Only Johor saw upticks while other states’ residential markets stay cautious—Henry Butcher

KUALA LUMPUR (Jan 26): Johor was the only state that gained confidence while the overall Malaysia residential market stayed flatish in 2025 as developers stayed cautious.

Henry Butcher Malaysia chief operating officer Tang Chee Meng said the residential property market appeared to have plateaued in 2025, with national transaction volume declining 2.75% to 187,073 in the first nine months, while transaction value slipped 0.3% to RM77,883.44 million.

“The main markets of Selangor and Penang registered a drop in both volume and value, while Kuala Lumpur recorded a decline in volume, but an increase in value. Only Johor saw growth in both,” he said during the media presentation of the Henry Butcher Perspective—Malaysia Property Outlook 2025 report last week.

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Johor improves as state steps in

In Johor, 15,653 units were launched in 2025, with transaction values totalling RM2,825.76 million, while 3,293 units remained unsold.

Tang explained that residential overhang in Johor had been high in previous years because of vacant units from earlier developments, particularly from China-backed projects, which affected investor confidence, including among Singaporeans.

“Conditions are improving because of proactive government initiatives. With the special financial zone in Forest City, more companies may set up offices there, spurring demand for office space and residential units,” he added.

Some industrial players have also begun housing workers in existing residential stock, with certain manufacturers accommodating employees in Forest City apartments.

On future supply, developers are taking a cautious approach.

“Most of the 60,000 units under construction will be completed. New launches are expected to remain limited, with projects typically numbering 200–300 units to avoid overhang,” Tang said.

KL and Selangor: High-rise demand persists

KL and Selangor recorded declines in residential transaction volumes in 2025. KL fell just under 0.4% to 10,249 units, while Selangor declined 5.7% to 39,583 units. In value terms, KL rose 6.9% to RM9,422.92 million, while Selangor dipped 3.8% to RM22,592.54 million.

About 55% of KL transactions were priced RM500,000 and below, 23% between RM500,001–1 million, and 22% above RM1 million. In Selangor, 63% of units were below RM500,000 and below, 26% at RM500,001–1 million, and 11% above RM1 million.

New launches increased to 6,442 units in KL, and 14,718 in Selangor; but sales dipped, highlighting the cautious mood among buyers.

Overhang in Selangor rose 20% to 2,757 units. In contrast, KL’s overhang fell 43% to 2,287 units.

Tang said smaller-sized units around 1,000 sq ft and below will remain popular, alongside niche high-end developments, and innovative concepts. The stable economy and low-interest rates will also continue to support the market, he added.

Penang overhang concentrated in condos

Penang’s residential market declined in volume and value in the first nine months of 2025, with 12,642 units worth RM5.7 billion transacted. Seberang Perai contributed 6,974 units valued at RM2.6 billion.

Owner-occupier demand underpinned Penang island, particularly for landed and mid-market strata units, while high-rise and serviced apartment absorption remained slower.

Penang island’s residential overhang rose from 2,570 units in 3Q2024 to 2,730 units in 3Q2025, a 6.2% increase, with total value hovering around RM2 billion.

The increase was driven primarily by the condominium and apartment segments, where overhang rose by 25.6% from 1,708 units (RM1.3 billion) to 2,146 units (RM1.4 billion).

Of these 2,146 unsold units, approximately 1,291 or around 60% were priced between RM200,000 and RM500,000, reflecting continued absorption challenges in certain high-rise sub-markets with competitive supply.

Seberang Perai’s overhang increased slightly by 8%, but is not expected to rise further in 2026.

Tang said the higher stamp duty proposed for non-citizens and foreign companies from 4% to 8% under Budget 2026 is expected to dampen marginal foreign investment purchases in Penang island, particularly in price-sensitive or yield-driven acquisitions.

Foreign buying activity in 2025 remained selective, with rental demand more visible than outright purchases, including among participants under the Malaysia My Second (MM2H) scheme, especially in heritage and coastal areas such as Seri Tanjung Pinang, Tanjung Tokong, Tanjung Bungah, and Batu Ferringhi.

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