Malaysia’s property market outlook for 2H 2024 & 2025 is showing signs of resilience and growth, driven by key trends such as foreign investments, sustainability initiatives, and major infrastructure projects.
Knight Frank Malaysia recently released its Real Estate Highlights 2H’24 report, shedding light on the industrial, office, retail, hospitality, and high-rise residential sectors across the country.
Let’s dive deeper into the latest market insights and explore what lies ahead for Malaysia’s property landscape.
Industrial Sector: A Strong Growth Engine
Johor: The Rising Industrial Powerhouse
Johor continues to attract businesses with its strategic location and proximity to Singapore.
The state has seen a surge in foreign investments, particularly in logistics, clean technology, and advanced manufacturing.
New industrial parks and free zones are emerging, making Johor a key player in Southeast Asia’s supply chain.
However, as the industrial boom progresses, challenges like water and energy consumption need to be addressed.
The state is focusing on green industrial practices, including the use of renewable energy sources, to ensure long-term sustainability.
Penang: Expanding as a Technology Hub
Penang’s industrial sector remains robust, supported by foreign direct investments (FDIs) in electronics, semiconductors, and manufacturing.
With upcoming developments such as the Penang Silicon Design Hub and Silicon Island, the state is strengthening its position as a global technology hub.
Sabah & Sarawak: Infrastructure-Driven Growth
Sabah’s industrial market is expanding due to its strategic location along key shipping routes. The state is focusing on improving infrastructure to attract large-scale industrial projects.
Meanwhile, Sarawak is leading the way in renewable energy, with investments in hydropower and green hydrogen projects. These initiatives are making the state an attractive destination for sustainable industries.
Office Sector: A Market in Transition
Klang Valley: The Demand for Premium Office Spaces
Despite global economic uncertainties, Kuala Lumpur’s office market is showing positive signs of recovery.
Occupancy rates have stabilized, and new Grade A office buildings such as Tun Razak Exchange (TRX) and Sunway Square are attracting corporate tenants.
However, older office spaces are facing increasing competition. To stay relevant, landlords are investing in upgrades and focusing on flexible leasing models to cater to evolving business needs.
Johor Bahru: Affordable Alternative to Singapore
As businesses seek cost-effective alternatives to Singapore’s high office rents, Johor Bahru is emerging as an attractive option.
Government incentives and improved infrastructure, including the upcoming Rapid Transit System (RTS) Link, are boosting office demand in the region.
Penang, Kota Kinabalu & Sarawak: Steady Demand with New Opportunities
Penang’s office market is expected to remain stable, but older office buildings may struggle to compete with modern workspaces.
Kota Kinabalu is seeing steady demand, with government efforts to attract multinational companies to the city.
Meanwhile, Sarawak’s commercial sector is benefiting from infrastructure projects that are driving business activities.
Retail Sector: Adapting to Changing Consumer Habits
Klang Valley: The Evolution of Shopping Malls
With the rise of e-commerce, shopping malls are shifting their focus to experiential retail and community-driven spaces.
Instead of traditional retail, malls are integrating co-working spaces, entertainment hubs, and wellness centers to attract visitors.
Johor Bahru: A Magnet for Singaporean Shoppers
Retail malls in Johor Bahru are thriving, thanks to cross-border shopping from Singaporean consumers.
The retail sector is seeing new brands entering the market, increasing competition and improving the overall shopping experience.
Penang & Kota Kinabalu: Resilience and Reinvention
Penang’s retail sector remains strong, but an influx of new malls may lead to increased competition.
Kota Kinabalu’s malls are focusing on diversifying their tenant mix to boost foot traffic and maintain rental yields.
High-Rise Residential Sector: Stability with Growth Potential
Klang Valley: Housing Market Remains Stable
Property prices in Klang Valley are expected to remain stable in 2025, with government housing initiatives supporting middle-income and first-time buyers.
The demand for condominiums in prime locations remains steady, particularly in areas with good transport connectivity.
Johor Bahru: RTS Link Boosts Demand for Condos
With the RTS Link connecting Johor Bahru to Singapore, the demand for residential properties near the station is increasing. Developers are launching high-end condos targeting both Malaysians and Singaporean investors.
Penang: Growth Driven by Infrastructure Projects
Penang’s property market is expected to see price appreciation, fueled by infrastructure projects such as the Penang LRT and airport expansion.
This will make the state even more attractive to property investors.
Kota Kinabalu: Limited New Launches, Strong Demand
Unlike other regions, Kota Kinabalu is seeing fewer new project launches, but demand for residential properties remains strong, particularly in well-established areas.
Key Trends to Watch in 2025
- Sustainability & Green Buildings: More businesses and investors are prioritizing green-certified buildings and eco-friendly industrial spaces.
- Foreign Investments: Increased FDIs in Johor, Penang, and Sarawak will continue to drive growth.
- Infrastructure Boom: New highways, LRT systems, and airport expansions will enhance property values.
- Hybrid Work Models: The demand for flexible office spaces will reshape the commercial property sector.
- Evolving Retail Landscape: Shopping malls will focus on experiential and lifestyle-driven retail spaces to compete with e-commerce.
Malaysia’s property market is set to navigate both opportunities and challenges in 2025.
The industrial sector continues to thrive, the office and retail markets are adapting to new business trends, and the high-rise residential sector remains stable with pockets of growth.
As sustainability and infrastructure developments take center stage, investors and homebuyers should keep an eye on emerging hotspots and government-backed incentives to make informed decisions.
With a strong economic foundation and key growth drivers in place, Malaysia’s real estate market is poised for a promising future!
Get in touch with us to discuss available properties and the best locations for your business.
