% higher than Malaysia. Population density and urbanization rate were person per km 2 and 72.18% respectively. They were % and 1.18% higher than Malaysia s average. Such figures depict that Outer Valley is a fairly concentrated and urbanized area in the context of a nation. The Outer Valley s property market was noticed to be more vibrant than the national average. Number of property transactions per 100 population = 2013: (Outer Valley): 1.93; (Malaysia): : (Outer Valley): 2.06; (Malaysia): 1.50 In addition, it was noticed that the transacted volume of property market in Outer Valley was cooling at a slower rate than the country s mean. The Outer Valley was one of the more resilient area in Malaysia; YOY change for number of transaction was recorded at -6.44%, which was better than the country s mean of %. Whereas value of transactions increased by 8.69% last year, compared to a 6.67% increment for the nation (JPPH, 2014). 13

14 Basic Information Table 3: Grouping of Household and Living Quarters by State (2010) (Department of Statistics Malaysia, 2014). DISTRICT HOUSEHOLD (H) % LIVING QUARTERS (LQ) % PERSON / H PERSON / LQ LQ / H NEGERI SEMBILAN 198, , MELAKA 191, , PERAK 480, , TOTAL 870, ,061, Ratio of existing residential stock per 100 population = (Outer Valley): 18.68; (Malaysia): Ratio of total population to number of person per household = (Outer Valley): 1,063,882 unit of houses (breakeven point); assuming household size is held constant. - Existing residential stock = (Outer Valley): 808,655 unit of houses (an additional of 255,227 units is required to reach breakeven point); assuming household size is held constant. As expected, Perak recorded the highest count for both the number of household (480,564: 55.20%) and living quarters (561,317: 52.90%). Coming in second was the district of Negeri Sembilan with 198,598 households (22.81%) and 264,874 living quarters (24.96%). Melaka secured the last place; with households and living quarters slightly over 20 percent of Outer Valley. Surprisingly, Negeri Sembilan has the highest ratio of person per household at 4.21, followed by Melaka (4.13), and Perak (3.99). Whereas the sequence of person per living quarters was inversed; starting with Perak (3.42), followed by Melaka (3.36) and Negeri Sembilan (3.15). The overall readings for Outer Valley were 4.07 person per household and 3.34 person per living quarters. The combined LQ/H ratio which came in at 1.22 for Outer Valley has confirmed that there are no current shortages of houses in this area. However, the stock availability is not too high (especially in Perak). It is anticipated that there could be a high possibility of smaller household size in the future. Such a reduction in the number of person per household would directly increase the demand for new living quarters and strain the existing housing stock in the market. An exception was noticed in the district of Negeri Sembilan which recorded a high LQ/H ratio when compared to the rest of the Outer Valley. The reading of 1.33 suggests that this area might be showing signs of excess residential properties. 14

15 Residents Data Figure 5: Breakdown of Negeri Sembilan s population by district (2010) (Department of Statistics Malaysia, 2014). JEMPOL 7% TAMPIN 7% JELEBU 3% KUALA PILAH 5% PORT DICKSON 12% REMBAU 4% SEREMBAN 62% It may seem logically that most inhabitants will usually reside around the central hub of commercial activities. In the context of Outer Valley, this area of central activities include state capitals and ports. In the case for Negeri Sembilan, districts such as Seremban and Port Dickson have higher number of residents than Rembau and Jelebu. Whereas in Melaka, the district of Melaka Tengah is the core of the state. Figure 6: Breakdown of Melaka s population by district (2010) (Department of Statistics Malaysia, 2014). ALOR GAJAH 22% MELAKA TENGAH 61% JASIN 17% 15

16 Residents Data Figure 7: Breakdown of Perak s population by district (2010) (Department of Statistics Malaysia, 2014). 7% 3% 3% 5% BATANG PADANG 11% 7% MANJUNG KINTA KERIAN 14% KUALA KANGSAR LARUT DAN MATANG HILIR PERAK 6% ULU PERAK 38% PERAK TENGAH 6% KAMPAR In the case for Perak, notable concentrations of population were noticed in former tin mining colonies such as Ipoh in the Kinta district and Taiping in the Larut dan Matang district. While the area around Pulau Pangkor and Lumut in the Manjung district; are highlypopulated due to tourism activities. 16

17 WEIGHTAGE (%) Residents Data Figure 8: Demographics of Malaysia by Age (2000 & 2010) (Department of Statistics Malaysia, 2014) < AGE 15 AGE > AGE 64 AGE GROUP Age Malaysia s population is aging slowly (but still in its early stages); with lower portion of children age group (< age 15) in 2010 compared to Working age adults (age 15-64) and retirement segments (> age 64) have increased by 4.5% and 1.2% respectively. Median age has increased from 23.6 (2000) to 26.2 (2010); which is still a relatively young population. The country s dependency ratio has dropped from 0.59 (2000) to 0.49 (2010), reinforcing the fact that: 1. Population growth is slowing 2. Children age group is diminishing (entering the age of workforce) 3. Working age group is increasing 4. More working adults are supporting the non-working classes (children and elders). 17

18 POPULATION Residents Data Figure 9: Demographics of Outer Valley by Age (2010) (Department of Statistics Malaysia, 2014). 1,400,000 1,200,000 1,000, , , , , AGE GROUP MELAKA NEGERI SEMBILAN PERAK Figure 10: Dependency ratio of Outer Valley (2010) (Department of Statistics Malaysia, 2014). DEPENDENCY RATIO PERAK MELAKA NEGERI SEMBILAN Outer Valley accounts for 14.67% of the total population in Malaysia and has a dependency ratio of 0.90; which is quite high. This indicates a significant proportion of non-working age groups (children and elders) as compared to the working age groups. It was worth noting that Negeri Sembilan has the lowest dependency ratio in the Outer Valley (0.84). This state s capital is closest to the vicinity of Inner Valley and its emerging district of Sepang; which creates a spillover effect from the Inner Valley. The overall population of Outer Valley is very young as well; which is in tandem with the national average. The 3 largest age groups are 0-19 (36.77%), (17.24%), and (12.70%). They account for 66.71% of the total population in the Outer Valley. However, the huge gap between age group of 0-19 and suggests that a large portion of the young working adults are moving to the Inner Valley in search of better job opportunities. 18

19 POPULATION Residents Data Figure 11: Demographics of Malaysia by Ethnicity (2010) (Department of Statistics Malaysia, 2014). INDIANS 7% OTHERS 1% CHINESE 22% NON- CITIZEN 8% BUMI 62% Malaysia has a total population of million as at 2010; with 61.87% as Bumiputeras, 22.58% as Chinese, 6.70% as Indians, 0.64% classified as others, and 8.20% as non-citizens. Figure 12: Demographics of Outer Valley by Ethnicity (2010) (Department of Statistics Malaysia, 2014). 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , ,000 0 BUMI CHINESE INDIANS OTHERS NON-CITIZEN ETHNICITY MELAKA NEGERI SEMBILAN PERAK Ethnicity The Outer Valley has a higher portion of minorities in its overall population composition than Malaysia; 53.47% Bumiputeras, 30.18% Chinese, 12.21% Indians, 0.35% others, and 3.79% non-citizens. However, districts within the Outer Valley has significantly different ethnic composition. In the state of Perak, Bumiputeras account for 49.06% of the population, which is quite comparable to the population of the Chinese at 34.43%. Whereas in Melaka, Bumiputeras made up the bulk of the residents within the vicinity with 64.12% of the state s population. Population composition in Negeri Sembilan include 53.52% Bumiputeras, 25.07% Chinese, and 15.24% Indians. 19

20 % CHANGE YOY Property market in Malaysia Figure 13: Malaysia s overall property market ( ) (NAPIC, 2014) VOLUME (% CHANGE) VALUE (% CHANGE) AVERAGE PRICE PER TRANSACTION (% CHANGE) The property market in Malaysia is highly cyclical. There is a high correlation between volume and value (correlation of efficiency value of 0.75; from ) proved to an excepting year, which recorded the worst decline in amount of transaction for the last 10 years; declining by % YOY. However, the total value of transaction recorded a decent gain of 6.67% YOY. This led to the biggest yearly gain in the last 10 years for the average price per transaction (rising by a staggering 19.65%). It is yet to be determined that such a rise in average price per transaction is sustainable if volume does not exist to support it. 20

21 % CHANGE YOY % CHANGE YOY Property market in Malaysia Figure 14: Volume of Malaysia property market by sectors ( ) (NAPIC, 2014) RESIDENTIAL COMMERCIAL INDUSTRIAL AGRICULTURAL DL & OTHERS Volume 2013 saw a broad decrease over all sectors of the property market; led by the commercial sector (-16.51%), industrial (-15.69%), agricultural (-12.37%), residential (-9.70%), and development land and others (-6.99%). Value Unlike volume, the commercial sector witnessed the highest incremental in value (27.96%), followed by the residential sector (6.34%), industrial (2.69%), agricultural (-6.97%), and lastly development land and others (-8.89%). For both of these instances, the residential property sector showed resilience compared to the rest of the market. Figure 15: Value of Malaysia property market by sectors ( ) (NAPIC, 2014) RESIDENTIAL COMMERCIAL INDUSTRIAL AGRICULTURAL DL & OTHERS 21

22 Property market in Malaysia Figure 16: Malaysia s average price per transaction by sectors (RM in million ( ) (NAPIC, 2014). Average price per transaction In 2013, the commercial sector recorded the biggest change in the last 10 years (53.27%), followed by the industrial sector (21.79%), residential (17.76%), and agricultural (6.16%). Whereas average price per transaction for development land and others marked the steepest unusual decline in the last 10 years (-43.28%). Abiding by the norm, the industrial sector has the highest average price per transaction of RM 1.46 million, followed by commercial (RM 1.04 million), development land and others (RM 0.89 million), residential (RM 0.29 million), and agricultural (RM 0.14 million). 22

23 Property market in Malaysia Figure 17: Weightage of Malaysia property market by sectors (Volume) ( ) (NAPIC, 2014). Weightage of sectors The residential market made up the bulk of the total property market in Malaysia; with a 10 year mean value of 63.87%, followed by the agricultural sector (19.59%), commercial (9.36%), development land and others (4.67%), and industrial (2.47%). A decrease in weightage for all sectors except residential (0.82%), and development land and others (0.25) was observed in

24 UNITS Property market in Malaysia Figure 18: Number of transactions by state in Malaysia ( ) (JPPH, 2014) , % , ,193 22,026 15,907 15, % (YOY) 2013 COUNTRY MEAN (% YOY) Number of transactions In 2013, Selangor recorded the highest amount of transactions (81,955: 22%) in Malaysia, followed by Johor (52,779: 14%), and Perak (46,234: 12%). These 3 states made up almost half of the total transactions in Malaysia. Negeri Sembilan was ranked number 7 out of the 16 states being examined (22,026: 6%), and Melaka was at the 11 th spot with 15,369 number of transactions at 4%. The combined number of transactions in the Outer Valley made up approximately 22% of total transactions in Malaysia. In terms of YOY changes, all states recorded negative growth rates except for Johor (7.07%), and Perlis (5.93%). Melaka was ranked number 4 (-3.38%), while Negeri Sembilan came in at number 6 (-5.03%), and Perak at number 7 (-8.05%). The Outer Valley as a whole was more resilient than the Inner Valley. The former declined by -6.44%, compared to a decline of % of the latter. The country s mean YOY reading was %. 24

25 TURNOVER (%) Property market in Malaysia 7 Figure 19: Turnover Rate of Malaysia Residential Market by state (2012 & 2013) (JPPH, 2014) CHANGE (%) % (YOY) 2013 COUNTRY MEAN (% YOY) Turnover rate (Residential) For the year ended 2013, the state of Perak recorded the highest turnover rate in Malaysia; clocking in at 4.35%, coming in second was Sarawak (4.04%), then Melaka (3.92%). The bottom 3 states were Labuan (1.60%), Kelantan (2.28%), and Sabah (2.29%). The Outer Valley has a combined turnover rate of 3.64%. The country s mean turnover rate was 3.34%. In terms of YOY changes, Perlis was the highest (0.79%), followed by Johor (0.37%), and then Pahang (0.22%). The bottom 3 states were Putrajaya (-2.85%), Kuala Lumpur (-1.71%), and Pulau Pinang (-1.20%). Outer Valley as a whole recorded YOY change of -0.34%. The country s mean YOY reading was -0.50%. 25

26 UNSOLD (%) Property market in Malaysia Figure 20: Percentage of Unsold Residential Units (New Launches) by state in Malaysia (2013) (JPPH, 2014) CHANGE (%) TOTAL UNSOLD 2012 TOTAL UNSOLD 2013 % CHANGE (1 YR) COUNTRY MEAN (1 YR) Unsold units of New launches (Residential) In 2013, based on individual states; Kelantan recorded the highest percentage of unsold residential units (new launches) in Malaysia (66.70%), followed by Terengganu (63.46%), and Sarawak (51.43%). Outer Valley has a collective unsold fraction of 40.95%. The country s mean reading was 43.90%. In terms of YOY changes, Sarawak was the highest (11.21%), followed by Kelantan (10.95%), and then Terengganu (5.35%). The bottom 3 states were Perlis (-38.62%), Pahang (-8.67%), and Putrajaya (-7.74%). The Outer Valley has a mutual YOY change of -0.46%. The country s mean YOY reading was -3.22%. 26

27 NUMBER OF TRANSACTIONS Residential market in Outer Valley Figure 21: Weightage of Outer Valley property market by sectors (Volume) (2013) (JPPH, 2014). 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, CHANGES (%) SUB-SECTORS MELAKA NEGERI SEMBILAN PERAK YOY (%) Weightage by sectors Similar to national norm, the residential market made up the bulk of the total property market transactions in Outer Valley; with a share of 62.30%, followed by agricultural (22.74%), commercial sector (9.40%), development land and others (3.09%), and industrial (2.47%). There was a shift in weightage from the commercial and agricultural sectors to residential sector as a share of the total transactions. It is worth noting that the weightage of development land and residential sectors were lower than national average. Whereas the commercial, industrial, and agricultural sectors were higher. YOY, all sectors recorded broad decrease; led by the development land (-11.17%), agricultural (-10.64%), commercial (-9.02%), industrial (-6.60%), and lastly residential (-4.11%). The Outer Valley s average was -6.44%. 27

28 NUMBER OF TRANSACTIONS Residential market in Outer Valley Figure 22: Number of residential transactions by state in Outer Valley (2013) (JPPH, 2014). 300, , , , CHANGES (%) 100, , NEGERI SEMBILAN MELAKA PERAK TOTAL MALAYSIA AREA 2013 YOY (%) Weightage by area (Residential) Due to its sheer size and population, Perak captured the major share of the total residential property transactions in Outer Valley. The state recorded 54% of the Outer Valley s transaction, whereas Negeri Sembilan and Melaka account for 28% and 18% of the total transactions respectively. The Outer Valley as a whole possessed 21% of Malaysia s total residential property market transactions. In terms of YOY, Perak was affected the most by the recent declining trend. The state s transactions declined by -6.68%, followed by Negeri Sembilan with -2.09%. Melaka was the only exception improving by 0.99%. This resulted in Outer Valley s transactions to deteriorate by -4.11%; which was better than the national average of -9.70%. 28

29 AVERAGE PRICE PER TRANSACTION (RM IN MILLION) Residential market in Outer Valley Figure 23: Average price per transaction for Residential Properties in Outer Valley (RM) (2013) (JPPH, 2014). 350, , , , , , , , , , CHANGES (%) 100, , NEGERI SEMBILAN MELAKA PERAK AVERAGE MALAYSIA AREA 2013 YOY (%) Average price per transaction (Residential) Contrary to its small size and population, Melaka has the highest average price per transaction in the Outer Valley; RM 191,947 (YOY: 29.59%). Coming in second was its neighboring state with RM 154,985 (YOY: -8.72%). The largest contributor in terms of number of transactions was last at RM 153,234 (YOY: 19.09%). The combined average price per transaction of Outer Valley was RM 160,679 (YOY: 12.13%). The country s average was RM 292,661 (YOY: 17.76%). Hence the absolute and relative values of both the Outer Valley were much lower than the national average. Given the favorable conditions, there is high potential for further development in thisregion. 29

30 NUMBER OF UNITS (SUPPLY0 Residential market in Outer Valley Figure 24: Supply compilation of Residential Properties in Outer Valley (2013) (JPPH, 2014). 7,000, ,000, ,000, ,000,000 3,000, SUPPLY RATIO (%) 2,000, ,000, NEGERI SEMBILAN MELAKA PERAK TOTAL MALAYSIA AREA PLANNED SUPPLY (PS) INCOMING SUPPLY (IS) EXISTING STOCK (ES) IS/ES (%) PS/ES (%) Supply compilation As usual, Perak hoards the largest number of existing residential stock in the Outer Valley (50.35%), followed by Negeri Sembilan (29.55%), and Melaka (20.10%). Planned supply was witnessed to be in a declining state when compared to incoming supply, except for Negeri Sembilan. In terms of IS/ES ratio, only the Melaka district was comparable to the national average of around 14%. Negeri Sembilan was higher at 25.06% and Perak lower at 9.87%. Whereas PS/ES ratio for all districts were lower than the national average except for Negeri Sembilan (30.62%). Favorable economic and employment conditions, coupled with resilient demand, high turnover rate, and low unsold units might put Melaka market in the spotlight within the Outer Valley. Valuations were still relatively cheap, price appreciation was incredible, and supply was steady in this historical state. 30

31 YOY CHANGES (%) Residential market in Outer Valley Figure 25: Supply compilation of Residential Properties in Outer Valley (2013) (JPPH, 2014) NEGERI SEMBILAN MELAKA PERAK TOTAL MALAYSIA IS/ES STATE PS/ES NEWLY LAUNCHED/TOTAL TRANSACTIONS COMPLETED/TOTAL TRANSACTIONS TOTAL LAUNCHES/TOTAL TRANSACTIONS YOY CHANGES (%) Supply compilation (Cont d) Referring to Figure 25, near term supply growth rate was moderate with Negeri Sembilan leading the charge at 25.06%. Whereas supply in the mid term was in an improving state led by Negeri Sembilan as well at 30.62%. When segregating new supply into physical availability, it was observed that majority of the launches were under construction (38.70%). YOY change for those not constructed was positive, whereas those newly launched, completed, and under construction were in a declining trend. This was especially pronounced in the state of Negeri Sembilan. The YOY change for newly launched units per total transactions was negative, except for Melaka (0.83%). YOY for completed houses per total transactions was negative except for Perak (1.13%). While YOY for total launches per total transactions were negative for all states except for Perak (4.89%). 31

32 NUMBER OF TRANSACTIONS NUMBER OF TRANSACTIONS Residential market in Outer Valley Figure 26: Number of residential transactions by price range in Outer Valley (Q1 2014) (NAPIC, 2014). 3, ,500 2, ,500 1, WEIGHTAGE (%) 0 (A) 0-50,000 (B) 50, ,000 (C) 100, ,000 (D) 150, ,000 (E) 200, ,000 (F) 250, ,000 (G) 300, ,000 (H) 400, ,000 (I) 500,001-1,000,000 (J) 1,000,001 - ABOVE PRICE RANGE (RM) Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) Figure 27: Number of residential transactions by house type in Outer Valley (Q1 2014) (NAPIC, 2014). 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, WEIGHTAGE (%) HOUSE TYPE Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) 32

33 AVERAGE PRICE PER TRANSACTION (RM IN MILLION) Residential market in Outer Valley Figure 28: Residential average price per transaction by house type in Outer Valley (RM in million) (Q1 2014) (NAPIC, 2014) CHANGES (%) -8 HOUSE TYPE Q Q Q YOY (%) QOQ (%) Distribution of the value of transactions beyond the Valley was quite balanced. All price range recorded number of transactions within the scope of 10-15% beside for a few exceptions. They were mainly the price range of RM 300, ,000 which received 8% of the total transactions in Q1 2014, the higher price range of RM 500,001 1,000,000 (4%), and the luxury price range of RM 1,000,001 and above; representing less than 1% of the total transactions. Thus, the price range was slightly skewed to the right, which put more emphasis on lower price range. However, there seemed to be a redistribution of weightage from the lower price range to higher price range. The most preferred house type in the Outer Valley was terrace houses which made up close to 50% of the total transactions in Q In addition, there was a high preference for vacant plot deals which represents 25% of the total transactions. All of the other house types were less than 10% each. Number of transactions for all strata properties was less than 5%. Generally, almost all house types recorded positive YOY changes for average price per transaction except for housing classified under others and townhouses. When compared with QOQ changes, the rate of increment seemed to be stabilizing in the near term. 33

34 GROSS RENTAL YIELD (%) Residential market in Outer Valley Figure 29: Gross rental yield of Residential Properties in Melaka (2013) (JPPH, 2014) LANDED STRATA UPPER CASE (%) LOWER CASE (%) AVERAGE (%) Figure 30: Average gross rental yield of Residential Properties in Perak (2013) (JPPH, 2014). STRATA (%) 7.00 DOUBLE-STOREY TERRACED (%) 2.85 SINGLE-STOREY TERRACED (%) AVERAGE GROSS RENTAL YIELD (%) 34

35 Residential market in Outer Valley Gross Rental Yield It was observed that the average gross rental yield for both Melaka and Perak were higher for the strata segment compared to the landed sector. This may be attributed to the faster appreciation of house prices in the landed sector compared to strata in recent times; in which the incremental in rental yields has not caught up with the appreciation rate of house prices. Average gross rental yield was higher in Melaka than Perak for both the landed and strata sectors. This was expected owning to better economic, labour, demographics and housing market in the former. Whereas in Melaka, the rental bandwidth was much broader in strata compared to the landed segment. Due to its relatively small market for strata properties in Melaka; more emphasis was placed in the factors of locality, quality and purpose of these units when determining the incoming rental yields. 35

36 NUMBER OF TRANSACTIONS NUMBER OF TRANSACTIONS Residential market in N. Sembilan Figure 31: Number of residential transactions by price range in Negeri Sembilan (Q1 2014) (NAPIC, 2014). 1,800 1,600 1,400 1,200 1, WEIGHTAGE (%) 0 (A) 0-50,000 (B) 50, ,000 (C) 100, ,000 (D) 150, ,000 (E) 200, ,000 (F) 250, ,000 PRICE RANGE (RM) (G) 300, ,000 (H) 400, ,000 (I) 500,001-1,000,000 (J) 1,000,001 - ABOVE Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) Figure 32: Number of residential transactions by house type in Negeri Sembilan (Q1 2014) (NAPIC, 2014). 1,800 1,600 1,400 1,200 1, WEIGHTAGE (%) HOUSE TYPE Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) 36

37 AVERAGE PRICE PER TRANSACTION (RM IN MILLION) Residential market in N. Sembilan Figure 33: Residential average price per transaction by house type in Negeri Sembilan (RM in million) (Q1 2014) (NAPIC, 2014) CHANGES (%) HOUSE TYPE Q Q Q YOY (%) QOQ (%) In this finale, the number of transactions in Outer Valley will be further broken down into individual states; mainly Negeri Sembilan, Melaka, and Perak. Negeri Sembilan The highest number of transactions was recorded in the price range of RM 400, ,000; which accounts for 30% of the total transactions in Negeri Sembilan. The second was RM 200, ,000 at 13%. Low-end price range of RM 0 50,000 was at third with 11%. As for other categories, every single one of these price range has less than 10% each from the total transactions in Negeri Sembilan. In previous quarters, it was noticed that the price range was skewed to the right, which put more emphasis on lower price range. However, in Q1 2014; this trend was reversed, which put slightly more weightage on higher price range. The most preferred house type in Negeri Sembilan was terrace houses which made up more than half of the total transactions in Q This was followed by vacant plots which represents 27% of the total transactions. All of the other house types were less than 5% each. Number of transactions for all strata properties was only capped at 4%. Generally, almost all house types recorded positive YOY changes for average price per transactions. Some of the biggest advancers were cluster houses and detached houses. QOQ, almost all house types recorded positive growth except for vacant plots, condominium and apartments, and low-cost flats. Two of the notable gainers were cluster and terrace houses. However, when compared with QOQ changes, the rate of increment seems to be slowing down in the near term for all house types except for flats. 37

38 NUMBER OF TRANSACTIONS NUMBER OF TRANSACTIONS Residential market in Melaka Figure 34: Number of residential transactions by price range in Melaka (Q1 2014) (NAPIC, 2014) WEIGHTAGE (%) 0 (A) 0-50,000 (B) 50, ,000 (C) 100, ,000 (D) 150, ,000 (E) 200, ,000 (F) 250, ,000 (G) 300, ,000 (H) 400, ,000 (I) 500,001-1,000,000 (J) 1,000,001 - ABOVE PRICE RANGE (RM) Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) Figure 35: Number of residential transactions by house type in Melaka (Q1 2014) (NAPIC, 2014) WEIGHTAGE (%) HOUSE TYPE Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) 38

39 AVERAGE PRICE PER TRANSACTION (RM IN MILLION) Residential market in Melaka Figure 36: Residential average price per transaction by house type in Melaka (RM in million) (Q1 2014) (NAPIC, 2014) CHANGES (%) HOUSE TYPE Q Q Q YOY (%) QOQ (%) Melaka Most transactions in this state was limited within the price range of RM 200, ,000 (66%). Other categories were less significant. As such, the price range was somewhat skewed to the left, which put more emphasis on higher price range. Similar to Negeri Sembilan, terrace houses were more preferred in Melaka due to the abundance of land. The most transacted house type in Melaka was single storey terrace houses (31%), followed by 2-3 storey terrace houses (20%). There was a shift in weightage from luxurious segments such as semi-detached and detached houses to more affordable houses. Basically, all house types recorded positive YOY changes for average price per transactions. Some of the biggest advancers were cluster houses, detached houses, and condominium and apartments. QOQ, all house types recorded positive growth except for town houses. Two of the notable gainers were condominium and apartments, and flats. When compared with QOQ changes, the rate of change seems to be improving in the near term for all house types. 39

40 NUMBER OF TRANSACTIONS NUMBER OF TRANSACTIONS Residential market in Perak Figure 37: Number of residential transactions by price range in Perak (Q1 2014) (NAPIC, 2014). 1,800 1,600 1,400 1,200 1, WEIGHTAGE (%) 0 (A) 0-50,000 (B) 50, ,000 (C) 100, ,000 (D) 150, ,000 (E) 200, ,000 (F) 250, ,000 PRICE RANGE (RM) (G) 300, ,000 (H) 400, ,000 (I) 500,001-1,000,000 (J) 1,000,001 - ABOVE Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) Figure 38: Number of residential transactions by house type in Perak (Q1 2014) (NAPIC, 2014). 3,500 3,000 2,500 2,000 1,500 1, WEIGHTAGE (%) HOUSE TYPE Q Q Q W (Q1 2013) W (Q4 2013) W (Q1 2014) 40

41 AVERAGE PRICE PER TRANSACTION (RM IN MILLION) Residential market in Perak Figure 39: Residential average price per transaction by house type in Perak (RM in million) (Q1 2014) (NAPIC, 2014) CHANGES (%) HOUSE TYPE Q Q Q YOY (%) QOQ (%) Perak Unlike Negeri Sembilan and Melaka, Perak did not have a spike in the price range of RM 400, ,000. Distribution of the value of transactions within Perak was focused in the lower range of RM 0 200,000 (74%). The shape of the entire distribution was highly skewed to the right. There was a weightage redistribution from the higher range of RM 200,000 and above, to the lower end of RM 200,000 and below in Q The most preferred house type in Perak was terrace houses which made up close to 45% of the total transactions in Q This was followed by vacant plots which represents 26% of the total transactions. Detached and low-cost houses each account for 10% respectively. All of the other house types were less than 10% each. Number of transactions for all strata properties was 2%. Generally, YOY changes for average price per transactions were mixed across all house types. Notable advancers include single storey semi-detached and detached houses. Decliners were led by town houses and flats. However, when compared with QOQ changes, the rate of increment seems to be stablizing in the near term. 41

42 References Department of Statistics Malaysia. (2014) Statistical Releases, [Online], Available: com_content&view=article&id=472&itemid=111&lang=en&negeri=malaysia [15 Jul 2014]. JPPH. (2014) Property Market Report 2013, Putrajaya: Valuation and Property Services Department. NAPIC. (2014) Key Statistics, [Online], Available: [15 Jul 2014]. 42

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