Olive Tree Property Consultants chief executive officer Samuel Tan.
PETALING JAYA: The property sector is expected to continue growing steadily this year underpinned by positive market sentiment and investment opportunities following stable growth in 2024.
Industry observers noted that Johor, especially, will continue to generate interest among real estate investors and buyers.
Olive Tree Property Consultants chief executive officer Samuel Tan noted that catalysts in 2025 will continue to be the oft-mentioned initiatives such as the Special Financial Zone, Johor-Singapore Special Economic Zone (JS-SEZ), Rapid Transit System (RTS), the potential high-speed rail revival and numerous “mega scale foreign direct investment (FDI)” coming into Johor.
“Industrial properties will remain hot especially for medium to large-scale build-to-suit factories, while data centres have been streaming in for suitable sites. We are seeing advanced manufacturing coming into Johor,” he told StarBiz.
Citing the Malaysian Investment Development Authority, Tan noted that Johor secured RM18bil in FDI by the third quarter of 2024.
“However, a final-quarter surge saw investments soar by RM30.5bil, propelling Johor into the top three states with the highest FDI inflows. Selangor led with RM101.1bil in FDI, followed by Kuala Lumpur at RM91.5bil.
“Johor’s investment was primarily driven by the services sector, which contributed RM34bil, while the manufacturing sector accounted for RM14.2bil.”
Tan noted that the halal market is projected to reach US$3 trillion by 2030.
“This investment strengthens Johor’s position in the global halal industry. The Johor government welcomes foreign investments in the halal sector, aligning with Malaysia’s ambition to be a leading halal centre.”
Meanwhile, Maybank Investment Bank Research (Maybank IB) in a recent report also noted that Johor should remain as the key sales driver over the medium term.
“The JS-SEZ has gained further momentum since the announcement of incentives and location details in January.
“To recap, these initiatives encompass the Iskandar Development Region and Pengerang, including key industrial parks and flagship areas.
“Its coverage has expanded beyond the five existing Iskandar Malaysia zones to include Sedenak, Forest City, Pengerang Integrated Petroleum Complex and Desaru.”
Additionally, the research house noted that five new priority sectors – aerospace, electrical and electronics, medical devices, pharmaceuticals and chemicals – have been added alongside previous focus areas such as the digital economy, manufacturing and logistics.
“Special incentives may be offered based on investment type and economic impact.”
Since the announcement of these details, Maybank IB noted that several projects have been initiated.
“Notably, the construction of multi-storey park-and-ride facilities (comprising 850 car park bays and 1,015 motorcycle parking spaces), along with drop-off and pick-up areas and access roads near the Bukit Chagar RTS link station has been awarded to the Sunway Group (RM1.5bil in contract value).
“Additionally, a 4.2-acre freehold land for an integrated development (RM2.6bil in gross development value) comprising serviced apartments, hotels and a retail mall has been sold to Sunway for RM451mil cash, or RM2,447 per sq ft.”
Additionally, the research house said there have been strong commitments from the state and federal governments with regards to Johor.
“The state government is now proposing an Elevated Automated Rapid Transit system to manage the anticipated traffic dispersal with the opening of the Johor Baru-Singapore RTS link, scheduled for January 2027.
“In addition to the RTS link, the state government also plans to enhance connectivity through ferry services between Johor and Singapore, making properties in Johor more attractive. “
Maybank IB said these developments underscored the state’s commitment to enhancing infrastructure and attracting diverse investments, positioning the JS-SEZ as a pivotal hub for economic growth.
All of this, said Tan, has generated positive sentiment for the Johor real estate market.
“The positive sentiment is likely to spill over to the first half of 2025. These two years are likely to be the ‘pivot point’ for Johor Baru after more than 10 years of a lull market.”
In view of the positive sentiment, Tan said serviced apartments within close proximity to the central business district (CBD) area have been doing exceptionally well.
“Demand for landed houses has been consistent with many housing projects witnessing healthy take-up.”
According to data from the Valuation and Property Services Department, Malaysia’s property transaction value surged 18% to RM232.30bil in 2024 – its highest annual figure in a decade.
The overhang situation in the country also showed improvements last year, as the number of unsold completed units fell 10.3% to 23,149 units.
Kuala Lumpur recorded the highest number of residential overhang units with some 4,234 units worth RM3.38bil, representing 18.3% and 24.2% of the market respectively.
This was followed by Johor with 2,964 units valued at RM2.89bil, which accounts for 12.8% and 20.7% of the total respectively.
Condominiums and apartments made up the lion’s share of the overhang, representing 60% of the total within the residential segment.
For the serviced apartment segment, Johor recorded the highest level of overhang at 10,624 units worth RM8.97bil, representing 54.3% and 57.1% of the total.
Most of these units were within the Johor Baru district.
Tan cautioned that developers and prospective buyers need to watch out for the supply pipeline of high-rise serviced apartments.
“We noticed that the supply of such highrise properties started to heat up, especially in the CBD vicinity.
“Developers should pace their supply pipeline to avoid excessive overhang, moving forward.”
Mindful of possible oversupply, Tan said the Johor Baru City Council is expected to curb the development of small-office-home-offices (Sohos) in the city.
“It is needful to note that service apartments and Sohos are popular in good suburbs.
“They are affordable especially to young families and first-time house buyers. Proper research needs to be done to justify their development.”
Tan said se stakeholders must leverage on the JS-SEZ to attract more multinational companies and their supply chains to Johor.
“Local small and medium enterprises must be prepared for this changing landscape,” he said.
