This article first appeared in City & Country, The Edge Malaysia Weekly on July 14, 2025 - July 20, 2025

In 1Q2025, Selangor recorded a slight decline in volume and value of housing transactions, along with a drop in overhang units, showing steady but cautious buyer demand. Kuala Lumpur, meanwhile, also saw fewer transactions but recorded a higher total transaction value.

There was an increase in unsold premium high-rise units in KL, indicating a significant affordability gap, according to Savills Malaysia director of research and consultancy Fong Kean Hwa in presenting The Edge Malaysia | Savills Klang Valley Residential Property Monitor 1Q2025.

Citing data from the National Property Information Centre (Napic), he notes that KL residential property transactions in 1Q2025 dipped slightly by 5.8% year on year (y-o-y) to 4,461 units from 4,736 units. Nevertheless, the total value of transactions increased by 9.2% y-o-y, from RM4.049 billion to RM4.423 ­billion.

Meanwhile, the number of overhang residential units in KL rose 1% y-o-y to 8,424 units from 8,342 units in the same period last year. This signals persistent challenges in property absorption despite ongoing market adjustments and developer incentives.

“High-rise properties — including serviced apartments, SoHo (small office home office) units, condominiums and apartments — constituted 8,255 units, representing approximately 98% of the total residential overhang in KL. The dominance of high-rise properties in the unsold inventory reflects the ongoing supply-­demand mismatch in urban and ­high-density areas,” Fong says.

Of the unsold high-rise units, 2,320 units (28.1%) were priced above RM1 million. Market demand is primarily focused on more affordable housing and premium-price units continue to experience slower take-up rates due to various challenges in the market, he adds.

In 1Q2025, residential supply in KL, including of serviced apartments and SoHo units, continued to expand, with 1,172 newly completed units. This, however, was a significant 65% y-o-y drop from the 3,366 units completed in 1Q2024.

Incoming residential supply declined by 8.5% y-o-y to 97,314 units as at 1Q2025, from 106,309 units in the same period last year. Despite the drop, Fong says the numbers still point to a notable volume of new supply over the next three years, primarily driven by condominiums, apartments and serviced apartments.

Selangor saw an increase in newly completed residential units, with 5,149 units delivered in 1Q2025, up 16.4% from 4,425 units in 1Q2024.

Incoming supply grew a modest 7% y-o-y, reaching 167,560 units in 1Q2025, compared with 156,641 units a year ago.

On the other hand, residential transaction activity declined y-o-y, with 13,322 units transacted versus 15,123 units previously, reflecting a 11.9% fall. Total transaction value also dipped 13.1% y-o-y, from RM8.288 billion to RM7.202 billion.

Selangor’s residential overhang showed notable improvement during the quarter under review with the number of unsold completed units declining by 17.5% y-o-y, from 5,901 units to 5,024 units.

“This significant reduction reflects an improvement in market absorption, likely due to more effective pricing [discount and rebate] and marketing strategies implemented [such as more freebies offered] by developers,” Fong explains.

In Selangor, high-rise units, which include serviced apartments, SoHo units, condominiums and apartments, accounted for 83.3% of the total residential overhang. Within the high-rise segment, 1,473 units (29.3%) were priced between RM500,001 and RM600,000. This indicates a concentration of unsold stock in the upper-mid-range price bracket.

Demand for high-rise residences in prime areas remains robust with improved price and rental growth compared with the previous year, according to Fong.

“In 1Q2025, transaction prices for two-bedroom high-rise residences in KLCC, Bangsar and Mont’Kiara increased by 3.5%, 2.6% and 6.4% y-o-y, reaching RM1.47 million, RM1 million and RM830,000 respectively. Rental rates also saw growth with increases of 2.5%, 4.7% and 3.2% y-o-y respectively. Despite this, Mont’Kiara offers better rental yields compared with KLCC and Bangsar.”

He adds that the KLCC high-rise residential market is expected to remain strong, driven by demand from high-net-worth individuals and expatriates. “The recently completed project, Hemmon House on Jalan Inai in the Golden Triangle area, offers 90 units priced above RM1,500 psf.”

Bangsar remains a popular choice for young professionals and expatriates, who are drawn to its vibrant atmosphere. This underpins ongoing residential development in Bangsar, such as Setia Federal Hill in Jalan Bangsar.

The first phase is jointly developed by S P Setia Bhd (KL:SPSETIA) and Mitsui Fudosan. It offers 693 units — from studio to 3-bedroom units (485 to 1,325 sq ft) — with selling prices from RM1,500 psf. The project is slated for completion by 2029.

Overall, KL remained a key high-rise residential hotspot in 1Q2025, with real estate activity continuing to thrive in several areas. Among the launches and activities were the soft launch of The CloutHaus KLCC, as well as land acquisitions by SkyWorld Development Bhd (KL:SKYWLD) and Eupe Corp Bhd (KL:EUPE).

Located at Jalan P Ramlee, The CloutHaus KLCC is a luxury development by TA Global Bhd. It has an estimated gross development value (GDV) of RM1.515 billion and offers studio to three-bedroom apartments (549 to 1,216 sq ft) priced at RM2,900 psf with a maintenance fee of 80 sen psf. The project is expected to be completed by 2029.

In 1Q2025, SkyWorld announced the acquisition of a 3.032-acre freehold plot in Mont’Kiara for RM110 million to develop a high-end residential project, while Eupe purchased a 2.46-acre piece of freehold land in KL for RM69.18 million where it plans to build a high-rise residential development.

In Selangor, the high-rise residential market continued to show steady growth in both prices and rental rates in 1Q2025, reflecting sustained demand. Bandar Sunway, Subang Jaya, Petaling Jaya and Shah Alam saw moderate price and rental rate increases, resulting in stable rental yields.

In Bandar Sunway, the average transaction price rose 3.5% y-o-y to RM880,000, while rental rates increased by 2.9% y-o-y to RM3,600 per month, yielding a 4.9% annual return.

Subang Jaya experienced a 4% y-o-y price increase, bringing the average transaction price to RM780,000. Rental rates rose 5.3% y-o-y to RM3,000 per month, yielding a 4.6% annual return.

Petaling Jaya saw a 4.3% y-o-y price increase, with transaction prices rising from RM1.055 million to RM1.1 million. Rental rates also grew by 5.3% y-o-y to RM3,475 per month, yielding a 3.8% annual return.

Shah Alam recorded a 6.8% y-o-y price increase, with the average transaction price rising from RM730,000 to RM780,000. Rental rates rose 4.6% y-o-y to RM2,720 per month, providing a 4.2% rental yield.

The Selangor property market was active during the quarter. Among the transactions was Gamuda Land’s acquisition of 336 acres of leasehold land for RM248.7 million as part of the ongoing 1,530-acre Gamuda Cove development. The new land is expected to contribute GDV of RM2.2 billion over 11 years. The acquisition is set to be completed by 2Q2026.

In 1Q2025, Trevi Properties Sdn Bhd rolled out Desa Tiara Residences in Cheras, with 350 condominium units ranging in size from 1,080 to 1,359 sq ft. Prices start at RM500 psf.

The 2-storey terraced house segment in KL and Selangor had a mixed performance in 1Q2025.

In KL, TTDI was one of the top performers with transaction prices growing 5.9% y-o-y to RM1.61 million, while rental rates rose 4.8% y-o-y to RM3,250 per month, yielding an annual return of 2.4%.

In Lucky Garden in Bangsar, prices saw a modest 0.6% y-o-y drop to RM1.65 million, while rental rates remained stable at RM3,200 per month, maintaining a rental yield of 2.3%.

OUG prices increased by 2.8% to RM920,000, but rental rates grew 5.1% y-o-y, reaching RM2,050 per month, resulting in a rental yield of 2.7%.

In Taman Midah in Cheras, prices held steady at RM780,000, while rental rates rose 6.9% y-o-y to RM1,870 per month, yielding 2.9% annually.

Meanwhile in Selangor, prices for SS2 in Petaling Jaya remained stable at RM1 million, while rental rates rose by 5.1% y-o-y to RM2,050 per month, giving an annual return of 2.5%.

Bandar Utama saw a notable price rise of 3.8% y-o-y to RM1.35 million, while rental rates remained stable at RM2,600 per month, resulting in a 2.3% rental yield.

Puchong’s 2-storey terraced house market reflected stable and positive sentiments. For example, Bandar Kinrara recorded a 6.1% y-o-y price increase to RM780,000, while rental rates remained steady at RM2,150 per month, with a 4.9% annual yield.

Bandar Bukit Puchong saw a 0.7% y-o-y price increase to RM710,000, while rental rates rose by 4.8% to RM1,730 per month, providing a 2.9% yield.

In Putra Heights, transaction prices declined by 6% y-o-y to RM700,000, while rental remained relatively stable at RM1,700 to RM1,800 per month, resulting in a 3% yield.

“While this trend reflects market conditions observed during the first quarter, the outlook for Putra Heights has been severely impacted by a major gas pipeline fire that occurred on April 1. The incident has since heightened safety concerns, affecting buyer confidence in the area,” Fong highlights.

Shah Alam’s terraced house market showed a mixed performance in 1Q2025. For instance, Bandar Setia Alam saw a 2.7% y-o-y price increase to RM760,000, with rental rates growing by 6.5% y-o-y to RM1,650 per month, yielding 2.6% annually. In Kota Kemuning, there was a 1.4% y-o-y decline in average transaction prices to RM700,000. Rental rates rose to RM1,700 per month, providing a 2.9% yield.

The semi-detached housing market in Selangor generally displayed a positive performance in 1Q2025, with most tracked areas experiencing price appreciation. Setia Ecohill remained steady at RM1 million but prices in Bandar Setia Alam fell 3.8% y-o-y to RM1.78 million. Rental rates dropped to RM4,000 per month, yielding an annual return of 2.7%.

Notably, Fong says Cyberjaya is expected to continue to attract demand, particularly from tech workers and business owners, due to its status as a prominent tech hub. “This outlook is further reinforced by significant investments such as MRCB’s (KL:MRCB) nearly RM288 million acquisition of seven land parcels totalling 36.6 acres within the Cyberjaya city centre, signalling long-term confidence in the area’s growth potential.”

While the overall housing market performance in 1Q2025 remained resilient, supported by strong domestic fundamentals such as stable employment, steady private consumption, ongoing infrastructure investment and sustained foreign direct investment inflows, Fong has a cautiously optimistic outlook for the segment for the rest of the year.

“The natural gas pipeline explosion in Putra Heights that happened in April, which damaged over 230 homes and displaced hundreds of residents, has raised awareness of safety risks associated with developments near critical infrastructure, which may lead to softer property values in the affected area and increased buyer caution.

“The incident may also prompt tighter planning regulations and higher compliance costs for developers. More broadly, the incident underscores the rising importance of risk management and ESG (environmental, social and governance) considerations in shaping future real estate developments and investment strategies,” he says.

In addition, Malaysia’s economy expanded by 4.4% in 1Q2025, reflecting a slight moderation from the previous quarter. The central bank has signalled a more cautious outlook, as global trade tensions begin to dampen consumer sentiment and private sector investment.

“Nonetheless, internal strengths [such as strong domestic demand] have fuelled renewed confidence, particularly in the industrial and residential segments within Greater KL, fostering a cautiously optimistic outlook for 2025,” Fong states.

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