Kuala lumpur: Malaysia's property market is expected to remain supported by investment activity, infrastructure development, and demand for specialised assets in the second half of 2026 (2H2026). However, investors are becoming more selective amid global geopolitical uncertainties and evolving market conditions.
According to BERNAMA News Agency, Knight Frank Malaysia's (KFM) group managing director Keith Ooi highlighted that occupier demand is increasingly shifting towards specialised assets that meet evolving business requirements. These include cold chain, data centres, and worker accommodation facilities in the industrial sector; Grade A offices, connected/transit-oriented developments, and flexible workspaces in the office sector; as well as integrated lifestyle and retail experiences in the retail sector. Ooi shared these insights at the launch of the KFM Real Estate Highlights (REH) 1H2026 report.
The report provides a biannual review of industrial, hospitality, office, and retail property performance across Kuala Lumpur, Penang, Johor, Sabah, and Sarawak. It noted that resilient economic fundamentals, such as a GDP growth of 5.4 per cent in the first quarter of 2026 (1Q2026), stable inflation and interest rates, sustained household spending, tourism recovery, and infrastructure investment, continue to support demand across various sectors, including office, retail, hospitality, and residential.
Additionally, the report emphasized that investment in technology, digital infrastructure, and manufacturing continued to underpin industrial and data centre demand. KFM executive director of Research and Consultancy, Amy Wong, noted that capital deployment into infrastructure-backed developments reflects investors' focus on long-term growth.
Wong explained that data centre land accounted for the largest category of Bursa Malaysia-announced property transactions in 1H2026, followed by development and industrial land. This trend indicates that investors are positioning themselves for future development opportunities rather than immediate income-generating assets. Of the top 10 transactions during the period, seven were land acquisitions, and five involved data centre sites across Selangor and Johor.
Wong further highlighted that operational information technology (IT) capacity was 1.2 gigawatts (GW) at the end of 2025, with an additional 2.9GW expected to come onstream between 2026 and 2028. During 1H2026, approximately RM2.45 billion worth of data centre land transactions involving 568 acres were recorded, while RM8.8 billion in data centre-related construction contracts were announced.
Unlike the previous year, contract awards are now spread across smaller packages involving substations, cabling, cooling systems, mechanical and electrical works. This shift indicates that opportunities are expanding beyond landowners and operators to contractors and infrastructure service providers.
Wong concluded that future investment decisions would increasingly depend on infrastructure readiness, particularly reliable access to electricity, water, and connectivity, rather than land availability alone. She noted that infrastructure corridors such as the Johor-Singapore Special Economic Zone (JS-SEZ), Penang's semiconductor ecosystem, and Klang Valley transport projects are expected to continue attracting investment into industrial, logistics, and mixed-use developments. Additionally, structural trends such as artificial intelligence (AI) adoption, supply chain diversification, and environmental, social, and governance (ESG) requirements are reshaping investment priorities, with developers placing greater emphasis on operational assets and infrastructure-supported developments.