KUALA LUMPUR (Nov 4): Malaysia’s property market continued to strengthen in the third quarter of 2025 (3Q2025), with residential activity holding steady and demand for industrial and data centre assets expanding, JLL Malaysia said in the JLL 3Q2025 press conference for the Malaysian property sector on Tuesday.

JLL Malaysia managing director Jamie Tan highlighted that recent measures such as the Budget 2026 and the agreement between Malaysia and the United States on reciprocal trade will further bolster Malaysia's economic outlook.

For the residential sector, Tan pointed out that Johor has emerged as the standout performer, with the state having recorded strong price appreciation across all product types for 3Q2025.

Tan highlighted a 10.2% uplift in landed housing for 3Q2025, while serviced apartment prices in Johor Bahru had risen by 20.8% since 2024. The uptick is being driven by the development of the Johor-Singapore Special Economic Zone, infrastructure upgrades, and positive spillover effects from industrial and data centre projects.

Prime residential demand in Kuala Lumpur remains resilient, supported by population growth and steady demand from foreign investors and local buyers. "Budget 2026 reinforces this stability by doubling the Housing Credit Guarantee Scheme allocation to RM20 billion, and extending the stamp duty relief," said Tan.

Meanwhile, property overhangs have continued to fall from pandemic highs. The state with the highest overhang, Johor, with 63% in 2021, was down to about 21% in 1H2025, said Tan.

As for the office sector, demand remains slow for the Greater KL office market, despite a slightly positive quarterly net absorption. JLL Malaysia head of office leasing advisory Quiny Lee pointed to a persistent “flight to quality” as occupiers relocate from older premises into Grade-A, green-certified buildings. "The overall vacancy rate increased slightly following new completions, intensifying the flight to quality trend, as tenants gravitate towards green and modern buildings," said Lee.

Meanwhile, market demand for the industrial sector softened in 3Q2025. JLL attributed this to market uncertainty from increased US tariffs and the expansion of the SST, causing companies to adopt a cautious, cost-conscious approach that reduced net absorption.

“New supply addition maintains market health despite rising vacancy rate of 6.3% in 3Q2025," said JLL Malaysia logistics and industrial senior manager Derek Yap.

As for developments on the data centres front, the sector is entering a strategic consolidation phase as it integrates substantial new capacity and completes infrastructure upgrades. “While this may create short-term market adjustments, the long-term outlook remains exceptionally strong,” said JLL Malaysia data centre transactions, capital market manager Sum Chun Kit.

Looking ahead, he anticipated deeper public-private partnerships that would drive sustainable growth. Key developments, he added, include renewable energy integration, water resources innovation and the upcoming Sustainable Data Centre Framework that is expected to boost the country’s digital economic growth.