Real estate market index
The Malaysian real estate market has shown steady, restrained growth continuously since 2009. Given the weight of foreign demand, the market slowed during the period of Covid restrictions. Once those restrictions ended, however, growth resumed.
Number of transactions
In 2025 transaction volume is estimated at around 455,000, which points to a slowdown in growth rates while a sustained upward trend is maintained. Malaysia's market remains one of the most stable in the Southeast Asian region, dominated by domestic demand and free of sharp cyclical swings.
Construction volume
In 2025 construction volume is estimated at around RM 148 billion, which indicates a slowdown after many years of steady expansion. Following the 2024 peak, development activity has moved into a phase of cautious stabilisation, reflecting a more measured approach by developers amid the saturation of certain market segments and the wish to avoid a build-up of excess supply.
Price per square metre
In 2025 the price structure of the Malaysian market remains stable and predictable. Kuala Lumpur retains its status as the most expensive market at around 7,600 RM/m², reflecting the concentration of demand and investment activity in the capital region. Penang ranks second (around 6,200 RM/m²) and remains one of the most attractive markets in terms of the balance between price and quality. Johor Bahru shows moderate levels (around 5,200 RM/m²) with growth potential on the back of integration with Singapore's economy. The more affordable cities — Ipoh and Kuching — remain markets driven mainly by local demand, with limited investment momentum.
Rental yield
In 2025 Malaysia's real estate market shows a balanced combination of moderate prices and stable rental yields: Kuala Lumpur remains the most expensive market yet retains strong appeal thanks to steady rental demand, while Johor Bahru and Penang form the mid-price segment with reliable yields, and the more affordable Ipoh and Kuching offer higher relative yields at a lower entry threshold, while remaining markets driven mainly by local demand and limited liquidity.
Foreign demand
Foreign demand accounts for a significant part of total demand in Malaysia. Official statistics on the share of foreign buyers, however, are not available. What is known is how transaction shares are distributed among foreigners. The leaders are citizens of Singapore and China, followed by buyers from Indonesia, Japan and South Korea.
Malaysia is pursuing a course aimed at affluent foreigners, and this policy has been implemented successfully for many years.
Foreign investment in commercial real estate accounts for up to 45% of the total volume.
The results of 2025 confirmed Malaysia's real estate market as a structurally stable, low-volatility market driven predominantly by domestic demand. Transaction volume continued to grow moderately and reached around 455,000 transactions, yet the pace of market expansion slowed markedly, indicating a shift from the post-pandemic recovery phase to a phase of cyclical normalisation. Development activity declined after the 2024 peak, evidence of a more conservative policy among developers and of their wish to avoid a build-up of excess supply, particularly in the mass-market segment.
Price dynamics in 2025 were moderately positive and remained substantially below the rate of inflation, which rules out any signs of overheating. The market shows pronounced segmentation: Kuala Lumpur and Penang concentrate the bulk of investment demand, Johor Bahru benefits from the cross-border effect of Singapore, while secondary cities retain a locally driven demand profile. A key feature of 2025 was the persistence of a relatively high gross rental yield (5–6%) alongside a moderate entry cost, which makes Malaysia one of the few markets in the region with a favourable price-to-rent ratio. Foreign demand remains secondary and has no systemic influence on market dynamics, which reduces the market's sensitivity to external shocks.
In 2026 Malaysia's real estate market is expected, under the baseline scenario, to continue on a path of controlled stabilisation. No substantial growth in transaction volumes is anticipated: the market will most likely remain in the range of 450,000–470,000 transactions, with the demand structure still oriented towards the domestic buyer. Price dynamics will be restrained, with expected growth within 3–6% per year, which is consistent with the economy's long-term potential and creates no inflationary imbalances.
New construction volumes will most likely remain at the 2025 level or decline slightly, which will help balance supply and demand and support prices on the secondary market. The rental segment will remain resilient and yields competitive relative to other Southeast Asian markets, particularly in the capital region and in economically integrated metropolitan areas.
Overall, in 2026 Malaysia will remain a market of moderate returns and high predictability, suited to long-term investment strategies focused on rental income and capital preservation. The market offers no speculative scenarios of rapid growth, but its macroeconomic resilience, balanced development pipeline and limited dependence on foreign capital form a favourable risk profile for conservative and institutional investors.
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