Knight Frank 2023 economic resilience supports property market growth trajectory
Knight Frank 2023 economic resilience supports property market growth trajectory

Knight Frank: 2023 economic resilience supports property market growth trajectory

KUALA LUMPUR: The residential property market improved in the first nine months of 2023, with both transaction volume and value registering a year-on-year (y-o-y) growth of 1.3 per cent and 3.5 per cent, respectively.

Nevertheless, new houses offered for sale in the primary market declined in 2023 due to concerns related to completed unsold units, also known as a property overhang, and market mismatch, property consultancy Knight Frank Malaysia said.

Senior executive director of Research and Consultancy Judy Ong said despite the inflationary pressures and elevated overnight policy rate (OPR), the overall residential market was positive, supported by the government’s initiatives and incentives to encourage homeownership.

This was also supported by the recent revision of criteria for the Malaysia My Second Home (MM2H)

programme, which led to a cautiously optimistic outlook for this year, Ong said in a statement after releasing the company’s Real Estate Highlights 2nd Half of 2023.

In the third quarter of 2023 (3Q 2023), the Malaysian economy grew 3.9 per cent, helped by stronger domestic demand, improved employment conditions, a rebound in the tourism sector, and increased construction activity.

Knight Frank Property Hub’s managing director Enoch Khoo said the flat 4.0 per cent stamp duty on the memorandum of transfer (MoT) for non-citizens and foreign-owned companies, effective Jan 1, 2024 as announced in Budget 2024, can potentially stabilise and control land and property prices.

Meanwhile, in the office space sector, five notable deals in KL City and Selangor saw a combined value of RM837.8 million during the review period.

This slight uptick and heightened interest suggest that confidence is returning with corporate entities seeking additional office space to fulfill growth needs.

Meanwhile, retail sales contracted 4.0 per cent y-o-y in the second quarter 2023 due to weakening consumer spending power amid elevated inflation. Hence, the full-year 2023 retail sales growth has been revised to 2.7 per cent versus an earlier 4.8 per cent projection.

Knight Frank Malaysia said three shopping centres/ supporting retail components with a collective space of about 1.7 million square feet are scheduled for completion or opening in 2024.

It also said the six to eight per cent impending sales and service tax (SST) rate hike effective March 1, 2024, coupled with the introduction of a five to 10 per cent luxury tax and subsidy restructuring may dampen retail growth.

“Retailers will be experiencing higher tax liabilities and will see rising operational costs, potentially eroding their profit margin, and this may lead to price adjustments, impacting consumers,” said Property Management director Yuen May Chee. – BK

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