Knight Frank Malaysia, a leading global property consultancy, has released its comprehensive analysis for the first half of 2024, revealing a dynamic and resilient real estate market across the residential, office, retail, hospitality and industrial sectors. The Real Estate Highlights 1st Half of 2024 (REH) report features insights into the performance of the property markets across Klang Valley, Penang, Johor, Sabah and Sarawak. This publication has been regularly churned out, with this year’s debut of a refreshed format. It also highlights the strategic developments that have propelled Malaysia’s property market to new heights in 2024, which remains a key area of interest for both investors and developers.
Below are some key market highlights across the different geographical locations:
Industrial Sector
Klang Valley
- There is a marked shift towards high-quality, sustainable logistics spaces, contributing to a slight rise in market rents. The region has attracted significant data centre investments, including major projects like Google’s data centers.
- Institutional investors are increasingly targeting industrial assets in the Klang Valley for their stable returns and yield-accretive potential.
Johor
- Rapid growth in the data centre market driven by proximity to Singapore as well as the launch of the Johor-Singapore Special Economic Zone (JS-SEZ) in January 2024.
- Initiatives like the Johor-Shenzhen Industrial Park and the solar-ready factory by Paragon Globe Bhd are setting benchmarks for sustainable industrial development in Johor, designed to enhance the region’s attractiveness for high-tech and green industries.
Penang
- Penang continues to draw substantial foreign direct investments, thanks to its strategic location and robust industrial infrastructure.
- The state is expected to become a hub for high-tech industries, particularly in semiconductor and electronics manufacturing, supported by enhancements in local infrastructure and investment incentives
Sabah
- Sabah’s industrial sector benefits from federal investments and initiatives aimed at boosting industrial growth.
- Federal government allocated RM6.6 billion in Budget 2024, plus a special RM300 million grant. Initiatives include hybrid solar energy generation and construction of electricity transmission lines in southern Sabah.
- Developments like the Jesselton Docklands and the increase in industrial property transactions indicate a healthy growth trajectory for the region’s industrial market.
Sarawak
- Sarawak is focusing on becoming “Asia’s Renewable Powerhouse,” with initiatives like the construction of a hydro dam in Kalimantan and various large-scale industrial parks.
- These efforts are part of a broader strategy to attract investments and foster sustainable economic development.
- Kuching’s industrial sector saw substantial increases in both transaction volume and value.
- Post COVID-19 Development Strategy (PCDS) 2030 to attract increased foreign investments.
Office Sector
Klang Valley
- 1H saw the completion of two significant buildings, adding 0.4 million sq ft, bringing the total space to 117.9 million sq ft with notable completions include Menara Felcra @ Semarak20 and Pavilion Damansara Heights Corporate Tower 1, contributing 213,000 sq ft and 233,000 sq ft respectively.
- Klang Valley’s office sector experienced modest improvements in occupancy and rental rates, driven by tenant relocations and a resilient market in KL Fringe and Selangor.
- Future completions in 2H2024 include The Exchange TRX Office, Oxley Tower, TNB Gold Bangsar, and Atwater Corporate Towers, expected to add approximately 1.4 million sq ft.
- Improvement in occupancy rates across KL City, KL Fringe and Selangor
Johor
- Stable rental rates observed, with average asking rents between RM2.90 and RM3.50 per sq ft per month in Johor Bahru City Centre, and RM2.90 to RM3.10 per sq ft per month in Johor Bahru City Fringe.
- Continued growth in co-working spaces, with the International Workplace Group (IWG) planning to open a third workspace in Medini, leveraging the demand for flexible work solutions.
Penang
- The office space supply remained stable with 6.9 million sq ft on Penang Island and 1.7 million sq ft in Seberang Perai. Three new office towers are expected to enter the market in the second half of 2024, including Sunshine Tower, GBS by The Sea, and a 34-story office suites building in Gelugor.
- Premium-grade office buildings in George Town and selected buildings outside George Town reported high occupancy rates, ranging from 80% to 100%.
Sabah
- The existing supply of office spaces in Kota Kinabalu remained stable at 5.2 million sq ft, with an occupancy rate of 86.0%.
- One notable activity included Casa Office & Home Furniture leasing approximately 4,300 sq ft in G Building at Bundusan. The Jabatan Audit Negara Negeri Sabah government office building was completed with a net lettable area of 39,579 sq ft.
Sarawak
- The relocation of Shell Malaysia Upstream’s headquarters to Miri Times Square has significantly impacted the office market, bringing the region’s first Grade A and Gold GBI office space.
- The commercial property market in Kuching saw a 5.9% increase in transaction volume and a 4.06% increase in transaction value, driven by infrastructure developments like Autonomous Rapid Transit (ART) and hydrogen buses.
Retail Sector
Klang Valley
- The retail market showed signs of recovery with increased footfall and sales with continued interest in prime retail spaces driven by local and international brands.
- New retail supply included the completion of retail components in mixed-use developments like Pavilion Damansara Heights and Sunway Velocity 2.
- E-commerce and omnichannel retail strategies are reshaping consumer behavior and retail space demand.
Johor
- The retail market in Johor is showing positive momentum, driven by active retailer movements and higher occupancy rates with Paradigm Mall Johor Bahru and AEON Mall Bukit Indah becoming key destinations, attracting a diverse range of established and emerging brands.
- Prominent malls like The Mall, Mid Valley Southkey, and KSL City Mall continue to experience strong demand, particularly from Singaporean shoppers. This surge in interest has pushed occupancy rates close to capacity .
Penang
- Retail spending in Penang is anticipated to increase in the second half of 2024 due to improvements in the labor market, the expansion of flight routes and frequencies, and growth in tourism-related activities.
Sabah
- Prime shopping malls in the Kota Kinabalu CBD have generally repositioned their tenant mix over the past two years, introducing renowned retailers to differentiate and strengthen their market positioning.
- As of Q1 2024, the supply and occupancy of retail space within shopping complexes in Kota Kinabalu were approximately 6.1 million sq ft, with an occupancy rate of 79.8%.
Hospitality Sector
Klang Valley
- The tourism sector is recovering, with increased hotel occupancy rates, especially in 4-star and 5-star categories.
- Significant new openings and renovations are expected to attract more tourists.
Johor
- Tourism spending in Johor reached RM71.3 billion, the highest per capita spending recorded since 2010, driven by economic recovery and a rebound in tourism activities.
- Several major hotel developments are underway, including the Novotel Hotel in JB Fringe and the Sheraton Johor Bahru in the CBD, both set to enhance the luxury hospitality offering in the region.
Penang
- International hotel brands such as Le Meridien, Westin, and Marriott are planning new openings.
- Direct flights to major cities and reciprocal visa-free policies are boosting tourism.
Sabah
- Federal government initiatives, including visa-free programs for Chinese and Indian tourists, are expected to increase high-spending visitors.
- The state’s hospitality sector is attracting foreign investments.
Sarawak
- Sarawak is enhancing its hospitality sector with a focus on eco-friendly developments. Notable projects include the development of two 5-star eco-resorts by Sinyi Group, which are focused on sustainability and minimizing environmental impact.
High-End High Rise Residential Sector:
Klang Valley
- 1Q2024 saw 3,413 residential units sold for RM2.80 billion, marking a 19.2% increase in volume and a 19.3% rise in value.
- Notable completions include three high-end condominium projects, adding 1,846 units.
- Future completions in 2H2024 will add approximately 5,866 units to the market.
Johor
- Notable growth in transaction volumes and values in both condominiums/apartments and serviced apartments categories.
- Several high-rise residential projects were launched, reflecting a vibrant market driven by strategic developments like the upcoming Johor Bahru-Singapore Rapid Transit System (RTS) Link.
Penang
- The high-end residential market in Penang continues to be buoyed by strong demand, particularly in areas with high connectivity and amenities.
- New properties featuring upgraded amenities are expected to boost the rental market, drawing tenants and fostering rental growth across various neighborhoods.
Sabah
- High-rise residential schemes are particularly targeted at small to mid-sized households, reflecting a focus on lifestyle and convenience.
- Occupation Certificates were attained for Jesselton Twin Towers during the review period, with the asset being noted as Borneo’s tallest iconic landmark.
Sarawak
- Achieved a GDP milestone of RM146 billion in 2023.
- Sarawak’s GDP reached RM146 billion in 2023, reflecting its strong economic performance. This economic growth is supporting increased activity in the high-end residential market.
- The market is seeing a rise in both transaction volume and value, driven by ongoing infrastructure developments such as the Automated Rapid Transit (ART) and hydrogen buses, which enhance the attractiveness of high-end residential properties in the region.
Conclusion:
Findings underscore the strategic importance of the industrial sector in the country’s economic landscape. Key infrastructure projects such as the East Coast Rail Line (ECRL), Johor Bahru – Singapore Rapid Transit System (RTS), Pan Borneo Sabah, and MyDigital 5G are expected to further enhance connectivity and support the sector’s growth. According to our Group Managing Director, Keith Ooi, “this indicates a strengthening investment climate, driven by strategic government initiatives and a supportive regulatory environment. Knight Frank Malaysia’s mid-year review highlights a promising trajectory for the property sector, supported by robust economic growth, significant investments, and adaptive market trends.” As Malaysia continues to show promising growth prospects, bolstered by strategic investments, infrastructure improvements, and evolving market dynamics.
To download the full report, click https://kf-my.com/REH1H2024-PDF
