KUALA LUMPUR, Aug 11 ― Economic disruption due to the Covid-19 pandemic caused property capital and rental to fall 0.5 per cent and 1 per cent respectively as of June, according to the Savills Prime Index: World Cities report.
The report released this month gauged the performance of the real estate market in 28 cities in the Middle East, Asia Pacific, Europe and North America, including Kuala Lumpur.
“Global uncertainty had been weighing on prime residential markets in 2019, with modest falls of 0.3 per cent recorded in the six months to December 2019. Combined, the annual average price movement turned negative for the first time since 2009, down 0.8 per cent for the year to June 2020.
“The markets which have held up best in the first half of 2020 are generally characterised by higher levels of domestic demand and tight supply,’’ said the report.
The report also stated that only nine cities ― Seoul, Moscow, Berlin, Amsterdam, Tokyo, Shenzhen, Hangzhou and Paris ― saw capital appreciation over the first six months of 2020.
“Seoul and Moscow recorded the strongest price rises in the first half of the year, with an increase of 5.5 per cent. South Korea largely avoided a lockdown and hence any significant associated disruption to the market.
“Seoul’s housing market has been on an upward trend for the past few years, driven by historically low-interest rates and government policies that have also limited new supply, further driving price increases.
“In Moscow, the prime residential market is driven predominately by domestic demand and fluctuations in prices are influenced by domestic factors,’’ said the report.
Kuala Lumpur remains resilient
According to the report, while Kuala Lumpur was affected by weak market sentiment in the first half of 2020, it remained resilient as the government has announced a stimulus package with incentives targeted at the residential property market.
“Kuala Lumpur and Cape Town are the best value cities in the index and the only cities where prime values are under US$300 (RM1,260) per square foot,” said the report.
Under the short-term Economic Recovery Plan (Penjana), the government reintroduced the Home Ownership Campaign (HOC) and revised Real Property Gains Tax (RPGT) and margins of financing for third housing loans onwards.
As for rental values, a total of seven cities ― Amsterdam, Paris, Singapore, San Francisco, Miami, Beijing and Seoul ― saw an increase in the first six months of 2020, with the South Korean city standing out the most in the index, up 8.5 per cent.
The Savills Index said Kuala Lumpur offered the best value for renters, with prime weekly rents at US$0.18 per square foot, or 91 per the equivalent of rent in New York, US.
New York topped the Index for average weekly rental values, 11 per cent above second-ranked Hong Kong and 43 per cent above Tokyo in third.
