KUALA LUMPUR: RHB Investment Bank Bhd (RHBIB) has maintained an ‘Overweight’ rating on the real estate sector, despite the recent equity market volatility brought about by the banking sector in the United States (US).
RHBIB said its investment thesis remained unchanged as the interest rate upcycle is nearing the end and China’s reopening from COVID-19 restrictions should benefit companies that own real and hospitality assets.
“While Bank Negara Malaysia (BNM) has not raised the overnight policy rate (OPR) any further this year, the banking crisis in the US may urge central banks in the region to slow down the increase in interest rates while monitoring global market conditions.
“This is somewhat favourable for potential property buyers, as it could mean mortgage rates will most likely stabilise at current levels (at 4.0-4.1 per cent) over the next three to six months,” it said in its Real Estate Sector Update yesterday.
The investment bank also believed that the interest rate upcycle should peak by the first half (1H) of 2023, with the current stock valuations have already factored in the impact of further rate increase on property demand.
Meanwhile, the government’s plan to expand the international airports in Penang and Subang, as well as establish a special financial zone in Iskandar Malaysia, should have a positive spillover effect on the property market over the medium term.
While details are still scarce at this juncture, it believes these potential catalytic developments could help boost the confidence of property buyers.
Besides, RHBIB said many developers under its coverage have become more upbeat on the property market this year, in view of their more aggressive launching pipelines and sales targets.
“For example, compared to the past when it had only one new project in a year, UOA Development will launch three new projects this year.
“Other companies such as SP Setia, UEM Sunrise and Mah Sing have set higher sales targets, implying a 5.0-15 per cent year-on-year growth for 2023,” it said.
Its top picks for the sector include IOI Properties for its sizeable pool of investment properties, and Matrix Concepts as its labour issue is expected to be resolved by mid-2023 and earnings should pick up as soon as construction works accelerate. – BERNAMA
