A BETTER outlook is expected in the residential property sector in the short-term, the Malaysian Institute of Economic Research (Mier) said in its 4th quarter Sectoral Survey conducted recently.

In its residential property sector outlook, Mier said more respondents were contemplating building more houses in the coming months.

Some 79% of survey respondents expressed optimism that prices would remain flat in the short-term, Mier added.

The construction workforce and payrolls of the residential property sector are generally expected to be unchanged in the coming months although 16% of the respondents divulged plans to increase staff and 27% planned to increase salaries soon.

However, Mier said, the survey found less optimism on the retail trade and tourism sectors.

Mier said an uncertain outlook pervaded the retail sector during the early part of the year as the previous year had ended on a less positive note.

The higher respondents reporting lower sales (36% against 5% in the previous quarter) overshadowed those that reported better sales (36% from 24%).

Mier said despite the anaemic business conditions, firms continued to hire staff.

Forty-three per cent of firms surveyed increased their staff size compared with 7% reporting cutbacks.

On tourism, Mier said the local tourism industry might have to brace for a weak start into 2003 with the US-led war in Iraq.

In the final quarter 2002, the sector moderated with tourism activities losing steam after a good performance in the third quarter.

Occupancy rates and reservations fared poorly in the fourth quarter.

Declines in occupancy rates were reported by 25% of respondents compared with 10% recorded in the previous quarter.

Reservations were also down sharply with 37% of respondents reporting declines against 8% in the third quarter.

Against weaker sales, lower occupancy rates and declining reservations, gross margins have taken a severe beating in the fourth quarter.

Source : The Star  22/3/2003