HLIB modernizes the real estate sector, sees benefits from the renewed MM2H policy

KUALA LUMPUR (June 18): Research Hong Leong Investment Bank (HLIB) has upgraded its rating on the real estate sector to “overweight” from “neutral”.

In Tuesday’s sector update, the research house said the most popular picks in the sector were IOI Property Group Bhd (KL:IOIPG), OSK Holdings Bhd (KL:OSK), Sime Darby Property Bhd (KL:SIMEPROP) and Sunway Bhd (KL:SUNWAY ).

This comes after the Ministry of Tourism, Arts and Culture (Motac) announced updated Malaysia’s ‘My Second Home’ (MM2H) guidelines last week.

The latest guidance is “more relaxed” than the 2021 version, HLIB says.

The updated MM2H guidelines included reduced requirements for fixed deposits, offshore income and liquid assets.

However, it also introduced a new requirement for purchasing a house, which is mandatory for MM2H holders.

The program is currently divided into three categories that detail the minimum requirements for purchasing a home: Silver (RM600,000), Gold (RM1 million) and Platinum (RM2 million).

There is also an additional category called Special Economic Zone (SEZ) and Special Financial Zone (SFZ) where the requirements are further relaxed (RM500,000 fixed deposit requirement – ​​reduced from RM1 million); no foreign income requirement (compared to RM40,000 per month previously).

HLIB said that in the Klang Valley, most developers operating in the area are expected to benefit as many properties are priced above RM600,000.

“These developers include Mah Sing, Sunway, OSK, UEMS, SP Setia, IOIPG and E&O.

“Apart from the Klang Valley in Johor, HLIB expects the decreasing overhang of serviced apartments in Forest City to be an overall positive for the housing market in this region.

“This particularly applies to investments in the area by Sunway and UEM Sunrise Bhd (KL:UEMS),” it said.

According to HLIB, developers whose land banks are located in locations to be designated as SEZs should also benefit.

However, it said the new home purchase order could discourage some potential applicants.

“From the point of view of the real estate sector, this is beneficial because more relaxed conditions will attract a wider group of interested parties.

“Although the home purchase requirement acts as an automatic filter to ensure all MM2H applicants are purchasing a property rather than renting it,” it said.

Additionally, HLIB warned that the program could face competition from similar programs in Thailand and Indonesia.