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RHB Research Stays ‘Overweight’ Amid Upcoming Property Projects

KUALA LUMPUR: The Malaysian property sector is expected to continue growing with the number of potential infrastructure projects, active land transactions and an influx of investments in the pipeline, especially those revolving around green energy, data centres and the manufacturing sector.

RHB Investment Bank (RHB IB) said developers with sizeable landbank and industrial segment exposure should see greater benefits from infrastructure developments and rising investment flows.

“We expect the property sector to continue to be driven by positive news flow on potential infrastructure developments such as the Kuala Lumpur-Singapore high-speed rail (HSR), Johor Bahru light rail transit (LRT) and Penang LRT, active land transactions (particularly in Iskandar Malaysia) and the influx of foreign direct investments and expansion by local manufacturing players,“ it said, adding that pump priming across the Klang Valley, Iskandar Malaysia and Penang region should lift the sector’s overall valuation.

The research house also noted that most developers – apart from UEM Sunrise Bhd, Sime Darby Property Bhd and SP Setia Bhd – are turning more optimistic with a 10-15 per cent higher sales target for the 2024 financial year (FY24).

So far, the property sector has appreciated about 18 per cent year to date.

“Although UEM Sunrise has set a lower sales target of only RM1 billion versus the RM2.1 billion achieved in FY23, we think the company may have something more exciting ahead, as its management has just revealed a revised masterplan for Gerbang Nusajaya, which saw a significantly higher proportion of industrial development,” the research house noted.

According to RHB Research, aggregate property sales in the fourth quarter (Q4) of 2023 were flat year-on-year (YoY) and down by only 5 per cent quarter-on-quarter (QoQ) due to stronger sales in Q2 and Q3.

On a full-year basis, it said that aggregate property sales rose 19 per cent YoY to RM19 billion versus RM16 billion in 2022.

“IOI Property Group Bhd (IOIPG), Mah Sing Group Bhd and Sunway Group saw encouraging growth in property sales from the Johor region last year,” the report said.

“This reaffirms our bullish view on the property sector. Demand is expected to pick up strongly as interest rates stabilise and economic growth improves, supported by favourable government policies, such as the easing requirements for Malaysia My Second Home programme and new infrastructure projects concentrated in Johor,” it said.

RHB Research has maintained an ‘Overweight’ call on the property sector with top picks UEM Sunrise, IOIPG and Eastern & Oriental (E&O).

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