September 2026 Market Outlook
Global Equity Markets
The S&P 500 advanced 2.62%, while the Nasdaq Composite gained 3.93% in August, supported by resilient technology earnings and continued investor confidence in the artificial-intelligence theme. Market sentiment remained constructive despite elevated of energy prices and higher long-term Treasury yields, while the expansion of long-dated bond buybacks helped ease liquidity pressure in the bond market.
Geopolitical Landscape: Shockwaves from the Strait of Hormuz
Geopolitical uncertainty remained a key driver of global markets in August, as tensions involving the United States and Iran continued to undermine confidence in Middle Eastern energy supply and shipping routes. Brent crude rose from US$78 to US$92 per barrel,
increasing global transportation and production costs, adding to inflationary pressures and reinforcing expectations that U.S. interest rates could remain higher for longer.
- Energy Supply Risk: Reduced shipping activity through the Strait of Hormuz continued to sustain a geopolitical risk premium in global oil prices.
- Inflation Pressure: Exorbitant energy prices increase global transportation, logistic and production costs, keeping global inflation rate higher for longer.
- Trade Vulnerability: Higher operating and shipping costs increased pressure on supply-chain-sensitive industries, keeping the external operating environment challenging.
Uncertainty surrounding the Strait of Hormuz kept energy and supply-chain risks elevated throughout the month. Higher oil prices added to global inflationary pressure and reinforced expectations that U.S. interest rates could remain higher for longer, while increased operating costs continued to weigh on the external economic environment.
Real Estate Focus: Malaysia’s Data-Centre Growth Shifts toward Sustainability
The development of Malaysia’s data-centre sector continued to gain momentum in July. Johor’s data-centre capacity is expected to expand towards 7,000 megawatts, further strengthening the state’s position as one of Southeast Asia’s leading digital-infrastructure hubs. The growth will increasingly depend on access to reliable power, efficient water management, renewable-energy integration and continued acceptance from local communities.
- Stricter Development Standards: New data-centre projects are facing greater scrutiny over the reliability of electricity supply, the efficiency of cooling systems, water consumption, environmental impact and their broader contribution to the local economy.
- Flight to Quality: Locations with secured grid capacity, energy-efficient cooling systems, renewable-energy arrangements and the necessary planning approvals are likely to attract stronger investor interest .
- Property Spillover: Sustainable data-centre development could continue to support demand for modern industrial facilities, logistics assets, utility infrastructure and professionally managed commercial properties, particularly in Johor and selected locations across Greater Kuala Lumpur.
The policy transition does not represent a rejection of digital-infrastructure investment. Instead, it reinforces the importance of asset quality, ESG credentials and responsible long-term project execution.
Malaysian Capital Markets: Withstanding External Volatility
Malaysia’s equity market remained stable, with the FBM KLCI edging up 0.05%, while domestic economic fundamentals remained supportive despite heightened global volatility.
- Stronger Economic Growth: Malaysia’s economy expanded by 6.0% year-on-year in
the second quarter of 2026, accelerating from 5.4% in the preceding quarter. Growth
was supported by resilient private consumption and stronger gross fixed capital
formation, reflecting continued household spending and investment activity. - Contained Inflation: Headline inflation moderated to 1.8%, maintaining a relatively
stable domestic price environment and maintained the consumer purchasing power
in Malaysia. - Stronger Ringgit: The Malaysia ringgit strengthened by 1.35%, providing support
against energy supply risk.
Investor participation remained selective throughout the month. Foreign institutions recorded approximately RM1.98 billion in cumulative net equity outflows, while local institutions remained supportive with around RM1.60 billion in net equity purchases, providing continued support to the domestic market amid persistent foreign selling and external volatility.
Real Estate Focus: Construction Momentum Supports Industrial and Infrastructure Demand
Malaysia’s construction sector maintained positive momentum in the second quarter of 2026, with construction value increasing 8.8% year-on-year to RM47.8 billion. Johor recorded RM9.4 billion of construction activity, representing 19.67% of the national total
with ranking second among Malaysian states.
- Johor Remains a Key Growth Corridor: Johor continue to contribution as significant share of national construction activity, reflecting ongoing residential, industrial, commercial and infrastructure development, supported by the government-led development of the JS-SEZ.
- Advanced Industrial Demand: Baltimore Aircoil Company (“BAC”) commenced the development of a new US$150 million manufacturing facility in Nilai. The project incorporates advanced manufacturing, engineering and R&D capabilities, expecting to create up to 200 high-skilled jobs by 2035.
- Flight to Quality: The expansion of advanced manufacturing continues to reinforces demand for industrial properties supported by reliable utilities, modern specifications, efficient logistics networks and strong ESG credentials.
The continued expansion of industrial activity indicates that the demand is increasingly concentrated in well-located areas capable of supporting high-value manufacturing operations. Industrial and commercial properties with established infrastructure, strong
connectivity and identifiable occupier demand remain better positioned, particularly in locations supported by sustained business activity and long-term economic growth.
Summary & Investment Strategy
August 2026 was shaped by persistent geopolitical uncertainty surrounding the Strait of Hormuz, elevated energy prices and higher-for-longer interest-rate expectations. Despite these pressures, global equity markets remained resilient, supported by technology earnings
and continued investor confidence in the artificial-intelligence theme, while expanded U.S. bond buybacks helped ease some pressure in long-term bond markets. For Malaysia, stronger economic growth, contained inflation and a firmer ringgit continued
to support domestic market resilience despite sustained foreign equity outflows. We remain constructive on quality-led industrial and commercial real estate, particularly assets supported by established infrastructure, reliable utilities, strong connectivity and identifiable
occupier demand in key growth corridors such as Johor Bahru and Kuala Lumpur’s Bukit Bintang area. Continued construction activity and advanced manufacturing investment should remain important drivers of long-term demand across Malaysia’s key growth corridors.
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