Budget 2026: Mixed Reactions from Property Experts as Malaysia Targets Balanced Growth

The tabling of Budget 2026 by Prime Minister Datuk Seri Anwar Ibrahim has drawn measured but mixed responses from Malaysia’s property experts, with most agreeing that the budget takes a balanced, growth-supportive approach rather than a direct stimulus for the property market.

While industry players welcomed targeted incentives—such as tax deductions for commercial-to-residential conversions, continued stamp duty exemptions for first-time buyers, and ESG-aligned fiscal measures—many also expressed a sense of restraint, noting that the broader property market will likely continue to move on its own momentum.

A “Muted” Budget for Property, but Socially Grounded

Rahim & Co Research Director Sulaiman Saheh described Budget 2026 as “relatively muted” for the real estate sector, echoing sentiments from previous years.

Savills: Property to “Move on Its Own Steam”

Datuk Paul Khong, Group Managing Director of Savills Malaysia, said Budget 2026 reflects a steady, self-reliant market outlook.

“There were no new big-ticket incentives for the property market. I expect the sector to move on its own steam into 2026, navigating headwinds with measured optimism.”

Khong said he had hoped for broader stamp duty exemptions, but the government’s decision to limit them to first-time homebuyers remains understandable given fiscal priorities.

He noted that the increase in stamp duty from 4% to 8% for foreign buyers could slightly raise acquisition costs, but Malaysia remains regionally competitive.

“Compared with Singapore or Hong Kong, Malaysia is still relatively affordable, so this won’t deter serious foreign investors,” Khong added.

He also endorsed the 10% tax deduction for commercial-to-residential renovations, noting it could revitalise outdated office stock, attract investors, and align urban regeneration with sustainability goals.

Knight Frank: A Budget for ESG and Urban Renewal

Knight Frank Malaysia Group Managing Director Keith Ooi called Budget 2026 “measured but transformative” in setting long-term direction for sustainable growth.

“It’s encouraging to see the budget weave ESG priorities into economic planning. The introduction of carbon taxation and green tax incentives shows a clear policy shift that will influence investment decisions across real estate and construction.”

Ooi highlighted the 10% tax deduction (up to RM10 million) for developers converting commercial to residential assets as a “significant step” toward revitalising underutilised office and retail buildings.

He said this dovetails with the RM600 million restoration allocation for Carcosa Seri Negara, representing a broader national push toward heritage preservation and adaptive reuse.

“This is more than just an economic exercise—it’s a cultural one. Malaysia is recognising that preserving heritage and repurposing assets is essential to building liveable, sustainable cities.”

Knight Frank also noted the budget’s public-private partnership allocation of RM10 billion and RM30 billion in GLIC investments, which will stimulate construction activity and boost investor confidence.

CBRE | WTW: Kuala Lumpur’s Urban Revitalisation Gains Momentum

Tan Ka Leong, Group Managing Director of CBRE | WTW, applauded the budget’s emphasis on urban regeneration and heritage restoration, noting that it will complement the Visit Malaysia 2026 initiative.

“There’s a strong focus on rejuvenating Kuala Lumpur through DBKL-led projects. The RM500 million allocation for redeveloping hawker centres, markets, and PPR maintenance is a practical step toward improving city liveability.”

Tan welcomed the loan coverage expansion under the Skim Jaminan Kredit Perumahan (SJKP)—which doubles from RM10 billion to RM20 billion—allowing 80,000 first-time homebuyers, including gig workers and the self-employed, to secure financing.

He also expressed support for the carbon tax, saying it will encourage the industry to integrate ESG practices in construction and property management.

However, he cautioned that the flat 8% stamp duty on foreign property transactions may create uneven advantages for Johor due to JS-SEZ tax incentives.

“Foreign investors comparing Johor and Kuala Lumpur may see more value in Johor due to SEZ advantages. The government needs to ensure parity to sustain nationwide appeal,” he said.

Johor Perspective: Regional Growth, Limited Housing “Goodies”

From the southern region, Olive Tree Property Consultants CEO Samuel Tan said Budget 2026 focuses heavily on regional balance and infrastructure rather than direct housing incentives.

Projects like the Senai–Desaru Expressway upgrade and Jalan Kluang–Rengam–Layang-Layang improvements reinforce confidence in the Johor–Singapore Special Economic Zone (JS-SEZ).

“The infrastructure upgrades strengthen investor confidence in Johor’s role within the SEZ. These are the building blocks for long-term growth,” he said.

Tan also supported the Rent-to-Own (RTO) and Housing Credit Guarantee schemes, noting they address the financing challenges of younger buyers.

He praised the RM53 million Digital Acceleration Grant and MCMC’s RM2 billion sovereign AI cloud initiative, highlighting their role in supporting Malaysia’s digital economy and smart infrastructure.

“Moving beyond data centres to developing the semiconductor ecosystem is a visionary step,” Tan said. “It positions Malaysia higher up the technological value chain.”

Tourism & Lifestyle Boosts

Nawawi Tie Leung Property Consultants Executive Director Saleha Yusoff said the RM1,000 personal income tax relief for domestic tourism will have ripple effects across property, retail, and hospitality.

“If even 10–15% of taxpayers take advantage of the relief, it could generate RM225 million to RM450 million in travel spending and contribute up to RM1.1 billion to GDP,” she said.

She emphasised that this measure, coupled with the RM700 million tourism allocation and Visit Malaysia 2026’s goal of attracting 47 million visitors, will help stabilise the mid-market hotel segment and support retail tenancy recovery.

“The key multiplier lies not in the amount, but in how industry players package local experiences that keep tourism spending within Malaysia,” she added.

What Budget 2026 Means for Property Stakeholders

For Homebuyers

Continued stamp duty exemptions for first-time buyers lower entry barriers.
Expanded SJKP loan guarantees improve financing access for non-salaried individuals.

For Developers

10% tax deduction for adaptive reuse of commercial assets reduces holding costs and encourages urban regeneration.
New carbon tax and ESG incentives align development with sustainability and green building practices.

For Investors

Higher stamp duty (8%) for foreign and corporate buyers could temper speculative activity but has limited macro impact.
Regional investments and GLIC-driven projects support infrastructure-led growth across key states.

Conclusion

Budget 2026 delivers a steady, sustainability-driven framework rather than a short-term property stimulus. With focus areas spanning urban revitalisation, green taxation, heritage restoration, and regional infrastructure, the government is clearly laying foundations for long-term resilience rather than quick fixes.

While developers and consultants had hoped for broader incentives, many see this as a disciplined and strategic budget that nudges Malaysia’s property market toward greater adaptability, ESG compliance, and data-driven growth.

For buyers, the outlook remains cautiously optimistic — affordability schemes and first-time buyer exemptions offer tangible relief. For investors and developers, the message is clear: Malaysia’s next wave of real estate growth will be built not just on new land, but on revitalisation, innovation, and sustainability.