Malaysia’s housing market remained sluggish in the first half of 2025, weighed down by unsold affordable homes and weakening developer confidence, according to the Real Estate and Housing Developers’ Association (Rehda).

At the release of its Property Industry Survey for 1H2025 and Market Outlook for 2H2025 and 1H2026, Rehda highlighted a persistent mismatch between housing supply and buyer affordability. Datuk NK Tong, Rehda’s immediate past president, said unsuitable locations and price-income gaps were the primary reasons behind unsold units.

“Under current rules, developers must allocate up to 50% of units for affordable housing regardless of location. While the policy is well-intentioned, this blanket approach often disconnects supply from demand,” Tong explained. Data from the National Property Information Centre (Napic) showed that affordable homes made up 20.7% of Malaysia’s unsold units in Q1 2025—the largest category of residential overhang.

Developer sentiment weakens

The survey revealed a sharp fall in market confidence. Only 19% of 187 senior executives expressed optimism about mid-2025 prospects, compared with 51% six months earlier. Confidence in sales also slumped to 19%.

Rehda president Datuk Ho Hon Sang cited rising construction costs, labour shortages, financing hurdles and uncertainty over the upcoming sales and service tax (SST) as major concerns. Reflecting the cautious mood, just 41% of developers plan to launch new projects in the second half of the year, down from 56% previously.

Financing challenges and loan rejections

The report also noted a 26% decline in new residential launches, with sales rates for new units falling sharply to 24% from 55% in late 2024. While landed 2- and 3-storey terraces continued to perform relatively better, overall demand remained muted.

Financing remained a key obstacle, with 71% of developers citing difficulties in securing end-financing for buyers. Loan rejection rates were highest for homes priced between RM300,001 and RM500,000, a segment targeted as affordable housing. More than half of developers held unsold completed units, mostly serviced residences priced above RM1 million or within the RM500,001–RM600,000 bracket.

Rising costs and tax worries

Although residential construction is exempt from the SST, developers flagged complications in separating taxable labour costs from non-taxable materials in mixed contracts. Rehda has proposed a simplified flat-rate approach and is engaging authorities to resolve the issue. Meanwhile, 74% of respondents reported higher business costs, squeezing profit margins further.

Outlook ahead

For the second half of 2025, developers are planning 24,427 new units—7,608 landed and 16,819 strata—but expect modest take-up rates of 25%–50% after six months.

The overall outlook for the next 12 months is described as neutral, with a slight uptick in optimism for early 2026. Tong cautioned, however, that sentiment may shift once the full impact of the SST becomes clearer.

Rehda reiterated its call for the revival of the Home Ownership Campaign to stimulate demand and reaffirmed its members’ commitment to delivering quality, affordable housing despite ongoing challenges.

A newly proposed high-rise residential project adjacent to D’ Starlingtton. Located along Jalan Teluk Kumbar, the site sits about 2km from Penang International Airport. The surrounding neighborhood has seen steady residential growth in recent years, with communities such as Platinum III, D’Zone Condominium, Saujana Heights, Emerald Residence, and Valencia Residence forming part of the area’s evolving urban landscape.

The proposed development will feature a 29-storey block comprising two residential towers, collectively offering 840 units. These towers will rise above a podium that incorporates commercial space, recreational facilities, and multi-level parking. The podium itself is planned to include six levels of car parking, 34 retail units distributed across several floors, and a management office. An adjacent plot has been reserved for future development, which is expected to include a mix of commercial and service apartment components.

Project Name: (to be confirmed)
Location : Teluk Kumbar
Property Type : Serviced residence
Total Units : 840
Built-up Size: (to be confirmed)
Land Tenure : Freehold
Indicative Price :(to be confirmed)
Developer : (Follow us to find out more)

DISCLAIMER: This article is solely based on research done using publicly available data. This is not an advertisement. Any claim, statistic, quote or other representation about a project or service should be verified with the developer, provider, or party in question.

Penang’s high-rise residential market has long been a focal point for both investors and homebuyers seeking premium urban and waterfront living. The latest ranking of the 30 most expensive selling high-rise residences is based on the average transacted prices per square foot (psf) recorded in 2024 and 2025. Importantly, the list only includes completed projects with actual transactions, excluding any residences that are still under construction or only marketed by developers. This provides a clearer picture of what buyers are truly paying in today’s market.

Gurney Drive: The Island’s Platinum Mile

Gurney Drive remains Penang’s most expensive stretch for high-rise living, led by Marriott Residences (RM2,069.83 psf) at the top of the list. Just behind it is Sunrise Gurney (RM1,872.07 psf), an established luxury project that continues to achieve exceptional prices in the resale market thanks to its prime frontage and scarcity of new supply along this iconic boulevard. Other premium entries include Gurney Ville and Gurney Paragon, underscoring the area’s lasting appeal among affluent locals and foreign investors alike.

Seafront Prestige in George Town and Seri Tanjung Pinang

Waterfront exclusivity continues to drive prices at the city’s edge. Shorefront Residences (RM1,318.64 psf), located along Lebuh Farquhar at the fringe of George Town’s heritage core, offers panoramic channel views while retaining cultural proximity—an exceptionally rare combination. Further north, Straits Residences (RM1,287.71 psf) and Quayside Condo (RM1,056.14 psf) anchor Seri Tanjung Pinang as a long-standing premium township, where marinas, retail amenities, and an established expat community reinforce its position as a seafront lifestyle hub.

Lifestyle Hubs and Branded Developments

Projects with strong developer branding and integrated lifestyle concepts also command premium pricing. Alila 2 (RM1,238.60 psf) leverages hillside exclusivity, while Setia V Residences (RM1,192.94 psf) appeals with large formats and premium positioning. In the south, Queens Residences Q1 and Q2 highlight the rise of Queens Waterfront as a new urban destination, blending retail, marina facilities, and easy bridge access. These schemes show that branding and master-planning can rival geography in sustaining high values.

The Role of Design and Density

Another factor driving premiums is exclusivity through scale and design. Moulmein Rise (RM1,242.31 psf) and The Cantonment (RM1,191.40 psf) illustrate how boutique, low-density developments in mature urban enclaves can achieve values on par with larger waterfront townships. Buyers here prize privacy, exclusivity, and design-led living as much as location.

Southern Growth and Connectivity

The southern corridor of Penang island is emerging as a competitive hub, with projects appealing to professionals working in the Bayan Lepas Free Industrial Zone. Muze @ Penang International Commercial City (RM875.05 psf) represents a new generation of integrated mixed-use precincts, while Quay West Residence (RM846.15 psf) gains traction through its adjacency to Queensbay Mall and Queens Waterfront, along with direct expressway access to both George Town and the airport. This underlines how connectivity and retail integration are reshaping perceptions of value beyond the island’s traditional prime zones.

Established Names Holding Value

Several established projects continue to perform strongly in resale transactions, reflecting both location and reputation. By The Sea (RM1,092.01 psf) in Batu Ferringhi caters to resort-lifestyle buyers, while Middleton Condo (RM1,034.54 psf) in Minden Heights appeals to families seeking exclusivity near Penang’s education belt. Legacy addresses like 1 Tanjong, Waterside Residence, and even older schemes such as Bellisa Court demonstrate how limited supply in mature neighborhoods helps sustain long-term value.

The data highlights that Penang’s high-rise market remains highly segmented. Timur Laut dominates the upper tier, thanks to its established seafront addresses and branded developments, but Barat Daya is fast catching up through projects tied to Queens Waterfront and the PICC precinct.

– Ken Lim
(Founder, PenangPropertyTalk.com)

Penang has become the first state in Malaysia to launch a community-driven initiative aimed at addressing the long-standing issue of abandoned vehicles in high-rise residential areas. The programme, known as Skim Strata Bebas Kenderaan Usang, was officially rolled out at Flat Turnkey Sri Pinang and jointly officiated by Transport Minister Anthony Loke and Penang’s Local Government Committee chairman Jason H’ng Mooi Lye.

Also present at the launch were Human Resources Minister Steven Sim Chee Keong and Penang Island City Council (MBPP) mayor Datuk A. Rajendran.

Loke praised Penang’s proactive leadership, describing the scheme as a model of collaboration between the state, local councils, the federal ministry, and private stakeholders. “This programme is a shining example of cooperation that should be emulated nationwide,” he said.

He highlighted the multiple problems caused by abandoned vehicles in strata schemes, including the occupation of scarce parking spaces, heightened community tensions, public health risks from mosquito and pest breeding, and potential misuse for criminal activities.

To overcome legal and financial hurdles in vehicle disposal, the Ministry of Transport has introduced the e-Deregistration (e-Dereg) system, which allows owners to deregister and scrap vehicles in a fast, legal, and transparent manner. The process can be completed online in under five minutes, eliminating the need for physical presence at Road Transport Department (JPJ) offices.

Through collaboration with licensed Authorised Automotive Treatment Facilities (AATF), such as Car Medic, scrapped vehicles are handled in an environmentally safe way. Loke commended Penang’s decision to integrate the system into its community-scale programme, calling it a breakthrough in cutting bureaucratic red tape and costs for residents.

As a symbolic gesture of leadership, H’ng announced he would be the first vehicle owner in Penang to deregister and scrap his car under the initiative. “This is our commitment to lead by example and to show that the state government is serious in freeing strata communities from the burden of abandoned vehicles,” he said.

Both Loke and H’ng urged joint management bodies (JMBs), management committees (MCs), and residents to spread awareness and encourage participation. They stressed that the initiative is not merely about clearing unsightly vehicles but about improving safety, public health, and quality of life in high-rise communities.

MBPP, which spearheaded the programme, was also commended for its role in shaping the initiative. H’ng reiterated that Penang remains among the first states to implement an integrated solution to tackle abandoned vehicles effectively.

“This scheme is not a minor matter. It directly affects the image, comfort, and safety of our neighbourhoods,” he said. “With strong collaboration between all parties, I am confident we can create cleaner, safer, and more organised strata housing areas.”

Penang’s pioneering effort is expected to set a precedent for other states to adopt similar solutions, creating a more sustainable and liveable urban environment nationwide.

The sales and service tax (SST) is emerging as a major concern for property developers, with more than 70% planning to raise property prices by 3% to 5% due to higher costs, according to a survey by the Real Estate and Housing Developers’ Association (Rehda) Malaysia.

The survey, which covered 187 developers, showed that 62% expect the SST to significantly increase project costs and disrupt business operations. About 70% anticipate construction costs will rise by at least 3%, prompting 73% of respondents to consider price hikes.

Rehda president Datuk Ho Hon Sang said the association is working with the government to refine SST rules, stressing the need for clearer guidelines for the construction and property sectors. He noted that measures such as avoiding double taxation and offering tax incentives for key materials and eco-friendly products would help ease the burden.

Developers are also calling for input tax credits or faster refunds to improve cash flow, simplified SST rates including tiered options, and enhanced digital systems to facilitate smoother dealings with Customs and relevant authorities.

Highlighting the complexity of the tax, Ho explained that while residential properties are exempt, commercial properties are subject to SST, creating confusion in mixed developments. “Materials are generally exempt, but human labour and machinery rentals — which make up a significant portion of our cost inputs — are taxed. It’s very cumbersome for developers to itemise each component. That’s why we are proposing a simplified approach, such as a flat 3% SST,” he said.

Beyond tax reforms, Rehda is also pushing for the revival of the Home Ownership Campaign (HOC), which previously offered stamp duty exemptions. Ho said past campaigns recorded strong take-up rates and believes a reintroduction could boost market confidence and encourage buying activity.