Overview
In 2024, the Malaysian real estate market expanded strongly, as seen by rises in transaction volume and value in some divisions. Infrastructure development, digitalisation, economic expansion, and more investments were the primary driving factors of this trend. States and property categories, however, indicated distinct levels of performance.
Economic Conditions
A constructive economic scenario in 2024, with the government anticipating consistent GDP growth, helped the Malaysian real estate market. This rise has driven increased transaction volumes and values across various real estate sectors. Interest rates were consistent and inflation was kept under control, which promoted real estate investments and house purchases. Government programs like infrastructure spending and incentives for first-time homebuyers also increased industry confidence.
Residential Sector
After slowing during the epidemic years, the residential sector’s growth resumed its regular pace. While the value climbed by 6.9%, the volume of transactions increased by 5.1%. While some states recorded drops in volume, value, or both, the majority of states reported improvements. Although the number of new residential units released increased by 47%, total sales performance fell from 41% to 34%. In addition, the Malaysian House Price Index (MHPI) saw a small increase, with semi-detached homes recording the largest price growth, while the total quantity of residential property dropped by 13%.
Affordable housing was still in high demand, especially from middle-class and first-time homebuyers. In response, developers started projects aimed at this market, although supply shortages in cities with high demand persisted. Conversely, luxury residential homes grew more slowly as buyers became more picky and cost-conscious. With more young professionals and foreigners choosing to rent apartments in desirable areas, the rental market also saw consistent demand.
It is anticipated that the residential real estate market will continue to rise steadily until 2025. Given that most Malaysians still favour single- and two-story terrace houses, landed properties are predicted to continue to be in high demand. There will also be ongoing demand for reasonably priced high-rise apartments in large cities and towns. It is anticipated that smaller apartments that lower the total cost of real estate would become more popular. Furthermore, investors are likely to be drawn to specialised, high-end projects in desirable areas with limited availability, whilst projects that adhere to green building and eco-friendly standards are becoming increasingly sought after.
Commercial Sector
The volume and value of transactions in the commercial sector increased by double digits, indicating high demand, particularly for shophouses. Comparing the first three quarters of 2024 to the same time in 2023, the volume of commercial transactions rose by 16.6%, while the value of those transactions increased by 32.7%.
As companies continued to adopt hybrid work arrangements, the office sector saw a little increase in supply but a small decline in occupancy rate. While older office buildings had trouble luring tenants, demand for premium office space in key areas remained steady. Tenants are anticipated to discover newer office buildings that comply with ESG and green-certified building standards more appealing in the future. Shopping centres in strategic locations continued to do well, and the retail industry saw a small increase in supply and occupancy rates. However, high vacancy rates plagued some underperforming malls, forcing landlords to entice tenants with incentives and accommodating lease conditions.
It has been projected that the commercial sector will profit from ongoing corporate expansion and economic growth in 2025. The demand for office space will be influenced by the opening of regional offices by multinational enterprises in Malaysia as well as the growth of existing corporations. However, developers may postpone or shelve new office projects due to a possible oversupply in the office sector, especially in Kuala Lumpur and Selangor.
Industrial Sector
Transaction volume and value increased by one and two digits, respectively, in the industrial sector. The first nine months of 2024 saw a 22.8% increase in the value of industrial transactions and a 6.5% increase in their volume. Strong demand and investment are fuelling this trend, which implies an emphasis on higher-value industrial buildings.
The need for warehouses and distribution centres was mainly shaped by the growth of e-commerce and logistics. Growth was also aided by the manufacturing sector, which saw a rise in both domestic and foreign investments in sectors like semiconductors, electronics, and green energy production. Investors hoping to profit from Malaysia’s advantageous location and kind government regulations showed a great deal of interest in industrial parks and free trade zones. With the help of ongoing domestic and foreign direct investments, the industrial subsector is anticipated to continue to have a promising future in 2025. Growth in this industry will be spurred by the expansion of data centres and chip manufacturing as well as government programs like the National Energy Transition Roadmap (NETR) and the New Industrial Master Plan 2030 (NIMP 2030). However, exports and industrial demand may be impacted by external global economic uncertainty.
Digitalisation in the Property Market
The Malaysian real estate industry was significantly shaped by digitalisation in 2024, and this trend is predicted to continue in 2025. The manner in which buyers and investors interact with the market has changed as a result of the usage of property technology (prop-tech) solutions, virtual property tours, and online property listings. Developers and real estate agents are increasingly using big data analytics, social media marketing, and artificial intelligence (AI) to reach specific audiences and make data-driven decisions.
Additionally, the emergence of fintech solutions has expedited real estate transactions, increasing purchasers’ access to financing choices. Digital payment methods, blockchain-based smart contracts, and online mortgage applications have improved the efficiency and transparency of real estate transactions. Buyer preferences for homes with automation and energy-efficient features are also being influenced by the growing popularity of smart home technologies.
It is anticipated that the use of digital platforms would increase market reach, improve consumer experiences, and increase transaction efficiency in the future. Effective use of digital tools by developers and real estate firms is likely to provide them with a competitive advantage in the changing real estate market.
Hospitality and Retail Sectors
The sub-sector of hospitality has an encouraging future, especially with Visit Malaysia Year 2026 approaching. Growing domestic travel and the 30-day visa-free program for Chinese and Indian nationals are expected to increase visitor numbers and demand for properties in the hospitality industry. Additionally, the declining Ringgit makes Malaysia a desirable travel destination for foreigners, which further supports the sector’s growth.
Retail sales are predicted to rise by 4.0% in 2025, indicating moderate growth for the retail industry. Retail spending is probably going to be driven by higher minimum wages and higher remuneration for civil personnel. The market will also be shaped by the growth of omnichannel retailing and e-commerce. Again, high-end stores and shopping malls in popular tourist areas stand to gain from foreign visitors spending more money in Malaysia as a result of the weaker Ringgit.
Regional Growth Areas
Several regions in Malaysia are expected to see strong property growth in 2025:
- Johor: The Johor-Singapore Special Economic Zone (JS-SEZ) is anticipated to boost residential, commercial, and industrial development, positioning Johor as a rival to Klang Valley within the next decade.
- Penang: The implementation of the Mutiara LRT line and upgrades to the Penang International Airport will stimulate property development along key routes.
- Selangor: State policies such as IDRISS, SSAP, and SAGE are expected to guide growth and attract investments.
Conclusion
The overall positive performance of the Malaysian property market in 2024 was driven by economic growth, digital expansion, infrastructure improvements, and government initiatives. Moving into 2025, the residential, industrial, and hospitality sub-sectors are expected to present the most promising investment opportunities. However, potential oversupply in the office segment, global economic uncertainties, and shifting consumer preferences will require careful navigation by developers and investors. Locations with strong infrastructure support, sustainable projects, and innovative property offerings are likely to stand out in the evolving market.
