The Malaysian property market recovered quickly from the pandemic-induced downturn in 2020, according to statistics provided by the Ministry of Finance’s Valuation & Property Services Department (JPPH), with the volume and value of property transactions improving in 2021 and continuing into 2022.
Residential Market
The performance of Malaysia’s residential property market improved significantly in the first nine months of 2022, with the volume of transactions increasing by 34.6 percent compared to the same period in 2021, and the value of transactions increasing by 34.8 percent, building on the momentum of the recovery that began in 2021.
According to Bank Negara Malaysia, the significant increase in the value of loans sanctioned for the acquisition of residential property reflects the recovery of the residential market.
Bank Negara Malaysia (BNM) has hiked the OPR four times this year, increasing the cost of borrowing for the purchase of a home. Economists believe that further rises may be necessary in 2023 before the BNM believes it has hit its maximum for interest rate increases in its efforts to control inflation. The rate increases will return interest rates to pre-pandemic levels and raise borrowing costs, which may have an influence on property demand, but it is not likely to be significant.
The conclusion of GE15 and the establishment of a unity administration would, ideally, put an end to the political insecurity of the last three years and create an atmosphere conducive to attracting more investors while also promoting economic progress and people’s well-being.
The new administration will have the opportunity to evaluate and improve the budget 2023 ideas that were filed by the previous administration but have not to be debated and approved by parliament.
The rise in building expenses has caused property developers to take a more cautious approach, delaying the introduction of new projects or staggering the debuts in smaller segments until the property market recovers more strongly.
The construction industry is suffering from a labour shortage, which has resulted in not only project delays but also an increase in construction expenses.
Some foreign experts forecast a global recession in 2023, and if their predictions come true, Malaysia’s economy will suffer, badly impacting the housing market. Local analysts, however, believe that Malaysia will not enter a recession, despite the fact that growth rates are projected to fall.
The residential property market is predicted to confront some headwinds and hard conditions in 2023, resulting in a little slowdown in growth but no shift in gears along the recovery route.
Highlights for 2023
The residential property market’s focus in 2023 will remain on:
• residential properties on land
• high-rise residences in popular locations at affordable prices ranging from RM500,000 to RM500,000.
• smaller-sized units, which reduce the unit’s absolute price
• high-end niche projects in prime areas
The elimination of severe MCO SOPs and the ability for foreigners to enter the country without being quarantined for a period of time will benefit not only the retail, leisure, and entertainment businesses, but also, most likely, the property industry.
The commencement of China’s plan to loosen its rigorous zero-covid policy would assist to improve the country’s economic growth, which will benefit Malaysia because China is the country’s major trading partner. However, there is concern that the surge of Chinese tourists would result in an increase in Covid infection rates, leading to the reinstatement of tougher SOPs.
Office industry
The office sector’s occupancy rates have continued to fall as a result of a significant rise in supply without a matching increase in demand. Nonetheless, rental rates, which fell in 2020, appeared to have stabilised in 2021 / 2022 as the economy reopened and returned to normalcy.
Office Market Factors to Watch in 2023
• Concerns about an oversupply of office space in the Kelang Valley will persist, and the approaching completion of many giant office projects in the next one to two years will exacerbate the oversupply scenario.
• Companies who are concerned about being caught in another business slump have taken a more flexible strategy, opting for co-working space rather than negotiating long-term agreements for permanent office space for expansion purposes.
• As a result of multinational and local corporations placing growing emphasis on environmental, social, and governance (ESG) issues, more new office buildings will use ESG-compliant designs to attract such tenants.
