Insights
Malaysia Property: All stars aligned
27 June 2024
- Solid domestic economic growth momentum underpins strong property demand
- Sustained sector recovery is expected given the improved supply-demand dynamics
- Major growth catalyst from burgeoning data centre investments
Riding on Malaysia's robust economy
Malaysia’s strong economic growth trajectory has led to resilient demand for properties as 1Q24 total property transactions grew 17% y-o-y, outpacing Malaysia’s strong 1Q24 GDP growth of 4.2%. It is noteworthy that the healthy growth was recorded across the key property subsectors, namely residential, commercial and industrial. This is further corroborated by strong property loans growth in the banking system where loans for residential property and non-residential property grew 7.5% and 5.9% respectively in Apr 2024, outperforming the pre-pandemic levels.
Supply overhang is no longer a concern
1Q24 residential overhang came in at 24,208 units (-6% q-o-q, -10% y-o-y), the lowest since 2017. In addition, marked improvement was seen in overhang for serviced apartment and SOHO (classified under commercial) which dipped 6% y-o-y and 37% y-o-y respectively in 4Q23. We believe that the solid labour market conditions with record labour force participation and low unemployment will continue to sustain the property sector recovery.
Steady performance from developers
Large Bursa-listed developers generally achieved healthy property sales and financial performance in 1Q24, riding on the strong property demand. Landed properties continue to receive robust demand while affordably-priced high-rise properties benefit from keen interest from first-time home buyers. Developers are likely to have more launches in 2H24, leveraging on the much-improved supply-demand dynamics.
Data centre boom
The massive data centre investments committed by world-class tech players such as Microsoft, Google and ByteDance have helped spur strong land price appreciation in Johor and Selangor, benefitting industrial landowners in strategic locations. In addition, major rail infrastructure projects such as MRT3, Penang LRT, Johor LRT and KL-SG HSR are expected to serve as a strong catalyst for Malaysia’s property sector.