Building momentum across sectors
PETALING JAYA: While real estate experts remain largely optimistic about the outlook of the property market in 2026, they expect the year to see its fair share of outperformers and strugglers.
Zerin Properties chief executive officer Previn Singhe said mid-market residential properties and established townships will continue to do well next year.
“Residential demand will continue to be led by the RM500,000-and-below segment, backed by ongoing policy incentives, the expanded Housing Credit Guarantee Scheme and stable household purchasing power.
“The strongest performance is expected in established townships and transit-oriented or integrated developments where connectivity, amenities and liveability are well defined,” he told StarBiz.
He added that development land in growth corridors will remain a priority for property players.
“Development land will remain in focus as developers position for longer-term township expansion.
“Interest will concentrate in scalable growth corridors such as Johor, Greater Kuala Lumpur’s (KL) southern belt and Penang mainland, where infrastructure investment, employment clusters and rising population density support sustained development potential.”
Moreover, he said hospitality- and tourism-linked assets are set to see a huge boost next year.
“Visit Malaysia 2026 (VM2026) is expected to lift hotel occupancy and spending in KL, Penang, Langkawi, Melaka, Pahang and Kota Kinabalu.
“This will support hospitality assets and selected mixed-use repositioning in well-located precincts.”
Previn also noted that destination malls and retail components within integrated townships will continue to perform well, backed by strong catchments and active asset management.
He added that Grade A and environmental, social and governance (ESG)-aligned offices will stay popular.
“Modern, green-certified and transit-connected office buildings will continue to attract occupiers consolidating into higher-quality space.
“This flight-to-quality trend is expected to persist as tenants align with operational efficiency and sustainability requirements.”
Previn also highlighted that industrial, logistics and data-driven assets will also prosper in 2026.
“This segment will remain the strongest performer, supported by continued investment in digital infrastructure, manufacturing expansion and supply chain diversification.
“Demand for logistics facilities, high-spec industrial parks and data centre-related assets will remain firm across Johor, Negri Sembilan, Penang and selected Greater KL corridors.”
Olive Tree Property Consultants founder and chief executive officer Samuel Tan concurred that industrial and logistics sectors, especially in modern and high specification assets, will continue to thrive in 2026.
“This is a structural, and not cyclical effect. The demand is driven by irreversible macro trends.
“The data centre boom is a major beneficiary of hyperscale data centre investments from global tech giants seeking alternatives to Singapore. This requires massive, secure and power-intensive facilities.”
Tan noted that companies are diversifying manufacturing and logistics hubs into South-East Asia under the China+1 strategy.
“Malaysia’s political stability, established infrastructure and strategic location make it a prime location. In Johor, the Singapore+1 strategy is working well, making Johor the largest investment destination in the third quarter of 2025.
“It delivered around RM91bil worth, almost reaching the RM100bil mark by the end of 2025,” he noted.
Additionally, Tan said the growth of last-mile delivery and need for inventory management continue to drive demand for modern logistics warehouses near urban centres and ports.
“Tenants are typically large corporates or multinationals with strong credit, signing long-term agreements with rental escalations. This provides predictable, high-yield income that is highly attractive in uncertain economic times.”
He added that government initiatives like the National Investment Aspirations and targeted incentives for high-tech industries directly feed demand for this sector.
“Key hotspots will be the southern corridor like Johor, the central region in Selangor and KL, and the northern corridor in Penang and Kulim.”
Meanwhile, Savills Malaysia Sdn Bhd group managing director Datuk Paul Khong said the hospitality sector and good retail malls will continue to see better days, on the back of a strong tourism performance.
“These sectors are on an uptrend trajectory and moving forward into 2026, especially in light of VM2026 next year,” Khong said.
Not without challenges
Meanwhile, Previn said older office stock without ESG upgrades or transit access will continue to struggle.
“Legacy buildings will continue to face rising vacancy and rental pressure unless meaningfully refurbished or repurposed.
“Clarification on proposed tax exemptions for commercial-to-residential conversions will be important for project viability.”
Additionally, he said high-density high-rise developments, including legacy residential and serviced apartment stock, will continue to face challenges.
“Oversupplied high-rise corridors, particularly in Johor, KL, parts of Penang, Perak and selected areas in Sabah, are expected to continue facing slow absorption.
“Much of this stock is structurally misaligned with current demand and without meaningful pricing adjustments or repurposing strategies, the segment will remain challenging in 2026.” Tan echoed Previn’s sentiment that high-rise apartments will suffer from a legacy of speculative launches from the previous decade.
“There is a fundamental mismatch, as there is an oversupply of units that are not aligned with current buyer priorities, such as poor location, lack of connectivity, poor design and mediocre amenities.”
He added that there will be intense competition from new launches with better designs, green certifications and competitive pricing (due to government incentives for affordable segments), which will continuously draw demand away from the older, stagnant stock.
“The lesson is clear. Developers must pivot towards fundamentally driven projects and away from generic high-rise projects aimed at speculative investors.
“They must also be mindful of the property cycles and know how to position themselves with the right products, at the right pricing and at the right time.” Previn also noted that non-prime luxury residential space, more often than not, tends to be reliant on foreign buyers. This could pose a risk to this sub-segment, he said.
“Demand in this niche segment may soften further due to the proposed increase in stamp duty for foreign purchasers from 4% to 8%. Only projects in prime locations with strong fundamentals are likely to sustain interest.”
A fairly good year As the year comes to a close, Previn believes that 2025 has been a year of selective resilience for Malaysia’s property market.
“Over the first nine months, the total number of property transactions softened compared to last year, down 1.3% in the first half (1H25) and 3.5% by the third quarter (3Q25).”
He noted that, in contrast, total transaction value continued to grow, rising 1.9% in the 1H25 and 12.5% by the 3Q25.
“While transaction volumes eased marginally, total transaction values held firm reflecting a market that is maturing, not weakening.
“This is consistent with what we see on the ground – capital is still active but more focused on the right assets and locations, as well as more substantial deals.” Tan said the Malaysian property market in 2025 has been a story of contrasts and cautious optimism, with the Johor market presenting a particularly unique narrative due to certain catalysts, initiatives and its proximity to Singapore.
“After years of oversupply and volatility, 2025 sees a move towards stabilisation. Growth is driven by genuine demand rather than speculation, particularly in the affordable housing segment and well-located mid-range properties.
“Properties integrated with, or near, major public transport hubs remain attractive.”
He emphasised that buyers and investors value connectivity, reduced congestion and future-proofing.
“There is a growing demand for sustainable, green-certified properties. Energy efficiency, smart home features and green spaces are becoming key differentiators for premium projects.
“With high ownership costs and shifting lifestyle preferences among younger demographics, the rental market for strategically located condominiums and serviced apartments is expected to remain robust.”
Additionally, he said high-density high-rise developments, including legacy residential and serviced apartment stock, will continue to face challenges.
“Oversupplied high-rise corridors, particularly in Johor, KL, parts of Penang, Perak and selected areas in Sabah, are expected to continue facing slow absorption.
“Much of this stock is structurally misaligned with current demand and without meaningful pricing adjustments or repurposing strategies, the segment will remain challenging in 2026.”
Tan echoed Previn’s sentiment that high-rise apartments will suffer from a legacy of speculative launches from the previous decade.
“There is a fundamental mismatch, as there is an oversupply of units that are not aligned with current buyer priorities, such as poor location, lack of connectivity, poor design and mediocre amenities.”
He added that there will be intense competition from new launches with better designs, green certifications and competitive pricing (due to government incentives for affordable segments), which will continuously draw demand away from the older, stagnant stock.
“The lesson is clear. Developers must pivot towards fundamentally driven projects and away from generic high-rise projects aimed at speculative investors.
“They must also be mindful of the property cycles and know how to position themselves with the right products, at the right pricing and at the right time.”
Previn also noted that non-prime luxury residential space, more often than not, tends to be reliant on foreign buyers. This could pose a risk to this sub-segment, he said.
“Demand in this niche segment may soften further due to the proposed increase in stamp duty for foreign purchasers from 4% to 8%. Only projects in prime locations with strong fundamentals are likely to sustain interest.”
A fairly good year
As the year comes to a close, Previn believes that 2025 has been a year of selective resilience for Malaysia’s property market.
“Over the first nine months, the total number of property transactions softened compared to last year, down 1.3% in the first half (1H25) and 3.5% by the third quarter (3Q25).”
He noted that, in contrast, total transaction value continued to grow, rising 1.9% in the 1H25 and 12.5% by the 3Q25.
“While transaction volumes eased marginally, total transaction values held firm reflecting a market that is maturing, not weakening.
“This is consistent with what we see on the ground – capital is still active but more focused on the right assets and locations, as well as more substantial deals.”
Tan said the Malaysian property market in 2025 has been a story of contrasts and cautious optimism, with the Johor market presenting a particularly unique narrative due to certain catalysts, initiatives and its proximity to Singapore.
“After years of oversupply and volatility, 2025 sees a move towards stabilisation. Growth is driven by genuine demand rather than speculation, particularly in the affordable housing segment and well-located mid-range properties.
“Properties integrated with, or near, major public transport hubs remain attractive.”
He emphasised that buyers and investors value connectivity, reduced congestion and future-proofing.
“There is a growing demand for sustainable, green-certified properties. Energy efficiency, smart home features and green spaces are becoming key differentiators for premium projects.
“With high ownership costs and shifting lifestyle preferences among younger demographics, the rental market for strategically located condominiums and serviced apartments is expected to remain robust.”