More room for property boom

THE property market is expected to continue growing in 2026, with the industrial sub-sector remaining a key segment, anchored by the Johor-Singapore Special Economic Zone (JS-SEZ).

Zerin Properties chief executive officer Previn Singhe says growth is expected to be more focused, with activity driven by clearer economic catalysts rather than a broad sector-wide momentum.

“Capital will continue gravitating toward assets with strong economic linkages, established catchments and clear infrastructure visibility,” he tells StarBiz 7.

“In these locations, transaction values are likely to remain firm, supported by employment growth, connectivity upgrades and sustained private sector investment.”

Previn adds that policy consistency in affordable housing and a stable financing environment will continue to underpin the residential sector.

“Meanwhile, segments facing structural imbalances, particularly legacy high-rise residential stock and older commercial buildings, will require more time to stabilise.”

Going into 2026, Previn says Johor is expected to lead market activity.

“The JS-SEZ, progress on the Johor Baru-Singapore Rapid Transit System (RTS) Link and the rollout of the 3,200-acre Maharani Freeport in Muar collectively strengthen cross-border mobility, boost industrial and digital clusters and support demand for logistics facilities, industrial land and housing in integrated townships and transit-supported areas.”

Olive Tree Property Consultants founder and chief executive officer Samuel Tan says growth drivers for the property market in 2026 will be the completion of mega-infrastructure projects, which will cause “ripple effects”.

Key projects like the RTS Link and continued expansion of the Mass Rapid Transit 3 and East Coast Rail Link will have a mature, price-in effect.

“Areas around completed stations will see solidified demand for residential and commercial spaces, promoting them as a long-term value pillar.”

Additionally, Tan says the momentum in data centres, semiconductor supply chain investments and regional logistics hubs is expected to continue.

“This will create high-value jobs and sustain strong demand for industrial real estate, indirectly supporting the residential market versus related corridors.

“Assuming continuity in government policy, initiatives like the Madani Housing Scheme and public-private partnerships for affordable housing remain a core driver of transaction volume and first-time homeownership, ensuring stability in the mass market segment.”

By 2026, Tan says sustainability certifications, energy-efficient features and climate resilient designs will move from a “niche to a mainstream expectation”.

“This is especially for mid-to high-end projects, which will create clear value differentiation,” he says.

Additionally, Tan says that a fully recovered tourism sector – coinciding with Visit Malaysia Year 2026 – will rejuvenate demand for the hospitality sector.

“This includes short-term rentals, service apartments and retail in hotspots like Kuala Lumpur, Johor Baru and Penang.”

Zooming in on Johor, Tan says the expected commencement of the RTS Link will be a “psychological” and “physical” catalyst.

“This will boost rentals and owner-occupier demand.

“The relentless cost of living and property prices in Singapore will continue to make Johor attractive for semi-retirees, remote workers and small and medium enterprises seeking regional offices or headquarters.

“Progress on the Pengerang Integrated Petroleum Complex and the JS-SEZ could further diversify demand into industrial and supporting service sectors.”

Barring unforeseen circumstances, Savills Malaysia Sdn Bhd group managing director Datuk Paul Khong expects the Malaysian property market to see a “step up” in 2026.

“We are hopeful for a better year ahead, based on actual market forces leading the way.

“Malaysia has the right ingredients for growth, coupled with its strong stability and economic factors. This will push and propel its main growth trajectory into 2026 and into the real estate sector as well.”

In spite of the positive outlook, real estate experts believe that the property market won’t be without challenges.

Previn says the higher stamp duty for foreign residential buyers will have an impact.

“The proposed increase in stamp duty for foreign purchasers from 4% to 8% may constrain activity at the upper end of the residential market and could soften foreign buyer sentiment.”

Previn says factors such as “legacy overhang” units and slow-moving stocks are also concerns.

“Although a large portion of overhang consists of legacy units, the recent quarter-on-quarter increase indicates that new supply is also contributing.

“Progress in clearing this stock will depend heavily on product repositioning, pricing adjustments and stronger alignment with actual occupier demand.”

He adds that older commercial buildings are also facing structural pressure.

“Conversions, refurbishments and environmental, social and governance upgrades remain essential for older office and retail assets.

“Industry players are seeking clearer guidance on tax exemptions for commercial-to-residential conversion, which could reduce the financial burden for such projects if confirmed.”

Furthermore, Previn says elevated logistics and construction costs, compliance requirements and global economic uncertainties (including tariff-related impacts), may continue to influence investment decisions and project timing.

Tan notes that certain urban areas, especially Kuala Lumpur, still face a glut of high-end condominiums and commercial office spaces.

“This leads to stagnant capital appreciation and competitive rental yields.

“Construction cost volatility is another issue. Malaysia’s open economy is sensitive to global recessions, trade tensions and currency fluctuations.

“A major downturn could dampen investor sentiment and foreign direct investment flows.”

Tan also highlights that the booming Johor property market will not be without its own struggles.

“Johor historically has one of the highest property overhangs in Malaysia. While absorption is improving, there is still a significant inventory of completed, unsold units, particularly in high-rise segments, which caps price growth.”

Moreover, he says the success of the Forest City Special Financial Zone is still not guaranteed.

“Its impact depends heavily on the clarity of regulations, speed of implementation and the ability to attract major anchor tenants. Past negative perceptions of the project also needs to be overcome.”

Tan also points out that Johor’s property fortunes are tightly linked to Singapore’s economic health.

“Any recession in Singapore would immediately reduce cross-border demand for both investment and properties. The reverse is also true,” he says.