A steady Malaysian property market outlook for 2023

Senior Associate Director for Laurelcap Group Christopher Chan sees a steady property market outlook for 2023 despite some headwinds facing Malaysia.

“Based on the 3rd Quarter 2022 statistics from the National Property Information Centre (NAPIC), there was a total of 105,204 transactions which has a value of RM 46.63 billion. There was a marked increase of 12.6% from the 2nd Quarter of 93,466 transactions. This shows a steady improvement in the property market. In terms of the number of transactions, the residential sector contributed 61.8% while agricultural, commercial and industrial sectors contributed 21.9%, 8.1% and 2.1% respectively”, he said.

“With the government support for 1st time home buyers on stamp duty savings for both the primary and secondary market, i.e. the stamp duty exemption on the instrument of transfer and loan agreement for houses worth between RM500,001 to RM1 million will be increased to 75% from the current rate of 50%, effective until 31 December 2023. This is on top of the 100% stamp duty exemption for houses below RM500,000. This is aimed at further encouraging ownership of first homes.”

He added that with the projected increase in population growth and the rise of households in higher income groups, this would provide a further boost.

Malaysia’s total population is projected to rise to 33.2 million in 2022, with a forecast annual growth rate of 1.2% for the 2020 to 2025 period, according to the United Nations (UN).

“With the new Malaysia Premium Visa Programme (PVIP) which is a long-term residency visa that enables investors, entrepreneurs, and foreign talents to live and work or study in Malaysia for up to 20 years, it is hoped that this will attract more wealthy foreign purchasers into Malaysia”, he said.

“The expected hike in the Overnight Policy Rate (OPR) of another 25 to 50 basis points (bps) is not too alarming as this is to bring the policy rate back to the pre-pandemic level of 3 to 3.25%”.

According to Christopher, the commercial and industrial properties have a positive outlook moving into next year. “This is supported by the continued expansion of e-commerce and moreover we have a large and robust manufacturing sector. As part of ASEAN, Malaysia has also benefited and will continue to stand to benefit from the trade diversions and spill-overs from US-China ‘decoupling’ ”, he stated.

It is interesting to note that the commercial and industrial properties contributed 10% of the overall transactions in the 3rd quarter of this year (10,783 units out of a total of 105,204 units). In terms of value, it represented 26% of the overall value (RM 12.35 billion out of RM 46.63 billion) according to NAPIC.

“The return back to the norm has seen office spaces taken up as not all workplaces are suitable for work from home environment”.

“The continued strong demand for data centres bodes well for the industrial property sector”.

As regards land, Christopher said that the prices have continued to be resilient and stable. He mentioned that while there are developers looking out to buy land to replenish their land bank, the issue has always been a scarcity of supply.

He said that the strategic fit of the land use and the development plans that the developer has in mind is of great importance.

He said that with the new unity government in place, it is hoped that we now will have a stronger government and that sensible and good policies would be adopted by the government to propel the property sector and the economy of the country forward. He further added that investors are well placed to take advantage of the current high inflationary environment as they scramble to find high yielding assets as a hedge against inflation and what better asset to do this than real estate.