CBRE | WTW: Mega infrastructure projects, new technologies to shape Malaysian real estate industry in 2025

• CBRE | WTW group managing director Tan Ka Leong: “As we look to 2025, it is clear that the Malaysian property market is entering a transformative phase. From infrastructure projects such as the East Coast Rail Line (ECRL), the Johor-Singapore Rapid Transit System Link (RTS Link) and the Pan Borneo Highway to the adoption of advanced technologies and sustainable urban redevelopment, the nation is poised to deliver promising opportunities for investors and stakeholders.”

KUALA LUMPUR (Jan 9): Malaysia's property sector will be mainly driven by the completion of mega infrastructure projects and the transition to new technologies this year, according to CBRE | WTW group managing director Tan Ka Leong at the media launch of the real estate consultancy's 2025 Market Outlook Report earlier on Thursday.

“As we look to 2025, it is clear that the Malaysian property market is entering a transformative phase. From infrastructure projects such as the East Coast Rail Line (ECRL), the Johor-Singapore Rapid Transit System Link (RTS Link) and the Pan Borneo Highway to the adoption of advanced technologies and sustainable urban redevelopment, the nation is poised to deliver promising opportunities for investors and stakeholders,” Tan said in his welcome address.

“To maximise and sustain the benefits from these game changers, development planning and building regulations should be reviewed and updated to fully leverage the potential of the property market,” he added.

Presenting on the Klang Valley market, CBRE | WTW associate director of research and consultancy Mary Kurien said that the transaction volume of high-rise residential units continues to supersede that of landed units in the first nine months of 2024 (9M2024).

“This represents a shift in consumer inclinations towards more affordable and spatially efficient non-landed dwellings.”

In 9M2024, the residential high-rise segment recorded an 11% year-on-year increase in transaction volume and a 19% year-on-year rise in transaction value. This is compared to 6% (volume) and 7% (value) for landed units for the same period.

Mary highlighted that the office market in the Klang Valley has become increasingly competitive.

"Landlords will have to adopt more competitive leasing strategies to retain existing tenants and attract new ones. There is also a shift towards sustainable and tech-driven office spaces, with 77% of the incoming supply of over 6.1 million sq ft being green-certified buildings."

As for the retail sector, she said it showed improved sentiments with a forecasted 3.9% increase year-on-year in 2024, with new completions including the New Ocean Fine Food City in Petaling Jaya, the rejuvenated Semua House in Kuala Lumpur and the Elmina Lakeside Mall in Shah Alam.

"Older malls continue to struggle and search for a niche in the changing retail landscape," she added.

In Klang Valley's industrial sector, Mary noted that major players such as Google, Amazon Web Services (AWS), NextDC and Mah Sing Group Bhd (KL:MAHSING) are investing billions of ringgit in data centres.

"Klang Valley's new industrial parks focus on high-tech industries, artificial intelligence (AI) and green real estate certifications."

Meanwhile, premium hotels including SO Sofitel @ Oxley Tower in Jalan Ampang and Park Hyatt @ Merdeka 118 are set to debut in Kuala Lumpur within the next three years.

According to Mary, 61% of the incoming hotel supply within the Klang Valley are made up of five-star hotel rooms.

Over in Johor, upcoming mega infrastructure projects and the formulation of special economic zones will continue to fuel Iskandar Malaysia’s property market, according to CBRE | WTW director Paul Brendan Chan.

"For instance, the strong market momentum is expected to extend with more residential products being introduced to the market, the expansion of co-working spaces within purpose-built offices, the increment in retail footfall and occupancy, the high demand for warehouses and data centres, and the new entries of international hotel brands," he said.

CBRE | WTW (Penang) director Tan Chean Hwa echoed similar sentiments in the Penang market, citing ongoing infrastructure projects such as the Penang LRT and the Silicon Island that are contributing to the state's sustained growth.

According to him, key sectors to look out for in the Penang market this year include the office and industrial sectors, driven by investments and rising demand.

“The overall Penang property market in 2025 is anticipated to be cautiously optimistic with ongoing infrastructure projects, government incentives and a thriving industrial sector driving growth. But this may be dampened by uncertainties arising from unfavourable trade policy and investor hesitancy,” he said.

For the Sabah property market, C H Williams Talhar & Wong (Sabah) director Cornelius Koh said that the most active property sector in Kota Kinabalu, excluding the agricultural segment, is the residential segment, which accounted for 74% of transaction volume and 50% of transaction value in 9M2024.

“On the whole, the market in Kota Kinabalu is in recalibration mode since the Covid-19 pandemic. Besides that, [tourist] arrivals in Sabah continue to record steady growth but have yet to reach pre-pandemic levels.”

Sarawak is gearing towards becoming a developed high-income state by 2030 in line with the Post-Covid-19 Development Strategy 2030, said C H Williams, Talhar, Wong & Yeo Sarawak director Yip Phooi Leng.

She added that the hotel sector in Sarawak is expected to achieve a record-breaking five million visitors with an estimated tourism receipt of RM13 billion in 2025.

“It’ll be an exciting year in 2025 with the increase in tourist arrivals anticipated and tourism activities mooted for Sarawak."

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