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Malaysia's Property Sector Set for Sustainable Growth in 2023, According to Knight Frank

CEO Khai Intela
Malaysia's property sector poised for sustainable growth in 2023, says Knight Frank The property market in Malaysia is showing strong signs of growth and resilience, with sustainable growth projected for 2023, according to a recent...

Malaysia's property sector poised for sustainable growth in 2023, says Knight Frank Malaysia's property sector poised for sustainable growth in 2023, says Knight Frank

The property market in Malaysia is showing strong signs of growth and resilience, with sustainable growth projected for 2023, according to a recent report by Knight Frank Malaysia. The country's real estate sector has benefited from a favorable economic landscape, driven by the strong pick-up in domestic demand, improving labor market conditions, and favorable government policies.

Residential Sector: A Strong Rebound with Promising Trends

The residential property market experienced a significant rebound in 2022, with a 22.4% yearly increase in sales volume and a corresponding 22.6% growth in sales value. This growth followed the normalization of economic activity, with 243,266 residential transactions valued at RM94,319.43 million in 2022. In the first quarter of 2023, 53,923 residential properties with a collective value of RM20,874.56 million changed hands.

In terms of prices, there were mixed trends in the condominium/serviced apartment segment in Kuala Lumpur. While Kenny Hills and Mont'Kiara witnessed price growth, there were slight dips in average transacted prices for KL City and Bangsar. The localities of Ampang Hilir/U-Thant and Damansara Heights saw steady prices. Overall, the average transacted prices of high-end condominiums/serviced apartments in Kuala Lumpur were marginally lower by circa 1.3% in 1H2023 compared to the preceding period (2H2022).

Malaysia's property sector poised for sustainable growth in 2023, says Knight Frank

Office Sector: Steady Demand and Encouraging Market Activity

The office sector in Kuala Lumpur and Selangor is displaying steady demand, with healthy rental and occupancy levels. The KL Fringe area is experiencing tight supply of high-quality decentralised offices, while Grade A offices in Selangor are witnessing good take-up. The market activity is strengthening as the business climate stabilizes, with companies seeking expansion and upgrading their office spaces.

Market demand for office spaces in well-connected locations with a wide array of amenities remains favorable. Some multinational occupiers are willing to pay a slight premium to enjoy the benefits of these locations. The emphasis on environmental, social, and governance (ESG) targets by companies with global mandates is also driving the flight to quality in the commercial office market.

Malaysia's property sector poised for sustainable growth in 2023, says Knight Frank

Retail Sector: Positive Outlook with Changing Consumer Landscape

Malaysia's retail sector experienced impressive growth, with retail sales expanding by 33.3% in 2022. However, with the slowing global growth and weaker economic outlook, annual retail sales growth for 2023 is projected to moderate to 4.8%. The changing landscape in consumer attitudes, behaviors, and purchasing habits is pushing stakeholders to focus on convenience, accessibility, and creating immersive experiences to drive sales.

The return of international tourists, especially from China, is a positive sign for the retail sector. However, the upcoming Luxury Goods Tax in the second half of 2023 could impact luxury goods' competitiveness and deter tourist arrivals. Despite this, the retail sector is expected to sustain due to stable labor market conditions and firm domestic demand.

Malaysia's property sector poised for sustainable growth in 2023, says Knight Frank

Industrial Sector: Gaining Momentum with Exciting Growth Prospects

The industrial market in Klang Valley is experiencing a surge in demand from end-users, manufacturers, and investors. This growth is attributed to the geopolitical climate and proactive government initiatives aimed at bolstering economic activities. The forthcoming completions of major infrastructure projects, such as the West Coast Expressway (WCE) and the East Coast Rail Link (ECRL), are set to revolutionize connectivity between industrial areas in the region.

Malaysia's institutional strengths and market potential are evident from the commitments made by industry giants like Tesla and Amazon Web Services. The industrial sector has witnessed an increase in sales value and average transaction value, with rising prices and rentals across the nation.

Malaysia's property sector poised for sustainable growth in 2023, says Knight Frank

Conclusion: A Promising Outlook for Malaysia's Property Sector

Despite external headwinds, Malaysia's property sector is poised for sustainable growth in 2023. The residential market is cautiously optimistic, while the office and retail sectors show steady demand and positive outlooks. The industrial sector is gaining momentum, with exciting growth prospects fueled by infrastructure development and strong investments.

Malaysia's real estate landscape offers opportunities for investors and end-users alike. The country's favorable economic landscape, supported by domestic demand and government policies, contributes to the growth and resilience of the property sector. As the market evolves and consumer preferences change, stakeholders continue to adapt and innovate to meet the needs of the dynamic property market.


Disclaimer: The images used in this article are sourced from the original article by Knight Frank Malaysia.

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