SIMEPROP: Malaysian Property Sector Poised for Growth Amid Robust Demand and Key Catalysts

The Malaysian property sector is gearing up for a dynamic year ahead, with analysts maintaining an “Overweight” rating fueled by robust demand and a pipeline of catalytic developments. Recent strong sales figures and a conducive economic environment point towards sustained positive momentum.

Performance Review

The sector demonstrated significant strength in the third quarter of 2025, with aggregate property sales jumping an impressive 40% quarter-on-quarter and 46% year-on-year. For the first nine months of 2025, total sales grew 11.4% year-on-year. Even after stripping out overseas contributions, domestic sales saw a resilient 1% year-on-year growth for the 9M25 period. This robust performance is largely attributed to developers’ strategic ramp-up of launches following the festive seasons and sustained demand, particularly in the wake of the expanded Sales & Service Tax (SST) and targeted fuel subsidy implementation in the second half of 2025. Several key developers, including Sime Darby Property, UEM Sunrise, and Sunway, are notably on track to surpass or have already exceeded their full-year sales targets. While the sector experienced a slight downturn in early 2025 due to global trade uncertainties, these headwinds have largely dissipated following the US-Malaysia Agreement on Reciprocal Trade in October 2025.

Future Catalysts and Outlook

Looking into 2026, several significant events are expected to further bolster market sentiment and drive re-rating for the property sector. These include the anticipated completion of the Johor Bahru-Singapore Rapid Transit System (RTS) Link by end-2026, the listing of Sunway Healthcare Group in the first quarter of 2026, and various REIT listings by other developers. Sime Darby Property’s maiden data centre facility at Elmina is slated for completion in 3Q26, promising new recurring income streams, while Eco World Development Group is making positive progress on its Puncak Alam DC construction.

The Iskandar Malaysia property play is also expected to remain strong, with increased news flow and new launches anticipated in conjunction with the RTS Link’s impending completion. Moreover, the easing interest rate environment is highly favorable for developers engaging in landbanking, potential asset acquisitions, and even mergers & acquisitions. Value-unlocking exercises by major developers, such as potential “special” or “windfall” dividends from the listing of investment properties, are also seen as significant share price catalysts for shareholders.

Investment Recommendation

The investment bank maintains an OVERWEIGHT rating on the property sector, anticipating an exciting year ahead driven by resilient demand and a strong pipeline of catalytic developments and corporate exercises. Top picks for the sector include Sime Darby Property (SDPR) and Sunway (SWB), both carrying a “BUY” recommendation with target prices of MYR2.33 and MYR6.08 respectively.