Overview of the Malaysian real estate market

The Malaysian real estate market has seen a slow decline since around 2012. Prices have seen slight increases, but the overall market has been seeing a slight decline for various reasons. The rate of increase has been lowering yearly and it took a deep dive in 2009, at an increase of only 5%. The number of property purchase transactions have also drastically decreased, reaching just over 300,000 in 2017, an all-time low since 2012. Price increases dropped from about 13% in 2013, to around 4% in 2018. Large city areas like Kuala Lumpur and Selangor are keeping the countries real estate afloat, with prices slightly above the national average. Smaller cities like Pahang and Perak continue to fall below the national average yearly.

In 2018, Malaysia’s real estate market showed sub-par results throughout the year. There was little quarterly increase in price throughout the country. 2018 Showed a rough time for Malaysia’s main top performing city of Kuala Lumpur. Kuala Lumpur’s overall performance for the year showed only a 1.7% increase in housing costs year over year. The cities number of transactions also showed a decrease from the previous year. Commercial, residential, and industrial properties are showing similar trends all around.

Causes of Decrease in Malaysia’s Real Estate Market

The decrease in Malaysia’s property market can be attributed to many factors. Malaysia’s Deputy Finance Minister, Datuk Lee Chee Leong, comments that an increase of new uninhabited or sold residential units in early 2017 caused a property oversupply that leads to a heavy market decrease. Approximately 40% more of the new residences were left unsold in the first two quarters of 2017, as compared to the first half of the previous year. Malaysia has been experiencing a lull due to unsold new properties and an oversupply of properties, this has resulted in a country-wide pricing decline.

decreased statisticsEconomic growth has also attributed Malaysia’s market decline. Malaysia’s economy saw a decline in recent years. The decrease in economic growth also caused a decrease in average income, which led to a decrease in purchasing. Malaysians are facing economic hardships and are less likely to buy property. Property prices are too expensive for locals. The decline in purchase power led developers to reduce upfront payments from around 10% down to just 1%.

Locals are not purchasing property, and foreigners are being placed under strict requirements when attempting to purchase. Government officials doubled minimum purchase requirements between 2010 and 2014 and tripled requirements to 1million RM by the end of 2014.

Malaysian construction industry overview

The decreasing rates in the real estate market in Malaysia is a reflection of the overall economy and decrease in economic growth within the past decade in Malaysia. Despite the low real estate rates and the lack of economic growth, the Malaysian construction industry has managed to continue growing with a positive incline. The country’s construction industry experienced growth in 2017 with private sectors and small scale local contractors continuously gaining new contracts. The Malaysian government continues to invest in the construction of new properties, especially throughout the major cities like Kuala Lumpur. The construction of malls, co-living spaces, and immense residential projects continue to develop throughout the country, making it a premier location for construction professionals.

Urban planning in Malaysia

Malaysia’s urban planning structure was modeled off of an original format taken from England and Wales. Malaysia has invested a substantial amount of government funding and financial currency to reviving its urban planning structure in major local areas, moving away from the original English structure.

Throughout the years, Malaysia has had issues with traffic and crowding throughout the city. Urban planners have taken many approaches such as road restructuring, a change, and flexibility in work hours, and a push on public transportation. Despite these issues, the country still suffers from overcrowding on the road.

The overcrowding of the roads and the rise in residential property development has increased the importance of surveying in Malaysia and has added to the demand for qualified surveyors. Building condition surveying is especially important to avoid complaints or defects and disputes due to overcrowding and space regulations. Surveying companies in Malaysia are in high demand, especially in the major cities like Kuala Lumpur. Surveying in Malaysia is ideal when handling local and nationwide construction regulations.


Hotel and short term stay industry growth and regulation

The Malaysian hotel industry has experienced a slight decline because tourists and visitors are choosing alternative short term housing options for their stay. Services like Airbnb are tempting visitors to choose homes and apartments as their accommodations for various reasons including convenience and cost flexibility. Home sharing services are benefiting through this shift of preference. Guests choose between single room spaces, shared spaces, full houses, and a list of alternative housing options.

Home sharing spaces are growing at a high rate in Malaysia and attaining high traction from tourists and homeowners who want to increase their income by offering their homes for short term rental. The hotel industry has claimed that the increase of short term rentals and home sharing spaces.

Hotel owners have estimated a decrease of about five to fifteen percent loss due to alternative short term housing options in Malaysia. Hotel owners have also claimed that consumers are in danger and face safety issues in short term rental spaces that do not follow industry guidelines. The hotel industry has expressed concerns that the home sharing platforms do not follow the same hospitality regulations as the hotels, hotel owners also complain that short term rental participants are not faced with the same tax regulations as Malaysian hotels.

The Malaysian hotel industry has called for the Malaysian government to regulate the influx of short term rental and housing options in the city. Urban planning and tourism officials are in ongoing discussion on the issue of hotels and short term rentals in Malaysia. Government regulation on short term rentals is a complicated topic within the urban planning and tourism real of Malaysia.

City tourism officials estimate over 36 million tourists traveling to Malaysia by 2020, increasing the demand for short term housing and hotel options.

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