This article first appeared in City & Country, The Edge Malaysia Weekly on June 22, 2026 - June 28, 2026

The residential market in the Klang Valley transitioned into a more selective phase in 1Q2026, but overall housing demand remained resilient in the period, according to Savills Malaysia director of research and consultancy Fong Kean Hwa when presenting The Edge Malaysia | Savills Klang Valley Residential Property Monitor 1Q2026.

Fong observes that homebuyers are shifting their focus towards high-quality developments that offer long-term value, particularly in well-connected areas, amid some market headwinds and investment risks.

“The affordability challenge continues to shape the landscape, particularly for first-time buyers, propelling demand towards more accessible suburban markets,” he says. “At the same time, external uncertainties, such as geopolitical developments and inflationary pressures, may continue to influence sentiment. Against this backdrop, cautious but sustained demand beyond 1Q2026 is likely to persist.”

He adds that this evolving environment suggests the need for developers to adapt to changing buyer preferences while retaining a focus on quality and value in their offerings.

Reviewing overall residential market performance in 1Q2026, Fong says it was relatively stable, well supported by the generally resilient macroeconomic environment.

“Malaysia’s economy expanded by 5.4% y-o-y (year on year) in 1Q2026, driven by steady growth across the construction, services and manufacturing sectors. Improved labour market conditions and manageable inflation created a supportive backdrop for housing demand. However, financing indicators signal a more cautious tone. Housing loan applications have declined 2.4% y-o-y, indicating a trend of selective buying behaviour,” he says.

It is evidenced in National Property Information Centre’s (Napic) statistics, which show that residential market transactional activity in 1Q2026 moderated from the preceding quarter, which was in line with typical seasonal trends.

“The softer performance compared with a year ago may initially suggest a slowdown … It is more likely to reflect a transition towards a more calibrated and selective market phase,” he explains.

This viewpoint is also supported by a rising Malaysian House Price Index (MHPI). In 1Q2026, the index gained 1.7% y-o-y to 235.5 points, with the All House Price increasing to RM507,533, suggesting that underlying demand continues to provide support, particularly in locations with strong connectivity, established amenities and proven liveability, such as the central region.

According to Savills Malaysia, the residential market in the central region (Kuala Lumpur, Selangor and Putrajaya) remained healthy in 1Q2026, recording a total of 16,333 transactions with an overall value of roughly RM11.9 billion. Although transaction volume declined 8.5% y-o-y, total value increased 1.8%, indicating sustained demand for better-positioned and higher-value properties.

Another notable trend that Fong observes was that well-positioned residential products are gaining more market traction.

“Buyers are no longer motivated solely by price or incentives; they are placing more importance on accessibility, established townships, functional layouts and long-term value retention. This shift has created a clearer divide between projects that meet evolving buyer expectations and those that struggle to differentiate themselves in a competitive market, especially in the central region,” he says.

In 1Q2026, residential transaction volume in Kuala Lumpur remained stable at 3,183 units, with the value rising 6.2% to about RM3.06 billion (an average of RM962,000 per transaction), indicating healthy interest in well-located developments, particularly among affluent owner-occupiers and investors seeking long-term capital preservation, according to Savills Malaysia.

The research firm also highlights that serviced apartments and SoHo (small office, home office) units in Kuala Lumpur gained stronger momentum during the quarter under review, recording a total of 1,587 transactions (up 23.6% y-o-y) and total value of RM2.17 billion (an average of RM1.367 million per transaction). Fong believes this uptick is likely to have been supported by a strengthening rental market and the appeal of urban living formats that offer convenience and accessibility.

Meanwhile, the city’s premium market also remained resilient, underscoring its established position with buyers prioritising accessibility, lifestyle amenities and long-term value.

“Even amid a cautious sentiment, well-located properties continue to attract buyers, particularly from higher-income brackets,” says Fong. “Conversely, affordability challenges persist across the broader market.”

Amid high home prices in Kuala Lumpur, he says, an increasing number of first-time buyers and upgraders are looking beyond the city to suburban locations.

This trend is particularly favourable for Selangor, which continues to be the country’s largest residential market and recorded 10,670 transactions in 1Q2026.

“Although the transaction volume [in Selangor] declined 14% y-o-y and total value eased to roughly RM6.2 billion (an average of RM582,000 per transaction), genuine housing needs continue to underpin demand, particularly for properties in the RM300,000-to-RM500,000 price range. They still constitute a significant share of transactions,” Fong says.

Another encouraging trend he has observed in the central region is the continued improvement in rental market conditions.

“Leasing activity strengthened across selected high-rise residential locations, supported by returning expatriates, improving corporate activity and sustained demand from young professionals. Occupancy levels rose in several established submarkets, particularly those near employment centres and transport links,” he says.

Fong adds that the recovery in rents is becoming increasingly relevant in shaping investment decisions, where investors are placing greater emphasis on yield sustainability, occupancy performance and income visibility, reflecting a more disciplined, fundamentals-led approach.

Savills Malaysia’s market tracking indicates that demand for high-rise properties in prime locations remains robust, with KLCC, Bangsar and Mont’Kiara recording stronger price and rental growth than the previous year.

In 1Q2026, average transaction prices of two-bedroom high-rise units in KLCC, Bangsar and Mont’Kiara rose 2%, 3% and 3.6% y-o-y respectively to RM1.5 million in KLCC, RM1.03 million in Bangsar and RM860,000 in Mont’Kiara.

Rental rates also recorded solid growth across these key locations, rising 7.3% y-o-y in KLCC, 6% in Bangsar and 6.3% in Mont’Kiara. Notably, Mont’Kiara continues to stand out for offering relatively stronger rental yields among the three submarkets.

“The Mont’Kiara high-rise residential segment is expected to remain resilient, underpinned by sustained demand from expatriates and high-net-worth individuals,” Fong notes.

Recent completions that target the same buyer group are SWNK Houze @ Bukit Bintang City Centre (BBCC) and Windsor Tower at Pavilion Damansara Heights. They have introduced about 441 units in Bukit Bintang and 568 units in Damansara Heights respectively. Fong says these additions will add support to the continued expansion of high-rise residential supply in prime, transit-oriented and established urban submarkets, where demand is increasingly concentrated.

Nonetheless, he highlights that Kuala Lumpur city centre remains a key hotspot for such products, with real estate activity continuing to gain momentum. A notable transaction in 1Q2026 involved Paramount Corp Bhd (KL:PARAMON), which acquired a 3.7-acre freehold tract in Jalan Ampang for RM257.9 million in March 2026. It plans to develop two high-end serviced apartment blocks with a gross development value (GDV) of RM1.1 billion. The land cost-to-GDV ratio is 23.4%. The acquisition marks the third residential development project in the Embassy Row area.

Meanwhile, in Selangor, the high-rise residential market remains resilient, with steady growth in prices and rents.

For example, the average transaction price in Bandar Sunway rose 2.3% y-o-y to RM900,000, with average monthly rental rates increasing to RM3,750 and a rental yield of 5%.

In Subang Jaya, the average transaction price increased to RM800,000, while monthly rents rose to RM3,200, translating into a rental yield of 4.8%.

In Petaling Jaya, average transaction prices remained stable around RM1.1 million. Rental rates increased 6.5% y-o-y to RM3,700 per month, or a yield of 4%.

In Shah Alam, average prices increased 2.6% y-o-y to RM800,000, while monthly rental rates rose to RM2,900 from RM2,720 a year ago, yielding an estimated rental return of 4.4%.

Key real estate activities in Selangor during the quarter under review included Radium Development Bhd’s (KL:RADIUM) acquisition of a 2.56-acre leasehold parcel in Bandar Ampang for about RM45 million in February 2026. The site is earmarked for a mixed-use, transit-oriented development (TOD) with an estimated GDV of RM470 million.

Selangor Dredging Bhd (KL:SDRED) acquired a 1.214ha freehold commercial parcel in Petaling Jaya for RM63 million in January 2026, for a high-rise serviced apartment project with an estimated GDV of RM507 million; Dwi Aurora @ Surya PJ was officially launched in March 2026. As part of the bigger 70-acre Surya PJ township development, the development comprises a 43-storey tower with 439 residential units.

The landed residential segment in Kuala Lumpur and Selangor demonstrated mixed performance across the locations under review.

“The 2-storey terraced house market in key areas in KL, such as TTDI, Bangsar Lucky Garden, OUG and Taman Midah, Cheras, showed positive price appreciation trends in 1Q2026,” Fong says.

In TTDI, transaction prices rose 5.6% y-o-y to about RM1.7 million, while rental rates rose 4.6% y-o-y to RM3,400 per month, or a yield of 2.4%.

In Lucky Garden, Bangsar, prices rose 6.1% y-o-y to about RM1.75 million, while rental rates rose 3.1% y-o-y to RM3,400 per month, or a yield of 2.3%.

In OUG, prices remained broadly unchanged at RM920,000 y-o-y, while rental rates increased to approximately RM2,300 per month, resulting in a rental yield of around 2.7%.

In Taman Midah, transaction prices rose 2.6% y-o-y to RM800,000, while rental rates rose 7% y-o-y to RM2,000 per month, or a yield of 3%.

Meanwhile, in Selangor, stronger price growth was observed in areas such as SS2 and Putra Heights.

In SS2, Fong says, the average transaction price of 2-storey terraced houses rose 8% y-o-y to RM1.08 million. Rental rates also rose 12.2% y-o-y to RM2,300 per month, or a yield of 2.6%.

In Putra Heights, 2-storey terraced house prices rose to RM750,000, while rents rose 8.6% y-o-y to RM1,900 per month, or a yield of 3%.

He also highlights that the semi-detached housing sector in Selangor showed an overall positive trend in 1Q2026, with price increases observed across most monitored areas in SS3, Bandar Kinara, Bandar Setia Alam, Tropicana Alam, Glenmarie Cove, Bandar Parkland in Klang, Evergreen Garden Residence in Cyberjaya and Taman Equine in Seri Kembangan.

“In 1Q2026, Selangor’s semidee housing market registered positive growth, with prices increasing in most key locations. Rental yields held steady at 2.1% to 3.8%,” Fong notes.

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