Kuala Lumpur, 2 October 2025 – Malaysia’s property sector is poised for a stronger second half of 2025 (2H 2025) that could help balance the weaker performance in the first half, according to a research note from Kenanga Investment Bank. The firm expects renewed sales momentum, particularly in residential and mixed-use segments, to underpin recovery in developer sentiment and earnings.
Kenanga notes that while 1H 2025 was muted, weighed down by affordability constraints, cautious buyers, and elevated input costs, signs of stabilization are emerging. The research house points to improving loan approval rates, selective demand in mid-priced homes, and more cautious supply launches as key indicators that buyers and developers are recalibrating expectations.
To support the forecast, Kenanga highlights that developers are increasingly shifting supply towards price bands that better match buyer affordability and financing capacity. They also expect improved absorption as macro stability holds, interest rates remain steady, and cost pressures ease slightly. Industrial, data center, and transit-oriented developments may also contribute as diversification engines in the property sector.
However, Kenanga remains circumspect about the risks. The firm warns that rising construction costs, labor shortages, and regulatory delays can erode margins or stall project deliveries. In addition, if global headwinds intensify or financing conditions tighten, buyer sentiment could dampen again. As such, Kenanga retains a Neutral stance on the sector, favouring selective exposure to developers with strong balance sheets, recurring income streams, and differentiated product offerings.
Investor Insights for Asia
For regional and Malaysia-focused investors, Kenanga’s projection provides useful directional cues. A stronger 2H may bring relief to developers and real estate-centric funds, offering a window for positioning ahead of expected recovery.
Developers with well-located landbanks, efficient cost management, and diversified income sources (e.g. rental arms, industrial logistics) may outperform peers. The appreciation of transit-oriented assets and industrial properties, particularly in fast-growing urban corridors, offers a buffer against cyclical residential headwinds.
That said, yields may remain compressed, and valuation gains might hinge more on multiple expansion than earnings surprises. Investors should watch closely how policy, interest rates, and execution risk materialize over the next two quarters, especially in Southeast Asian property markets where funding and regulatory variability are more pronounced.
