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PETALING JAYA (Jan 16): A local industry leader notes that Malaysian firms are reassessing their strategies to position real estate as an institutional-grade asset class capable of delivering stable, long-term returns.
Sime Darby Property group managing director and CEO Datuk Seri Azmir Merican underscored a broader transformation within the real estate sector, where development alone is no longer sufficient to sustain long-term value. Instead, firms are increasingly integrating investment management capabilities, recycling capital through funds and partnerships to achieve more sustainable returns.
He shared this during the Real Estate and Housing Developers’ Association (Rehda) Institute CEO Series 2026, themed “Reinventing Growth: Innovation and Investment Opportunities in Asean & Malaysia”. The flagship event held here on Thursday brought together over 400 senior leaders and decision-makers from government, banking, finance, manufacturing, construction, and real estate to explore growth, innovation, and investment opportunities driving the region’s economy.
While other global experts highlight property supply deficits across their respective markets, Azmir framed the challenge as both structural and strategic. He noted that land scarcity, rising replacement costs, and shifting buyer preferences (in Malaysia) have fundamentally altered development economics. In response, large developers are reassessing traditional models, placing greater emphasis on capital efficiency, partnerships and recurring income streams.
Housing demand outstrips supply in Australia
Across markets, speakers pointed to a widening gap between population-driven demand and the pace of new supply. CBRE Australia associate director of Asian Services & Capital Markets Jing Jun Heng said that institutional capital has increasingly shifted towards major gateway markets such as the US and Japan, with Australia emerging as a key beneficiary of this global reallocation. Over the past 18 months, investment volumes from the US alone have matched the combined capital deployed by Japan, Singapore and China, with a significant share directed towards industrial assets and repriced office stock.
This capital movement is occurring against the backdrop of sustained population growth. Australia continues to rank among the top global destinations for migration, a trend that is placing sustained pressure on housing demand. According to Heng, while infrastructure spending has more than doubled over the past decade to approximately AU$100 billion (about RM271.8 billion) annually—more than half allocated to transport—the short-term consequence has been elevated construction costs and labour shortages, further constraining residential delivery.
“We can see that there's a major shortfall. Sydney will deliver around 14,000 apartments per year during this period, which falls short of the required 33,000 units. Melbourne will deliver an average of 8,700 units per year, and again, falls short of 37,000 units it needs to deliver… Brisbane will deliver 4,700 units, which falls short on the required 16,000.”
The result is a pronounced imbalance in housing markets. Supply across major Australian cities has fallen well short of estimated demand, particularly along the eastern seaboard. Vacancy rates remain below levels considered stable, contributing to strong rental growth and reinforcing the appeal of build-to-rent, multifamily and other institutional living models. Heng noted that this imbalance has been a key driver behind increased institutional participation in residential development, adaptive reuse of office assets, and land-banking strategies with long-term redevelopment potential.
Private landlords’ exits drain supply in UK’s major cities
A similar pattern is evident in the UK. Savills UK head of European Living Research & Consultancy Richard Valentine-Selsey observed that regulatory changes, rising costs and tax pressures have accelerated the exit of private landlords from the market. Since 2021, an estimated hundreds of thousands of homes have been sold out of the private rental sector, exacerbating supply shortages in major cities.
This contraction has created space for institutional investors to expand their presence across multifamily and student housing segments. While rental growth in the UK has moderated from post-pandemic peaks, affordability constraints are increasingly shaping underwriting assumptions. Valentine-Selsey emphasised that long-term fundamentals—urbanisation, education demand, and demographic shifts—continue to underpin institutional interest, particularly in regional cities such as Manchester, Birmingham, and Glasgow, which are absorbing a growing share of new development.
Meanwhile, Gamuda Land UK head Niall Emmet Farmer outlined the company’s expanding footprint and investment approach in the UK, highlighting a transition towards greater operational independence, and long-term value creation.
He noted that Gamuda Land has delivered multiple projects across the full development cycle, including completed residential schemes, student accommodation, office developments, and an upcoming built-to-rent project, reflecting strong occupier interest across sectors.
Farmer explained that recent market adjustments following the end of the low interest rate environment have led to higher financing costs, repricing of assets and reduced transaction volumes, but also created opportunities for investors able to take a long-term view.
He emphasised that Gamuda Land’s strategy is grounded in assessing structural fundamentals such as population growth, employment trends, infrastructure capacity, and supply constraints, while focusing on assets with durable income, strong ESG (environmental, social and governance) credentials, and active management potential.
According to Farmer, while prime assets remain competitive, value is increasingly emerging in well-located secondary opportunities, logistics and living sectors, where constrained supply and sustained demand continue to support long-term investment prospects.
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