KUALA LUMPUR (Jan 15): AmInvestment Bank Research has maintained its 'buy' rating on Mah Sing Group Bhd at 70 sen, with an unchanged fair value of RM1.13, offering a potential gain of 60%.
KUALA LUMPUR: The property sector is like any other economic sectors and should be subject to market forces of demand and supply, so there is no reason why the government should bail out developers in the current slum when they run into trouble.
Property consultancy Rahim & Co executive chairman Tan Sri Abdul Rahim Abdul Rahman said at a press conference on the company’s Property Market Review 2019/2020 that property development is a business and all businesses come with risks.
So when developers run into trouble, “the government has no business saving them”, he said.
Rahim said that before embarking on any projects, developers should do proper feasibility and market studies which would indicate demand and price that can be absorbed by the market. The current overhang of about 50,000 units may take five years to be resolved based on the country’s population of about 35 million and the disparity between income and property prices.The Singapore government will fine a developer if they do not sell all their units within a certain period. In other words, Singapore is saying to the developer, before you embark on your development, do a proper study, Rahim said.
Bank Negara provided guidelines for project financing and this required developers to submit independent feasibility/market studies. But this was relaxed after developers lobbied against these guidelines because developers wanted to save the fees. At the end of three years, they are unable to sell, Rahim said.
He said these studies are important and valuers will say it as it is.
“We call a spade a spade and we lose a lot of friends this way, ” he said.
The period that was most crucial was between 2011 and 2013 when the property prices spike.
Rahim said credit was easy especially during that period when developers sold their units using interest-bearing schemes.
”So, yes, they (the developers) brought this on themselves, ” he said.
While the government should not bail out developers, Rahim said Malaysians should also not have the mentality that property prices will always go up.
“If a property was purchased a few years ago, chances are the buyer would have lost money. So there is such a thing as a cycle, ” he said.
As for the overhang of about 50,000 units valued at about RM34bil comprising residential sector plus serviced apartments and small offices home offices, that is a huge concern.
It may not be an economic calamity but it is a major concern, Rahim said.Rahim & Co research director Sulaiman Akhmady Mohd Saheh said what is of even greater concern other than the current overhang numbers is the fact that the numbers are rising.
“It (the overhang) is consistently on the rise, ” he said.
“What we are seeing today is the completed unsold units of about 50,000 units. There are also units which are currently under construction which are unsold, and which will enter the market, ” he said.
Sulaiman said the various government measures like reducing the threshold price for foreign buyers from RM1mil to RM600,000 and the recently concluded Home Ownership Campaign (HOC), which though are important, are not expected to have a significant impact on reducing the overhang.
The government threw its support behind the HOC by giving stamp duty exemptions with the objective of reducing the huge overhang figures but developers took the opportunity to launch new units.
“The HOC was basically the primary market sales, so developers saw an uptick in sales, ” said Sulaiman.
He said close to half of the overhang comprised units priced RM1mil and above and those between RM200,000 and RM400,000.
In malaysia mahsing have more than 1000 ekar to bulid up highrise.. now around 10 project on going hot sale.. mahsing condo high end and price resondable
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
EngCCCC
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Posted by EngCCCC > 2020-01-09 11:54 | Report Abuse
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