News: Bursa Malaysia’s Property Index Hit One-Year High Despite Weak Market Sentiment

Apr 9, 2021

Despite the weak sentiments on the property market, Bursa Malaysia’s Property Index climbed to a one-year high of 788.15 points on Wednesday (7 April).

The property index has been registering steady gains since end-March, inching up 4.5% or 33.88 points from 754.27 points on 31 March as majority of its constituents posted share price gains, reported The Malaysian Reserve (TMR).

Year-to-date, the index has increased 8% or 61.5 points. Loui Low, Head of Research at Malacca Securities Sdn Bhd, attributed the gains on expectations of a pent-up demand for homes and to increased buying from households having extra cash to spend.

“There are still a lot of home-buyers and if developers can give extra rebates to bring home prices down further, we will see more properties being purchased,” Low told TMR.

“Another catalyst could be that some households may have managed to save some cash as they stayed at home for a significant portion of last year. The savings could be enough to pay for a down payment for those looking to buy a home,” he said.

“That could be the narrative over the next few quarters with travel restrictions likely to remain in place.”

Names such as Eco World Development Group Bhd, Bina Darulaman Bhd, SP Setia Bhd, Sentoria Group Bhd, LBS Bina Group Bhd, Sime Darby Property Bhd and Guocoland (M) Bhd have attracted investors interest.

Check out the top 10 property developers in Malaysia here.

EcoWorld, for instance, saw its shares climb 50% year-to-date to close at 72 sen on Wednesday (7 April) from 24 sen on 4 January.

SP Setia’s shares rose 23.7% year-to-date to a one-year high of RM1.20, while LBS Bina gained 34% year-to-date to as high as 55 sen before ending at 54 sen.

GuocoLand and Lagenda Properties Bhd climbed 32% and 28% year-to-date to 82 sen and RM1.65, respectively.

Dr Carmelo Ferlito, CEO of Centre for Market Education, attributed the share price gain to optimism on Malaysia’s vaccination rollout programme.

According to him, the property stocks benefit from the positive momentum generated by vaccine rollout and growing expectations of economic recovery.

“We do not have the first quarter’s property data yet, but if we look at 2020, it was obviously a weak year for the market, with a decline in transaction volume and value,” he told TMR.

“I believe that these stocks are purely benefitting from the general market mood and positive expectations about the future.”

Ferlito noted that it could be misleading to view property stocks outside of a more general context considering that negative sentiment continue to linger.

Data from the Valuation and Property Services Department showed that the property market’s performance significantly declined in 2020, dropping 9.9% year-on-year in volume and 15.8% in value.

Based on its 2020 report, Malaysia registered 295,958 property transactions last year, with a total value of RM119.8 billion.

The residential property sector saw transaction volume and value decline 8.6% and 9% to 191,350 transactions and RM65.86 billion. The commercial property sector also saw transaction volume drop 21% to 20,255, while transaction value fell 32.6% to RM19.53 billion.


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Mak Hon Yean
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