In 2023, the Malaysian property market saw significant trends and developments that have set the stage for the outlook and predictions for 2024. 

The huge mismatch between what Malaysians can afford to buy versus what developers are building has become increasingly apparent, leading to a shift in consumer behaviour towards renting instead of buying.

With affordable housing in short supply, especially in highly urbanised areas like Kuala Lumpur, Johor, Penang, and Selangor, demand for rental properties surged in 2023. 

This increased demand for rental properties has led to a notable shift in the market dynamics, with renters seeking affordable and well-maintained units in desirable locations.

In response to the changing market dynamics, developers in Johor, Selangor and Kuala Lumpur focused on catering to the mass market segment by launching new residential projects priced below RM300,000. 

These mass-market homes aimed to address the growing demand for affordable housing options among Malaysian buyers.

On the other hand, the overhang market in Johor, Selangor, Kuala Lumpur and Penang was dominated by residential properties priced between RM500,000 to RM1 million. 

This suggests that there is a surplus of mid-range properties in these areas, which may take longer to sell due to affordability constraints and oversupply issues.
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Johor

In Johor, the property market is expected to continue facing challenges in 2024, particularly in areas with a high concentration of oversupply. 

The mass market segment, which saw an abundance of new launches priced below RM300,000 in 2023, may experience slower growth as developers adjust to the changing demand landscape. 

However, growth areas such as within Iskandar Malaysia may still present opportunities for investors, especially in well-planned integrated developments that cater to both residential and commercial needs.

Selangor

Selangor, being one of Malaysia's most populous states and a major economic hub, is expected to maintain its position as a key player in the property market. 

While the demand for affordable housing is likely to remain strong, developers may shift their focus towards more sustainable and inclusive development strategies. 

Growth areas such as Cyberjaya, Shah Alam and Subang Jaya are expected to continue attracting interest from both buyers and developers, with a focus on mixed-use developments and transit-oriented projects.

Kuala Lumpur

In Kuala Lumpur, the property market is expected to see continued interest in high-density urban living, driven by factors such as urbanisation and lifestyle preferences. 

However, affordability concerns may lead to a greater emphasis on the development of affordable housing and innovative financing solutions. 

Growth areas within the city centre and its surrounding suburbs, such as KL Sentral, Bangsar and Mont Kiara, are expected to remain attractive to both investors and homebuyers.

Penang

Penang, known for its rich cultural heritage and vibrant lifestyle, is expected to continue experiencing steady demand for residential properties, particularly in sought-after areas such as George Town, Bayan Lepas, and Tanjung Tokong. 

However, affordability concerns and oversupply in certain segments may lead to a slowdown in the high-end property market. 

Developers may focus on niche markets and alternative housing options to cater to changing consumer preferences.

The growth areas to watch out for on the main island are mainly along the proposed Bayan Lepas LRT.

Growth areas

In addition to established urban centres, growth areas such as transit-oriented developments, industrial zones, and emerging satellite towns are expected to attract interest from investors and homebuyers alike. 

These areas offer opportunities for sustainable development and investment diversification, while also addressing issues such as urban sprawl and congestion.

Johor

In Johor, the growth areas are primarily located in Iskandar Malaysia, especially in well-planned integrated developments that cater to both residential and commercial needs.

One such area is Bukit Chagar which will serve as an interchange station Johor Bahru – Singapore Rapid Transit System (RTS) Link.

Slated to commence passenger service by end-2026, the RTS Link can serve up to 10,000 commuters during peak periods, for every hour and in each direction.

The RTS Link will also have a spillover impact in the nearby JB Sentral area which is home to malls, hotels and the upcoming Ibrahim International District.

Selangor

In Selangor, the growth areas are in Southern Kuala Lumpur, particularly, those near high-impact projects and transit-oriented developments along the Putrajaya Line, Kuala Lumpur–Singapore high-speed rail (HSR) and the Malaysia Vision Valley.

Nilai and Seremban are areas to watch out for.

Nilai is poised for further growth as it is located within the Malaysia Vision Valley. Covering Nilai to Port Dickson, it will have a proposed area of 108,000 hectares. 

The upcoming industries include high-tech, logistics, education, health, tourism and sports. 

The Malaysia Vision Valley is expected to create some 1.35 million jobs by 2035 and investments of more than RM417.6 billion by 2045.

To support the Malaysia Vision Valley, the Seremban HSR station will be situated in Nilai within the Labu and Kirby estates. 

Major townships in the vicinity include Bandar Enstek, Bandar Ainsdale Property and S2 Height. 

Seremban will be an interchange station for the Seremban Komuter Line and KTM Electric Train Service.

Kuala Lumpur

The growth areas in KL are along the MRT3 Circle Line, namely, Bukit Kiara Selatan, Bukit Kiara, Sri Hartamasa, Mont Kiara, Bukit Segambut, Taman Sri Sinar, Dutamas, Jalan Kuching, Titiwangsa, Kampung Puah, Jalan Langkawi, Danau Kota, Setapak, Rejang, Setiawangsa, AU2, Taman Hillview, Kuchai, Jalan Klang Lama, Pantai Dalam, Pantai Permai and Universiti.

Titiwangsa MRT station which will serve as an interchange station with the Ampang and Sri Petaling Line, KL Monorail Line and Putrajaya Line.

As the Circle Line is still under construction, this presents a good opportunity for genuine homebuyers to start looking in and around the station.

Homes in the secondary market will be the most ideal as they are priced cheaper than new launches.

Penang

The growth areas in Penang remain unchanged in Batu Kawan and some parts of Seberang Perai.

Since the opening of the Second Penang Bridge, Batu Kawan has seen rapid developments from several renowned developers such as EcoWorld and Tropicana as well as the opening of IKEA.

While connectivity remains patchy at Batu Kawan, there is a planned Bus Rapid Transit (BRT) system for Batu Kawan as part of the Penang Transport Master Plan.

In Seberang Perai, the growth areas will be along the planned Raja Uda-Bukit Mertajam Line to connect the northwestern region to the southeastern region.

For those who can afford to buy a property on the main island, areas along the Bayan Lepas LRT line will be the new growth corridor.

What’s in store for buyers

Buyers in 2024 can expect a more diverse range of options in the property market, with an emphasis on affordability, sustainability, and lifestyle amenities. 

Innovative financing schemes and incentives may also be introduced to encourage homeownership and address affordability concerns.

What’s in store for sellers

Sellers may need to adjust their expectations and pricing strategies to align with changing market conditions. 

Those with properties in oversupplied segments may need to offer incentives or value-added services to attract buyers, while those in high-demand areas may continue to command premium prices.
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What’s in store for tenants

Tenants can expect a more competitive rental market in 2024, particularly in urban areas where demand for rental properties is high. 

Affordability remains a key concern for tenants, and they may seek out properties with flexible lease terms and inclusive amenities.

What’s in store for landlords

Landlords may need to be more proactive in managing their rental properties, offering competitive rental rates and investing in property maintenance and upgrades to attract and retain tenants.

Those with properties in growth areas may continue to enjoy strong rental yields and capital appreciation.

Conclusion

Overall, the Malaysian property market is expected to continue evolving in 2024, with a focus on affordability, sustainability, and innovation. 

While challenges such as oversupply and affordability concerns may persist, there are also opportunities for growth and investment in emerging sectors and growth areas. 

By staying informed and adaptable, stakeholders in the property market can navigate these changes and capitalise on new opportunities in the year ahead.

From map reading to identifying growth areas, this easy-to-understand session aims to assist first-time homebuyers looking for homes along the Sungai Buloh-Serdang-Putrajaya (SSP Line).
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By Khalil Adis

The Malaysian property landscape has undergone significant changes since the Covid-19 pandemic hit. 

With the completion of iconic projects like the Merdeka 118 Tower and the Sungai Buloh-Serdang-Putrajaya (SSP Line) over the past three years, there are exciting opportunities in the market. 

However, affordability remains a key concern for first-time homebuyers in Kuala Lumpur and Greater KL.

Data from the National Property and Information Centre (NAPIC) reveals that 48.2 per cent of the 8,226 new residential units launched in the third quarter of 2023 were priced below RM300,000. 

This indicates a strong demand for affordable properties. 

High-rise developments make up 67.8 per cent  of these units, while 32.2 per cent are landed properties. 
Selangor and Kuala Lumpur accounted for 1,062 and 1,236 units respectively.

To address these concerns and help first-time homebuyers make informed decisions, I will be covering one of the 5Cs of property buying - checking for the transport masterplan - in greater detail during my upcoming talk on July 16 at the iProperty Bumiputera Home & Property Fair 2023. 

Here are five things you can expect to learn:
#1: Learn how to do map reading

Navigating the Klang Valley and Greater KL areas can be overwhelming for first-time homebuyers. 

In this talk, we will learn the art of map reading to understand the different train lines that serve these areas. 

By gaining a grasp of the overall growth areas, we can then dive deeper into the newly completed SSP Line.
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#2: Understand the transportation master plan

Get to know the key facts and figures of the SSP Line, such as the budget allocation and the number of stations. 
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Understanding the transportation master plan will enable you to uncover the budget allocation from the federal government. 

We will analyse how this budget allocation can potentially have a positive spillover impact on properties along the line.

#3: Learn where the growth areas are

To identify potential growth areas, we will delve into the two other 5Cs - checking for economic drivers and job creation. 

By studying case studies like the Cyber City Centre and the KLIA Aeropolis Digital Free Trade Zone (DFTZ), we can gain insights into the areas with promising development potential.

#4: Find the sweet spot in terms of distance to train stations

While it may be tempting to buy a property close to train stations, we need to be cautious not to be too close, especially for elevated train stations. 

Additionally, developers need to adhere to certain requirements to qualify for transit-oriented development (TOD).
 
Learn about the sweet spots that strike the right balance and how they can impact your property's resale and rental value.

#5: Identify affordable properties along the SSP Line

Not all affordable areas are equal. 

To find truly affordable properties, we need to identify areas with new or upcoming train stations and government-announced plans for upcoming economic zones. 

These areas should be situated away from the city centre but close enough to train stations and dedicated hubs, ensuring long-term price appreciation. 

Discover the income-to-mortgage ratio and identify areas along the SSP Line that won't burn a hole in your pocket, offering the greatest potential for capital appreciation.

iProperty Bumiputera Home & Property Fair 2023

​Join me at the iProperty Bumiputera Home & Property Fair 2023 on July 16 to gain valuable insights into the property market and make informed decisions as a first-time homebuyer. 

Don't miss out on this opportunity to learn about navigating the Klang Valley and Greater KL areas, understanding the transport masterplan, identifying growth areas, finding the sweet spot in terms of distance to train stations and discovering affordable properties along the SSP Line. 

See you there!

As Singapore's property market continues to reach new heights, investors are eyeing Malaysia as a potential alternative. But is it the answer to Singapore's escalating property prices?  Let us find out.

​By Khalil Adis

Singapore's property market has been making waves, with both the HDB and private property sectors hitting record highs in their price indexes. 

This surge in prices has prompted investors and homebuyers to search for alternatives and Malaysia has emerged as a popular choice. 

However, before you pack your bags and head south, let us dive into whether Malaysia truly offers a viable solution to Singapore's escalating property prices.

The latest data from the Housing & Development Board (HDB) and the Urban Redevelopment Authority (URA) paints an intriguing picture. 

The HDB Resale Price Index (RPI) and Private Property Index (PPI) for the first quarter of 2023 reached unprecedented levels of 173.6 points and 194.8 points, respectively. 

These figures indicate a strong demand for properties in Singapore, driving prices to new heights.

Analysts say they are witnessing resale transactions decreasing from April to March 2023, which could explain the marginal increase in the RPI.

“In April 2023, HDB resale volumes decreased month-on-month by 4.3 per cent, following a 23.7 per cent surge in transaction activities in March,” said Luqman Hakim, chief data & analytics officer at 99.co..

But it is not just rising property prices that pose a concern. 

Rental rates have also skyrocketed, leaving tenants grappling with the search for affordable accommodations. 

Rising rentals

Take, for instance, Marwani (not her real name), a landlord in Jurong West, who witnessed the rental price of her 4-room flat soar from $1,750 per month in 2021 to a staggering $3,500 per month in 2023—an almost 200 per cent increase! 

“I am lucky that my tenants have continued to stay on despite the steep increase in rental,” said Marwani.

Her agent was the one who negotiated the lease renewal.

The private property rental market also experienced a steep climb, with a 7.2 per cent increase in the first quarter of 2023.

These exorbitant prices and soaring rentals have left many individuals, like Edward (not his real name), a tenant in Singapore, seriously considering buying a resale HDB flat as a more financially viable option. 

“I signed a 2-year lease which had averted a rental hike. However, I am pretty sure it will go up next year,” said Edward who lives close to the city centre.

Edward believes that owning property might be more cost-effective in the long run, particularly with the prospect of rising rents. 

“It makes more financial sense to buy now rather than rent as I foresee it will be cheaper to pay my monthly mortgage should my rent increase,” he said.

Analysts have also observed this growing trend, noting that tenants are increasingly turning to purchasing resale flats amidst high rental prices.

“Resale prices increased by 1.1 per cent compared to March 2023, with 5-room flats rising the most at 1.9 per cent. It is possible that with rent prices remaining high, many tenants are opting to buy resale flats instead. Subsequently, with the revised ABSD rates from 27 April 2023 onwards, there is expectant pressure on rental demand (and prices), prompting spillover demand from tenants as they reinvest and buy HDB resale flats,” said Hakim.

With the demand for properties in Singapore remained robust, the government has stepped in to cool the market. 

The recent increase in Additional Buyers Stamp Duty (ABSD), which affects second-timer Singaporeans and first-time foreign property owners, aims to rein in property speculation. 

Push factor to Malaysia?

With 2-room HDB flats now hovering around the $300,000 mark and million dollar HDB flats becoming this norm, could this push potential biuyers to Malaysia?

Not quite.

Yusoff (not his real name) is among one of the few Singaporeans who is packing his bags after recently selling his 2-room HDB flat in Woodlands for slightly above $300,000.

“My wife recently passed away while my relatives are all in Malaysia. It makes sense for me to retire there,” said Yusoff.

Indeed, the first quarter data of 2023 from HDB showed that such flats were transacted at a median price of $330,000, $325,000 and $315,000 in Punggol, Sembawang and Yishun respectively.

That is almost enough to buy a private property in Malaysia where the minimum purchase price in most states is at RM1 million, including in Johor.

However, not everyone is in the same predicament as Yusoff. 

Edward, for instance, is staying put.

Despite these cooling measures, the idea of buying properties across the causeway in Malaysia may not be as enticing as it seems.

“There are many push factors such as the lack of liberal values in a predominantly Muslim country. Also, Malaysia appears to be unstable both politically and economically,” said Edward.

While the affordability factor in Malaysia's property market may initially catch the eye of potential buyers, it is worth noting that property overhang for residential properties continues to be a serious issue.

Johor, for instance, continues to be the leading state for residential overhang at 5,348 units, the third quarter of 2023 data from the National Property and Information Centre (NAPIC) showed.

This would put pressure on the secondary market causing investors to suffer a loss as in the case of Country Garden Danga Bay.

Additionally, concerns surrounding political and economic stability in Malaysia may deter investors who prioritise stability and predictability in their investments.

Ultimately, while the ABSD increase may lead some investors to explore opportunities outside of Singapore, it seems that the challenges and limitations associated with investing in Malaysia may outweigh the potential benefits. 

As always, conducting thorough research and seeking expert advice before making any investment decisions is crucial.

Conclusion

So, is Malaysia truly the solution to escaping Singapore's soaring property prices? 

The answer may not be as straightforward as it seems. 

While Malaysia offers some advantages in terms of affordability, potential buyers need to carefully consider factors such as political stability and the severe oversupply issue which may impact their investment.

In less than six years, Malaysia has seen five different  prime ministers and the cancellation of several mega projects including the Kuala Lumpur–Singapore high-speed rail (HSR).

Combined with its weakening ringgit, they have had an impact on the perceived political stability of the country and affected investors’ confidence.

While Singapore’s and Malaysia’s foreign ministers have recently reaffirmed ties and announced the completion of the Johor Bahru–Singapore Rapid Transit System (RTS Link), buying activity among Singaporeans particularly in Iskandar Malaysia remains muted.

Nevertheless, demand for the mass market housing segment will continue to be robust across Malaysia in 2023 judging by the volume of new launches for affordable homes in the third quarter of 2023, data from the National Property and Information Centre (NAPIC) showed.

According to NAPIC, of the 8,226 units launched during the quarter, 48.2 per cent (3,996 units) were priced below RM300,000 suggesting that they were geared towards local buyers.

Of this, 67.8 per cent (5,581 units) comprised high-rise development while 32.2 per cent (2,645 units) are landed properties.

Despite this, property overhang continues to be a serious issue across Malaysia that appears to have been further exacerbated by the impact of Covid-19.

From Johor to Kuala Lumpur, the number of unsold residential units has continued to remain consistently high with no sign of relief, since NAPIC started tracking the data.

Nevertheless, buying activity has rebounded strongly from 61,283 units transacted in the third quarter of 2021 to 105,204 units transacted in the same quarter in 2022, suggesting a recovery in the property market.

Of the 105,204 units transacted, 64,989 units or 61.8 per cent are in the residential sector followed by commercial and industrial at 8,570 units (8.1 per cent) and 2,213 units (2.1 per cent) respectively.

Johor

Johor continues to be the leading state for residential overhang at 5,348 units followed by Penang and Selangor at 5,222 and 4,386 units respectively as of the third quarter of 2022.

In the serviced apartment sector, Johor also had a whopping 14,780 overhang units followed by Kuala Lumpur and Selangor at 5,346 and 2,586 units respectively in the same period.

This suggests there is a severe mismatch between what buyers can afford versus what developers are offering.

In Johor, the supply glut has affected prices in the secondary market.

For example, at the peak of the market, condominium units in Iskandar Puteri, Danga Bay and Medini were launched at an average price of around RM1,000 per sq ft.

Country Garden Danga Bay, for instance, is now listed on property portals with an asking price of around RM600 per sq ft.

Over Iskandar Puteri, Teega @ Puteri Harbour was launched at around RM600 per sq ft and is now asking for around RM630 per sq ft.

Similarly, Meridin @ Medini is now asking for around RM580 per sq ft.

The only exception is Ujana which was launched at around RM250 per sq ft and is now asking for around RM450 per sq ft.

Nevertheless, the data suggest that the oversupply situation has stunted capital appreciation for residential properties.

With many good deals to be sought in the resale market, this may favour first-time homebuyers who are looking for a completed property in move-in condition.

The auction market is also another place that investors may want to look into for below-market-value (BMV) as such deals at public auctions have become ubiquitous due to the impact of Covid-19.

While such properties may offer good deals, due diligence is important as there are inherent risks involved. 

Still, there are bright spots in Johor once the RTS Link is scheduled to be operational by the end of 2026, following a meeting on 16 January 2023 with Singapore's Foreign Affairs Minister Dr Vivian Balakrishnan and Malaysia’s Zambry Abdul Kadir.

Connected to the Thomson-East Coast MRT line (TEL), properties around the Bukit Chagar and JB Sentral areas may see their resale value increase due to the enhanced connectivity that will spur cross-border investment in tourism, real estate and retail industries.

Unfortunately, we are unlikely to see the resumption of the Kuala Lumpur–Singapore high-speed rail (HSR) project anytime soon.

As such, the outlook for properties around the Gerbang Nusajaya, Iskandar Puteri, and Medini as well as around the planned areas in Batu Pahat and Muar will continue to be muted.

We are also unlikely to see robust buying activities for residential properties among Singaporeans and foreign investors like those seen in 2010.

Selangor

The growth areas in Selangor will be those along the Putrajaya Line spanning from Kwasa Damansara through the Klang Valley and to Putrajaya Sentral.

The second line of the Klang Valley MRT Project to be developed, full service is expected to start in January 2023.

Kwasa Damansara, in particular, will be home to transit-oriented developments (TODs) that will include affordable homes, three shopping centres and a hotel.

Spanning 64 acres and with a gross development value (GDV) of RM8 billion, the township will be served by Kwasa Damansara and Kwasa Sentral MRT stations.

Another area to watch out for is around Sierra MRT station which is developed by IOI Properties.
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Located on the southernmost tip of Puchong, Sierra is poised to enjoy the economic spillover benefits from three major government projects - KLIA Aeropolis, Malaysia Vision Valley and Cyberjaya City Centre in Cyberjaya.

Speaking of Cyberjaya City Centre, Cyberjaya City Centre MRT station is a TOD project to be developed by Malaysian Resources Corp Bhd (MRCB) with a development plan spanning 20 years.

Phase one is expected to generate a gross development value (GDV) of RM5.35 billion.

It will feature a 200,000 sq ft convention centre, a 300- to 400-room business hotel, low and high-rise office buildings and a retail podium.

Kuala Lumpur

With travel restrictions now lifted, Kuala Lumpur will continue to see strong interest for high-end properties among local and foreign buyers in KLCC, Bukit Bintang, Bangsar, Mont Kiara, Sri Hartamas, Bukit Jalil and Damansara Heights.

Like Johor, the good deals are in the secondary market where their prices are significantly lower compared to new launches.

This is partly due to the 5,346 overhang units for serviced apartments in Kuala Lumpur as NAPIC’s data showed.

Nevertheless, the rental yield for such properties will likely be below 3 per cent due to the high purchase price versus their asking rent on property portals.

Investors are also likely to face a negative cash flow as the rentals will not be able to cover the mortgage.

For example, a property priced at RM880,000 will have a mortgage of RM3,609 over 30 years at an interest rate of 4.6 per cent. 

With an asking price of around RM3,000 in Kuala Lumpur, this means investors will have to top up the difference in cash.

Additionally, properties along the MRT3 Circle Line will be highly sought after. 

Unfortunately, developers will continue facing difficulties in off loading their high-end developments in Kuala Lumpur unless high-impact transportation  project like the HSR is implemented.

Penang

The growth areas in Penang remain unchanged in Batu Kawan and some parts of Seberang Perai.

Since the opening of the Second Penang Bridge, Batu Kawan has seen rapid developments from several renowned developers such as EcoWorld and Tropicana as well as the opening of IKEA.

While connectivity remains patchy at Batu Kawan, there is a planned Bus Rapid Transit (BRT) system for Batu Kawan as part of the Penang Transport Master Plan.

In Seberang Perai, the growth areas will be along the planned Raja Uda-Bukit Mertajam Line to connect the northwestern region to the southeastern region.

For those who can afford to buy a property on the main island, areas along the Bayan Lepas LRT line will be the new growth corridor.

However, the LRT project has been hit with a series of delays since it was announced in 2015 as part of the Penang Transport Master Plan.

Comprising 19 stations along a 22 km line, the project was supposed to begin in 2018 but has yet to begin construction due to issues of funding between the state and federal governments.

So until this political issue is resolved, we are unlikely to see the full implementation of the Penang Transport Master Plan.

Conclusion

The Malaysian economy is still reeling from the impact of Covid-19.

Against a weakening ringgit and an RM1.5 trillion national debt, improving connectivity between Singapore and Malaysia may resolve its woes, particularly in Johor.

Unfortunately, Malaysia also has a history of flip-flopping on its policies such as having a rival special economic zone in Forest City (as opposed to the one that was initially planned for Medini) and the cancellation of the HSR project.

As we speak, the Johor state government recently announced that it is exploring the possibility of ferry services between Puteri Harbour international terminal and Singapore.

However, according to local sources who were involved in the development of Puteri Harbour, this idea had been in the pipeline since 2010 but was shelved as Singapore did not see a viable need for the ferry service.

With Malaysian Prime Minister Anwar Ibrahim now in Singapore making an official visit, we could perhaps see the ferry service and HSR project being discussed.

“Connectivity, some long-standing issues, which we think are ripe for resolution, hopefully, and opportunities for the future in both the digital and green economy space. I expect it will be a very useful, significant meeting. As I said, it will set the agenda, set a timetable for the ministers and the respective ministries to follow up,” concluded Dr Balakrishnan on his recent bilateral trip to Malaysia on 17 January 2023.

In addition, Malaysia also needs to resolve its severe oversupply of residential properties by regulating the market to prevent a mismatch in demand and supply.

The government could also offer incentives to local developers to build affordable homes. 

To learn from Singapore's case study, the Local Government Development Ministry is inviting experts from the Housing & Development Board (HDB).

"The ministry will examine case studies for best practices on housing policies in other countries including neighbouring countries such as Singapore that have shown success in providing the public with affordable housing,” the ministry said in a statement.

However, as land is a state issue, implementing this will be a challenge for the federal government as they do not have a central government body like Singapore’s Urban Redevelopment Authority (URA) and HDB.

Such is the case for Medini whose special economic zone was planned by the federal government and Khazanah Nasional while the one in Forest City was mooted by the state government.

Despite COVID-19 and record housing prices on the island, buying activity in Singapore has remained brisk while Malaysia’s has been somewhat muted.

By Khalil Adis

Ask any Singaporeans if they will invest in Malaysia right now and most likely they will say no.

Instead, Singaporean investors flushed with cash have been busy snapping up properties in the Lion City.

Data from the Urban Redevelopment Authority (URA) showed that in the third quarter of 2021, developers sold 3,550 private residential units, compared with the 2,966 units sold in the previous quarter.

This figure does not include Executive Condominiums.

So what gives?

With COVID-19 travel restrictions, it makes sense to buy a property within Singapore.

Amid the pandemic, news of Singaporeans having their homes broken into in Johor while they were away plus other developments from across the causeway may have spooked potential investors.

From the cancellation of the Kuala Lumpur-Singapore High Speed Rail (KL-Singapore HSR) project to the revision of the Malaysia My Second Home (MM2H) policy, such news is enough to rattle investors’ confidence. 

After all, if a high-level government-to-government project like the KL-Singapore HSR could be terminated, what more for those involving the private sector like housing?

Thus, it came as no surprise that despite its higher property price, buying activity has remained robust within the Lion City with record prices seen in both the HDB and private property markets.

Malaysian developers are also closely watching Singapore’s property market.

Wanting a slice of the lucrative pie, some are considering launching projects in Singapore but are unsure if Singaporeans will bite.

Singapore: Record prices call for curbs to cool the property market

When comparing Singapore’s and Malaysia’s property market performances since the pandemic began, they contrast like day and night, as government data showed.

While properties in Singapore are notorious for being one of the most expensive in the world, it is also seen as a safe haven for property investment due to its political stability, efficiency and transparency.

This may perhaps explain why despite COVID-19, the local property market experienced a bull run.

Data from HDB showed that the Resale Price Index (RPI) for the third quarter of 2021 is now 150.6 points - a record high so far.

This was an increase of 2.9 per cent over that in the second quarter.

Meanwhile, data from the URA, showed that prices of private residential properties increased by 1.1 per cent in the third quarter of 2021, compared with the 0.8 per cent increase in the previous quarter. 

Similarly, the Private Property Index (PPI) is also at a record high.

This had prompted the government to introduce a slew of cooling measures on 15 December 2021.

Malaysia: Pandemic fatigue saw lukewarm buying activity but housing prices continued to rise

Malaysia is one of the few places in the world where foreigners can own a freehold property.

By default, this should make Malaysia a highly sought after investment destination.

However, government data showed otherwise.

Data from the National Property and Information Centre (NAPIC) showed that the Malaysian House Price Index for the third quarter of 2021 was at 198.6 points. 

On a year-on-year and quarter-on-quarter comparison, the index declined by 0.7 and 1.9 points respectively.

Meanwhile, house prices continued to increase from a median price of RM204,470 recorded in 2009 to RM428,458.42 in the third quarter of 2021.

This suggests that while the market has remained somewhat lukewarm, property prices have kept on climbing by a whopping 209.54 per cent in 12 years.

So while locals are priced out from the property market and are not buying, foreigners appear to be staying away too.
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This is despite the strong Singapore dollar versus the Malaysian ringgit.

Severe oversupply of residential units in Malaysia 

It is also worth noting that Malaysia has a severe oversupply problem with 30,358 unsold residential units valued at RM19.80 billion, figures from NAPIC showed.

Of this, the majority of them (6,509 units) are located in Johor, just next to Singapore.

Nation-wide, the majority of them (10,262 units or 33.8 per cent) are priced between RM500,000 to RM1 million - a price point beyond the reach for most Malaysians.

Clearly, majority of the unsold units located in Johor are geared towards foreign buyers.

KL-Singapore HSR resumption is needed to bolster confidence

While COVID-19 has hampered cross border travel, there appears to be light at the end of the tunnel when both countries officially launched the Malaysia–Singapore land Vaccinated Travel Lane (VTL) scheme on 29 November 2021.

Significantly, Malaysian Prime Minister Ismail Sabri is also suggesting reviving the terminated KL-Singapore HSR project during the launch.

As a key regional aviation hub, Singapore offers Malaysia direct access to affluent travellers and potential investors.

The Lion City also has among the highest concentration of high net worth individuals in the world.

With three stops in Johor, it seems almost impossible that the KL-Singapore HSR project could succeed without Singapore’s participation.

Look beyond local politics

Malaysia will need to look at the bigger picture to see that the KL-Singapore HSR project can enhance cross-border investments that will in turn, solve its housing woes.

Rather than viewing Singapore as a rival, Malaysia should see that the KL-Singapore HSR project is a win-win solution for both countries.

The spirit of good neighbourliness and gotong-royong must prevail.

After all, when Iskandar Malaysia was first mooted by former Prime Minister Abdullah Badawi,  Singapore was meant to complement and not compete with Malaysia.

This is something local politicians need to be reminded of time and again.

For now, the only investors Malaysia can bank on are the permanent residents that are still holding Malaysian citizenships in Singapore

A rethink in policy is needed if Malaysia wants to continue attracting foreign investors.

By Khalil Adis

I recall taking part in an international property expo in London in 2018 whereby the Malaysia My Second Home (MM2H) programme was heavily promoted to encourage British citizens to invest in Malaysia.

The expo was held with a Malaysian consulting firm working together with the Tourism Ministry to attract foreign investors to buy a property and retire there.

For many British citizens wanting to escape from the cold London weather, Malaysia appears to be the ideal tropical getaway.

This is despite Malaysia being half a world away and not as well-known as Singapore.

In fact, during my various encounters with locals in London, many are surprised to learn that there are many reputable schools in Malaysia such as Marlborough College Malaysia, University of Reading and Newcastle University of Medicine, just to name a few.

Iskandar Malaysia, in particular, piqued their interest, as some had regularly attended the F1 Night Race in the Lion City.

Close to Singapore but with a relatively affordable cost of living, many had expressed interest in buying a property in Iskandar Malaysia where they have the option of living in Johor while sending their children for quality education in either Singapore or Iskandar Puteri.

Malaysia is seen as attractive due to strength of the British pound versus the ringgit, the affordable property price and one of the few places in the world where foreigners can own freehold property without any restrictions.

Sweeping changes

Fast forward, three years later,  the political landscape in Malaysia has shifted rapidly with three different Prime Ministers within a short span of time.

This has no doubt affected investor’s confidence as they try to make sense of what is going on.

With a change of government, there has also been various tweaks in policies including for the MM2H.
​
For example, previously, the minimum sum required for a fixed deposit was RM150,000 for those over 50 and RM300,000 for those under 50 years of age.

However, this has been increased overnight to RM1 million under the sweeping changes that were announced in August 2021.

That is almost a 600 per cent increase.

Foreigners must also prove to have liquid assets of between RM500,000 and RM1.5 million, depending on their age,

On top of that, they must have a monthly offshore income of at least RM40,000.

These policy changes are indeed tone deaf as many livelihoods have been upended since the pandemic started in 2020.

Those who have uprooted to Malaysia will have no choice but to leave the country if they cannot fulfil these new requirements.

It also reaffirms what investor’s already know - Malaysia is known for its flip-flop policy changes.

This may harm the country’s image, investors’ confidence and in turn, affect the property market.

Johor is the worst state in supply overhang

Even before the pandemic began, Johor was already facing a severe supply glut as Chinese developers began to flood the market notably in Danga Bay, Johor Bahru CBD and Forest City.

Still, developers remained optimistic as they continue to bank on the Kuala Lumpur-Singapore High Speed Rail (KL-Singapore HSR) project.

With the project now terminated, the overhang situation in Johor will likely worsen.

According to data from the National Property Information Centre (NAPIC), as of the first quarter of 2021, Johor had the most number of unsold completed residential housing in the whole country at 6,001 units.

This was followed by Selangor and Penang at 3,679 and 4,447 units.

Most notably, homes ranging from RM500,000 to RM1 million made up the majority of the total overhang sector in Malaysia with 9,408 units (34.3 per cent) unsold worth a total of RM6.44 billion.

The serviced apartment sector in Johor fared even worse with 16,537 unsold units majority of which are within the RM500,000 to RM1 million range.

The revised policy changes for the MM2H appears to be the final nail in the coffin for the property market since many developers tie in this programme when marketing their projects overseas.

Some developers and stakeholders say the sweeping changes do not make any sense and will likely kill the property market since foreigners are likely to buy unsold homes ranging from the RM500,000 to RM1 million range.

Federal government needs to consult with stakeholders

Clearly, a rethink in policy is needed if Malaysia wants to continue attracting foreign investors.

Figures from Iskandar Regional Development Authority (IRDA) showed that as of June 2021, Iskandar Malaysia saw the completion of investment projects worth RM7.33 billion between January to April 2021 with 20 per cent involving domestic investors and the other 80 per cent from foreign investors.

According to Datuk Ismail Ibrahim, IRDA’s chief executive, the projects that were approved to be developed in the region in 2020 included those from China, Japan and Singapore.

Overall, IRDA said Iskandar Malaysia’s total cumulative recorded investment reached RM341.4 billion since 2006 to date with 61 per cent of this has been realised.

As we speak, the Sultan of Johor had expressed his displeasure on the flip-flop in policy and requested an immediate review.

For this to be effective, the federal government needs to consult with the local authority, developers, MM2H agents, applicants and real estate agencies as they are closer to the ground.

They also need to sit down with developers and stakeholders in Iskandar Puteri and Medini as they rely heavily on foreign purchasers and investors, especially those from Singapore.

For now, the policy is doing more harm than good.

The iconic project would have benefitted both countries since Malaysia and Singapore are historically intertwined

​By Khalil Adis

Since Malaysian Prime Minister Muhyiddin Yassin rose to power in 2020, the local political landscape has shifted rapidly.

On the one hand, it has deeply polarised Malaysians in what they perceive as a ‘back-door government’.

On the other hand, it has caused seasoned investors and political watchers do a double-take to decipher what is really going on.

Against a backdrop of a pandemic, reports of political infighting, defections and ongoing corruption court cases from the previous administration, Malaysia’s political landscape appears to be a fractured one.

From across the pond though, it looks like Malaysia has it all - a warm, tropical climate, rich in natural resources, a melting pot of different races and cultures and one of the very few countries where you can own freehold property.

However, a quick glance on social media shows that Malaysians are tired about the constant politicking which they feel have hindered the country’s progress.

Foreign direct investment affected by pandemic

So how has Malaysia fared so far?

Figures from the Malaysian Investment Development Authority (MIDA) showed that in 2020, net foreign direct investment (FDI) fell 56 per cent to US$3.4 billion in 2020 due to the Covid-19 pandemic.

Meanwhile, Malaysia’s net FDI inflows stood at RM13.9 billion representing a decline from RM31.7 billion in 2019. 

"Malaysia’s lower net FDI inflows in 2020 is not necessarily an unfavourable sign, when taking into consideration the global investment landscape and the uncertainties that prevailed during the year," said MIDA in  its report.

While Malaysia’s FDI last year was affected by the pandemic, the lack of political will to see through certain projects may affect investors’ confidence.

KL-Singapore HSR project

One such example is the cancellation of the Kuala Lumpur-Singapore High Speed Rail (KL-Singapore HSR) project.

Malaysia and Singapore have since the dawn of time been historically intertwined.

Since many Singaporeans have relatives living in Malaysia and vice versa, the KL-Singapore HSR project would have provided immense benefits as it will allow the flow of goods and investments especially in the hard to reach cities like Seremban, Ayer Keroh, Muar and Batu Pahat.

It would also have provided a much-needed boost for the already muted property market in Iskandar Malaysia by tapping onto Singapore’s position as an international aviation hub and among those living in Kuala Lumpur.

Over in Seremban, the upcoming Malaysia Vision Valley would have benefitted from the train service since transportation connection over there is patchy at the moment.

Spanning from Nilai to Port Dickson and with a proposed area of 108,000 hectares, the Malaysia Vision Valley will see the development of high tech, logistics, education, health, tourism and sports industry.

Should the KL-Singapore HSR project proceed, the Malaysia Vision Valley would be able to tap onto local talents from Kuala Lumpur and from the international market in Singapore.

Likewise, it would have resulted in the flow of investments and skilled workforce to Bandar Malaysia, Singapore and  vice versa.

Sadly, this was not to be.

History repeating itself?

Looking back, one cannot help but feel that the KL-Singapore HSR project’s fate echoes eerily similar to the previous scenario in the 1980s and 1990s which had deterred Singaporeans from investing in Johor.

Similarly, Iskandar Malaysia started out full of promises in 2008 until interest somehow fizzled out sometime in 2016.

Once an investors’ darling, Iskandar Malaysia is now facing a severe housing supply glut which has been further exacerbated by the Movement Control Order (MCO) and travel restrictions.

Meanwhile, Medini, a dedicated special economic zone continues to be a ghost town when night falls.

One source who was involved in the joint-venture project between Singapore and Malaysia had complained about the lack of progress and the lack of political will to make things happen.

Adding to the complication is the powers of the state versus the federal government since land in a state matter.

Such bureaucratic red tapes is bound to create frustration.

The source has since left.

It is worth noting that in July 2019, Pinewood Group pulled out of Iskandar Malaysia Studios (IMS) officially ending their 10-year partnership by mutual agreement with the local partners.

A glimmer of hope

​The only saving grace right now is the Johor Bahru – Singapore Rapid Transit System (RTS) Link.

Slated to commence passenger service by end-2026, the project will link Woodlands North MRT station to Bukit Chagar.

Still, the expected economic spillover impact from the RTS Link is minute when compared to the KL-Singapore HSR project.

Last month, the World Bank Group said Malaysia will need to relook at some of its policies and to rebuild them towards attracting more quality investments into the country that at the same time would provide more jobs for the people.

“There should also be a more coordinated promotion effort to get a higher return of investment and finally, it is important to have continuity in policy and direction as well as structural reforms,” Richard Record, the World Bank Group’s lead economist was reported as saying.

This was in response to a question on how Malaysia could attract more FDI to catch up with countries in the region.

Perhaps, one day, when travel restrictions are lifted, Malaysia will revisit the feasibility of implementing the KL-Singapore HSR project once again.

The COVID-19 pandemic has wreaked havoc in the already muted real estate market. We summarise roundups for 2020 and what market trends to expect in 2021.

​By Khalil Adis

2020 will go down as an unprecedented year as countries around the world are faced with a global pandemic. Malaysia is no different as the Movement Control Order (MCO) and travel restrictions have adversely affected an already dampened market.

According to the National Property and Information Centre (NAPIC), the property market contracted sharply in March and April due to the implementation of the MCO before picking up again in May as restrictions were eased during the Conditional Movement Control Order (CMCO) period.

Here are the highlights for 2020:
#1:. Steep decline in the volume of property transaction across the board

NAPIC’s first half of 2020 data showed that the volume of property transaction declined 27.9% with 115,476 units in the first of the year compared to 160,165 units during the same period last year. Out of this, 75,318 units were those in the residential property sector which recorded a decline of 24.6%.

The steepest decline was recorded in the commercial property sector which saw a 37.4% drop followed by the industrial, agricultural and development land and others at 36.9%t, 32.8 per cent and 28.6% respectively.

It is hardly surprising that the Bank Negara Malaysia revised the Overnight Policy Rate (OPR) four times in 2020 itself to bring down interest rates in order to encourage consumer spending and to facilitate the application of new loans.
#2: Residential overhang continued to increase

The COVID-19 pandemic has seen the oversupply situation in the residential property sector worsening.

According to data from NAPIC, there was a 3.3% (31,661 units) increase in the overhang in residential properties. Out of this, 31.7% are priced below RM300,000. 53.2% comprises high-rise units followed by landed terraced homes (29%), semi-detached & detached (12.4%), low-cost housing (1.6%) and others (3.8%).

High rise units within the price range of RM500,000 to RM700,000 form the bulk of the unsold inventory at 4,144 units. Johor had the highest overhang at 19.5% followed by Selangor at 16.4%.

Meanwhile, serviced apartments (which is classified as commercial property by NAPIC) recorded a 26.5% or 21,683 units increase in overhang. 61.8% are priced above RM700,000. A whopping 73.7% are located in Johor followed by 11.6% in Kuala Lumpur.

#3: Majority of new launches were in the mass market segment

Despite the muted property market, developers continued to launch projects, particularly in the mass market segment. NAPIC’s data showed that 13,294 units of new launches were recorded in the first half of 2020. Of this, 50.1% are priced below RM300,000 while 33.7% are priced between RM300,000 to RM500,000.

Landed properties dominate new launches making up 69.7% of the figure while the remaining 30.3% are stratified properties.

Negeri Sembilan recorded the most launches in the entire country during the period with 2,797 units. This was not surprising as properties that are located away from Kuala Lumpur and Greater Kuala Lumpur are more affordably priced for local home buyers.

#4: Steep decline in office and shopping centre occupancy rates

The MCO had a detrimental effect on office and shopping centre occupancy as many Malaysians are forced to work from home. Private office building saw their occupancy rate plunging 74.3% with only 12.70 sq m of space occupied out of the total space of 17.09 sq m.

Meanwhile, shopping centres experienced the most decline at 76.7%  occupancy rate. Only 9.62 sq m of space were occupied out of the total space of 12.55 sq m.

#5: Malaysian House Price Index records first-ever decline, corrected slightly in Q2 2020

The mismatch between what Malaysians can afford versus what is being offered in the market, combined with the pandemic has further worsened the overhang situation resulting in an extremely muted year for developers.

According to data from NAPIC, the Malaysian House Price Index stood at 198.3 percentage point in Q2 2020 after hitting a peak of 199.7 percentage point in Q12020 – the 0.7% decline is the first-ever one recorded since 2010.

Nevertheless, when compared to Q1 2010 (97.25), the price index recorded an increase of 102.5 to reach 199.7 percentage point during the same period in 2020. This suggests house prices across Malaysia have been skyrocketing over the past 10 years before moderating slightly in the second quarter of 2020.

Moving forward, here are the property market trends we can expect in 2021

#1: Affordable homes priced below RM500,000 will rule the market

As seen from data from NAPIC, majority of the new launches in the first half of 2020 are mass market homes priced below RM500,000. This trend will likely continue in 2021 especially for homes that are located in Greater Kuala Lumpur.

Pricing aside, several Budget 2021 initiatives to further promote homeownership, especially for first-time buyers will spur demand for such homes. For example, the full stamp duty exemption on instruments of transfer and loan agreement for first time home buyers will be extended until 31 December 2025.

The stamp duty exemptions for first residential home has been capped for homes priced RM500,000 and below. This exemption is effective for the sale and purchase agreement executed from 1 January 2021 to 31 December 2025.

As such, we can expect the mass market segment to pick up momentum.

#2: Rent-to-Own Scheme in the private and public housing sectors

​High house prices in Malaysia has resulted in both the private and public housing sectors to roll out innovative measures to make it easy for first-time home buyers. With developers under pressure to move unsold units, many will likely continue to offer attractive discounts, rent-to-own schemes and zero down payments to draw buyers.

Meanwhile, in the public sector, the government will implement a Rent-to-Own Scheme by collaborating with selected financial institutions under Budget 2021. This programme will be implemented until 2022 involving 5,000 PR1MA houses with a total value of more than 1 billion ringgit and is reserved for first-time home buyers.

#3: Occupancy rates for office will continue to decline

​The high daily cases of COVID-19 in the country will have an adverse effect on the office occupancy rate as many companies continue to adopt a work from home policy. As such, we are likely to see their occupancy rates continue to decline until a nationwide vaccination is rolled out.

Data from NAPIC showed that as of the first half of 2020, Kuala Lumpur had the highest purpose-built office existing stock at 9,266,687 units followed by Selangor and Putrajaya at 4,030,791 and 2,525,253 units respectively. Meanwhile, there will be an incoming supply of 1,465,441, 244,290 and 208,391 units in Kuala Lumpur, Johor and Selangor respectively.

Collectively, this will result in downward pressure for the office market. Landlords are likely to lower their asking price to continue securing tenants. Meanwhile, corporate tenants will be spoilt for choice as there will be many good deals in the market.

#4: Uncertain time for shopping centres

​In Q42020, several COVID-19 cases have been detected at notable shopping centres in Kuala Lumpur/Greater Kuala Lumpur such as at Nu Sentral, 1 Utama, The Gardens Mall (TGM), Mid Valley Megamall (MVM) and Bangsar Shopping Centre.

Consumer precaution will trickle into 2021 and this will have an impact on footfall as many stay away from shopping malls while the tourism market continues to suffer due to travel restrictions, further limiting footfalls from tourists and holiday-makers.

Similar to the office sector, the shopping centre market will be very challenging. We will likely see the further closure of some outlets resulting in increasing vacancy rates.

NAPIC’s data showed that as of the first half of 2020, Selangor had the highest shopping complex existing stock at 3,712,375 units followed by Kuala Lumpur and Johor at 3,131,431 and 2,452,258 units respectively. Meanwhile, there will be an incoming supply of 639,508, 480,125 and 167,779 units in Kuala Lumpur, Selangor and Melaka respectively.

This article was first published on iProperty Malaysia.

A combination of COVID-19, an oversupply in residential properties and a lukewarm economy have made it a buyer’s market.

By Khalil Adis

Buying a property in Malaysia is a complex process unlike in Singapore.

Being a small country, one can rely on the Urban Redevelopment Authority’s (URA) masterplan to check for planning developments that will be taking place in the next 30 to 40 years.

In Malaysia, however, such information is scant making property buying an arduous and risky process.

When looking to buy a property, you should target the most affordable property but with the greatest potential for capital appreciation. 

How can you do that? Easy, simply by applying the following 5Cs:

#1: Check the masterplan

A masterplan would typically define a township’s development in the next one to two decades. 

​It would also showcase the different designated land use and transportation plans within that particular township. 

An area deemed highly desirable will attract businesses and residents. 

Think about why properties in KLCC and Bukit Bintang are expensive whereas other areas like Bukit Beruntung are not popular. 

With this in mind, you should find out as much as possible about your new neighbourhood.

 #2: Check the transport masterplan

Generally, properties close to transportation hubs such as MRT or LRT stations can command a premium of between five and 10 per cent over the long term.

This is because people generally want to live close to transportation hubs explaining why Transit Oriented Developments (TODs) have become very popular in KL and Greater KL.

This demand translates to an appreciation of one’s property. 

​Are there MRT or LRT stations that are being planned in your area? What about expressways?  

Study the upcoming Sungai Buloh-Serdang-Putrajaya (SSP Line) and LRT Bandar Utama–Klang Line (Klang Valley LRT Line 3) prior to your property purchase.


#3: Check budget allocation from the government

​ Government policies do have an indirect impact on a property. 

For example, budget allocation for improvements in public infrastructure and new economic drivers will have an impact on new and existing homes in and around the vicinity. 

So check where the government is building new hospitals and so on. 

One good example is the development of the Malaysia Vision Valley in Negri Sembilan.

#4: Check for economic drivers

Have you ever wondered why properties in KLCC are so expensive?

This is because it is home to a number of industries such as petrochemical, banking, finance, tourism and so on. 

The best strategy is to buy in an area that is not yet developed but where there are plans for various economic drivers. 

A government-mooted economic corridor or a reputable developer that has experience in building townships are great indicators if the area will succeed or not. 

#5: Check for job creation

 This is like feeling someone’s pulse. 

You need to check if the township you are eyeing for is going to be a ghost town or a happening place. 

If it is the former, perhaps you should stay away. 

If it is the latter, more and more workers will be drawn there, becoming a magnet for people and a hive of activity. 

People are the lifeblood of a neighbourhood.

As the area becomes highly desirable, people will naturally want to live and work in and around the vicinity. 

As there is an increase in demand, property prices in that area will also rise.

That is how a property appreciates over time.
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Good luck in your property hunt!

As Malaysia eases its Movement Control Order (MCO), the Malaysian property market is set for a major reboot as COVID-19 will forever change the way the industry operates. Here are our top eight predictions.

By Khalil Adis

The Malaysian economy has bucked the trend growing by 0.7 per cent in the first quarter of 2020 from the 3.6 per cent growth in the previous quarter, data from the Department of Statistics Malaysia (DOSM) showed. 

However, the coronavirus pandemic has wreaked havoc in the job market with the unemployment rate increasing to 3.5 per cent compared to the 3.2 per cent recorded in the previous quarter.

"The increase in the unemployment rate was mainly attributed to the adverse impact of the Movement Control Order (MCO) on the labour market," said chief statistician Dato' Sri Dr. Mohd Uzir Mahidin

Meanwhile, employed persons in Malaysia increased to 1.6 per cent to 15.24 million persons in the first quarter of 2020.

The DOSM noted that the highest unemployment rate in Malaysia was in 1986 at 7.4 per cent.

Meanwhile, Bank Negara's Economic and Monetary Review 2019 stated that Malaysia's GDP growth is projected to be between -2.0 per cent to 0.5 per cent this year.

Noting that 2020 is "an exceptionally challenging year for the global economy", Bank Negara said global growth is expected to contract.

"While the Movement Control Order and measures to promote social distancing will dampen economic activity temporarily, they are necessary to contain the spread of the virus," Bank Negara said in a statement.

In terms of the construction sector, DOSM's data showed that it contracted 7.9 per cent from 1.0 per cent in the preceding quarter.

This is the lowest growth since the second quarter of 1999.

Moving forward, Dato' Sri Dr. Mohd Uzir Mahidin predicted that Malaysia is projected to record an unemployment rate of between 3.5 per cent and 5.5 per cent this year due to the impact from COVID-19

With the World Health Organization warning that COVID-19 "may never go away", a new normal in the property sector will emerge influencing how Malaysians will live, work and play.

Here are our top eight predictions arising from COVID-19:

#1: Property market will be extremely muted in 2020

The uncertainty arising from COVID-19 will have an impact on consumer spending. 

Malaysia is expected to enter a recession this year resulting in job losses.

As such, consumers will prefer to hold on to cash amid the uncertainties ahead.

This will likely worsen the supply glut that Malaysia is already experiencing at the moment.

According to data from the National Property and Information Centre (NAPIC), as of 2019, Malaysia has an existing stock of 5,727,814 residential units.

In addition, it has an incoming supply and planned supply of 443,161 units and 441,309 units respectively bringing the total supply to a whopping 6,612,284 units.

Developers with unsold inventory, especially in the medium to high-end segment, will be faced with a double whammy.

They either have to drop prices to entice local buyers or continue to bleed as border controls imposed in the country means foreign investors are not allowed to enter Malaysia to view properties.

Either way, the prognosis does not look very good for the market.

Developers with strong branding, cash flow and who are offering affordable homes for locals will come out as winners amid this pandemic.

As we speak, some developers are currently rolling out Ramadan and Hari Raya packages with a low deposit of RM1,000 to continue enticing buyers.

However, whether or not buyers will be able to get a bank loan is another matter altogether.

#2: Office space demand will decrease 

As businesses cut costs and working from home becomes the new norm, we can also expect a glut in office space supply to increase, particularly for Grade 'A' office.

According to data from NAPIC, as of 2019, Malaysia has an existing stock of 2, 549 office buildings with 22, 590, 473 sq m of space.

As more companies adopt the remote working model for good, existing office buildings will need to reconfigure their current space to factor in social distancing requirements.

Operators of coworking spaces and landlords will thus need to refurbish existing office spaces to continue attracting tenants.

New health requirements such as temperature takings and hand sanitisers may also translate to higher operating costs.

Meanwhile, developers with incoming and planned office supply in the pipeline will need to go back to the drawing board to redesign their office plans resulting in reduced floor density.

Data from NAPIC showed that Malaysia has an incoming and planned office supply of 51 buildings (2, 378, 131 sq m) and 15 buildings (398, 944) respectively as of 2019.

This sector will face downward pressure in their asking prices as more companies adopt a work from home policy.

Overall, the vacancy rate across Malaysia is expected to increase, further exacerbating the supply glut in the office market.

Developers who have already secured corporate tenants for upcoming office buildings in Kuala Lumpur such as Tun Razak Exchange (TRX) and Merdeka 118, before COVID-19 struck, are likely to emerge stronger from the crisis.

#3: Construction costs will increase due to late delivery of projects

The MCO restrictions have resulted in construction delays across all sectors of the property market.

During the MCO, construction sites were closed while materials which were sourced from overseas were impacted from the shut down of the global supply chain.

With the MCO now eased, construction has now restarted but with temperature screenings, staggered working hours and social distancing in place.

With construction now delayed by two to three months and with new safety requirements, we can expect construction costs to increase.

This will likely be passed on to consumers.

Whether or not such new projects can attract buyers with a higher per sq ft price remains to be seen due to the uncertainty in the economy and the job market.

Buyers with cash in hand may instead look to the secondary market where prices are more realistic.

#4: Tourism, food & beverage, transportation, travel, retail and hotel industries will be adversely affected

The MCO has seen a knock-off effect on the tourism, food & beverage, travel, retail and hotel sectors due to international and local travel restrictions.

According to the Malaysian Association of Hotels (MAH), approximately 15 per cent of hotels in the country may have to shut down their operations.

Data from NAPIC showed that as of 2019, Malaysia has an existing stock of 3,404 hotels with 266, 972 rooms.

Several of these hotels, located in tourism hot spots such as Kuala Lumpur, Ipoh and Melaka, have now ceased operations or are in the process of being auctioned off.

With a planned and incoming supply of 114 hotels with 24,161 rooms and 74 hotels with 14,810 rooms respectively, we can expect demand for the hotel sector to remain muted.

As it is, hotel operators are already facing stiff competition face from owners of Airbnb units.

So, until a vaccine is found, the hotel and Airbnb sectors will continue to bleed.

For hotels that are in the planned and incoming supply, they are faced with a dire situation to continue operations but where demand from tourists are far and few between.

It remains to be seen whether the construction of such hotels will continue or if they will be cancelled altogether.

Either way, they will be likely operating in the red.

The only exception is hotels which have been gazetted as quarantine areas.

For Airbnb owners, you might want to convert your units to long-term leases or student accommodations in the time being.

#5: Retail sector will see many businesses cease operations

While shopping centres can now operate, the damage is already done.

The MCO that kicked in on  March 18 means that businesses are greatly impacted as malls are forced to closed.

Combined with running overheads such as cleaning costs, rent, wages, refurbishing damaged goods and other operating costs, shop owners are under great financial stress to either continue operation or wind down their business for good.

Either way, human traffic will not return to normal due to social distancing requirements.

As such, we can expect small to medium retail outlets and F&B outlets, particularly those leasing spaces at high-end malls to shutter.

Instead, they will switch to online shopping.

#6: Digital-related, food, healthcare, pharmaceutical and wellness sectors will thrive

Digital-related sectors such as online shopping, delivery, technology and website hosting will thrive amid the pandemic as working from home now becomes the new norm.

Developers and agents will need to adapt to changing market situation via contactless procedures such as conducting online viewings and meetings to close sales.

For instance, online property portals such as iProperty.com are coming up with innovative ways to help their clients sell property online.

In a post-pandemic world, Zoom meetings have now become ubiquitous.

This is also an ideal time for individuals to start a side hustle such as small home-based business selling cookies online to supplement their income

COVID-19 also means increased demand for food, healthcare, pharmaceutical and wellness industries.

On March 27 2020, the Malaysian government announced a second stimulus package to combat COVID-19.

For instance, an extra RM500 million has been allocated to purchase medical equipments, such as ventilators, personal protective, lab and ICU equipments.

Meanwhile, another RM1 billion is allocated for the purchase of medical equipment and expertise from private healthcare services.

#7: Tenants from healthcare industry will drive the rental market

With RM1.5 billion in total allocated to support the healthcare sector, this presents good news for investors who are holding on to vacant Airbnb units or landlords who are located close to such industries to seek out such tenants.

Having said that, the rental market in Malaysia is very soft at the moment so the rental income may or may not cover your mortgage. 

As data from NAPIC showed earlier, Malaysia has an existing stock of 5,727,814 residential units as of 2019.

This will increase in 2020 arising from the supply from incoming and planned units.

While some investors may have to top up cash,  having a negative cash flow is better than leaving your units untenanted.

Investors should seize this opportunity. 

#8: 2020 is about business consolidation

​As long as there is no vaccine found, business activities will never return to normal.

Forget about whatever business plans that you have planned in 2019.

Instead, brace yourself for a long, cold, winter ahead.

Consolidation will be the new normal for this year as many developers and industry players will focus on conserving cash.

Leveraging on digital technology will be the new norm.

We can expect pay cuts, hiring freezes and retrenchments as businesses cut losses on non-revenue generating departments.

We have already seen certain developers doing this and establishing working from home permanently.

This is the time to learn a new skill, read books and focus on self-development to continue staying relevant in your respective fields.