PETALING JAYA (Sept 12): Real estate developers in Malaysia are more positive about the country's property industry outlook for the first half of 2025 (1H2025) compared to the second half of 2024 (2H2024), according to Real Estate and Housing Developers’ Association (Rehda) Malaysia during a media briefing of its Property Industry Survey 1H2024 and Market Outlook for 2H2024 and 1H2025 held at Wisma Rehda, Petaling Jaya on Thursday. 

The survey report revealed that around 26% of the 162 property developers in Peninsular Malaysia who participated in the survey were optimistic of the residential sector's growth for 1H2025, with 53% neutral, 17% pessimistic, 3% very pessimistic and 1% very optimistic.

This was compared to 22% of the survey respondents who were optimistic of the industry's outlook for 2H2024, with none who were very optimistic. 

“This was quite consistent with the other findings of the survey such as on the domestic economic environment, [property developer’s] business prospects and consumer purchasing power, all which indicate an improvement in optimism compared to the second half of this year,” said Rehda Malaysia president Datuk Ho Hon Sang when presenting the survey results at the briefing.

He attributed the optimism to a relatively well-performing economy, stable inflation, appreciation of the ringgit, as well as an influx of foreign investments, which includes the setting up of data centres.

As for market sentiments this year, Ho noted that they are somewhat dampened as developers opted for a wait-and-see approach. “Developers are still treading carefully when it comes to their business operations, despite the improving industry conditions in terms of launches and sales."

He also highlighted that 56% of the developers surveyed are not looking to launch new projects in 2H2024, with about three-quarters of them anticipating their sales performance to be 50% or below in the first six months after the launch. 

This is due to unfavourable market conditions, business constraints, lack of suitable product or land bank locations, higher number of unsold stock and lack of demand in a project location, according to the survey report.

In addition, a significant 93% of the developers surveyed said there is a higher increase in the price  of building materials in 2024 compared to the previous years, with materials such as glass, cement and sand having recorded more than 10% increase in average price as at June 30, 2024. 

To address this issue, Ho said that developers have to resort to lower profit margins, increase property selling prices, use more cost-effective materials, change the design of houses and build smaller units. 

During the briefing, Ho said that the association hopes that the upcoming Budget 2025 will provide several incentives for developers to deliver on the government’s directive to build more affordable housing units. 

He suggested that the Ministry of Housing and Local Government (KPKT) can set aside a budget to rope in various stakeholders to conduct a study on the demand and supply for affordable housing. 

He added that it is important to determine the price and location for these properties and suggested that the government can leverage technology such as big data and AI (artificial intelligence) for this.

“We need a well-informed mechanism to handle [the demand and supply for] affordable housing and minimise cross-subsidisation, which will burden the M40 [Middle 40% income group].”

The association also hopes that the government will exempt the 1% levy imposed by the Human Resource Development Corporation (HRD Corp) on companies in the construction industry, as well as provide incentives such as tax deductions for developers who undertake green and sustainable projects. 

“Feedback from developers is that they need to spend more on green and sustainable practices such as the industrialised building system [IBS], building information modelling [BIM] and green certifications,” said Ho.