KUALA LUMPUR, Nov 10 (Bernama) -- Tighter housing loan approvals and potentially higher borrowing costs are expected to weigh on Malaysia's residential property market in 2027, as banks become more selective in financing property purchases, said JLL Malaysia.
Managing director Jamie Tan said a potential increase in the Overnight Policy Rate (OPR), coupled with more stringent lending practices, could make it more challenging for prospective homebuyers to secure financing, particularly those who rely heavily on housing loans and mortgages.
He said any increase in interest rates could affect both the residential segment and the wider property market, given homebuyers’ reliance on mortgage financing.
“If you look at past trends, whenever interest rates increase, it tends to affect both the residential segment and the overall property market.
“This is because, at the end of the day, homebuyers rely on housing loans and mortgage financing to purchase their homes,” he told a press conference here today.
Earlier, Tan said Malaysia's residential property transaction volume and value recorded a modest rebound in the second quarter (2Q) of 2026, following a sharp correction in 1Q 2026, although both metrics remained slightly lower year-on-year.
Kuala Lumpur recorded a 7.9 per cent increase in residential transaction volume in 2Q 2026 compared with the preceding quarter, while transaction value was relatively unchanged, pointing to a shift towards more affordable market segments.
“Johor continued to outperform other states, maintaining its upward trend despite a natural cooling-off following a prolonged period of growth,” he added.
Meanwhile, on the industrial property segment, JLL Malaysia's Industrial and Logistics director Derek Yap said Malaysia needed more quality factory space to accommodate rising demand from the semiconductor, electrical and electronics (E&E), automotive and data centre-related supply chain industries.
He said many developers in Greater Kuala Lumpur were building multi-storey warehouses to maximise development space and rental income, while manufacturing companies continued to require conventional factory facilities for production activities.
"In short, we need more factory space to accommodate the growing demand from these manufacturers," he said.
He further identified electricity supply as a key challenge for industrial development, particularly in Johor, where attracting high-value manufacturing investments, including semiconductor and E&E companies, would require adequate power infrastructure.
The Federal and state governments were working with Tenaga Nasional Bhd to expedite infrastructure upgrading works to meet industrial electricity requirements, he noted.
On data centres, Yap said demand remained strong, driven by continued expansion of artificial intelligence (AI) and cloud computing, although future developments would depend on the availability of essential infrastructure.
He said the government was taking a proactive approach in managing data centre supply through the data centre taskforce, which ensures sufficient power, water and connectivity before projects are approved.
Besides that, renewable energy requirements and the social impact of developments, including their proximity to residential areas and public buildings, are also increasingly important considerations in data centre investment approvals.
-- BERNAMA