Malaysia’s property sector continues to face significant hurdles, with Kenanga Investment Bank maintaining its underweight stance due to persistent structural challenges. The research firm highlights ongoing issues such as oversupply, affordability constraints, and cautious consumer sentiment as key barriers to recovery, particularly in the residential segment. While industrial properties show promise, residential developers grapple with weak demand and financial pressures on potential buyers.
A major concern remains the growing inventory of unsold homes, with overhang units rising to 127,180 in the second quarter of 2024. High concentrations in urban hubs like Kuala Lumpur, Selangor, and Johor reflect a deepening mismatch between supply and demand. Affordability remains a critical issue, with median home prices at RM335,000 far exceeding the average monthly salary of RM3,000–RM3,500. This gap, worsened by stagnant wages and rising living costs, leaves many Malaysians unable to enter the housing market.
In contrast, the industrial property segment is gaining momentum, fueled by government efforts to attract foreign investment. Developers such as Mah Sing Group and Sime Darby Property are pivoting toward industrial projects as a more stable revenue source. Land sales are also becoming a strategic focus, allowing firms to capitalize on landbank appreciation while navigating residential market volatility. However, household debt remains a concern at 84.2% of GDP, and potential fuel subsidy cuts could further strain consumer spending power.
Despite these challenges, transit-oriented developments (TODs) are emerging as a bright spot, particularly in high-traffic areas like the Klang Valley. As fuel costs rise, properties near public transport hubs may see increased demand. Kenanga identifies Mah Sing and MKH as top picks, given their focus on affordable housing below RM500,000—a segment still attracting first-time buyers. Meanwhile, Malaysian Resources Corp has been downgraded due to valuation concerns. The sector’s outlook remains cautious, with inflationary risks and policy changes likely shaping its trajectory in the coming months.