CBRE WTW Forecasts Malaysia's Real Estate Market Transformation by 2026

Malaysia's Real Estate Market Poised for Transformation by 2026

According to CBRE | WTW, Malaysia's real estate sector is set for a significant transformation by 2026, shifting from resilience to relevance. The nation's economic stability and the emergence of quality assets, particularly those compliant with Environmental, Social, and Governance (ESG) standards, are key drivers of this change. The residential market is expected to see selective positivity, with price increases projected to exceed 3%. This growth is supported by the Malaysia My Second Home (MM2H) program, which continues to attract foreign buyers interested in properties valued above RM1 million. Furthermore, the easing of the property overhang in key areas like Kuala Lumpur and Penang underlines the market's increasing significance.

Projected Market Growth to USD 55.82 Billion by 2031

Data from Mordor Intelligence indicates that the Malaysian real estate market, valued at USD 40.16 billion in 2025, is anticipated to expand to USD 55.82 billion by 2031. This represents a robust Compound Annual Growth Rate (CAGR) of 5.64% during the forecast period. Residential properties, which captured a 61.35% market share in 2025, continue to dominate. Kuala Lumpur, with a 44.90% revenue share, remains a focal point for investment. Johor Bahruor-sale/malaysia/johor">Johor Bahru is also notable, advancing at a 6.78% CAGR through 2031, indicating a rising interest in the region.

Impact of the Malaysia-US Agreement on Reciprocal Trade (ART)

The recently established Malaysia-US Agreement on Reciprocal Trade (ART) is expected to have a substantial impact on Malaysia's commercial and industrial real estate sectors. This agreement aims to enhance bilateral trade and investment, drawing foreign capital into advanced parks and mixed-use developments. As per IMARC Group, the market is projected to grow from USD 22.15 billion in 2024 to USD 29.60 billion by 2033, with a CAGR of 2.94% during 2025-2033. This growth is fueled by economic recovery, urbanization, and increased construction activity.

Residential Market Benefits from MM2H Program

The Malaysia My Second Home (MM2H) program continues to be a significant catalyst for the residential real estate market. By attracting affluent foreign buyers, the program mitigates the property overhang issue in urban centers like Kuala Lumpur and Penang. As MyRumahBaru notes, the market is entering a cautious phase with stable yet selective transactions, driven by moderate price increases. This stability is attributed to cost-push factors and developers' focus on efficiency and affordability.

Economic Growth Underpins Real Estate Prospects

Malaysia's economic growth serves as a solid foundation for the real estate market's expansion. According to CBRE | WTW, the economy expanded by 5.3% in the third quarter of 2024, fueled by investment and consumer spending. The GDP at constant prices for the first three quarters of 2024 amounted to RM1,217 billion, showcasing a 5.2% growth compared to the previous year. With headline inflation at a manageable 1.9%, the consumer price index reached 133.2 points, providing a stable platform for real estate investments.

Future Implications and Strategic Insights for Investors

Looking ahead, Malaysia's real estate market presents substantial opportunities for investors. The anticipated shift towards relevance by 2026 highlights the importance of ESG-compliant assets and strategic locations like Kuala Lumpur and Johor Bahru. Investors are encouraged to consider mixed-use developments and advanced industrial parks, as these sectors benefit from international agreements like ART. RealEstateAbroad.com analysis suggests that the focus should remain on acquiring quality assets within freehold zones, aligning with the country's regulatory framework.

• Focus on acquiring properties in Kuala Lumpur and Johor Bahru for long-term capital appreciation.
• Prioritize investments in ESG-compliant properties to align with global sustainability trends.
• Leverage the MM2H program to tap into the high-end residential market segment.
• Monitor economic indicators such as GDP growth and inflation rates to guide investment decisions.