PETALING JAYA: Property sales momentum will stay strong this year and in 2024, underpinned by the stable interest rate outlook and revival of major infrastructure projects.
Bullish on the real estate sector, RHB Research said the market sentiment would also be lifted by the potential review of the Malaysia My Second Home (MM2H) programme and other potential catalytic developments.
The Johor property market, in particular, would see a sustainable recovery going forward, according to RHB Research.
“Over the last few months, news flow seems to favour the Iskandar Malaysia property market.
“These include the proposed Johor-Singapore special economic zone, review of the MM2H and the revival of the Kuala Lumpur-Singapore high-speed rail (HSR) project.
“Indeed, property as a high-beta sector already saw some positive momentum since early July,” RHB Research said in a note.
The research house also highlighted that the cheap ringgit may possibly be another boost to Iskandar Malaysia.
“During our recent visit to Johor, we learnt from our colleagues and corporates that visitors from Singapore have been increasing not only during the weekends, but also starting from Friday,” it said.
According to RHB Research, the completion of the Johor Baru-Singapore Rapid Transit System (RTS) by end-2026 would lead to the increase in visitors from Singapore even during weekdays.
“We believe this should have a positive spillover to the property market soon,” it added.
With the interest rate normalisation coming to an end, RHB Research thinks that it would provide some certainty.
This is especially among home buyers as well as property investors.
The current mortgage rate stands at about 4.5% to 4.7%, back to the pre-pandemic levels.
The market is expecting zero or one more interest rate hike in the second half of 2023.
The research house also noted that political risk is expected to ease after the conclusion of the state elections by August.
This, it added, should allow the Pakatan Harapan-led administration to implement its reform agenda and move ahead with the mega-infrastructure projects.
“Property stocks, given their high beta, should continue to rerate.
“This is especially given their undemanding valuations,” it said.
Looking ahead, RHB Research said it preferred developers that could benefit from major infrastructure projects.
“Given the catalysts from the HSR project and the RTS, which is already ongoing, our new top pick is UEM Sunrise Bhd
.
“We also retain IOI Properties Group Bhd and Matrix Concepts Holdings Bhd as our top picks.
“This is given their solid fundamentals as well as respective landbank exposure which could potentially benefit from the HSR project (if the alignment under the previous proposal is maintained),” it elaborated.
