Press Statement: Knight Frank Malaysia Budget 2026
KUALA LUMPUR, 10 October 2025 – Knight Frank Malaysia views Budget 2026 as a measured policy framework aimed at sustaining growth while maintaining fiscal prudence. With total spending of RM470 billion, the Budget takes a cautiously expansionary stance — seeking to strengthen Malaysia’s economic fundamentals amid evolving domestic and global headwinds.
The government’s focus on infrastructure-led development, digital transformation, and the green transition underpins its intent to build a more resilient economy. GDP growth is projected between 4.0% and 4.5% in 2026, with the fiscal deficit targeted to narrow to 3.5% from 3.8% previously.
Infrastructure remains central to Malaysia’s development strategy, with allocations spanning transport, utilities, and urban regeneration. These measures are expected to sustain activity in the construction and property sectors, though effective project execution will be key to translating spending into tangible growth outcomes.
Homeownership continues to feature prominently, with the extension and expansion of key housing incentives. The challenge ahead will be ensuring that policy support meaningfully addresses affordability gaps and supply-demand imbalances, particularly in urban centres.
The Budget also places renewed attention on urban revitalisation and adaptive reuse. The government’s proposal for a 10% tax deduction (up to RM10 million) for developers undertaking commercial-to-residential conversions marks a significant step towards rejuvenating underutilised office and retail buildings. This is
complemented by RM600 million allocated for the restoration of Carcosa Seri Negara — signalling a more deliberate national approach to urban renewal and heritage preservation.
Budget 2026 also advances Malaysia’s sustainability agenda, with a clearer framework for ESG adoption and low-carbon transition.
Knight Frank Malaysia’s Group Managing Director, Keith Ooi, noted that, “It’s encouraging to see the Budget weave ESG priorities into economic and development planning. The introduction of carbon taxation, coupled with green tax incentives, signals a firm policy shift that will influence investment decisions across
the real estate and construction sectors.”
On the investment front, the Budget continues to rely on public–private collaboration as a key growth driver. RM30 billion in GLIC investments, RM10 billion through public-private partnerships (PPP), and RM10.8 billion in GLC and statutory body investments reflect ongoing efforts to stimulate domestic activity and investor confidence.
Overall, Budget 2026 outlines a pragmatic path forward — balancing fiscal restraint with targeted stimulus. Its success will depend on policy implementation and the private sector’s ability to adapt to evolving structural priorities in infrastructure, housing, and sustainability.
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