CONSIDERING the muted sentiment of the real estate market, there is no denial that properties priced at an affordable range of around RM500,000 are the ones well-positioned to capture the interest of potential home buyers.
Beyond that, CGS-CIMB Research also expects developers with (i) land banks in the Klang Valley area as well as those with (ii) large land banks to cater to landed residential units to also be in the driver’s seat to find buyers.
The above are key findings from a survey conducted from Sept 30 to Oct 9 to understand the preferences of Malaysian property buyer preferences by targeting the retail investor base in Malaysia.
Among others, the survey involving 1.037 respondents is intended to understand the changes in property buying sentiment in Malaysia after the unprecedented COVID-19 outbreak.
“Most respondents view the equity market as their preferred choice of investment which suggests that the wealth spill-over effect from the recent retail market rally to the property market could be limited,” wrote analyst Ngo Siew Teng in a sector update.
Detailing the survey’s findings, the research house found that 44% of the respondents had plans to purchase a property in 2020 prior to the COVID-19 outbreak.
However, post the movement control order (MCO), only 35.5% of the earlier 44% are still planning to get a property in 2020 while 32.7% are postponing their purchases to 2021, and 31.8% have changed their mind about buying a home.
According to the National Property Information Centre (NAPIC), the total property overhang (completed unsold + unsold under construction + unsold not constructed) saw an improvement in 2019 with a 8% year-on-year (yoy) decrease which could be mainly driven by the Home Ownership Campaign (HOC) 2019 and fewer new launches by developers.
Nonetheless, the 1H CY2020 total completed unsold property (by units) increased 10.7% vs. 2H CY2019 due to the COVID-19 outbreak and disruptions from the MCO.
1H CY2020 total completed unsold property value was circa RM47 bil (63,063 units), an increase of 13% by value vs. 2H CY2019, comprising RM20 bil for residential, serviced apartments (RM19 bil), shops (RM5 bil), small office, home office (RM1 bil) and industrial properties (RM2 bil).
At the current juncture, CGS-CIMB Research gathered that most of the respondents:
- View current property prices as unaffordable;
- Have a purchasing budget of RM250,000-RM499,999;
- Prefer to buy newly-launched properties and landed residential units;
- Favour properties in Kuala Lumpur and Selangor;
- Regard location and pricing as important factors; and
- Do not believe that now is a good time to buy a residential property.
“A majority of property upgraders and first-time buyers favour landed residential properties, indicating that landed units are more in demand at the moment,” observed the research house.
Another notable trend is that property investors have higher interest in commercial retail space/shops and vacant land as well vs other groups, in addition to being more receptive to acquiring property through auctions.
On this note, CGS-CIMB Research named Sime Darby Property Bhd as its top pick given the developer is well-positioned to tap into the existing market trend. Moreover, majority of its new launches are landed residential at its existing townships with the bulk of its land banks located within the Klang Valley.
All-in, CGS-CIMB reiterated its “neutral” stance on the property sector given the weak macro outlook, affordability issues and likely lower property sales which is balanced by KL Property Index’s undemanding valuation. – Nov 5, 2020
