Sectoral Outlook: Real Estate Stocks in Malaysia

Global Real Estate Outlook 2025

The real estate sector has long been one of the cornerstones of Malaysia’s economic development. From large-scale township developments to integrated commercial hubs, property remains a critical investment segment. In the stock market, real estate investment trusts (REITs) and property development companies form a significant portion of Bursa Malaysia’s listings. But with recent economic shifts, urban migration, and digital disruptions, how are Malaysian real estate stocks expected to perform in 2025 and beyond?

This blog explores the sectoral outlook for Malaysian real estate stocks, including key drivers, market challenges, top-performing counters, and investor strategies.

🏗️ Overview of Malaysia’s Real Estate Sector

Malaysia’s property sector spans multiple sub-industries:

Residential: High-rise condos, landed homes, affordable housing
Commercial: Offices, retail malls, and shoplots
Industrial: Warehouses, logistics parks, manufacturing hubs
REITs: Property portfolios offering dividend income

Despite experiencing a slowdown during the COVID-19 pandemic, the sector has gradually rebounded, driven by government stimulus, infrastructure investment, and foreign direct investment (FDI) in industrial properties.

📊 According to NAPIC (National Property Information Centre), Malaysia recorded over 399,000 property transactions worth RM179 billion in 2023—an increase compared to the previous year.

📈 Performance of Real Estate Stocks on Bursa Malaysia

On Bursa Malaysia, property-related counters include both real estate developers and REITs. Here are two segments investors commonly track:

🔹 Property Development Stocks

These companies focus on building and selling real estate projects. Top listed developers include:

Sime Darby Property Berhad (SIMEPROP)
Mah Sing Group Berhad (MAHSING)
UEM Sunrise Berhad
SP Setia Berhad

These stocks are highly cyclical and respond to interest rate policies, housing demand, and construction material costs.

🔹 Real Estate Investment Trusts (REITs)

REITs offer exposure to rental income-generating properties and tend to be more defensive:

IGB REIT
Sunway REIT
KLCCP Stapled Group
Axis REIT (industrial-focused)

REITs are known for providing dividend yields of 4–6% annually and are popular with income-focused investors.

🔍 Key Trends Influencing Malaysia’s Real Estate Stocks

1. Interest Rate Stability

Bank Negara Malaysia has maintained the Overnight Policy Rate (OPR) at a steady 3.00% since 2023. Stable interest rates can encourage mortgage uptake and support housing demand. Lower borrowing costs also help developers manage debt.

📌 BNM Interest Rate Updates

2. Affordable Housing Demand

Demand remains strong in the RM300,000–RM500,000 price segment. Developers like LBS Bina and Matrix Concepts are aligning their strategies to meet this demand with affordable and mid-market offerings.

3. Industrial and Logistic Parks Boom

E-commerce growth and manufacturing FDI have driven demand for logistics hubs and industrial parks, especially in states like Johor, Selangor, and Penang.

This benefits companies like:

Axis REIT (logistics and industrial assets)
AME Elite Consortium Berhad (industrial parks)

4. Data Centres and Digital Infrastructure

Malaysia is fast becoming a regional hub for data centres and cloud infrastructure, which is fueling new forms of real estate development. For instance, partnerships between REITs and tech firms like AWS or Google are creating new asset classes in the property space.

5. REIT Sector Recovery

Retail REITs like Sunway REIT and Pavilion REIT have seen stronger footfall in malls post-pandemic, resulting in improved earnings. Office REITs are recovering more slowly due to hybrid work trends, but location-centric assets (e.g., KLCC) remain resilient.

🧩 Risks and Challenges

Despite positive signals, the real estate sector in Malaysia faces challenges:

High Unsold Inventory: As of 2024, Malaysia has over 25,000 unsold residential units, especially in high-rise developments.
Construction Cost Inflation: Rising prices for cement, steel, and labour affect profit margins.
Land Bank Limitations: Prime land in city centres is becoming scarcer.
Policy Uncertainty: Changes in housing policies, property taxes, or foreign ownership rules can affect sentiment.

🏆 Top Performing Real Estate Counters (2024 Snapshot)

Stock	Sector	2024 YTD Return	Key Strength
Axis REIT	Industrial REIT	+9.3%	E-commerce logistics growth
Sunway REIT	Retail/Commercial	+6.5%	Footfall recovery in malls
Sime Darby Property	Developer	+11.2%	Township development and land bank
Mah Sing	Developer	+7.4%	Affordable housing pipeline

Source: Bursa Malaysia Stock Performance

💡 Should You Invest in Malaysian Real Estate Stocks?

Here are a few investor considerations:

✅ REITs for Income Investors

If you’re looking for stable cash flow and relatively lower volatility, REITs like Axis REIT and IGB REIT offer attractive yields.

✅ Developers for Growth-Oriented Investors

For higher returns, property stocks like SIMEPROP or Mah Sing offer capital appreciation potential—especially during economic upswings.

✅ Diversify Within the Sector

Investing in a mix of REITs and development stocks can provide exposure to both income and capital gains.

🧭 Strategic Outlook for 2025

With the rollout of Budget 2025 and Malaysia’s focus on infrastructure modernization and sustainable development, the property sector is poised for evolution.

Key forecasts include:

Increased development in green buildings and ESG-compliant assets
Continued growth in industrial property investments
Digital integration in property transactions via proptech startups

📌 Related Reading: Impact of Budget 2025 on Malaysian Businesses

📌 Final Thoughts

Real estate stocks in Malaysia offer diversified investment opportunities—from income-generating REITs to high-growth development companies. While challenges such as oversupply and regulatory hurdles remain, the sector’s fundamentals are supported by demographic demand, industrial growth, and infrastructure expansion.

For investors, understanding the specific sub-sector, assessing dividend yields or price-to-book ratios, and tracking macroeconomic policies are essential to building a resilient property stock portfolio.