7 days ago
Klang Valley Property Market Shows Signs Of Recovery: HLIB
Hong Leong Investment Bank Bhd (HLIB) has maintained its OVERWEIGHT call on the property sector, with BUY ratings on Sunway (target price: RM5.90), IOI Properties Group (RM4.05), SP Setia (RM1.80), Mah Sing (RM1.85), Matrix (RM1.73), OSK (RM2.00) and Sime Darby Property (RM2.05), while UEM Sunrise is rated Hold with a target price of RM0.78.
According to HLIB, the sector continues to demonstrate resilience despite early-2025 headwinds stemming from the US tariffs and AI chip export restrictions. In the Klang Valley, high-end residential demand is showing early signs of recovery, with premium projects such as TA Global's Clouthaus and E&O's Conlay Signature Suites recording encouraging sales.
This improving sentiment, especially among investment-focused buyers, is expected to support better margins for developers, while the proposed Urban Renewal Act may unlock redevelopment potential in mature, high-value areas.
In Johor, the Johor-Singapore Special Economic Zone (JS-SEZ) and enhanced connectivity to Singapore are driving robust property demand. Developers, including Sunway, Mah Sing and UEM Sunris,e have lined up major launches, although HLIB cautions that the surge in investor-driven projects near the RTS Link corridor may lead to oversupply and eventual price correction if not matched by genuine end-user demand.
In Penang, a stronger Ringgit and ongoing trade uncertainties are seen as potential drags on the high-end market, particularly for developers like E&O, due to weaker tech-sector income. Negeri Sembilan, while facing intensified competition from Selangor and internal players, could benefit from the longer-term upside of MVV 2.0, which is being positioned as a cost-competitive industrial hub that could eventually lift residential demand.
Outside the 2024 data centre boom, HLIB sees cooling demand in that segment as land acquisition has tapered and regulatory approvals have become more stringent, with feasibility further pressured by rising costs and regulatory concerns.
However, industrial property demand beyond the data centre segment remains firm, supported by steady foreign direct investment, government backing and increasing attention to secondary growth hubs like Johor and Negeri Sembilan.
The retail and hospitality segments are expected to weather the new 8% SST on leases, with most of the burden shared across tenants and consumers.
The recent OPR cut and salary adjustments for civil servants are anticipated to boost consumer spending, helping retailers absorb the impact. Tourism strength continues to underpin the hospitality segment, with IOIPG well-positioned to benefit from its expanded hotel offerings and enhanced connectivity at IOI Resort City.
HLIB noted that despite external headwinds, the KLPRP Index has staged a rebound, and the research house believes the broader industrial market remains on solid footing. With rising incomes and supportive policies, Malaysia's pivot toward a high-value economy supports the research house's Overweight stance, with IOIPG, OSK, Sunway and Sime Darby Property named as its top sector picks. Related
