The Malaysian economy, as measured by gross domestic product (GDP), continued with its strong expansion of 5.9% in 2017 (2016: 4.2%). During Q1 2018, the economy registered a commendable growth of 5.4% (Q4 2017: 5.9%), supported by the services and manufacturing sectors. 

For the whole year of 2018 GDP is expected to range from 5.5% to 6.0%. 

Market highlights

• Property market regained momentum with more launches during the review period. 
• Mismatch in supply and demand continues to put pressure on secondary pricing in Kuala Lumpur City. 
• Rentals in most localities continued to hold steady with the exception of Bangsar, where they are noted to be slightly lower. 
• To improve sales target, developers are going on property roadshows around the country to boost sales of new products and to clear existing stock. 
• The historic conclusion of GE14 will see plausible return of property buyers and investors as they shift from the 'wait and see' approach to 'actively looking to buy' due to improved market sentiment. 
• The three-month tax holiday following the zero-rating of the Goods and Services Tax (GST) effective 1 June and the re-introduction of the Sales and Services Tax (SST) only on 1 September is positive and provides a further boost to the property market. 
• Moving forward, a gentle recovery in the high-end market is expected with more launches next year. 

Supply and Demand

The cumulative supply of high-end condominiums/residences stood at 51,278 units following the completion of four projects during the review period. They are:

• Four Seasons Private Residences Kuala Lumpur (242 units)
• The Residences by Tropicana (353 units)
• Pavilion Hilltop (621 units)

More projects are scheduled for completion by the second half of 2018 and collectively they are expected to contribute some 2,084 units to the existing supply. These are:

• Ruma Residences (199 units)
• Pavilion Suites (383 units)
• Premium Residences @ KL Gateway (466 units)
• Dorsett Residences Sri Hartamas (707 units)
• One Kiara -Tower A (118 units)
• Inwood Residences (211 units)

The freeze on approvals for condominium/serviced apartment projects offering products priced above RM1 million effective 1 November 2017 may provide a breather to the oversupplied market although it seems to have a lesser impact on earlier approved projects. 

Selected projects launched during the first half of 2018 have reportedly achieved a sales rate ranging from 20-30%.

Outlook

In Q1 2018, a total of 216 condominium/apartment units changed hands in Wilayah Persekutuan Kuala Lumpur, marginally lower when compared to Q4 2017 which registered 238 transacted units. 

Post-election, there appears to be an uptick in enquiries from potential buyers due to renewed confidence in the newly elected Government.

In the mass housing market, there is a plausible return of buyers and investors as they actively look for good deals ahead of the anticipated recovery in the property market. 

The recent echo of improving sentiments coupled with strong growth momentum of the economy and rebound of oil price among others show that there is a window of opportunities for recovery in the property market, including the high-end segment. 

Malaysia is expected to return to the radar of investors after the market stabilises with more clarity in the policies of the newly elected Government. 

Click here to view Knight Frank Malaysia Real Estate Highlights 1^st Half 2018 report.

For more information or to discuss the report, phone or email Judy Ong, Executive Director of Knight Frank Malaysia, via the contact details listed below. 

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