OPR remains at three percent
The overnight policy rate (OPR) is the benchmark rate set by Bank Negara Malaysia as a tool to manage the current economic situation. The OPR will affect the interest rate of long-term loans, including housing or commercial loans. As inflation rate continued to ease compared to last year, the Malaysian government decided to keep the OPR at three percent. The last OPR increase of 0.25 percent occurred in May 2023. The steady OPR will likely ensure the real estate market remains robust coming into 2024, as consumers will be able to apply for loans without a higher mortgage.The value of approved loans for residential properties in Malaysia experienced an increase of around 60 billion Malaysian ringgit in 2022. Meanwhile, the value of non-residential loans increased by nearly twofold within the same period. The current government, under Prime Minister Anwar Ibrahim, has also announced affordable housing schemes for B40 lower-income and M40 middle-income groups. This would mean more Malaysians would be able to afford residential properties. In 2022, the average price of a house in the country was around 450,000 Malaysian ringgit.
More supply than demand in commercial sector
Although the residential sector makes up the majority of the real estate industry in Malaysia, the commercial sector is just as important. In 2023, several new shopping malls opened their doors to consumers, including lavish The Exchange TRX and Pavilion Damansara Heights in the capital, Kuala Lumpur. This will add more area to the existing shopping complex space, especially in big cities.Despite the demand for physical retail spaces, the rise of e-commerce in Malaysia and consumers’ increased preference to buy things online mean that businesses can also operate solely online. This could lead to an oversupply of commercial properties. However, the market value of commercial real estate in Malaysia has been experiencing an increase in the past few years.
