The media taking photos of the CBRE WTW heads during the launching.
PETALING JAYA: The property market was recovering stronger in 2022 on the back of a robust year-on-year (y-o-y) Gross Domestic Product (GDP) growth, especially in the third quarter of last year.
The Klang Valley, Iskandar Malaysia in Johor and Kuching in Sarawak registered an upmarket performance while the rest of the regions managed to maintain their market performance.
“Transaction momentum has been building up. Confidence levels have also been improving. With the election behind us, we’re fortunate to have more political stability. In terms of initiatives, the new government has been putting the rakyat at heart, with a priority on developing infrastructure. This is crucial for nation-building," said CBRE|WTW chairman Foo Gee Jen.
In the residential properties sector, recovery happened across all regions, said CBRE|WTW director Ungku Mohd Iskandar Ungku Ismail during the launching of the property management company's Market Outlook 2023 on Jan 11.
The total loan approved for residential property transactions in Q3 grew by 17.6% y-o-y to RM49.32bil, despite the Overnight Policy Rate (OPR) being increased four times in 2022. However, supply moderated in most of the regions as developers were still cautious in launching new units. The recovery also includes an uptrend in the supply of luxury residential properties in Klang Valley, with a total of 68,000 units in Q3 2022.
"More high-end residential units are expected in 2023, with a focus on own-use," said Ungku Mohd.
The industrial sector was the key growth driver in Klang Valley, Johor and Penang. In Klang Valley, transactions were driven primarily by the logistics and demands for warehouses to serve the growing e-commerce.
Penang, which is the second largest recipient of approved manufacturing investments, has seen investments in new distribution centres and industrial parks by foreign pharmaceutical companies and semiconductor makers. Coming third in approved manufacturing investments, Johor become the focus for data centres, logistics and warehousing facilities.
While retail activities have seen an uptrend in general, spurred in part by the return of tourists, the more established malls in better locations registered stronger recovery in footfall and occupancy. The evolution of omnichannel shopping has seen malls innovating themselves to offer new attractions.
Phase 2 of the IOI City Mall in Putrajaya opened in 2022 with a city farm, sports centre, and MICE centre, while malls in Melaka have diversified into online wholesale businesses and kiosks.
Demand for purpose-built offices (PBOs) in Klang Valley remained subdued. In addition, older PBOs completed in the 80s and 90s are losing tenants to newer PBOs, which offer high-speed internet and are environmental, social and governance (ESG) compliant. Some of the older PBOs such as Wisma Lee Rubber and Wisma KFC were revamped into hotels. In Johor and Penang, healthy demands were sustained by the retention of office spaces to support the hybrid working mode.
The revival of tourism contributed to a rejuvenation in the hotel sector across regions. In Klang Valley, the rebound has encouraged fresh concepts to be adopted, such as contactless check-in and keyless room entry and boutique and heritage hotels.
Market Outlook
Government infrastructure projects, such as the Pan Borneo Highway in Sarawak, 5G network and the resumption of international tourism by China will be important to further market recovery, especially in Sabah and Sarawak.
While the economy is expected to be resilient in 2023 with the GDP growth forecasted at 4% to 5%, optimism in the property sector is attenuated by more OPR hikes that will bring back the pre-pandemic rates and rising inflation that push up construction cost and cost of living.
Foo added that the government also should tackle the issue of housing unaffordability from the angle of the mismatch between wage growth and house prices, saying that the B40 segment is particularly affected by further OPR hikes.
"There must be an equilibrium between wage growth and prices. The government can help the B40 segment with subsidy, encouraging the healthy inflow of FDI and improving the education system," he said.
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