The average house prices in Malaysia has more than doubled since the turn of the millennium. In major urban centres, the prices have more than quadrupled in the past 1.5 decade. According to the Malaysian House Price Index, the positive growth has been consistent, averaging at 5.85% to date.
However, as per any economic cycle, there will be a pattern of ups and downs. The market is consolidating now due to both internal and external factors, such as Brexit, reduction of oil price, declination of the Ringgit and uncertainty in the world economic outlook. Still, Malaysia continue to be attractive as there are good quality buildings available and ongoing major infrastructure enhancement. Within the Asia Pacific region, international Grade A buildings here are considered the cheapest compared to other Asian countries such as Singapore, Bangkok, Jakarta and Hong Kong.
The housing sector remains the main driver for the Malaysian property sector. We have seen several trends being implemented, such as gated and guarded communities, super condos, and iconic integrated residential tower with hotel facilities or ‘branded residences’. Affordable housing is currently a hot topic among Malaysians. Many government initiatives have been introduced to ease the burden of the people in securing a house of their own (although more can be done to improve the situation).
The office and retail sectors saw a ‘bull run’ from 2007 – 2012. Now, as supply comes in and more new launches are being pushed out, the market has become more competitive. However, we still see investments being injected to enhance commercial developments in certain established areas.
Growth in the Klang Valley has been given a new boost. The market is still active with the introduction of new major infrastructures, such as MRT Line 1. extension of the LRT Lines and new route of LRT 3. Similar growth can also be seen in other regions. In Johor, tremendous growth is seen in Iskandar Malaysia. Under the Comprehensive Development Plan, nine pillars were identified to ensure growth in the region. This resulted in a boom in the state’s property sector, which eventually led to the current overheated situation.
Coupled with the challenging economic situation, it is currently a tough time for the property market there. However, location and infrastructure are strong factors that will sustain the growth within Iskandar Malaysia. Combined with other elements, such as local population growth, the setup of international institutions and new multinational companies, as well as the availability of places of attraction, it should see further growth.
Growth is also seen in Kota Kinabalu, Penang and the East Coast Region, namely the Malaysia-China Kuantan Industrial Park, The property market is expected to further accelerate with additional initiatives including the enhancement of major infrastructure such as the High Speed Rail (HSR), Pan Borneo Highway, Coastal Highway and upcoming mega projects like the Vision Valley in the south as well as Rubber City and Chuping Valley in the north.
Property transactions have slowed down in the past several years and many blame the high prices on the inflation of raw materials and uncertain economic condition. High end properties are still being actively developed; some projects may take time to sell all its unit. However, new projects by developers with a good reputation are still selling well and will be able to secure genuine buyers.