KUALA LUMPUR: Overall macroeconomic environment, government policies and investment flows are expected to spur property sales for developers by between 10 per cent and 15 per cent in 2024, compared with 2023.
RHB research in its note said aggregate property sales remained resilient based on the latest sales numbers released by developers.
Excluding the bulky overseas property sales in 2Q23 recorded by UEM Sunrise and Sunway Bhd, nine-month 2023 aggregate property sales grew nine per cent from the same period last year, suggesting healthy demand for property locally.
"We expect more aggressive landbanking activities in 2024. Eco World, AME Elite Consortium, Mah Sing, and Avaland are amongst the developers that 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.
It remains confident on the Iskandar Malaysia property market given the concentration of high profile investments and infrastructure developments that are taking place in the southern region.
The revival of the High Speed Rail project is a re-rating catayst for the sector.
The research firm believes many local institutional funds are still sceptical on the property sector recovery while some think that they have missed the boat.
"Although we do not have any data to track (the local funds), foreign shareholding has yet to increase substantially especially for certain more liquid property stocks," RHB research said.
UEM Sunrise, for example, which discloses its monthly foreign shareholding every quarter, has a foreign shareholding of less than six per cent as at Dec 2023, compared to a high of 22 per cent at the peak of the previous property cycle (Apr 2013).
As for Sunway, its foreign shareholding was also around 22 per cent during the peak (but this included GIC's 12.2 per cent stake) as compared to only 5 per cent as at Nov 2023 (GIC exited in 2013-2014).
Strong news flow focusing on Iskandar Malaysia, active landbanking activities, property sales growth of 10-15 per cent in 2024 and 30-day visa free policy for travellers from China and India, are expected to drive investors interest in property stocks.
These, together with the easing of requirements for Malaysia My 2nd Home (MM2H) programme are expected to drive foreigners' purchase of properties in Malaysia.
RHB research has an overweight the property sector. Its top picks for the sector are UEM Sunrise (target price (TP): RM1.18), Sunway (TP: RM3) and IOI Properties (RM2.10).
It favours UEM Sunrise for being the best best proxy for the Johor thematic play given its strategic landbank exposure in Iskandar Malaysia, which makes up 92 per cent of its total landbank.
Sunway for its exposure to Johor and also in view of the upcoming listing of Sunway Healthcare Group (SHG).
While IOI Properties for the likely commencement of rentals from its IOI Central Boulevard office towers by mid-2024, which will be a major earnings kicker from financial year 2025 forecast.