The bullish sentiments of developers of commercial real estate in the Klang Valley region are sparking concerns over possible oversupply.

Malaysia's property market is enjoying positive expectations due to changes in demographic structure and a constant cycle of supply and demand. The property scene is expected to maintain its upward momentum, with statistics released last year by the National Property Information Centre showing that 2011 was a peak year for residential property transactions in five years.

However, the commercial real estate outlook is not as rosy. Although commercial developers are bullish about their prospects, market watchers are sounding the alarm.

Dr Ernest Cheong of Ernest Cheong PTL Sdn Bhd warned that the Klang Valley is becoming over-saturated with commercial properties. He said that there is an oversupply of commercial property, resulting in take-up rate of less than 50% for office units which will be ready for sale this year.

Cheong further added that the Malaysian property consultancy community is practically unanimous in their views on the supply and demand imbalance in the commercial real estate currently.

"It appears that the Malaysian corporate, including the public and private sectors, are bullish on the development of commercial properties in the Klang Valley into the 2020. I am fearful for the future of the commercial property market in Malaysia," he said.

Cheong stated that the only way to address the potential oversupply in the sector is to either cease commercial real estate development, or create and heighten demand so as to absorb the excess supply.

Tags: Commercial real estate, Income properties, Business space, Office for lease

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