December 2024 Market Outlook
FOMC Outlook for Rate Cuts
The Federal Reserve reduced the interest rate by another 25-basis point to 4.5% – 4.75%. The FED indicates 1 more 25 bps cut in 2024 and another 100-basis point cut in 2025.
Impact on Malaysia
1- Lower US rate may weaken the USD, increasing inflow into Malaysia asset, including property market.
2- Lower MGS yields make Malaysia REIT/ QJBCC fund more attractive to investors due to better return.
Malaysia Government Securities (MGS) – Conventional (MGS Benchmarks)
Tenure | Maturity | Coupon (%) |
3 – year | May – 2027 | 3.502 |
5 – year | Aug – 2029 | 3.885 |
7 – year | Apr -2031 | 2.632 |
10 – year | Jul – 2034 | 3.828 |
Source: BNM
Malaysia Overnight Policy Rate
The OPR has been kept at 3% throughout 2024, providing a stable environment for borrowing, especially for real estate. BNM has keep the rate unchanged since July 2023.
% | As of 5th Sep | 4Q24 | 1Q25 | 2Q25 | 3Q25 |
Overnight Policy Rate | 3.00 | 3.00 | 3.00 | 3.00 | 3.00 |
Statutory Reserve Requirement | 2.00 | 2.00 | 2.00 | 2.00 | 2.00 |
Source: UOB global research
Property Sector: Catalytic Themes Shaping 2025
The KL Property Index (KLPRP) outperformed the FBMKLCI year to date. KLPRP posted a robust gain of 27% in 1H24, the substantial share price increases year to date were largely driven by new catalysts, particularly from property players benefitting from their involvement in the data centre industry.
Source: AVC, Dec 24
Looking ahead to 2025, we believe the continuation of this momentum will depend on catalytic themes such as:
- Government Policies, the New Industrial Master Plan 2030 (NIMP30) to increase the growth in foreign direct investment (FDI) and domestic direct investment (DDI), as well as industrial property values transacted and incentives for data centre investment, which may boost manufacturing and industrial land sales.
- New Infrastructure Projects, such as the Johor Bahru-Singapore Rapid Transit System (RTS) and Penang Light Rapid Transit which enhance connectivity, create real estate investment opportunities and increase landbank value for property developers.
- Increasing Foreign Direct Investment (FDI), which is expected to boost income, create growth and increase demand for industrial property and eventually residential property.
National Property Information Centre (NAPIC)
NAPIC data showed an encouraging trend driven by commercial and development land & other transactions. Based on the latest National Property Information Centre (NAPIC) data, the property market saw strong growth for the first 3 quarters of year 2024, with 311,211 transactions worth RM162.96b (+6.2% in volume yoy 2023, +14.4% in value yoy 2024). In terms of volume, all subsegments showed single-digit volume growth with the exception of commercial and development land & others: residential (+4.9%), commercial (+16.6%), industrial (+6.5%), agricultural (+4.4%), and development land & others (+8.4%). In value terms, all subsegments recorded double-digit growth with the exception of residential and agricultural: residential (+6.9%), commercial (+32.7%), industrial (+22.8%), agricultural (-0.8%), and development land & others (+26.6%).
Transaction Value by State
Source: NAPIC
Transaction Value by Type
Source: NAPIC
Malaysia Tourist Arrival – Hotel Property Segment Outlook
The year to date, tourist arrivals in Malaysia for hotel stays have returned to pre-pandemic levels, largely driven by visitors from Asia, particularly China and Singapore.
The recovery in hotel average daily cost (ADR), driven by higher occupancy rates. Johor are expected to see the largest jumps, particularly on the mid to high tier hotel segment.
Transaction Value by Type
The year to date, tourist arrivals in Malaysia for hotel stays have returned to pre-pandemic levels, largely driven by visitors from Asia, particularly China and Singapore.
The recovery in hotel average daily cost (ADR), driven by higher occupancy rates. Johor are expected to see the largest jumps, particularly on the mid to high tier hotel segment.
Source: Various source, Dec 2024
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