Cross-border real estate investment in M’sia up 40%

PETALING JAYA: Cross-border real estate investment in Malaysia is expected to increase by 40% this year compared to 2021 levels, thanks to the reopening of the Singapore causeway and border crossing which will contribute to the revival of the economy and the fortunes of the Malaysia, according to real estate technology group Juwai IQI Group.

The group expects Malaysian expatriates living in Singapore and Singaporean nationals to increase their property acquisitions in Malaysia, particularly in Johor and Kuala Lumpur. Investment is expected to continue to climb in 2023.

Kashif Ansari, co-founder and CEO of Juwai IQI Group (picture) said the reopening of the border will have significant impacts on the Malaysian economy. This will lead to a full resumption of pre-pandemic trade and travel between countries, allow Malaysians to seek opportunities in Singapore and Singaporeans to seek opportunities in Malaysia.

“The reopening marks the start of a new era of two-way cross-border real estate investment,” Kashif said.

In 2022, Singaporeans looking to invest in Malaysia will be driven by the strength of the Singapore dollar and the perception that the Malaysian market is approaching the bottom of the cycle. They expect prices and activity to rise in the coming years.

Also, the high real estate prices in Singapore will make buyers look for alternatives in Malaysia.

“The pandemic has fueled housing demand and reduced the supply of housing on the market in Singapore. The result has been new highs for private residential property prices,” Kashif said.

Overall, private house prices in Singapore increased by 10.6% in 2021. Despite the price hike, the number of transactions increased by 68% compared to 2020, the group said.

Additionally, the Singapore dollar is near a five-year high against the ringgit, trading between RM3.10 and S$1, significantly higher than it was at the start of the pandemic. in February 2020, when the dollar fell to RM2.98. The rate represents a 4-5% increase in purchasing power for buyers holding Singapore dollars.

In addition, the Malaysian real estate market currently offers excellent accessibility. While the Malaysian property market has performed surprisingly well during the pandemic, data from the Ministry of Finance shows that transactions have nevertheless been lower than in previous years.

“In H1’20, the total value of residential transactions fell more than 26% below the level of H1’19. However, in H1’21, the total value of transactions was still below the level of 2019. In H2 ’21, prices fall 1.2% but transactions remain in line with 2019 levels.

“Nevertheless, the real estate market could be at the start of a new bull cycle with fewer sales and less new construction, combined with growing economic optimism in the country.

“As employment, household income and GDP all increase in 2022 and beyond, we expect the internal market to perform well as well,” Kashif said.