HIGHER approved property loan in April 2022, which coincided with the re-opening of the Malaysian borders and the country entering into the endemic phase, heralds hope that the subdued real estate sector may be moving out of the doldrums.
At a glance, the property loan data in April 2022 is neutral to property sector as the negatives of lower property loan application is offset by higher approved loan, according to MIDF Research.
“Meanwhile, we see marginally better new property sales outlook for property companies in 2022, mainly due to reopening of economy,” envisages analyst Jessica Low Jze Teing in a property sector outlook.
“Hence, we think developers are likely to meet their new sales target in 2022. In a nutshell, we maintain our ‘neutral’ view on property sector due to limited catalyst to the sector.”
According to data released by Bank Negara Malaysia (BNM), total loan approved for purchase of property climbed to RM16.7 bil (+6.2% year-on-year [yoy]) in April 2022 despite lower loan application mainly due to higher percentage of total approved loan over total applied loan of 38.5% in April 2022 against 34% in April 2021.
Note that approved loan increased for six consecutive months. Cumulatively, 4M 2022 total approved loan grew to RM59.3 bil (+15.7% yoy), signalling better new property sales outlook for property developers in 2022.
On the other hand, total loan applied for purchase of property fell in April 2022 for first time in seven months. Loan application eased to RM43.3 bil (-6.3% yoy) in April 2022 as demand for property took a breather after six consecutive increases in October 2021 to March 2022.
Cumulatively, total loan applied for purchase of property inched up marginally to RM151.6 bil (+1.04% yoy) in 4M 2022, indicating marginally stronger buying interest on property following the re-opening of economy.
“Nevertheless, we expect property sales outlook to improve marginally in 2022 as house ownership campaign ended,” noted MIDF Research.
“Our ‘buy’ calls for the sector are Mah Sing Group Bhd (target price [TP]: 74 sen) and IOI Properties Group Bhd (TP: RM1.29). Mah Sing recorded higher earnings in 1Q FY2022 mainly due to contribution from its property development division.”
Besides, new sales momentum is expected to support launches of properties in the affordable price range.
“We’re also positive on IOI Properties Group as we see brighter outlook for its property investment and leisure & hospitality divisions following re-opening of economy,” added the research house. – June 2, 2022
