Malaysia sees marginal rise in loan application for property purchases
Malaysia saw a marginal rise in loan application for property purchases and analysts believe that this might be due to a pause in rate hike by Bank Negara Malaysia (BNM) in July 2023 which might have encouraged purchases of property.
In a report, the research team at MIDF Amanah Investment Bank Bhd (MIDF Research) noted that according to data released by BNM, loan application for purchase of property recovered marginally by 2.7 per cent m-om to RM51.8 billion in July 2023 after decline of 11 per cent m-o-m in June 2023.
“We think that the marginal recovery in loan application could be due to pause in rate hike by Bank Negara Malaysia in July 2023.
“Cumulatively, total loan application in the first seven months of 2023 (7M23) stood at RM348.8 billion (up 0.9 per cent y-o-y).
“The marginally higher total application indicates healthy demand for property,” it opined.
Meanwhile, it noted that demand for industrial property is growing and that led to growing exposure of property companies in industrial development.
For instance, SP Setia added three new industrial estates recently into its portfolio namely Setia Fontaines Industrial Park in Penang, Setia Alaman in Klang, and Tanjung Kupang in Johor. Meanwhile, Eco World Development Group saw encouraging sales from industrial properties as it makes up 35 per cent of new sales in 7M23.
Subsequently, Eco World Development Group proposed to acquire 403.8 acres of industrial land in Kulai, Johor from IOI Properties Group for cash consideration of RM211 million.
On the other hand, it pointed out that Sunway Bhd expanded portfolio to industrial asset development recently by acquiring 245 acres of freehold land at Kuang, Rawang for development of an Industrial Tech Park. Similarly, Mah Sing Group set up a JV for industrial development recently due to growing demand for industrial property in Malaysia from buyers in China.
“Overall, we see growing contribution from industrial development to property companies in the near-term, riding on the solid demand for industrial assets,” it said.
Overall, MIDF Research maintained a ‘neutral’ with positive bias on property sector as it expected demand for property to continue recover gradually.
“Besides, Bank Negara Malaysia maintained OPR at three per cent in September 2023 which should underpin demand for property going forward,” it added.