Developers set for recovery amid budget boost and Johor catalyst

PETALING JAYA: Malaysia’s property sector is poised for a recovery in value as attractive valuations, Budget 2027 incentives and renewed investment interest in Johor offer upside for developers, says RHB Research.

The research house is maintaining its “overweight” rating on the sector, noting that property stocks are trading at a 60% discount to their revalued net asset value (RNAV), compared with a 51% discount in May.

It said the recent selloff, driven by rising bond yields, an uncertain political landscape and geopolitical volatility, had created investment opportunities, with much of the negative sentiment already reflected in share prices.

“We think the negatives are largely priced in, and investors should position for a recovery in value,” the research house said, favouring fundamentally strong developers with good earnings visibility supported by property sales and unbilled sales.

RHB Research named Eco World Development Group Bhd (Eco World) its top pick, with a target price of RM2.66, implying potential upside of 38% from its reference price.

Budget 2027 is expected to provide further support through the extension of stamp duty exemptions for first-time home buyers until Dec 31, 2030.

Buyers purchasing homes priced up to RM500,000 will receive a full exemption, while those properties that are portioned above that threshold, and priced up to RM750,000, will qualify for a 50% exemption.

The incentive should lower upfront purchase costs, benefitting developers across market segments, particularly those with greater exposure to affordable and mid-range homes, including Matrix Concepts Holdings Bhd, Mah Sing Group Bhd and LBS Bina Group Bhd.

RHB Research said higher personal tax relief, a one-percentage-point reduction in personal income tax for selected income brackets and cash assistance should also support consumer sentiment and help offset the potential impact of higher mortgage costs.

Attention is also turning to Johor, with the Johor-Singapore Special Economic Zone masterplan expected to be launched in December.

Developers with exposure to Iskandar Malaysia, including Eco World, UEM Sunrise Bhd, Sunway Bhd, Mah Sing and AME Elite Consortium Bhd, are expected to benefit from investment-led demand, RHB Research noted.

Despite softer demand in the mass-market segment, aggregate property sales grew 32% year-on-year and 2.7% quarter-on-quarter in the second quarter of 2026.

Industrial, high-end residential and commercial investment properties remained resilient.