This article first appeared in City & Country, The Edge Malaysia Weekly on January 5, 2026 - January 11, 2026

Property experts believe 2025 was a resilient year for the real estate sector and the positive momentum is expected to continue into the new year. Both the residential and industrial segments delivered a strong performance, a trend likely to persist. While opportunities abound, they will require careful study and planning to ensure optimal and profitable outcomes. Here is part one of the poll, part two will be published in the Jan 12 issue.

Penang’s residential property market maintained steady growth in 2025, with median prices across the state climbing to around RM475,000 to RM486,000. Momentum was strongest in prime locations, where high-rise and luxury units on the island saw year-on-year (y-o-y) price gains of 6% to 12% in 2024/2025, particularly in Jelutong, Gelugor, Pulau Tikus, Bayan Baru, Tanjung Bungah and Gurney Drive.

We expect overall price growth of 3% to 5% in 2026. The high-end segment and prime island locations are forecast to remain the outperformers. Mainland and mid-market housing are expected to remain stable.

Areas tied to upcoming infrastructure projects, especially those benefiting from the Penang Light Rail Transit (Mutiara LRT) and future developments around Penang Silicon Island, are likely to see demand upticks. Industrial-driven residential demand will remain relevant as growth in manufacturing and foreign direct investments (FDIs) supports new jobs. This growth will bolster mid-range and rental demand.

Waterfront condominiums, heritage properties and landed homes in prime locations remain limited relative to demand, presenting opportunities for long-term capital appreciation and stable rental yields. For mid-market and first-time buyers, mainland areas such as Seberang Perai, Batu Kawan and Bukit Mertajam offer more affordable pricing and stronger value. Those areas are increasingly appealing as infrastructure and industrial growth extend beyond the island.

Meanwhile, residential units near industrial hubs stand to benefit from ongoing job creation. Similarly, transit-oriented developments (TOD) could deliver capital upside as connectivity improves. Mixed-use and waterfront developments that combine lifestyle, convenience and premium finishes are expected to remain in demand among both lifestyle-oriented buyers and investors.

To maintain momentum and avoid overheating, the following strategic moves would strengthen the market:

•     Timely delivery of the LRT project and related connectivity improvements will enhance accessibility and unlock latent demand, especially outside core island zones.

•    Government or state-level incentives, for example — subsidies, tax breaks or public-private partnerships — to make lower- and mid-range housing more attainable.

•     Developers should continue offering a diverse product mix, preventing oversupply of condos and ensuring options across income segments.

•     To promote industrial-residential linkage by strengthening planning to align housing supply with workforce growth. This linkage will enable more rental supply near employment centres.

•     Maintain clear guidelines for foreign investment, foreign buyer participation and streamline approval processes; avoid sudden policy shifts that cause buyer/investor uncertainty.

The 2025 market was resilient but selective. While transaction volume dipped slightly (6%) in 1H2025 after a record 2024, values held firm.

The 2026 outlook is cautiously optimistic with gross domestic product growth projected at 4% to 4.5%. The market is expected to shift from recovery to sustainable growth, supported by government fiscal policy and external financial sectors. We anticipated that the top-performing sectors would be industrial and data centres, the industry’s “golden goose”, fuelled by FDI in Johor, Selangor and Penang. Affordable housing will remain robust, supported by government incentives such as stamp duty exemptions. VM2026 will also likely boost short-term rentals and retail real estate investment trusts (REITs).

Opportunities lie in TOD and infrastructure catalysts. For example, in Johor Bahru, with the RTS Link expected to be operational by end-2026, properties near Bukit Chagar and within the JS-SEZ are poised for strong capital appreciation and rental yields, driven by anticipated Singaporean cross-border demand.

Investors may look for adaptive reuse projects such as commercial-to-residential conversions and prioritise green-certified buildings as they increasingly command higher rental premiums and better financing rates.

While the market is stable, it suffers from a mismatch in supply rather than a shortage. The focus must be on fixing what we already have. We should revive a targeted Home Ownership Campaign to clear unsold homes in smaller cities and introduce flexible financing to help gig workers secure loans.

Instead of aggressive new construction, we should incentivise converting empty Grade B and C purpose-built offices into apartments and offer tax breaks for upgrading older buildings with green features.

Finally, to prevent future unsold inventory, authorities must require stricter proof of demand before approving new projects and ensure that affordable housing is properly connected to public transport.

In Johor, 2026 is poised to be a pivotal inflection point, primarily driven by one mega project, the Johor Bahru–Singapore RTS Link. The outlook is bifurcated with high potential for specific micro-locations, but continued challenges for the broader market.

The RTS Link, which is targeted to be operational by January 2027, is the primary bullish driver. It moves the Johor-Singapore story from “promise” to physical reality. This boosts long-term investor confidence significantly.

We expect a sharp increase in rental demand and potential rental yield for properties within a one- to 2km radius of the RTS Station at Bukit Chagar. Prices for completed, move-in ready properties in the RTS catchment area are likely to see price firming and selective appreciation in the 12 to 24 months preceding and following the opening, as investors and end users position themselves for improved connectivity, resulting in increased demand.

The JS-SEZ momentum will boost commercial and industrial properties. This will create spillover demand for residential units for relocated executives and workers.

The success of the Forest City Special Financial Zone incentives will be more apparent. If successful, it could create a niche market for foreign-owned properties within that zone, but it remains separate from the mainstream Johor Bahru market.

The fundamental price arbitrage will remain with continued Singaporean demand. With the RTS easing the commute, more Malaysians working in Singapore and Singaporeans may consider Johor real estate for retirement homes, weekend properties or investment properties.

The oversupply of high-end high-rises in areas not served by the RTS will persist. These markets may remain soft, with stagnant prices and low rents. The Johor government may revise foreign buyers’ rules, such as minimum prices and quotas, to improve approval rates and sentiment.

The year 2026 is projected to be when Johor’s property market shifts from potential to tangible, transport-led integration. The RTS Link’s expected opening will be the defining event, likely creating a robust, high-occupancy sub-market around its terminal while leaving poorly located assets behind.

The master plan of the JS-SEZ initiative will be rolled out in early 2026, causing increased interest in the industrial sector, especially in Kulai, Iskandar Puteri, Tanjung Langsat and Tebrau. The standout narrative nationally will be Johor’s unique cross-border transformation, making it the most watched and volatile, yet opportunity-rich, market in the country.

Towns with stations along the Electric Train Service (Electrified Double-Tracked Rail), from KL Sentral to JB Sentral, will benefit. It will take 3½ to four hours from JB to KL. Pockets of development will be seen. These can be mini TODs. The rail will run from KL to JB from Dec 12, 2025, and will be carrying both passengers and cargo. Towns that will benefit include Kluang and Segamat in Johor and Gemas and Seremban in Negeri Sembilan.

A new passenger service line to help disperse the flood of commuter traffic expected from the soon to be completed RTS Link is scheduled to be launched in December 2026. KTM will expand its 40km Kempas Baru-Pasir Gudang line that currently serves only freight operations to include passenger services, with the establishment of two passenger stations. This bodes well for areas around the two stations.

We expected more clarity on the Elevated Autonomous Rapid Transit as a means to disperse the passengers from the RTS station. This will ease congestion in JB, and hopefully, the Iskandar Malaysia Bus Rapid Transit will be incorporated, so that 90% of the JB district will be covered with public transport through the feeder buses. This will cause a surge in demand for houses in the outlier areas.

The property market has shown signs of stabilising in 2025. Total transaction volume has declined while total transaction value has inched up, indicating that buyers have become more selective but remain willing to commit to the right property in the right location.

The property market is expected to enter 2026 on firmer ground, though sentiment will likely remain cautious. Homebuyers and investors looking for a good buy are expected to prudently focus on key fundamentals such as location, connectivity, product quality, and potential capital and rental returns.

The residential sector will remain the most active. Homes and units priced between RM300,000 and RM800,000 and those located in growth corridors, will show relatively stronger potential. The high-rise segment will stay competitive, particularly in the Klang Valley, Penang and Johor, where overhang remains elevated.

In the commercial sector, Grade A and green-certified offices will continue to record healthy occupancy, while older buildings will face pressure to upgrade. Huge and well-managed malls with strong footfall will sustain stable yields, with city malls attracting tourists and locals while township malls draw residents from surrounding areas.

In the industrial sector, warehousing and logistics properties will remain the top performers, supported by e-commerce demand, modern warehousing needs and nearshoring trends. Rental rates in mature logistics hubs in the Klang Valley, Penang and Johor are expected to rise as demand continues to outpace supply in 2026.

Investors and homebuyers will find opportunities in growth corridors anchored by catalytic projects such as the JS-SEZ, the Johor Bahru–Singapore RTS, the ECRL, the MRT3 Circle Line, the Penang LRT Mutiara Line and the Pan Borneo Highway. These developments are set to enhance connectivity, stimulate economic activity and support long-term property value growth in surrounding areas.

In the primary market, opportunities will emerge in lifestyle-oriented, well-connected developments with strong management, which appeal to a wide range of investors and homebuyers, from younger households to retirees. In the Klang Valley, demand for TOD properties will strengthen once the MRT3 Circle Line is implemented, creating a fully integrated rail network across the region.

Investors and homebuyers can also consider overhang stocks and opportunities in the secondary market, including properties put up for auction under foreclosure exercises, as prices in such cases are expected to become more attractive. Nonetheless, thorough due diligence remains essential before making any purchase decision.

Consequently, for those upgrading from a flat or apartment to a larger unit, or moving to a bigger landed property, 2026 could be an ideal year to buy. The reduction of the overnight policy rate from 3% to 2.75% also means lower borrowing costs.

While prioritising affordable housing for the B40 segment, the government should also expedite catalytic projects to stimulate economic activity, strengthen purchasing power and boost business confidence among Malaysians and small and medium enterprises. With 2026 designated as VM2026, revisiting policies such as Malaysia My Second Home could further attract foreign buyers and encourage greater foreign ownership.

Zooming into 2025 itself, the property market showed normalised activities while demonstrating strong resilience in overall values. Although there was a slight decline in transaction volumes in 1H2025, the overall transaction values remained steadily higher and trending well into the year end.

In 2025, the residential sector continued holding the lion’s share of total transactions with strong housing demand due to population growth, urbanisation, low interest rates and favourable mortgage terms. The rise in “remote working” has also led to more demand for new lifestyle-themed properties within suburban and new semi-rural areas. Governmental incentives for the first-time homebuyers also help stimulate market activities and enhance buyers’ confidence.

Industrial and development land is expected to continue gaining further momentum in 2026. In 9M2025, the country attracted approved investments totalling RM285.2 billion, representing a 13.2% increase from the previous year.

Johor led all states with RM91.1 billion in approved investments, followed by Selangor with RM51.9 billion, Kuala Lumpur with RM45.9 billion, Penang with RM23.7 billion and Kedah with RM17.5 billion.

The hospitality sector and good retail malls will continue to see better days on the back of a strong performance for 1H2025. These sectors are on an uptrend trajectory, with VM2026.

The office market has also performed well with a strong “flight to quality” trend emerging over the past 24 months. Many companies are relocating to new green buildings to align with their ESG agendas and net zero carbon journeys.

By location, new opportunities are within the economic zones such as JS-SEZ in Iskandar Malaysia, Greater KL where the main population and job centres are found as well as Penang, the major industrial and manufacturing hub.

As per the Napic report, foreign purchasers account for less than 1% of total residential property transactions (913 out of 120,307 transactions in 1H2025). There should be more effort to target qualified foreign purchasers of residential properties. Any sort of waivers or reduction in property taxes and costs will be welcomed. VM2026 is timely with the influx of tourists and will help boost the retail and hospitality sectors for next year.

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