Mah Sing expects better sentiment this year
Company targets property sales of at least RM1.8bil
KUALA LUMPUR: Mah Sing Group Bhd is expecting property sentiment and demand to improve this year due to the improving economic landscape.
The property developer is targeting a minimum of RM1.8bil in property sales this year, matching last year’s figures.
The company said it would target most of its sales from properties that are priced below RM500,000 in strategic locations.
“We prefer to underpromise and overdeliver. We are keeping the target at RM1.8bil, but we have properties of RM2.2bil to deliver this year. If sentiment improves further, of course, we would be able to do better,” executive director Datuk Steven Ng said on the sidelines of Invest Malaysia 2018.
Its sales for 2018 would consist of 74% residential property sales that are priced RM500,000 and below, focused on Greater KL.
Despite the improving economic fundamentals of the country, Ng said the company’s strategy to focus on affordable properties is still sound because the sector is still experiencing very tight lending conditions that were imposed by Bank Negara.
“The key thing is that Bank Negara is still very strict in this sense. Even though sentiment has improved but the demand for affordable housing is still very high, as people are still looking for affordable products. If the banks are willing to relax, then I think this would actually drive this sector very well,” Ng said at a press conference.
“Affordable properties are RM500,000 and below and priced at about RM530 per sq ft,” he added.
On the property overhang condition in certain locations, group managing director Tan Sri Leong Hoy Kum said this was due to the mismatch in terms of location and pricing.
“Demand for properties in strategic locations and the right pricing continues to be strong,” he said.
Moving forward, the company expects to continue land banking activities in the Klang Valley and the Greater KL region.
“We would like to cater to market needs, given that more of the younger generation are looking for a home in these locations. With our strong balance sheet, we won’t buy for the sake of buying, but rather only buy where there is good demand. We won’t fix an amount that we want to spend for the land buy, obviously we are bankable,” Leong said.
Meanwhile, chief executive officer Datuk Ho Hon Sang said the company’s focus on affordable properties would not affect its margins, which are at 20% at the pre-tax margin level.
“Land and material prices have not come down. How we achieve this is a lot to do with value engineering. We only concentrate on one product, with a modular form for construction – which is very efficient. We would also look at how we manage our costs,” Ho said.
“When selling affordable housing, you can’t really increase your selling price. So, you have to manage your cost properly. We have been doing this for the last 20-plus years. Now, we look at value engineering the construction processes,” he added.