Malaysia Property Market Strengthens in 3Q 2025, Driven by Johor and Digital-Economy Growth
KUALA LUMPUR — Malaysia’s property market continued its upward momentum in the third quarter of 2025 (3Q 2025), supported by firm residential demand, expanding industrial investment, and strong activity in the data-centre sector, according to JLL Malaysia.
At JLL’s 3Q 2025 press conference on Tuesday, Managing Director Jamie Tan said that recent policy support — including Budget 2026 incentives and the new Malaysia–United States reciprocal trade agreement — will reinforce confidence and drive further economic growth.
Johor Emerges as Standout Performer
Tan identified Johor as Malaysia’s top-performing state for 3Q 2025, registering broad-based price appreciation across landed, high-rise and serviced-apartment segments.
“Landed housing values rose 10.2% quarter-on-quarter, while serviced-apartment prices in Johor Bahru are up 20.8% since 2024,” she said.
The surge is being fuelled by rapid progress in the Johor–Singapore Special Economic Zone (JS-SEZ), infrastructure expansion, and sustained spillover from industrial and data-centre investments.
JLL noted that the state’s property overhang — which stood at 63% in 2021 — has declined sharply to about 21% in 1H 2025, signalling improved market absorption and balanced supply.
Kuala Lumpur’s Prime Residential Market Remains Resilient
In the Greater Kuala Lumpur area, prime residential demand remains stable, supported by steady household formation, inbound expatriate demand and targeted policy incentives.
Tan said Budget 2026’s measures — doubling the Housing Credit Guarantee Scheme allocation to RM 20 billion and extending stamp-duty relief — will continue to underpin affordability and liquidity in the housing market.
“Population growth, foreign interest and targeted incentives are helping maintain resilience in the capital’s prime residential segment,” she added.
Office Market: Flight to Quality Persists
Despite a modest quarterly uptick in net absorption, the Greater KL office sector remains challenged by new completions and evolving workplace strategies.
Quiny Lee, JLL Malaysia’s Head of Office Leasing Advisory, said tenants are increasingly relocating from older buildings to Grade-A, green-certified premises.
“The overall vacancy rate increased slightly following new completions, intensifying the ‘flight to quality’ trend as occupiers seek modern, sustainable spaces,” Lee explained.
This shift mirrors global patterns as corporate occupiers prioritise environmental performance, wellness design and transit accessibility.
Industrial Market Softens but Remains Healthy
JLL reported a temporary moderation in industrial-property demand in 3Q 2025 as companies adopted a cost-conscious stance amid higher US tariffs and the expanded Sales and Service Tax (SST).
Derek Yap, Senior Manager for Logistics and Industrial, noted that net absorption slowed but new supply continued to enhance long-term market depth.
“New additions are maintaining market health despite a higher vacancy rate of 6.3% in 3Q 2025,” Yap said.
Industrial zones in Shah Alam, Johor Bahru and Penang remain key destinations, particularly for logistics, light manufacturing and data-centre-related infrastructure.
Data Centres Enter Strategic Consolidation Phase
Malaysia’s data-centre sector is transitioning into a strategic consolidation phase, integrating new capacity as large-scale infrastructure upgrades progress, said Sum Chun Kit, JLL Malaysia’s Manager for Data Centre Transactions and Capital Markets.
The country’s total installed capacity currently stands at 835 MW, with projections to surpass 2,850 MW by 2026 and exceed 4,000 MW after 2030, positioning Malaysia among Asia-Pacific’s top data-centre markets.
“While consolidation may create short-term adjustments, the long-term outlook remains exceptionally strong,” Sum said.
He cited TNB’s grid enhancements, renewable-energy integration, and upcoming policy initiatives — including the Sustainable Data Centre Framework — as catalysts for continued investment.
Sum also expects deeper public–private partnerships to strengthen Malaysia’s competitiveness, alongside innovations in water-resource management and AI-driven facility design.
Macro Outlook: Policy Support and Sustainable Growth
JLL Malaysia expects the property market’s recovery to extend through 2026, supported by fiscal stimulus, infrastructure projects and growing foreign direct investment.
Tan emphasised that Budget 2026’s focus on housing access, green incentives and digital-economy infrastructure will sustain market confidence across sectors.
Meanwhile, the Malaysia–US reciprocal trade accord is expected to encourage greater cross-border capital flows into industrial parks, logistics hubs and high-tech real-estate assets.
“Overall, the property sector remains in expansionary territory,” Tan concluded. “Residential activity is holding steady, while digital-economy assets and industrial infrastructure are becoming the new growth frontiers.”
Johor, Kuala Lumpur and Cyberjaya Lead the Next Property Cycle
JLL’s analysis reinforces a structural shift in Malaysia’s property landscape:
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Johor continues to outperform on the back of JS-SEZ growth and Singapore spillover effects.
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Kuala Lumpur remains the nation’s prime residential and office market, buoyed by policy support.
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Cyberjaya is solidifying its role as Malaysia’s data-infrastructure capital, linking technology investment with real-estate development.
As Malaysia’s digital economy, green-energy initiatives and cross-border trade ties converge, the country is well placed to sustain a balanced, innovation-driven property cycle heading into 2026.
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Malaysia’s 3Q 2025 performance shows one clear message: the nation’s property sector is no longer just recovering — it’s repositioning for long-term, sustainable growth.
