According to data released by Bank Negara Malaysia, loan applications for the purchase of property recovered marginally by +2.7%mom to RM51.8b in July 2023 after a decline of -11%mom in June 2023. On a yearly basis, loan application was higher by +1.5%yoy in June 2023 after a steep decline of -13.6%yoy in July 2023.
MIDF says the marginal recovery in loan applications could be due to a pause in rate hikes by Bank Negara Malaysia in July 2023. Cumulatively, total loan applications in 7MCY23 stood at RM348.8b (+0.9%yoy). The marginally higher total application indicates a healthy demand for property.
Total loans approved for the purchase of property continued to decline in July 2023 by -4.2%mom to RM23.1b after a decrease of -5.6%mom in June 2023. The decline in approved loans was mainly due to a lower percentage of total approved loans over total applied loans of 44.6% in July 2023 against 47.8% in June 2023. On a yearly basis, the total loan approved in July 2023 was marginally higher by +1.7%yoy, bringing the cumulative total approved loan in 7MCY23 higher at RM153.8b (+8%yoy). The higher total approved loan indicates a better new sales outlook for property developers.
On the other hand, demand for industrial property is growing and that has led to growing exposure of property companies in industrial development. For instance, S P Setia added three new industrial estates recently into its portfolio namely Setia Fontaines Industrial Park in Penang, Setia Alaman in Klang, and Tanjung Kupang in Johor. Meanwhile, Eco World Development Group saw encouraging sales from industrial properties as it made up 35% of new sales in 7MFY23.
Subsequently, Eco World Development Group proposed to acquire 403.8 acres of industrial land in Kulai, Johor from IOI Properties Group for a cash consideration of RM211m. On the other hand, Sunway Berhad expanded its portfolio to industrial asset development recently by acquiring 245 acres of freehold land at Kuang, Rawang for the development of an Industrial Tech Park. Similarly, Mah Sing Group set up a JV for industrial development recently due to the growing demand for industrial property in Malaysia from buyers in China.
Overall, MIDF sees a growing contribution from industrial development to property companies in the near term, riding on the solid demand for industrial assets. Hence the house maintains its neutral stance on the sector with a positive bias. Besides, Bank Negara Malaysia maintained OPR at 3% in September 2023 which should underpin demand for property going forward. Top picks include Mah Sing Group and Matrix Concepts.
