What's the property market outlook 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, 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 are the current property price trends across different regions of Malaysia?

Property prices across Malaysia are experiencing moderate growth with significant regional variations as of September 2025.

Nationally, property prices grew by approximately 1.4% year-on-year in 2024, with forecasts indicating 2-5% growth for 2025. The strongest price growth is occurring in areas benefiting from major infrastructure investments, particularly Johor Bahru and Penang.

Johor Bahru leads price appreciation due to the upcoming Rapid Transit System (RTS) link to Singapore and the East Coast Rail Link (ECRL) development. Penang follows closely, driven by its expanding technology sector and continued appeal to both local and foreign buyers. In contrast, Kuala Lumpur faces price pressure due to oversupply issues, particularly in the high-rise residential segment.

The affordable and mid-market segments, particularly properties priced below RM500,000, demonstrate the strongest price resilience across all regions. This trend reflects both government policy support and sustained local demand from Malaysian households.

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

How have rental yields been performing in major cities like Kuala Lumpur, Penang, and Johor Bahru?

Rental yields in Malaysia's major cities vary significantly, with secondary cities consistently outperforming Kuala Lumpur as of September 2025.

Johor Bahru leads with rental yields of 6.22%, driven primarily by strong demand from Singaporean tenants and investors taking advantage of favorable currency exchange rates. The city's proximity to Singapore and ongoing infrastructure development continue to support robust rental demand.

Penang achieves rental yields of 5.74%, supported by its growing technology sector and appeal to both local professionals and international tenants. The state's economic diversification and tourism industry provide stable rental income sources.

Kuala Lumpur shows lower rental yields at 4.26%, primarily due to high property prices and oversupply in certain segments, particularly serviced apartments and high-rise residential units in the city center. However, established suburbs like Petaling Jaya (5.62%) and Subang Jaya (6.04%) maintain stronger yield performance.

What is the latest supply and demand situation for residential and commercial properties?

Malaysia's property supply and demand dynamics in 2025 show increased development activity with moderate absorption rates.

Developers launched 12,498 new residential units in Q1 2025, more than double compared to Q1 2024, with the majority focused on affordable and mid-priced categories below RM500,000. This surge in launches reflects developer confidence and response to government affordable housing initiatives.

The take-up rate for new launches remains modest at 10.8%, indicating cautious buyer sentiment despite increased supply. Completions have increased as pandemic-delayed projects reach the market, adding to available inventory.

The unsold housing overhang stabilized at approximately 23,500 units, slightly below previous year levels, suggesting the market is achieving better balance between supply and demand. Commercial property, particularly industrial and logistics spaces, shows stronger absorption with record uptake in Greater Kuala Lumpur and Johor regions.

Are there any upcoming government policies or incentives that could impact the property market?

Several government policies and incentives are actively shaping Malaysia's property market landscape in 2025.

A new 6% service tax on construction for commercial and industrial properties became effective in July 2025, though residential construction remains exempt. This policy change has minimal immediate impact on property prices but may affect development costs for non-residential projects.

The government continues strong support for affordable housing through established schemes including PR1MA, Residensi Wilayah, and Rumah Selangorku programs. These initiatives remain crucial for stimulating demand among lower and middle-income buyers, particularly for properties under RM300,000.

Major infrastructure investments including the East Coast Rail Link (ECRL) and the RTS connection to Singapore are creating significant property market opportunities in connected regions, particularly benefiting Johor and eastern states.

How are foreign ownership rules currently affecting demand from international buyers?

Malaysia maintains relatively open foreign ownership policies with increasing international buyer interest in specific regions.

Foreign ownership rules have not seen significant tightening recently, allowing Malaysia to remain attractive to international investors compared to neighboring countries. However, state-imposed minimum purchase thresholds still apply, varying by location and property type.

Johor experiences rising foreign investment, particularly from Singaporeans capitalizing on favorable exchange rates and the upcoming RTS link. Chinese buyers also show renewed interest in strategic developments like Forest City and other mixed-use projects.

Penang attracts foreign buyers through its established expatriate community, technology sector growth, and cultural appeal. The combination of reasonable property prices and strong rental yields makes it particularly attractive to Asian investors seeking regional diversification.

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

What is the level of housing affordability compared to average household income?

Housing affordability remains a significant challenge across Malaysia, particularly affecting first-time buyers and middle-income households.

The majority of residential property transactions occur in the sub-RM300,000 price range, reflecting widespread income constraints among Malaysian households. This concentration in the lower price segment demonstrates that higher-priced properties remain out of reach for most buyers.

Demand is strongest for properties priced below RM300,000, with government housing schemes continuing to bridge affordability gaps for qualified buyers. These programs include special financing arrangements and subsidies designed to help first-time and lower-income purchasers enter the market.

Urban areas, particularly Kuala Lumpur and its surrounding regions, show the greatest affordability stress, with property price-to-income ratios remaining elevated. Secondary cities offer better affordability ratios, contributing to their stronger market performance and rental yield potential.

How are mortgage rates and bank lending policies influencing property purchases?

Malaysia's mortgage market conditions remain supportive for property buyers with stable rates and accessible lending in 2025.

Interest rates have stabilized with no imminent increases expected, maintaining favorable borrowing conditions for qualified buyers. This stability supports continued buyer affordability and market activity across various property segments.

Bank lending policies have normalized following previous growth periods, with mortgage approvals growing modestly. Financial institutions maintain cautious but accessible lending standards, balancing risk management with market support.

The combination of stable rates and normalized lending conditions creates a predictable financing environment that supports both local buyers and qualified foreign investors seeking property exposure in Malaysia.

What is the pipeline of new developments and how might it affect oversupply or shortages?

Malaysia's development pipeline remains robust in 2025, with strategic focus on infrastructure-connected areas and affordable housing segments.

New residential, industrial, and commercial development projects continue at strong levels, particularly in Johor and Selangor states where infrastructure investments create development opportunities. The pipeline emphasizes affordable and mid-range housing categories responding to demonstrated market demand.

While overall supply is increasing, the focus on affordable segments (under RM500,000) helps match persistent local demand, reducing severe oversupply risks outside of certain high-rise city clusters. This targeted development approach supports market stability.

Industrial and logistics property development shows particularly strong momentum with record uptake rates, especially in Greater Kuala Lumpur and Johor regions, driven by Malaysia's growing role in regional supply chains and e-commerce logistics.

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 vacancy rates in key residential and office markets?

Vacancy rates across Malaysia's property markets show mixed conditions with gradual improvement in most segments as of September 2025.

High-rise residential and serviced apartment vacancy rates in Kuala Lumpur city center remain elevated due to historical oversupply, particularly in luxury segments. However, these rates are gradually correcting as new development shifts toward more demanded affordable categories.

Office markets in major business districts show stable occupancy with selective pressure on older buildings lacking modern amenities. Prime office spaces in KLCC and other premium locations maintain better occupancy rates compared to secondary office buildings.

Industrial and logistics properties experience record-low vacancy rates across Greater Kuala Lumpur and Johor, driven by Malaysia's expanding role in regional manufacturing and e-commerce fulfillment. This sector represents the tightest supply-demand balance in the Malaysian property market.

How is Malaysia's economic growth and employment outlook impacting property demand?

Malaysia's strong economic fundamentals are providing solid support for property demand across multiple market segments.

GDP growth of 5.3% in 2024 with forecasts of 4.5-5% for 2025 creates positive wealth effects supporting property purchases. Strong performance in manufacturing and digital economy sectors drives employment growth and income stability for potential property buyers.

Low unemployment rates and high labor force participation support consumer sentiment and housing demand, particularly in urban centers where job growth concentrates. Professional employment growth in technology, financial services, and manufacturing sectors underpins demand for quality residential properties.

Economic diversification efforts, including development of high-tech manufacturing and digital services industries, create sustainable income growth that supports long-term property market fundamentals and reduces reliance on commodity price cycles.

What trends are emerging in the luxury, mid-market, and affordable housing segments?

Malaysia's residential property market shows distinct performance patterns across different price segments as of September 2025.

Housing Segment	Price Range	Market Performance	Key Trends
Luxury	Above RM1.5M	Slower absorption	Limited demand, selective buyers
Upper Mid-Market	RM800K-1.5M	Cautious activity	Professional buyers, premium locations
Mid-Market	RM500K-800K	Steady demand	Stable employment supports purchases
Affordable	Below RM500K	Strongest activity	Government support, high transaction volume
Budget	Below RM300K	Very strong demand	Most transactions, first-time buyers

The affordable housing segment drives the majority of transactions and new supply, benefiting from government schemes and matching local income levels. Mid-market properties maintain steady performance supported by stable employment conditions, while luxury segments face slower absorption due to limited buyer pool and economic caution.

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

How do property market conditions in Malaysia compare to neighboring countries like Singapore and Thailand?

Malaysia's property market offers distinct advantages compared to Singapore and Thailand, particularly in terms of affordability and rental returns.

Property prices in Malaysia remain significantly lower than Singapore across all segments, making it accessible to a broader range of investors and buyers. Rental yields in Malaysian secondary cities (5-6%) typically exceed both Singapore (2-4%) and major Thai cities (3-5%), providing better income generation potential.

Foreign ownership policies in Malaysia are more accessible than Singapore's strict Additional Buyer's Stamp Duty and cooling measures, while offering more straightforward ownership structures than Thailand's complex leasehold and nominee arrangements for foreign buyers.

Singapore offers greater political stability and currency strength but at significantly higher entry costs and lower yields. Thailand provides lifestyle appeal and established expat communities but with more complex legal frameworks for foreign ownership.

Malaysia strikes a middle ground with reasonable prices, competitive yields, relatively straightforward foreign ownership rules, and stable political and economic conditions, making it attractive for both investment and residential purposes.

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. Crown Continental - Malaysia Property Market Forecast 2025
2. BambooRoutes - Malaysia Property Market Outlook
3. Star Property - Property Market Adjustments Early 2025
4. Property Genie - Malaysia Property Market Q1 2025 NAPIC Report
5. Global Property Guide - Malaysia Price History
6. Alliance Bank - Banking on Resilient Domestic Demand
7. TS2 Tech - Kuala Lumpur Real Estate 2025 Trends
8. NAPIC - Property Market Q1 2025 Snapshots