The property industry spends billions marketing new launches. Glossy brochures, celebrity endorsements, "sold out in 3 hours" press releases. What the industry does not advertise is this: Malaysia has over 30,000 completed residential units sitting empty and unsold. The National Property Information Centre (NAPIC) tracks these units quarterly under the term "overhang" — properties that have received their Certificate of Completion and Compliance (CCC) but remain unsold nine months after launch. The total value exceeds RM20 billion.
Conventional wisdom says overhang is a warning sign. Avoid these projects. If nobody bought them new, something must be wrong. But conventional wisdom misses a critical nuance: overhang creates a buyer's market within a seller's market. While prime resale condos in Mont Kiara trade at full valuation with multiple offers, developers sitting on 200 unsold units in the same city are quietly offering 15-30% discounts, free furnishing packages, and stamp duty absorption. The question is not whether overhang exists. It is whether you can identify the good buys within the overhang pile — and avoid the bad ones.
What Is Property Overhang?
NAPIC defines overhang as:
Completed residential units that remain unsold 9 months after being launched for sale.
This is distinct from:
- Unsold under construction — Units still being built that have not been sold. These may sell upon completion.
- Planned supply — Units approved for development but not yet under construction.
- Secondary market unsold — Existing owners trying to sell. NAPIC does not track these.
Overhang units are finished products. They have CCC. They can be occupied immediately. But nobody has bought them. Some have been sitting empty for years.
Why NAPIC's definition matters for investors: Overhang units are the most motivated seller category in Malaysian property. The developer has already spent the capital, completed construction, and is paying holding costs (maintenance fees, financing costs, sales team expenses) on every unsold unit every month. Time is working against them. This creates negotiation leverage that does not exist in most property transactions.
The Numbers: How Big Is the Overhang?
Malaysia's residential property overhang has been a persistent issue since the mid-2010s building boom:
| Year | Overhang Units | Estimated Value (RM Billion) |
|---|---|---|
| 2016 | ~14,000 | ~RM8.5B |
| 2017 | ~24,000 | ~RM15.6B |
| 2018 | ~32,000 | ~RM19.9B |
| 2019 | ~30,000 | ~RM18.9B |
| 2020 | ~29,000 | ~RM18.9B |
| 2021 | ~36,000 | ~RM22.8B |
| 2022 | ~27,000 | ~RM18.4B |
| 2023 | ~25,000 | ~RM17.8B |
| 2024 | ~27,000 | ~RM19.5B |
| 2025 (latest available) | ~29,000+ | ~RM20B+ |
The overhang peaked in absolute units around 2021 and has since modestly declined — but remains structurally elevated. The market is not absorbing these units quickly.
Where Is the Overhang Concentrated?
Not all states have equal overhang exposure. The concentration tells you where developers overbuilt and where buyer demand fell short:
| State | Overhang Units (Approx.) | % of National Total | Primary Price Segment |
|---|---|---|---|
| Johor | ~7,000-8,000 | ~26% | RM300K-RM700K condos/apartments |
| KL | ~4,000-5,000 | ~16% | RM500K-RM1M+ condos/serviced apartments |
| Selangor | ~3,500-4,500 | ~14% | RM300K-RM600K condos/apartments |
| Penang | ~2,500-3,500 | ~10% | RM400K-RM800K condos |
| Perak | ~2,000-2,500 | ~8% | RM200K-RM400K |
| Sabah | ~1,500-2,000 | ~6% | Mixed |
| Kedah | ~1,000-1,500 | ~5% | RM200K-RM400K |
| Others | ~4,000-5,000 | ~15% | Mixed |
Johor dominates the overhang because of the massive building spree in Iskandar Malaysia during 2013-2018. Developers built thousands of units targeting Singapore buyers who never materialized in expected numbers. Forest City alone accounts for a significant portion of Johor's overhang. The JB city center and Medini corridor also have substantial unsold stock.
KL's overhang is concentrated in serviced apartments — particularly in areas like Bukit Bintang, Cheras, and the KL city fringe where developers launched dozens of high-rise projects simultaneously. Many of these are priced above RM500,000, which exceeds the affordability threshold for most local buyers.
Want the full data? The PropCashflow Ebook includes cashflow-positive property listings with side-by-side conventional and Islamic financing analysis. Get Instant Access — SGD 999 →
Why Overhang Exists: The Root Causes
Understanding why units remain unsold helps you assess whether the overhang in a specific area is a temporary glut or a structural problem:
1. Price-Income Mismatch
The most fundamental cause. Developers built for the market they wanted, not the market that exists. Malaysia's median household income is approximately RM6,338/month (2022 data). Using the standard 30% debt-to-income ratio, the maximum affordable mortgage payment is ~RM1,900/month — which supports a property price of roughly RM350,000-400,000 at current interest rates.
Yet the bulk of overhang units are priced above RM500,000. The developers who built for the RM500K+ market overestimated demand at that price point.
2. Overbuilding During the 2015-2019 Boom
Low interest rates, easy developer financing, and optimistic demand projections led to a construction boom. Multiple projects in the same area launched simultaneously, creating supply that far exceeded absorption capacity. Johor's Iskandar Malaysia is the textbook example — but it happened in KL, Penang, and Selangor too.
3. Foreign Buyer Slowdown
Many high-rise projects in Johor, KL, and Penang were positioned for foreign buyers — particularly Singaporeans, Chinese, and Hong Kong buyers. Changes in China's capital controls, Malaysia's higher foreign buyer minimum prices, and general cooling measures reduced foreign demand below projections.
4. Service Apartment / Serviced Residence Classification
A significant portion of KL and Johor overhang is in "serviced apartments" or "service residences" built on commercial land. These units:
- Cannot access the Housing Development Act protection (HDA)
- Have higher maintenance fees (commercial rates)
- May have different utility tariffs
- Often cannot get certain government housing schemes
Buyers who understand these differences avoid them. Many first-time buyers discover these issues only after doing research — and decide against purchase.
5. Location-Specific Issues
Some overhang projects suffer from poor location fundamentals:
- No public transport connectivity
- Limited amenities (no nearby schools, hospitals, retail)
- Industrial or undesirable surroundings
- Distance from employment centers
These are not temporary problems. They are structural deficiencies that discounts cannot fully overcome.
Overhang by Price Range
| Price Range | Overhang Units (Approx. %) | Buyer Pool |
|---|---|---|
| Below RM200K | ~5% | Small — most affordable units do sell |
| RM200K-RM300K | ~10% | Moderate — some demand but location-dependent |
| RM300K-RM500K | ~30% | Large share of overhang — price-income mismatch zone |
| RM500K-RM1M | ~35% | Largest overhang segment — exceeds most local buyer capacity |
| Above RM1M | ~20% | Luxury segment — limited buyer pool, long absorption period |
The RM300K-RM1M range accounts for roughly 65% of all overhang units. This is the zone where developer ambition exceeded market reality.
Is Overhang an Opportunity?
Yes — but only in specific circumstances. Overhang creates opportunities because developers are motivated sellers with carrying costs. Here is what they offer:
Developer Discounts on Overhang Stock
| Incentive | Typical Value | How It Affects You |
|---|---|---|
| Price discount | 10-30% off original launch price | Lower purchase price = higher yield |
| Free furnishing package | RM15,000-50,000 value | Saves furnishing cost; ready for immediate rental |
| Stamp duty absorption | Developer pays your MOT stamp duty | Saves 1-3% of purchase price |
| Low booking fee | RM1,000-5,000 (vs standard RM10,000-50,000) | Lower upfront cash requirement |
| Free legal fees | Developer absorbs SPA legal fees | Saves RM3,000-8,000 |
| Extended payment scheme | Deferred down payment over 12-24 months | Eases cash flow during purchase |
| Guaranteed rental return | 6-8% for 2-3 years (built into price) | Use with extreme caution — see risks below |
The real discount calculation: A unit launched at RM500,000 with a "20% discount" sells at RM400,000. But was the original RM500,000 price realistic? Check the secondary market: if similar units in the same building trade at RM380,000-420,000 on the resale market, the "discounted" RM400,000 is actually market price — not a bargain. Always compare the overhang price to recent subsale transactions, not to the developer's original asking price.
When Overhang IS a Good Buy
The sweet spot for overhang investment exists when ALL of the following conditions are met:
-
Rental demand exists in the specific building. Check PropertyGuru and iProperty for rental listings in the exact development. If there are 50+ competing rental listings, the building has a rental absorption problem. If there are only 5-10 listings, demand is healthy.
-
The discount is real (below secondary market price, not just below original launch price).
-
The developer is reputable and the build quality is acceptable. Inspect the actual unit, not just the show unit.
-
The location has employment centers and transport links. Overhang in a connected location is recoverable. Overhang in a remote location may never recover.
-
Maintenance fees are reasonable. Some overhang buildings have high maintenance fees because the developer set the rate based on full occupancy. With 40% of units empty, the MC may face a deficit — leading to poor building maintenance that further suppresses values.
The Risks of Buying Overhang
| Risk | Why It Happens | How to Mitigate |
|---|---|---|
| Low rental demand | If units did not sell, tenants may also be scarce in the area | Check actual rental listings and tenancy rates in the building |
| Uncertain resale value | Overhang suppresses prices; more unsold units = downward pressure | Buy only if yield justifies the investment regardless of capital gains |
| Quality issues | Some developers cut costs on overhang projects or rush completion | Inspect the unit thoroughly; hire a defect inspection service (RM300-800) |
| Building maintenance issues | Low occupancy = lower MC income = deferred maintenance | Visit the building, check common areas, talk to residents and management |
| Guaranteed rental return traps | Returns are built into inflated price; after guarantee expires, actual rent is lower | Calculate yield based on actual market rent, not guaranteed rate |
| Sinking fund deficit | With many empty units, the MC cannot fund the sinking fund | Request sinking fund statements from the MC before purchase |
| Over-supply in the area | If 5 developments in the same area have overhang, it is an area problem | Check NAPIC data for the entire locality, not just one building |
The Guaranteed Rental Return Trap
This deserves special emphasis. Some developers offer "guaranteed 6-8% rental return for 2-3 years" on overhang units. The mechanics:
- Developer prices the unit at RM500,000
- Offers "guaranteed 7% return" = RM35,000/year = RM2,917/month
- The guarantee is funded by inflating the purchase price by RM70,000-100,000 (the "guaranteed" returns for 2-3 years)
- After the guarantee expires, actual market rent is RM1,800/month
- Your real yield on the inflated price is 4.3%, not 7%
How to spot it: Compare the guaranteed rental rate to actual market rents for comparable units in the area. If the guaranteed rate is 30-50% above market rent, the guarantee is subsidized by the purchase price.
How to Find Overhang Properties
| Source | What You Find |
|---|---|
| NAPIC website (napic.jpph.gov.my) | Quarterly overhang reports by state, price range, and property type |
| Developer websites | Search for "ready units," "completed stock," or "move-in ready" — these are euphemisms for overhang |
| PropertyGuru / iProperty | Filter by "developer sale" or "new property" with "ready" or "completed" status |
| Property portals "developer direct" | Some portals have a dedicated section for developer stock |
| Property agents specializing in new launches | Ask specifically about unsold completed stock — agents know which developers have it |
| Developer showrooms | Visit the sales gallery; ask about completed unsold units and what incentives are available |
Negotiation tip: Overhang units at the end of a developer's financial quarter are the most negotiable. Developers need to clear stock for financial reporting, and sales targets create urgency. January, April, July, and October are typically the best months to negotiate.
Overhang Hotspots: Where to Look (and Where to Avoid)
Worth Investigating
| Location | Why | Caution |
|---|---|---|
| Johor Bahru City Centre | RTS Link will improve Singapore connectivity; discounts 20-30% | Verify RTS timeline; check specific building occupancy |
| KL Sentral / Brickfields fringe | Strong transport links; tenant demand from nearby offices | Some projects are service apartments with high fees |
| Penang mainland (Butterworth/Batu Kawan) | Penang Second Bridge improved access; lower price point | Rental market less established than Penang island |
| Selangor near LRT/MRT stations | Transport connectivity supports rental demand | Over-supply in some corridors (Sungai Buloh-Kajang line) |
Approach with Extreme Caution
| Location | Why Caution Is Needed |
|---|---|
| Forest City, Johor | Massive unsold inventory; limited domestic buyer appeal; policy uncertainty |
| Remote Iskandar Malaysia projects | Far from JB city center; limited amenities; extremely high overhang |
| KL luxury segment (above RM1M) | Thin buyer pool; long absorption timeline; high maintenance costs |
| Projects without public transport access | No MRT/LRT = limited tenant pool = persistent vacancy risk |
The Investor's Overhang Evaluation Checklist
Before buying any overhang unit, work through this checklist:
| Check | How | Pass/Fail Criteria |
|---|---|---|
| Actual market rent in the building | Check PropertyGuru/iProperty rental listings | Yields above 5% gross at discounted price = Pass |
| Building occupancy rate | Visit the building at night; count lit units vs dark | Above 60% = Pass; below 40% = Fail |
| Maintenance fee per sqft | Request from developer or MC | Below RM0.35/sqft = Pass; above RM0.50/sqft = Caution |
| Sinking fund balance | Request from MC | Positive and growing = Pass; deficit = Fail |
| Secondary market comparison | Check recent subsale transactions on PropertyGuru | Overhang price below subsale = Pass |
| Transport connectivity | Check distance to nearest MRT/LRT/bus hub | Within 1km of rail station = Pass |
| Defect inspection | Hire professional inspector (RM300-800) | Minor defects only = Pass; structural issues = Fail |
| Developer reputation | Check REHDA membership, past project reviews | Established developer with delivered projects = Pass |
| Number of competing rental listings | Count active rental listings in the same building | Fewer than 20 active listings = Pass; 50+ = Caution |
| Area supply pipeline | Check NAPIC data for planned and under-construction supply | Limited new supply = Pass; massive pipeline = Fail |
Overhang is not inherently good or bad. It is a market condition that creates motivated sellers. Your job is to determine whether the specific unit, building, and location justify the investment — regardless of the discount. A 30% discount on a property nobody wants to rent is still a bad investment. A 15% discount on a property in a high-demand rental location is a genuine opportunity.
Overhang properties are where patient, data-driven investors find alpha. But only if they run the numbers on every single unit — and walk away from the ones that do not work.
Related reading: