Caution on 2H’s property outlook due to movement, economic restrictions

KUCHING: Analysts are cautious on the property outlook for the second half (2H) due to the various movement and economic restrictions which can cause a slowerthan-expected recovery in the sector.

According to AmInvestment Bank Bhd (AmInvestment Bank), the local property sector has been languishing over the last five to six years, since hitting an upswing in mid-2013 when the House Price Index (HPI) showed double-digit growth.

AmInvestment Bank believed the most encouraging signs this year were developers’ first quarter of 2021 (1Q21) sales growth rate of five to 10 per cent year on year (y-o-y) via online booking platforms amid the pandemic, willingness to sacrifice margin by focusing on affordable residential segments in line with market demand and landbanking activities in prime areas with good public infrastructure and connectivity to KL city centre.

“However, we are cautious on the 2H property outlook due to the various movement and economic restrictions which can cause a slower-than-expected recovery in the sector,” the research firm said.

AmInvestment Bank gathered that Sunway Bhd (Sunway) recently raised its financial year 2021 (FY21F) sales target by 38 per cent to RM2.2 billion (from RM 1.6 billion previously) given the encouraging sales in Singapore and Sunway Belfield, KL city centre.

However, most of the property developers under the research firm’s coverage have maintained their FY21F sales target of RM1 billion to RM3.8 billion so far, which is relatively flat compared to the actual FY20 sales achieved at RM0.9 billion to RM3.8 billion.

“After successfully registering upbeat first quarter of current year 2021 (1Q21) sales, accounting for 32 per cent of full-year targets on average, we think the sales momentum could slow down from mid-May with the imposition of the Movement Control Order (MCO) 3.0, which was subsequently followed by a lockdown in June.”

AmInvestment Bank recalled in March last year when the first MCO lasted 1.5 months (from March 18 to May 3, 2020), housing sales fell 11 per cent quarter on quarter (q-o-q) in 2Q20 and thereafter rebounded by 121 per cent q-o-q in 3Q20.