Knight Frank Malaysia has released its latest report, Real Estate Highlights 2nd Half 2024 (REH 2H2024), offering a comprehensive analysis of Malaysia’s property market. Complementing the forward-looking insights of the recently published Malaysia Commercial Real Estate Investment Sentiment Survey (CREISS) 2025, this report covers five key sectors (industrial, office, retail, hospitality and high-rise residential), and highlights a strong performance in 2024 across several of these sectors.
Significant developments in Klang Valley, Johor, Penang, and East Malaysia are driving the market forward, with strategic investments and evolving demands fueling continued optimism. From sustainable industrial spaces to the recovery of the hospitality sector and increasing demand for green-certified offices, Malaysia’s property market is well-positioned for sustained growth into 2025.
Judy Ong, Senior Executive Director of Knight Frank Malaysia, remarked, “Malaysia’s property market continues to grow, underpinned by sustained demand for housing, shifts in global supply chains fuelling demand for industrial spaces, rising data centre investments and strong recovery in the hospitality segment. Coupled with rising demand for sustainable and green-certified developments, the industry is poised for a progressive and dynamic year ahead.”
Below are some key market highlights across the different geographical locations:
Industrial Sector
| Klang Valley |
| The industrial property market in Klang Valley remains robust, driven by strong investments in sectors like green technology and advanced manufacturing, particularly in Selangor. However, new large-scale industrial townships may introduce short-term price and rental rate pressure.Industrial REITs are shifting focus to redevelopment opportunities in response to challenges in acquiring institutional-grade assets, showcasing adaptability in a competitive market.With stable prices and rental rates, the market is well-positioned to meet rising demand for logistics and sustainable solutions, despite risks from global economic uncertainties and geopolitical tensions. |
| Johor |
| Johor is positioning itself as a hub for sustainable and high-tech industries, leveraging ESG principles, renewable energy, and cutting-edge technologies to drive growth in logistics, clean technology, and advanced manufacturing.Infrastructure upgrades, like port enhancements and advanced industrial parks, alongside significant foreign direct investments and a growing data centre ecosystem, are solidifying Johor’s status as a regional trade and investment hub.With a strong focus on sustainability and high-tech ecosystems, Johor’s industrial market is poised for sustained growth. Addressing resource challenges, such as water and energy consumption, through government and private sector collaboration will further enhance its appeal to investors. |
| Penang |
| The industrial market in Penang is expected to thrive in 2025 due to strong foreign and domestic investments, along with new industrial parks contributing to its growth as a global technology hub, particularly with initiatives like Penang Silicon Design and Silicon Island.Infrastructure improvements, such as the expansion of Penang International Airport and new public transport projects, will enhance connectivity, attracting more businesses to the region.A focus on sustainability is shaping industrial developments, with green practices and renewable energy integration becoming increasingly important, as demand for industrial space continues to rise alongside the growth of manufacturing, logistics, and e-commerce fulfillment. |
| Sabah |
| Sabah’s industrial growth is driven by its strategic location as a gateway to Southeast Asia and global markets, with proximity to key shipping routes and neighboring BIMP-EAGA regions.To sustain momentum, authorities need to prioritize improving infrastructure and identifying suitable areas for large-scale industrial developments. |
| Sarawak |
| Sarawak’s industrial sector is set for significant growth, driven by strategic infrastructure development, a strong emphasis on renewable energy, and government support, creating a solid foundation for sustainable growth.Enhanced transportation infrastructure, including new roads, airports, and seaports, will improve connectivity and reduce costs, unlocking new areas for industrial development and boosting economic activity.The state’s leadership in renewable energy, especially in hydropower and green hydrogen projects, positions Sarawak as a hub for sustainable industrial growth, fostering investments in energy-efficient technologies and practices. |
Office Sector
| Klang Valley |
| The Klang Valley office market is gradually recovering, with rents and occupancy rates improving, driven by resilient demand from local and international occupiers, especially global companies setting up shared service offices.With 0.8 million sq ft of new office space completed in 2024 and 1.5 million sq ft expected by 1H2025, larger floor plates in KL Fringe and Petaling Jaya are gaining traction due to strong amenities and connectivity. Developments like The Exchange TRX and Sunway Square Corporate Tower 2 are projected to draw significant interest.While investment activity remains cautious, prime office assets with strong tenancy profiles and strategic locations, such as TRX and Sunway Square, are positioned to attract long-term investors seeking stability and growth. |
| Johor |
| Johor Bahru is gaining traction among tenants for Grade A office spaces due to lower rental rates and operational costs, coupled with attractive incentives from the JSSEZ. The city’s affordability compared to Singapore makes it appealing for companies looking to establish a presence in the region. As demand grows, older office buildings are likely to be refurbished or repurposed to meet the need for modern workspaces. |
| Penang |
| The Penang office market is projected to stay stable in 2025, despite the addition of 480,000 sq ft from two new office towers. Older office buildings may see rental rates dip due to increased supply, but demand for modern, well-equipped spaces is expected to remain strong, reflecting current tenant needs. Overall, the market will likely favor newer developments that meet evolving preferences over older properties. |
| Sabah |
| The Kota Kinabalu office market is stable, with rental and occupancy rates steady as no new supply is expected. Government efforts to attract multinational corporations are likely to keep demand strong for office spaces in prime areas. As prime office space approaches full occupancy, there may be new opportunities for developing high-quality offices in strategic locations. |
| Sarawak |
| Sarawak’s commercial property sector is thriving, fueled by infrastructure development and a focus on sustainability, with the PCDS 2030 aiming for major GDP growth through initiatives like carbon trading and renewable energy.From 2021 to 2023, the state attracted over RM21.5 billion in investments, creating over 11,000 jobs and advancing in sectors such as renewable energy, healthcare, and education.These developments are driving demand for commercial spaces and are aligned with Sarawak’s goals of achieving RM282 billion in GDP and a median household income of RM15,000 by 2030. |
Retail Sector
| Klang Valley |
| The retail sector in Klang Valley is seeing cautious optimism due to government initiatives like increased cash handouts and wage adjustments, which support household income and spending on essentials despite inflation pressures.A growing number of community-focused retail spaces, like Bloomsvale Shopping Gallery and Elmina Lakeside Mall, are emerging, reflecting strong tenant interest and a shift towards curated consumer experiences.Retailers need to adapt to changing consumer behaviors and government policies, focusing on value-driven products and technological innovations to maintain growth and resilience in a competitive market. |
| Johor |
| Johor Bahru’s retail market is thriving, with higher occupancy rates and more shoppers in malls, indicating a positive trend in consumer engagement. Retailers are adapting to changing consumer needs by broadening their product ranges and adding entertainment and health facilities to shopping experiences. The arrival of new brands is boosting the retail landscape, driven by strong spending power from the Singapore Dollar. |
| Penang |
| Penang’s retail market is expected to stay stable in 2025, driven by factors like rising retail spending, new brand entries, more flight routes, and increased tourism activity. The opening of Sunshine Mall in October 2024 and the upcoming Waterfront Shoppes Phase 1 will intensify competition, particularly on Penang Island. This heightened competition may lead to lower occupancy rates and rental prices in the retail sector. |
| Sabah |
| Prime shopping malls in Kota Kinabalu are strategizing to improve operations and boost their market presence by filling vacant spaces and refining tenant mix. By curating a tenant mix that resonates with consumer preferences, these malls aim to draw more visitors and enhance consumer spending. This approach is expected to lead to increased turnover rents, promoting the financial health of the retail assets. |
Hospitality Sector
| Klang Valley |
| Malaysia’s economy shows resilience with a 5.3% growth rate and is on track to welcome 27.3 million international tourists in 2024, having already achieved over 80% of that target by November with 22.5 million visitors. The government is enhancing the tourism landscape through initiatives like the revised Malaysia My Second Home (MM2H) program and the expansion of medical tourism, which saw revenues reach RM2.25 billion in 2023.The Klang Valley’s hospitality sector is set for a boost with new luxury hotel openings planned for 2025, supported by improved connectivity and policies like visa exemptions for Chinese and Indian tourists, signaling strong investor confidence and sustained recovery in the industry. |
| Johor |
| Johor Bahru is thriving as a tourist hotspot, primarily attracting Singaporean visitors due to its prime location and easy access. The tourism sector is experiencing a strong recovery post-pandemic, with indicators like AOR and ADR on the rise, alongside ongoing redevelopment projects. The future looks bright for Johor Bahru’s tourism, with anticipated growth and rising popularity in the region. |
| Penang |
| Penang’s hospitality market is expected to grow in 2025, driven by enhanced accessibility and an increase in tourist arrivals due to new hotel developments and expanded flight routes from major cities worldwide.The state maintains its position as Malaysia’s leading medical tourism hub, accounting for about 45% of the nation’s medical tourism revenue, thanks to its high-quality, cost-effective healthcare services and a diverse range of visa options for international patients, primarily from Indonesia and China. |
| Sabah |
| Sabah’s tourism recovery is gaining momentum, focusing on China as a key market, bolstered by airport upgrades and new flight routes, along with increased interest from international hotel brands. The East Coast is witnessing a surge in new hotel openings, including Fairfield by Marriott in Kuala Besut and the Perhentian Marriott Resort & Spa, showcasing its growing appeal as a tourist destination.Malaysia is enhancing its port infrastructure, particularly at Kuantan Port, to attract cruise tourism, providing economic benefits through increased local spending and improved connectivity. |
High-End High Rise Residential Sector:
| Klang Valley |
| The Klang Valley residential market is projected to experience stable growth in 2025, fueled by government support for homeownership and a steady Overnight Policy Rate from Bank Negara Malaysia, creating a favorable environment for buyers.Key initiatives like the Housing Credit Guarantee Scheme and the Residensi Madani aim to enhance affordability, targeting middle-income and B40 groups with tax relief and the construction of affordable housing units.Despite challenges like inflation and geopolitical tensions, Malaysia’s strategic location and ongoing infrastructure improvements position its property market for resilience and attract investment from both locals and foreigners. |
| Johor |
| The high-rise residential market in Johor Bahru is thriving, with many upcoming project launches, especially near the new RTS Link station, which boosts demand and pricing.Despite land scarcity in the city center, there’s a surge of activity in surrounding areas, particularly in Iskandar Puteri, where positive market sentiments are fueling new developments. |
| Penang |
| The high-rise residential market in Penang is on a positive trend, driven by a strong economy, stable interest rates, and improvements in the job market and wages. Key infrastructure projects, like the Penang LRT Mutiara Line and upgrades to the Penang International Airport, are set to enhance connectivity and increase demand in the property sector. |
| Sabah |
| The residential market in Greater Kota Kinabalu is likely to experience a slowdown in new launches as existing developments move through their phases.High-rise residential projects are expected to see steady growth in established and strategically located neighborhoods, while demand for landed residential properties continues to rise. |
Conclusion:
Malaysia’s property market demonstrated resilience and steady growth across various sectors in 2024, driven by strategic investments, infrastructure upgrades, and evolving market demands. The industrial sector led the way with advancements in technology and sustainability, while the office and retail markets continued their recovery, supported by shifting occupier preferences and consumer spending. Meanwhile, the hospitality sector saw a boost in tourist arrivals, and high-end residential properties maintained stable demand, aided by government initiatives and infrastructure improvements.
Looking ahead to 2025, the property market is poised to build on this momentum, focusing on sustainability, innovation, and enhanced connectivity. Key regions across the country are well-positioned to attract both local and international investors, paving the way for long-term growth.
Amy Wong, Executive Director of Research & Consultancy at Knight Frank Malaysia, commented, “The report highlights market trends that will form an exciting year ahead for Malaysia’s property market. The industrial sector is growing rapidly, and the hospitality industry is making a strong recovery. There are plenty of opportunities for investors and stakeholders. Moving forward, a strong focus on sustainability will be crucial for future strategic investments.”
Keith Ooi, Group Managing Director of Knight Frank Malaysia, added, “Malaysia’s property market has consistently adapted to challenges, paving the way for sustainable growth. With our emphasis on ESG, innovation, and infrastructure development, we are confident the market will continue to thrive, reinforcing Malaysia’s position as a regional leader.”
To download the full report, click https://kf-my.com/REH2H2024-FULLREPORT
Legal Disclaimer: The Editor provides this news content "as is," without any warranty of any kind. We disclaim all responsibility and liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. For any complaints or copyright concerns regarding this article, please contact the author mentioned above.
