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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 currently ensures a stable environment for investors
Positive
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.
Here's some positive information: Malaysia is a country with a stable environment. The last Fragile State Index reported for this country is 53.1, which is very good.
Malaysia ensures a stable environment for investors through its robust legal framework and business-friendly policies, which include tax incentives and streamlined processes for foreign direct investment. Additionally, the country's strategic location in Southeast Asia, coupled with its well-developed infrastructure and diversified economy, provides a conducive environment for both regional and global trade.
A solid investment potential exists in this country. Now, let's review the economic outlook.
Malaysia will see substantial development
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 2024 with a growth rate of 4.4%, which is a robust number. If we take 2025, the consensus estimate is 4.4%.
On the long term, the growth will persist since Malaysia's economy is expected to increase by 19.4% during the next 5 years, resulting in an average GDP growth rate of 3.9%.
The expected sustainable growth rate in Malaysia indicates a stable and growing economy, which can lead to increased demand for real estate as more people and businesses seek properties. This growth can drive property values up over time, offering potential appreciation and rental income for real estate investors.
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 5 for Malaysia. For interpretation, it's quite low.
There hasn't been significant change, considering that the BCI score, 12 months ago, registered at 1.
It's worth noting that, currently, the Business Confidence Index (BCI) is at a minimal level in many countries, not just Malaysia. However, this does not automatically mean that the property market lacks opportunities. A minimal confidence score often reflects 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 crucial to consider other relevant metrics and factors that can offer 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 growing and 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. Furthermore, the Malaysian population is growing (+10% in 5 years).
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 2025.
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 projected to remain minimal
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 1.0%, which gives us an average yearly increase of 0.2%.
It means that Malaysia is expected to have near-zero inflation then. Unfortunately, buying a property now may not lead to significant price increases or high profits in the future.
Is it a good time to buy real estate in Malaysia then?
Now it's time to draw our conclusions.
2025 is shaping up to be a promising year to invest in property in Malaysia, thanks to the country's stable environment for investors. Malaysia has been working hard to create a secure and attractive climate for both local and international investors, which is crucial for anyone looking to buy property. This stability means that you can invest with confidence, knowing that the government is committed to maintaining a favorable economic environment. This kind of assurance is a big plus for property buyers who want to make sure their investment is safe and sound.
Looking at the bigger picture, Malaysia's economy is expected to grow by 19.4% over the next five years, with an average GDP growth rate of 3.9%. This kind of sustainable growth is a strong indicator of a stable and expanding economy. As the economy grows, so does the demand for real estate, as more people and businesses will be looking for properties. This increased demand can lead to higher property values over time, which is great news for anyone considering buying property now, as it offers the potential for appreciation and rental income.
Another reason why 2025 is a good time to buy property in Malaysia is the measured growth in property prices. While some markets experience rapid and unpredictable price hikes, Malaysia's property market is expected to grow at a more measured pace. This means that you can invest without the fear of sudden market crashes or bubbles. A steady increase in property prices is beneficial for investors, as it allows for more predictable returns and less risk.
Additionally, Malaysia's population is not only growing but also becoming wealthier. This demographic trend is likely to increase the demand for housing, further supporting property values. According to Numbeo, rental properties in Malaysia offer gross rental yields ranging from 2.9% to 5.6%, which is quite attractive for investors looking for rental income. Plus, with inflation projected to remain minimal, the purchasing power of both investors and renters is likely to stay strong, making 2025 an opportune time to invest in Malaysian real estate.
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.
-Will real estate prices go up in Malaysia?
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.