Investor interest in sector poised to rise

Uptrend in transaction volume likely to sustain in 2024

property

KUALA LUMPUR: Investor interest in the property sector is expected to continue rising even though there are some categories of investors who appear to be sceptical of recent gains.

The sector has been struggling over the past decade since its recorded 2013-2014 valuation peak.

Nevertheless, share prices of property developers had risen in the second half of last year in anticipation of the uptrend being sustained.

“We highlight that the total property-transaction volume in 2022 was just 10% lower than the previous peak in 2011, while total property-transaction value has already surpassed the previous peak in 2014. While full-year data for 2023 has not been published, we expect the momentum to be sustained in 2024,” RHB Research said.

It noted that although the 34% appreciation in the KL Property Index, which tracks share prices of listed property developers appears significant, the valuation for the sector has yet to reach the

“The recent entry of Nvidia and Microsoft as well as other regional data centre operators into the country point to a boost in confidence among foreign investors.” RHB Research

levels seen during the previous peak.

RHB Research also pointed out that based on its enquiries over the last few months, it sensed many local institutional funds are still sceptical of the sector’s recovery on the stock exchange, while others think that they have missed the boat.

“Although we do not have any data to track (the local funds), foreign shareholding has yet to increase substantially, especially for certain more liquid property stocks,” the research house said.

The research house points out that UEM Sunrise Bhd has a foreign shareholding of less than 6% as of December 2023, compared to a high of 22% at the peak of the previous property cycle in April 2013.

Meanwhile, Sunway Bhd’s foreign shareholding was also around 22% during the peak then compared to only about 5% as of November 2023.

However, new catalysts could be in store for the sector moving forward, which may drive investor interest.

These include the recent news about the property scene in Iskandar Malaysia, Johor, the active land transactions and the recent property sales growth of 10%-15%, RHB Research said.

It also noted that the easing of requirements for the Malaysia

My 2nd Home (MM2H) programme is expected to drive foreigners’ purchases of property in Malaysia in the medium term.

Meanwhile, there appears to be more interest from developers to add to their land holdings, especially in the Klang Valley and Iskandar Malaysia.

RHB Research also anticipates there would be more aggressive land acquisitions from property developers in the residential and industrial segments, as developers are looking out for more land.

“The recent entry of Nvidia and Microsoft as well as other regional data centre operators into the country point to a boost in confidence among foreign investors. The influx of investments and rising demand for industrial land is already driving prices in Johor,” it said.

“Some of the land parcels near the Second Link Expressway were transacted at record prices (RM120-RM125 per sq ft) based on our checks where vendors are required to provide some infrastructure amenities.

“We believe the entrance of these large multinational companies are just the beginning of the investment wave,” it added.