Malaysia property deals up 8.8% to RM142 billion in first three quarters of 2023

[KUALA LUMPUR] Malaysia’s property market saw 293,095 transactions worth a total of RM142.5 billion (S$40.3 billion) in the first nine months of 2023, according to a report by Knight Frank Malaysia on Monday (Feb 5).

The value was 8.8 per cent higher compared to the RM131 billion during the same nine-month period in 2022, even though the number of transactions then was slightly higher at 293,115.

In a release, Knight Frank said that 2023 exhibited “a reliable performance” in both Malaysia’s economy and its real estate market.

“Looking ahead in the commercial real estate market, (we) anticipate a relatively stable and prudently optimistic environment in 2024,” said the property valuation and advisory firm.

It noted that there has been an increasing demand for commercial properties in Malaysia last year, and it expects this growth momentum to carry on in 2024 with a greater focus on the industrial and logistics sub-sectors.

Keith Ooi, the group managing director of Knight Frank Malaysia, said: “The surge in demand for data centres in the Asia-Pacific region, coupled with growing interest in alternative investments such as serviced residences and industrial parks, underpins the resurgence of the commercial real estate market post-pandemic.”

The latest figures are part of the results from an annual survey by Knight Frank that collected insights from developers, real estate investment trust managers, commercial lenders and other respondents.

The findings revealed that 68 per cent believed that foreign direct investment, dominated by the country’s manufacturing sector, will be more favourable in 2024 due to improved economic conditions.

The report showed that a majority of the respondents indicated they were optimistic about Malaysia’s economic performance, digital evolution and real estate market, driven by a resilient labour market and positive consumer sentiments.

“The favourable outlook on political stability further contributes to enhanced investor confidence on both domestic and international fronts,” said the report.

Amy Wong, executive director of research and consultancy at Knight Frank Malaysia, said that investments are expected to intensify in the retail, healthcare and educational or institutional sub-sectors. “However, minimal interest is observed in the office and industrial/logistics sub-sectors, while the hotel and leisure sector maintains a trend similar to last year,” she added.

The survey also revealed that there is keen interest in serviced residences and hotels in Klang Valley, Penang and Sabah because of the robust tourism in those states.

Meanwhile, industrial properties and business parks in Klang Valley, Penang and Johor have attracted investors who are seeking opportunities in logistics and industrial hubs.

Wong also said there is a growing preference for alternative investments in sectors like co-living or student accommodation, co-working or flexible office space.

In terms of performance forecast, the majority of the respondents are confident that Malaysia’s industrial and logistics sub-sectors will offer a better capital appreciation (62 per cent), rising yield return (68 per cent) and higher rental (62 per cent).

However, the outlook for the office sub-sector is divided. More than a quarter of respondents expect declining capital values (32 per cent), yields (24 per cent) and rentals (35 per cent) of older assets due to substantial existing and incoming supply.

According to Knight Frank Malaysia’s estimates, there will be an additional 1.75 million square feet of space entering the Klang Valley office market by end-2024.

“This is likely to sustain pressure on occupancy rates and rents, as the supply continues to surpass demand,” said Wong.