By Joseph Wong
Malaysia's property market is poised for a year of steady growth and transformation this year, driven by a combination of economic trends, strategic infrastructure developments and evolving buyer preferences. Analysts and industry stakeholders project a cautiously optimistic outlook, highlighting opportunities in both residential and industrial property segments.
According to UOB Kay Hian, Malaysia's property sector is expected to sustain double-digit revenue growth in 2025, with an estimated increase of 11%. This growth is attributed to continued sales momentum and progressive billings from ongoing projects. Sector earnings are forecasted to outpace revenue growth, fueled by high-margin land sales and the increasing focus on industrial properties.
The firm has maintained an overweight rating for the sector, signalling optimism about long-term opportunities. This positive sentiment is underpinned by several supportive factors, including record-high investments in Malaysia, rising land values and robust demand for industrial properties.
Drivers of growth
Industrial property has emerged as a major driver of growth, with developers increasingly diversifying beyond residential projects. High-tech manufacturing, e-commerce, logistics and data centre developments are driving demand for strategically located industrial parks in Johor, Selangor and Penang.
Notable initiatives like the Johor-Singapore Special Economic Zone and the establishment of free trade zones (FTZs) near ports have further strengthened this segment. Companies such as Sime Darby Property and Eco World Development Group are actively pursuing industrial park developments to capitalise on this trend. For instance, Sime Darby recently secured a long-term lease with Google at its Elmina Business Park while Eco World is advancing plans for data centre projects in Selangor and Johor.
Major infrastructure projects, including the East Coast Rail Link (ECRL) and the Johor Autonomous Rapid Transit (ART), are expected to unlock new investment opportunities and enhance connectivity in previously overlooked areas. These developments, coupled with urban planning initiatives, are likely to stimulate regional growth and increase property values in key locations.
Rising land values
Rising land values, particularly in industrial hotspots, are creating new opportunities for developers. Agricultural land is being repurposed for industrial use, while demand for data centres and logistics facilities is driving land appreciation. This trend benefits developers with diversified portfolios and large landbanks such as Mah Sing and P Setia, positioning them to capture the sector's evolving dynamics.
The residential property sector continues to dominate Malaysia’s property market, with demand remaining robust, particularly for affordable homes priced below RM500,000. Government incentives such as stamp duty exemptions for first-time buyers and the Madani Deposit Scheme have supported this segment, catering to first-time buyers and young professionals.
Urban demand and affordability
Urban strongholds like Kuala Lumpur, Selangor, Johor and Penang remain hotspots for residential demand. Properties near public transportation hubs are particularly attractive for rental purposes, driven by the needs of working adults and young professionals. Developers have adopted a cautious approach, focusing on smaller-scale launches to improve absorption rates and reduce the high number of completed but unsold units.
Datuk Siders Sittampalam of PPC International Sdn Bhd emphasised the need for stakeholders to enhance policy frameworks, support affordable housing initiatives and leverage strategic projects to sustain growth. He also highlighted the importance of landed homes, provided they are offered at competitive price points, as they continue to be a top preference for buyers.
Johor's property market stands out, benefiting from increased foreign direct investments in sectors like data centres, renewable energy and electronics. According to popular consensus, initiatives such as the Johor-Singapore Special Economic Zone and the Rapid Transit System (RTS) have boosted confidence in the region.
Residential transactions in Johor have surged since the reopening of borders in 2022, with both volume and prices on the rise. The demand is driven by pent-up post-COVID demand, high accommodation costs in Singapore and government incentives for first-time homebuyers.
However, the state also grapples with a persistent overhang of unsold properties. Developers have managed to clear much of the backlog, especially in high-rise developments near Johor Bahru city centre and the RTS terminal. Moving forward, developers are advised to carefully assess market conditions before launching new projects to avoid oversupply.
Challenges and considerations
While the overall outlook for 2025 remains positive, challenges such as economic uncertainties and affordability concerns persist. The absence of impactful policy measures like the Home Ownership Campaign (HOC) in the 2025 budget could limit growth in the residential segment. Additionally, the overhang in certain markets and rising construction costs necessitate prudent planning by developers.
Despite these challenges, the industrial property segment continues to demonstrate resilience, with increasing investor interest in niche products like sustainable logistics spaces and integrated developments. Strategic locations in Klang Valley and Johor are expected to attract further investments, reinforcing the sector’s role as a stable pillar of growth.
Rahim and Co International Sdn Bhd chief executive officer Siva Shanker predicts a return to organic growth for Malaysia’s property market in 2025, emphasising the importance of slow and steady progress for long-term sustainability. While the days of dramatic 20%-30% sector growth are behind us, the shift towards a balanced growth trajectory reflects a maturing market poised for transformation.
Developers with exposure to thematic drivers such as data centres, industrial parks and high-demand residential areas are likely to perform well in the coming year. Corporate exercises like the listing of Sunway Bhd’s healthcare business and S Setia’s investment properties are also expected to sustain interest in property stocks.
By focusing on sustainable practices and leveraging key growth drivers, Malaysia’s property sector is set to navigate the challenges ahead while capitalising on opportunities in both residential and industrial markets. This steady, forward-looking approach promises a resilient and thriving property landscape in the year to come.
Stay ahead of the crowd and enjoy fresh insights on real estate, property developments and lifestyle trends when you subscribe to our newsletter and follow us on social media.
