Write an article about Bumper year for property stocks but will it continue in 2025? .Organize the content with appropriate headings and subheadings (h1, h2, h3, h4, h5, h6), Retain any existing tags from Sime Darby Property’s shares surged 159.7% this year as investors turned bullish on its data centre-related initiatives. (Bernama pic)
PETALING JAYA: Property-related companies on Bursa Malaysia have seen a surge in their share prices as the property sector continued its renaissance in 2024 after being mired in the doldrums in previous years.
Bursa Malaysia’s Property Index hit a six-year high in April this year as market sentiment surrounding the sector improved steadily since mid of 2023.
The index, which tracks property sector-linked stocks, was up 28.75% year-to-date (YTD) as of Dec 27 when it closed at 1,109.93 points.
Among the big-cap property developers, Sime Darby Property Bhd, Eco World Development Group Bhd (EcoWorld Malaysia), SP Setia Bhd, and Mah Sing Group Bhd saw the biggest gains in their share prices.
YTD as of Dec 27, Sime Darby Property’s shares have surged 159.68% followed by Mah Sing (115.85%), EcoWorld Malaysia (90.74%) and SP Setia (75%).
IOI Properties Group Bhd, the largest property group by market cap at RM11.67 billion, saw its shares rise by 20.45% while UEM Sunrise Bhd had a 21.43% increase.
Among the mid-cap property counters, Chin Hin Property Group Bhd’s share price soared 165.48%, followed by Cresendo Corp Bhd (84.15%), Eastern & Oriental Bhd (56.78%), and Matrix Concepts Holdings Bhd (44.24%).
The common theme for the big gainers such as Sime Darby Property, Mah Sing, EcoWorld Malaysia, SP Setia Bhd, and Cresendo is that they are involved in data centre projects or have sold land for such projects.
For example, Sime Darby Property has tied up a lucrative deal to build and lease a hyperscale data centre to tech giant Google at its Elmina Business Park in Selangor while EcoWorld Malaysia has secured reputable data centre operators for its Quantum Edge business park in Kulai, Johor.
Mah Sing has gone one step further than most developers which typically sell land to foreign data centre operators. To ensure it generates recurring income, it is collaborating with Bridge Data Centres to develop Mah Sing DC Hub @ Southville City in Selangor, on a joint venture basis.
Maybank Investment Bank said Sime Darby Property, with its exposure to industrial parks and data centres, is well positioned to benefit from booming industrial activities.
In a recent note, it opined Malaysia’s property sector is poised for “a transformative year in 2025”, driven by refocusing on fundamentals and execution strength.
Looking ahead, it said the property sector is expected to remain anchored around themes such as the Johor-Singapore Special Economic Zone (JS-SEZ), data centre developments, and corporate exercises aimed at enhancing company value through asset crystallisation initiatives.
It noted the highly anticipated announcement of the JS-SEZ details has been postponed to January 2025.
Growth drivers priced in
Nevertheless, the bank has downgraded the sector to “neutral” from “positive” as most thematic drivers have been in play for some time with no new themes emerging.
“While the Malaysia property sector holds promise with upcoming developments such as JS-SEZ, data centres, and corporate exercises, these positives are largely priced in.
“Investors should remain selective, focusing on companies with solid fundamentals, proven track records, and growth prospects,” it advised.
Its key stock picks include SP Setia for its undemanding valuation and strategic initiatives, Sime Darby Property for its industrial and data centre exposure, and EcoWorld Malaysia for its market position and management capability.
Risk factors to consider include potential policy changes, economic outlook, and rising costs, it added.
UOB Kay Hian has an optimistic outlook on the property sector as developers are positioned to capitalise on both residential and industrial demand.
It expects Malaysia’s property sector to sustain double-digit revenue growth in 2025, projecting an increase of 11%, driven by continued sales growth and further billings from ongoing projects.
“The sector’s evolution reflects broader economic trends, including the rising importance of digital infrastructure, international investment, and the strategic growth of industrial zones,” said the research house, which maintained its “overweight” rating on the sector.
It added developers with significant land reserves and diversified portfolios are expected to continue performing strongly as the property sector transitions to a more balanced and growth-oriented landscape.
Meanwhile, the Real Estate and Housing Developers’ Association (Rehda) Malaysia’s recent Property Industry Survey revealed a cautiously optimistic sentiment for the first half of 2025.
Some 26% of the 162 property developers surveyed expressed optimism about the residential sector, with 53% adopting a neutral outlook.
However, challenges such as oversupply in certain areas, high household debt, elevated interest rates, and weakened consumer sentiment persist, the survey noted.
While research houses see continued growth for the sector, it may be unrealistic for investors to expect outsized gains for property stocks in 2025 given growth catalysts have already been priced in.
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