The local property sector is expected to record moderate growth in 2025, with projected sales totalling RM21.5bil, amid heightened uncertainty stemming from potential risks associated with both current and former US presidents, Joe Biden and Donald Trump.

Investor concerns over the artificial intelligence diffusion policies introduced under the Biden administration are expected to persist and potentially intensify under a Trump-led US government.

This could moderate the pace of data centre expansion by multinational companies in Malaysia.

Affin Hwang Investment Bank Research (Affin Hwang Research) has maintained an “overweight” call on the sector, believing that solid fundamentals – such as improved connectivity, an industrial-led demand recovery and supportive policy measures – will drive long-term growth.

The research house said the fundamentals will be underpinned by sustained demand, ongoing infrastructure expansion, and strategic regional developments.

“With rising demand and gradual increases in average selling prices, we expect profit margins to improve,” it noted, adding that Eco World Development Group Bhd, Sime Darby Property Bhd and IOI Properties Group Bhd are among the developers well-positioned to capitalise on the sector’s positive outlook.

In 2024, the sector delivered strong sales of RM19.3bil, with homes priced below RM600,000 continuing to drive market activity. However, data from the National Property Information Centre showed that developers accounted for just 17% of total residential transactions in 2024, down from 22% in 2023.

While new launches surged to 75,784 units in 2024, the highest since 2017, absorption rates slipped from 40% in 2023 to 37% in 2024, pointing to weaker buyer appetite despite the increased supply.

Despite this shift, Affin Hwang Research observed that developers under its coverage outperformed the broader market, showing resilient sales growth driven by core residential offerings and strategic expansion into the industrial segment.

Developers also ramped up supply by 24% nationwide in 2024, reflecting their optimistic outlook, driven by expectations of a more favourable economic environment and continued government support.

Moving forward, Affin Hwang Research said key initiatives – such as the full stamp duty exemption on property transfers and loan agreements for first-time homebuyers, a flat 4% stamp duty, and a relaxed Malaysia My Second Home requirements – are expected to drive further growth in 2025 by attracting foreign investment and high-net-worth individuals.

“We reiterate our ‘overweight’ rating on the property sector, driven by improving property market sentiment, the resurgence of large-scale infrastructure projects – particularly in the Johor region – expectations of a stronger ringgit in 2025, and sustained high property sales among the listed property developers under our coverage.”