Property sector outlook to remain positive on healthy loan applications — MIDF Research

• Pointing to recent news on the possibility of a high-speed rail (HSR) project between Ipoh and Kuala Lumpur, MIDF said the project would improve demand for properties in Ipoh and concurrently benefit property developers that have exposure in the state. 

KUALA LUMPUR (Nov 15): The outlook for the property sector in Malaysia is expected to remain positive, according to MIDF Research, based on the current healthy loan applications, higher approved loans, and potential new infrastructure projects. In a client note on Wednesday, the research house said it was maintaining its “positive stance” on the sector and projected that its outlook remains intact.

“Looking ahead, we expect loan applications to remain in positive growth territory, as BNM (Bank Negara Malaysia) maintained the OPR (overnight policy rate) at 3% in November,” MIDF said. 

Pointing to recent news on the possibility of a high-speed rail (HSR) project between Ipoh and Kuala Lumpur, MIDF said the project would improve demand for properties in Ipoh and concurrently benefit property developers that have exposure in the state. 

Although the project is currently under review and would need approval from the transport ministry and the Selangor government, the research house expects Sunway Bhd — which it rated “neutral” with a target price at RM1.84 — may benefit from the project, given the group’s rapid development projects in Ipoh.

Earlier, BNM reported that loan applications for the purchase of properties had grown by 0.9% month-on-month (m-o-m) and 15.6% year-on-year (y-o-y) in September 2023, to take total loan applications in the first nine months of 2023 (9MCY2023) to RM457.9 billion, or an increase of 2.6% y-o-y. 

MIDF observed that this indicated strong property buying interest following the reopening of the country’s borders and resumption of economic activities. 

On the flip side, total loans approved for the purchase of properties eased by 13% m-o-m, mainly because the percentage of total approved loans over the total applied of 39.8% in September 2023 was relatively lower compared to 46.1% in August 2023. 

However, total loans approved for the purchase of properties increased by 5% y-o-y in September, the fifth consecutive month of growth since May 2023.

“That brought cumulative approved loans in 9MCY2023 to RM200.7 billion (+7.6% y-o-y), which signals better overall new sales outlook for the property sector,” the research house said. 

In addition, the research house has recommended Mah Sing Group Bhd (“buy” call with target price of RM1.01) and Matrix Concepts Holdings Bhd (“buy” call with target price of RM1.86) as its top picks for the sector, as it is of the view that developers that focus on affordable homes will see robust sales on the back of resilient demand.

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