Malaysia’s Budget 2026 Signals Transformative Growth for Real Estate and Property Markets
Header photo shows Yulia Nikulicheva, Head of Research & Consultancy at JLL Malaysia.
RM419.2 Billion “Rakyat’s Budget” Under MADANI Economy Framework Delivers Comprehensive Property Sector Support
KUALA LUMPUR, 22 October 2025 – Malaysia’s Budget 2026, themed “The Rakyat’s Budget,” presents significant opportunities for the real estate and property sectors through strategic allocations totaling RM419.2 billion under the MADANI Economy framework. The budget represents Malaysia’s transition from economic stabilisation to comprehensive transformation, with key implications for housing affordability, commercial property development, and infrastructure-driven growth.
Economic Foundation and Growth Strategy
The 2026 Budget continues the MADANI framework’s focus on targeted investments and government spending rationalisation. With an ambitious GDP growth target of 4.0-4.5%, the government maintains its strategic approach of utilising Public-Private Partnership mechanisms rather than announcing new mega-projects. Federal revenue is expected to increase 2.7% to RM343.1 billion, partly driven by SST expansion and broader e-invoicing adoption, while government debt remains below the 65% ceiling at 64.6% of GDP.
Priority Sector Investments Drive Industrial Demand
The government has identified four key high-value sectors for accelerated development:
- Semiconductor manufacturing
- Artificial Intelligence
- Advanced manufacturing & Pharmaceutical industries
- Sustainability technologies
These allocations specifically target sectors affected by evolving global trade policies, positioning Malaysian businesses to remain competitive amid changing international tariff environments.
JLL Impact Assessment: Manufacturing investments are expected to drive demand for industrial properties. Given the government’s continued support for Malaysia’s key sectors, we anticipate sustained demand for logistics and industrial assets. With additional incentive mechanisms such as Special Economic Zones (SEZs), demand for industrial real estate in established hot spots (Klang Valley, Johor, Penang and Kedah) is likely to remain robust.
Digital Infrastructure Expansion
RM2 billion has been allocated for the MADANI submarine cable (SALAM) connecting 3,190km across Peninsular Malaysia to Sabah and Sarawak, alongside continued 5G network expansion. The nationwide 5G network expansion targeting 80% coverage by 2026 will enable smart building technologies and IoT integration. This infrastructure development is expected to strengthen Malaysia’s data centre ecosystem and enhance nationwide connectivity.
JLL Impact Assessment: These initiatives will likely drive continued growth in logistics, industrial, and data centre real estate across established hubs including Klang Valley, Johor, and Penang, while potentially creating new investment hotspots in other states.
Talent Development Initiative
A significant RM7.9 billion allocation for the Technical and Vocational Education and Training (TVET) ecosystem represents a substantial increase from previous budgets. This year’s budget prioritises specialised training for:
- Semiconductor manufacturing
- Artificial Intelligence applications
- Energy transition technologies
- Aerospace industries
The government further proposes to support training programmes that develop local IC Design talent to global standards. This workforce development strategy directly supports Malaysia’s competitive positioning in high-tech manufacturing and data centre industries.
Special Economic Zones Development
Three previously announced Special Economic Zones will receive RM7 billion in infrastructure investments:
- Johor-Singapore SEZ
- Bukit Kayu Hitam SEZ
- Forest City
JLL Impact Assessment: The newly designated Special Economic Zones are projected to generate billions in approved investments through their specialised incentive mechanisms, with the JS-SEZ already recording RM37.1 billion in approved investments for H1 2025.
While the government has yet to publish the blueprint for the Johor-Singapore SEZ, the zone has already generated substantial interest from investors across various sectors, drawn by the tailored incentives targeting specific industries and its strategic location.
The Bukit Kayu Hitam SEZ offers a unique advantage with its location on the Malaysia-Thailand border, presenting significant opportunities for cross-border synergies. The special tax regime is designed to strengthen economic cooperation between the two countries and boost regional economic growth.
Meanwhile, the Forest City SFZ which is also part of the JS SEZ proposes a special regime for Single Family Offices (SFO), which is expected to attract additional foreign investment into Malaysia.
Overall, the proposed SEZs are strategically positioned to maintain Malaysia’s investment momentum while focusing on high-growth sectors.
Single Family Offices
Budget 2026 reinforces Malaysia’s position as a regional hub for wealth management and high-value investments by reaffirming policies and guidelines governing Single Family Offices (SFOs). The move underscores the Government’s commitment to creating a robust and competitive ecosystem that caters to ultra-high-net-worth individuals and families seeking a secure, transparent and efficient jurisdiction for managing their global wealth.
The Budget recognises the strategic role of SFOs in deepening Malaysia’s financial services landscape and strengthening its standing as a preferred destination for high-end capital inflows. By supporting the regulatory and incentive frameworks introduced by key agencies, including the Securities Commission Malaysia and the Ministry of Finance, the government aims to streamline SFO establishment, simplify compliance procedures and enhance investor confidence.
Tourism and Hospitality Sector Support
With 2026 declared as “Visit Malaysia Year,” the government has allocated:
- RM700 million for regional tourism programs
- RM20 million for health tourism promotion in ASEAN
- Additional programs supporting regional tourism, including enhanced air connectivity between states and other tourism infrastructure initiatives.
JLL Impact Assessment: These investments are expected to boost tourist arrivals across multiple states, driving demand in the hospitality real estate sector. The increased number of tourists and their expanded visits to various Malaysian states should also stimulate retail sector growth throughout the country.
This comprehensive tourism promotion creates significant opportunities for hotels, resorts, and short-term rental properties, while tourism tax incentives including 100% income tax exemption on incremental tourism income will accelerate hospitality sector investment.
Enhanced Connectivity Projects Driving Property Growth
The Budget prioritises completion of major transportation infrastructure, including:
- East Coast Rail Link (ECRL) Phase 1
- LRT Line 3
- ETS connection from Kuala Lumpur to Johor
- RTS Link between Johor Bahru and Singapore
- Enhanced bus network connectivity
- LRT Mutiara Line in Penang
JLL Research Insight: Historical data demonstrates that rapid transit route improvements consistently drive increased real estate demand and developments around station locations, creating new investment opportunities along these corridors. Improved connectivity infrastructure is generating increased demand for residential, industrial and commercial real estate assets. These improvements are likely to stimulate investments in industrial park infrastructure within states impacted by the ECRL and ETS connections. These states will offer more competitive packages in terms of land values and labour costs, while becoming easily accessible by rail as a reliable alternative transportation option. The improved connectivity will also stimulate tourism and drive the development of tourism-related projects (hotels, commercial facilities) in areas that previously had limited access to rail connectivity.
Major Housing and Urban Regeneration Initiative
The government has doubled the Housing Credit Guarantee Scheme (SJKP) allocation to RM20 billion, enabling 80,000 additional first-time homebuyers and creating significant demand pressure in the RM300,000-500,000 housing segment. This initiative, combined with extended stamp duty relief through December 2027 for properties up to RM500,000, provides predictable demand visibility for developers while reducing barriers to homeownership.
The development of Kota MADANI, featuring 10,000 houses with 80% allocated for public servants, will establish Malaysia’s first smart, AI-driven green city in Precinct 19, Putrajaya. This project is expected to set premium sustainability benchmarks that will influence nationwide building standards and create competitive pressure for ESG-compliant developments.
A new Urban Regeneration program offers landlords a 10% tax deduction capped at RM10 million on redevelopment costs for aging commercial buildings converted to residential use. This initiative addresses the significant issue of obsolete urban building stock and should improve asset enhancement decision-making for property owners. This would most likely affect landlords/owners of commercial real estate assets located in the largest urban agglomerations.
“The sustainability focus through carbon tax implementation and MyHIJAU GITA incentives will fundamentally reshape commercial property investment decisions,” said Yulia Nikulicheva, Head of Research & Consultancy at JLL Malaysia. “Properties with strong ESG credentials and energy efficiency will command premium valuations, while older commercial assets may face competitive pressure without green retrofits. This creates both challenges and opportunities as the market transitions toward sustainable building standards,” added Nikulicheva.
Enhanced Market Regulation and Commercial Property Incentives
Budget 2026 introduces a flat 8% stamp duty rate for foreign property purchases, doubling from the previous 4% rate, which is likely to rebalance market dynamics toward domestic demand while creating opportunities for local investors.
The government has also introduced policy frameworks supporting rent-to-own schemes and encouraging Build-Then-Sell (BTS) models, legitimising innovative housing solutions and creating additional financing alternatives for prospective homebuyers. This initiative is likely to create additional opportunities for investors and developers.
JLL Market Outlook
“Budget 2026’s strategic focus on high-value sectors, infrastructure connectivity, and talent development creates a robust foundation for sustained economic growth, while its emphasis on fiscal prudence and social well-being ensures progress remains inclusive and beneficial to all Malaysians,” said Jamie Tan, Managing Director of JLL Malaysia. “We anticipate these measures will maintain stable labour market conditions and support continued income growth, which should fuel steady demand across the real estate markets.”
The comprehensive approach to maintaining Malaysia’s competitive advantages in key global sectors, combined with substantial infrastructure investments, positions the country’s real estate markets for continued expansion in 2026 and beyond.
Sumber: Kopi and Property