What will drive Kuala Lumpur’s residential demand in 2024?

Projects are expected to increasingly cater to single-family households.

Kuala Lumpur’s prime residential market is expected to experience suppressed demand due to the unchanged interest rates, according to a recent JLL report. 

“It is unlikely that demand from locals will grow, as interest rates are projected to remain steady. As for foreigners, it remains unclear whether the revised terms of the Malaysia My Second Home (MM2H) programme will have a strong positive impact on demand,” the report said.

Here’s more from JLL:

In 2024, there is an anticipated local demand for residential projects that offer a desirable lifestyle, unique features and smaller unit sizes, driven by the growth of single-family households. High-rise developments must have appealing common areas and lifestyle facilities to attract buyers. However, these will not meet the MM2H requirements, thus limiting foreign buyer participation.

Demand remains soft as buyers reconsider property purchases

There were no changes in the interest rate in 4Q23, and it remained constant at 3% after three consecutive rate hikes. The unchanged trend in interest rates may have implications for demand in the market, as higher interest rates typically restrict buyers’ ability to purchase properties.

Soft demand persists as local buyers remain sensitive and cautious, reassessing decisions regarding high-value purchases, while foreign buyers wait for updates on the MM2H programme, in the hope that favourable rules will be introduced.

New residential projects continue to launch

One project, Imperial Lexis, was completed in the quarter, adding 164 units to the total stock. The completion of the other three projects remains delayed due to ongoing labour shortages that continue to plague the residential construction sector. 

Two projects, The Peak and Majestic Residence, were launched during the quarter, totalling 532 units.

Rental demand remains stronger in the residential market

Investment in the Prime market might experience a subdued period due to anticipated changes in the Malaysian My Second Home (MM2H) programme, which could affect the flow of foreign investment into Malaysia’s real estate sector. New improvement measures are aimed at stimulating potential investment sentiment.

Rents in the Prime market have risen, as renting remains a favourable option for both locals and foreigners. Companies are also gradually returning to their respective offices while adopting hybrid modes of operation. The rental budget among potential tenants contributed to an increase in rents.

Note: Kuala Lumpur Residential refers to Kuala Lumpur's prime residential market.