“Positive news flow on the Johor-Singapore Special Economic Zone (JS-SEZ), infrastructure developments, as well as foreign and domestic direct investments are expected to buoy investor sentiment on the property sector in 2H 2024,” it said in a note.
Upcoming detailed announcements on the JS-SEZ and potential revival of the KL-Singapore high speed rail could spur investor interest further in Johor-related property stocks, it added.
Earnings growth for developers with exposure to the industrial segment, sizeable landbank and strong balance sheet should fare better, it said.
“While property demand may continue to be supported by improving economic growth and catalytic infrastructure developments, investments by data centre (DC) and electronics and electrical (E&E) players could significantly boost demand for industrial development.”
It added developers with solid balance sheet may start to look at the viability of DC-related real estate investment, and players such as Sime Darby Property Bhd and Mah Sing Group Bhd may further expand their investments.
The research house noted announcements on DC-related transactions have accelerated especially over the last two months. According to Prime Minister Anwar Ibrahim, Malaysia has approved RM114.7 billion worth of investments in DCs and cloud services between 2021-2023.
Malaysia also aims to attract RM500 billion investments in the semiconductor segment. “We think the DC investment cycle is only at the initial stage, and we expect much more land transactions to happen,” it added.
Property sales to ramp up in 2H
RHB said while property sales in the first quarter were “decent”, it expects sales in 2H to come in much stronger as developers ramp up their launches during mid-year.
It noted demand for landed homes at township developments and high-rise units at strategic locations remain encouraging.
“Lately, we also saw a strong take-up for high-end landed units and luxury condominium with big floor space. Senna and Fera by Eastern & Oriental (E&O), The Ophera by Sime Darby Property, and Aetas Seputeh by Avaland are all 50-90% sold,” it said.
During its recent visit to Iskandar Malaysia, RHB said it learnt that property sales are gaining momentum.
“Footfall to Sunway Iskandar’s sales gallery have doubled from last year, and the marketing team is now seeing more and more buying from foreign purchasers especially during the weekend,” it said.
Likewise, UEM Sunrise Bhd has also received a significant number of bookings and registrations for its next property launch, it added.
“We think greater urbanisation and industrialisation in Iskandar Malaysia from the potential economic impact of JS-SEZ will fuel demand for properties in Johor,” said RHB.
RHB has maintained its “overweight” call on the property sector and “buy” calls on UEM Sunrise, Sime Darby Property and Mah Sing, which are its top picks.
It has a target price (TP) of RM1.60 per share on UEM Sunrise, a 41.6% upside from its current price of RM1.13. The stock is up 34.5% year-to-date (YTD) and a whopping 232.4% over the past one year. It has a market capitalisation of RM5.7 billion at its current price.
RHB has a TP of RM2 on Sime Darby Property, which is 37.9% higher from the current price of RM1.45, which values the group at RM9.7 billion. The group has surged 133.9% this year and 195.9% over the past year.
Its TP for Mah Sing is RM2.26, an upside of 29% from the current price of RM1.75, which values the developer at RM4.9 billion. The group is up 113.4% YTD and 177.8% over the past year.