Staying optimistic
Developers continue to look for opportunities
“Challenging times present an opportunity for us to capture a larger market segment and we are ready to face this head on.” Datuk Jimmy Doh
IN light of the various macroeconomic headwinds, Malaysian property developers are hopeful that the market will start to see an improvement next year.
As such, property developers are already laying out their strategies to tackle the current challenges and capitalise on what they hope will be a better year for the sector in 2023.
Lagenda Properties Bhd managing director Datuk Jimmy Doh says there will be challenges, adding however that there will also be plenty of opportunities for the group to prosper.
“The industry moves into 2023 facing headwinds. Key considerations from a macro-economic perspective such as rising cost of living and increase in interest rates are general dampeners on consumer sentiment and will have a direct impact on residential property sales.
“This combined with persistent overhang issues and stringent banking approvals, are challenges that the broader industry will have to face head on in 2023,” he tells Starbizweek.
Nevertheless, Doh is confident that Lagenda will remain robust and confident in its ability to deliver continued growth.
He emphasises that the company’s niche focus on affordable landed housing will allow Lagenda to remain “somewhat insulated” during challenging times, as the demand for more affordable housing rises.
“As we move towards the new year, we see an opportunity in increasing our presence in more areas, as a large majority of Malaysians continue to prioritise affordable living spaces with top-notch facilities.
“Challenging times present an opportunity for us to capture a larger market segment and we are ready to face this head on,” Doh says.
Malton Bhd chairman Tan Sri Lim Siew Choon says rising inflationary pressure, labour shortage, steep rise in raw building materials, interest rate hikes and implementation of a new minimum wage will likely affect Malaysia’s property sector.
“The market volatility arising from the Russia-ukraine conflict, supply-demand imbalances as well as the upcoming general election this month will further exacerbate buyer sentiments,” he says in the group’s annual report.
Amid an increasingly uncertain outlook, Lim notes that the World Bank has forecast global gross domestic product growth to slow down to 3.2% and 2.9% in 2022 and 2023 respectively.
“Many of the downside risks flagged in such as rising inflation and tightening of global conditions, all pointing to increased risk of a global recession.”
Lim acknowledges that China’s slowdown has been worse than anticipated with prolonged Covid-19 lockdowns, coupled with the economic costs of war and rising fuel and food prices.
“The country’s economy is on an upwards track to recovery from the pandemic following a successful vaccination drive and the full withdrawal of movement restrictions, underpinned by stronger domestic demand and improvements in the labour market.”
Whilst the world and Malaysia are still reeling from post-pandemic effects, Lim says Malton remains cautiously optimistic on its outlook.
“As we move forward with renewed optimism, the group strives to build on its competitive positioning to maximise shareholders’ value.
“We stay committed to strengthen our environmental, social and governance (ESG) goals by enhancing our digital technology, engagement with financial institutions and regulatory bodies, while upholding good corporate governance for longterm growth.”
MK Land Holdings Bhd, in its recently released annual report, says its strategic priorities moving forward will differ according to its individual business target market.
“Overall, there would be continued strong focus on digital marketing to increase leads, improve engagements and efficiency and ultimately, lead to improved sales.”
Specific to the luxury homeowner market, MK Land says its focus will be personalised with engagements towards targeted potential buyers and target market.
“As for the township developments, the group is constantly striving to improve the offerings to the existing and potential buyers, including exploring the development of community parks, retail and public amenities.”
Smart homes
Additionally, MK Land is also exploring the development of smarter, more environmentally and occupant-friendly houses which offer flexibility for people to work and study from home.
“Such a move will augment the group’s intention for product differentiation, not simply to offer houses but a conducive lifestyle, working in partnership with customers to embrace the ideas of ESG.”
The group adds that it is on an expansion mode, having explored and identified new areas of growth.
“One such area is the landbank business strategy for future developments. The group will continue to focus on developing affordable homes in Taman Bunga Raya (Selangor), Klebang Putra and Raia Perdana (both in Perak), as well as to optimise usage of remaining landbanks in Damansara Perdana (Selangor), as well as Perak developments Bukit Merah and Bandar Technopolis Perdana.”
To support progress in this strategic direction, MK Land said it has managed to significantly reduce its holding of unsold stocks.
“The group is confident in reducing this number even further, taking into account the entrance of buyers who have delayed buying for the last two years to scout for good deals.
“The group will continue to focus on sales of its products and the timely completion of its ongoing projects while remaining cautious with new launches.”
With the lifting of the movement control order and other forms of restrictions, MK Land says it can hence refocus on its repositioning plan for Bukit Merah Laketown Resort (BMLR).
“Action plans are in place to regain the group’s position and market share for BMLR. This includes the possibility of refurbishing existing offerings and complement these with adding more attractions and events to attract visitors throughout Peninsular Malaysia and Singapore.
“Drawing on its strategic management during the pandemic, the group’s leisure segment will continue to be vigilant on health and safety aspects, whilst engaging in digital marketing to expand its reach to the public.”
Sustainable energy
Additionally, MK Land says it is reviewing further business opportunities for renewable energy (RE).
“It is currently in discussion with several companies on potential collaboration following the recent announcement by the government to transition towards sustainable energy.
“One of the initiatives include the allocation and redistribution of the RE quota of 1,200 megawatts (MW) for solar resources. From the 1,200MW quota, 600MW will be allocated for the procurement of green electricity via virtual power purchase agreement.”
Looking at the evolving economic scenario, MK Land says it is confidently poised to face the future and will continue to grow its product portfolio, pursuing a forward-looking strategy to capitalise on the revitalised economy.
“In keeping with prudent financial management and efficiency of operations, the group will focus on renewed growth in the market.
“While the future is immensely challenging, the group will continue to create value by leveraging its inherent business strengths and its business model, which has thus proven resilient and sustainable.”
Augmented by short, medium and longterm plans, MK Land says it is confident in progressing forward, launching new projects, transforming its processes and broadening its revenue base.”
Guocoland (M) Bhd chairman Tang Hong Cheong meanwhile says ongoing headwinds look to remain for the short-to-medium term.
“Prevailing external risks within the current environment which could have a bearing on business resilience and prospects include the Russia-ukraine war that has caused further strain on global supply chains and led to higher commodity and raw material prices.
Operating costs
“The property sector will face challenges from increased operating costs arising from inflation compounded by a weakened ringgit against the dollar, rising interest rates and the minimum wage policy in Malaysia which took effect on May 1, 2022,” he says in the group’s latest annual report.
Tang adds that the group will remain steadfast to overcome these challenges through management initiatives in project and cost management, as well as efforts to drive sustainable growth while ensuring financial stability.
Separately, Berjaya Land Bhd chairman Tun Richard Malanjum, in the company’s 2022 annual report, says the pace of economic recovery has been gaining momentum with the reopening of the economy and international borders.
“Looking ahead, the current global landscape has ushered in a new era of innovation and change for businesses.
“To this end, the group will continue to grow its potential by seeking opportunities in the domestic and global markets to fortify our presence and enhance profitability.
“The directors anticipate that the group’s business performance and operations in the financial year ending 2023 to be satisfactorily going forward. The group has put in place measures to mitigate the rising cost of doing business and tighten internal efficiencies with prudent cost optimisation,” he says.