RHB IB sees strong property sales momentum for 2023, 2024

• In a sector update on Monday (July 17), the research house said it believes property sales momentum will stay strong this and next year, with the Johor property market seeing sustainable recovery going forward.

KUALA LUMPUR (July 17): RHB Investment Bank research has maintained its “overweight” rating on the property sector and said it remains upbeat on the sector, given positive news flow that could lift market sentiment, including the revival of major infrastructure projects, a potential review of the Malaysia My Second Home (MM2H) programme, other potential catalytic developments, as well as a stable interest rate outlook.

In a sector update on Monday (July 17), the research house said it believes property sales momentum will stay strong this and next year, with the Johor property market seeing sustainable recovery going forward.

“Our top picks are now UEM Sunrise Bhd (UEMS), IOI Properties Group Bhd (IOIPG) and Matrix Concepts Holdings Bhd (MCH).

RHB’s Loong Kok Wen said that over the last few months, news flow has seemed to favour the Iskandar property market.

She said these include: i) the proposed Johor-Singapore special economic zone, ii) review of MM2H, and iii) talks to revive the KL-Singapore high-speed rail project. Indeed, property as a high-beta sector already has seen some positive momentum since early July.

Loong said the sharp weakening of the ringgit hit equity market sentiment in 2Q, but the cheap currency has helped to spur spending by foreign visitors, especially from neighbouring Singapore.

“During our recent visit to Johor, we learnt from our colleagues and corporates that visitors from Singapore have been increasing not only during the weekends, but also starting from Friday.

“With the completion of the Johor Bahru-Singapore Rapid Transit System in 2026, the flow of visitors from Singapore should increase even during weekdays.

“We believe this should have a positive spillover to the property market soon,” she said.

Loong said the market is probably expecting zero or one more interest rate hike in 2H2023.

“With interest rate normalisation path coming to an end, this should provide some certainty, especially among home buyers as well as property investors.

“Current mortgage rate stands at about 4.5-4.7%, back to the pre-pandemic levels,” she said.