What is the outlook for the real estate market in Malaysia?

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

Everything you need to know before buying real estate is included in our Malaysia Property 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 Malaysia. 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, Johor Bahru, and Penang. 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's the current trend in Malaysia's real estate prices over the past 12 months?

Malaysia's residential property market showed moderate growth in 2024 with nationwide house prices rising 1.4% year-on-year.

The average house price reached RM 483,879 in Q4 2024, though this represented a 2.01% quarter-on-quarter decline - the first quarterly drop since Q3 2021. After adjusting for inflation, prices actually dipped slightly by 0.27%, indicating real price stability rather than dramatic growth.

Different property types performed variably throughout the year. Terraced houses gained 1.3% annually but fell 2% quarterly, while high-rise properties posted the strongest annual growth at 1.8% despite a 1.8% quarterly decline. Detached houses showed the weakest performance with only 0.6% annual growth and a 2.8% quarterly drop. Semi-detached properties increased 1.6% year-on-year but declined 1.8% quarter-on-quarter.

This pricing pattern reflects a market transitioning from pandemic-era volatility to more normalized growth rates. The quarterly decline signals some cooling after sustained increases in previous years, when prices grew 3.85% in 2023 and 3.9% in 2022.

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

How are property prices expected to evolve in the next 6 to 12 months?

Malaysia's property market is forecast to experience moderate price growth between 2% and 5% throughout 2025.

This growth will be primarily driven by strong underlying demand and rising construction costs that developers are passing on to buyers. Well-located developments in prime areas may see higher price increases, but industry experts don't anticipate double-digit growth rates returning in the near term.

Developers are expected to continue raising prices to offset higher construction costs, particularly for materials and labor. However, affordability constraints will limit how aggressively prices can be increased, especially in the mass market segment where most transactions occur.

Regional variations will be significant, with areas benefiting from infrastructure projects like the RTS Link in Johor and new transport connections in Penang likely to outperform the national average. Urban centers may see more restrained growth due to existing oversupply conditions.

What does the medium to long-term outlook (2–5 years) look like for Malaysia's property market?

Malaysia's property market is positioned for sustained growth with a projected compound annual growth rate (CAGR) of 6.64% from 2025 to 2033.

Several key drivers support this optimistic long-term outlook. Population growth and continued urbanization will fuel housing demand, while major infrastructure projects including the East Coast Rail Link (ECRL) and RTS Link to Singapore will unlock new areas for development and investment. Government initiatives promoting affordable housing will also sustain market activity across different price segments.

The industrial and logistics sectors are expected to be particularly strong performers, driven by e-commerce expansion, manufacturing growth, and foreign direct investment. Residential demand will remain robust, supported by a growing middle class and improving connectivity between major urban centers.

However, several challenges could impact this trajectory. Interest rate fluctuations, changes in government regulations, and ongoing affordability concerns for first-time buyers represent potential headwinds. The market's ability to absorb existing oversupply in certain segments, particularly high-rise developments in major cities, will also influence overall performance.

How do trends differ between residential, commercial, and industrial property sectors?

Sector	Performance	Key Trends
Residential	Steady growth	65% of transactions; landed properties preferred; high-rise oversupply in cities
Commercial Office	Adapting	Demand for flexible Grade A spaces; hybrid work impact
Commercial Retail	Recovering	Tourist and community locations performing well
Industrial	Strongest performer	E-commerce and logistics driving demand; modern facilities needed
Logistics	High demand	Klang Valley, Johor, Penang as key hubs
Manufacturing	Expanding	FDI inflows boosting factory space demand
Mixed Development	Growing	Integrated living-working-shopping concepts gaining traction

What are the key differences in market performance between Kuala Lumpur, Penang, Johor Bahru, and other major cities?

Malaysia's major cities show distinct performance patterns based on their economic drivers and development characteristics.

Kuala Lumpur leads in absolute prices with an average of RM 708,402, but offers relatively modest rental yields at 4.26%. The capital faces oversupply challenges in the high-rise segment, though strong rental demand persists in the city center where professionals and expatriates concentrate.

Johor Bahru emerges as the standout performer with high average prices of RM 656,648 and the best rental yields at 6.22%. The proximity to Singapore, cross-border demand, and booming industrial and logistics sectors drive this strong performance. The upcoming RTS Link will further enhance its investment appeal.

Penang offers a balanced proposition with moderate prices of RM 471,980 and solid rental yields of 5.74%. The state benefits from a tech-driven economy, heritage tourism, and steady demand from both local and international buyers. Penang Mainland presents particular value opportunities.

Melaka stands out for affordability with the lowest average prices at RM 305,463, supported by strict affordable housing policies. The Klang Valley maintains its position as the economic powerhouse with rental yields in the 5-6% range and continues attracting investment due to infrastructure upgrades and job creation.

Which areas in Malaysia are currently considered undervalued or up-and-coming for investment?

Several strategic locations across Malaysia present compelling investment opportunities as of June 2025.

1. **Johor's Infrastructure Corridor**: Iskandar Puteri, Forest City, and areas near the RTS Link station offer strong growth potential due to the massive infrastructure pipeline and proximity to Singapore. The RTS Link completion will dramatically improve connectivity and property values.2. **Penang Mainland (Seberang Perai)**: This area benefits from significantly lower entry prices compared to Penang Island while enjoying spillover demand and new transport links. The upcoming Penang Transport Master Plan will enhance connectivity.3. **East Malaysia Growth Zones**: Sabah and Sarawak are experiencing infrastructure upgrades through the Pan Borneo Highway project, renewable energy investments, and new economic zones. These developments are creating previously unavailable investment opportunities.4. **Klang Valley Suburban Townships**: Areas on the fringe of the main urban centers offer affordability, space, and access to improving amenities. New MRT and LRT extensions are making these locations increasingly attractive.5. **Secondary Cities with Industrial Growth**: Cities benefiting from industrial expansion and improved connectivity present value opportunities before major price appreciation occurs.

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

What are the average rental yields by city and property type, and how have they changed recently?

Malaysia's rental yields vary significantly by location, with secondary cities often outperforming major urban centers.

City/Area	Rental Yield (%)	Recent Trend
Johor Bahru	6.22	Rising due to Singapore demand
Subang Jaya	6.04	Stable high performance
Iskandar Puteri	5.74	Increasing with development
Penang	5.74	Growing tech sector demand
Petaling Jaya	5.62	Consistent professional demand
Shah Alam	5.13	Steady suburban growth
Kuala Lumpur	4.26	Pressured by high prices

Rental yields have generally increased over the past year, particularly in Johor and Penang, driven by growing rental demand and relatively stable property prices. The national average for residential properties ranges from 4-6%, with properties in the RM300,000-RM600,000 range typically delivering the best yield-to-risk ratios.

How has transaction volume evolved across property types and regions in the past year?

Malaysia's property transaction activity reached impressive levels in 2024, hitting a decade-high total value of RM232.3 billion, representing an 18% year-on-year increase.

Total transaction volume reached 420,525 deals, up 5.4% from the previous year, indicating both higher activity levels and rising average transaction values. This growth reflects renewed confidence in the market and improved economic conditions.

Regional distribution shows balanced activity across the country. The Northern Region (Penang, Perak) led with 25.9% of transactions, followed closely by the Southern Region (Johor) at 24.6% and the Central Region (Kuala Lumpur, Selangor) at 24.0%. The East Coast contributed 16.5% while East Malaysia accounted for 9.0% of total transactions.

New residential launches surged by 47% in the third quarter of 2024, demonstrating developer confidence in market conditions. Importantly, the property overhang situation improved significantly with unsold completed units dropping by 10.3%, indicating better demand-supply balance than in previous years.

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 are the financing conditions right now — interest rates, LTV limits, and approval rates?

Malaysia's property financing environment remains supportive for both local and foreign buyers as of June 2025.

Interest rates have stabilized with no immediate hikes expected from Bank Negara Malaysia. This stability provides predictability for property buyers and investors planning their financing strategies over the medium term.

Loan-to-value (LTV) ratios are set at up to 90% for Malaysian citizens and permanent residents, while foreigners can access financing up to 70% of property value, requiring a 30% down payment. These ratios remain unchanged from previous years, maintaining accessibility for qualified buyers.

Approval rates continue to be healthy, particularly for first-time homebuyers and affordable housing segments where banks maintain supportive lending policies. The government's continued focus on homeownership accessibility helps maintain favorable lending conditions.

Additional government incentives include tax relief on housing loan interest for properties priced between RM500,000 and RM750,000, effective from 2025 to 2027. This program specifically targets the middle-income segment and helps reduce the effective cost of property ownership.

If I want to buy to live, which area and property type offer the best balance between affordability, amenities, and long-term value?

For owner-occupiers seeking the optimal balance of affordability, lifestyle, and future value, suburban Klang Valley locations offer the most compelling propositions.

1. **Shah Alam, Subang Jaya, and Petaling Jaya**: These established townships provide excellent connectivity to Kuala Lumpur, comprehensive amenities including shopping centers, schools, and healthcare facilities, while maintaining more affordable prices than city center locations.2. **Penang Mainland Areas**: Seberang Perai and surrounding areas offer significantly lower entry costs compared to Penang Island, with improving infrastructure and amenities. The upcoming transport improvements will enhance connectivity and long-term value.3. **Johor Bahru (RTS Link Areas)**: Properties near future RTS Link stations provide exceptional value for money with strong future growth potential. The cross-border connectivity will significantly enhance these areas' desirability.4. **Property Type Considerations**: Landed homes (terraced or semi-detached) are preferred by families seeking space and long-term value, while high-rise developments suit singles and young professionals prioritizing amenities and city access.5. **Budget Sweet Spot**: Properties in the RM400,000-RM700,000 range typically offer the best balance of quality, location, and affordability for most owner-occupiers.

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

If I want to buy to rent out, what budget and property type should I target for the best return?

For buy-to-rent investors, targeting properties in the RM300,000-RM600,000 range delivers optimal rental yields and tenant demand.

Investment Strategy	Recommended Budget	Property Type
High Yield Focus	RM300,000-RM450,000	Smaller apartments in suburban areas
Balanced Return	RM450,000-RM600,000	Landed homes in established townships
Premium Segment	RM600,000-RM800,000	Quality condos near business districts
Expatriate Market	RM500,000-RM1,000,000	Serviced apartments with amenities
Student Housing	RM250,000-RM400,000	Small units near universities
Young Professional	RM350,000-RM550,000	Modern apartments with LRT access
Family Rental	RM400,000-RM700,000	Landed homes in family-friendly areas

Top target cities include Johor Bahru, Penang, Subang Jaya, and Iskandar Puteri, where rental yields consistently exceed 5-6%. Focus on areas with strong tenant demographics: young professionals, expatriates, and growing families. Properties near public transport, established amenities, and employment centers typically maintain high occupancy rates and rental growth potential.

If I want to buy to resell, which areas and segments show the most promising short-term appreciation potential?

For capital appreciation strategies, focus on areas benefiting from infrastructure development and economic catalysts expected to complete within 2-5 years.

1. **Johor Bahru Infrastructure Corridor**: Properties near RTS Link stations and special economic zones offer the strongest short-term appreciation potential due to Singapore connectivity and cross-border demand.2. **Penang Mainland Development Areas**: Major transport projects and industrial expansion in Seberang Perai will drive significant value increases as infrastructure completes.3. **Klang Valley Transit-Oriented Developments**: Areas along new MRT and LRT lines, particularly stations opening in 2025-2027, present excellent timing for capital appreciation.4. **Industrial and Logistics Properties**: The strongest appreciation potential exists in modern industrial facilities, driven by e-commerce growth and foreign direct investment inflows.5. **Emerging Township Centers**: Well-planned developments in growing suburban areas often experience rapid appreciation as amenities and connectivity improve.6. **Strategic Timing**: Properties purchased 12-24 months before major infrastructure completion typically capture maximum appreciation as buyer interest peaks before project delivery.

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. Global Property Guide - Malaysia Price History
2. Penang Property Talk - Market Growth 2025
3. EdgeProp - Henry Butcher Market Analysis
4. Data Insights Market - Malaysia Real Estate Report
5. The Edge Malaysia - Market Analysis
6. The Edge Malaysia - Investment Outlook
7. InvestAsian - Malaysia Property Investment
8. Crown Continental - Market Forecast 2025
9. Global Property Guide - Malaysia Rental Yields
10. Smart Invest Malaysia - Top Cities Guide