Kuala Lumpur (18 October 2024) — Kuala Lumpur-headquartered 27-country real estate agent network IQI, a member of Juwai IQI, celebrates Malaysia Budget 2025’s focus on efficiency and investment, according to comments released by Juwai IQI Co-Founder and Group CEO Kashif Ansari.
“This is a record-setting budget, but it is focused on efficiency and investment,” Mr. Ansari said. “We believe the country will harvest the benefits of this focus over the long-term in the form of faster
economic growth and real estate gains.
“Budget 2025 works to obtain as much economic and social benefit as possible from every ringgit spent. To that end, it invests in fighting corruption, and it attempts to focus subsidies and incentives only on the people who need the most help. By focusing benefits on poorer and middle class households, who tend to spend a larger portion of their income on basic goods and services compared to the wealthy, this budget will stimulate economic activity and internal demand.
“The Budget allocates RM34.45 billion to lower- and middle-income groups. That’s the total we arrived at after adding up all the direct subsidies, financial relief programs, and other initiatives targeting these groups and announced today. That represents a significant amount of money. It will reduce cost of living pressures, stimulate the economy and job growth, and drive an increase in home purchases.
Johor SEZ Will Have Biggest Direct Impact on Real Estate
“Budget 2025 commits the government to announcing incentives by the end of this year that are powerful enough to attract large-scale investment into the Johor-Singapore Special Economic Zone “Helping give the Zone an early boost will be the designation of Forest City as a Free Trade Zone, which will drive tourism and encourage financial services businesses to expand there. “Imagine if Johor were to become the Shenzhen of Malaysia. At more than 3,500 square kilometres, the SEZ is about twice the size of Shenzhen. After it was made a special economic zone, Shenzhen, China saw its economy grow 14,090-fold over 40 years Shenzhen and its millionaire count grow by 140% over the past decade.
“We have previously estimated that the SEZ and expected infrastructure projects could add 3% to the state’s GDP by 2029, although it’s too soon to know how realistic that forecast is. What is clear is that Johor has a golden opportunity for the development of new homes and industrial and commercial property to serve a growing and increasingly high-income population. Development opportunities could be concentrated in areas like Forest City, Tuas Link, and surrounding the new HSR stations.
“Everyone will be holding their breath until the end of the year, when fuller details of the incentives will be announced.
Making Homes Affordable
“Because of IQI’s intense focus on helping home-buyers, we applaud Budget 2025’s first-time owner tax relief. First-time home owners will receive relief on up to RM7,000 of loan interest payments, and the greatest relief will be targeted at buyers of homes valued at up to RM500,000. “Because this relief will only be available to those who purchase after January 1, 2025, it will help first-time buyers get into the market and stimulate demand and new construction in popular first- time buyer markets.
GDP Growth to Roar in 2025
“Our analysis suggests that, with this budget, and current economic conditions, Malaysia’s economy will roar into 2025 with 5% GDP growth this year. We expect to see a similar growth rate in 2025. “Annual GDP growth in the first half of 2024 was 5.1%. Even more encouraging is the fact that the growth is happening across multiple sectors: manufacturing, trade, commodities, and construction. Looking ahead, we expect full-year 2024 growth rate to also be 5.1%. Next year, the GDP growth rate will remain at 5%, according to our projections.
Source: IQI
Expect the Policy Rate to Remain Unchanged
“The forecast for GDP growth depends on our assumption that the policy rate set by Bank Negara Malaysia will remain at 3% for the foreseeable future. We think Bank Negara will determine that the stablised inflation rate, lower global inflationary pressures, and strong investment flows into Malaysia warrant maintaining the current 3% rate.
“Bank Negara has seen good news in the inflation numbers. Headline inflation was only about 1.8% for the first half of the year and will most likely be 2.3% for the full year 2024. Inflation may rise to a manageable 3.0% in 2025. Both numbers are well within Bank Negara Malaysia’s 2% to 3.5% forecast range. That’s why we believe Bank Negara will leave the policy rate unchanged.
Malaysia 2023 2024f 2025f 2026f
GDP Growth Forecast 3.6 5.1 5 4.5
Policy Rate Forecast 3 3 3 3
“What does the 3% rate mean for the economy? Most analysts consider the 3% rate to be neutral, meaning that it is not likely to stimulate the economy or to hold it back. While some would refer a lower rate to boost growth, we disagree. In the long run and in the current conditions, the 3% rate probably serves the best interest of the economy.
Real Estate Doing Better than Expected
“Because of all this good news, most analysts have lifted their forecast for the Malaysian real estate
market. Steady interest rates and the growing economy have provided good conditions for homebuyers and renters.
“In 2025, we expect two themes to dominate the residential market. First, mixed-use developments and integrated townships will predominate. These large-scale developments combine residential, commercial, retail, and recreational spaces. Residents of these communities have easy access to transportation, shopping, restaurants, and parks — and can easily get to schools and workplaces.
“The second major residential real estate theme of 2025 will be affordable housing. The government is making a concerted effort to increase and improve the supply affordable housing. Everyone should have access to decent and affordable housing. The government’s focus on affordable housing should lead to more construction of social housing and of homes prices below RM300,000.
“My conclusion is that Malaysia’s economy is set for a strong 2025, with key sectors like manufacturing, technology exports, construction, and services driving consistent growth. Residential real estate will benefit, with integrated townships and the increase in affordable housing the two key themes of the year. Stable interest rates and broad-based growth have positioned Malaysia for steady progress in 2025”
— end of press release —
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