Urban Renewal Act needs hyper-localised approach - expert

The Urban Renewal Act must be implemented thoughtfully and tailored within local contexts, said PropertyGuru Malaysia country manager Kenneth Soh.

“It has to be a very hyper-localised approach depending on the area in question. The government is rightly consulting with all parties, trying to understand the nuances; that’s commendable.

“We’ll see how that develops. The effort of understanding all the stakeholders involved is necessary,” he told reporters after a media briefing in Kuala Lumpur today.

Soh cited the redevelopment of Petaling Street in the capital, saying it became a bustling tourism destination while still preserving its identity.

“We’ve seen some private initiatives in Malaysia that focus on preserving the heritage of certain areas. For example, small-scale redevelopment projects in Petaling Street have successfully retained the historical essence of the location while repurposing old buildings for new uses and integrating sustainable features.

“These efforts have transformed the area into a lively spot, frequented by young people and tourists alike,” he said.

Soh said data from the Valuation and Property Services Department showed that the overall property market has remained relatively stable, with price-demand mismatch concerns in the affordable housing segment.

The data also showed that residential properties priced below RM300,000 accounted for the highest overhang in terms of pricing, with 7,135 unsold units, or 30.3 percent of total overhang, he noted.

“The data showed that (the overhang) has dropped a bit, but if you look at the broader trend since the Covid-19 reopening, it’s been on a fairly stable trajectory.

“From our point of view, this data is not yet a red flag; it could be due to seasonal issues,” he said.

Explaining property overhang

Nonetheless, Soh pointed out that on closer price analysis, the mismatch becomes more apparent at different price points.

Compared with affordable properties priced at RM300,000 and below, higher-priced properties are more evenly matched in terms of demand and supply, and the higher-priced units do not remain in the market for long, he said.

“The demand is strong for the higher-priced units. The mismatch is more on the lower-priced affordable units, which explains the overhang,” he said.

Soh said the challenge in completed but unsold units, known as overhang, is not purely due to pricing. It could be due to location, building quality, accessibility, and quality of the particular project, all of which affect a buyer’s decision-making process.

He said a buyer may have the means to buy the property, “but it (the property) is not desirable”.

“So the cost associated with buying that property is a lot higher.

“If you look at the transaction numbers, the highest number of transactions is those below RM500,000. That means there is demand there,” he said.

Soh also noted the emergence of regional hotspots such as Johor, where sentiment among developers and agents is markedly optimistic.

“There’s a lot more optimism due to trends, policies, and the spillover effect from Singapore,” he said, adding that Kuala Lumpur and Penang’s property markets are more stable.

- Bernama

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