Property Sector Outlook 2024: HLIB Maintains “Neutral” Stance

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HLIB 2024 Property Sector

HLIB predicts a slowdown in the property sector in 2024, expecting normalized billings and restrained launches. Top picks include Sunway, OSK, Sime Darby Property, and IOI Properties.

KUALA LUMPUR, 4th Jan 2024 – Hong Leong Investment Bank (HLIB) Bhd reaffirmed its “neutral” position regarding the property sector, anticipating a normalized billing pace and measured growth in new property launches and sales throughout 2024. In 2023, the property sector emerged as Bursa Malaysia’s second-best performer, with the KL Property Index witnessing an impressive 34.5% return, in stark contrast to FBM KLCI’s 2.7% loss. 

This exceptional performance was driven by the correction of a prior sector mispricing and a sector rebound influenced by factors like increased earnings from accelerated billings, augmented sales due to more new products in the primary market, and heightened launches amid improved supply conditions.

In a Thursday note, HLIB observed that several favorable conditions supporting the property sector’s growth in 2023 will lessen in the current year. Notably, the accelerated billings witnessed in 2023, linked to developers hastening progress to avoid LAD payments, are expected to decrease and stabilize in 2024.

“Furthermore, the increased sales in 2023, in our assessment, were partially attributed to buyers transitioning from the secondary to the primary market due to the availability of more new products. With developers substantially increasing launches in the domestic market in 2023, these products will require time for market absorption. Consequently, developers are unlikely to significantly escalate their launches in 2024,” stated the research house. At the time of this statement, the KL Property Index showed an increase of 10.8 points or 1.2%, reaching 908.71.

Despite an overall neutral outlook on the sector, the research firm has pinpointed specific stocks within its coverage that exhibit the potential to exceed expectations. Highly recommended are Sunway Bhd, OSK Holdings Bhd, Sime Darby Property Bhd, and IOI Properties Group Bhd, all with “buy” ratings and target prices of RM2.76, RM1.77, 81 sen, and RM2.50, respectively. 

As of the latest figures, Sunway’s shares increased by 0.94% to RM2.15, reflecting a market value of RM11.83 billion, while OSK recorded a 1.73% rise to RM1.33, valuing it at RM2.79 billion. Sime Darby Property witnessed a growth of 3.05% to 68 sen, resulting in a market capitalization of RM4.59 billion. IOI Properties remained steady at RM1.84, maintaining a market value of RM10.13 billion.

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