KUALA LUMPUR (May 26): Real estate investment in the Asia-Pacific region hit its strongest quarter since 2021, according to Knight Frank’s latest Asia-Pacific Capital Market Insights report.
In a statement on Tuesday, the report showed that total investment volume across the region reached US$64.6 billion (RM255.2 billion) in the first quarter of 2026 (1Q2026), up 13% quarter-on-quarter (q-o-q) and 64.7% year-on-year (y-o-y).
Cross-border volume grew 56.3% q-o-q to US$22.4 billion (RM88.5 billion), reflecting renewed deployment by sovereign and institutional capital. In Malaysia, interest was driven by catalysts such as the Johor-Singapore Special Economic Zone, with Johor, Selangor, Kuala Lumpur, Penang and Kedah accounting for the majority of approved investments.
International institutional investors remain positive on the office sector, supported by low prime vacancy, strong occupier demand and limited development pipelines. The sector accounted for the largest share of investment activity regionally in 1Q2026, with volumes reaching US$23.5 billion (RM92.8 billion), up 46.7% y-o-y.
“These regional trends are reflected in the domestic market. Cities such as Kuala Lumpur saw prime rental rates growing 1.3% q-o-q to RM6.12 psf per month and a vacancy rate of 22.1% in the recent quarter, with net lettable area projected to grow just 0.6% by 2027 in the city centre, driving demand for quality, future-ready spaces,” said Knight Frank Malaysia chief executive officer Keith Ooi.
Although not ranked among the top cross-border capital destinations within the Asia-Pacific region, Malaysia drew increasing investor interest in 2025. The real estate sector in Malaysia registered approved investments worth RM78.2 billion, representing a 21.2% increase from 2024, involving 1,123 projects across commercial, residential and serviced apartment developments.
“We are seeing rising international sentiment, especially for prime properties in safe haven markets. Although wider geopolitical risks persist, incoming capital for the region indicates that market activity is likely to remain robust, though deployment will likely see increasing selectivity,” said Knight Frank Malaysia Capital Markets – Investments executive director James Buckley.
“Industrial developments and data centres continue to perform domestically, though we anticipate the hospitality sector to benefit as well, with international arrivals expected to reach 29.6 million this year on the back of the Visit Malaysia 2026 and Malaysia Year of Medical Tourism 2026 campaigns.”