Monday, 13 January 2014

Malaysia's property market to take a breather this year and next

PETALING JAYA: The property market might need at least two years to digest and recover from the various cooling measures that came into effect this month, but expect it to surge again in 2016, say industry officials.
According to Malaysian Institute of Estate Agents president Siva Shanker, 2014 is expected to be a tough year for sales, but the market will find its footing next year and catch the next upcycle in 2016.
“The market ground to a standstill after Budget 2014. There was a knee-jerk reaction in sales.
“It will probably stay in the doldrums for the first half of 2014. The second half may be better,” Shanker, who is also CEO-Agency of property consultancy PPC International Sdn Bhd, told StarBiz by phone.
Shanker believes that speculation over the past few years in the primary market, resulting in “far more properties bought than needed”, had been put to a stop by the new curbs.
“The days of 20%-40% appreciation in property prices after only a few years is over, ” he said.
Even so, Shanker sees the secondary market, which he said had languished for years, regaining its lustre.
“A new launch in Bangsar could set you back RM1,500 per sq ft, compared to RM800-RM1,000 per sq ft for an existing property. The discount goes up to 50% in some prime areas,” he said.
An analyst with TA Research said that unlike previous years, many listed developers have held back on their 2014 sales targets – a departure from their usual forward guidance in December – until a clearer picture emerges from the effects of Budget 2014 and other tightening measures.
The exception is Mah Sing Group Bhd, which is aiming for a 20% increase in sales this year to RM3.6bil.
According to the analyst, policy uncertainty on several fronts – such as whetherIskandar Malaysia’s Medini is exempt from real property gains tax, or the pricing of bank loans using the net selling price of a property – remains an overhang on the market.
“The sector’s fundamentals are intact, but in terms of share prices, the catalysts are lacking,” she said.
Property players have noticed a marked slowdown in sales since the various curbs were put in place, although it is unclear by how much.
A number of high-end launches were also shelved, as developers switch their focus to the affordable segment of the market, where demand is more resilient.
Some of the projects launched post-Budget 2014 include block B of YTL Land & Development Bhd’s Fennel@Sentul East condominiums, which saw a take-up of 80% soon after it was opened for sale in mid-November, while tower A and B of Sunway Bhd’s Geo Residences were 85% sold within two weeks, HwangDBS Vickers Research noted.
In Iskandar Malaysia, however, the response to UEM Sunrise Bhd’s Almas Suites and WCT Holdings Bhd’s Medini Signature Tower 2 have been lukewarm,Maybank Research said in a report last week.
The brokerage’s only “buy” call is Glomac Bhd, even though the firm has cut its own sales target for the year ending April 30, 2014 by 18%.
CIMB Research is more upbeat. It expects buying interest to return in the first half of this year, albeit gradually, when potential homeowners realise that prices are unlikely to fall, and that inflationary pressure from the impending goods and services tax, along with other subsidy cuts, leads to higher prices.
“As these macro prudential and policy measures are meant to curb speculation and not restrain genuine demand, the impact (though negative in the short term) should be positive over the longer run because they should help to remove froth from some segments of the market.
“Also, affordability remains close to its highest ever. Robust sales by developers should provide impetus for a re-rating of property stocks,” the research house told clients earlier this month.
Hong Leong Investment Bank Research, which believes the market will stage a recovery in the second half of the year, advocates a buy-on-weakness strategy for shares amid trough valuations. - The Star

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