The Malaysian economy is recovering at a healthy pace, sparking cautious optimism for the property market.

The Malaysian economy is recovering at a healthy pace, sparking cautious optimism for the property market.

  • Speaking at a panel session at PropNex Malaysia’s Xpo 2024, experts said the country’s economic recovery will not stifle foreign investment, industrial and property market growth.

SUBANG JAYA (July 5): Experts who participated in a panel session at PropNex Malaysia’s Xpo 2024 expressed cautious optimism about the local property market.

They believe that although Malaysia’s economy is still in the process of recovery, this will not hinder the growth of foreign investment, industry and the property market.

The session was moderated by Evon Heng, COO of PropNex Malaysia, and featured insights from Marcus Teng, CEO of PropNex Malaysia, Kenny Ho, Chief Financial Specialist at UOB, and Alfred Chia, CEO of SingCapital Pte Ltd, delving deeper into the key factors driving micro and macro market trends in the Malaysian economy and property market.

Malaysia’s economic and housing policies attract foreign investors

Putrajaya’s current policies are expected to steer the economy in the right direction, and as the economy booms, so will the property market.

“Malaysia Madani’s goal is economic growth, improved business environment and public infrastructure. By following these policies, we expect to see a 17% increase in sales from the first quarter of 2023 to date. What’s more interesting is that value has doubled compared to last year, increasing by up to 34%, indicating that the market is recovering strongly. This growth should continue if we stay the course and deliver on Madani’s vision,” Teng said.

Teng also cited Malaysia’s strengthening position in the semiconductor industry and Google’s recent investment in building a hyperscale data center in Elmina Business Park as evidence of Malaysia’s improving situation.

The government also plans to attract more foreign investment to boost the housing market.

Alfred Cheah, CEO of Singapore Capital, used the example of Singapore to highlight the differences between the two countries, saying: “Property in Singapore is naturally expensive. Foreigners looking to buy a residential property here have to pay an additional 60 per cent in stamp duty on top of the purchase price. This keeps property prices sustainable. But it also affects Singaporeans who want to expand their property investments. So I think one of the natural places investors will look is Malaysia.”

This contrasts with Malaysia’s policies, which include relaxed Malaysia My Second Home (MM2H) provisions and a flat 4% stamp duty for foreigners, aimed at attracting property investment.

Falling interest rates are expected to ease the burden of home buying

Another factor that could spur growth in the local real estate market is lower interest rates overall.

“One of the main factors affecting property prices is interest rates. The US Federal Reserve has kept interest rates very high. However, there is a consensus that interest rates will fall towards the second half of the year. This is favourable for homebuyers as it will reduce borrowing costs and increase the ease of home purchases. At the same time, it will reduce financing costs for developers,” explains Chia.

“A lot of investors will be considering where to put their money because as interest rates fall, so will returns. Most of them will probably be considering real estate,” he added.

Central banks, including the Bank of Canada and the Swiss National Bank, have already started cutting interest rates.

Meanwhile, the Malaysian central bank’s interest rate has been transparently fixed at 3.3%, which is ideal for those doing business and investments in ringgit.

“In the financial markets, the central bank has been lagging behind for many years. We have seen a recent change in policy in opening up the sukuk funding market. Sukuk are indeed important as fixed income funding that underpins many industries. There is a lot of funding from sukuk bonds. These bonds are a long-term source of funding for many property developers,” explains UOB treasury specialist Kenny Ho.

The event also featured a presentation by PropNex Malaysia Group Regional Leader Cliff Siow on Building Wealth through Property Investment, highlighting the ideal qualities of real estate for capital growth.

The exhibition also served as a platform for developers from different regions of Malaysia to showcase their projects. EdgeProp, one of PropNex Malaysia’s strategic partners from 2022, also participated in the exhibition with a booth. Visitors to the booth also took home some fantastic prizes as they got the chance to participate in EdgeProp START and win a cash jackpot of RM10,000.

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