Property Sector – Update

Mixed Mixed Mixed outlook from Maybank property conference

Maybank hosted a property conference last week (10 Feb 2014) and invited experts from different fields of the domestic property sector to give their views. The conference was well-attended by over 120 investors.

The speakers included: 1) Mr Christopher Boyd (executive chairman), Mr Allan Soo (managing director [MD]) and Mr Nabeel Hussain (associate director) from CBRE Malaysia, 2) Mr Shaun Di Gregorio (CEO) from iProperty Group, 3) Ms Tracy Pan (head of mortgages) from Maybank’s consumer finance, 4) Mr Elvin Fernandaz (MD) from Khong & Jaafar S/B and 5) Tan Sri Eddy Chen (MD) from MKH Bhd.

The speakers, comprising a banker, developer, researcher, surveyor and property consultants, gave a comprehensive update on the property sector from different angles. The key takeaways are as follows.

Maybank Property

Declining interest in Iskandar Malaysia
According to iProperty’s consumer sentiment survey, there is a slight dip in Singaporean buying interest in Iskandar Malaysia properties post-Budget 2014. We are not surprised by this as the new property cooling measures (higher RPGT and floor price for foreign ownership imposed by the federal government, and higher levy by the Johor state government) are to control excessive property speculative activities.
We remain cautious on the increasingly crowded developments at Iskandar Malaysia, especially in the mixed use and high-rise residential project spaces. Without synchronised planning and control by the authorities, the Iskandar property market could be deluged by massive supply of high-rise mixed development projects, inducing price volatility.

Consumer sentiment remains weak; affordable housing still in trend
Survey on consumer sentiment by iProperty shows that overall sentiment has been generally weak post-Budget 2014 and this is likely to lead to a slowdown in demand over the next six months as many potential buyers are still adopting a wait-and-see approach. Similar to the findings of our survey in July 2013, location and pricing remain as key considerations and most respondents of iProperty’s survey are looking for properties priced below MYR500,000/unit. This reinforces our view that affordable housing (especially landed properties) would continue to see strong demand.

Banks remain supportive; new financing packages introduced
Banks are still very supportive of the mortgage market with various new financing packages being introduced e.g. bridging loan for individuals and renovation financing. Most of the mortgages are still based on ‘true value’ (i.e. SPA price) and not ‘net pricing’ (net of discounts/rebates/incentives) of the properties and this will encourage developers to continue to offer attractive marketing incentives to property buyers.

Rising pressure on margins
The seemingly lack of clarity over the implementation of the new property cooling measures under Budget 2014 (transparent selling price and higher floor price for foreigner buyers) continue to create uncertainty in the property space. Also, the industry is facing serious labour shortage and stubbornly high land costs on top of the stricter property measures and increasing competition from the foreign developers.

Source: Maybank Kim Eng Research

Leave a Reply