Encouraging outlook
Property market expected to see higher sales
“Statistics showed a 2.5% increase in overall transaction volumes and a total transaction value of Rm196.83bil, surpassing pre-covid levels.” Datuk Paul Khong
STELLAR property market statistics for 2023, as well as solid earnings performances by local developers, seem to have all but confirmed that the sector is set to see encouraging growth this year.
Property consultants expect the market to resume the positive momentum, while several developers are also projecting better performances for 2024.
According to data released by the National Property Information Centre on Wednesday, the Malaysian property market’s transaction values rose by almost 10% to a record of Rm196.83bil in 2023 from the previous year, with its growth momentum expected to continue this year.
Savills Malaysia group managing director Datuk Paul Khong says the local Malaysian property market fared well in 2023, despite enduring a bumpy ride.
“Statistics showed a 2.5% increase in overall transaction volumes and a total transaction value of Rm196.83bil, surpassing pre-covid levels.
“As usual, the residential sector again dominated with 62.8% of transactions and 51.3% of value,” he tells Starbizweek.
“However, challenges remain, especially in managing unsold units, which totalled 59,058, with high-rise units comprising 49%,” Khong added.
KGV International Property Consultants executive director Samuel Tan says the country’s property market performance last year is a testament of the improving economy and pent-up demand post Covid.
“It also shows that stakeholders, especially developers, are getting the formula right by positioning the right property types at the right pricing to attract buyers,” he said.
Positive developments
Meanwhile, the recently concluded corporate results season saw several developers announcing higher sales targets for this year, on expectations of a positive outlook for the property market in 2024.
Among them is S P Setia Bhd, which is targeting sales of Rm4.4bil for this year.
The group had projected sales of Rm4.2bil in 2023, only to end up surpassing its target by 21% to record total sales of Rm5.1bil last year.
An analyst with a local bank-backed brokerage firm says the developer is poised to achieve its sales target for the year.
“With its ongoing township launches and strategic de-gearing efforts, we believe S P Setia will meet, if not surpass its sales target for the current financial year (FY24).”
He adds that the company’s earnings performance will also be driven by its diversified projects and foreign developments.
Meanwhile, MIDF Research in a report says S P Setia’s key launches in FY24 include phase 1 of Setia Federal Hill, which is a joint venture with Mitsui Fudosan.
“Project gross development value (GDV) is at Rm1.4bil and management targets to launch the project in the third quarter of FY24,” it says.
Additionally, TA Research says S P Setia is preparing to launch their first industrial development, Setia Alaman, in the Klang Valley.
“Scheduled for launch this year, efforts are underway to convert the land parcels’ titles to industrial use.
“Beyond Setia Alaman, the company has also allocated 323 acres in Setia Fontaines, Penang and 307 acres in Tanjung Kupang, Johor, for industrial park development.”
Meanwhile, Hong Leong Investment Bank (HLIB) Research says the group’s Battersea Power Station (BPS) project in the United Kingdom is also expected to see an improved performance.
This, the research house says, will be fuelled by declining mortgage rates, handover of Koa apartments and the increased vibrancy in BPS auguring well for the township residential demand.
“The group’s net gearing also improved quite significantly in the fourth quarter of FY23 to 68.2% (from 75.5% in the third quarter of FY23).”
The research house says it expects improvements in S P Setia’s gearing levels, going forward, underpinned by the group’s ongoing land sales.”
Separately, FY23 also saw developer Mah Sing Group Bhd achieving sales of Rm2.26bil, which was a 13% increase over the Rm2bil it recorded in the previous year.
For FY24, the group is projecting a higher minimum sales target of Rm2.5bil in 2024.
In a statement, Mah Sing said the optimistic forecast is underpinned by a compelling pipeline of projects strategically positioned in the affordably priced housing segment.
This, the group emphasised, aligns seamlessly with current market demand, particularly from the rapidly growing firsthome market.
Strong market acceptance
TA Research says Mah Sing’s FY24 sales target is supported by upcoming launches valued at Rm2.8bil.
“The management expresses confidence in achieving this target, citing robust demand for affordable homes in urban locations.
“We gather that the group’s recent launches have consistently shown strong market acceptance, maintaining an impressive uptake rate of over 90% throughout FY23.”
Additionally, the research house says Mah Sing’s balance sheet remains solid, which, as of end of December 2023, saw a low net gearing ratio of 0.08 times and a cash balance of Rm981mil.
“Despite acquiring six new parcels of land since 2023, with an anticipated GDV of Rm6.2bil, Mah Sing is actively seeking opportunities to further enhance its landbank in key areas such as Klang Valley, Johor and Penang.
“This strategic approach aims to expand the company’s residential and industrial development portfolios.”
HLIB Research says the six pieces of land that were acquired last year are targeted to be launched in 2024.
“With the labour shortage issue fully resolved in 2023, the group can now expedite its site progress and accelerate its launches.
“This bodes well for the group’s fast turnaround strategy as the cash flow can be ploughed back for its landbank acquisition and expansion activities.”
Meanwhile, Sunway Bhd is targeting sales of Rm2.6bil for FY24, following a strong performance in the previous year.
The group achieved sales of Rm2.4bil across its Malaysian and international operations in 2023, exceeding its target of Rm2.3bil for the year.
For FY24, Kenanga Research anticipates Sunway to maintain a strong performance across its diverse portfolio.
“Strategic launching of projects in established townships and continued development in existing ones should bolster the property development arm.
“Despite concerns about inflationary pressures potentially impacting consumer spending, the group’s diversified property investment portfolio is poised to maintain stability, with the possibility of a weakening ringgit attracting tourists.”
Additionally, the research house says it foresees expansion in the results of its healthcare joint venture, particularly with the forthcoming opening of several new hospitals over the next two years and medical tourism sector.
TA Research, meanwhile, pointed out that Sunway’s new sales of Rm2.6bil will be underpinned by planned launches worth Rm2.1bil.
“Of the Rm2.1bil new launches, 88% will comprise Malaysian projects, with the balance 12% from China.”
With unbilled sales of Rm4.1bil and an outstanding construction order book of Rm3.5bil (comprising external jobs), the research house emphasises that Sunway has earnings visibility for the next threeto-four years.
“In our view, Sunway is well-positioned to benefit from the strengthening domestic economy.
“We believe the leisure, hotel and healthcare segments will see positive impacts from the recovery of inbound leisure tourism and medical tourism, as international travel normalises,” TA Research says.