Upward momentum likely for property players

PETALING JAYA: The local property sector is poised for significant growth, driven by macroeconomic factors and thematic plays, analysts say.

TA Research said the rise in developers’ share prices is more than just a fleeting trend and is, instead, a golden opportunity worth accumulating.

“Since August last year, our stance on the property sector has turned bullish, spurred by the emergence of compelling catalysts driving a re-rating.

“These include political stability, increased foreign direct investments, the rollout of major infrastructure projects, the establishment of special economic zones and the continuation of homeowner-friendly policies,” the research house said in a report yesterday.

TA Research said the burgeoning data centre thematic play, which was absent during the 2013 upcycle, is now a significant growth driver.

“The property market is not only riding a wave of positive news but is also backed by solid fundamentals and growth prospects.

“Despite the sector’s current valuation being above the long-term average, the strong economic fundamentals and new growth drivers provide a compelling case for continued upward momentum,” the research house said.

TA Research noted that the positive shift from August last year has been validated by the rally in share prices among property developers, with the Bursa Property Sector Index (KLPRP Index) concluding 2023 as the second-best performer on Bursa Malaysia.

“Notably, it recorded a substantial gain of 34.5%, trailing only behind the Utilities Sector Index, which surged by 51.4%. This performance notably outpaced the benchmark FBM KLCI, which experienced a decline of 2.7%.

“Although the KLPRP Index retracted some gains in the last two weeks of June as investors locked in profits, it still maintains a 28.7% gain year-to-date, outperforming the benchmark FBM KLCI’s 10.7% increase,” the research house said.

TA Research said comparatively, in 2013, the country’s economic strength was centred primarily on the Klang Valley and Johor.

However, in 2024, there is the emergence of two additional economic powerhouses, namely Penang and Sarawak.

“For the first time in Malaysian history, major public transportation infrastructure projects are simultaneously underway in the Klang Valley (mass rapid transit line 3 and high-speed rail or HSR), Johor (rapid transit system or RTS), HSR and automated rapid transit or ART), Penang (light-rail transit or LRT), and Sarawak (Kuching Urban Transportation System ART).

“This shift, alongside an improving macro-economic outlook, increased infrastructure investments and various housing schemes aimed at assisting first-time homebuyers, points towards a more resilient housing market moving ahead,” the research house said.

Meanwhile, UOB Kay Hian (UOBKH) Research said in view of the record-high total investment for the country over the past two to three years, it anticipates positive spillover effects on the property sector.

“Property transactions are hitting record highs, overhang is decreasing, and investment is climbing in the real estate sector, suggesting that the worst may be behind us,” the research house said.

UOBKH Research said in the second half of 2024, the outperformance momentum is expected to continue on government policies like the Industrial Master Plan 2030 and data centre investment incentives boosting land sales for the industrial segment.