KUALA LUMPUR: The upcoming Budget could reveal one of three possible directions the government plans to take its data centre (DC) investment policy, says Hong Leong Investment Bank (HLIB) Research.
It said the government could opt for supportive measures that could encourage further DC investments, implement cooling measures such as stricter approvals or higher approval rates to manage the sector's expansion, or announce no new major policy changes.
According to HLIB, the third option, where the government stands pat on its existing policies regarding DC investment, will be the most likely outcome.
"Given the current momentum in DC investments, particularly from global players like Amazon and Microsoft, the government is unlikely to implement restrictive policies that could deter growth," it said.
Meanwhile, any supportive measures would benefit developers with exposure to the DC sector, particularly Mah Sing Group Bhd
and Sime Darby Property Bhd, as well as those with significant landbanks in DC hot spots like Johor and Selangor.
HLIB has an "overweight" rating on Malaysia's property sectors as it says a multi-year upcycle is now in motion.
"Property developers are the nation builders that lay the bricks and foundation of the economy.
"Thus, we expect them to perform well in this new era of growth in Malaysia supercharged by robust investment activities," it said.
According to the research firm, the announcements that global tech giants like Amazon, Google, Microsoft and Bytedance are investing in Malaysia, was unheard of in the past.
It said the companies are prioritising speed to market over capital spending in their rapid expansion of DC capacity to support AI development.
"This trend benefits property developers and landowners, as these firms are willing to purchase land at competitive prices to meet their expansion needs."
In addition, the RM160bil in investments approved by Mida in 1H24 reinforces the strong monmentum in investment activity in the country.
"Industrial developers and office owners are set to benefit first from this influx, followed by residential developments, which will gain from spill-over economic effects and the easing of housing supply pressures as developers diversify into industrial and commercial projects," said HLIB.
The research firm's top picks in the sector are IOI Properties Group Bhd, OSK Holdings Bhd, Sime Darby Property and Sunway Bhd.
