Malaysia Property Sector Eyes Modest Q2 Earnings Recovery as New Sales Improve

KUALA LUMPUR 2026 — Malaysia’s property developers are expected to post a modest sequential earnings recovery in the second quarter of 2026, as stronger new property sales provide better visibility on future earnings.

MBSB Research said the sector remains relatively stable, but the recovery is unlikely to be strong as developers continue to face higher construction and operating costs. Inflationary pressures are also expected to weigh on profit margins for the remainder of the year.

Property loan applications in June stood at RM56.6 billion, remaining almost unchanged from the previous month. However, applications were 7.8% higher year-on-year, bringing total applications for the first half of 2026 to RM319.6 billion.

Bank Negara Malaysia data showed that approved property loans reached RM24.1 billion in June, also up 7.8% from a year earlier. Total approved loans for the first six months of 2026 amounted to RM134.9 billion.

The loan approval ratio remained at 42.5%, indicating that buying sentiment is still cautious as households deal with higher living costs. MBSB Research said the figures point to a property market that is stable but currently lacks strong catalysts for rapid growth.

The research house maintained its “neutral” outlook on the property sector, expecting better earnings in the second quarter but largely flat performance for the full year. Rising costs and softer consumer sentiment remain the key risks.

Among its preferred property stocks are Matrix Concepts Holdings Bhd, IOI Properties Group Bhd and Mah Sing Group Bhd. Matrix has a target price of RM1.55, supported by expectations of an earnings recovery and an attractive dividend yield.

IOI Properties carries a target price of RM4.64, with potential value creation from land monetisation and a proposed real estate investment trust, while Mah Sing has a target price of RM1.25, supported by its affordable housing strategy and possible land sales.

Overall, Malaysia’s property market is expected to remain resilient in 2026, but stronger growth will depend on improved consumer confidence, manageable construction costs and continued demand for new housing developments.