By Joseph Wong
Malaysia’s real estate sector is regaining momentum, buoyed by a combination of global tailwinds and robust domestic fundamentals. A 90-day tariff truce between China and the United States has sparked renewed confidence among investors while Kuala Lumpur’s property segments, from industrial to residential, are showing signs of healthy growth.
According to global real estate agency IQI, activity in the property market picked up sharply following the announcement of the temporary trade truce.
“Prior to these talks, real estate purchases in Malaysia dropped 6% versus the same quarter last year. Much of the decline was because the US-China trade impasse froze many deals in their tracks,” said IQI co-founder and group chief executive officer Kashif Ansari. “Now, after just 24 hours of good news about the China-US talks, investors and developers are already moving quickly to restart delayed projects.”
Ansari noted that many investors had been sitting on the sidelines, reluctant to commit to long-term investments amid global market volatility. The agreement, though temporary, provided just enough reassurance to trigger renewed interest in capital deployment.
“All the fundamentals are strong in Malaysia. Good policies and regulations are in place. With some reassurance about global stability, the capital flowing into property deals will increase significantly,” he added.
Global markets also responded positively to the news. The S&P 500 rose 2.6% while the Hang Seng index climbed 1.7%, indicating wider optimism beyond Malaysia’s borders. Though the agreement is only valid for 90 days, many analysts believe it signals a step toward a longer-term resolution, which could further reinforce investor appetite.
IQI forecasts a potential 2% rise in Malaysian home prices in the second half of the year, driven by recovering sentiment. Terraced homes are expected to lead the price rebound, followed by high-rises and detached units.
Strong start for 2025
Supporting this optimistic outlook, JLL (Malaysia) released its Q1 2025 Market Dynamics Report, highlighting resilient performance across all major real estate sectors in Kuala Lumpur.
The logistics sector continues to shine, driven by Malaysia’s growing appeal as a regional logistics hub. Though no new warehouses were completed in Q1 2025, five facilities completed in 2024 added more than four million sq ft of space to the market. These facilities have attracted a broad range of tenants, including companies in electronics, automotive, logistics and healthcare.
Vacancy rates fell to 4.0% in Q1 2025, down from 4.8% in the previous quarter. The drop is attributed to strong pre-commitment rates for new builds and robust absorption of existing space.
“The Malaysian logistics market is thriving, driven by a robust economy and increased international investment, particularly from China and Taiwan. This aligns with global supply chain diversification strategies while benefiting local companies through technology transfer and integration,” the report stated.
Green, Grade A spaces in high demand
Kuala Lumpur’s office market saw improving occupancy, especially in premium precincts like Tun Razak Exchange (TRX), which is rapidly emerging as a high-profile international business hub.
Vacancy rates dropped to 16.1% overall, with KL Fringe performing better at 8.5%. Demand is strongest for Grade A buildings with green certifications, reflecting the shift toward ESG-compliant workplaces and improved employee well-being.
With hybrid working now the norm, most corporations are no longer expanding their footprint. Instead, they are optimising existing space or moving into flexible office arrangements. Providers like Worq and Infinity8 are leading the charge in co-working solutions tailored for both large enterprises and SMEs.
Prime properties drive market confidence
Kuala Lumpur’s residential market remains resilient, particularly in the prime sector. New launches in core areas recorded 30% to 50% take-up rates in Q1 2025, with some nearing 70% in early phases.
Developers are becoming more responsive, offering compact, efficient layouts in transit-oriented locations, said JLL. Sustainability features and connectivity are key selling points.
The rental market in central districts is stable, underpinned by demand from expatriates and young professionals. Flexible living options, such as co-living spaces and serviced apartments, are gaining traction in tourist-friendly and centrally located neighbourhoods.
Foreign interest is also rising. Malaysia’s Premium Visa Programme (PVIP) and the refreshed Malaysia My Second Home (MM2H) scheme are helping boost investment in high-value residential units, particularly stratified developments near public transport.
In the retail sector, food and beverage (F&B) remained the primary driver of leasing activity. Popular regional brands like Japan’s Sushiro, South Korea’s Super Matcha and China’s Luckin Coffee made their debut in Malaysia this quarter, highlighting the country’s growing appeal as a regional testbed for consumer brands.
The fashion segment also gained momentum, with new entries such as JNBY (China), KaraKu (Japan) and Semir expanding their footprint. Vacancy rates improved to 10.4% in the city centre and 17.6% in suburban areas. Rent levels edged up slightly due to healthy leasing activity and tenant competition for prime space.
A standout development was the expansion of Alamanda Shopping Centre in Putrajaya, which added 199,000 sq ft of space, including a major outdoor adventure park. Additionally, Asian Pac Holdings acquired Jaya Shopping Centre for RM100mil, marking its entry into the Petaling Jaya retail market.
Resilience and confidence across the board
"Kuala Lumpur's real estate market demonstrates resilience and growth across sectors," said JLL (Malaysia) research and consultancy head Yulia Nikulicheva. "We're seeing increased institutionalisation in logistics, adaptation to hybrid work models in offices, strong prime residential demand and continued retail expansion. These trends position Kuala Lumpur favourably for continued growth in 2025 and beyond."
Combined with the global boost from the China-US tariff truce, Malaysia’s property sector is on firmer footing than it has been in years.
IQI’s Ansari concluded this is what property industry stakeholders have been waiting for. The capital is ready, the projects are lined up and the market sentiment has finally turned a corner. If permanent trade stability is achieved, Malaysia’s real estate sector could be entering a golden phase.
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