SOUTHEAST ASIA OUTLOOK 2025

Southeast Asia Outlook 2025: Long-Term Growth Prospects Remain Intact

Key Property Data

PIPELINE SUPPLY OVER CURRENT INVENTORY RATIO (%)

RENTS Q4 2024 (MYR PSF PM) 2025 FORECAST

VACANCY Q4 2024 (%) 2025 FORECAST

CURRENT INVENTORY (MILLION SF)

PIPELINE SUPPLY (MILLION SF)

CAPITAL VALUE OUTLOOK 2025

OFFICE (KL CBD GRADE A) *RETAIL (KL CBD PRIME)

6.80

28.0

60.74

11.94

20%

219.32

12.1

18.94

2.14

11%

INDUSTRIAL (GREATER KL)

1.20 – 4.00

N/A

48,185 units

2,553 units

5%

Source: Cushman & Wakefield Research * Prime units: Retail units that enjoy strong footfalls with good frontage and accessibility

Occupier Market Commentary and Recommendations Office: The office market remains a tenant-favorable market, characterized by a surplus of available spaces

supply. To remain competitive, landlords are expected to renovate their existing properties to attract more tenants. Prime Logistics: As e-commerce continues to expand, particularly in the post-pandemic era, the demand for logistics and warehousing spaces in Malaysia is anticipated to rise considerably. Cold storage facilities are also expanding across the country as demand rises, including the establishment of a cold storage air freight hub in Sabah to boost seafood exports to Greater China.

MALAYSIA MARKET SNAPSHOT

for lease. With vacancy rates currently elevated, landlords are anticipated to adopt a flexible stance on rental rates, creating opportunities for tenants to negotiate favorable lease terms. Retail: While the influx of new retail spaces could impact current occupancy rates, the increase in civil servant salaries and the minimum wage is anticipated to boost purchasing power, affecting both demand and

Investment Opportunities And Recommendations New office developments are expected to see an increase in occupancy rates in 2025, with more relocations expected. Developers are broadening their investment portfolios by incorporating industrial parks and data centre developments, driven by the growing need for logistics facilities and digital infrastructure. Some major companies have made strategic moves in this area, tapping into the surge in e-commerce and the ongoing digital transformation. The consumer sector in Malaysia is forecasted to experience growth in 2025, supported by higher wages, growing disposable income, and steady economic conditions. This is likely to enhance the purchasing power of Malaysian consumers, which should have a positive impact on the retail sector. The continued development of infrastructure, especially in urban and industrial areas, is expected to further increase property values. Additionally, the government’s focus on economic recovery and pro-investment policies should promote growth.

Economy Malaysia’s economy is expected to see steady growth between 4.0% and 5.5% in 2025. The overall economic indicators are stable with low unemployment maintained, and the economy is expected to grow in both the services and manufacturing sectors. The minimum wage will increase from RM1,500 to RM1,700 per month, starting from February 1, 2025. The progressive wage policy will be fully implemented in 2025, with a RM200 million allocation aimed at benefiting 50,000 workers. After a consistent performance this year, the Malaysian property market is projected to continue its steady growth into 2025, with demand expected to be resilient.

Recent Significant Deals

Key Market Developments KEY INFRASTRUCTURE/ECONOMIC DEVELOPMENTS (EXPECTED COMPLETION) • MRT 3 Circle Line (Phase 1: 2028, Full phase: 2030)

PRICE (MIL USD) / US $PSF

PROPERTY NAME

BUYER

SELLER

PROPERTY TYPE

NET YIELD (%)

DATE

TYPE

IMPLICATIONS / AREAS TO WATCH

D’Pulze Shopping Centre

KIP REIT

Pacific Trustees

Retail

71 / 228 psf

7.1%

Q4 2024

• Infrastructure

• Higher office demand within outer KL CBD and KL Fringe areas

Tenaga Nusantara Sdn Bhd

Kluang Mall

Sunway Reit

Retail

35 / 98 psf

6.8%

Q3 2024

• The East Coast Rail Link (ECRL) (Phase 1: 2026, Full phase: 2027)

• Infrastructure

• Establish railway connection between West Coast and East Coast region

Wisma Damansara

BRDB Development

Selangor Properties

Office

105 / 178 psf

N.A.

Q4 2024

Sedania Innovator Berhad

Body Fashion (M)

Kelana Parkview Tower Office

0.67 / 61 psf

3.13%

Q3 2024

• Johor Bahru-Singapore Rapid Transit System (RTS) Link (2026)

• Infrastructure

• Catalyst for further development of Johor Bahru

Industrial Property

Crest Group

Oasis Harvest Corp

Industrial

3.66 / 622 psf

1.8%

Q4 2024

Source: RCA, Cushman & Wakefield Research

• Penang LRT Mutiara Line (Full phase: 2030)

• Infrastructure

• Connecting mainland to Butterworth. Starting from the reclaimed Silicon Island, will be a new job centre all the way to Komtar in the city centre

Source: Cushman & Wakefield Research

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CUSHMAN & WAKEFIELD