Oversupply of office space could be worse than Asian financial crisis - BNM

In the quarterly bulletin published by BNM, the paper entitled "Imbalances in the Property Market" also spells out an oversupply in the office space as well.

The report stated that "oversupply of office space and shopping complexes in the major states will be exacerbated by incoming supply, potentially becoming more severe than the Asian Financial Crisis".

The BNM bulletin highlights incoming supply could exacerbate the glut in Klang Valley. It states that since the first quarter of 2015, office vacancy rate in the Klang Valley area has increased steadily from 20.9% to 23.6% in first quarter of 2017. This is higher that the national average rate of 18.1% and more than three times the regional average of 6.6%

Speaking at the third quarter GDP announcement, BNM Governor Tan Sri Muhammad Ibrahim said that "supply-demand imbalances in the property market have increased since 2015". This is confirming various statements made by property market punters and speculators that the property 'bubble' exists, and may burst in 2018.

BNM also says that the total retail space in major states in the country has increased sharply over the years. In 2016, Penang had the highest retail space per capita in the nation at 10.5 square foot per person, followed by Klang Valley (8.2 sq ft/person). Benchmarking against international cities, Hong Kong has 3.6 sq ft/person followed by Singapore at 1.5 sq ft/person.

This shows that the incoming supply of 140 new shopping complexes by 2021 across the Klang Valley region will aggravate the oversupply of shopping spaces across Klang Valley, Penang, and Johor in the coming years

Muhammad also stated that "unsold residential properties are at a decade-high with majority of unsold units being in the above RM250,000 price category.