Juwai IQI: Data Centers, Logistics, and Housing Demand to Fuel Malaysia’s Real Estate Sector in 2H 2025

Juwai IQI: Data Centers, Logistics, and Housing Demand to Fuel Malaysia’s Real Estate Sector in 2H 2025

Kuala Lumpur, 4 March 2025— The Malaysian property market should maintain its surprisingly strong performance through the rest of 2025, according to remarks released today by Juwai IQI Co- Founder and Group CEO Kashif Ansari.

“The real estate market demonstrated resilience and growth across all key segments in 2024,” Mr. Ansari said. “We saw the number and value of transactions hit their highest levels in a decade.”

The strong real estate market helped boost the share prices of many property industry companies publicly traded on Bursa Malaysia. WMG Holdings Bhd’s value quadrupled during 2024, leaving it with a market cap of more than RM400 million.

Outlook for 2025: Key Growth Drivers

“Here is what’s going to affect the property market in 2025. First, AI and digital infrastructure investments are expected to be major drivers of industrial real estate growth. Over RM57 billion has already been committed for data centres, with a total investment pipeline of RM149 billion. That indicates continued investor confidence.

“Second, foreign direct investment and Malaysia’s strategic participation in BRICS and CPTPP will contribute to sustaining the commercial real estate market.

“In the residential sector, we project price growth of up to 3% in 2025, along with an increase in new home supply and continued improvement in transaction volume.

“The southern region, particularly areas with strong cross-border ties to Singapore, will see heightened demand as companies and consumers begin to take advantage of the new transport links and the incentives of the Johor-Singapore Special Economic Zone.

“The new Economic Zone more tightly binds Malaysia to its largest investor, which will boost economic activity more than similar pacts with other countries could. Singapore sends more foreign direct investment to Malaysia than any other country. While the 2024 statistics are not yet available, Singapore topped the charts in 2023 with its RM22.6 billion of FDI. That was 28% more than second-ranked Hong Kong (RM17.5 billion) and Japan (RM5.5 billion).

Industrial and Commercial Segments Lead the Market

“Malaysia’s industrial sector is flexing its muscles. If you were to ask me which sector was the biggest driver of real estate growth, I would have to say it’s this one. Industrial transaction values climbed by 22% year-on-year in Q3 to reach RM7.2 billion. Industrial transaction growth was concentrated in Johor, Klang Valley, and Penang.

“Strong demand for warehouses and distribution centres was driven by the rapid expansion of Malaysia as a distribution hub. The e-commerce sector also boomed, with gross e-commerce merchandise value (GMV) ballooning by 16% in 2024 to RM139.55 billion (US$31 billion). There is a lot of shopping going on in Malaysia, and that has boosted demand for warehouses and distribution facilities.

“Of course, we must not overlook the significant investments being made in manufacturing facilities and especially data centres. That also contributed to the momentum in the industrial market. Over RM57 billion has already been committed for new data centre construction in 2025.

“Since the DeepSeek announcement, data centre growth has only increased, despite initial fears that it would undermine the sector. STMicroelectronics, Amazon, NTT, and others have made major new commitments since DeepSeek unveiled its latest low-cost model.

“Oracle has said it will invest $6.5 billion into Malaysian data centres, Google $2 billion, YTL and NVIDIA $4.3 billion, SEA $1.5 billion, and Microsoft an undisclosed amount.

“Additionally, Intel is investing $7 billion in Penang’s semiconductor facilities, and Infineon has launched a new chip plant in Kulim. That highlights how Malaysia is an increasingly high-tech manufacturing hub.

“In the commercial real estate market, major tenants are shifting towards newer and more environmentally sustainable office buildings. Seventy-eight percent of the top 100 occupiers in KL have committed to climate targets.

“The result is that new developments like Merdeka 118, which is Malaysia’s first triple-platinum LEED-certified building, will find it relatively easy to find tenants despite having higher rental costs than most buildings on the market. Even though there are some vacancies in the market, these high-quality projects will see their space absorbed quickly.

“Besides industrial and commercial, there is hospitality. The hospitality sector experienced a strong rebound, contributing MYR198.7 billion, or 10.5% of GDP, to the economy in 2024. International tourist arrivals surged to 22.5 million between January and November. Tourist arrivals are 26% higher than a year earlier.

“So, Malaysia is lucky because its real estate markets present an overall picture of growth.

Residential Market: Resilient and Growing

“When it comes to residential real estate, that will also continue to grow this year. In 2024, it recorded a 10.4% increase in transaction value, reaching RM28.74 billion in Q3 2024.

“Residential transactions accounted for 50% of all property transactions, an increase from 46% in the first half of the year. In part, that growth was driven by new supply, with 10% more new homes completed. There is much more supply in the pipeline, as well. The industry has nearly tripled the number of new homes it is building compared to last year.

“Even with the new construction, demand was strong enough that the property overhang dropped to its lowest level since 2017, with 21,968 unsold units in Q3. Look at Johor as an example. There, 90% of the property overhang consists of serviced apartments, but the number of apartments in the overhang has declined dramatically. Only 11,810 remained unsold on 1 January.

“The Malaysian House Price Index (MHPI) remained stable in 2024, moving less than one point from 219.4 to 220.2. Affordability measures, such as the RM10 billion Housing Credit Guarantee Scheme (HCGS) and targeted tax reliefs, have helped sustain demand for homes.

Conclusion: A Positive Year Ahead

“My overall outlook for the Malaysian real estate sector in 2025 is that we will have another strong year. Industrial and commercial segments will lead the way, supported by high-tech investments and expanding trade partnerships.

“The residential market will remain stable. There, increased supply and affordability initiatives will help address challenges that slowed the market in past years.”

((END))

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