KUALA LUMPUR: Analysts are optimistic about Malaysia's property sector, forecasting strong capital inflows and renewed buying interest as global interest rates begin to decline.
RHB Research has maintained its "overweight" rating on the sector, identifying Johor as a key market.
The firm noted that major infrastructure projects, such as the Johor-Singapore Rapid Transit System (RTS) and the Johor-Singapore Special Economic Zone (JS-SEZ), are expected to further stimulate demand, alongside increasing foreign direct investments (FDIs) in the region.
In its property outlook report, RHB highlighted robust demand for recent property launches, particularly in Nusajaya, Johor.
"Since the last property upcycle in 2011-2013, developers have started to see queues forming overnight or in the early morning at some of their new property launches again—especially those located at strategic areas, for example, Nusajaya," it said.
Projects by UEM Sunrise Bhd and Sunway Bhd saw overwhelming interest, with units oversubscribed three to four times.
"Considering that the global interest rate is likely to decline over the next one to two years, we believe this buying trend will continue, given the renewed interest in the Iskandar Malaysia property market, with the RTS, influx of FDIs, JS-SEZ, and high living standards in Singapore being key demand catalysts."
The research firm anticipates continued interest in the Iskandar Malaysia property market and lists its top picks in the sector: Sime Darby Property Bhd (target price: RM2.00), Mah Sing Group Bhd (TP: RM2.26), UEM Sunrise (TP: RM1.60), and Sunway (TP: RM5.00).
RHB noted that the strong prospects for property transactions entering the rate cut cycle may have been underestimated. Upcoming key events include the tabling of Budget 2025, the signing of the JS-SEZ definitive agreement, and the potential revival of the Kuala Lumpur-Singapore High-Speed Rail (HSR).
Additionally, RHB stated that rate cuts by the US Federal Reserve (US Fed) are likely to boost investments from institutional funds, property buyers, and developers.
The firm emphasised Malaysia, particularly its high-growth regions, as an attractive market for both local and foreign buyers. Malaysia's strategic location makes it a prime destination for data centre (DC) investments, with further land and DC transactions anticipated.
RHB also indicated that a stabilising ringgit and interest rates are likely to attract more property buyers to these high-growth areas.
This week, the US Fed lowered interest rates by half a percentage point, marking an aggressive start to its monetary easing cycle. Lower US interest rates generally benefit riskier assets, including those in emerging markets, as investors seek better returns away from the weakening US dollar and bond yields.