KUALA LUMPUR: The property sector in Malaysia is expected to benefit from the 2024 Budget as a result of the government's ongoing efforts to boost homeownership and positive developments in major infrastructure projects.
Other encouraging factors include the development of Iskandar Malaysia in Johor and potential changes to the Malaysia My Second Home (MM2H) programme.
AmInvestment Bank expects residential property transaction activity to improve further, in line with the government's effort to increase the number of affordable houses outlined in the Mid-Term Review of the 12th Malaysia Plan (MTR 12MP), 2021-2025, and the MADANI Neighbourhood Scheme.
Malaysia and Singapore are expected to finalise the Terms of Reference (ToR) for the proposed Johor-Singapore Special Economic Zone (SEZ) in Johor after discussions between the leaders of both countries this month.
AmInvestment Bank anticipates that the government will reveal more details about the proposed SEZ in the 2024 Budget today.
It anticipates that the government will continue to support homeownership for people in the B40 and M40 income brackets, with a focus on first-time homebuyers, as well as broaden the scope of rent-to-own (RTO) schemes to make them more accessible to people in the B40 and M40 income brackets.
"From our view, most housing-related policies (in the 2024 Budget) will conform to the MADANI economic framework, which envisions a prosperous nation and balance for all Malaysians," it said.
The investment bank said these policies will also align with the objectives set forth in the MRT 12MP.
"As such, we believe the 2024 Budget will primarily focus on topics such as promoting homeownership, enhancing housing affordability, boosting development in Iskandar Malaysia, and reaffirming commitments to major infrastructural projects outlined during the 12MP MTR," it said.
These projects include the Bayan Lepas light rapid transit in Pulau Pinang, the upgrading of the Senai-Desaru expressway and north-south expressway, the construction of Sarawak-Sabah link road II and Sabah Pan Borneo highway phase 1B, as well as the expansion of bus rapid transit (BRT) and intracity bus services.
Also, there is a possibility for the government to announce the implementation of mass rapid transit 3 and the potential revival of Kuala Lumpur-Singapore high-speed rail, it said in a note.
AmInvestment Bank believes there is a high chance for the extension of the previously introduced 75 per cent stamp duty exemption for houses priced at RM500,000 to RM1,000,000 under the Malaysian Home Ownership Initiative (i-MILIKI), which is set to expire by the end of this year.
iMILIKI now offers 100 per cent stamp duty exemptions for first-time home buyers for properties priced below RM500,000 (expiry by end-2025) and 75 per cent exemptions for properties priced between RM500,000 and RM1 million (expiry by end-2023).
Concerning MM2H, the government is currently reviewing and considering relaxing the programme's requirements.
Notably, the MM2H programme has seen a 90 per cent drop in applicants since 2021, owing to stricter conditions that have forced foreigners to choose other countries, such as Thailand, which offers a similar programme called the Thai Elita Visa.
The potential positive revisions are expected to attract more foreign property buyers and address overhang issues in Malaysia, particularly in Kuala Lumpur, Johor, and Penang, which have been popular destinations for foreigners seeking to reside in the country.
AmInvestment Bank continues to be overweight in the real estate sector.
It said that since the beginning of 2023, the Kuala Lumpur Property Index (KLPRP) has outperformed the Kuala Lumpur Composite Index (KLCI), with a gain of 36 per cent versus the KLCI's loss of 4.0 per cent.
"Moving forward, we expect a gradual recovery in property transaction volumes on improved market sentiments and stronger demand, aided by our economist's estimated 2024 gross domestic growth of 4.5 per cent and job recoveries," it said.