CIMB Investment Bank Bhd (CIMB Securities) has maintained a NEUTRAL stance on the property sector, with a target price (TP) of RM1.05 for UEM Sunrise Bhd and RM1.50 for SP Setia Bhd, as the research house evaluates the impact of Australia’s new two-year ban on foreign purchases of existing homes.
This restriction, set to take effect from April 1, 2025, to March 31 2027, aims to curb soaring home prices in Australia and free up properties for local buyers. CIMB Securities noted that the ban is unlikely to affect ongoing or future launches by Malaysian developers with Australian interests, as it pertains solely to the existing property market.
Foreign investment in Australia’s housing market has cooled, with the market share of foreign buyers in new housing dipping for three consecutive quarters, according to a National Australia Bank survey. However, foreign interest in existing homes has seen a slight increase. Despite this, CIMB Securities believes the policy could have a longer-term impact, potentially reducing transaction volumes if unaffordable house prices continue to escalate.
CIMB Securities highlighted the significant role housing plays in Australia’s rising cost of living, with the latest measures forming part of a broader government strategy to increase homeownership among citizens. The Australian government’s goal is to deliver 1.2 million new homes by 2030, and recent reforms, including tax incentives for developers and a shared equity scheme, are expected to help address the issue.
For Malaysian developers, the research house pointed to UEM Sunrise and SP Setia’s Australian ventures, noting the ongoing construction of developments like the Collingwood project in Melbourne and the Subiaco Oval development in Perth. Both companies are well-positioned, with SP Setia launching Atlas Melbourne in October 2024, marking a key step in their Australian expansion.
Among construction-related stocks, MRCB and Gamuda Bhd were highlighted for their exposure to Melbourne’s property market, with both developers reporting positive take-up rates for their respective projects. Analysts maintained a Buy rating for both stocks, with target prices set at 96 sen for MRCB and RM6.00 for Gamuda. Despite the challenges posed by the new policy, these developers are expected to continue benefiting from the ongoing demand for primary properties in Australia.
CIMB Securiies cautioned that while the immediate impact on Malaysian property developers in Australia may be limited, the broader effects of the policy on foreign demand for existing homes could ripple through the property market over the coming years.
