In a statement today, HLIB said that the sector was an outperformer in 2023 as the Kuala Lumpur Property Index (KLPRP) recorded an impressive return of 34.5% versus the Kuala Lumpur Composite Index (KLCI)’s loss of 2.7%.

“In 2023, with improving supply-side conditions, the time was ripe for a correction of the earlier sector mispricing,” it said.

HLIB said the sector also saw a triple boost from stronger earnings from accelerated billings, higher sales as there were more new products in the primary market, and higher launches as supply conditions improved.

Nonetheless, the investment bank said that these three factors did not reflect a fundamental change in underlying demand dynamics.

HLIB also said it maintained the sector’s “neutral” rating after downgrading from “overweight” in Dec 2023.

“Stocks such as Sunway Bhd (Sunway), OSK Holdings Bhd (OSK), and Matrix Concepts Holdings Bhd achieved their all-time high stock price during 2023.

“Despite an overall neutral view on the sector, we nonetheless identified several names under our coverage that have the potential to outperform – our top picks are Sunway, OSK, Sime Darby Property Bhd (Sime Darby), and IOI Properties Group Bhd (IOI Properties),” it said.

Meanwhile, HLIB said it expects moderate growth in 2024, and much of the sector tailwinds enjoyed in 2023 to diminish.

“As such, developers are unlikely to raise their launches significantly in 2024.

“With the expectation of moderate growth in the economy and new launches, consequently, we think sales will also see a similar pace of moderate growth in 2024,” it added.