High-rise and luxury segments seen most vulnerable
PETALING JAYA: Malaysia’s property market remains an appealing investment avenue despite increasing global uncertainties, according to industry experts.
PPC International Sdn Bhd managing director Datuk Siders Sittampalam said the local property market remains attractive to investors despite the ongoing West Asia crisis.
“However, the appeal is likely to be selective rather than broad-based, with investment decisions increasingly adopting a sector-led approach.
“It is important to recognise that Malaysia’s property market continues to be driven largely by domestic fundamentals, rather than direct exposure to the Middle East,” he told StarBiz.
An analyst said investing in property during global economic uncertainty “still makes sense,” adding, however, that it is “no longer about riding a broad market upswing”.
“It’s about selectivity, resilience, and long-term thinking. Property remains attractive because it’s a tangible, income-generating asset.”
Amid uncertain times, he said investors often value “stability.”
“Real estate can provide relatively predictable rental income and act as a partial hedge against inflation. Compared to more volatile assets like equities, it tends to be less reactive to short-term global shocks.”
However, he said the current environment has changed the investment outlook.
“Higher construction costs, cautious lending and more price-sensitive buyers mean that not all properties will perform well. Oversupply in certain segments, especially high-density developments, can limit both rental yields and capital appreciation.
“At the same time, global uncertainties can affect job markets and consumer confidence, indirectly impacting demand,” he said.
Compared with many countries in the region, Siders noted that Malaysia’s political neutrality provides a degree of stability.
“As such, the crisis is expected to affect the market only indirectly, primarily through higher oil prices, inflationary pressures and shifts in investor sentiment.
“One key reason the market remains attractive is that, during periods of geopolitical uncertainty, investors tend to rotate away from volatile equities into hard assets such as real estate.”
Siders emphasised that property, particularly income-producing assets, is generally less sensitive to short-term volatility affecting equities and other financial instruments.
“That said, the principal risk lies in a prolonged period of elevated oil prices, which could translate into higher domestic transportation costs, increased steel and concrete prices, pressure on rental affordability and slower take-up rates for high-end residential properties.”
Collectively, Siders said these factors may erode household disposable income and temper overall market momentum.
“In my view, investment strategies should now be anchored on income generation and strong underlying fundamentals, rather than expectations of capital appreciation or speculative gains.”
One market observer said that in times of uncertainty, the key question isn’t whether to invest, but rather “how to invest.”
“Investors should focus on properties with strong fundamentals – good locations, access to infrastructure, proximity to employment hubs and realistic pricing.
“Rental demand is especially important now, as steady income can offset slower price growth. A longer investment horizon also becomes critical, since quick gains are less likely in a cautious market cycle.”
Amid current economic uncertainties, a property analyst said there would be an impact on the market should things escalate further or be prolonged.
In such a situation, he said the impact would vary depending on the property segment. He said high-rise condominiums, especially in Kuala Lumpur, would be the most vulnerable segment.
“This segment would be the hardest hit because buyers here are often investors or middle- to upper-income earners.”
He noted that this segment also tends to be more sensitive to economic uncertainty, rental yields and short-term sentiment.
“Should oil prices spike, investors here will likely pull back and there will be fewer speculative purchases.
“The number of expatriates would also shrink if the global economy slows. Moreover, rental demand for these types of properties could also soften.”
Ultimately, this could lead to slower price growth or stagnation for high-rise condominiums.
“There would be higher unsold inventory. This is already an issue for condominiums within the Klang Valley,” he said.
Similarly, luxury and high-end properties are also at high risk, he noted.
“This segment is highly dependent on foreign buyers and investor sentiment.
“Oil price spikes often come with global uncertainty, which reduces foreign inflows and makes buyers more cautious. In such situations, transactions within this segment could drop significantly and prices may stagnate or correct.”
On the flip side, he said affordable houses (or mass-market properties) would be the most resilient if global economic conditions continue to worsen.
“This segment holds up better because it is driven by genuine need for owner occupation rather than investment.
“It is also often supported by government schemes and financing access. Even if oil prices push up living costs, people still need homes.
“Demand may slow slightly, but the segment still remains relatively stable. Prices may still inch up, albeit more slowly.”
Nevertheless, higher oil prices equals higher fuel costs, he noted. “Therefore, commuting can become more expensive.
“In such cases, locations far from city centres may see reduced appeal, while well-connected areas (especially ones near mass rapid transits and light rail transits) will hold their value better.”
By EUGENE MAHALINGAM eugenicz@thestar.com.my
