Reopening of the border and its impact on real estate, the economy


AFTER closing our borders for almost two years, Malaysia is expected to reopen its borders to international visitors in 2022.

Impact on real estate

The reopening of the borders will have a direct impact on the real estate market by attracting foreign investors and foreign permanent residents to Malaysia. More broadly, the reopening of borders is a symbol of the global return to normality, economic growth and job growth.

We expect the residential market to strengthen as the economy generally rebounds. The volume of transactions will increase first and over time lead to an increase in prices.

Economic perspective

The rapid pace of vaccination and new Covid drugs are improving the outlook, which in 2022 is expected to lead to a surge in household spending and the urge to consume. All the same conditions are also likely to increase real estate demand and the formation of new households.

We expect the economy to rebound in 2022, matching the corresponding growth in the global economy. The government is implementing economic and fiscal stimulus measures, so we expect GDP growth to reach 6% next year.

Cross-border residential buyers

In 2020 and 2021, cross-border investments in Malaysian real estate declined significantly, as expected.

The next few years are less predictable due to the unprecedented nature of our situation. Due to economic uncertainties and the risk of a resurgence of the pandemic, investors should remain cautious.

However, our base scenario and the most likely outcome is that cross-border investment in luxury Malaysian residential real estate increases in the short and long term.

We expect cross-border residential demand to increase throughout 2022. It will likely reach 2019 levels in 2024 or 2025. Even so, demand will be significantly higher than the current status quo. It will be a relief for the developers and sellers currently in the market.

Expect buyers from Singapore to be the first to return, followed by those from other countries that have traditionally played a role in Malaysia’s luxury housing market.

The Malaysia My Second Home (MM2H) program is an important driver of cross-border demand. Under the new rules, we will likely see an increase in the average purchase price for MM2H participants.

This article was written by Juwai IQI co-founder and group CEO Kashif Ansari (pix).

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