KUALA LUMPUR: Despite the long uncertainty after the 15th general election (GE15) results, the stability achieved with the appointment of Malaysia’s 10th prime minister will have a positive impact on the commercial and industrial property markets in 2023, according to comments released on Nov 30 by Irhamy Ahmad MRICS, Chartered Valuation Surveyor and CEO and founder of Irhamy Valuers International.
“The recent political uncertainty may have caused investors to put major transactions on hold. But given that we now have a new Prime Minister, we foresee more transactions taking place. Investors are now more confident and the property market will perform well in 2023,” Irhamy said.
“I understand those who were worried about the impact the uncertain GE15 results might have had, but the economy goes into 2023 in a strong position. That’s despite unsettling events such as war in Europe and the continued isolation of China, which is by far our largest regional economy. Malaysia’s economy is expected to grow moderately between 4% and 5% in 2023. That compares to the anticipated 6.5% to 7% growth in 2022, according to the Finance Ministry.
“Economic performance in 2023 is likely to be backed by strong fundamentals and our diversified economic structure. Ongoing policy support will cushion the impact of the rising cost of living and mitigate the downside risks stemming from prolonged geopolitical uncertainties and tightening global financial conditions.
Commercial, industrial and logistics property
“The outlook for medium term has not changed. Judging by the enquiries we are receiving, the corporate sector in Malaysia is still planning for a busy 2023.
“All-sector property transaction volume climbed more than 36% in the first half of 2022. Commercial and Industrial transactions account for 29.3% of total transaction value, equivalent to about RM24.77 billion in the first half. The number of commercial transactions increased in every price range, with the highest price band also demonstrating the highest rate of growth at 54%.
“As predicted, the greatest number of first-half all-sector property transactions closed in Selangor, Perak, and Johor. Selangor alone accounts for 36,026 transactions in the first half, which is approximately one-fifth of the total.
“Transaction value in the first half was significantly higher than the pre-pandemic level, which remained relatively steady in 2018 and 2019. We believe transaction value will continue to climb as we go into 2023, but more modestly. Growth will return to something more similar to the historic trend due to the higher base comparisons as we get past the extremely low numbers of 2020 and 2021.
“The big drivers of activity are infrastructure projects such as renewable energy, transit, and telcos. The industrial market is growing due to the rise of e-commerce and increased investment by foreign manufacturers.
“In 2023, Malaysia will benefit from corporate efforts to diversify their global supply chains. After the disruption of the pandemic, companies want redundant and diversified supply chains. Very often that means locating facilities in Asean, and especially in Malaysia.
“Just look at Apple, whose manufacturing supply chain is one of the world’s largest and has long been concentrated in China. However, the Covid response in China has caused delays to production, and Apple is looking for greater supply chain security.
“Twenty Apple suppliers are now located in Malaysia, which already gives us an important role in the supply chain. Malaysia has significantly more Apple suppliers than the 18 in Thailand, 16 in the Philippines, 11 in India, and two in Indonesia. I believe Malaysian suppliers will account for a larger share of Apple’s supply chain by 2025 than today.