Knight Frank Malaysia: Residential property market improved in first nine months of 2023

• Knight Frank Malaysia senior executive director of research and consultancy Judy Ong: Despite the inflationary pressures and elevated OPR (overnight policy rate), the residential property market appears to be moving in a positive direction, marked by increased sales volume, new property launches and successful completions.

KUALA LUMPUR (Jan 11): Malaysia’s residential property market improved in the first nine months of 2023, with both transaction volume and value registering a year-on-year growth of 1.3% and 3.5% respectively, according to Knight Frank Malaysia.

In its recently released “Real Estate Highlights 2nd Half of 2023” report, the international property consultancy highlighted that the overall residential property market is showing an uptick in both transaction volume and value, partly due to developers having enhanced the promotion of homeownership through collaborations with banks, offering post-sale services such as hassle-free fit-out, rental programmes and home care services.

“Despite the inflationary pressures and elevated OPR (overnight policy rate), the residential property market appears to be moving in a positive direction, marked by increased sales volume, new property launches and successful completions. This is further supported by the government’s initiatives and incentives to encourage home ownership among the rakyat; and coupled with the recently relaxed criteria for the MM2H (Malaysia My Second Home) Programme, the residential market maintains a cautiously optimistic outlook as it enters 2024,” said Knight Frank Malaysia senior executive director of research and consultancy Judy Ong in a media statement.

During the review period, the industrial property market also recorded a higher sales value of 7.6%, albeit with a lower transaction volume of circa 4.6% on an annual comparison, indicating the sector remained relatively stable.

Meanwhile, KL City office market continues to face pressure due to supply-demand imbalance in the first nine months of 2023, while the office markets in KL Fringe and Selangor exhibit resilience, characterised by steady leasing activities, particularly in prime locations featuring Grade A buildings.

For the retail sector, Knight Frank Malaysia has revised the retail sales growth projection downward to 2.7% from 4.8%, due to the weakening spending power amid elevated inflation during the review period. Moving forward, Knight Frank Malaysia director of property management Yuen May Chee expects that the sales and service tax (SST) rate hike from 6% to 8% effective March 1, 2024, coupled with the introduction of the 5% to 10% luxury tax and restructuring of subsidies, may further dampen growth in the retail market.

Up north in Penang, Knight Frank Malaysia executive director of Penang branch Mark Saw commented that the overall property market in the state was stable, with high-rise residential properties recording better performance last year, while overall retail malls’ occupancy rate continued to improve; and office rental and occupancy levels of selected privately owned purpose-built office buildings having remained stable.

In Johor, the asking rental rates for office space in Johor Bahru City Centre, Johor Bahru City Fringe and Iskandar Puteri remained consistent, while transaction for high-rise residential in the city had seen improvements, especially for projects nearby the Johor Bahru–Singapore Rapid Transit System (RTS) Link project.

Commenting on the Sabah property market, Knight Frank Malaysia executive director of Sabah branch Alexel Chen said that the housing sector remains a buyer’s market, with condominium/apartment as a singular property type representing majority of the existing stock with circa 54,119 units.

Chen highlighted that retail components of some key mixed-use developments in the city centre garnered popularity in their food and beverage (F&B) offerings during the review period. He also observed that several notable retailers in the country made their maiden entry into the Kota Kinabalu market, indicating a brighter outlook for the state’s retail segment going forward.

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