Strong rebound for property expected in 3Q

PETALING JAYA: Malaysia’s property sector is poised for a stronger rebound in the third quarter of this year, supported by improving sentiment, resilient demand across key property segments, and a stable interest rate environment.

RHB Research said short-term headwinds, including Budget 2026’s neutral stance, political uncertainty from the Sabah state election, and US-China trade tensions, have prompted mild profit-taking.

The research house has maintained an “overweight” call on the sector, expecting better earnings in November, with Sime Darby Property Bhd (SimeProp) and Sunway Bhd remaining its top picks for their diversified portfolios and robust balance sheets.

The research house pointed out that Budget 2026 offered limited new incentives for the sector, but reaffirmed existing support measures.

The stamp duty exemption for first-time homebuyers of properties priced up to RM500,000 has been extended until end-2027, sustaining demand in the mid-range segment.

RHB Research said it believes developers such as Mah Sing Group Bhd, Matrix Concepts Holdings Bhd, and Eco World Development Group Bhd (EcoWorld) are expected to benefit.

Meanwhile, the stamp duty for foreign buyers will rise from 4% to 8% next year, but the research house reckoned this will not deter demand from affluent investors, particularly in Iskandar Malaysia, where infrastructure projects like the Johor Baru–Singapore Rapid Transit System and the Johor-Singapore Special Economic Zone continue to drive interest.

It added that the government’s proposal for build-then-sell schemes and tax deductions for converting commercial buildings into residential use could gradually reshape the market, but the immediate impact is expected to be limited due to implementation challenges.

Despite some cooling interest from data centre operators, following stricter US regulations on tech investments, it noted that major developers are doubling down on land acquisition.

The research house pointed out that strong property sales have depleted existing land holdings, prompting Tier-1 players such as SimeProp, EcoWorld, and Mah Sing to scout for new sites in Iskandar Malaysia, the Klang Valley, and Malaysian Vision Valley 2.0 (MVV 2.0).

The research house said even as data centre expansion slows, construction for ongoing projects with Pearl Computing Malaysia is progressing.

Confidence among developers remains high, anticipating a stronger second half of this year as new launches ramp up and industrial-property demand continues to climb.

RHB Research added that the industrial property market remains one of the most resilient drivers of sector growth, before highlighting that heightened US-China trade tensions are accelerating foreign investment diversification into South-East Asia, and Malaysia continues to attract manufacturing and logistics players looking to establish regional bases.

Developers report an uptick in inquiries from East Asian multinationals seeking production and warehouse facilities.

RHB Research noted that the recent sell-down has improved valuations, with the sector now trading at a 53% discount to revalued net asset value of between plus one standard deviation and its long-term historical mean. It expects sentiment to recover as earnings momentum picks up and macro conditions stabilise.