With the Covid-19 pandemic taking its toll on the economy, Hong Leong Investment Bank Bhd (HLIB) expects Malaysian property developers to revise their sales and launch value targets for this year.
HLIB analyst Andrew Lim Ken-Wern believes property transaction volume for 2020 may decline if developers do not offer sufficient discounts to lure buyers, reported The Edge.
“The lower interest rate environment would improve the affordability for homebuyers but may not spur sufficient demand for the market,” said Lim in a note.
“We lower our GDV (gross development value) launch estimates and raise our RNAV (revalued net asset value) discounts by 5%-10% to reflect the halt in operations during the MCO (movement control order) period alongside potential pushbacks in planned launches.”
And given the lack of near-term catalysts to warrant a broad-based re-rating, Lim revealed that HLIB maintains its ‘neutral’ stance on the property sector.
HLIB’s note comes after the Valuation and Property Services Department Malaysia released its latest property report last week.
In its report, the department said it expects the Malaysian property market to remain resilient this year, despite the economic headwinds.
It noted that affordable housing as well as finding solutions to the country’s property overhang situation continue to be the government’s main agenda.
“The close monitoring on the implementation of programmes under the National Housing Policy 2.0 (2018 – 2025) and various incentives introduced to promote home ownership among Malaysians, are expected to contain the overhang situation in the coming year,” said the report.
On the development front, the department expects Bandar Malaysia mega project’s revival to positively impact the property market in the medium and long term.
“Meanwhile, high-impact major infrastructure projects such as [the] West Coast Expressway and East Coast Rail Link will open up new development areas to attract Foreign Direct Investment, which will entail business and employment opportunities as well as catalyst for development growth,” it added.
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