Malaysia’s logistics and industrial property sector had a steady momentum amid shifting regional supply chain dynamics, according to Knight Frank’s Asia-Pacific Logistics Highlights H1 2025 report.
While logistics rents across Asia-Pacific fell marginally by 0.4% year-on-year in the first half of 2025, the first decline since the pandemic, Malaysia’s logistics hubs have demonstrated resilience, buoyed by their strategic locations and evolving role within the broader regional ecosystem.
However, given the recent announcement of the reduction in the reciprocal tariff by US government from 25% to 19%, it is anticipated that the logistics sector would experience a positive outlook in the second half of the 2025, especially warehouses nearer to the seaports. In addition, the government’s recent initiatives — including cash aid, petrol subsidies, and an increase in the minimum wage to ease the rising cost of living — may help spur consumer spending in the second half of the year, particularly on fast-moving consumer goods (FMCG), which in turn is expected to drive demand for logistics and warehouse space.
“Malaysia’s participation in key trade agreements like RCEP and CPTPP has already positioned the country as an attractive destination for exporters and manufacturers, particularly with the benefit of lower intra-regional tariffs,” said Chelwin Soo, Director of Land & Industrial Solutions at Knight Frank Malaysia. “The recent tariff adjustments by the U.S. only add momentum to the ongoing shift in global manufacturing strategies, with many players now diversifying into Southeast Asian markets like Malaysia that offer competitive positioning and ease of trade.”
Malaysia’s Strategic Position and Market Outlook
Malaysia’s strategic position within Southeast Asia and its connectivity to key regional hubs underpin this selective demand. Malaysia is increasingly benefiting from global supply chain shifts under the “China+1”, “Taiwan+1”, “Asia+1”, and even “Singapore+1” strategies, as manufacturers operators seek to diversify risk, lower costs, and expand regionally.
“Malaysia’s strategic location, cost competitiveness, and favourable tariff structure — especially when compared to China — make it a logical choice for companies looking to realign their operations across Asia,” said Allan Sim, Senior Executive Director of Land & Industrial Solutions at Knight Frank Malaysia. “We’re seeing rising interest from Chinese manufacturers aiming to either establish or expand their presence in Malaysia, which translates into stronger demand for industrial space, particularly in warehousing space.”
Regional Overview: Occupier Caution and Strategic Repositioning
The report highlights that global occupiers are increasingly cautious, resulting in a slowdown in rental growth across many major markets. However, this caution stems more from strategic repositioning than a fundamental weakening of demand.
“While rents have continued to dip in Chinese mainland markets, further deceleration across the rest of the region have dragged rental growth into negative territory. We believe this to be largely due to occupier caution, as there has not been a significant deterioration in the region’s fundamentals,” said Christine Li, Head of Research, Asia-Pacific, Knight Frank.
“As occupiers explore relocations or dual logistic strategies to mitigate cross-border tariff risks, India, with a more competitive tariff structure as well as lower costs, is emerging as an important node in China-plus-n strategies. Occupiers in the region can be expected to remain agile in adapting and evolving their supply chain strategies to weather the shifting geopolitical landscape. While expansion plans will be put on hold, we expect selective demand to remain sustained in emerging Southeast Asian markets and India.”
Legal Disclaimer: The Editor provides this news content "as is," without any warranty of any kind. We disclaim all responsibility and liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. For any complaints or copyright concerns regarding this article, please contact the author mentioned above.
