JLL Malaysia: Risk of overbuilding as market sentiment improves

• In the JLL 1Q2025 press conference for the Malaysian property sector on Wednesday, JLL Malaysia managing director Jamie Tan shared that property hotspots, such as the central Klang Valley, Penang and Johor, are more prone to overbuilding as market sentiment improves.

KUALA LUMPUR (Jan 22): The risk of overbuilding of residential properties would become more apparent in the coming years, particularly in high-growth cities, according to JLL Properties Services (Malaysia) Sdn Bhd (JLL Malaysia).

In the JLL 1Q2025 press conference for the Malaysian property sector on Wednesday, JLL Malaysia managing director Jamie Tan shared that property hotspots, such as the central Klang Valley, Penang and Johor, are more prone to overbuilding as market sentiment improves.

“This is the risk that we foresee. It’s a key concern for every developing nation. Therefore, it is important for stakeholders and policymakers to have meaningful controls in place, to prevent a property glut. Have the proper policies in place, and do proper feasibility studies before any new launches,” he stressed.

Nevertheless, Tan pointed out that residential market growth has surpassed pre-pandemic levels, indicating market resilience and proven investor sentiment.

“At the same time, overhang [of residential properties] had also dropped significantly since the pandemic years,” he added.

Meanwhile, prices continue an upward trend, driven by escalation in construction cost and land prices.

As for the office sector in Kuala Lumpur, it continued to demonstrate ongoing resilience, driven by increasing focus on sustainability and technological advancements, said JLL Malaysia head of office leasing advisory Quiny Lee, in her presentation during the press conference.

“Tenants are actively seeking green-certified and technological advanced buildings that align with their ESG (environmental, social and governance) commitments and operational needs,” said Lee.

Similarly, the logistics and industrial market is showing continued strength, driven by ongoing trend of supply chain diversification and the “China Plus One” strategy, according to JLL Malaysia logistics and industrial director Derek Yap. "We’re seeing increased interests from both local and international investors, particularly in the logistics, automotive, medical equipment, and E&E (electrical and electronic) sectors.”

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Meanwhile, Malaysia’s data-centre segment is poised for remarkable growth, with an expected compound annual growth rate (2024 to 2028) of 69%, with Johor recording a 77% rate.

“The projected growth rates reflect an increasing confidence in Malaysia’s digital infrastructure, and its potential to become a key player in the global data-centre landscape,” said JLL Malaysia capital markets senior director KL Eng.

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