Savills Malaysia
group managing director and head Datuk Paul Khong

Contribute by Datuk Paul Khong 

After the Covid-19 pandemic, Malaysia’s property market performed reasonably well in 2022 and has been stable throughout 2023 in the face of different challenges affecting the various sectors.

Many businesses have done well, with some having gone back to pre-pandemic levels or better (of course, some are still licking their wounds), and a good general recovery has been envisaged.

The latest statistics from the National Property Information Centre (Napic) on the residential market basically show almost identical results, especially on the growth rate, for 2023 with no major variances. However, other sectors have recorded differing results for the year.

Local interest rates (OPR is still at 3% but under pressure), construction costs, food costs, and up-coming luxury taxes with SST up to 8% are all on the rise and will be of concern moving forward. Petrol prices have helped, though. Kudos to our national leadership, RM2.05 per litre is unbelievable.

On the property front, industrial including data centres and logistics is taking pole position while the retail sector is following closely as most retailers are performing well, especially food and beverage (F&B) and luxury brands, even though the post-Covid revenge spending is diminishing and prudence is back in our midst with the growing inflationary pressures.  

The residential market continues to perform well because demand for housing is still strong and supported by a mid-young population. The home ownership drive is still pushing on, though targeted at affordable properties. Boutique luxury housing projects and good landed developments are still attracting buyers.

At the tail-end of 2023, we foresee a final closure with the various domestic markets treading carefully into 2024. It has been a reasonably good year for most, although it was a bumpy ride throughout.

Budget 2024 continues to favour the affordable segments of the property market and this will translate into continuous opportunities for the next term. Ending the year 2023, the markets remain challenging with disruptions from the wars (in Ukraine and Gaza) causing various issues, especially from the marco-economic and logistics standpoints.

Property prices, for new builds, in particular, will continue to push capital values northwards, especially from a replacement cost angle (ie a cost-push factor). Property sectors are expected to move on steadily into 2024 and prices will move in tandem with market conditions.

We forecast that 2024 will probably be an equivalent year (if not better) with identical results given the current global economic climate but we remain cautiously optimistic that it can perform better.

Current headwinds will blow strongly through to 2024, thus impacting all sectors. We still hope for a positive closure to the current wars and international conflicts, followed by a global recovery and back to business as usual again.

In 2024, the mid-level and affordable segments of the market should continue to do well with the government’s intervention and the residential sector being our main focus. Developers will continue to supply the market with more affordable units to drive higher home ownership.

Environmental, social and governance (ESG) factors will play an even bigger role as MNCs and banks are now starting to relocate to green-certified buildings while developers are also heading for green certification in their projects supported by banks with their green financing packages. This will garner well for the property sectors from the sustainability and corporate governance angles.

Items of (property) interest from Budget 2024 are:

• the revision of a friendlier MM2H, though with a slight increase in foreign buyers’ stamp duty to a flat 4% (absolute tax of RM16,000), and
• the move by the government to adopt international practices (e.g. Singapore has 80% owner consensus) for the redevelopment of old en bloc strata properties which will come in as starters in 2024.

 Land prices and the property sector will eventually continue on its upward trend again as the property market is cyclical and expected to move on after a long trough (down since 2014/15 coupled with Covid in 2020/21) but barring all further unforeseen global circumstances or events.

Industrial, logistics and data centres (LID) will continue to be top favourites in 2024 and residential will fare well in both affordable and landed products. Premium housing units will be selective depending strongly on location, pricing and lifestyle concepts.

Lastly, we predict that more developments will move southwards to Johor. With Malaysia and Singapore signing the Joint Special Economic Zone (MOU to be signed on 11 Jan 2024) and the Sultan of Johor becoming the new YDP Agong in Q1 2024, the entire southern corridor will attract positive vibes and turn into the latest hot spot to watch out for.

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