Property sector to continue upswing

MIDF Research said it remains “positive” on the local property sector as it believes the overall outlook for the market is improving.

PETALING JAYA: The property market is expected to continue its positive trajectory into the second half of the year, especially in light of the constructive developments in Johor and declining overhang.

MIDF Research in a report noted that Johor has proposed establishing the Johor-Singapore Special Economic Zone (JS-SEZ) in the Iskandar Malaysia region and Pengerang.

“The proposed JS-SEZ in the Iskandar Malaysia region and Pengerang should benefit property companies with exposure to Johor.

“Note that UEM Sunrise Bhd has 4,471 acres of land in Gerbang Nusajaya and 1,172 acres of land in Puteri Harbour.”

Additionally, the research house pointed out that IOI Properties Group Bhd also has exposure in Johor with a remaining landbank of 3,868 acres there.

“Meanwhile, Sunway Bhd has 1,770 acres of land in Sunway City Iskandar Puteri.

“Similarly, Mah Sing Group Bhd has a remaining landbank of 1,082 acres in Johor and is expanding further down south, as it recently proposed to acquire 100 acres of land in Pulai, Johor Baru.”

MIDF Research also said Eco World Development Group Bhd has an undeveloped landbank of 1,295 acres in Johor.

“In a nutshell, the establishment of JS-SEZ bodes well for the development potential of developers with landbank in Johor.

Meanwhile, the Valuation and Property Services Department announced earlier this week that the level of residential overhang decreased to 24,208 units worth RM16.49bil in the first quarter of 2024, compared with 25,816 units worth RM17.68bil in the fourth quarter of 2023.

MIDF Research said it remains “positive” on the local property sector as it believes the overall outlook for the market is improving, considering the declining residential overhang.

“The unchanged overnight policy rate at 3% is also supportive to the recovery in property demand.

“Besides, the better outlook for the property market in Johor, which is driven by the Johor Baru-Singapore Rapid Transit System Link and JS-SEZ will further buoy the property sector in Malaysia.”

Looking at companies under its coverage, MIDF Research said it is revising its target price for Sunway to RM3.69 from RM3.01, as the research house updates its valuation on the company’s healthcare and construction divisions.

“We continue to see strong catalysts from the listing of Sunway’s healthcare division.

“On the other hand, our target price for S P Setia Bhd is under review, pending the quarterly results announcement. Our top picks for the sector are Mah Sing and Matrix Concepts Holdings Bhd,” it said.

The research house added it favoured Mah Sing, as it sees stable sales prospects from the group’s affordable residential segment.

“Its growing property presence in Johor is expected to drive earnings and sales growth going forward.

“Meanwhile, we like Matrix Concepts due to its stable outlook, which is driven by its Sendayan township in Seremban that focuses on affordable landed homes. Besides, the dividend yield of Matrix Concepts is attractive.”

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