Asia-Pacific's cross-border investment in Malaysian commercial real estate sector hit US$9.5b in 1Q—Knight Frank

• While Malaysia was not among the top cross-border capital destinations this quarter, there was a steady rise in enquiries, particularly for Kuala Lumpur, Penang’s industrial corridors, and Johor’s logistics and residential hubs.

KUALA LUMPUR (May 6): Malaysia is cautiously emerging as a diversification market for global investors seeking value beyond mature hubs, with Japan, South Korea, and Australia leading inbound flows, according to Knight Frank Malaysia.

In a statement on Tuesday, Knight Frank said that its latest Asia-Pacific Capital Markets Insights report found that Asia-Pacific’s cross-border investment in the commercial real estate sector surged to US$9.5 billion (RM40.2 billion) in the first quarter of 2025 (1Q2025), doubling year-on-year.

Knight Frank Malaysia group managing director Keith Ooi said the research firm is observing early signs of renewed cross-border investor interest in Malaysia, particularly among those reassessing Southeast Asia’s growth potential.

“Malaysia offers improving fundamentals, an evolving real estate investment trust market, and increasingly transparent regulations. While investor caution remains, the region’s overall momentum offers reasons for optimism,” he said.

The firm noted that while Malaysia was not among the top cross-border capital destinations this quarter, there was a steady rise in enquiries, particularly for Kuala Lumpur, Penang’s industrial corridors, and Johor’s logistics and residential hubs.

Knight Frank Malaysia's executive director of capital markets — investments, James Buckley, said investors who previously focused solely on core markets are now shifting some attention to Malaysia, albeit cautiously.

“The industrial and data centre sectors are attracting capital, as are hotels, given the rebound in tourism, which is driving improved occupancy and average daily rates.

“We are seeing exploratory interest that could translate into transactions if key policy and macroeconomic indicators stabilise,” he said.

Furthermore, Knight Frank anticipates stronger activity in the second half of 2025, contingent on stable economic conditions and clearer policy signals from the government.

The firm said that overall transaction volume in Asia-Pacific held steady at US$33.4 billion in 1Q2025, easing 0.8% from the same period last year.

“However, this reflected a sharper 17.1% decline from the strong activity in 4Q2024. International investors remained active, with cross-border transactions accounting for 28.4% of all investment activity, the highest proportion since 3Q2023,” it added.

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