Property market momentum to continue: Rahim & Co report

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(From left) Shanker, Choy, Rahim, Sulaiman and Mohamad at the press conference.

(From left) Shanker, Choy, Rahim, Sulaiman and Mohamad at the press conference.

KUALA LUMPUR: The measured growth trajectory observed in Malaysia's property market in 2023 is expected to continue this year. This is primarily attributed to buyers maintaining a cautious approach toward property acquisitions, even though there has been an overall improvement in sentiment.

“We expect the market to continue the momentum that was generated in 2022 at a more normalised pace, but still, Malaysia is probably going to have a good year for the property market,” said Rahim & Co Research Sdn Bhd research director Sulaiman Saheh during the Rahim & Co property market review recently.

The company released its annual Property Market Review 2023/2024 analysing property market trends across the country. It detailed moderate growth in the 2023 property sector, with mixed performance between states and the commercial, residential and industrial sectors. 

The first nine months in 2023 recorded one of the highest numbers of transactions since the 2011-2012 peak. The commercial real estate sector stood out with 22.3% and 24.8% growth in volume and value respectively. In particular, the performance of the property market in Johor 2023 is commendable, with the highest recorded growth in terms of percentage in volume of transactions, Sulaiman said.

A more cautious approach to new launches, with smaller-scale phases and a priority on ongoing projects over newer ones, improved the nation's overhang numbers from 55,482 units in 3Q2022 to 49,364 in 3Q2023. 

On the commercial front, both the retail and office sectors saw a slight improvement in occupancy rates, but the incoming supply of retail and office units in the Klang Valley is expected to continue to put pressure on the market. 

Trends in 2023

While the residential segment has had a continuous focus on affordability, most of the affordable units are high-rises rather than landed properties. As such, home purchasing has steadily shifted towards these units. 

The rental market has also increased, as renting has become the only option for many city dwellers. 

“On the residential market, to sum it up to say, it has become more polarised. Polarised because you can’t say only the affordable prices are going to sell, and the higher-end prices are not going to sell. It depends on the actual product, on the quality of it, on the location of it, and the target market,” Sulaiman said.

He pointed out that while the number of transactions for the affordable sectors continues to dominate, the number of transactions for high-end properties has also increased, simply because the number of transactions has increased.

With the advancement and adoption of digital technologies, newer stocks of retail and office units are looking to enhance their building design, whether to become more flexible or to suit hybrid working arrangements. 

There is a high number of organisations, especially MNCs, who have put ESG as one of the top agenda for most property developments, Sulaiman said.

For the hotel sector, the emphasis on the tourism industry and the rebound of tourist arrivals to 14.4 million for the first 9 months of 2023 exceeded initial projections. Several renowned hotels were opened and expanded with anticipation of the targeted 26.1 million tourist arrival with a projected spending of RM97.6bil during the next Visit Malaysia Year 2026.  

A special focus on Johor

There is a renewed buzz in Johor with the announcement of the Johor-Singapore Special Economic Zone (JS-SEZ), the Forest City Special Financial Zone, the Rapid Transit System (RTS) link to Singapore and the proposed 3 new LRT lines.

New incentives and programmes are expected in the state that will focus more on economic growth generation, driving demand for industrial and commercial properties.

“On the industrial impact of NIMP (New Industrial Master Plan) with the movement of industrial property in the past few years, we see more and more focus put on managed industrial parks, on these specialised industrial parks, as well as data centres,” Sulaiman said.

“Developers are now thinking of that approach as opposed to developing the cookie-cutter units, or the standard, generic units because it’s going to be very, very competitive,” he added.

These are equipped with ESG, built-to-suit features and AI facilities. These specific and niche industrial parks mitigate a potential swamping risk for industrial units.

Overall, the moderating growth pace of 2023 is likely to spill over into 2024. 

Policy-based enablers such as the revised MM2H programme and perhaps the once-debated Residential Tenancy Act would be key to driving traffic for both the foreign buyers’ market and the rental market. 

Across the different regions in the country, ongoing infrastructure projects and proposed plans including the Pan-Borneo Highway, ECRL and the revisited  High-Speed-Rail (HSR) are poised to strengthen local economic growth and opportunities.

Executive chairman Tan Sri (Dr) Abdul Rahim Abdul Rahman, Estate Agency chief executive officer Siva Shanker, Petaling Jaya office director Choy Yue Kwong and valuation services senior manager Mohamad Alhafiz Farouk represented the company at the press conference.


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