Insights
Malaysia Property: Cautiously optimistic
24 September 2024
- On sustainable uptrend, despite slightly weaker momentum in 1H24 vs. 2H23
- Improved supply-demand dynamics to underpin healthy property sector growth momentum
- Realisation of approved investments to accelerate property sector revival
Taking a breather after a strong recovery
Malaysia’s property sector remains on a steady growth trajectory with 1H24 total property transactions rising by 8% y-o-y, although the momentum has weakened slightly given the 7% volume contraction compared to 2H23. We believe this is a healthy consolidation after a strong recovery since 2022 as the current transaction level remains markedly higher than the pre-pandemic level. In addition, this is further corroborated by firm property loans demand as loans for residential property and non-residential property grew 7.5% and 6.8% respectively in July 2024, outperforming the pre-pandemic levels.
Supply overhang concern is largely resolved
2Q24 residential overhang came in at 22,642 units (-6% q-o-q, -14% y-o-y), the lowest since 2017. Improvements are also seen in the overhang for serviced apartment which dipped 3% q-o-q and 6% y-o-y in 2Q24. Meanwhile, 1H24 property prices rose by 2.2%, compared to 4.6% in 1H23 and 2.5% in 1H22. We believe that the solid labour market conditions with record labour force participation and low unemployment will continue to sustain the property sector recovery.
Positive sales performance from developers
1H24 property sales for large Bursa-listed developers generally met expectations amid robust economic prospects. Landed properties continue to receive robust demand while affordably-priced high-rise properties benefit from keen interest from first-time home buyers. Developers with exposure in industrial developments enjoy strong property sales, thanks to the strategic moves by the government to push for high value-added industrialisation under various national policy blueprints.
Burgeoning investment activities
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 in the longer term.