Malaysia Property Market Outlook and Top Small Cap Picks Edition

The Malaysia property market is expected to face moderate growth in 2024, driven by the resilience of domestic demand and a steady construction sector, despite global economic uncertainties. According to the CBRE|WTW Malaysia Real Estate Market Outlook 2024 report, growth will be led by infrastructure projects, increased foreign direct investment (FDI), and government efforts to stabilise inflation. The residential sector remains buoyant, supported by various policies targeting affordable housing. Meanwhile, the industrial and retail sectors are set to benefit from infrastructure development and technological advancements.

Despite challenges like rising interest rates, the residential market has shown resilience, particularly in the landed property segment. Transaction volumes in certain key regions, such as Penang and Iskandar Malaysia, reflect a steady demand for affordable housing. Developers have responded by introducing more projects catering to first-time buyers and middle-income earners. Additionally, the government's focus on housing affordability through incentives and financing schemes is expected to keep this sector active. In Iskandar Malaysia alone, property transactions surged by 64% in volume and 75% in value, indicating strong market activity.

Major infrastructure projects, such as the East Coast Rail Link (ECRL) and Pan Borneo Highway, are anticipated to have a long-lasting positive impact on property development across Malaysia. These projects are expected to open up new growth areas and enhance connectivity, driving demand for residential, industrial, and commercial properties. For example, the Penang Light Rail Transit (LRT) project and the expansion of Penang International Airport will provide a significant boost to property markets in these regions, making them attractive to both local and foreign investors.

The industrial sector continues to be a standout performer, with logistics and warehousing leading the way. Strategic collaborations with major players like Tesla and SF Airlines have fueled demand for industrial spaces in key regions such as Klang Valley and Johor. This is expected to sustain the upward momentum for industrial property transactions and investments in the coming years. Industrial parks such as the Green Tech Park in Penang are becoming hubs for global electronics and electrical companies, contributing to the sector’s growth.

With these dynamics in mind, there are a few standout small-cap stocks that are poised to benefit from the market’s positive trends. Here are three companies to watch in the small-cap space:

Malton Berhad remains a strong pick due to its diversified property development portfolio and steady revenue streams. The company has a strong presence in both residential and commercial developments, with projects that cater to a wide range of buyers. Its strategic focus on mid-range residential properties aligns well with the market’s demand for affordable housing. Additionally, Malton’s involvement in key projects such as the Pavilion Bukit Jalil is expected to contribute to its long-term revenue growth.

TWL Holdings Berhad is another promising player, known for its focus on affordable housing projects, particularly in suburban areas. As the demand for affordable homes continues to grow, TWL is well-positioned to capitalise on this trend. The company’s ongoing projects cater to first-time homebuyers, which is a key growth segment supported by government incentives. TWL’s expansion into industrial property development also provides diversification, making it a well-rounded pick for small-cap investors.

KTI Landmark Berhad is gaining traction due to its strong foothold in the high-rise residential and commercial property sectors. The company has been focusing on developments in prime urban locations, particularly in Penang and Klang Valley, which are expected to benefit from the ongoing infrastructure developments. KTI Landmark’s strategic landbank acquisitions and focus on high-quality, sustainable projects make it a strong contender in the small-cap property space.