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Everything you need to know is included in our Malaysia Property Pack
Are you considering buying real estate in the land of Diversity? Are you unsure if it's better to buy now or wait until next year?
People hold diverse opinions regarding market timing. The Malaysian real estate agent you know might advise you that now is the opportune time to buy property, while your childhood friend from Kuala Lumpur may suggest exercising more patience before making a decision.
At BambooRoutes, when we create articles or update our pack of documents related to the real estate market in Malaysia, we use factual data and statistics to analyze information, minimizing biases and uncertainties caused by opinions.
We've done extensive research on official reports and government website statistics, resulting in a comprehensive database. Here's what we've learned, which can provide valuable insights for your decision-making process regarding real estate purchase in Malaysia.
Enjoy the article!
How is the property market in Malaysia these days?
Malaysia is, today, a reliable and stable choice for investors
Neutral
Stability should be the first thing you look at when you want to invest in real estate because it safeguards against market fluctuations and uncertainties. It is an information you need as a foreigner who might buy a property in Malaysia.
Rest assured, Malaysia remains a stable country. The last Fragile State Index reported for this country is 56.4, which is a good performance.
Malaysia has a strong and growing economy, as well as a stable political environment, which makes it an attractive investment destination for investors looking for reliable and stable returns. Additionally, Malaysia has a well-developed infrastructure, a transparent legal system and a talent pool of skilled workers, making it an ideal place for businesses to invest in.
Stability is here. Now, let's dive into the economic forecast.
Malaysia is projected to grow strongly
Positive
Make sure the country's economy is strong before deciding to buy a property.
As indicated by IMF projections, Malaysia is likely to finish 2023 with a growth rate of 4.5%, which is a robust number. Concerning 2024, the consensus estimate is 4.5%.
That will continue to be true for more years to come since Malaysia's economy is expected to increase by 20% during the next 5 years, resulting in an average GDP growth rate of 4%.
Projected strong growth in Malaysia indicates that the economy is healthy and stable, making it an attractive investment opportunity for those looking to invest in property in the country. Additionally, it can be expected that property prices will appreciate in the long-term, making it a great investment for those looking to make money.
Nonetheless, GDP growth is not the only metric to look at.
Malaysian business owners have a neutral outlook towards market conditions
Neutral
How do Malaysians perceive their economy? Relying solely on the GDP forecast may not provide an accurate assessment. Luckily, in Malaysia there is a standardized metric that is regularly published. This doesn't apply to every country, so we're in luck.
The Business Consumer Index (BCI) is a measurement that captures the confidence of business leaders in the current and future economic conditions. Surveys and assessments contribute to its determination.
According to the Malaysian Institute of Economics Research's data, the latest Business Confidence Index value is -3 for Malaysia. For interpretation, it's quite low.
There hasn't been significant change, considering that the BCI score, 12 months ago, registered at 4.
It's worth noting that, currently, Business Confidence Index (BCI) is pretty low in lots of countries, not only Malaysia. However, this does not automatically imply that the property market presents no opportunity. A lower confidence score often indicates a temporary period of uncertainty or caution, which is a natural part of economic cycles.
Therefore, before deciding whether it's the right time to buy property in Malaysia, it's essential to look at other relevant metrics and factors that can provide a more comprehensive understanding of the market conditions.
A measured growth for property prices in Malaysia
Positive
Malaysia's home prices have increased by 9.9% in 5 years according to Central Bank Of Malaysia.
It means that if you had bought a condominium in Kuala Lumpur for $500,000 five years ago, then it would now be worth around $549,000.
These days, the property market is showing signs of steady progress as Malaysian property prices exhibit a gradual but notable upward trajectory.
Certainly, it's a positive indication. Who wouldn't appreciate a consistent and reliable growth? If you are considering purchasing a property in Malaysia, and if this trend persists, there is a chance your investment could experience capital appreciation.
You can find a more detailed analysis of the real estate prices in our property pack for Malaysia.
Everything you need to know is included in our Malaysia Property Pack
Malaysia's population is getting richer
Positive
It's vital to take population growth and GDP per capita into account before purchasing real estate because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Malaysia, the average GDP per capita has changed by 5.5% over the last 5 years. It's a good number.
This means that, if you purchase a luxury apartment in Kuala Lumpur and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is set to increase in Malaysian cities like Kuala Lumpur, Penang, or Johor in 2024.
Rental yields are average in Malaysia
Neutral
Now, let's shift our focus to the rental yield.
It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in Malaysia is purchased for 500,000 MYR and generates 25,000 MYR in annual rental income, the rental yield would be 5%.
According to Numbeo, rental properties in Malaysia offer gross rental yields ranging from 2.9% and 5.6%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Malaysia.
It means that your income potential is relatively moderate.
Everything you need to know is included in our Malaysia Property Pack
In Malaysia, inflation is expected to be moderate
Neutral
In two words, inflation is when purchasing power decreases.
It's when your customary plate of nasi lemak costs 10 Malaysian ringgit instead of 8 Malaysian ringgit a couple of years ago.
If you're considering investing in a property, high inflation can offer you several advantages:
- Property values have a tendency to increase over time, leading to potential capital appreciation.
- Inflation can result in higher rental rates, thereby increasing the cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, effectively preserving the value of the investment.
- Diversifying your portfolio with real estate provides stability during periods of inflation.
- Tax advantages, such as depreciation deductions, can help offset the impact of inflation.
According to the IMF, over the next 5 years, Malaysia will have an inflation rate of 12.4%, which gives us an average yearly increase of 2.5%.
It means that Malaysia may face inflation in the near future. In such a situation, buying property now becomes an option to consider.
Is it a good time to buy real estate in Malaysia then?
Now it's time to draw our conclusions.
2024 offers a compelling opportunity to consider investing in Malaysian property, given several favorable signals that indicate a conducive environment for real estate investment. Malaysia's strong projected economic growth serves as a promising backdrop for property investment. A thriving economy typically correlates with increased demand for real estate, potentially leading to enhanced property values over time.
One notable advantage is the measured growth of property prices in Malaysia. This indicates a balanced and sustainable appreciation, minimizing the risks associated with rapid and volatile price fluctuations. Such stability is a positive sign for investors seeking steady returns on their property investments.
The improving financial status of Malaysia's population is another factor contributing to the attractiveness of property investment. As the population experiences a rise in prosperity, the demand for housing and real estate could increase, driving the potential for capital appreciation and rental income.
While some signals are neutral, they still contribute to the overall positive environment for property investment. Malaysia's reputation as a reliable and stable choice for investors remains intact. Additionally, the neutral outlook of Malaysian business owners towards market conditions suggests a balanced perspective, potentially leading to steady real estate demand.
Although rental yields are average in Malaysia, the other favorable factors, including economic growth, stable investment climate, and population prosperity, offer a compelling case for property investment. Moreover, the expected moderate inflation further stabilizes the investment landscape and supports the argument for considering property acquisition in Malaysia in 2024.
We hope this article has offered you practical support!. If you need to know more, you can check our our pack of documents related to the real estate market in Malaysia.
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This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
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