The research house is upbeat on the sector given the positive news flow that includes 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 research note today, RHB IB said it remains optimistic towards the growing momentum of property sales, with the Johor property market seeing a sustainable recovery moving forward.
Its analyst Loong Kok Wen said the news coverage has been instrumental in bolstering the Iskandar property market over the past few months, coupled with the property sector being more volatile since early July.
She said these include the proposed Johor-Singapore special economic zone, potential revival of the KL-Singapore high-speed rail (HSR) project, and review of the MM2H programme.
“Indeed, property as a high-beta sector already has seen some positive momentum since early July,” she noted.
RHB IB’s top picks for the sector are UEM Sunrise, IOI Properties and Matrix Concepts.
Double-edged sword
Although the sharp weakening of the ringgit hit equity markets in the second quarter, the cheap currency has helped to stimulate spending from foreign visitors, predominantly 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,” said Loong.
“With the completion of the Johor Bahru-Singapore Rapid Transit System (RTS) 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 added.
Nevertheless, Loong said the interest rate outlook should remain stable and the market is probably expecting no further rate increase, or one more interest rate hike in the second half.
“With the interest rate normalisation path coming to an end, this should provide some certainty, especially among homebuyers as well as property investors,” said Loong.
The current mortgage rate stands at about 4.5%-4.7%, back to the pre-pandemic levels, she said.