Near-term outlook for property sector to remain unexciting, says MIDF

• It said residential overhang units in 1QCY22 were largely contributed by condominium and apartment.

KUALA LUMPUR (August 12): MIDF Research has maintained its “Neutral” rating on property sector and said it sees near-term outlook for property sector to remain unexciting due to the oversupply concern.

It said residential overhang units in 1QCY22 were largely contributed by condominium and apartment.

It said condominium and apartment contributed 20,680 units or 58% to total residential overhang units.

Meanwhile, 2-3 storey terrace contributed 5,889 units or 17% to total residential overhang units followed by 2-3 storey semi-detached (5%).

It said Johor remained in the top three of the lists for the past few years mainly due to the excessive building of residential properties which outpaced demand for properties in Johor.

In a thematic report on Friday (Aug 12), the research house said residential overhang units remain on the high side in 1QCY22, which would make property market to remain competitive and prompt property developers to offer attractive package to attract buyers.

“That may also make property developers unable to fully pass on the rising cost of construction to property buyers and bring margin compression of property developers.

“Our Buy calls for the sector are Mah Sing Group Bhd (Buy, TP: RM0.74) and IOI Properties Group Bhd (Buy, TP: RM1.29),” it said.

MIDF said it likes Mah Sing for its strategy of focusing on affordable home segment.

“Mah Sing could benefit from i-MILIKI as Mah Sing is focusing on selling  properties priced within affordable price range and below RM500,000.

“We are also positive on IOI Properties Group due to its undemanding valuation of trading at 73% to its NTA per share of RM3.60.

“We see earnings outlook of IOI Properties Group to underpin by higher contribution from property investment and leisure & hospitality divisions following reopening of Malaysia’s economic activity,” it said.