Malaysia Commercial Real Estate Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)
The Malaysia Commercial Real Estate Market is anticipated to register a CAGR of more than 8% over the forecast period. The significant demand from the industrial segment drives the market. Furthermore, the market is driven by the need for healthcare real estate in many regions as the market is recovering.
Key HighlightsPost-pandemic structural trends in the country's commercial real estate (CRE) market are likely to exacerbate already-existing imbalances. It is because vacancy and rental rates of office and retail spaces have gotten worse since the pandemic outbreak and may take longer to get better due to the structural changes seen. In Malaysia's real estate market, the value of the massive transactions grew 61% QoQ (MYR 1.13 billion (USD 0.25 billion): Q4/2021) to over MYR 1.82 billion (USD 0.48 billion).
According to Savills, the most significant transaction occurred in Kuala Lumpur, when Hap Seng Consolidated Bhd paid MYR 868 million (USD 195.83 million) to acquire a vacant 15.3-acre commercial site on Jalan Duta from TTDI KL Metropolis Sdn Bhd (a wholly-owned subsidiary of Naza TTDI Sdn Bhd). It is to construct a mixed-use development with a projected gross development value of MYR 8.7 billion (USD 1.96 billion).
In 2021, the value of construction work grew by -5.0% to MYR 112.0 billion (USD 25.27 billion) compared to MYR 117.9 billion (USD 26.6 billion) in 2020. Budget 2022 announced that the government would invest MYR 2 billion (USD 0.45 billion) in guarantees to banks via the Guaranteed Credit Housing Scheme. It is aimed at assisting those in the gig economy, people with funds to pay for loans but who cannot produce an income statement because they do not earn in the traditional sense.
Increase in government spending in private sectorIn its 2021 budget, the Malaysian government announced a Protection of People and Recovery of the Economy (PEMULIH) aid package to support construction businesses that may benefit private companies. It includes the allowance of price changes or Variation of Price (VoP) for government projects. It follows a significant increase in the cost of building materials and assistance for local G1-G4 contractors to carry out small-scale government projects by conducting lottery and tendering processes. It also enables the use of new civil engineering and building and electrical work rate schedules and the allowance of Extension of Time (EoT) or extension of contract on government projects for supply and service contracts affected by the implementation of the Movement Control Order (MCO) subject to a contract clause.
The private sector continued to propel the construction activity with a 58.7% share of the value of construction work done MYR 16.2 billion (USD 3.87 billion) as compared to the public sector with a 41.3% share of the value of construction work done MYR 11.4 billion (USD 2.72 billion). The value of construction work done in Residential buildings and Non-residential buildings subsectors remained significant in the project owned by the private sector, which contributed 37.9% and 37.1%, respectively. Meanwhile, the project owned by the public sector remained underpinned by the Civil engineering subsector with a share of 69.4%.
Competitive LandscapeThe Malaysia Commercial Real Estate Market is fragmented, with many players having scope for growth. Some major players in the Malaysian commercial real estate market include Conlay Construction, YTL Corporation, IJM Corporation, Ho Hup Construction Company, and Renzo Builders. The developers are trying to bring new, lower-cost products to meet current demand. Evolving technological advancements such as new proptech solutions are driving the market in terms of increased transactions and better management of real estate assets.
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