PETALING JAYA: Rising headwinds for the property sector in the near-term are anticipated as the oil price hike is likely to impact buying interest in properties and increase costs for developers.
MBSB Research in a report opined that buying interest is likely to be weaker as people hold back spending on big ticket items amid the growing cost of living.
The sector is also facing a mounting property overhang, which is at its highest level since the third quarter of 2022.
“In view of the rising headwinds ahead, we downgrade our call on the property sector to ‘neutral’ from ‘positive’,” said MBSB Research.
CGS International (CGSI) Research retained its “neutral” rating on the sector as well, given the lack of major near-term catalysts. In terms of earnings, the research house anticipates a resilient financial year 2026 (FY26) to FY28.
“We note that most developers presently maintain their FY26 sales targets. In our view, this suggests stable demand, with the impact of macro headwind largely contained,” CGSI Research added.
The research house – which recently hosted meetings with several key property players – said it came away with a constructive view on the sector, as management teams reiterated a resilient outlook despite near-term headwinds stemming from Middle East tensions.
“We gather that industrial property players remain upbeat on the segment, which continues to ride on structural demand growth in Malaysia,” CGSI Research said.
This is further supported by their expansion of industrial exposure, evidenced by Sime Darby Property Bhd
’s upcoming joint venture with SD Guthrie Bhd to add about 5,000 acres of industrial land and Axis Real Estate Investment Trust’s target to double assets under management to RM10bil by 2030, among others.
“Encouragingly, developers highlighted potential upside from geopolitical tensions, which could accelerate trade diversion and boost demand for industrial properties.
“This is further supported by increased enquiries from data centre players, which view Malaysia as a viable alternative location amid shifting regional dynamics,” CGSI Research added.
Eco World Development Group Bhd remains CGSI Research’s top sector pick.
