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Malaysia’s property sector is poised to gain momentum as demand for data centres and industrial properties continues to rise, enhancing the value of landbanks held by property developers. According to MIDF Research, the sector is expected to remain resilient, supported by the stable overnight policy rate (OPR) of 3 per cent, which is likely to sustain buying interest throughout 2025.
Stable Property Overhang Despite Challenges
MIDF Research noted that while residential overhang increased slightly in the fourth quarter of 2024 (4QCY24), the overall property overhang in Malaysia remains stable. Residential overhang stayed below the three-year average of 27,000 units, indicating a relatively balanced market.
In Johor, the property market showed signs of improvement, with residential overhang declining from 3,030 units in the third quarter of 2024 (3QCY24) to 2,964 units in 4QCY24. Similarly, the overhang for serviced apartments in Johor dropped to 10,624 units in 4QCY24 from 11,810 units in 3QCY24, reflecting improving market sentiment in the region.
Data Centres and Industrial Properties Drive Growth
The increasing demand for data centres and industrial properties is expected to be a key driver of growth for the property sector. As digitalization accelerates and e-commerce expands, the need for data centres and logistics hubs is rising, creating new opportunities for developers with strategic landbanks. These assets are becoming increasingly valuable, particularly in well-connected locations with robust infrastructure.
Property Loan Applications Reflect Seasonal Trends
MIDF Research also highlighted that property loan applications in January 2025 decreased by 5.1 per cent month-on-month, a trend attributed to the school holidays and Chinese New Year public holidays. However, the firm anticipates a rebound in loan applications starting March 2025, driven by stronger economic activity and sustained buying interest.
"Looking ahead, we expect loan applications to remain flat in February 2025 due to the shorter month, followed by stronger growth from March onwards. Overall, buying interest in the property market is expected to remain resilient in 2025," MIDF Research stated.
Positive Outlook for 2025
The property sector’s outlook for 2025 remains positive, supported by stable interest rates, improving market sentiment, and growing demand for industrial and data centre properties. Developers with landbanks in strategic locations are well-positioned to capitalize on these trends, while the overall market is expected to maintain its resilience despite seasonal fluctuations.
In conclusion, Malaysia’s property sector is set to benefit from a combination of stable economic conditions, improving market sentiment, and rising demand for specialized properties. As the market continues to evolve, developers and investors are likely to find new opportunities in the growing data centre and industrial property segments.
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