Malaysia's Property Market To Remain Supported By Infrastructure, Specialised Assets
KUALA LUMPUR, July 15 (Bernama) -- Malaysia's property market is expected to remain supported by investment activity, infrastructure development and demand for specialised assets in the second half of 2026 (2H2026).
However, investors are becoming more selective amid global geopolitical uncertainties and evolving market conditions.
Knight Frank Malaysia’s (KFM) group managing director Keith Ooi said occupier demand is increasingly shifting towards specialised assets that meet evolving business requirements.
“These include cold chain, data centres and worker accommodation facilities in the industrial sector; Grade A offices, connected/transit-oriented developments and flexible workspaces in the office sector; and integrated lifestyle and retail experiences in the retail sector,” he said at the launch of the KFM Real Estate Highlights (REH) 1H2026 report here today.
The report is a biannual review of industrial, hospitality, office and retail property performance across Kuala Lumpur, Penang, Johor, Sabah and Sarawak.
The report noted that resilient economic fundamentals, including gross domestic product (GDP) growth of 5.4 per cent in the first quarter of 2026 (1Q2026), stable inflation and interest rates, sustained household spending, tourism recovery and infrastructure investment, continued to support demand across the office, retail, hospitality and residential sectors.
It also noted that investment in technology, digital infrastructure and manufacturing continued to underpin industrial and data centre demand.
Meanwhile, KFM executive director of Research and Consultancy Amy Wong said capital is increasingly being deployed into infrastructure-backed developments, reflecting investors' focus on long-term growth.
She said data centre land accounted for the largest category of Bursa Malaysia-announced property transactions in 1H2026, followed by development and industrial land, signalling that investors are positioning themselves for future development opportunities rather than immediate income-generating assets.
Of the top 10 transactions during the period, seven were land acquisitions, accounting for 76 per cent of the combined transaction value, while five involved data centre sites across Selangor and Johor.
"It's no longer just about announcements. Operational information technology (IT) capacity was 1.2 gigawatts (GW) at the end of 2025, while a further 2.9GW is expected to come onstream between 2026 and 2028," she said.
Wong said about RM2.45 billion worth of data centre land transactions involving 568 acres were recorded in 1H2026, while RM8.8 billion in data centre-related construction contracts were announced during the same period.
Unlike last year, she said contract awards are now spread across smaller packages involving substations, cabling, cooling systems, mechanical and electrical works, indicating that opportunities are expanding beyond landowners and operators to contractors and infrastructure service providers.
"Instead of just landowners and operators, it is moving towards contractors who are delivering things like substations, cabling, mechanical and electrical equipment, cooling, civil works and all the other technical infrastructure that goes into it," she said.
Wong said future investment decisions would increasingly depend on infrastructure readiness, particularly reliable access to electricity, water and connectivity, rather than land availability alone.
She said infrastructure corridors such as the Johor-Singapore Special Economic Zone (JS-SEZ), Penang's semiconductor ecosystem and Klang Valley transport projects are expected to continue attracting investment into industrial, logistics and mixed-use developments.
She added that structural trends such as artificial intelligence (AI) adoption, supply chain diversification and environmental, social and governance (ESG) requirements are reshaping investment priorities, with developers placing greater emphasis on operational assets and infrastructure-supported developments.
-- BERNAMA