EXECUTION matters as much as demand in Malaysia’s property sector as the second half of financial year 2026 (2H26) unfolds.
Investors are increasingly looking beyond headline growth themes to identify developers with resilient earnings, strategic landbank and clear catalysts that can weather near-term uncertainty while benefitting from longer-term structural trends.
According to brokerages polled by StarBiz 7, the sector’s medium-term fundamentals remain intact despite experiencing a soft start to the year.
Their analyses broadly point to industrial developments, Johor’s economic transformation, recurring income streams and disciplined execution as the key drivers shaping investment strategy for the remainder of 2026.
RHB Research, for one, retains an “overweight” rating on the sector despite what it describes as “the current mini downcycle”, believing underlying demand remains healthy.
“Despite the near-term market headwinds that have led to the current mini downcycle, we retain our sector rating.
“We believe the fundamental demand for property should stay healthy. All developers we cover are keeping their pipeline launches and sales targets unchanged,” the research house explains.
“Major corporate exercises, such as real estate investment trust listing and property asset and landbank acquisitions, are the key sector drivers.”
RHB Research expects Johor to remain the country’s strongest property story, saying: “Over the near term, we are more confident on Iskandar Malaysia’s property market.”
It expects the government to unveil the Johor-Singapore Special Economic Zone (JS-SEZ) investment blueprint and masterplan soon, and the expected completion of the Johor Baru-Singapore Rapid Transit System (RTS) Link by December is another positive driver.
RHB Research adds that manufacturing and data centre investments should continue supporting demand for landed homes, commercial properties, industrial assets and selected high-rise projects, making UEM Sunrise Bhd and Eco World Development Group Bhd (EcoWorld Malaysia) attractive proxies.
Industrial driver
Although residential demand has softened, particularly in the lower and middle segments, RHB Research believes the weakness is temporary as industrial demand remains firm and higher-end homes continue attracting upgraders, investors and foreign buyers.
However, it also cautions that state election outcomes may temporarily weigh on sentiment as investors monitor political stability and policy continuity.
Hong Leong Investment Bank (HLIB) Research likewise maintains an “overweight” stance, arguing that Malaysian developers now enjoy several growth avenues instead of relying solely on traditional residential projects.
“Developers today have multiple growth avenues to ride the real estate upcycle.
“In particular, developers with diversified exposure across regions and segments, including residential, industrial and commercial assets, are better positioned to capture opportunities, mitigate cyclical risks and deliver more resilient earnings through the cycle,” the research house argues in its recent report.
HLIB Research’s preferred stocks reflect that diversified approach.
Among its recommended “buy” stocks are SkyWorld Development Bhd, with a target price of 90 sen, supported by record unbilled sales and a growing project pipeline; UEM Sunrise at 92 sen, with the management seeking to unlock value from its sizeable Johor landbank; OSK Holdings Bhd, at RM2.85, underpinned by improving prospects in both its property and cables businesses; and Sunway Bhd, with a RM6.50 target price, seen to be backed by earnings contributions from property development, investment properties, construction and healthcare.
For TA Research, while it remains constructive on the property sector, it expects investors to stay selective through the remaining months of 2026.
Despite modestly lowering its property sales growth forecasts, the research house maintains its “overweight” stance on the sector.
“We now project 2026 and 2027 property sales to grow by 8.3%, a moderation from our earlier estimate of 10.4% in our annual strategy outlook,” it states in a recent report.
Even so, the research house says: “Overall, we maintain a bullish view on the sector’s medium-term outlook, supported by solid fundamentals, strategic execution, and favourable macro trends.”
Bright spots
TA Research says it expects investors to closely monitor whether stronger launch pipelines translate into actual sales, whether industrial and data centre landbank can be monetised efficiently, and whether earnings growth broadens beyond land sales and overseas contributions.
It also points to Budget 2027 expectations, possible election uncertainty and rising construction costs as potential risks.
The research house’s top “buy” picks are Sime Darby Property Bhd (SimeProp), with a target price of RM2.10, supported by industrial development leadership and recurring income growth; and Ibraco Bhd, with a target price of RM1.52, reflecting Sarawak’s development pipeline and renewable energy expansion.
It has also recently upgraded IOI Properties Group Bhd to “buy”, with an unchanged target price of RM4.52, while maintaining “buy” calls on SP Setia Bhd, Sunway, Mah Sing Group Bhd, Paramount Corp Bhd and SkyWorld Development, with Glomac Bhd remaining a “hold”.
UOB Kay Hian Research, which similarly stays “overweight” on the property sector, cites sustained industrial momentum, residential sales picking up after the first-quarter (1Q26) seasonal slowdown and as developers backloaded launches towards 2H26, and cost impact remaining manageable so far.
Its preferred investments are Eco World, with a target price of RM2.70, supported by industrial exposure; and Lagenda Properties Bhd, at RM1.88, benefitting from above-industry profit margins and record-high unbilled sales.
Meanwhile, CIMB Research adopts a more cautious stance, maintaining a “neutral” stance on the property sector amid mounting execution risks.
It says Malaysia’s property market weakened during the 1Q26, with slower transaction activity and muted developers’ sales reflecting a more measured buying environment.
Although developers continue to maintain their annual sales targets, CIMB Research warns that higher construction costs, approval delays and softer demand could complicate execution during the rest of the year.
Still, it identifies industrial developments and Johor as the sector’s brightest points for the sector.
In its recent report, CIMB Research lists its preferred stock as UEM Sunrise, with a target price of 83 sen, citing its exposure to the Johor Baru-Singapore RTS and JS-SEZ catalysts.
Its other “buy” recommendations include EcoWorld Malaysia, with a target price of RM2.60; SimeProp at RM1.72; and Matrix Concepts Holdings Bhd, with a target price of RM1.55, underpinned by the group’s industrial growth exposure, expanding recurring income and attractive dividend yields.