Datuk Paul Khong, Group managing director and head, Savills Malaysia

Contributed by Datuk Paul Khong

The past few years have been a challenging period as we navigated through the post Covid-19 pandemic era and its widespread impacts. In 2023/24, while many sectors rebounded, others continued to struggle and recover. Nevertheless, 2024 began with strong sentiments and promises, marking a notable improvement in overall performance compared to previous years.

This progress didn’t come easy. Global geopolitical tensions persisted, with the Russia-Ukraine and Israel-Palestine wars continuing alongside the ongoing US-China rivalry. These issues set the tone for the international market, creating widespread disruptions.

Malaysia’s resilience in 2024

Amidst global uncertainties, Malaysia maintained stability within its own economic framework:

• Monetary policy: Bank Negara Malaysia held the Overnight Policy Rate (OPR) steady at 3% since May 2023, fostering financial stability.

• Fuel prices: Early in 2024, petrol prices were favorable at RM2.35 per litre, though selective Budi Madani subsidies meant high diesel prices at RM3.35 per litre. Recent adjustments to RM2.05 and RM3.19 per litre, respectively, provided some relief.

• Economic boost: The introduction of EPF Account 3 injected funds into the economy, stimulating spending.

• Property market growth: Property transactions rose by 8% year-on-year to 198,906 in H1 2024, with transaction values climbing 23.8% to RM105.65 billion.

• Industrial expansion: Industrial land prices surged, driven by high demand from data centres, logistics and manufacturing sectors.

• Construction costs and property prices: Cost increases pushed property prices higher across most sectors, with industrial demand leading the charge.

Key developments and trends in 2024

• Industrial sector growth

• The demand for industrial properties, particularly for data centres, dominated 2024, with significant land transactions in Johor and the Klang Valley.

• Budget 2025 introduced a 60% tax investment allowance for "smart logistic complexes," supporting logistics under IR 4.0.

• Foreign investment

• Malaysia’s position as a "safe haven" for foreign investments grew stronger amidst global tensions.

• The 50th anniversary of Malaysia-China collaboration sparked new interest, particularly from Chinese industrial developers seeking joint ventures.

• Johor’s economic momentum

• The Johor-Singapura Special Economic Zone (JS-SEZ) and Forest City’s designation as a free trade zone were pivotal milestones, supported by incentives for private family offices.

• The RTS Link between Johor Bahru and Singapore is set for completion by 2026, positioning Johor as a key growth hub.

• High-Speed Rail (HSR) discussions gained traction, complementing Johor’s development and the potential revival of the Bandar Malaysia project.

• MM2H programme and residential market

• The revised Malaysia My Second Home (MM2H) programme gained traction, attracting wealthy foreign buyers.

• However, bank auctions for low and mid-level residential properties increased, indicating struggles within specific market segments.

• A call for a revised Home Ownership Campaign (HOC) in 2025 aims to boost the residential property market.

Challenges in Budget 2025

Despite the positive outlook, Budget 2025 provided limited direct support for the property sector, apart from tax relief on interest for properties below RM500,000/RM750,000. Developers and investors must continue to navigate a challenging landscape independently, as the sector saw no significant allocations or policy changes.

As we step into 2025, Malaysia’s economic fundamentals remain robust. Economic growth is forecasted at 4.5%-5.5%, with inflation projected at a manageable 2.0%-3.5%. Industrial, logistics and data centre sectors are expected to drive growth.

Johor, in particular, stands out with developments like the RTS Link, new data centre projects and the revitalisation of the Forest City Free Trade Zone. These projects will bolster Johor’s position as the Shenzhen of Singapore.

While challenges such as geopolitical instability persist, Malaysia’s resilience, strategic initiatives and investor confidence will likely sustain positive momentum. With a leap of faith, 2025 promises continued growth and opportunities across various sectors.

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