KUALA LUMPUR (Sept 20): RHB Research has maintained its “overweight” call on the Malaysian property sector, forecasting strong capital inflows and renewed buying interest as global interest rates begin to decline.

Institutional funds, property buyers, and developers are expected to deploy more capital into the sector, buoyed by the US Federal Reserve’s (US Fed) anticipated rate cuts.

The research house sees Malaysia, particularly in high-growth areas, as a prime destination for both local and foreign property buyers.

“Malaysia, a prime destination of data centre (DC) investments due to its strategic location, should continue to see more land and DC transactions, while local and foreign property buyers and investors are more likely to buy properties in high-growth areas — given the stabilising ringgit and interest rates,” RHB said in its property outlook report on Friday.

The US Fed cut interest rate by half a percentage point this week, which some quipped as an aggressive start to its monetary easing campaign.

Rate cuts in the world’s biggest economy is positive for riskier assets, including emerging markets, as investors move away from the weakening US dollar and US bond yields for better returns. 

In the note, the house highlighted strong demand for recent property launches, especially in Nusajaya, Johor.

The soft launches by UEM Sunrise Bhd (KL:UEMS) and Sunway Bhd (KL:SUNWAY) saw overwhelming interest, with units oversubscribed by three- to four times, RHB said.

“We believe this trend will continue, given the renewed interest in the Iskandar Malaysia property market,” RHB added.

On the other hand, key projects, such as the Johor-Singapore Rapid Transit System and the Johor-Singapore Special Economic Zone (JS-SEZ), are expected to fuel this demand further, alongside foreign direct investments (FDIs) into the region.

RHB’s top picks in the property sector include Sime Darby Property Bhd (KL:SIMEPROP) (target price (TP): RM2.00), Mah Sing Group Bhd (KL:MAHSING)(TP: RM2.26), UEM Sunrise (TP: RM1.60), and Sunway (TP: RM5.00).

RHB also forecasts a rise in Real Estate Investment Trust (REIT) listings as lower interest rates make such moves more favourable.

Developers like IOI Properties Group Bhd (KL:IOIPG) and SP Setia (KL:SPSETIA) have already expressed interest in listing their assets under REITs, and RHB believes Sime Darby Property could be another strong candidate.

“Its growing investment asset portfolio includes KL East Mall, Senada Mall, Elmina Lakeside Mall, and the logistic assets in Bandar Bukit Raja,” RHB said.

Coupled with that, the completion of the Google DC in 2026 is expected to boost Sime Darby’s asset portfolio by RM1.5 billion to RM2 billion, further strengthening its investment potential, it added.