Koon Yew Yin, 4th March 2024

All property developers have just announced their annual profit for 2023. All of them reported increased profit.

Why property prices are going up?

One key reason for the high property prices is the escalating cost of construction materials. The rising prices of raw materials such as steel, cement, and timber have significantly impacted construction expenses. As developers face growing bills, these costs are inevitably passed on to buyers, leading to higher property prices.

Additionally, rising inflation has contributed to the high property prices. With inflation going up, property developers face higher construction costs, which ultimately leave buyers with higher property prices. This is coupled with a rising interest rate environment. During the pandemic in 2020, the overnight policy rate (OPR) in Malaysia dropped to a record low of 1.75 per cent. However, Bank Negara Malaysia raised the OPR by 25 basis points to 3.00 per cent on May 3, 2023. As borrowing becomes more expensive, construction costs and property prices inevitably increase in tandem.

Furthermore, development in infrastructure, particularly transportation networks, has also led to property appreciation. As Malaysia continues to expand its Mass Rapid Transit (MRT) network, more residential areas are connected to key areas such as business districts and educational institutions. Improved accessibility and connectivity raise the appeal and value of properties located near these new MRT stations.

In summary, the combination of rising construction costs, inflation, and improved infrastructure connectivity has contributed to the high property prices in Malaysia.

The list below is the comparison of the top 10 property developers in Malaysia based on their Earning Per Share (EPS) for the latest 4 quarters.

KSL announced its total 4 quarter EPS of 40.76 sen and its net tangible asset (NTA) backing of Rm 3.65. Its profit increased by 230% more than last year. KSL is the cheapest in term of 3.1 PE ratio. ECO World is the most expensive selling at 68 PE ratio.

KSL Holdings Bhd is a holding company. It is engaged in real estate services. The company has four reportable segments Property development; Property investment; Investment holding and Car park operation. Property development includes the development of residential and commercial properties; Property investment includes an investment of real properties and hotel; Investment holding includes the provision of management services to the subsidiaries, and Car park operation includes car park management services. KSL derives most of its revenue from Property development. For example:

The KSL Esplanade Mall in Klang, Malaysia, spans an impressive 650,000 square feet. It features four floors of retail space, making it a substantial shopping center. Additionally, the mall includes a landscaped park, an event space of up to 10,000 square feet, an outdoor dining terrace, and a children’s playground. Operated by KSL City Management Sdn Bhd, this mall aims to be more than just a shopping destination, offering a variety of experiences for visitors. It’s definitely a significant addition to Klang’s retail scene!