Developers gearing up for higher sales

MIDF Research said total loan applications for January and February was up 8% year-on-year.

PETALING JAYA: Loan applications for property took a breather in February, but they were higher in the first two months of 2024 at RM91bil, indicating stronger demand for property, according to MIDF Research.

The total loan applications for January and February was up 8% year-on-year (y-o-y), said the research house, which expects buying interest on property to grow stronger in 2024 as the outlook for the sector is positive.

“Cumulatively, the total approvals in the first two months in 2024 stood at RM37.8bil (up 14.2% y-o-y).

“The higher approved loan underpins expectations of higher new sales,” it said.

For February, the loan applications for the purchase of property stood at RM40.1bil, down 21% month-on-month due to the short month.

In tandem with the lower loan applications, approved loans for the purchase of property was lower at RM17.4bil.

Citing data from the National Property Information Centre, the research firm said the House Price Index (HPI) in Malaysia resumed an uptrend since 2022 with the reopening of the economy post-Covid-19.

The HPI was subdued in 2020 and 2021 due to the pandemic.

“Going forward, we see the property price outlook in Malaysia remaining positive as the property market is improving. Besides, we think that the rising construction cost and inflationary pressure may drive property prices marginally higher as developers pass on the cost to home buyers.”

Besides this, MIDF Research said the upcoming infrastructure projects such as Johor Baru-Singapore Rapid Transit System Link and Penang LRT will further improve connectivity and support buying sentiment on property in Malaysia.

Its top picks for the sector are Mah Sing Group Bhd and Matrix Concepts Holdings Bhd.

The research firm said it liked Mah Sing due to its exposure to the affordable residential segment and growing presence in the industrial properties segment.

The group’s growing property presence in Johor will further support the growth of its property sales.

Notably, Mah Sing has set a higher new sales target of RM2.5bil for its financial year 2024 (FY24), while balance sheet remains healthy with low net gearing of 0.08 times.

Meanwhile, it noted that Matrix Concepts has a stable outlook, driven by its Sendayan township in Seremban, Negri Sembilan, that focuses on affordable landed homes.

Its land bank expansion in Labu will further support growth of its property development business.

The group registered stable new sales of RM961mil in the first nine months of FY24 and is on track to meet management’s new sales target of RM1.3bil.

In addition, the dividend yield of Matrix Concepts is attractive at 5.4% based on dividend forecast of 9.8 sen, said the research firm.