Selective Demand, Data Centres To Drive Malaysia’s 2026 Property Market
Malaysia’s property sector is poised for a year of stability with pockets of strong growth in 2026, particularly in industrial assets such as data centres, according to PropertyGuru Group Malaysia Managing Director Vic Sithasanan.
He expects the market to be shaped by steady residential demand, selective commercial activity and a standout year for industrial properties, underpinned by digitalisation and artificial intelligence (AI)-driven infrastructure needs.
On the housing front, Sithasanan said to BusinessToday that search activity has remained resilient through 2025 despite global headwinds, helped by policy support such as the Step-Up Financing Scheme under the Housing Credit Guarantee Scheme, tax relief for homes priced between RM500,000 and RM750,000 and the Overnight Policy Rate adjustment to 2.75%.
Buyer preferences, however, are shifting.
“As return-to-office trends gain traction, home seekers are gravitating back towards employment hubs and locations with strong highway and public transport connectivity.
“Hence, projects in established areas with completed infrastructure are likely to see healthier demand,” he said.
He highlighted that today’s buyers are also more selective, favouring reputable developers with strong branding and well-designed, liveable projects.
Industrial: The Clear Outperformer
Meanwhile, Sithasanan revealed that the industrial segment is expected to lead growth in 2026, with demand for data centres set to outpace 2025 levels.
“Rapid digitalisation and rising AI adoption are fuelling demand for data storage and processing capacity, creating sustained momentum for industrial and logistics-linked assets,” he explained.
On the other hand, Sithasanan said interest rates, inflation and foreign investment policies will remain key market drivers. With inflation manageable and Malaysia’s economy projected to expand between 4% and 4.5% in 2026, rates are likely to stay broadly stable, supporting predictable property activity.
Foreign demand continues to provide a steady undercurrent. Based on proprietary data from PropertyGuru.com.my and iProperty.com.my, 15%-20% of traffic over the past three years has come from foreign IP addresses, with Singapore-based visitors accounting for about 6.5%-7.5%.
Cross-border interest, particularly from Singaporean buyers eyeing higher-value homes in well-connected areas, could strengthen further once the Johor-Singapore RTS Link becomes operational. Malaysia’s relative affordability and the strong Singapore dollar continue to enhance its appeal.
Opportunities and Risks Ahead
Developers will still need to navigate global uncertainties that could push up construction material and labour costs. Building diversified supply chains and tightening cost controls will be critical to protecting margins.
Demographic shifts also present an opportunity. As Malaysia’s population ages, demand is expected to grow for accessible homes near healthcare, amenities and transport, as well as developments incorporating active ageing or assisted-living elements.
For investors, climate resilience is emerging as a decisive factor. The rising frequency of flash floods underscores the importance of site selection and sustainable design. Over time, properties in less flood-prone areas or with strong mitigation features are likely to command greater value and stronger returns.
Overall, 2026 is shaping up to be a year of cautious confidence — steady fundamentals in residential, strong momentum in industrial, and a more discerning, sustainability-focused market.
