Business Times Online, 26 February 2014 – Property take-up rate stays resilient

Business Times Online, 26 February 2014

INTEREST REMAINING STRONG: HLIB says sector likely to stage recovery in second half of the year, keeps neutral weighting

THE take-up rate of properties in Malaysia remains resilient despite the Kuala Lumpur Property Index (KLPRP) significantly underperforming the FTSE Bursa Malaysia KLCI (FBM KLCI), following tighter measures to curb speculation unveiled in 2014 Budget.

These include the real property gains tax (RPGT) being raised to 30 per cent, minimum purchase price for foreigners raised from RM500,000 to RM1 million, and developers banned from offering Developer Interest Bearing Scheme.

Hong Leong Investment Bank Research (HLIB) said in a report yesterday many projects continue to register high take-up rate, with the likes of Paloma by Tropicana Corp Bhd achieving 60 per cent sales within a month of launch.

It said interest remains strong in Penang with land reclamation projects on the island and a spate of land acquisitions on the mainland.
The firm expects Johor to take a somewhat longer time to recover.

"We believe the current weakness in share price presents an opportunity to accumulate, given developers under our coverage are currently trading at 30 to 60 per cent discount to RNAV (real net asset value), with the mid cap stocks trading at mid-single digit price earnings ratio.

"All in all, we believe the sector will stage a recovery in the second half of the year, and keep our neutral weighting for now," HLIB said.

The firm said its long-term outlook remains fundamentally unchanged, as it believes Malaysia's property prices will continue their long-term upward trend.