ASEAN KEY DESTINATIONS
Malaysia ready for property boom
OSK Research said a major mass housing boom will likely occur in the first half of this decade.
It added that the sector was already entering the early stage of a property "super cycle".
"Although the expected peak in 2012/13 may have dire consequences, the phenomenal boom that immediately precedes it gives investors an excellent opportunity to profit from the trend for at least the next 12 months.
"We, therefore, seize the opportunity to upgrade our property sector call to overweight from neutral," OSK Research said in its research note to investors yesterday.
Although location is key to identifying real estate opportunities, what is equally important but often overlooked is timing, it added.
It noted that the current 20-year boom in the medium- to high-end residential properties since the early 1990s might peak in 2012/13, after which mass affordable housing could dominate the real estate industry around 2015/16.
Stocks with focus in the medium- to high-end segment, such as Sunrise, YNH Property, IGB Corp and Bandar Raya Developments, are some of the best bets for the next 12 months.
"Mass housing developers, especially the 'fallen angels' such as LBS Bina and MK Land, may come to the fore as another major investment theme after that," OSK Research noted.
For "best of all worlds" exposure during this period, OSK Research recommends buying SP Setia.
It said the country's current boom in higher-end residential properties is probably in its longest "bull run" ever, spanning almost two decades since the early 1990s.
"This, unfortunately, has also given rise to the illusion of the infallibility of properties. We are now entering the final phase of this secular boom, which will be characterised by a period of fast-rising property prices in the medium- to high-end residential segment, particularly landed ones."
OSK Research observed that those born in the 1950s had become more risk-averse in their investments since 2003/04.
"As they approach retirement, they will divert a significant portion of their wealth into savings and traditionally perceived defensive asset classes such as real estate.
"However, their eventual absence may bring an end to the boom if there is no credible demand force to fill the void."
An Island & Peninsular Bhd executive said that only foreigners will benefit from Malaysia's property boom due to the cheaper ringgit.
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