Malaysia was not immune to global financial problems over the past 18 months and had its own short recession in the first half of 2009. The government in Malaysia is focused on stimulating the economy and this is combined with the general stabilisation of the global economy. However, recovery is clearly starting, as real GDP expanded by a strong 4.8% in Q209 quarter-on-quarter (q-o-q), having contracted by 7.8% in Q109 and by 3.4% in Q408.
Oversupply in the office sector meant that the real estate market headed into the downturn at a disadvantage, but rental rates have stabilised during the second half of 2009. Occupancy in Kuala Lumpur’s golden triangle remained close to 100% and although office space availability will increase in 2010, this should be seen as a positive, tenant’s marketplace, not a squeeze on rents. According to CB Richard Ellis (CBRE), vacancy and rentals began to level out in the fourth quarter of 2009 and new supply coming on stream over the next three years will continue to make for a highly competitive leasing environment.
Property investment in Malaysia is set to increase further than the increase of 424% q-o-q to MYR880.3mn seen in Q309, as a change in international investment regulations means foreign acquisition no longer require FIC (Foreign Investment Committee) approval. Financial incentive packages have boosted the residential market and together with the likely increase in foreign buyers, developers are more confident to launch new projects. This is showing through in the news that developers are reporting into 2010, with new launches and new projects starting.
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