Malaysia’s property market has transitioned beyond the recovery phase
By Joseph Wong
Malaysia’s real estate industry is officially transitioning from its post-pandemic recovery phase into a period of measured, sustainable growth. According to Rahim & Co Research Sdn Bhd’s Property Market Review 2025/2026, the sector is now underpinned by disciplined supply, stable economic fundamentals and a shift in buyer preferences toward high-quality, long-term value.
Despite a challenging global environment, Malaysia’s economy maintained a positive trajectory in 2025, with GDP growth accelerating to 5.2% in the third quarter. This stability, supported by a robust labour market and surging investments in high-value sectors like data centres and renewable energy, has anchored property market confidence.
While transaction volumes softened slightly by 2.1% in the first nine months of 2025, transaction values rose by 5.6% to RM172.06bil. This divergence signals a sophisticated market recalibration as buyers are increasingly prioritising quality assets, connectivity and liveability over speculative gains. Regionally, growth has become more decentralised, with Johor, Kedah, and Melaka recording decade-high transaction levels fueled by infrastructure expansion and industrial spillovers.
Residential discipline and commercial polarisation
The residential sector remains the market’s largest component but has entered a period of relative price stability. The House Price Index recorded only a marginal 0.1% year-on-year increase in the third quarter of 2025.
Significantly, developers have adopted a more disciplined approach. Notably, new residential launches fell by 31.8% to 24,913 units. This cautious stance focuses on absorption rates and product-market fit, effectively reducing the risk of future oversupply. However, the overhang remains a challenge, with unsold completed residential stock totalling 49,428 units, primarily concentrated in high-rise and serviced apartment segments.
In the commercial space, performance is polarised. Retail properties are benefiting from a tourism rebound, with prime malls maintaining occupancy above 90%. Conversely, the office sector continues to grapple with structural oversupply, though flight to quality remains a dominant trend as tenants seek newer, ESG-compliant buildings in transit-oriented locations.
Industrial property continues to be the market’s standout performer. Supported by the New Industrial Master Plan and RM285.2bil in approved investments (MIDA), demand remains aggressive for logistics facilities, smart industrial parks, and data centres. ESG standards and digital readiness are no longer optional but are now strategic enablers of this sector’s growth.
Looking toward 2026, Rahim & Co forecasts a positive but moderate outlook. Growth will be driven by qualitative improvements rather than sheer volume. With the Johor-Singapore Special Economic Zone (JS-SEZ), major infrastructure projects, and Visit Malaysia 2026 providing tailwinds, the property market is positioned on a firmer, more balanced footing for the years ahead.
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