KUALA LUMPUR: Selangor's real estate industry is benefiting from the ongoing decline in residential overhang since it allays worries about an excess of residential real estate, says MIDF Research.

Citing data from the National Property Information Centre (NAPIC), the firm said in a note that the house price index (HPI) for Selangor is on an uptrend, supported by resilient demand for property in the state and the recovery of the property sector in Malaysia.

HPI for Selangor is at 224.2 in the third quarter of 2023 (Q3 2023), up from 220.5 in Q2 2023 and 218.0 in Q3 2022. HPI in Selangor recorded three consecutive growths from Q1 2023 to Q3 2023, in line with the uptrend in HPI in Malaysia as the property market recovers post reopening of the economy.

Residential overhang in Selangor fell to 4,228 units in Q4 2023 from 4,500 units in Q3 2023 and 5,258 units in Q4 2022.

"We believe that the continuous decline in residential overhang is positive for the property sector in Selangor as it eases concern about oversupply in residential properties.

"Overall, we see that the outlook for the property sector in Selangor is stable and positive, supported by the stable house price outlook and easing concern about residential oversupply," the firm said.

It said that there is improvements in Puchong due to greater connectivity, and the amenities offered.

Puchong is also connected by public transport, such as the LRT line, which has seven stops there.

It is also home to IOI Mall, and there's ongoing commercial development.

"As urbanisation of Puchong is nearing maturity and with lands getting scarce in Klang Valley, developers are planning for higher density projects such as condominiums instead of landed properties to maximise the development value of land," MIDF said.

IOI Properties Group is one of the biggest developers in Puchong. It developed Bandar Puchong Jaya and later, Bandar Puteri Puchong and 16 Sierra.

The other prominent developers in Puchong are YTL Land & Development Bhd, Malton Berhad, and Glomac Berhad.

MIDF maintained a "positive" outlook on the property sector as it viewed that the recovery in the sector would continue to drive new sales and earnings for property developers.

"The property price outlook in Malaysia is expected to remain positive due to healthy buying interest,

Its top picks are MAh Sing Group Bhd (Buy, TP: RM1.23) and Matrix Concepts Holdings (Buy, TP: RM1.91).

"We like Mah Sing for its quick turnaround strategy and high exposure to affordable homes via its M series projects. Besides, its growing presence in the industrial property segment will support earnings growth in the medium to long term.

"Meanwhile, we like Matrix Concepts as its new sales remain encouraging, while landbank expansion in Labu will further buoy earnings growth. Besides, the dividend yield of Matrix Concepts is attractive at 5.4 per cent," it added.