Malaysia’s economy recovering at a healthy rate, allows cautious optimism for property market

• Experts during a panel session at PropNex Malaysia's Xpo 2024 say the country’s recovering economy is no deterrent to growth of foreign investments, industry, and the property market.

SUBANG JAYA (July 5): Experts taking part in a panel session at PropNex Malaysia's Xpo 2024 are cautiously optimistic about the local property market.

They are of the view that although Malaysia’s economy is still in recovery mode, it is no deterrent to the growth of foreign investments, industry, and the property market.

Moderated by PropNex Malaysia COO Evon Heng, and featuring insights from PropNex Malaysia CEO Marcus Teng, UOB head treasury specialist Kenny Ho, and SingCapital Pte Ltd CEO Alfred Chia, the session took a deep dive into the key factors driving micro and macro market trends in Malaysia’s economy and property market.

Malaysia’s economic and housing policies to attract foreign investors

Putrajaya’s current policies are predicted to steer the economy on the right path, and when the economy booms, so does the property market.

“The goal of Malaysia Madani is to improve economic growth, business environment, and public infrastructure. In following these policies, we can see a 17% increase in our turnover volume from 1Q2023 to now. What is more interesting is the doubling of value, up to 34% compared to last year. This indicates that the market is strongly recovering. If we stay our course and realise the Madani vision, this growth should continue,” said Teng.

Teng also referenced Malaysia’s strengthening position in the semiconductor industry and the recent investments made by Google to build a hyperscale data centre in Elmina Business Park, as evidence of improving conditions in Malaysia.

The government is also on track to attract more foreign investment to boost the housing market.

Using Singapore as an example to highlight the differences between the two countries, SingCapital Pte Ltd CEO Alfred Chia said: “Singapore’s property is naturally expensive. As foreigners looking to buy residential property here, on top of the buying price, they will need to pay 60% in additional stamp duty. This ensures our property prices remain sustainable. However, Singaporeans who want to expand on their property investments will also be affected. So, I think Malaysia will be one of the natural locations investors will turn to.”

This is in contrast to Malaysia’s agenda, as the government’s policies are designed to attract property investment, like the relaxed stipulations for Malaysia My Second Home (MM2H) and the fixed 4% stamp duty for foreigners.

Forecasted decrease in interest rates to return affordability

Another factor that will potentially drive growth in the local property market is the overall decrease in interest rates.

“One of the main factors that affects property prices is interest rates. Interest rates have been very high due to the US Federal Reserve. However, there is a consensus that interest rates will lower towards the second half of the year. This will benefit homebuyers, as the cost of borrowing will be reduced, meaning increased affordability. At the same time, developers will have lower financing costs,” explains Chia.

“A lot of investors will then be considering where to put their money, because as interest rates are lower, so are the earnings. Most of them will probably consider property,” he adds.

Central banks have already begun to reduce interest rates, including the Bank of Canada and Swiss National Bank.

Meanwhile, Bank Negara Malaysia’s interest rate has been fixed transparently, at 3.3%. This is ideal for those who conduct business and invest in the Ringgit.

“In the financial markets, Bank Negara has been on the back foot for many years. You can see the recent change in its policies in terms of opening up the sukuk funding market. Sukuk is actually important as a fixed income funding that supports many industries. There is a lot of funding that comes from sukuk bonds. These bonds are a long-term source of funding for a lot of property developers,” explains UOB head treasury specialist Kenny Ho.

The event also saw a presentation by PropNex Malaysia group district leader Cliff Siow on building wealth through property investments, highlighting the ideal nature of property for asset progression.

The expo also served a platform for developers from different regions of Malaysia to showcase their projects. As one of PropNex Malaysia’s strategic partners since 2022, EdgeProp was also present at the expo with its booth. Visitors to the booth participated in EdgeProp START for a chance to win the RM10,000 Cash Bonanza and also took home amazing prizes.