JLL Malaysia: Property market shows gradual recovery as occupiers seek quality space

JLL Malaysia reported a gradual recovery in the property market at its Q3 2026 media briefing on Nov 10. Office occupancy improved, industrial vacancy fell, and residential transactions remained below year-earlier levels. The consultancy highlighted demand for quality space and potential support fro

PETALING JAYA (Nov 10) — Malaysia’s property market is showing a gradual recovery, with improving office occupancy and lower industrial vacancy, although residential transactions remain below year-earlier levels, according to JLL Malaysia. Presenting its third-quarter 2026 market findings at a media briefing on Tuesday (Nov 10), the property consultancy highlighted demand for quality space and the potential for Budget 2027 measures to support activity into next year.

Technology and shared services companies remained key sources of office demand. However, substantial incoming industrial supply is expected to strengthen tenants’ negotiating position and keep rental growth moderate. Malaysia’s residential transaction volume and value improved modestly in the second quarter of 2026 following a significant first-quarter correction, although both remained marginally lower year-on-year, JLL said. Kuala Lumpur’s transaction volume rose 7.9% quarter-on-quarter, while transaction value was relatively unchanged. The consultancy said this suggested a shift towards more affordable properties. Johor continued to outperform other states, maintaining an upward trend despite moderating activity after a prolonged period of growth.

According to JLL’s briefing material, cumulative mortgage applications reached RM363.4 billion as at September 2026. The consultancy reported a housing loan approval rate of 38.36%, below the 40%–41% range recorded between 2022 and 2025. Greater Kuala Lumpur’s Grade A office market recorded improved occupancy across all three submarkets monitored by JLL in the third quarter. Occupancy in the Kuala Lumpur City submarket rose to 83.6% from 83% in the preceding quarter, while average achievable rents stood at RM7.51 psf per month. The decentralised submarket recorded the highest net absorption at 123,093 sq ft, up from 23,262 sq ft in the previous quarter. JLL put the office supply pipeline through 2030 at 3.34 million sq ft, led by The Capitol with 1.2 million sq ft and Menara Ethos at TRX with 800,000 sq ft.

Green-certified buildings recorded higher average achievable rents of RM6.79 psf, compared with RM5.83 psf for buildings without green certification. Technology and shared services companies remained the main sources of office demand. JLL expects the Enhanced Global Services Hub (GSH) incentive proposed under Budget 2027 to provide further support for prime office space.

Greater Kuala Lumpur’s industrial stock increased to 41 million sq ft in the third quarter from 39.6 million sq ft in the preceding quarter, according to JLL. Vacancy fell to 8.8% from 9.9%. Average rents stood at RM2.20 psf per month. The consultancy attributed rental increases primarily to pre-agreed adjustments of up to 10% at established, fully-occupied properties completed in 2022 and 2023. Johor, Penang and Selangor remained key industrial locations, supported by foreign direct investment, electrical and electronics industry ecosystems and data centre developments. JLL’s draft article put Penang’s industrial stock at 9.6 million sq ft, with asking rents of RM3.50–RM4 psf. Johor had approximately 13 million sq ft of stock, with rents of RM2.30–RM3 psf.

Automated storage and retrieval systems also gained ground in cold storage facilities, accounting for 30.9% of cold storage stock in 2026, compared with 10.2% in 2016, according to the draft. Nevertheless, JLL expects industrial rental growth to remain moderate in 2026 as substantial incoming supply gives tenants greater negotiating power. Local institutional investors and Malaysian real estate investment trusts remained the sector’s main investor base, focusing on quality assets in strategic locations.

Budget 2027 outlines an overall envelope of RM510 billion. Separately, the government projects a fiscal deficit of 3.3% of gross domestic product in 2027, moving towards a target of 3% by 2028. Malaysia’s economy is projected to grow between 4.2% and 5.2% next year. JLL expects proposed first-home stamp duty relief to reduce transaction costs and support demand, particularly in the affordable housing segment. Under the proposed measures, eligible Malaysian first-homebuyers purchasing homes priced up to RM500,000 would receive a full stamp duty exemption on loan agreements and instruments of transfer. For homes priced above RM500,000 and up to RM750,000, the proposal provides a full exemption on the first RM500,000 and a 50% exemption on the remaining portion. The measures cover sale and purchase agreements executed from Jan 1, 2027 to Dec 31, 2030. Budget 2027 also proposes stamp duty exemptions for specified instruments involving rescue contractors or developers and original buyers participating in the revival of abandoned housing projects certified by the Housing and Local Government Ministry.

For commercial property, JLL expects the proposed Enhanced GSH incentive to strengthen Malaysia’s position as a regional business hub and support demand for Grade A offices. The proposed framework provides a 5% tax rate on qualifying GSH income for new companies. Incentive periods may be renewed in five-year blocks up to a maximum of 30 years, subject to performance and commitments. It applies to applications received by the Malaysian Investment Development Authority from Jan 1, 2027. JLL also expects Automotive Hi-Tech Valley in Tanjong Malim, Perak, to support industrial land demand along the automotive corridor. Under Budget 2027, wholly-Malaysian-owned automotive vendors relocating there would be eligible for a tax deduction capped at RM5 million for qualifying relocation expenditure incurred from Jan 1, 2027 to Dec 31, 2030.