Data centres, logistics and housing demand fueling nation’s real estate market
By Joseph Wong
Malaysia’s real estate market is poised for continued growth in 2025, driven by increasing foreign investment, the rapid expansion of digital infrastructure and strong demand in the industrial, commercial and residential sectors. With significant government incentives, strategic partnerships and ongoing infrastructure development, the country is cementing its position as a key investment destination in Southeast Asia.
The Malaysia Market Outlook Seminar 2025, hosted by Knight Frank Malaysia (KFM) in collaboration with the Asia Pacific Real Estate Association (APREA) and UEM Sunrise, provided valuable insights into emerging trends and opportunities in the sector. At the same time, Juwai IQI’s analysis of the market’s performance in 2024 and its projections for 2025 further reinforced Malaysia’s strong potential for growth.
The major factors shaping the Malaysian real estate landscape include the industrial and data centre boom, logistics expansion, foreign direct investment (FDI) and the resilience of the residential market.
The growth drivers of 2025
One of the most significant trends in Malaysia’s property market is the rapid expansion of industrial real estate, particularly in Johor with the Johor-Singapore Special Economic Zone (JS-SEZ) initiatives. In 2024, industrial transaction values surged by 22% year-on-year in Q3, reaching RM7.2bil. This momentum is expected to continue in 2025 as Malaysia strengthens its position as a global hub for high-tech industries and logistics.
A key driver of this growth is the explosion of data centre investments. Over RM57bil has already been committed for data centre development, with a total investment pipeline of RM149bil. Global technology giants such as Oracle, Google, YTL, NVIDIA, Amazon and Microsoft have announced significant investments, reinforcing Malaysia’s role in the digital economy.
APREA chief executive officer (CEO) Sigrid Zialcita noted: “The rise of Malaysia, particularly Johor, as a prime destination for industrial and digital infrastructure investment underscores its growing importance in the regional economy. With the Johor-Singapore Special Economic Zone creating new avenues for growth, Malaysia is poised to attract more institutional capital, reinforcing its position as a strategic gateway to Southeast Asia.”
The establishment of the JS-SEZ will further enhance Malaysia’s attractiveness, offering streamlined regulatory processes, cross-border trade facilitation and substantial tax incentives for businesses in the industrial and digital sectors.
The logistics boom
Malaysia’s logistics and warehousing sector has also experienced tremendous growth, largely fueled by the e-commerce boom. In 2024, Malaysia’s gross e-commerce merchandise value (GMV) soared by 16% to RM139.55bil. This surge in online shopping has increased demand for warehouses, distribution centres and fulfilment hubs, positioning Malaysia as a critical player in global supply chains.
Johor, with its proximity to Singapore and expanding industrial infrastructure, has become a hotspot for logistics investment. The JS-SEZ is expected to further boost trade between Malaysia and Singapore, which remains Malaysia’s largest foreign investor, contributing RM22.6bil in FDI in 2023.
Strengthening Malaysia’s position
Foreign investment remains a cornerstone of Malaysia’s economic growth. The country’s participation in BRICS and CPTPP trade agreements has strengthened its appeal to international investors. Multinational corporations are increasingly choosing Malaysia as a base for regional operations, given its competitive costs, strategic location and investor-friendly policies.
At the Malaysia Market Outlook Seminar 2025, industry leaders emphasised the importance of continued FDI inflows, particularly in high-growth sectors such as manufacturing, logistics and technology.
Invest Malaysia Facilitation Centre Johor’s Md Eharay Abd Majid highlighted how the JS-SEZ would drive high-value investments, attract top-tier companies and further integrate Malaysia into global markets.
In addition, Malaysia’s commercial real estate sector is evolving as companies prioritise environmentally sustainable office spaces. A total of 78% of the top 100 corporate occupiers in Kuala Lumpur have committed to climate targets, prompting a shift towards energy-efficient buildings.
New developments like Merdeka 118, Malaysia’s first triple-platinum LEED-certified building, are attracting high-profile tenants despite commanding higher rental costs. As businesses seek to align with global sustainability standards, demand for green buildings is expected to rise, making eco-friendly commercial spaces a lucrative investment opportunity.
Impact on the residential market
Malaysia’s residential property market remains resilient, with steady price growth and increased transaction volumes. In 2024, residential transaction values rose by 10.4%, reaching RM28.74bil in Q3. The segment accounted for 50% of all property transactions, up from 46% in the first half of the year.
Affordability remains a key focus, with government initiatives such as the RM10bil Housing Credit Guarantee Scheme (HCGS) and targeted tax reliefs helping to sustain demand. The Malaysian House Price Index (MHPI) remained stable in 2024, moving only slightly from 219.4 to 220.2, indicating a balanced market.
Johor, in particular, has seen significant progress in reducing its property overhang. The number of unsold serviced apartments dropped dramatically, with only 11,810 remaining as of January 2025. This reflects the market’s ability to absorb new supply and adapt to changing demand dynamics.
Positive outlook
Looking ahead, Malaysia is well-positioned for continued real estate growth. Infrastructure projects, digital transformation and pro-business policies will sustain the momentum across all property segments.
Knight Frank Malaysia senior executive director Allan Sim said: “Malaysia is at the forefront of attracting high-value industrial and logistics investments. With strong fundamentals and investor-friendly policies, we see significant opportunities for businesses to thrive in this market.”
Similarly, Juwai IQI co-founder and group CEO Kashif Ansari emphasised that 2025 would be another strong year for the sector, with industrial and commercial real estate leading. The residential market will remain stable, supported by increased supply and affordability initiatives.
With foreign investors eyeing Malaysia’s booming industrial and data centre markets and the government rolling out incentives to attract capital, the country stands out as a prime destination for global real estate investment.
Fueled by strong foreign investment, digital infrastructure expansion and sustained demand in the industrial, commercial and residential sectors, Malaysia’s real estate market is expected to experience continued robust growth.
With supportive government policies, ongoing infrastructure projects and a favourable investment climate, Malaysia is set to maintain its upward trajectory in 2025, making it an attractive destination for both domestic and international investors.
"Malaysia is at the forefront of
attracting high-value industrial and
logistics investments," Sim said.
Ansari said 2025 would be another strong year for the real estate sector.
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