KUALA LUMPUR: The April 2024 uptick in total loan applications for property purchases which rose to RM52.9 billion as reported by Bank Negara Malaysia (BNM) signals a stronger demand for properties, said MIDF Research.
In a research note today, it said the higher loan application is in line with MIDF Research's expectation of stronger demand in 2024 on the back of an improving outlook for the property sector and the status quo of overnight policy rate (OPR) at three per cent.
Additionally, it said approved loans for property purchases returned to a 15.2 per cent year-on-year growth (YoY) in April 2024, driven mainly by the higher loan applications.
"We opine that the loan approval should remain encouraging going forward on the back of higher loan applications. That should translate into better new sales prospects for developers," it said.
Overall, earnings growth in the first quarter of 2024 (1Q 2024) for property companies was positive, driven by higher recognition from property projects as the labour shortage issue was resolved while improving new property sales has also supported earnings growth.
"Property companies' new sales in 1Q 2024 were largely on track to meet expectations as buying interest remains healthy," it said.
Meanwhile, a few property companies, Mah Sing Group, UEM Sunrise, and Sime Darby Property, ventured into the data centre industry recently to ride on the growing demand for data centres in Malaysia.
"We view such ventures by property companies positively as the move enhances the value of their landbank. It also increases their recurring income (stream) in the form of rental or profit sharing of data centre business.
"We believe that income derived from data centres should remain stable due to its growing demand in Malaysia," it said.
According to data released by the National Property Information Centre (NAPIC), residential overhang declined to 24,208 units in 1Q 2024 from 25,816 units in 4Q 2023, with Perak having the highest unsold completed housing at 4,588 units in 1Q 2024 versus 4,598 units in 4Q 2023.
"Overall, the residential overhang continued to decline in 1Q 2024. It fell to the lowest level since 2018. This is positive for the property sector.
Hence, MIDF Research is maintaining a positive call on the property sector with a "Buy" call for Mah Sing Group and Matrix Concepts with target prices of RM1.83 and RM2.00, respectively.
– BERNAMA
TAGS: MIDF Research, Mah Sing, Matrix Concepts, UEM Sunrise, Sime Darby Property, data centres