How is the property market forecast in Kuala Lumpur?

Authored by the expert who managed and guided the team behind the Malaysia Property Pack

Yes, the analysis of Kuala Lumpur's property market is included in our pack

Who is the author of this content?

BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Kuala Lumpur. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At BambooRoutes, we explore the Malaysian real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Kuala Lumpur, Penang, and Johor Bahru. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

What has been the year-on-year change in average property prices in Kuala Lumpur over the past five years, and what is the forecasted percentage change for the next two years?

Kuala Lumpur property prices rose by 4.2% year-on-year as of Q4 2024, significantly outpacing Malaysia's national growth rate.

Over the past five years, annual price growth in Kuala Lumpur has fluctuated between 0.9% and 4.3%. The market experienced slower growth during 2020-2022 due to pandemic impacts, with prices recovering strongly in 2023-2024. The 2024 growth of 4.2% represents the highest annual increase since the pre-pandemic period.

For the next two years, property consultancies forecast annual price appreciation of 3-7% in Kuala Lumpur. Transit-oriented developments and prime locations could see up to 9.7% cumulative growth by 2027, driven by infrastructure completion and improved connectivity. However, the luxury condominium segment may experience flat or minimal growth due to persistent oversupply and high vacancy rates exceeding 20%.

This price trajectory positions Kuala Lumpur as one of Southeast Asia's more stable property markets, with growth rates that balance appreciation potential against affordability concerns.

It's something we develop in our Malaysia property pack.

How many new residential units are expected to be launched in Kuala Lumpur in the coming year, and how does that compare with the average of the past three years?

Over 12,498 new residential units are projected to be launched in Kuala Lumpur and the broader Klang Valley in 2025, representing a dramatic surge in supply.

This figure marks more than a twofold increase compared to Q1 2024 launch numbers and significantly exceeds the pandemic recovery period averages. During 2021-2024, annual launches averaged approximately 5,000-7,000 units per year as developers cautiously managed inventory amid uncertain market conditions.

The 2025 supply surge reflects developer confidence in market recovery and pent-up demand. Notably, 65% of these new units are priced below RM500,000, indicating a strategic shift toward addressing affordability concerns and targeting middle-income buyers who have been largely priced out of the market.

This substantial increase in supply will test the market's absorption capacity, particularly given current vacancy rates in certain segments.

What is the current vacancy rate for condominiums, landed homes, and serviced apartments in Kuala Lumpur, and how has this shifted since 2020?

Property Type	Current Vacancy Rate	Market Condition
High-rise Condominiums	20%+ in prime districts	Oversupplied, especially luxury segment
Serviced Apartments	20%+ in prime districts	High vacancy due to reduced tourism/business travel
Landed Homes	Below 10%	Strong end-user demand, limited supply
Luxury Condominiums	Highest among all segments	Significant oversupply, weak absorption
Mid-market Condos	15-18%	Better absorption than luxury segment
Affordable Housing	8-12%	Strong demand, limited supply
SOHO/Studio Units	22-25%	Oversupplied, investor-focused segment

How have rental yields evolved across key districts like Mont Kiara, KLCC, and Bangsar over the last three years, and what are the projected yields through 2026?

Rental yields across Kuala Lumpur's prime districts have shown improvement since 2022 as rental rates recovered faster than property prices.

KLCC currently offers rental yields ranging from 2.9% to 6.4%, with significant variation based on building quality and unit specifications. Mont Kiara yields typically range from 4.2% to 5.3%, benefiting from strong expat demand and proximity to international schools. Bangsar consistently delivers yields above 5% in most projects, supported by its appeal to young professionals and proximity to the city center.

The yield evolution reflects several factors: rental rates have rebounded as expatriate populations return post-pandemic, while property prices have grown more moderately. Mont Kiara particularly benefits from renewed demand from international school families and multinational corporation employees.

Through 2026, yields are projected to remain steady or experience slight compression due to new supply entering the condominium market. However, mid-market properties in these districts should maintain favorable yields as demand remains robust relative to luxury segments.

Investors should note that actual yields vary significantly based on specific building amenities, management quality, and unit positioning within each district.

What is the current absorption rate of newly launched properties, and how does it compare with the long-term average absorption rate in Kuala Lumpur?

The absorption rate for newly launched properties in Kuala Lumpur stands at 10.8% as of Q1 2025, indicating gradual market recovery but remaining below historical norms.

This current rate represents an improvement from pandemic lows but still trails the long-term average of 12-15% recorded in pre-pandemic years. The slower absorption reflects several market dynamics: cautious buyer sentiment, affordability constraints, and selective purchasing behavior as buyers become more discerning about location and value propositions.

Pre-pandemic absorption rates were consistently higher, often reaching 15-18% during peak periods, supported by stronger economic sentiment and lower household debt levels. The current 10.8% rate suggests the market is still working through inventory accumulated during the slower pandemic period.

Developers are adapting by focusing on affordability and strategic pricing, with projects below RM500,000 showing better absorption rates than premium segments. The absorption rate is expected to improve gradually as employment conditions strengthen and consumer confidence returns.

What is the total transaction volume for residential properties in Kuala Lumpur in the latest full year, and how does it compare with the five-year average?

Kuala Lumpur recorded approximately 50,000 residential property transactions in the latest full year, marking a strong post-pandemic recovery.

This figure represents a 4% increase from 2023 and sits above the five-year average of 45,000-48,000 transactions annually. The recovery demonstrates renewed market confidence and improved buyer sentiment as economic conditions stabilize and employment markets strengthen.

The transaction volume includes both primary and secondary market sales, with secondary market transactions showing particular strength as existing homeowners take advantage of improved market conditions. First-time buyer activity has also increased, supported by government initiatives and bank financing programs targeting affordable housing segments.

This return to "normal" transaction levels indicates the Kuala Lumpur property market has successfully navigated pandemic challenges and restored healthy trading activity. The volume trend suggests sustained demand across different property segments and price ranges.

How much foreign investment has flowed into Kuala Lumpur's residential and commercial property market over the past year, and what proportion of total transactions does it represent?

Foreign investment in Kuala Lumpur's residential property market has increased over the past year, driven by returning expatriates and MM2H visa holders seeking to establish Malaysian residency.

Foreign buyers represent less than 10% of total residential transactions in Kuala Lumpur, maintaining their position as a minority but noteworthy segment. The increase reflects improved border conditions, renewed confidence in Malaysia's economic stability, and attractive property prices relative to regional markets like Singapore and Hong Kong.

Commercial property has attracted larger institutional foreign inflows, particularly focused on key developments like the Tun Razak Exchange (TRX) and other Grade A office projects. These institutional investments represent significant capital but constitute separate market dynamics from residential purchasing patterns.

The foreign investment proportion remains controlled by government regulations requiring minimum purchase prices for foreign buyers, ensuring that international investment complements rather than dominates local market activity.

What are the current average prices per square foot in Kuala Lumpur for luxury condominiums, mid-market apartments, and landed houses, and how do they compare with regional cities like Bangkok and Singapore?

Property Type	Kuala Lumpur	Bangkok	Singapore
Luxury Condominiums	RM 1,200-2,500/sqft	THB 5,000-12,000/sqft	SGD 2,000-4,000/sqft
Mid-market Apartments	RM 600-1,100/sqft	THB 3,000-7,000/sqft	SGD 1,200-2,300/sqft
Landed Houses	RM 700-1,500/sqft	THB 4,000-8,000/sqft	SGD 1,150-2,800/sqft
Affordable Housing	RM 400-600/sqft	THB 2,000-3,500/sqft	SGD 800-1,200/sqft
Prime District Premium	30-50% above average	40-60% above average	50-80% above average
New Launch Premium	10-20% above resale	15-25% above resale	20-30% above resale
Foreign Buyer Premium	Minimum RM1M threshold	No restrictions	Additional buyer's stamp duty

What percentage of households in Kuala Lumpur are currently priced out of homeownership based on median household income versus median house prices?

Over 55% of Kuala Lumpur households are currently priced out of homeownership based on standard affordability calculations using median income versus median property prices.

The median home value in Kuala Lumpur sits around RM794,000, while median household income levels support home purchases below RM500,000 using conventional lending ratios. This affordability gap has widened over the past five years as property prices grew faster than household income increases.

The affordability challenge is most acute for young professionals and middle-income families earning RM5,000-8,000 monthly, who find themselves caught between affordable housing programs (limited supply) and market-rate properties (beyond their reach). This group represents a significant portion of the working population but struggles to access homeownership without family assistance or extended loan terms.

Government initiatives targeting affordable housing below RM500,000 address this gap, but supply remains limited relative to demand. The 65% focus on sub-RM500,000 units in 2025 launches directly responds to this affordability crisis.

It's something we develop in our Malaysia property pack.

How have interest rates and mortgage approval rates in Malaysia shifted over the past two years, and how are they expected to affect demand in Kuala Lumpur's property market?

Malaysia's policy interest rate has remained stable at 3% over the past two years, providing consistent borrowing cost foundations for property buyers.

Mortgage approval rates have improved significantly since the pandemic as banks adopted more flexible lending criteria and government initiatives supported first-time buyer programs. Banks have also introduced more varied loan products targeting different income segments, including longer loan tenures and lower down payment options for qualified buyers.

Interest rates are expected to rise marginally in late 2025 as regional central banks respond to inflation pressures and global monetary policy shifts. However, any increases are likely to be gradual, with rates potentially reaching 3.5-4% by end-2026.

The stable rate environment has supported current demand levels, but affordability constraints remain the primary barrier rather than borrowing costs. Any rate increases could dampen buyer sentiment, particularly affecting discretionary purchases and investment buying. First-time buyers would be most sensitive to rate changes given their typically higher debt-to-income ratios.

What is the pipeline of infrastructure projects in Greater Kuala Lumpur—such as MRT3 and major highway expansions—and how many new properties are directly tied to these developments?

1. **MRT3 Circle Line Development**: Expected to connect major townships and employment centers, with numerous residential projects planned within 500 meters of proposed stations2. **Highway Expansion Projects**: Major expressway improvements including upgrades to existing routes and new connections to surrounding areas3. **Bandar Malaysia Development**: Large-scale township project incorporating mixed residential, commercial, and transportation hub elements4. **LRT Extension Projects**: Additional light rail connections expanding coverage to previously underserved areas5. **East Coast Rail Link (ECRL) Integration**: Connection points creating new development opportunities in Greater KL areas6. **Smart City Initiatives**: Technology-focused developments incorporating sustainable infrastructure and modern connectivity7. **Transit-Oriented Developments (TODs)**: Integrated projects combining residential, retail, and public transportation access

At least 10,000 new residential units are directly tied to proximity and integration with these infrastructure projects. MRT3 and key expressway projects alone account for the majority of these transit-connected developments.

These infrastructure investments are expected to create significant property value appreciation in affected corridors, with developments within walking distance of transit stations commanding premium pricing and higher absorption rates.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Malaysia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

What do local and international property consultancies forecast as the compound annual growth rate for Kuala Lumpur's property market between 2025 and 2030?

Leading property consultancies including Knight Frank, JLL, and Savills forecast a compound annual growth rate (CAGR) of 3.5-5% for Kuala Lumpur property prices between 2025 and 2030.

This forecast range reflects several key factors: continued urbanization driving demand, infrastructure development enhancing connectivity and property values, and Malaysia's growing position as a regional business hub. Prime transit-connected districts are expected to achieve higher growth rates within this range, potentially reaching the upper end of 5% annually.

However, growth rates will vary significantly by segment. Oversupplied luxury condominium markets may experience lower growth rates around 2-3% annually, while affordable housing and well-located mid-market properties could exceed 5% annual appreciation due to strong underlying demand.

The CAGR projections assume continued economic stability, moderate interest rates, and successful completion of major infrastructure projects. External factors such as regional economic conditions and global property investment flows could influence actual performance within this forecasted range.

It's something we develop in our Malaysia property pack.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. TS2 Tech - Kuala Lumpur Real Estate 2025 Market Analysis
2. Trading Economics - Malaysia Housing Index
3. BambooRoutes - Kuala Lumpur Price Forecasts
4. Malay Mail - Residential Construction Malaysia Q1 2025
5. IQI Global - Kuala Lumpur Market Insights
6. BambooRoutes - Kuala Lumpur Property Price Trend
7. Global Property Guide - Malaysia Price History
8. CEIC Data - Malaysia House Prices Growth
9. JLL - Kuala Lumpur Q2 2025 Market Report
10. Hartamas - Malaysia Property Market Trends and Forecasts