Malaysia’s rapid data centre expansion has raised concerns over whether large-scale developments could reduce land available for housing.
With billions of ringgit in investment flowing into Johor, Selangor and other key markets, the question is becoming increasingly relevant for homebuyers, developers and property investors.
However, Juwai IQI Co-Founder and Group CEO Kashif Ansari said the impact on housing land remains minimal. He noted that the bigger issue is not land competition itself, but how data centre growth may influence infrastructure, development costs and surrounding property demand.
How Much Land Do Data Centres Actually Use?
Less than many may expect. Between 2021 and mid-2025, Malaysia approved 143 data centre projects covering an estimated 14,300 acres.
While the figure appears substantial, it represents only about 0.02% of the country’s total land area, suggesting that the direct impact on land available for housing remains limited.
Malaysia is not facing a land shortage. There are still more than 32,000 completed homes unsold. Future planning should focus on ensuring electricity and water supply capacity is reserved for housing and public infrastructure before being allocated to other sectors, including data centres.
Kashif Ansari, Co-Founder and Group CEO, Juwai IQI
Crucially, Malaysian planning law already separates data centres from housing. Data centres can only be built on land zoned as commercial or industrial. They cannot be built on land zoned for residential development.
So in a regulatory sense, data centres and housing projects are not competing for the same plots.
Where the Real Competition Happens
The actual tussle is over agricultural land that has not yet been converted. Data centre operators offer up to RM140 per sq ft, far above what typical industrial buyers pay.
| Metric | Price (per sq ft) |
|---|---|
| Average industrial land price in Johor (previous) | RM79 |
| Average industrial land price in Johor (latest) | RM86 |
| Data centre transaction range | RM114 to RM160 |
| Maximum data centre buyer willingness | Up to RM140 |
Source: Kashif Ansari / Juwai IQI, as reported by Utusan Malaysia, 17 July 2026.
However, this does not mean housing developers lose out. In one notable case, Paragon Globe sold 113 acres in Tanjung Kupang and Plentong to data centre operators for RM636 million, then used that capital to fund housing projects, infrastructure, and debt reduction. The data centre sale gave the developer more resources to build homes, not fewer.
Interested in Johor’s market right now? See the latest Johor property price data.
No Housing Shortage, but Construction Costs Need Watching
Malaysia is not facing a shortage of homes. As of Q1 2026, more than 32,000 completed residential units remained unsold, along with over 19,000 serviced apartments.
The bigger concern is rising construction costs. The rapid growth of data centres is increasing demand for skilled workers, particularly mechanical, electrical and plumbing specialists. As data centres and housing projects compete for the same talent, labour costs may rise and place additional pressure on future residential development costs.
Although each data centre looks large, the actual land footprint is very small compared to the country’s total area. This is not a national land shortage issue. It only affects a few strategic locations that are investment hotspots, particularly in Johor.
Kashif Ansari, Co-Founder and Group CEO, Juwai IQI
What This Means for Buyers and Investors
House prices in Johor rose by 5.7% last year, but the increase was mainly driven by the RTS Link, the Johor-Singapore Special Economic Zone and broader state economic growth, rather than data centre development. So far, there is no study proving that data centres have directly pushed up house prices in Johor.
For homebuyers, residential zoning protections remain in place, and housing supply is not currently at risk. Our complete 2026 homebuying guide covers the key information you need, from financing to purchasing costs.
For investors, Malaysia’s data centre capacity is expected to more than double to 2,055MW by the end of 2026, with a further 3,500MW planned. This could support more jobs, stronger economic activity and continued housing demand in key data centre corridors such as Johor.
Explore the JS-SEZ investment opportunity and the latest new housing developments in Johor to see where the market momentum is heading.
Juwai IQI Co-Founder and Group CEO Kashif Ansari’s insights on Malaysia’s data centre expansion and its impact on the housing sector were featured in Utusan Malaysia.
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