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SUMMARY
Foreigners are likely to buy fewer Malaysian condos where the only attraction is price or rental yield, but a broad nationwide retreat in foreign buying does not look imminent.
Foreign buyers are tiny in Malaysia by transaction count but unusually important by value. In the first half of 2025, they represented only 0.76% of residential purchases while accounting for 3.8% of transaction value, with the average foreign purchase worth more than five times the average Malaysian one.
The new 8% transfer stamp duty changes the economics most sharply for investors buying ordinary condos for yield. On a RM1 million property, the extra RM40,000 of duty can absorb roughly a full year of gross rent if the property yields around 4%.
That means the first casualties should be interchangeable investment units rather than every foreign-facing project. A condo with no strong local demand, no scarcity and no reason to own it beyond a brochure yield is much easier to walk away from now.
Chinese demand complicates the bearish case. Malaysia's share of Chinese overseas-property enquiries has risen sharply, from 2.8% in 2024 to 7.3% in the first half of 2026, even though those enquiries still need to convert into completed transactions.
The nature of that Chinese interest also looks more durable than pure speculation. Families, expatriates and long-stay buyers choosing places such as Mont Kiara, Desa ParkCity and Penang are making lifestyle and education decisions, not simply comparing headline yields.
Johor is likely to diverge even more from the national market. Singaporeans already rank close to Chinese buyers by transaction count, and condos around the future Johor Bahru-Singapore RTS have a transport and cross-border employment story that generic Johor towers do not.
MM2H adds another unusual source of demand. Thousands of approved participants have either bought homes or are still in the purchase process, and the Forest City special category creates a particularly direct link between residency and property ownership.
Malaysia's wider housing market is softer, with lower transaction volumes and more completed unsold stock, but high-rise activity has held up better in parts of Klang Valley and Penang. That makes it hard to argue that the condo market itself is already in broad retreat.
The bigger shift is toward selectivity. Higher taxes, a stronger ringgit and abundant supply give foreign buyers more reasons to reject mediocre projects, while the best-located condos can still benefit from relocation demand, infrastructure, residency programmes and established expatriate communities.
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Are foreigners actually a big part of Malaysia’s condo market?
Foreign buyers matter a lot to some Malaysian condo projects, but they are tiny when we look at Malaysia’s housing market as a whole.
Department of Valuation and Property Services figures presented to Parliament show that non-citizens completed 913 residential purchases in the first half of 2025. That was just 0.76% of all residential transactions.
The money tells a different story. Those 913 purchases were worth RM1.904 billion, equal to 3.8% of residential transaction value. The average foreign purchase therefore came to roughly RM2.09 million. Malaysian citizens bought 119,394 homes worth RM47.47 billion during the same period, giving an average of about RM398,000.
So a foreign transaction was worth more than five times the average Malaysian purchase.
That explains why foreign buyers can look much more important than their national market share suggests. They show up disproportionately in expensive Kuala Lumpur apartments, selected Penang developments and internationally marketed projects in Johor.
For Malaysia overall, foreigners cannot make or break the housing market. For a RM1.5 million condo tower aimed partly at Singaporean or Chinese buyers, they absolutely can.
| H1 2025 residential buyers | Transactions | Transaction value | Share of transaction volume | Approx. average purchase |
|---|---|---|---|---|
| Non-citizens | 913 | RM1.904bn | 0.76% | RM2.09m |
| Malaysian citizens | 119,394 | RM47.47bn | More than 99% | RM398,000 |
Why could foreigners buy fewer Malaysian condos now?
Foreigners have a very obvious reason to hesitate today: buying Malaysian residential property has suddenly become much more expensive upfront.
Malaysia raised the transfer stamp-duty rate for non-citizens who are not permanent residents from 4% to 8% from 2026. Malaysia's Inland Revenue Board has since clarified that the 8% rate applies to qualifying purchases under the new rules and that MM2H participants do not receive a general exemption.
That is a serious increase.
A foreign buyer purchasing a RM1 million condo can now face RM80,000 of transfer duty instead of RM40,000. At RM2 million, the difference becomes RM80,000. At RM3 million, the buyer pays RM120,000 more than under the previous rate.
Foreign buyers already have to deal with state-level minimum purchase prices, different approval rules depending on location and generally less generous financing than local owner-occupiers.
The new tax therefore lands on top of existing friction. It should remove some purchases, especially among investors who liked Malaysia mainly because property looked cheap.
| Condo price | Previous 4% duty | Current 8% duty | Extra cost |
|---|---|---|---|
| RM600,000 | RM24,000 | RM48,000 | RM24,000 |
| RM1,000,000 | RM40,000 | RM80,000 | RM40,000 |
| RM1,500,000 | RM60,000 | RM120,000 | RM60,000 |
| RM2,000,000 | RM80,000 | RM160,000 | RM80,000 |
| RM3,000,000 | RM120,000 | RM240,000 | RM120,000 |
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Will the new 8% stamp duty scare off foreign condo investors?
Yes, the 8% stamp duty should push some foreign investors out of Malaysian condos, particularly buyers chasing ordinary rental yields.
Take a RM1 million condo producing RM45,000 of gross rent a year. That is a 4.5% gross yield. The extra RM40,000 of transfer duty now consumes almost 11 months of gross rent before the buyer has paid maintenance fees, furnishing costs, agent commissions, vacancy costs, financing expenses or tax.
At a 4% gross yield, the extra duty is equivalent to an entire year of rent.
The calculation becomes less painful when the buyer has another reason to own the property. Someone moving to Kuala Lumpur with children may accept the higher cost. An MM2H participant may need to purchase a home anyway. A Singaporean buying beside the future Johor Bahru RTS connection may be making a ten-year infrastructure bet.
A buyer comparing rental returns across Bangkok, Kuala Lumpur, Dubai and other cities will be much more sensitive.
This is where the clearest drop in demand should appear: foreigners who liked Malaysian condos mainly because entry prices were low and the yield looked decent.
Are Chinese buyers losing interest in Malaysian property?
Chinese demand for Malaysian property is currently moving in the opposite direction: interest has risen very sharply.
Juwai IQI reported this week that Malaysia attracted 7.3% of Chinese overseas residential-property enquiries in the first half of 2026. The same share was 4.5% in 2025 and just 2.8% in 2024.
In two years, Malaysia's share has therefore increased by roughly 160%.
Malaysia also moved from seventh place among Chinese overseas-property destinations during 2022-2024 to sixth in 2025 and fourth currently, behind Thailand, Australia and the United Kingdom.
China is already Malaysia's largest foreign residential buyer by value. Official figures show 329 Chinese purchases worth RM834.65 million in the first half of 2025. Chinese buyers accounted for about 36% of foreign transaction volume but roughly 44% of foreign transaction value.
Enquiries do not guarantee transactions, of course. The 8% duty could stop some interested buyers from completing.
Still, the starting point is unusually strong. A market heading into an obvious foreign-buyer retreat would normally show falling interest before falling transactions. Malaysia is currently showing the reverse among its largest foreign buyer group.
| Chinese overseas-property interest in Malaysia | 2024 | 2025 | H1 2026 |
|---|---|---|---|
| Share of Chinese global enquiries | 2.8% | 4.5% | 7.3% |
| Malaysia's ranking | 7th | 6th | 4th |
| Growth in enquiry share vs 2024 | — | +61% | +161% |
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Why are Chinese buyers looking at Malaysia more now?
Chinese buyers appear to be looking at Malaysia increasingly for living, education and long-term relocation, which makes this demand harder to kill with a higher transaction tax.
Juwai IQI says the current Chinese buyer mix is shifting toward expatriates and families who plan to occupy their homes. The neighbourhoods attracting attention fit that pattern. Mont Kiara and Desa ParkCity offer international schools, established foreign communities and everyday amenities. Penang combines lifestyle, healthcare, education and a large existing Chinese-speaking community.
These buyers behave differently from someone purchasing a generic off-plan apartment purely because the brochure promises a 6% yield.
A family planning to stay in Kuala Lumpur for years cares about commute times, schools, bedroom count and whether the neighbourhood works. A RM40,000 increase in tax on a RM1 million purchase still hurts, but it is less likely to end the purchase completely when the home solves a real-life problem.
This shift also helps explain an interesting change in Malaysia's broader market. NAPIC data highlighted by Juwai IQI show that homes priced at RM1 million and above were the only major price band to record transaction growth in the first quarter of 2026, up 1.8% year on year. Their share of all residential transactions reached 9.2%, versus 8.3% in 2025 and 7.9% in 2024.
We cannot attribute that increase entirely to foreigners. Wealthy Malaysians buy those homes too. But the part of the market most relevant to foreign buyers is currently holding up better than cheaper segments.
Are Singaporeans about to stop buying Johor condos?
Singaporeans still have unusually strong reasons to buy selected Johor condos, and the RTS corridor is making Johor the hardest place to argue for an imminent foreign-buyer retreat.
Official foreign-buyer data already put Singapore very close to China by transaction count. Singaporeans bought 320 Malaysian homes in the first half of 2025, only nine fewer than Chinese buyers.
Johor now has something it lacked during earlier property booms: a major piece of cross-border infrastructure that can directly change how practical it is to move between Johor Bahru and Singapore.
The Johor Bahru-Singapore Rapid Transit System Link gives central Johor Bahru projects a much clearer story than "property is cheaper across the border." Buyers can make a bet on commuting, employment links, tourism and the wider Johor-Singapore Special Economic Zone.
Individual projects are already showing how concentrated that demand can become. Quayside JBCC, close to the future Bukit Chagar RTS station, has reported more than 80% international ownership, with Singapore among its major buyer markets.
That example should not be stretched across all of Johor. A condo far from the RTS, with hundreds of competing units and no obvious local rental base, faces a very different market.
Location is becoming brutally important.
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Is Malaysia’s condo market itself starting to weaken?
Malaysia's housing market is softer today, but condos are holding up better than the headline transaction numbers suggest.
The latest NAPIC data available nationally cover the first quarter of 2026. Knight Frank's analysis of those figures shows 52,936 residential transactions, down 10.7% from a year earlier. Transaction value fell 7.8% to RM22.6 billion.
Completed unsold residential stock rose much faster, increasing 24.7% to 52,064 units.
Yet Malaysia's house price index still increased 1.7%, while the national high-rise sub-index rose 1.3%.
Klang Valley gives us an even clearer split. Total residential transactions there fell 11.2%, but high-rise transactions increased 5.1% to 5,986 units. The high-rise price index was basically flat.
Penang shows something similar. Overall residential transaction volume fell 16.6%, while high-rise transactions were down only 2%. High-rise transaction value actually increased 0.6%, and Penang's high-rise price index rose 3.4%.
So the latest numbers point to a slower housing market with growing inventory, while selected condo markets are proving considerably more resilient.
| Q1 2026 | Malaysia | Klang Valley | Penang |
|---|---|---|---|
| Residential transaction change | -10.7% | -11.2% | -16.6% |
| High-rise transaction change | — | +5.1% | -2.0% |
| Residential overhang | 52,064 units | 14,244 units | — |
| House/high-rise price change | MHPI +1.7% | High-rise broadly flat | High-rise +3.4% |
Does Malaysia have too many condos for foreign buyers?
Malaysia has plenty of condo supply, which gives foreign buyers more power to reject mediocre projects.
Knight Frank counts 126,991 prime high-rise units in its Klang Valley coverage. Another 3,558 units were completed in the first half of 2026, with roughly 9,170 more scheduled for the second half.
Klang Valley's residential overhang reached 14,244 completed unsold units, 10.9% higher than a year earlier.
This changes the balance of power. A buyer considering Kuala Lumpur can compare new launches, completed units, distressed resale stock and established buildings in proven expatriate neighbourhoods.
Johor has the same problem in a different form. The RTS can create enormous interest around central Johor Bahru while doing very little for an undifferentiated high-rise project much farther away.
Penang also has a large existing high-rise base. Knight Frank puts high-rise supply there at 138,330 units, up 6.9% year on year.
Foreign demand can remain healthy nationally while weak projects struggle badly. Those two outcomes fit together perfectly well.
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Is MM2H still creating real foreign property demand?
MM2H is currently creating a meaningful pipeline of foreign home purchases because buying residential property is built directly into the programme.
The revamped Malaysia My Second Home programme approved 3,172 applications in 2025, covering 9,038 people including dependants. Tourism Minister Tiong King Sing later said those approvals had generated around RM3.875 billion in economic value, including RM1.51 billion in residential property purchases.
By the end of 2025, 744 participants had already bought homes. Another 2,637 were still in the buying process, including people finalising sale and purchase agreements or choosing a property.
That pending pool is about 3.5 times larger than the number that had already completed purchases.
The nationality mix also overlaps heavily with Malaysia's established foreign property markets. Among those 744 completed purchases, Chinese participants bought 304 homes, Taiwanese participants 91 and Singaporeans 63.
The new stamp duty makes every one of those purchases more expensive because MM2H participants do not receive a blanket exemption. But the programme still gives approved foreigners a very strong reason to complete a property purchase.
Could MM2H and Forest City actually push foreign condo buying higher?
MM2H could lift foreign condo purchases in specific places, and Forest City has one of the clearest policy-created buyer pipelines in Malaysia.
The Special Economic Zone and Special Financial Zone MM2H category has lower fixed-deposit requirements than the main Platinum, Gold and Silver tiers. In return, participants entering through that route are tied to property ownership in Forest City under the programme's conditions and Johor's applicable property rules.
Among the 3,172 MM2H applications approved in 2025, 322 entered through this special category.
That is significant for Forest City because the development spent years dealing with the aftermath of a huge foreign-oriented construction boom and much weaker demand than originally expected.
A few hundred visa-linked purchases will not suddenly solve every resale, occupancy and inventory problem there. Still, these buyers add to transaction volumes that otherwise might not exist.
More broadly, MM2H shows why the foreign-buyer story is becoming fragmented. The same government that made ordinary foreign property purchases more expensive has also created residency programmes that push approved foreigners toward buying homes.
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Is the stronger ringgit making Malaysian condos too expensive for foreigners?
The stronger ringgit has chipped away at Malaysia's bargain appeal, although the price gap with places such as Singapore remains enormous.
Foreign buyers care about what a Malaysian condo costs in their own currency. When the ringgit rises, a property can become more expensive for a Singaporean, Chinese, American or European buyer without the Malaysian asking price moving at all.
Combine that currency effect with an 8% transfer duty and the deterioration becomes noticeable.
This matters most to people choosing among several investment destinations. A foreign buyer who could easily switch between Kuala Lumpur, Bangkok or another regional market now has less room for error in the Malaysian deal.
Singaporeans looking at Johor face a different calculation because the absolute price gap across the border remains so large. Buyers relocating to Malaysia for lifestyle or retirement also care about far more than the exchange rate on purchase day.
Currency is another drag on price-sensitive demand, but there is no convincing evidence yet that it has overwhelmed Malaysia's broader affordability advantage.
Will foreigners still buy Malaysian condos just for rental yield?
Pure yield buyers should become less common because today's entry costs make mediocre rental properties much harder to justify.
This is probably where the composition of foreign demand will change fastest.
Consider again a condo yielding around 4% to 5% gross. Before maintenance charges, vacancy and taxes, that already leaves limited room for a large one-off acquisition cost. Doubling transfer duty adds another hurdle before the investment has earned its first ringgit.
Foreign buyers therefore have much more reason today to ask whether the property has something beyond yield.
A Kuala Lumpur apartment beside international schools can attract future owner-occupiers. A Johor Bahru unit beside the RTS can offer a transport-driven resale story. A property bought through MM2H serves a residency purpose. A scarce unit in an established Penang neighbourhood can appeal to long-stay foreign residents.
The generic investment condo has a much weaker pitch.
Developers that relied on glossy overseas roadshows, guaranteed-yield language and the simple idea that "Malaysia is cheap" should feel this change first.
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Which Malaysian condos are most exposed if foreign buying slows?
Foreign-oriented condos with no strong local demand are the most exposed now, especially projects competing with lots of similar units.
The national numbers give buyers little reason to rush. Residential overhang has climbed sharply, transaction volumes are lower and developers face increasingly selective customers.
That makes replaceability a major risk.
If twenty comparable towers offer similar layouts, similar facilities and similar rental yields, an overseas buyer can walk away when taxes rise. The seller has little leverage.
The strongest projects have harder-to-copy advantages. Central Johor Bahru has the RTS. Mont Kiara has international schools and a deep expatriate rental market. Desa ParkCity has an established residential environment that new towers cannot recreate overnight. Mature Penang neighbourhoods benefit from lifestyle, healthcare and existing foreign communities.
Malaysia's foreign condo market is therefore likely to become more concentrated around places where buyers can immediately explain why that particular property deserves to exist.
What would prove that foreign condo demand is actually falling?
We should call a real foreign-buyer downturn only when completed purchases start falling across the major buyer groups, and the latest evidence does not establish that yet.
The useful official benchmark is 913 non-citizen residential transactions in the first half of 2025, led by China with 329 purchases and Singapore with 320. Together, those two nationalities accounted for roughly 71% of foreign purchase volume.
That concentration makes the next test fairly simple.
Chinese completed transactions would need to weaken even after Malaysia's share of Chinese overseas-property enquiries reached a decade high. Singaporean purchases would need to cool despite the approaching RTS opening and stronger Johor-Singapore economic links. MM2H's large pending home-purchase pool would also have to convert poorly.
Meanwhile, we should watch whether the RM1 million-plus price segment turns down. Currently, it is one of the few parts of the national market still showing transaction growth.
If several of those indicators break together, we will have evidence of a genuine retreat.
Until then, softer national housing transactions tell us more about Malaysian housing overall than about foreigners specifically.
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So, are foreigners about to buy fewer Malaysian condos?
Foreigners will probably buy fewer weak investment condos, but the evidence does not currently support a broad collapse in foreign condo buying across Malaysia.
The bearish argument has become much stronger than it was a year ago. Foreign buyers now face an 8% transfer duty instead of 4%. The ringgit has strengthened. National residential transactions are down. Unsold inventory has climbed. Pure rental investors can easily find deals where the numbers no longer work.
Some of those buyers will disappear.
Yet the strongest foreign-demand channels are still moving well. Chinese interest in Malaysian homes has reached its highest share of global enquiries in a decade. Singapore remains one of Malaysia's two biggest foreign buyer markets while the Johor RTS is getting closer to operation. MM2H has created thousands of approved participants who either have bought or are still working through property purchases. Higher-priced Malaysian homes are also holding up better than the wider transaction market.
The clearest change is happening inside foreign demand rather than simply to its size.
Low-conviction investors are becoming harder to attract. Buyers with a concrete reason to own in Malaysia still have plenty of reasons to proceed.
That should favour a smaller group of condos in Kuala Lumpur's established expatriate neighbourhoods, central Johor Bahru, selected Penang locations and MM2H-linked markets. Developers selling interchangeable towers primarily on cheap prices and rental-return promises have a much tougher job now.
So our answer is partly yes.
Foreigners are likely to buy fewer Malaysian condos where the only attraction was price. But as of now, Chinese demand, Singapore-linked Johor buying and MM2H are strong enough that calling a nationwide foreign-buyer retreat would be premature.
OUR METHODOLOGY
The central question does not have a clean answer from any single statistic. Foreign condo demand can weaken in one part of Malaysia while strengthening in another, and headline housing data can easily hide what is happening among foreign buyers specifically. We therefore tested the question across actual purchases, buyer costs, forward interest, condo-market conditions, location-specific demand and policy-created demand such as MM2H.
We gave the greatest weight to completed transaction data, official housing statistics, government policy and programme data. Forward-looking indicators such as buyer enquiries, infrastructure catalysts and project-level foreign ownership were used to understand where demand may move next, but not treated as equivalent to completed purchases.
We matched each source to the part of the question it could actually answer. National residential data were used for the overall market, high-rise data for condos, state and city evidence for Kuala Lumpur, Johor and Penang, and foreign-buyer policy data for the extra costs and restrictions faced by non-citizens.
We also separated concentration from market size. A project with unusually high foreign ownership can tell us that overseas demand is powerful in one location, but it does not prove that foreigners are a large share of Malaysia's housing market nationally. The same distinction applies to Chinese enquiry data: it measures interest, not completed transactions.
No single positive or negative indicator determines the conclusion. We looked for convergence across realized purchases, the economics of buying, changing buyer motivations, MM2H purchase pipelines, the Johor RTS catalyst, inventory conditions and the performance of higher-priced and high-rise segments.
Key sources used for this analysis include Parliament of Malaysia on foreign residential purchases and nationality breakdowns, Malaysia's Ministry of Finance on the 8% foreign-buyer stamp duty, the Inland Revenue Board on implementation of the new stamp-duty rules, NAPIC/JPPH for Q1 2026 property-market data, Knight Frank Malaysia for its Klang Valley and Penang high-rise market compilation, Juwai IQI data reported by Malay Mail on Chinese overseas-property enquiries, the Ministry of Tourism, Arts and Culture on MM2H programme structure, the official MM2H SEZ/SFZ rules for Forest City, Parliament's February 2026 Hansard on completed and pending MM2H property purchases, Malaysia's Ministry of Transport on the Johor Bahru-Singapore RTS Link, Singapore's Land Transport Authority on the RTS route and opening timetable, and Bank Negara Malaysia for exchange-rate data.
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