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Malaysia Real Estate Report Q1 2012
Business Monitor International, Nov 2011, Pages: 51
Malaysia Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Malaysia's Real Estate industry.
There seems to be a subdued optimism in Malaysia’s real estate sector at present, reflecting BMI’s forecast moderation in GDP growth to 4.8%, from the strong showing of 7.2% in 2010. Our current forecasts for the real estate sector are relatively firm, the main hindrance being a lack of new supply in the commercial property sector. When we spoke to them in mid-2011, our in-country sources were reasonably upbeat.
A big driver for growth in construction is the government’s Economic Transformation Programme (ETP), launched in December 2010. The government identified 131 projects with a total investment value of MYR794.5bn. Exactly 46 projects, with an investment value of MYR95bn have been confirmed.
MYR36.6bn of this is for investment in the Mass Rapid Transport (MRT) programme and MYR28bn (30%) is for investment in the oil, gas and energy sector. Investment in tourism includes the development of the MYR600mn Marina Island Pangkor 2nd International Resort and Entertainment Island, which includes waterfront property development. The new 1Malaysia Housing Programme – which aims to provide affordable homes to moderate-income households – is also an opportunity for corresponding commercial developments to grow.
Key Opportunities In The Real Estate Sector:
- It is hoped that overseas investors will be targeting Malaysia in the coming months. Markets like Malaysia are appealing to Middle Eastern companies aiming to avoid the US and eurozone amid debt fears. The country is also marketing its potential to Chinese investors.
- Infrastructure plans formed by the ETP will boost the profile of a number of local companies involved in their development. These are also serving to increase investor perception of Kuala Lumpur and its surrounding area in particular.
- In the wake of the global financial crisis, Malaysia remains one of the most stable markets in the region.
Key Risks To The Real Estate Sector:
- Moderation of growth in the economy could cause a slowdown in investment, while companies wait for conditions to improve at a better rate.
- A number of Malaysian property developers are looking overseas, following rising domestic land costs that hamper their ability to find new development opportunities.
- A large proportion (20%) of Kuala Lumpur’s office space is vacant, suggesting a dearth of new property in recent years has not been matched by demand. This will prevent developers from creating new projects until existing supply is taken up.
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