Tan said the southern region of Malaysia holds significant promise for real estate growth in 2024.
KUALA LUMPUR: The property sector may be on its way to a meaningful recovery after a decade of being in the doldrums, says a property valuer.
CBRE | WTW group managing director Tan Ka Leong said a recovery is supported by increasing foreign interest and with the overhang situation set to further improve.
“There were times in the property sector where prices had risen by up to 20% to 30% in a single year.
“We believe this trend may likely come back in 2024 or 2025, particularly in areas where there are catalytic developments taking place,” said Tan at the CBRE | WTW briefing on Malaysian Real Estate Market Outlook 2024.
“But what we want to urge is that stakeholders should work towards ensuring sustainability in price is always there. Everyone should do their part to ensure that prices are always sustainable in Malaysia,” he added.
Increasing foreign interest is led by recent developments at Iskandar Malaysia, Johor, as the 4km Rapid Transit System (RTS) Link that connects Bukit Chagar in Johor Baru to Woodlands in Singapore is currently being constructed.
Tan said the situation that is happening at Iskandar Malaysia is encouraging following a long slowdown period prior to this, where developers found it tough to sell their units.
“Iskandar Malaysia is the hottest property scene now in Malaysia. The RTS Link is the game changer and it is progressing well at more than 60% at this point in time,” he said.
In his speech, Tan said the southern region of Malaysia holds significant promise for real estate growth in 2024.
Iskandar Malaysia is attracting considerable interest from international investors due to its ongoing infrastructure development and its focus on sustainable living, he said.
“This makes it a prime location for exciting new projects and a potential economic powerhouse in the years to come,” Tan added.
In his presentation on Iskandar Malaysia, CBRE | WTW director Paul Brendan Chan said Iskandar Malaysia’s property market is flourishing, being propelled by noteworthy key infrastructure progress and positive influence by Singapore.
He said Singapore acts as a game-changing influence in the residential, retail and hotel sectors, underpinned by its robust spending power from the big exchange rate differential gap between both countries.
Beyond Iskandar, Tan said the wave of transformation extends across Malaysia, impacting various sectors.
“The Klang Valley, fuelled by major players like Tesla, is emerging as a hub for sustainable development, drawing leading corporations and innovative retailers. This shift promises exciting possibilities for both urban living and economic growth,” he said.
He added that there could also be positive spillover effects to the property sector should the Kuala Lumpur-Singapore High-Speed Rail (HSR) be built.
“This is another game changer which I believe many market stakeholders are looking forward to. It will definitely spill over from what had happened in Iskandar Malaysia to the Klang Valley with any decision to proceed with the HSR project.”
The recent guidelines issued for the Malaysia My Second Home (MM2H) project could also spur further interest in the property market, he said.
“The revision in requirements of MM2H will definitely help developers clear some of the overhang stocks, particularly in the high-rise segment. The recent announcement of a 4% stamp duty for foreign property buyers is not significant,” Tan said.
He also said recent statistics by the National Property Information Centre (Napic) showed overhang inventories have actually reduced.
“What happened is that in the past couple of years, especially since Covid-19 hit us, a number of developers have held back their launches and had not been introducing new supply into the market,” Tan said.
“This has actually helped the developers reduce their stocks in hand,” he added.
He said the latest data from Napic showed that properties priced RM1mil and above in the Klang Valley constitutes some 20% of the outstanding overhang inventory.
Another 20% comes from the RM500,000-RM600,000 price range and a further 20% from the RM600,000-RM700,000 price range.
He noted that developers are nowadays very careful in pricing their products as people are paying more attention to the absolute price of properties rather than the price per square feet.
Meanwhile, CBRE | WTW adviser Foo Gee Jen said the current Napic data had a weakness as the collection of data is too generalised.
“This is in relation to the overhang data where the collection of data is too generalised, as we are putting everything into the same category that lumps up every unsold, overhang property without any ageing analysis and the rationale behind why this project was unsold,” Foo said.
“This will certainly not augur well when you want a more holistic view of the situation. For example, when you look into RM20bil worth of assets – how many of these are 20-year-old assets?
“There will be no buyers for such assets even at a hefty discount. So perhaps this should be categorised differently for a more holistic view of what is happening,” Foo added.
Meanwhile, CBRE | WTW cautioned on further mall developments as it said the shopping mall segment was oversupplied now.
“In the last couple of years, even before the pandemic, the retail sector is always the survival of the fittest.
“I believe there is an oversupply, particularly in the city centre. You can see that some malls have failed while some are performing better,” Tan said.
