The reopening of international borders on January 1, 2022, will have a direct impact on the Malaysian property market, particularly in the luxury segment, as foreign investors and permanent residents will be encouraged to invest in real estate.
According to Juwai IQI co-founder and group chief executive officer Kashif Ansari, the reopening of borders is a symbol of the overall return to normalcy, economic growth, and employment growth.
"We anticipate that the residential market will strengthen as the economy recovers. Transaction volume will rise first, followed by price growth over time," he said.
According to Kashif, the rapid pace of vaccination and new Covid medications is improving the outlook, which is expected to increase household spending and consumer desire in 2022.
All of the same conditions, he said, are likely to increase property demand and the formation of new households.
"We anticipate that the economy will recover in 2022, matching the global economy's growth. Because the government is implementing both economic and fiscal stimulus, we expect GDP growth to reach six per cent next year," Kashif said.
He said that because exports account for 65 per cent of Malaysia's GDP, improvements in the global outlook and the resolution of the international supply chain will have a positive external impact in Malaysia.
"Furthermore, UOB economists predict that unemployment will fall by six basis points to 3.6 per cent in 2022. To summarise, we anticipate a growing economic recovery and significantly improved prospects for next year," he said.
Malaysia has gradually reopened its economy in recent weeks as coronavirus infection rates have slowed amid a ramped-up vaccination programme.
Meanwhile, Kashif said that cross-border investments in Malaysian real estate would be significantly lower this year.
Because of the unprecedented nature of the situation, he said that the next few years would be less predictable.
He believes that investors will remain cautious due to economic uncertainty and the risk of a resurgent pandemic.
"However, our base case and the most likely outcome is that cross-border investment in luxury Malaysian residential real estate rises in the short and long term. We anticipate an increase in cross-border residential demand throughout 2022. It is expected to reach 2019 levels in 2024 or 2025.
"Even so, demand will be significantly higher than it is now. This will be a boon to developers and sellers who are currently on the market," he said.
Buyers from Singapore, according to Kashif, will be the first to return to the local property market.
It would be followed by property buyers from other countries who have traditionally participated in Malaysia's luxury housing market.
"More countries are opening special travel bubbles where fully vaccinated travelers can go between countries without quarantine, such as between Malaysia and Singapore. We expect more countries outside of Europe to relax their requirements as the situation eases," he said.
The Malaysia My Second Home (MM2H) programme, according to Kashif, is a significant factor in cross-border demand.
"We are likely to see an increase in the average purchase price for MM2H participants under the new rules," he said.