Kenanga Research said that developers are adapting by prioritising affordable housing, aligning with evolving consumer needs in a challenging economic environment.
PETALING JAYA: The affordable housing segment remains a bright spot for the Malaysian property sector despite persistent headwinds such as oversupply, high household debt and affordability concerns.
Industrial property and land sales monetisation are also proving to be more resilient as business models amid the sector’s challenging outlook.
A shift in revenue strategies among developers should keep earnings growth sustainable, according to Kenanga Research.
Reiterating its “underweight” stance on the property sector, the brokerage noted that big-cap property players in particular continue to face potential downside, while the prospects for mid-to-small cap names have turned less negative.
“Looking ahead, the Malaysian property sector will continue to focus on affordability, as outlined in the challenges seen with the rise of overhang units and affordability gaps for first-time homebuyers.
“With population growth and urbanisation driving demand, transit-oriented developments in key regions like the Klang Valley are expected to gain traction, providing a strategic response to the rising cost of living and household debt pressures,” Kenanga Research wrote in its report yesterday.
“Despite persistent oversupply and economic headwinds, the sector has shown resilience through strategic shifts – such as the monetisation of land near developed areas and the growing industrial segment.
“Developers are adapting by prioritising affordable housing, aligning with evolving consumer needs in a challenging economic environment,” it added.
Kenanga Research noted that while headwinds like oversupply, high household debt, and affordability concerns persist, developers are increasingly focusing on land sales to capitalise on landbank appreciation to smoothen their respective gearing.
Additionally, it noted, the industrial segment is becoming a sustainable revenue stream, driven by demand for logistics and warehouse spaces from eCommerce growth.
“These strategic moves, combining land monetisation and industrial property investments, help offset weaker residential demand and suggest a more balanced outlook for the sector despite ongoing challenges,” it stated.
Kenanga Research’s top sector pick are MKH Bhd
and Mah Sing Group Bhd, given their focus on affordable homes priced below RM500,000, with strong demand from first-time house buyers and its transit-oriented development projects that will benefit from the switching to public transport from private vehicles following fuel subsidy rationalisation.
Meanwhile, it noted that Mah Sing and Sime Darby Property Bhd are among some of the main beneficiaries of the growth in the industrial property segment as these developers are increasingly shifting their focus towards industrial properties to mitigate their reliance on the residential market.
It noted that besides the growth of eCommerce and heightened demand for logistics and warehouse facilities driving the industrial property segment, government initiatives to attract foreign direct investment have also supported this trend.
