RHB in its sector update report maintains overweight on the property sector with top picks being UEM Sunrise, Sime Darby Property, Mah Sing with earnings growth for developers with exposure to the industrial segment, sizeable landbank and strong balance sheet to fare better.
While property demand may continue to be supported by improving economic growth and catalytic infrastructure developments, investments by data centre (DC) and E&E players could significantly boost demand for industrial development. Upcoming detailed announcement on the Johor-Singapore Special Economic Zone (JS-SEZ) and potential revival of the KL-Singapore High Speed Rail could spur investor interest further in Johor-related property stocks
Multi-billion MYR investments in DC and semiconductor sectors. Announcement on DC-related transactions accelerated especially over the last two months. According to Prime Minister Datuk Seri Anwar Ibrahim, Malaysia has approved MYR114.7bn worth of investments in DCs and cloud services between 2021-2023.
MYR500bn investments in the semiconductor segment. The house thinks the DC investment cycle is only at the initial stage, and the house expects much more land transactions to happen. Developers with solid balance sheet may start to look at the viability of this DC-related real estate investment, and players such as SDPR and Mah Sing may further expand their investments
1Q24 property sales were decent, but RHB expects sales in 2H to come in much stronger as developers ramp up their launches during mid-year. Demand for landed homes at township developments and high-rise at strategic locations remain encouraging. Of late RHB also noted thar a strong take-up for high-end landed units and luxury condominium with big floor space. Senna and Fera by Eastern & Oriental (E&O), The Ophera by SDPR and Aetas Seputeh by Avaland (AVALAND MK, NR) are all 50-90% sold.
During a recent visit to Iskandar Malaysia, RHB said it learnt that property sales are gaining momentum. Footfall to Sunway Iskandar's sales gallery have doubled from last year, and the marketing team is now seeing more and more buying from foreign purchasers especially during the weekend. Likewise, UEMS has also received a significant amount of bookings and/or registrants (for the next launch) who were not able to buy Senadi Hills (due to it being oversubscribed) when the project was launched at end-2023. The house thinks greater urbanisation and industrialisation in Iskandar Malaysia from the potential economic impact of JS-SEZ willfuel demand for properties in Johor
Positive news flow on the potential incentives and initiatives on the JS-SEZ, infrastructure developments, as well as foreign and domestic direct investments are expected to buoy investor sentiment on the property sector in 2H24