THE sector saw some minor sell-down or profittaking activities over the last two weeks, mainly due to the overhang prior to the announcement of Budget 2026.
Then there was the dissolution of the Sabah state assembly that possibly casts some near-term uncertainties on the local political landscape and escalating trade tensions between the US and China.
RHB believes market sentiment will gradually recover, and the third quarter of 2025 (3Q25) should see better earnings being reported by developers in November.
No significant measures for the property sector were announced at the recent tabling of Budget 2026. The notable ones are the extension of full stamp duty exemptions for first-time home buyers for houses priced up to MYR500k till 31 Dec 2027 and a flat 8% stamp duty for foreigners from 4% previously.
“While the demand for midrange residential properties will continue to be supported, we think the higher stamp duty rate for foreigners will unlikely dampen demand from the higher end property segment, especially given the infrastructure and economic catalysts in Iskandar Malaysia,” said RHB.
Market sentiment has been somewhat affected since the dissolution of the Sabah state assembly on 6 Oct. Until the state election is concluded, RHB foresees some overhang in the property sector, as news flows from the election during this period may cast some uncertainties over the local political landscape.
Nevertheless, we are confident that sentiment will be restored after the state poll, as the sector’s fundamentals remain strong.
In line with historical trends, we expect the second half of 2025 (2H25) sector property sales to be much stronger, as many developers are ramping up their launches from late 2Q onwards.
The Iskandar Malaysia property market remains robust, while demand for township properties, mid-range high-rise residential units, commercial shops, and industrial properties is still strong.
Tier-1 developers such as Eco World Development (ECW), SDPR, and Mah Sing are actively looking for more landbank in Johor, Negeri Sembilan, and Selangor for residential and industrial developments.
The extreme trade policies imposed by the US on China should continue to drive foreign investments into South-East Asia, in our view, and recent feedback from developers does indicate that queries to set up production hubs or warehouses from East Asia-based multinational companies have been rising.
We think the negative sentiment is temporary, with solid demand for properties well supported by a stable interest rate outlook and influx of investments. —Oct 21, 2025
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