From affordability challenges to foreign investment trends, we break down how Malaysia’s property market performed in 2025 and what it means for buyers, developers, and investors in 2026. Full discussion with Director Research and Consultation Services, Sr Sulaiman Saheh.
00:00The real estate market is always evolving, shaped by economic shifts, lifestyle changes and global trends.
00:06Today, we'll explore how Malaysia's property sector performed in 2025 and what the future could hold as we step into 2026.
00:15Joining us virtually is Sulaiman Sahih, Director, Research and Consultation Services, Rahim & Co. International.
00:21I want to say thank you very much, Sulaiman, for joining me.
00:24Firstly, we're going to take a look at the market performance and resilience.
00:272024 saw record-high transactions, but 2025 began with cautious sentiment and affordability concerns.
00:35How would you characterize the overall performance of Malaysia's property market in 2025?
00:41Did it meet expectation or fall short?
00:44Which subsectors, residential, commercial industries, perform best and why?
00:49Please share with us.
00:51Thank you. I'm happy to be here again.
00:53About the property market in 2025 to date, the market has actually showed some signs of moderation or, I would say, normalization from a robust performance that was seen in 2024.
01:09If we remember how the market was since the turn after post-COVID, the market actually rebounded very well in 2022.
01:18Then it was actually held again in 2023.
01:22But 2024, it showed further acceleration.
01:25This acceleration is actually over-performed, basically.
01:30And from there, we actually expected some moderation within the market, be it the market demand, especially for the affordable segment, is still very strong.
01:41The demand for good properties, investment properties, is still there.
01:48But the number of transactions, because of the high figures in 2024, it did show some signs of moderation in 2025 to date.
01:58It was actually a larger decline in the first quarter.
02:04It actually normalized a bit in the second quarter.
02:07And coming to third quarter now, we are actually recording a slight reduction of 2.1% in the total volume of transactions.
02:15Be it that, the total value of transactions actually continued to grow.
02:20It grew above 5% for the same period for the first nine months of this year compared to last year.
02:28And despite steady growth, affordability remains a pressing issue.
02:33With rising SST, construction costs, and financing hurdles, how close are we to a tipping point where affordability could significantly dampen demand?
02:43What structural reforms or policy intervention do you think are most urgent to address this?
02:48Affordability is a major concern, not just in Malaysia, but across the world, all over.
02:58But for the Malaysian perspective, affordability remains a big issue with the lagging wage growth in terms of the growth of our annual income or annual salary compared to the growth of property prices.
03:13We do understand property prices, especially for the primary market from the developers.
03:20They are also being challenged with the rising costs of construction, labor supply, as well as the other different factors.
03:30And within now, since the middle of this year, SST actually is basically roped in.
03:38The SST actually being deployed for construction services, except for the residential segment proper, the residential proper.
03:46But because we can see a lot of developments in Malaysia right now are actually service apartments on commercial properties, where the integrated commercial nature would also attract those kind of incremental costs of construction.
04:02And this actually cascades down to the overall cost, which then affect the selling prices, especially for the developers.
04:11Looking at that, with the cost being a primary concern that fuel up the prices that are still high, there is a bit of moderation in terms of price growth.
04:25It actually slowed down a bit in the third quarter, which actually gives a telltale sign as to affordability still remains a main paradigm where the project can be marketable and sellable within the market.
04:39The number of overhang units, although it has actually stabilized somewhat, the residential segment actually showed a bit of increment.
04:46But the service department segment actually showed a bit of a decline because the market has actually absorbed.
04:53That's probably due to the slower new launches that's been launched in the past few years because of the challenging market that gave the market time to actually absorb some of these unsold units.
05:07Moving forward, I think with regards to the affordability factor, I think government intervention and government incentives, as well as tax breaks to the developers, as well as some assistance, financial assistance, the stamp duty exemption for the prices of properties or houses that are below $500,000 should still be continued,
05:29especially to help the value, especially to help the value, especially to help the B40 and M40 in attaining their first home buyers market.
05:36And these are that are supposed to be continued on.
05:39Just to also share, with regards to the affordability factor, we also need to actually appreciate the total cost of occupation, if you like,
05:49where some of the developments that are within TODs, transit-oriented developments close to LRT stations or MRT stations,
05:57more focus is supposed to be put a bit more emphasis on these affordable segments or the mid-market segments because these are the most in demand for those people who are actually not so reliant on private transportation and relies more on public transportation which are conventionally more akin towards the M40 market or the B40 market.
06:27Sulaiman, we have a few minutes. From developer and investor's view, how will BTS and the Urban Renewable Act affect supply costs, urban property dynamics over the next three to five years?
06:38The BTS or Built Then Sell program is actually one of the highly debated issues right now.
06:50And it has actually been around in market for the past 15 years, if I'm not mistaken.
06:54The issue here is due to the affordability is one.
07:00And another thing is actually the abandoned projects issues that we actually have, the abandoned projects or sick projects or delayed projects.
07:08These risks are really, most of it is, the risk is burdened to the owners, to the buyers who actually finance the project as they pay as progressive payment,
07:20which is the sale then built.
07:22But it is that same system that we have actually deployed for all these years, which allows developer to defray some of their capital outlay, upfront capital outlay for the development,
07:35which is actually subsidized or basically financed from the progressive billing or the progressive payment that they receive.
07:42This would actually impede in terms of financial challenges, especially for the smaller developers.
07:51Cash is actually, cash flow management is going to be very important.
07:54And hence, the larger companies can actually have better strength in addressing this or strategize towards the built BTS program.
08:03But the sell then built program should still be looked at because the transition is going to be more, it's expected to be more moderate and more gradual rather than total transition in one go.
08:16And it is also selective according to the market.
08:19The URA, Urban Renewal Act, is actually one of the highly anticipated acts also.
08:26It is actually a way for us to actually look at how to rejuvenate or revitalize certain segments or certain dilapidated or underutilized properties that we actually have.
08:37But also, this is where it is easier said than done because if it's a development, a redevelopment for a property that is only single owner, it's easier to manage.
08:49But when it comes to multiple owners, we need to address to give an equitable compensation or mechanism so that it's going to be a win-win partnership.
09:01All right, Salaim, I'm probably going to take a look at the asset recovery is only expected by 2026.
09:07Salaim, maybe you can share with us, what are some of the biggest risks or incentives that could derail this trajectory?
09:16Is it global economic shocks, domestic policy changes or structural issues like overhang and aging stock?
09:22We have a balance of less than one minute.
09:24Can we help to wrap it up?
09:27All right.
09:28The global economic challenges still remain and that became, that becomes a backdrop for everyone.
09:34That's basically how our foreign policies and our government is actually supposed to address that from a fiscal position.
09:44Because Malaysia is dominated by the local market predominantly, so it is going to be within the local market that is actually going to see more changes or more vulnerable to any changes.
09:57One of the risks I would actually say is the consistency of policies and how it is being deployed or basically how it's being rolled out to the market so that the market confidence and sentiment is actually being taken care of in order for the whole market,
10:17be it private sector, public sector, can move forward together.
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