30-12-2023, 10:22 AM
The Malaysian property sector had been soft for many years. This slowdown long before Covid-19. A few years back I wrote an article about whether the Bursa property sector will recover by 2024. My idea of recovery is to get back to the 2016/17 performance.
I think the sector is going to do well in 2024. If you look at the housing starts data you can see an uptrend since 2020. It normally takes about 3 to 5 years for property projects to be completed from the start of construction. As such housing starts can be a forward indicator. A continuous uptrend will mean that performance of property companies in the coming years will be better.
The chart below “synchronized” the housing starts with the revenue for the large Bursa property companies (those with equity > RM 1 b) You can see that although the housing starts peaked in 2014 the sector revenue peaked a few years later in 2016/17.
While we have yet to see the data for the housing starts for 2023 or even the large companies revenue for 2023, I am confident that they will be higher than those for 2022. The questions are whether the 2024 revenue will be at the same level as that for 2016/17. And if so, will the stock price respond accordingly.
I think the sector is going to do well in 2024. If you look at the housing starts data you can see an uptrend since 2020. It normally takes about 3 to 5 years for property projects to be completed from the start of construction. As such housing starts can be a forward indicator. A continuous uptrend will mean that performance of property companies in the coming years will be better.
The chart below “synchronized” the housing starts with the revenue for the large Bursa property companies (those with equity > RM 1 b) You can see that although the housing starts peaked in 2014 the sector revenue peaked a few years later in 2016/17.
While we have yet to see the data for the housing starts for 2023 or even the large companies revenue for 2023, I am confident that they will be higher than those for 2022. The questions are whether the 2024 revenue will be at the same level as that for 2016/17. And if so, will the stock price respond accordingly.