Despite the overall property sector outlook being projected to remain challenging, analysts opine that certain segments will outperform others in the current market condition.
According to AmInvestment Bank Bhd (AmInvestment Bank), Malaysian property sales remained subdued in 2016.
"Based on the data by the National Property Information Centre (NAPIC), in 2016, total transaction volume fell 11.5 per cent year on year (y-o-y) to 320,425 transactions, while total transaction value dropped three per cent y-o-y to RM145.4 billion.
"For the residential segment, total transaction volume slipped 13.9 per cent y-o-y while total transaction value declined 10.7 per cent y-o-y" the research firm said.
AmInvestment Bank believed the key challenging factor to growth in the domestic property sector is the mismatch between property prices and the household income level.
While there have been incentives by some of the property developers to offer financing schemes to buyers, the research firm also believed the overall sector can only be boosted if the mispricing gap is reduced, or the mortgage financing requirement is relaxed, which would result in higher affordability for consumers.
Moving forward, while AmInvestment Bank expected the overall sector outlook to remain challenging in 2HFY17, the research firm believed certain segments will outperform others in the current market condition.
"Within the residential segment, we expect the affordable segment to shine driven by the resilient demand, especially from young professionals and families due to the continuous urbanisation process.
"This is well reflected by the move from the majority of the local property developers to focus on this segment currently" the research firm said.
It added that the Malaysian population is in a sweet spot to seize the demographic dividend, with the median age of 28.2 years old in 2015, which is the most productive stage of the age profile.
On the office property sector, AmInvestment Bank was still bearish on it due to a glut, mainly in the Klang Valley.
AmInvestment Bank also maintained its bearish outlook on new commercial properties especially shopping malls, due to the oversupply situation.
As for the industrial segment, the research firm was positive on logistics industrial properties as it expected the demand to be sustained by the strong growth of e-commerce in the country.
All in, AmInvestment Bank maintained its â€˜neutral' call on the sector, with Sunway Bhd, Mah Sing Group Bhd, and Malaysian Resources Corporation Bhd as its top picks.