Malaysia Real Estate Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Malaysia Real Estate Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

The Malaysian real estate market is expected to register a CAGR of more than 4.5% during the forecast period.

The COVID-19 pandemic has crippled demand, adding to downward pressure on house prices. As a result, Malaysia’s house price index rose a minuscule 0.3% during the year to Q1 2021, down from the previous year’s 1.9% Y-o-Y increase. This is also a sharp slowdown from the annual price growth of 7.5% from 2010 to 2019. When adjusted for inflation, house prices actually fell 1.3% Y-o-Y in Q1 2021.

Malaysia's property market is expected to rebound in 2022 as more demand will likely be skewed towards affordable housing. Developers are cautiously optimistic about the property prospects in the medium to long term due to the likelihood of robust demand for properties among the young demographic.

The interest rate at the moment is expected to remain favorable. 2022 will continue to be challenging in continuation from 2021 as there is not much given in the 2022 Budget except for real property gains tax (RPGT) reverting to 0% and 5.0% for both individuals and companies, respectively.

Malaysia Real Estate Market TrendsOversupply Causing Problems

After a decade-long house price boom, Malaysia’s housing market has been cooling in the past two years due to massive oversupply. There are MYR 18.48 billion (USD 4.41 billion) of unsold apartments in Malaysia’s major cities, the result of a serious overbuilding of top-end properties during the recent boom.

To combat this over-building, the government has introduced multiple measures to control speculation and discourage developers from over-building. Stamp duty was increased from 3% to 4% on properties worth above MYR 1 million (USD 238,578). The government also introduced an additional 5% in real property gains tax (RPGT) on sales of properties owned from 6 years and beyond. However, these measures have been temporarily relaxed to deal with the impact of the pandemic on the property market.

Greater Kuala Lumpur Increases Office Space

Greater Kuala Lumpur's office market reached a cumulative supply of over 136 million sq ft at the end of Q3/2021, of which 67% is located in WP Kuala Lumpur (91.7 million sq ft). This represents a year-to-date growth of 2.1% and is expected to close the year at 4.4% growth as more offices are completed by the end of 2021.

Nine new office completions were witnessed in the first nine months of 2021 in the Greater KL. Six of the buildings are in WP Kuala Lumpur, namely Menara Legasi, Menara Permata Sapura KLCC, TSLaw Tower, The Five at Kompleks Pejabat Damansara, Plaza Conlay and Menara Great Eastern 2, amounting to 2.06 million sq ft. On the other hand, Outer KL recorded three new office buildings, namely, Q Tower, Imazium at Damansara Uptown, and Quill 9 Annexe, accounting for 0.69 million sq ft. Expected new office completions in Greater KL will amount to 9.9 million sq ft by 2023, representing a further supply growth of 7% from existing levels, of which WP Kuala Lumpur accounts for 84% or approximately 8.3 million sq ft.

Malaysia Real Estate Market Competitive Analysis

The top participants in the Malaysian real estate sector are covered in this research. The residential real estate market in Malaysia is extremely fragmented. Large firms have financial resources to their advantage, whereas small businesses can compete effectively by building expertise in local markets. Hartamas Real Estate (Malaysia) Sdn Bhd, Bandar Utama City Sdn. Bhd., S P Setia Bhd, Lien Hoe Corporation Berhad, Amcorp Properties Berhad, and others are some of the main companies.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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