Malaysia · Research
Real Estate Highlights 1H 2026
A comprehensive analysis of Malaysia's industrial, data centre, office, retail, hospitality and residential markets.
A comprehensive analysis of Malaysia's industrial, data centre, office, retail, hospitality and residential markets.
Download the report PDF · 21 MBA resilient economy navigating global headwinds
Malaysia recorded 5.4% year-on-year GDP growth in the first quarter of 2026. Household consumption, a resilient labour market and continued private investment remained supportive, while geopolitical and trade uncertainty continued to weigh on the external outlook.
Domestic demand carries 5.4% growth
Household spending, resilient employment conditions and steady private investment powered the quarter. Inflation remained moderate at 1.6%, while Bank Negara Malaysia maintained the OPR at 2.75%.
Economic expansion remained broad enough to support domestic activity, with ongoing investment in technology, digital infrastructure and data centres. Export momentum continued to benefit from electrical and electronics products as well as travel and ICT services.
Monetary conditions stayed stable as Bank Negara Malaysia kept the Overnight Policy Rate unchanged at 2.75%.
External risks increased as conflict involving the US, Israel and Iran raised concerns over energy supply, crude-oil prices and renewed inflation. Aviation routes in the Middle East were also disrupted, creating uncertainty for tourism and hospitality.
Crude-oil prices later moved back toward pre-conflict levels in June 2026 amid a fragile truce and renewed diplomatic efforts. Even with easing pressure, uncertainty around geopolitics, global trade, investment and business confidence remained.
Domestically, subsidy rationalisation continued. The BUDI95 monthly fuel quota was reduced to 200 litres in March 2026, while the Budi Madani Diesel programme was announced for implementation from July 2026, replacing monthly cash assistance with a MyKad-based subsidised fuel mechanism of up to 200 litres for eligible recipients. The measures are intended to improve targeting and support fiscal consolidation.
4Q2025: 1.3% · 1Q2025: 1.5%
2026(f): 1.3%–2.0%
4Q2025: 3.0% · 1Q2025: 3.1%
2026(f): 3.0%
Exports up 12.7% on E&E strength
Total external trade reached RM789.8 billion in 1Q2026. Electrical and electronics products, travel and ICT services supported exports, while the ringgit remained sensitive to US interest-rate expectations, trade developments and geopolitical risk.
The ringgit strengthened against many major trading-partner currencies during the quarter, but remained volatile against the US dollar. Its movement broadly tracked other regional Asian currencies and was driven mainly by external developments rather than a deterioration in domestic fundamentals.
Looking ahead, domestic demand, investment activity and technology-related exports are expected to remain supportive. Political developments, geopolitical tensions and trade uncertainty nevertheless remain important risks for business and investment sentiment.
4Q2025: RM436.0 bil (+11.0%)
1Q2025: RM384.2 bil
4Q2025: RM387.5 bil (+11.7%)
1Q2025: RM337.3 bil
Domestic investors step up as FDI cools
Approved domestic investment increased 13.0% to RM36.7 billion, while foreign investment eased 7.3% to RM56.2 billion. Technology, digital infrastructure and data centres remained significant parts of the investment pipeline.
1Q2025: RM32.4 bil · 2025(r): RM222.4 bil
1Q2025: RM60.6 bil · 2025(r): RM208.7 bil
Every sector signal points up
Industrial output, services prices, retail sales, tourist arrivals and house prices all advanced, providing a supportive starting point for the six property-market chapters that follow.
Stronger industrial output supports continued demand for industrial and logistics space.
Improving manufacturing sentiment supports industrial and logistics prospects.
Growth was broad-based; real-estate activities +0.4% and professional services +0.8% q-o-q.
Festive spending and government cash-assistance programmes were supportive; VM2026 is expected to help sustain growth.
International arrivals were at 97% of pre-pandemic levels; VM2026 targets 47 million arrivals and RM147.1 bil in tourism receipts.
The high-rise residential sub-index rose 1.3%, indicating resilient values despite softer overall market conditions.
Industrial Market
Industrial assets are becoming increasingly specialised as occupiers prioritise operational efficiency, automation and supply-chain resilience.
Industrial steady but outlook turns cautious
Malaysia’s industrial sector continued to expand through early 1H2026, supported by manufacturing output, electricity consumption and trade activity, although businesses became more cautious on global trade and geopolitical risks.
- Investment was spread across a wider range of projects and industries than a year earlier.
- PMI returned above 50 in June 2026, indicating modest expansion, while manufacturers remained cautious on trade policy and external conditions.
Malaysia: Notable Investment, 1H2026
| Developer / Partners | Investment Value (RM mil) | Location | Project Sector |
|---|---|---|---|
| Nexperia | 1,600.0 | Penang | Semiconductors |
| WaferWise Semiconductor | 700.0 | Penang | Semiconductors |
| Halo Laser Technologies | 329.8 | Penang | Semiconductors |
| Greatech Integration | 322.0 | Penang | Automation Engineering |
| Boston Scientific Medical Devices | 308.0 | Batu Kawan, Penang | Life Sciences & Medical Technology |
| Biocon | 226.1 | Johor | Life Sciences & Medical Technology |
| Aixtron | 200.0 | Penang | Semiconductors |
| JPG Fuji | 200.0 | Johor | Oil & Gas |
| Hanan Medicare | 194.9 | Rawang, Selangor | Pharmaceutical |
| Jemaluang Dairy Valley | 119.0 | Mersing, Johor | Food Manufacturing |
| Sheng Long Aqua Technology | N/A | Larut & Matang, Perak | Food Manufacturing |
Klang Valley
Industrial demand holds despite uncertainty
Approximately RM4.8 billion in approved manufacturing investment across 134 projects accounted for around 20% of national value and 27% of approved projects. Port Klang handled about 3.71 million TEUs in 1Q2026, up 5.2% y-o-y.
Warehouse choices widen for occupiers
Ready-built facilities, specialised cold-chain logistics and automation are gaining importance as occupiers prioritise efficiency and faster deployment.
Expansion plans turn more cautious
Outlook: fundamentals remain supportive, but tariffs, logistics costs and a larger Grade A pipeline are shifting bargaining power toward occupiers.
Johor
Investment stays firm in Johor
Transaction volume increased 0.8% to 356 while value rose 33.1% to RM2.5 billion. Johor Bahru remained dominant, while Kulai continued to emerge as a strategic industrial corridor.
Outlook: JS-SEZ and infrastructure improvements support long-term growth, while construction costs, geopolitics and future supply create execution risks.
Penang
Transactions and manufacturing investment remain strong
- Penang Technology Park @ Bertam Phase 1 completed; Phase 2 ~85% complete.
- PILA master plan approved; first air-cargo warehouse phase targeted for 2029.
- Batu Kawan ATE campus: 10 acres valued around RM40 million.
Outlook: semiconductor strength and logistics investment remain positive, while US tariff uncertainty and geopolitics may temper near-term sentiment.
Sabah
Infrastructure primes the next industrial phase
- Kudat Blue Economy Industrial Park, Kota Belud Industrial Park and Beaufort Industrial Park are priority hubs.
- Southern Link Transmission Line includes RM765 million for a 330-km high-voltage link.
- SALAM submarine cable: RM2 billion and 3,190 km.
Outlook: infrastructure and green-energy investment are foundational; road, power and digital connectivity delivery will determine competitiveness.
Data Centre Market
Malaysia’s data centre market remains on a growth trajectory, while infrastructure credibility, resource accountability and stakeholder confidence become increasingly important.
Digital economy framework sets long-term direction
Malaysia Digital 2030, AI-governance initiatives, hyperscaler commitments, renewable-energy procurement and growing institutional capital are defining the next phase of data-centre growth.
- Alibaba Cloud opened its third Malaysian region.
- Approval policy is becoming stricter on “phantom” power reservations and requires evidence of committed demand.
- Power, water, fibre and renewable-energy access are increasingly critical site-selection criteria.
- Melaka and Perak are attracting proposed AI/data-centre projects beyond Johor and Klang Valley.
Klang Valley: Notable Data Centre Land Transactions, 1H2026
| Location | Land Size (Acres) | Consideration (RM mil) | Purchaser |
|---|---|---|---|
| IOI Industrial Park, Banting | 136.03 | 740.68 | Bridge Data Centres |
| Kapar | 157.07 | 687.89 | WG Malaysia VIII Sdn Bhd (DayOne) |
| Cyberjaya | 10.00 | Undisclosed | AIMS Data Centre |
| NCT Smart Industrial Park, Sepang | 100.00 | Undisclosed | Undisclosed |
Johor: Notable Data Centre Land Transactions, 1H2026
| Location | Land Size (Acres) | Consideration (RM mil) | Purchaser |
|---|---|---|---|
| Bandar Cemerlang, Ulu Tiram | 49.72 | 346.53 | Digital Edge Data Centers |
| QUANTUM Edge, Kulai | 49.59 | 280.80 | KNBDC Malaysia Five Sdn Bhd |
| Gerbang Nusajaya | 65.28 | 398.11 | DayOne Data Centers |
Market Outlook
Growth remains intact but is entering a more selectively approved phase. Projects with committed demand, utility readiness, financial certainty and responsible resource use are expected to be favoured. Geopolitical uncertainty may improve Malaysia’s regional position, while maturing recurring-income streams are likely to attract more IPO, REIT and M&A activity.
Office Market
The office market enters a more selective phase, with location, quality and long-term value driving demand.
Services growth supports office market fundamentals
Business-facing services continued to expand, supporting office occupier demand.
Klang Valley
Few completions now; stronger pipeline ahead
Prime offices hold occupancy and rents
- Huawei AI Lab and Innovation Centre at The Exchange 106 (~13,600 sq ft).
- Sunrate at Menara Binjai; Yamada Consulting & Spire at Mercu Aspire; Zoho in Subang Jaya; Argon & Co in Kuala Lumpur.
- Maybank relocated ~650,000 sq ft across 33 floors at Merdeka 118; Bank of America also opened there; Alliance Bank moved to Menara Alliance Bank.
- MDLR/MD Nexus replaced the former MD Cybercity/Cybercentre framework from 1 Jan 2026.
Investors remain selective
- Menara AmBank RM331 mil.
- Menara Liberty RM45 mil.
- Wisma HELP RM60 mil.
- Proposed REIT injections: IOI City Towers RM540 mil; Puchong Financial Corporate Centre RM440 mil.
Outlook: building quality, connectivity, sustainability and digital readiness will increasingly separate resilient assets from older stock.
Johor Bahru
- JB City Centre rents: RM3.30–3.80 psf/month.
- JB Fringe: RM3.10–3.40 psf/month.
- Iskandar Puteri: RM3.60–3.80 psf/month.
- MVS North & South Towers and Menara IIB recorded premium-space leasing interest, including Grant Thornton and PwC.
Penang
The Light Exchange added about 176,000 sq ft and was reported around 90% committed, while GBS@Penang Airport was around 80% committed. Selected asking rents remained broadly RM3.00–6.50 psf/month.
Sabah
OGSE expansion, the state’s 60% local-contract-ownership target and banking growth are supporting office demand, including plug-and-play space.
| Building | Asking Gross Rent (RM psf/month) |
|---|---|
| Plaza Shell | 5.50 |
| Menara MAA | 2.30–3.50 |
| Wisma Great Eastern | 2.40–3.00 |
| Wisma Sabah | 2.50–2.90 |
| Riverson Suites | 3.50–4.00 |
| Wisma BSN | 2.00–2.30 |
Sarawak
New supply remains concentrated in Kuching and Miri. Demand is expected to be supported by the proposed New Kuching International Airport, Batang Baram Delta development, PCDS 2030 and the Sarawak Digital Economy Blueprint 2030.
Retail Market
Experience-led concepts, retailer expansion and asset enhancement initiatives continue to shape retail differentiation and competitiveness.
Retail sales grow 3.7% in 1Q2026
Festive spending, government assistance and tourism supported retail demand, while fuel, logistics and input-cost pressures remain important risks for 2H2026.
Klang Valley
- The Mines is upgrading canal-front F&B areas and replacing Lotus’s with Jaya Grocer by end-2026.
- New projects emphasise placemaking, lifestyle and mixed-use integration.
- Retail expansion spans F&B, lifestyle, specialty, necessity and experiential concepts.
- Proposed IOIPG REIT is valued around RM7.6 bil; KIP REIT acquired Setapak Central Mall for RM435 mil at a 7.2% yield.
- Mega and regional malls generally sustained occupancy above 90%.
Outlook: necessity retail and experience-led positioning support resilience, while incoming supply raises competition.
Johor
Cross-border spending from Singapore, new brand entries and improving Johor–Singapore connectivity continue to support retail demand. Malls are increasingly emphasising lifestyle and experiential positioning.
Penang
Harvey Norman opened its 39th Malaysian store and fifth in Penang at Gurney Plaza. Selected prime-mall ground-floor rents in 2025 ranged approximately RM2.98–36.98 psf/month.
Sabah
- Marche Kota Kinabalu introduced a premium open-air lifestyle concept.
- The Hill @ Damai is positioned as a lifestyle-commercial destination with healthcare-supportive features.
- Oriental Kopi debuted at Suria Sabah; Fatty Lai Crab Pot opened its first Malaysian outlet at Imago; The Parenthood and Kidzooona strengthened edutainment offerings.
| Retail Lot Size | Ground Floor Rental Range |
|---|---|
| <1,000 sq ft | RM7.26–28.50 psf |
| >1,000 sq ft | RM1.01–8.42 psf |
Outlook: stable but tourism and airline-cost headwinds temper near-term growth.
Hospitality Market
Tourism growth, expanding connectivity and active institutional interest continue to support stronger hospitality market momentum.
Tourism and connectivity support hotel demand
Singapore remained the largest source market, followed by China, Indonesia, Thailand and Brunei. VM2026, medical tourism, MICE activity, new routes and airport upgrades support demand, while fuel costs remain a risk.
Klang Valley
- Former Glenmarie Hotel & Golf Resort rebranded Hilton Shah Alam Glenmarie.
- Summit Hotel USJ undergoing RM45 mil redevelopment.
- Hotel Maya KL being repositioned under KiN Hotel Group.
- Waldorf Astoria Kuala Lumpur and The Regent Kuala Lumpur form part of the luxury pipeline.
- MyCEB secured 92 business events by Jan 2026, representing ~RM1.6 bil economic impact and 101,000+ international delegates.
Johor
The former Thistle Hotel is targeted to reopen as the 410-key JW Marriott Hotel Johor Bahru in Dec 2026. Capri by Fraser at Richmond Mayor is planned for 2030 with 275 suites. Visitor arrivals were about 6.1 million in 1Q2026, up 1.9% y-o-y.
Penang
| Property | Star | Rooms | Details |
|---|---|---|---|
| Iconic Marjorie Hotel, Tribute Portfolio | 5 | 298 | Bayan Lepas; opened Jan 2026 |
| Soori Penang | 5 | 15 | Khoo Kongsi precinct, George Town |
| 1926 Heritage Hotel Penang, The Unlimited Collection | 5 | 78 | Reopened Apr 2026 |
Sabah
Rising aviation fuel costs and route reductions may affect Sabah’s 4.0 million visitor target. Visit Sabah 2027 is designed to build on VM2026 with destination branding, connectivity and higher-value tourism.
Sarawak
International arrivals remained the main driver, while new air links and Business Events Sarawak continue to support leisure and MICE demand.
Residential Market
Residential demand remains focused on well-located, centrally positioned and quality developments amid an increasingly selective market environment.
Residential drives 58.8% of property transactions
Residential remained the largest property segment. Activity softened against a high base, while prices stayed relatively firm and completed-unsold stock increased.
Klang Valley
- Prime-area high-rise stock: 126,991 units; 3,558 units completed in 1H2026.
- New launches concentrated in KL City, TRX, Damansara Heights and Maluri.
- Prime pricing broadly stable in KL City, Ampang Hilir/U-Thant, Desa ParkCity, TTDI/KLGCC and Sunway City.
- Urban professionals and expatriates continue to support rental demand.
- OPR remained 2.75%; SRR reduced to 1.0%.
Prime Residential Asking Rents
| Prime Area | 2H2025 (RM psf) | 1H2026(p) (RM psf) | Trend |
|---|---|---|---|
| KL City | 3.60–6.90 | 3.50–7.00 | Stable |
| Ampang Hilir / U-Thant | 2.60–4.90 | 2.60–4.80 | Stable |
| Bangsar / Bangsar South / KL Sentral / Seputeh | 2.30–5.50 | 2.40–5.60 | Up |
| Damansara Heights | 3.10–6.80 | 3.00–6.50 | Down |
| Mont' Kiara | 2.50–5.50 | 2.60–5.50 | Stable |
| Desa ParkCity | 4.10–6.40 | 4.10–6.30 | Stable |
| TTDI / KLGCC | 3.70–4.30 | 3.60–4.40 | Stable |
| Cochrane / Chan Sow Lin / Maluri | 3.60–4.30 | 3.80–4.50 | Up |
| Petaling Jaya Town | 3.10–4.30 | 3.20–4.50 | Up |
| Sunway City | 3.40–5.70 | 3.30–5.80 | Stable |
| Ara Damansara / Tropicana Damansara | 2.20–4.90 | 2.20–4.90 | Stable |
Outlook: broadly stable, supported by financing and transit connectivity, but buyer selectivity and unsold inventory encourage measured launches.
Johor
The high-rise market remains supported by the upcoming RTS Link and broader economic growth but is entering a price-normalisation phase. Future performance will depend on actual absorption, competitive pricing, practical layouts and differentiation.
Penang
Affordable and mid-priced homes remained relatively resilient, while the high-rise segment performed better than the broader market.
Sabah
Both landed and high-rise activity improved in 1Q2026, although landed housing continued to represent the larger transaction base.
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