“We take this opportunity to upgrade the sector to ‘overweight’ from a ‘neutral’ rating as we think the sector has entered a new cycle,” it said in a research note.

HLIB noted that developers and foreign property purchasers alike had been adopting a ‘wait-and-see’ approach pending the government’s announcement of the new MM2H conditions.

“With better clarity on the relaxed conditions, developers now have a better picture and visibility of the market and we could potentially see more launches in the high-end residential segment,” it said.

HLIB also noted that the relaxation of several requirements, such as the reduced fixed deposit, is a positive change expected to renew interest in the programme.

However, it said the new mandate that MM2H holders must purchase a house may deter some potential applicants.

“From the property sector’s perspective, this is beneficial, as the relaxed conditions will attract a broader range of interests, while the house purchase requirement acts as an automatic filter, ensuring all MM2H applicants buy a property rather than renting,” it said.

HLIB added that the MM2H programme should have spillover economic benefits for tourism and healthcare.

However, the investment bank said it remains cautious about the increased competition from neighbouring countries like Thailand and Indonesia.

On June 15, Motac announced updated guidelines for the MM2H programme, which now includes three categories, namely Silver, Gold, and Platinum, along with a special category for Special Economic Zone (SEZ) and Special Financial Zone (SFZ).

MM2H holders are now required to purchase and own a house with a minimum house purchase value of RM600,000 for Silver, RM1 million for Gold, and RM2 million for Platinum.

“For applications under the SEZ/SFZ category, the minimum purchase price will depend on the respective state requirements.

“There was no such requirement under the previous versions of the MM2H,” it said.