Tenant confidence returned as the emarket stabilised, driving flight-to-quality movement across sectors

• Market demand strengthened as tenants gained confidence following clarity from August 2025 tariff announcements, which spurred renewed activity. Vacancy decreased to 5.7% from 6.3% in Q3 2025, reflecting improved absorption and recovering market conditions.
• Companies from logistics, automotive, medical, and E&E sectors drove market activity and led the flight to quality trend by relocating from older buildings to newer facilities across key industrial corridors.

No new completions in the quarter as prior developments support available supply

• No new completions occurred in the quarter, keeping total Grade A warehouse stock at approximately 36.78 million sq ft across the market, as development activity remained subdued throughout the period.
• Two major 2025 completions continued driving available supply in Q4. Pulau Indah Industrial Park delivered 359,000 sq ft while Daiwa Malaysia (Shah Alam) contributed 1.2 million sq ft, both located in key logistics corridors.

Rental pricing remains competitive while capital values and yield compression signal strong investor confidence

• Rental rates remained flat quarter over quarter but declined 0.6% year over year on a net rent basis as property owners focused on gaining market share through competitive pricing and extended rent-free periods for older facilities.
• Capital values increased marginally from MYR 372 per sq ft to MYR 374 per sq ft, while Grade A warehouse yields compressed by 3 basis points, reflecting sustained investor confidence amid flight-to-quality trends.

Outlook: Infrastructure connectivity and China Plus N flows strengthen market fundamentals

• Infrastructure initiatives, particularly the ECRL which reported 89% overall progress as of Q4 2025, are expected to improve connectivity and strengthen Malaysia’s regional trade role, driving long term demand for industrial land and logistics facilities.
• China Plus N diversification will continue driving market demand for logistics and industrial space. Malaysia’s investor friendly policies and strategic benefits ensure sustained investment flows, supporting continued sector growth.