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What will happen in Malaysia’s real estate market? Will prices go up or down? Is Kuala Lumpur still a hotspot for foreign investors? How is Malaysia’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with developers, real estate agents, and clients who buy properties in Malaysia, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
1) More Middle Eastern investors will enter Malaysia’s property market due to its Islamic banking system
Middle Eastern investors are finding Malaysia's property market increasingly appealing, thanks to its strong Islamic banking system.
In 2023, Malaysia's Islamic banking assets made up 45.6% of the total banking system financing, growing at a healthy rate of 7.7% annually. This growth rate is more than double that of conventional financing, highlighting the sector's vitality. Malaysia now stands as the largest Islamic banking market in the Asia-Pacific region, holding 62.7% of the region's total Islamic banking assets.
The upcoming merger between Malaysia Building Society Bhd and Malaysian Industrial Development Finance Bhd is set to create a full-service Islamic bank. This move is expected to enhance Malaysia's appeal to Middle Eastern investors, further solidifying its position in the market.
Malaysia's strategic location serves as a gateway to Asia, offering Middle Eastern investors easier access to broader Asian markets. This geographical advantage, coupled with a robust Islamic finance infrastructure, makes Malaysia an attractive destination for property investments.
For investors from the Middle East, Malaysia's Islamic banking system offers a familiar and reliable financial environment. This familiarity is a key factor in attracting more Middle Eastern capital into the Malaysian property market.
2) Urban rents in Malaysia will increase as more expats return after the pandemic
Rents in urban centers are climbing as more expatriates return to Malaysia post-pandemic.
In 2023, the average rent in Malaysia increased by 5.5%, and by mid-2024, it hit RM1,995. This uptick is largely due to a surge in demand for city rentals. More people are eyeing urban living, drawn by the vibrant lifestyle and opportunities these areas offer.
Expatriates are a big part of this trend. With more non-citizens, including international students and professionals, moving back, the demand for urban rentals is intensifying. These individuals often prefer city life, adding pressure to the rental market.
Government initiatives like the Malaysia My Second Home (MM2H) program are also influencing the scene. By revising policies to attract foreign investment and talent, the government is indirectly boosting urban rental demand. These efforts aim to enhance the economy while making Malaysia a hub for global professionals.
Surveys such as Mercer’s 2024 Cost of Living City Ranking highlight why expatriates are drawn to cities like Kuala Lumpur. Known for its affordable living and high quality of life, Kuala Lumpur saw a 5% rent increase in the last quarter, reaching RM2,863. This reflects the city's growing appeal among expatriates.
Sources: Penang Property Talk, UN Statistics, EOS Global Expansion, Malay Mail
In this video, we can see that rental costs in Kuala Lumpur have surged due to returning expatriates, confirming post-pandemic rent hikes.
3) Coastal property prices will drop as climate change and rising sea levels raise concerns
Coastal property prices are dropping due to climate change and rising sea levels.
In many coastal areas, extreme weather events like flooding are becoming more frequent, making these locations less appealing to buyers. People are increasingly aware of the risks, and this awareness is affecting their purchasing decisions. For example, NASA reports that 96% of countries with coastlines have seen sea level rise since 1970, which is a major concern for potential homeowners.
In Malaysia, the situation is even more challenging because flood insurance coverage is limited. Many property owners are left vulnerable when floods hit, facing hefty financial burdens without adequate insurance. This lack of protection is a significant factor in the declining value of coastal properties, as buyers are cautious about the potential costs of flood recovery.
Real estate trends show that buyers are shifting their focus away from coastal areas. They prefer investing in properties that are less exposed to environmental risks, which is understandable given the growing awareness of climate change impacts. This shift in preference is causing coastal properties to appreciate more slowly or even lose value.
In some regions, the market is responding to these changes by offering more inland properties, which are seen as safer investments. Buyers are increasingly looking for homes that promise stability and security, away from the unpredictable nature of coastal living. This trend is reshaping the real estate landscape, with inland areas gaining popularity.
As climate change continues to influence buyer behavior, the real estate market is adapting, but coastal properties are undeniably facing challenges. The combination of environmental risks and financial concerns is steering buyers towards safer options, leaving coastal properties struggling to maintain their value.
4) Property prices in Johor Bahru will rise as the Rapid Transit System Link to Singapore is completed
The new Rapid Transit System (RTS) Link between Johor Bahru and Singapore is transforming the local property market.
Imagine cutting your commute time significantly; that's what the RTS Link does for the thousands of daily travelers between these two bustling cities. Before this, the Causeway was a notorious bottleneck, with over 350,000 people stuck in traffic jams. Now, the RTS has eased this congestion, making Johor Bahru a more appealing place to live for those working in Singapore.
With the RTS, properties near its stations are hot commodities. The convenience of quick travel has naturally boosted demand, especially for homes close to these transit points. Even before the RTS was fully operational, the property market in Johor Bahru was already showing signs of life. The number of unsold units dropped from 5,258 in 2022 to 4,228 in 2023, a clear sign of rising demand.
Properties near the RTS stations have already seen an 18% price increase, and this upward trend is expected to continue. The improved connectivity is a major draw for people looking to capitalize on the ease of travel between Johor Bahru and Singapore. This is especially true for Singaporeans, who are leading the charge in snapping up properties in Johor Bahru.
Johor Bahru's property market is not just about numbers; it's about lifestyle changes. The RTS Link offers a seamless connection, making it easier for residents to enjoy the best of both worlds—affordable living in Johor Bahru and lucrative job opportunities in Singapore. This dynamic is reshaping the real estate landscape, with more people eager to invest in this growing market.
As the RTS Link continues to attract interest, the property market in Johor Bahru is poised for further growth. The ease of travel and the promise of a better quality of life are compelling reasons for potential buyers to consider investing here. The completion of the RTS Link is indeed a game-changer, setting the stage for a vibrant and thriving property market in Johor Bahru.
Sources: The Straits Times, The Sun, Juwai Asia
5) New policies will boost affordable housing development, affecting the luxury property market
The Malaysian government is making big moves to boost affordable housing.
In the 2025 budget, they've set aside RM900 million for new projects under the Residensi Rakyat and Rumah Mesra Rakyat programs. These efforts are expected to bring 30 new projects to life, helping around 17,500 people find homes by the end of 2025. This is a significant step towards making housing more accessible for many Malaysians.
To make buying a first home easier, the government has introduced RM10 billion in guarantees through the Syarikat Jaminan Kredit Perumahan Berhad (SJKP). This initiative is designed to assist up to 20,000 first-time homebuyers by reducing financial risks and simplifying the loan process. It's a game-changer for those looking to step onto the property ladder.
In a bid to tackle the issue of abandoned housing projects, the government is teaming up with private developers. So far, they've revived 351 projects, bringing 43,738 units back to life. This collaboration is set to continue, with plans for 800 housing units under the Madani Inclusive Housing Project in key areas like Kuala Lumpur, Selangor, and Penang.
These efforts are not just about numbers; they're about creating communities and providing stability for families. The focus on affordable housing is reshaping the property landscape, making it more inclusive and accessible for everyone.
As these policies take effect, the luxury property market might feel the impact. With more affordable options available, potential buyers could shift their focus, leading to changes in demand and pricing dynamics.
Sources: Property Genie, The Sun
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6) Luxury condo prices in Kuala Lumpur will drop as supply exceeds demand
Kuala Lumpur's luxury condo market is in a bit of a pickle, with vacancy rates still high at 28.7% in early 2024.
Despite this, developers keep rolling out new projects like The Peak and Majestic Residence, adding 532 more units to an already crowded market. This constant influx of new condos is making it tough for prices to hold steady.
Rental yields aren't helping either. The average gross rent in prime areas barely budged, going up by just two sen to RM3.32 per square foot in early 2024. This sluggish growth in rental income is turning investors off and putting more pressure on prices.
Foreign investment isn't picking up the slack. The Malaysia My Second Home (MM2H) programme hasn't delivered the boost it promised, with foreign buyers holding back for better conditions. Locals, meanwhile, are eyeing more affordable options, steering clear of luxury condos.
Government data paints a clear picture of the oversupply issue, with 25,311 unsold residential units in the third quarter of 2023, and condos and apartments making up a hefty 61.1% of this overhang. Experts say this glut will stick around, especially with interest rates staying put and keeping foreign buyers at bay.
Real estate agencies are noticing the strain, with developers offering price cuts and discounts to lure buyers. Agents are finding it tough to close deals, as buyers are getting picky and hunting for bargains, which is dragging prices down.
Sources: Real Estate Asia, Real Estate Asia, Global Property Guide, The Edge Malaysia
7) More young Malaysians will choose renting over buying, affecting long-term property ownership trends
Young Malaysians are finding it tough to buy homes due to rising property prices.
In cities like Kuala Lumpur and Selangor, average rents have jumped by 2.9% in just a year, making it even harder for young people to save for a home. This increase in rent is a big deal because it eats into the money they could be saving for a down payment.
Student loans are another hurdle. Many young Malaysians are buried under substantial student loan debt, which makes buying a home feel like a distant dream. For every $1,000 added to their student loans, homeownership drops by 1.8% for those under 35. It's no wonder that 51% of renters say their student loans are holding them back from buying a house.
Wages aren't helping either. With a median wage of RM2,645 per month, saving for a home is tough. The cost of living keeps climbing, and so do property prices, leaving many young Malaysians feeling stuck.
There's also a cultural shift happening. Young people are starting to value flexibility and mobility over owning a home. Co-living spaces and shared accommodations are becoming popular because they offer more affordable and flexible living options. Social media is buzzing with minimalist and nomadic lifestyles, where experiences are valued more than owning a house.
These trends suggest that young Malaysians might prefer renting over buying, which could change the property market in the long run.
Sources: Business Today, Education Data, IQI Global
8) Demand for affordable urban housing in Malaysia will rise as the middle class grows
The growing middle class in Malaysia is fueling the demand for affordable housing in urban areas.
In 2024, 92.5% of Malaysians earned as much as the top 40% of global earners in 2022, marking a significant rise in middle-class income. This boost means more people can afford homes, but they still seek budget-friendly options. Urban living is becoming more popular, with 78.72% of Malaysia's population residing in cities by 2023, and this trend is expected to continue.
As folks move from rural areas to cities for better jobs, the need for housing in urban centers grows. This shift underscores the necessity for more affordable housing to support the expanding city populations. The government is stepping in with initiatives like the National Affordable Housing Policy, which aims to centralize housing authorities and cut construction costs.
Despite these efforts, many low-income families still face high housing costs, showing a gap that needs filling with more affordable options. The government's role is crucial, but the market also needs to adapt to these changing demands. The urban migration trend is not just about numbers; it's about people seeking better lives and opportunities.
For potential buyers, understanding these dynamics is key. The middle class's growth and urbanization are reshaping the housing market, making it essential to stay informed. As the demand for affordable housing rises, so does the opportunity for investment in these areas.
Sources: Statista, Statista, MDPI
We believe this video demonstrates how Malaysia's expanding middle class is influencing the demand for affordable urban housing, driven by income shifts and government policies.
9) Demand for retirement-friendly properties in Malaysia will grow as the population ages
Malaysia is seeing a big shift towards an aging population.
By 2040, over 17% of Malaysians will be 60 or older, up from 11.6% in 2024. This means more people will be looking for homes that suit their retirement needs. Imagine living in a place where everything is within reach and easy to manage. That's what many older folks are after, and it's pushing the real estate market to offer more of these senior-friendly options.
As the number of elderly individuals grows, there's a clear need for accessible and low-maintenance living spaces. Surveys show that older Malaysians prefer homes that are easy to navigate and manage. This trend is reshaping the housing market, with developers focusing on creating more senior housing options to meet this demand.
The Malaysian government is also stepping up to support its aging citizens. With initiatives like the National Policy for Older Persons, there's a push to create age-friendly environments. This policy support, along with people living longer, highlights the need for more suitable living arrangements for the elderly.
These government efforts are crucial as they encourage the development of retirement-friendly communities. It's not just about building homes; it's about creating spaces where older people can thrive. This means more than just ramps and elevators; it's about fostering a community that caters to their needs.
With life expectancy on the rise, the demand for these types of properties is only going to grow. Developers and policymakers are recognizing this shift and are working to ensure that the housing market can meet the needs of an aging population. It's an exciting time for real estate in Malaysia, with opportunities to create spaces that truly cater to the needs of older residents.
Sources: The Star, The Malaysian Reserve, UNDP Report
10) Demand for homes in Penang will rise as more tech companies set up regional offices
Penang is quickly becoming a hotspot for tech companies, drawing significant investments and attention.
Take Intel, for instance, which is investing $7.1 billion in a new chip facility in Penang. This move is set to create a wave of job opportunities, boosting the local tech scene. As more jobs pop up, more people are likely to move to the area, which naturally means increased demand for housing.
The semiconductor sector is a big player here, with the E&E sector in Penang showing a 12.1% annual growth rate from 2018 to 2022. This growth isn't just numbers; it's about real jobs and real people moving in, looking for places to live.
The local government is also playing its part by rolling out initiatives like "Silicon Design @5km+." This includes the Penang IC Design and Digital Park, offering over 1 million square feet of office space designed for tech companies. These efforts make Penang a magnet for tech professionals.
With these developments, Penang is not just a place for tech companies but also for those looking to invest in property. The influx of tech workers means more potential buyers and renters, making the real estate market here quite promising.
So, if you're considering buying property in Penang, now might be the time. The tech boom is creating a ripple effect, transforming the real estate landscape and offering exciting opportunities for investors.
Sources: Digital News Asia, The Star, Kr-Asia
11) Virtual reality tours will become standard for property viewings, altering buyer interactions with the market
Virtual reality tours are revolutionizing the real estate market, especially in Malaysia.
By 2025, over half of Malaysian adults had tried a virtual tour, and a notable 67% of home buyers preferred them when checking out properties. This isn't just a fad; listings with virtual tours got 87% more views, with buyers spending more time exploring them.
The younger crowd, aged 18 to 34, are particularly keen on this tech. They're 130% more likely to book a showing if a virtual tour is available. This shows how crucial immersive tech is becoming in real estate.
Advancements in VR have made these tours more accessible and affordable. Now, user-friendly interfaces work smoothly on smartphones, which are increasingly used for property searches.
In Malaysia, the push for virtual tours is partly due to the need for efficient property viewings, especially in tourism and hospitality. This tech is not just a novelty; it's becoming a staple in how properties are marketed.
As VR technology continues to evolve, expect it to become a standard tool in real estate, changing how buyers interact with the market.
Sources: Markwide Research, PhotoUp, ActSugi
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12) Blockchain will make property transactions cheaper and more transparent
Blockchain is revolutionizing the real estate industry, making property transactions smoother and more transparent.
In Switzerland, BrickMark set a groundbreaking precedent by using blockchain for a major real estate deal back in 2020. Fast forward to 2024 in Malaysia, where The Real Lifestyle Company took a bold step by tokenizing $23 million in residential properties. This move opened up the market, allowing investments as low as $50, making real estate more accessible to everyone.
One of blockchain's standout features is its ability to automate tasks through smart contracts. This means fewer middlemen and lower transaction costs, which is a win-win for buyers and sellers. The International Blockchain Real Estate Association even suggests that blockchain could slash real estate fraud by up to 50%, potentially saving a whopping $160 billion each year.
Transparency is another big win with blockchain. It creates a permanent, unchangeable record of transactions, which is a huge plus in areas prone to property fraud. This ensures that property records are secure and transparent, giving buyers peace of mind.
Experts and media have been buzzing about these benefits, especially in 2023 and 2024, predicting that blockchain will keep transforming property markets. The technology is expected to boost efficiency and cut costs, making it a game-changer for the industry.
As more real estate firms explore blockchain, the trend of tokenizing assets is gaining momentum. This not only democratizes property investment but also enhances the overall transparency of transactions, making it easier for everyone to participate in the market.
Sources: Malaysia's First RWA Project, Blockchain in Real Estate, Tokenization of Real Estate, Blockchain in Real Estate, Blockchain's Impact on Real Estate
13) Property values will rise in previously hard-to-reach areas as public transportation expands
Public transportation expansions can boost property values in previously hard-to-reach areas.
Take Johor Bahru, for example. With the Malaysia-Singapore Rapid Transit System (RTS) underway, property demand jumped by 17% as the project hit 50% completion in 2023. This new accessibility is a magnet for both people and businesses, making the area more appealing. The RTS has also led to a 20% drop in unsold property units, showing how transit projects can transform local real estate markets.
We've seen this pattern before. When the Pune Metro in India launched in 2016, property values near metro stations increased. The metro eased traffic and cut pollution, making nearby areas more desirable. This kind of development, known as transit-oriented development (TOD), integrates transit stations with mixed-use spaces, encouraging public transit use and boosting real estate value. Cities like Hong Kong, Singapore, and Tokyo have successfully implemented TOD, creating vibrant, sustainable urban environments.
Real estate experts are optimistic about areas gaining new transit access. iProperty Malaysia notes that the Malaysia-Singapore RTS is a game-changer for Johor’s property market. Set to finish by 2026, this system is expected to enhance connectivity with Singapore, driving economic growth in southern Johor. Homebuyers often seek homes near public transport, fueling demand in these newly accessible regions.
In many cities, the expansion of public transport networks has led to a surge in property values. This is because new transit lines make previously hard-to-reach areas more accessible, attracting more people and businesses. For instance, the Malaysia-Singapore Rapid Transit System (RTS) has already shown positive effects in Johor Bahru. By 2023, as the RTS reached 50% completion, the property demand index in Johor Bahru rose by 17%, and there was a 20% reduction in unsold property units.
Sources: MetProperty, Urban Design Lab
14) Properties with sustainable features will become more desirable due to new environmental initiatives
In Malaysia, green building certifications have surged, with 619 certified by June 2022.
Thanks to the Malaysian government's push for sustainability, financial incentives like tax breaks are available for those who achieve Green Building Index certification. This makes eco-friendly properties not just good for the planet, but also for your wallet.
With the media spotlight on climate change, public awareness about sustainable living is growing. People are now more conscious of their environmental footprint, which is driving interest in homes with green features.
Developers are catching on, too. Companies such as Mah Sing and Eco World are integrating sustainable elements into their projects, showing a clear shift towards eco-friendly development.
These new environmental initiatives are making properties with sustainable features more desirable than ever. As the demand for eco-friendly homes rises, investing in such properties could be a smart move.
Sources: Akademia Baru, Inspect Solution, National Energy Transition Roadmap
One of our partners sent us this video where Malaysia's new environmental initiatives are discussed, highlighting their role in making sustainable properties more desirable.
15) Property values will rise as smart home technology becomes standard in new developments
In Malaysia, smart home technology is becoming increasingly popular.
By 2023, around 1.3 million Malaysians were using smart home devices, and this number is expected to more than double by 2028. This surge shows that people are keen on making their homes smarter and more efficient.
Interestingly, 75% of potential home buyers are ready to pay more for smart home features. They value the convenience, time savings, and enhanced security these technologies offer. Even renters are on board, with 82% wanting at least one smart device in their homes, highlighting a widespread interest across different housing markets.
The smart home market in Malaysia is booming, with projections to surpass $235 million by 2025. This growth is driven by the desire for safer living spaces and the cost-saving benefits of home automation, which also allows for remote monitoring.
These trends suggest that smart home technology is not just a luxury but is becoming a standard feature in new residential developments. As more people embrace these technologies, property values are likely to increase, making it a wise investment for future homeowners.
Sources: Statista, Exploding Topics, Research and Markets
16) Demand for eco-friendly homes in Malaysia will rise, pushing up prices for properties with green certifications
Eco-friendly homes are becoming increasingly popular in Malaysia, driven by several key factors.
Malaysians are more aware of climate change and sustainability, thanks to increased media coverage and public discussions about eco-friendly living. This growing awareness is making people more interested in sustainable housing options.
More properties are now getting the Green Building Index (GBI) certification, a benchmark for sustainable buildings in Malaysia. This certification boosts property sales prices, showing that people are willing to pay more for homes with green credentials.
The government is also pushing for greener living. With the Twelfth Malaysia Plan aiming for carbon neutrality by 2050, policies like the New Industrial Master Plan 2030 and the National Renewable Energy Roadmap are in place. Special loans for developers building green properties further encourage eco-friendly construction.
Consumer preferences are shifting too. People are realizing the benefits of eco-friendly homes, such as lower operational costs and higher property values. Real estate marketing is catching on, highlighting energy efficiency and sustainability to attract buyers who care about the environment.
Sources: Emerald Insight, Juwai Asia, DFDL
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.