Malaysia’s Property Market Sees Positive Growth Amidst Evolving Trends for 2025
The Malaysia property market experienced a robust performance in 2024, with transaction values rising by 14% to RM163 million and transaction volumes increasing 6% to 311,211 units in the first nine months of the year compared to the same period in 2023.
According to Henry Butcher Malaysia’s Property Outlook 2025, this growth is set to continue, fueled by GDP growth projections of 4.5% to 5.5%, national infrastructural upgrades, further digitalisation in the property industry, and increased inflows of FDIs and DDIs.
Residential Market: A Delicate Balance Between Affordability and Rising Costs
Strong Uptick in New Launches
In 3Q2024, new residential launches surged by 47% year-on-year, reaching 192,484 units, with terrace houses dominating the market as Malaysians’ preferred choice. However, transaction values rose only 6.8%, indicating ongoing affordability concerns.
Henry Butcher COO Tang Chee Meng highlighted the growing importance of affordable landed properties and smaller-sized high-rise units to meet diverse buyer needs:
“Affordability varies regionally. In smaller towns, it may mean homes priced below RM300,000, while in urban areas, it could extend to RM500,000–RM600,000.”
House Prices Remain Stable
The Malaysian House Price Index (MHPI) reflected minimal changes in 2024, with semidetached houses recording the highest price increase of 5.4%. Developers may, however, be forced to raise prices in 2025 to offset higher construction costs.
Niche High-End Demand
Limited supply of luxury residential properties in recent years is creating opportunities for well-positioned high-end developments. Developers are encouraged to adopt sustainable and innovative designs to stay competitive.
Industrial Sector: The Best Performing Segment
Steady Growth in Transactions
The industrial sector saw a 6.5% increase in transaction volume to 6,320 units in 3Q2024, alongside a 22.8% jump in transaction value to RM20.67 billion. This growth was driven by high demand in Johor and Selangor, which contributed 33% and 18% of transactions, respectively.
Key Drivers for 2025
- Data Centres and High-Tech Manufacturing
The government’s focus on data centres and chip manufacturing, supported by initiatives like the National Energy Transition Roadmap (NETR) and Industry4WRD, is expected to sustain industrial growth. - Infrastructure Boosts
Improved connectivity through the Johor-Singapore RTS and Mutiara LRT Line in Penang will attract more investors, further stimulating industrial demand.
Commercial Sector: Oversupply Looms Over Office Spaces
The purpose-built office (PBO) sector faces challenges with an increase in supply to 18.82 million sq m in 3Q2024, while occupancy rates declined to 71.6%.
Mega Towers Raise Oversupply Concerns
Developments of mega office buildings exceeding one million sq ft may lead to oversupply in the Klang Valley, potentially affecting rental yields.
“The concern of oversupply is real, especially in areas where office developments outpace demand,” cautioned Tang.
2025 Outlook: Sustained Growth and Emerging Opportunities
Malaysia’s property market is poised for sustained growth in 2025, with several key themes emerging:
- Residential Focus: Affordable landed homes and smaller, budget-friendly high-rise units will dominate, alongside selective demand for luxury developments.
- Industrial Expansion: The sector will continue thriving with FDI-driven investments in Johor and Selangor.
- Sustainability Trends: Developers are expected to embrace green building practices and smart technologies to align with shifting buyer preferences.
With government policies such as the New Industrial Master Plan 2030 and ongoing infrastructure upgrades, Malaysia’s property market remains a compelling investment destination. However, careful attention to affordability, oversupply risks, and innovative approaches will be crucial for developers and investors alike.
