KUALA LUMPUR: Real estate developers are showing greater optimism about the property market outlook for the first half of 2025 (1H 2025) compared to the second half of 2024 (2H 2024), which was impacted by carry-forward transactions and rising building material costs.

However, they remain cautious and are adopting a wait-and-see approach, particularly with the proposed Urban Redevelopment Act (URA) set to be tabled in Parliament next year, according to Juwai IQI co-founder and group CEO Kashif Ansari.

The URA, introduced by the Housing and Local Government Ministry (KPKT), aims to rejuvenate ageing and dilapidated urban areas, signalling the potential revitalisation of city centres.

Kashif also highlighted the anticipated amendments to the Housing Development (Control and Licensing) Act 1966 (Act 118).

Scheduled for tabling by KPKT next year, these amendments are designed to hold developers accountable for fraudulent practices and abandoned projects while preventing them from fleeing the country.

The changes will also extend protections to include commercial properties, such as offices and shopping centres, which are currently excluded from the Act.

Kashif said that looking ahead, he anticipates strong market performance in 2025, driven by growth in manufacturing, technology exports, construction, and services.

He also emphasised the importance of stable interest rates in maintaining affordability for mortgages and development financing, which would benefit household finances and industry players alike.

Stable interest rates mean existing floating-rate loans will see minimal fluctuations, fostering confidence for homebuyers and developers, Kashif explained.

Kashif predicts mixed-use integrated townships and affordable housing will dominate the residential market in 2025.

Large-scale projects combining residential, commercial, retail, and recreational elements are becoming increasingly popular due to their accessibility to transportation, schools, and workplaces.

Affordable housing is also gaining momentum, supported by government initiatives to increase supply and improve affordability.

Kashif noted the government’s focus on constructing more social housing units and homes priced below RM300,000 to meet demand from lower- and middle-income groups.

Early this month SkyWorld Development Bhd announced plans to deliver over 35,000 affordable housing units in Penang, with a gross development value (GDV) of RM13 billion. These homes, priced between RM225,000 and RM420,000, target the B40 and M40 income groups, aiming to enhance homeownership accessibility.

The Real Estate and Housing Developers’ Association (Rehda) Malaysia’s recent Property Industry Survey reflects a cautiously optimistic sentiment for 1H 2025.

About 26 per cent of the 162 property developers surveyed expressed optimism about the residential sector, with 53 per cent adopting a neutral outlook.

Despite the positive outlook, challenges such as oversupply in certain areas, high household debt, elevated interest rates, and weakened consumer sentiment persist.

These factors may moderate growth in the property market, said one developer, speaking anonymously.

The developer acknowledged the hurdles but expressed confidence in Malaysia’s potential for sustained transformation and growth in the property sector well into 2025.

An analyst from a local research firm reiterated its OVERWEIGHT stance on Malaysia’s property sector, projecting sustained growth into 2025.

He said that developers are well-positioned to tap into both residential and industrial demand, supported by strategic urban planning and infrastructure initiatives such as the Johor Autonomous Rapid Transit and potential incentives for the Johor-Singapore Special Economic Zone.

 

Source: New Straits Times, December 23, 2024