Paramount Corporation Bhd expects a two to three percent reduction in property prices, following the roll-out of the sales and service tax (SST) in September, reported the New Straits Times.
This comes as construction materials cost is also expected to fall by one to two percent with the implementation of SST.
“Each project involves construction cost of about 50 percent, while the rest is land acquisition, consultation and other input costs…Of these, only 15 percent of construction cost was tax exempted, which reflects the overall construction cost reduction of up to two percent,” said Jeffrey Chew Sun Teong, Paramount’s Group Chief Executive Officer and Executive Director, after the company’s results briefing.
“With this cost reduction, we can reduce real estate prices, but only up to three percent.”
He noted that the reduction in residential prices will depend on the project type and location, as this will relate on whether the company will bear SST cost or pass it on to buyers.
“We will see the need to either absorb the SST costs or the buyers have to bear the tax. It depends on the type of project and location. On average, the SST’s implementation will see overall real estate prices down by three percent,” he explained.
For the first half of the year, Paramount posted a revenue of RM440.6 million, of which 68 percent or RM301.3 million were contributed by its property portfolio, while the rest were contributed by its education portfolio.
With this, Chew believes that the company is on track to achieve its annual sales target of RM1 billion, as new property launches for the rest of the year comes with a total estimated gross development value (GDV) of RM1.2 billion.
“During the first half, Paramount has achieved RM598 million in sales with the launch of projects amounted to RM708 million in GDV. New launches in the second half include Suasana Tower 2 project, Keranji Phase II and the commercial development in Atwater will provide positive sales momentum to the company,” he said.
“Unbilled sales as at June 30, 2018 increased to RM866 million from RM736 million as at first quarter of this year and will provide positive contribution to the company.”
Paramount believes that its 41.3ha landbank, with GDV of RM7.57 billion, will keep them busy until 2027.
Image sourced from NST Online
This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email editorialteam@propertyguru.com.my
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