PETALING JAYA (Oct 27): The ease of restrictions in Malaysia has allowed more sectors, including the office, retail and residential sectors, to operate and start moving to normality. According to JLL Research's "Greater Kuala Lumpur — Property Market Monitor 3Q2021" report released on Oct 19, the footfall at offices in the Greater KL is likely to increase as fully vaccinated employees are able to return to workplaces.

The report added that, however, the Business Conditions Index decreased to 87.5 in the second quarter of 2021 (2Q21), reaching below the threshold since 4Q20 due to a spike in Covid-19 cases over the past couple of months, which induced stringent containment measures to be implemented.

"The market activity has been largely driven by the technology sectors that experienced growth amid challenging times, and struggling sectors such as the aviation and tourism industries continued to downsize," it said.

"Meanwhile, there was an increase in total supply as four new projects were completed this quarter, and additional completions are expected in the coming quarters as containment measures eased towards the end of 3Q21. Transactions recorded during the quarter were largely related-party transactions, whereas the investment market remained quiet due to market uncertainties."

In terms of the residential sector, developers avoided physical launches and went with soft launches instead because of the restrictions on conducting events and the capacity limits for visitors to the project sales galleries during National Recovery Plan Phase 1.

"Hence, developers focused on completing under-construction projects during loosened containment measures, whereby two projects that were completed earlier were waiting for the post-completion site inspections and the handover started this quarter, adding 480 units to the total stock," the report said.

JLL Research noted that sales activities remained mostly muted as a result of partial movement restrictions. The Malaysia My Second Home (MM2H) programme resumed on Oct 1 with stricter criteria, and as such, future sales will depend greatly on local buyers.

As the federal government initiatives to stimulate residential sales are attracting willing buyers predominantly to the primary market, the secondary market is put under pressure, and ultimately adjusting the asking prices.

"Rental demand and subsequently asking rentals continued to decline due to economic and employment uncertainties and there were no incoming expatriate population as international borders were closed," it said.

Meanwhile, the report also revealed that the ease of restrictions at shopping malls allows fully vaccinated individuals in the Greater KL to browse and shop at bricks-and-mortar stores.

No project completion/opening and new addition of projects were observed during the quarter. JLL expects delays in new openings as a result of the construction delays during multiple lockdowns.

"Vacancy rates also increased across all submarkets. Many retailers that have closed down were already struggling prior to the outbreak of the pandemic, whereby the lockdown has accelerated their closure progress. Additionally, several new outlet openings were also observed during the quarter," it said.

"With the reopening of the economy and more retail businesses being allowed to operate, a small group of investors will start to revisit retail investment opportunities to take advantage of the anticipated recovery. We believe opportunistic investors may perceive this period as an attractive opportunity to deploy their capital despite the challenges."