RESEARCH HOUSES POSITIVE ON PROPERTY SECTOR AMID LOWER RESIDENTIAL OVERHANG

MIDF Research remains positive on the property sector with improving fundamentals and a lower residential overhang, easing concerns about an oversupply.

In a research note, the investment bank said the overnight policy rate (OPR) is expected to remain unchanged and this should also continue to support property demand.

MIDF Research said relaxing requirements for the Malaysia My Second Home (MM2H) programme have been viewed positively as this should raise applications and property demand.

The latest MM2H revisions included a lowering of the minimum age requirement to 30 years from 35, thereby widening accessibility, and financial prerequisites were made less stringent.

“States favoured by foreigners such as Johor, Kuala Lumpur and Penang should see improved demand,” added MIDF Research. 

Cumulatively, it noted that loan applications for property purchases in the 11 months of 2023 were 5.2% higher year-on-year at RM560.6 billion, indicating a steady recovery in the sector.

"We see property demand to remain strong in 2024 with buying interest supported by improving property outlook," said MIDF Research.

Meanwhile, Maybank Investment Bank (Maybank IB) said developments in Johor, such as the Johor-Singapore Special Economic Zone (JSSEZ), with details likely due next week, would be the sector's focus in the first half of 2024.

"We await information on the JSSEZ. It could be located in Sedenak, which is part of the 2,950 hectares (7,290 acres) owned by state-owned Johor Corp. In our view, the sizeable landbank and relatively lower land costs should attract foreign investments, similar to Iskandar Puteri, launched in 2007," said the investment bank.

Maybank IB also noted that it was rational to position the JSSEZ in Sedenak to create a new growth area in Iskandar Malaysia as this would help generate job opportunities. Data centres are also located there and this would accelerate growth in the surrounding areas.

It added that Khazanah Malaysia Bhd owns land in Iskandar Puteri and via 70%-owned UEM Sunrise, chances are good that the special economic zone will be located there.

"While land cost is higher in the Iskandar Putri area compared to Sedenak, it is more mature and closer to Singapore. Even without the JSSEZ, properties in Iskandar Puteri would still be supported by resilient local demand, especially from Malaysians working in Singapore, and foreign investments," said Maybank IB.

It added that Forest City has been identified as a special financial zone and with the high-speed rail station possibly located in Iskandar Puteri, buying interest should continue in the region.