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Malaysian property sector to grow 10 to 15 percent on economic improvements and government policies, says RHB Research

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KUALA LUMPUR: 2024 is set to be another gangbusters year for property developers. Improvements in the overall macroeconomic environment, investment flows and government policies are expected to contribute some 10 to 15 percent increases in property sales for developers.

In a note released by RHB Research, the firm notes that aggregate property sales have remained strong based on numbers released by developers. It added that the research house anticipates more land banking activities in 2024 to spur property sales.

"We expect more aggressive land banking activities in 2024. Eco World, AME Elite Consortium, Mah Sing, and Avaland are among the developers who are on the lookout for land parcels. Areas of interest are primarily Iskandar Malaysia, and the Klang Valley. In September 2023, Eco World acquired 404 acres of land in Kulai from IOI Properties," RHB Research said.

On the global economic front, the US Federal Reserve’s decision to cut or maintain interest rates in 2024 may offer some relief to emerging markets in the form of more stable interest rate trajectories, said the firm.

That being said, both local and foreign investors have yet to take up meaningful positions in property companies, implying value that has yet to be made.

“After our rounds of marketing in 4Q23, we think many local institutional funds have yet to take a meaningful position in the property sector. Foreign shareholding, for example, has yet to increase substantially. UEMS and Sunway have a foreign shareholding of <6%, compared to about 22% during the peak a decade ago (GIC’s shareholding made up 12% for Sunway then),” said the firm.

Renewed discussions around Malaysia’s high-speed rail project and the easing of the Malaysia My 2nd Home (MM2H) programme are expected to drive sales for the property sector further, adds the research house.

The firm also views the entry of conglomerates such as Microsoft and Nvidia into Johor’s Special Economic Zone (SEZ) as a boost to the property sector.

UEM Sunrise (TP:RM1.18), Sunway (TP:RM3) and IOI Properties (TP:RM2.10) are the firm’s top three picks for property counters benefiting from these policies and developments. UEM Sunrise is the firm’s top pick due to its strategic landbank exposure to the Iskandar Malaysia project.


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