MBSB Investment Bank Bhd (MBSB Research) has maintained its NEUTRAL stance on the property sector, citing stable buying sentiment in the first five months of 2026 but with moderating expectations ahead.
The research house named Matrix Concepts Holdings (BUY, target price RM1.55), IOI Properties Group (BUY, target price RM4.64) and Mah Sing Group (BUY, target price RM1.25) as its top sector picks.
MBSB Research said total property loan applications reached RM263 billion in 5MCY26, up marginally by 1.4% year-on-year, indicating that demand remains healthy despite some moderation. In May 2026 alone, loan applications declined 10.1% month-on-month to RM56.5 billion, which the research house attributed partly to public and school holidays during the period.
However, approved property loans remained weaker, falling 10.7% month-on-month to RM24 billion in May 2026. The research house noted that the decline was also driven by a lower approval ratio of 42.6% compared with 46.5% a year earlier as banks became more selective in approving financing.
MBSB Research said the KL Property Index gained 4.5% in the first half of 2026, outperforming the FBM KLCI which recorded a marginal decline. However, the index is currently trading at a price-to-book ratio of 0.68 times, slightly above its long-term average of 0.66 times, suggesting valuations are fairly priced with limited upside.
The research house expects rising electricity costs, fluctuating fuel prices and higher logistics expenses to gradually increase household costs, potentially making consumers more cautious.
