KUALA LUMPUR: The property sector is expected to continue its positive momentum in 2025, building on last year's strong performance, RHB Investment Bank Bhd (RHB Research) said.
The firm said the sector continued to outperform the market in 2024 with the KL Property Index rising by 31.5 per cent following a 34.5 per cent increase in 2023.
"2024 saw a greater involvement of many developers in data centre (DC)-related investments and land transactions, as well as industrial developments.
"Many developers also managed to acquire sizeable land parcels during the year, with the focus shifting more towards Iskandar Malaysia," it said in a note.
RHB Research said the sector valuations in 2025 will likely be driven by value crystalisation of non-development businesses, especially from recurring income-generating property asset portfolio and businesses such as healthcare.
The firm also expects stronger contributions from the industrial development segment as the Donald Trump 2.0 era begins, along with new catalysts if the Kuala Lumpur-Singapore High Speed Rail (KL-SG HSR) and Penang Special Financial Zone (SFZ) are implemented.
"Over the near term, the signing of a definitive agreement related to the Johor-Singapore Special Economic Zone (JS-SEZ) and recent news flow on the KL-SG HSR and Bandar Malaysia will likely buoy sentiment on the sector.
"In Penang, the state government is mulling over the establishment of a SFZ. Potential sites for the SFZ include Gurney Bay and Andaman Island. The biggest beneficiary would be Eastern & Oriental, given its prominent presence in the area," RHB Research added.
Property sales may increase in 2025 as RHB Research expects developers to mostly target 5.0-10 per cent growth.
It said that some developers will likely focus on launching mid-range high-rise products to conserve their landbanks and address the potential affordability issue.
Some, on the other hand, will continue with the existing strategy, with additional offerings of commercial and industrial products.
Meanwhile, the thriving industrial sector brings about strategic opportunities for property players to accumulate assets.
RHB Research said Southeast Asia is still a sweet spot for global trade and will likely see foreign direct investments rise – benefiting from trade diversions after Donald Trump becomes the next US president later this month.
"Developers with exposure to industrial development should continue to benefit.
"Apart from land transactions and the development of industrial properties, demand in this area may also represent a strategic opportunity for developers to accumulate industrial property assets over the medium term," it said.