Will 2020 be the boom-time for Malaysian real estate?
Residential real estate prices, rents, and sales numbers will increase significantly in 2020 and 2021, both nationally and in the eight states preferred for investment, according to a survey of 386 Malaysian real estate agents. The survey was conducted in November 2019 by Juwai IQI, which is one of the largest real estate groups in Southeast Asia with more than 7,000 agents.
Kashif Ansari, Group Executive Director of Juwai IQI, said:
“This survey is the first large-scale effort to quantify and forecast trends in the Malaysian real estate industry by asking industry experts. We hope it will become a trusted and important for decision-makers as similar indexes in other industries, such as the Purchasing Managers’ Index.
We share the positive outlook reported in the survey, within rational bounds.
“Agents have a very strong, positive outlook on the future of the residential real estate sector over the next 12 and 24 months.
“The survey findings show that the states with the most robust price-growth outlook are Kuantan and Ipoh. Respondents predict prices in Kuantan will grow 9.4% over the next 12 months. Prices in Ipoh are pegged to grow 7.6% over 12 months. The states with the weakest outlook for price growth are Penang, with 2.1% forecast growth, and Sarawak with forecast growth of 3.4%.
“When it comes to the rental market, the findings show that Ipoh has the highest growth forecast of any state, with rents expected to swell by 12.25%. Overall, Ipoh has the most positive outlook. One-hundred per cent of respondents in Ipoh expect local first-time buyers to buy more properties in the state over the next 12 months than in the past 12 months. At the same time, 87.5% of respondents predict local upgrade buyers will also make more property purchases in the coming year.
“Of the various buyer groups, the buyers with the most bullish forecast are local first-time buyers. Nearly two-thirds of respondents, or 64.7%, believe first-time buyers will increase the number of transactions they complete in the coming year, versus only 6% who think they will not. Local first-time buyers are the largest buyer group in the new-build market and the third-largest in the subsale/secondary market.
“The buyer group with the largest share of nation-wide subsale/secondary market is local upgrade buyers. By contrast, relatively few local upgrade buyers purchase in the new-build market. They have the lowest share of transactions nation-wide of any domestic buyer group.
“Foreign buyers often seem to get more public attention than other buyer groups, but they account by far for the smallest share of all transactions. Foreign buyers purchase many fewer homes than do local first-time buyers, local investors, or local upgrade buyers. That is true in both the new-build and subsale/secondary markets. Respondents report that foreign buyers account for 19.3% of new-build transactions and 19.7% of subsale/secondary sales.
“Industry experts expect all buyer groups to purchase more real estate in the year to come. Nationally, 64.7% of respondents expect local first-time buyers to close more transactions over the next 12 months. Local upgrade buyers are expected to purchase more property in the coming year by 61.2% of respondents, local investors by 65% of respondents, and foreign buyers by 79.7% of respondents. Note that these forecasts do not specify the scale of the increase in transaction numbers.”
Juwai.com Executive Chairman Georg Chmiel said:
“In 2020, we expect the economy to grow by 4.3% to 4.8%, even in the current unsettled global environment. Malaysia’s exports and trade surplus will grow in 2020. The country is attracting companies and operations that otherwise might have gone to China.
“The lower price threshold for foreign buyer purchasing will also help absorb some of the unsold inventory that has been weighing on the market. While the price thresholds are only being lowered for one year, hopefully, that will give foreign investors enough time to purchase. For the market to be healthy, developers need to sell those unwanted units so they can build more projects that are suitable for local buyers. Our recent survey of hundreds of agents found that 71% approve of the lower foreign buyer price threshold.
“We expect all these factors to support the residential real estate market in 2020.”