To boost economic recovery and create more domestic and foreign demand, Lee said the government needs to provide continuous support to ensure a strong recovery in the short term while continuing to strengthen resilience for the medium and long term, and be prepared for any other shocks that may come along. “Action must be taken to address the structural problems we face — whether it is in terms of loans, skilled labour, innovation, culture or creativity.”

He added that the support of local investors is important, considering that small and medium enterprises comprise 98.4% of the businesses in the country. “To support them, one can look into areas such as regulatory, investment incentives and combined costs.”

Meanwhile, Malaysia recorded an inflation rate of 2.2% in November last year, a five-month high, with expectations that it would moderate in 2022. But this remains uncertain.

Lin pointed out that inflation is a cost and it will not come down on its own, unless there are policies implemented to bring it down.

Lee concurred, saying that the impact of inflation on the earnings of various sectors depends on the degree it can be passed on, to preserve margins and hence, profitability. In the case of inflation and the central bank raising interest rates, the financial sector will benefit from the perspective of the equity market.

“When there is inflation, the cost of doing business in the construction industry will increase. Unless contractors are able to maintain their costs, they will still face difficult times,” he said.

During his presentation on “Emerging Asia-Pacific residential housing and technology trends post-Covid-19”, Juwai IQI Holdings co-founder and non-executive chairman Georg Chmiel noted that consumer behaviour has changed. Juwai IQI is an international real estate technology group.

“People try to avoid crowded places and do not like to use public transport, leading to a rise in demand for cars. There are people in Western countries who have moved to remote places,” he pointed out.

He noted that mental health is also quite a challenge due to the isolation and having children being schooled at home. Hence, having suitable spaces in the property to make it more liveable is extremely important.

Meanwhile, there has been an increase in the number of virtual tours since the pandemic and this proves that videos have become an important part of marketing, said Chmiel.

With stronger demand for ESG (environmental, social and governance) factors and the rise of 5G, certain things are now possible, he added. Better bandwidth will allow a number of things in smart housing. For instance, companies in China have made significant investments in smart features such as energy-efficient products, digital twin technology, building management software, smart buildings, smart homes and package storage.

Chmiel noted that demand for classified portals is more results-oriented and the “old practice of [web] portals that will one day replace agents is not true”.

There is also the rise of technology for mobile devices and new marketing channels, whereby the vast majority of people, especially in Asian countries, will soon be using their mobile phones to view and transact properties because the way property is sold is changing. 

Another trend would be the Asean super application, which is an extension of the normal application that one usually has on his or her phone. 

Chmiel highlighted, however, that what is still missing is a good solution for financing. This is where the rise of blockchain technology will make the financial industry more transparent as participants will be able to have a decentralised recording system and track what is happening in the system. 

The hybrid working model seems to be best for productivity, staff retention and employee morale, as well as the need to balance between solo project work and collaboration, said Savills Hong Kong senior director of research and consultancy Simon Smith during his presentation on “Post Pandemic: The evolution of commercial office and workspace demand in Asia-Pacific”.

According to him, there are two sides to a hybrid working model that need to be considered from the perspective of employees and employers.

From an employee’s perspective, dwelling sizes in Asia-Pacific are often smaller and occupied by several generations, which tends to push the worker more towards the office and away from the home. 

“Overall, employees generally reported a much higher level of satisfaction with a hybrid model rather than working full-time in the office,” said Smith.

On the flipside, he opined that employers will be thinking much more about office cost, and how efficiently an office space can be used if the cost can be saved and if a percentage of the workforce is at home at any given time. It is also about how much flexibility an employer has, what the workplace culture is, as well as the length and severity of lockdowns, if any.

Apart from the pandemic, other influences have impacted this change in work format, he opines. “If you look at the shifting demographics, for example, the new workforce is youthful and are usually in their twenties and thirties. This is the new generation of the office-based service sector, and each worker has a different perspective on life, arguably from those in their fifties, who are more community-focused, socially democratic and location-agnostic.”

Another influence is the traditional shift from the secondary to tertiary industry, Smith noted. “It is moving from manufacturing to services, and within the services sector, there is another revolution, that is, the Fourth Industrial Revolution, which means a shift to or focus on things like artificial intelligence, big data and robotics. We are also aware of the huge changes that have taken place in technology, whereby we have much better access to technology at home and this has allowed us to work remotely over the last few years.”

One of the pertinent topics discussed at the conference is how Malaysia is poised to attract more foreign direct investments (FDIs). A panel discussion titled “Attracting strategic foreign investment into Malaysia: How can Malaysia differentiate itself regionally?” drew ideas and views on what could be done to attract more international investments.

The panellists were Malaysian Investment Development Authority (Mida) CEO Datuk Arham Abdul Rahman, Fiabci Malaysia president and S P Setia Bhd deputy president and chief operating officer Datuk Seri Koe Peng Kang, EUROCHAM Malaysia chairman Oliver Roche, AMCHAM Malaysia CEO Siobhan Das, Malaysia-China Business Council director Datuk Tee Guan Pian and InvestKL chairman Datuk Seri Michael Yam.

Das said, “It is a discussion we need to further explore. As it is, Malaysia is already home to many manufacturing companies, and the ecosystem here is absolutely solid, stable, growing, with a trained workforce and a proven track record. An emerging area is the role of ESG, and the role it plays [in the local market] to attract FDIs.”

The panellists raised the issue of shortage of labour and talent. “The question is, with the investments coming in so rapidly, will we have sufficient resources [on the ground] to meet them?” Das asked.

Arham commented, “Although we have done well for the numbers, there is still room for improvement, especially in terms of talent, and high-skilled talent. In terms of consistency, we have been very successful. But talent is something that we have to manage.”

Koe said, “We have companies that provide automation design, tools to support this ecosystem … If you compare with our neighbouring countries, they enjoy what we have to offer, from the weather to infrastructure, education, culture and so on.”

According to Mida, 522 manufacturing projects worth RM103.9 billion were approved between January and September 2021, compared with RM64.8 billion during the same period in 2020, which translates into more than a 60% increase. It added that Singapore topped Malaysia’s list of FDI sources at RM44.2 billion, followed by China (RM22 billion), Austria (RM10.9 billion), Japan (RM6.9 billion) and the Netherlands (RM6.6 billion).

Tee said, “Malaysia is still very attractive. We still see investments coming in from China, even though Singapore seems to have garnered the most. During the pandemic, the major policy shift in China [has resulted in] more investments being pumped into Hong Kong and Singapore, and it is still a challenge to invest in Malaysia.”

According to InvestKL, with its “RM20 billion by 2030” target, Kuala Lumpur is a hub for innovation and talent, supported by a strong ecosystem and access to a talented multiracial workforce that’s young, educated, productive and fluent in English. If there is political stability and an investor-friendly environment, along with the Government Transformation Programme, the country will attract more FDIs.

Yam said, “Less than 2% of the properties here are owned by foreigners, which is equivalent to 60,000 units (out of the six million houses in the country). It is quite minuscule, and yet there is a [misconception] that they are driving up property prices. Also, foreigners may have to consider which land to purchase by state [as it is a state matter].”

Roche said, “There was a lot of controversy over the MM2H programme. I strongly recommend that we look at reducing the requirements and that will create more job opportunities and talent. We have been pushing the restart button for the EU-Malaysia free trade agreements and negotiations.”

Going into 2022, investors are especially keen on logistics investments, with an estimated 70% of enquiries in Asia-Pacific (APAC), according to CBRE APAC head of occupier research and head of data intelligence and management Ada Choi, who presented on “How can property developers and fund managers ride the boom in regional logistics and industrial real estate in 2022?”

“We are seeing higher enquiries compared with 1Q2021 (of about 70%), particularly on institutional-grade logistics, compared with other asset classes such as offices, for example Grade A office (40%), retail such as neighbourhood malls (20%) and other alternatives such as data centres (36%), based on our recent data,” she said.

In terms of portfolio strategies and location selection, Choi pointed out the top three factors that investors consider before deciding on the location, namely “proximity to markets and consumers, real estate rents and proximity to transport facilities”. Other considerations include labour and availability cost, proximity to point of production and suppliers, and network and synergy with other warehouses.

Moving forward, CBRE APAC anticipates warehouses in satellite cities (adjacent to/within mega metropolitan areas) to be the most preferred form of logistics assets, accounting for 69% over the next three years. “This is followed by urban warehouses (52%) and in-city delivery stations (50%).”

Smart technologies that are trending up in the region for logistics are systems that enable automation such as warehousing management software, the Internet of Things (RFID and other sensors), automation tech such as conveyors and sorting systems, Automated Storage and Retrieval System (AS/RS), goods-to-person picking system and Autonomous Guided Vehicles (AGVs), as well as emerging technologies such as robotic arms/cobots and blockchain technology to trace the delivery process, said Choi.

Digitalisation, technology and ESG will be the main drivers and considerations in terms of property trends this year, according to the panellists in the session titled “Learnings from the region: Future of Malaysian real estate landscape for 2022 and beyond”. Moderated by Rehda Malaysia deputy president Datuk N K Tong, the panellists were Chmiel, Malaysia Shopping Malls Association president Tan Sri Teo Chiang Kok and Sime Darby Property Bhd group managing director Datuk Azmir Merican.

Azmir listed some key considerations and learnings by Sime Darby Property, with reference to its self-sustaining township, Subang Jaya. “Infrastructure, connectivity and lifestyle are key to the success of a well-planned, self-sustaining township. There has to be more emphasis on sustainability, especially for the new generation.”

Chmiel said, “In terms of trends, the most relevant one today is ESG, a term often used for aggregation of concepts, and investors are looking at ESG-related ratings. It boils down to liveability; it is about features that make living easier and having the right technology and infrastructure. The features and ESG measures can improve values and reduce costs.”

He listed the top three key things to look out for: digitisation of processes, the usage of technology to make the property more attractive and exclusive, and the destruction of the financial service. 

In terms of ESG adoption, Teo commented, “In terms of other shifts, designing houses [with greater liveability] has become more important. A big portion of land has become social spaces, with playgrounds, landscaping and trees, with considerations for other features such as water retention rates and preserving waterways. At our end, we have been quite active in our ESG participation.”

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