HLIB Research maintained an “overweight” view on the domestic property sector.
PETALING JAYA: The property sector is in the midst of a multi-year upcycle, driven by rising household incomes, policy tailwinds and Malaysia’s transition toward a high-value economy.
In a note, Hong Leong Investment Bank Research (HLIB Research) said the sector has undergone a structural transformation in recent years, with new opportunities opening up in industrial, retail, office and hospitality segments.
As such, HLIB Research recommends investors view the sector through a broader lens – beyond just residential demand – to capture these new growth avenues.
“This diversification provides developers with multiple growth pillars and new revenue streams, thereby strengthening earnings visibility and reducing reliance on any single segment.
“Our top picks are IOI Properties Group Bhd
, OSK Holdings Bhd, Sunway Bhd and Sime Darby Property Bhd.”
HLIB Research maintained an “overweight” view on the domestic property sector. In Johor, the research house said the Johor-Singapore Special Economic Zone is expected to spur industrial demand.
The upcoming Johor Baru–Singapore Rapid Transit System commencement should further uplift residential demand near the station while also boosting retail spending from Singaporeans, which will support upcoming retail malls.
In Negri Sembilan, the industrial segment is gaining momentum as the state positions itself as a cost-competitive alternative to Selangor.
A major boost will come from the Malaysia Vision Valley development.
The office sector is also showing signs of recovery.
Meanwhile, Malaysia’s stable political environment enhances its appeal as a tourism destination relative to peers such as Thailand and Indonesia, benefiting hospitality players with strong exposure to hotels, malls, and theme parks.
About the recently concluded second-quarter earnings season, HLIB Research said property stocks under its coverage delivered results that are broadly within expectations.
Out of the eight companies, six reported results in line with their expectations, while two fell short: IOI Properties, due to the deferred recognition of land sales, and UEM Sunrise Bhd, on the back of weaker-than-expected sales and progress billings.
“For our coverage universe, second quarter of financial year 2025 (2Q25) aggregate core earnings stood at RM676mil (up 26.1% quarter-on-quarter; down 30.8% year-on-year (y-o-y)), lifting first half of financial year 2025 (1H25) earnings to RM1.46bil (down 2.4% y-o-y).
“In 2Q25, aggregate sales rose to RM4.45bil (up 26.5% quarter-on-quarter; up 11.2% y-o-y), lifting 1H25 sales to RM7.98bil (up 1.4% y-o-y).
“This underscores the sector’s resilient sales momentum, sustaining the strength seen in the prior year.”
