Signs of quick rebound in property sector

The slew of property launches and speedy take-up rates lately are signs that the local (property) sector is on a quick rebound from the global economic downturn.

In its latest report, HwangDBS Vickers Research said the local high-end property sector had been on an uptrend, with developers raking in quick profits from project launches.

Among them were DNP Bhd’s Verticas condominiums in Bukit Ceylon, Kuala Lumpur, which saw 60% of the 50 units soft launched being taken up.

En bloc buyers also snapped up 93% of non-bumiputra units launched (last month) at IJM Land Bhd’s Light Linear project in Penang.

“We see demand for high-end units returning, which could re-rate the sector,” said HwangDBS.

It also highlighted Eastern & Oriental Bhd’s St Mary serviced apartments in Kuala Lumpur (launched in June, 80% take-up in five days) and SP Setia Bhd’s Sky Residences condominiums in KL (previewed in September 2008, with an average 70% take-up so far).

“Developers are more confident now to resume launches, which should lead to faster earnings recovery. Selling prices may soon be raised and incentives gradually pulled back, resulting in margin expansion for developers,” HwangDBS said.

An analyst from a local bank-backed brokerage said the take-up rates were not surprising, given the developers’ good reputation.

“These developers aren’t your fly-by-night type of developers. They have very good reputation and solid track record. The average investor or house-buyer is more likely to park his money with a well-known developer, knowing that his money would be safe,” he said.

Another analyst said the property sector was making a comeback in the region. In the last few months, Hong Kong, Singapore and China had seen strong surges in property demand, she said.

“There’s so much liquidity with nowhere to go. This is one of the safest ways to fight inflation. Putting your money in the bank basically means being eaten up alive by inflation.

“Malaysian property is generally still very affordable. If you don’t buy one now, it will be even more difficult to afford it next time. The 2% interest you get from banks is nothing,” she noted.

HwangDBS also highlighted the Malaysia Property Inc, a joint public-private sector initiative aimed to attract foreign investments worth RM20bil in the domestic real estate sector over the next 10 years.

“The recent liberalisation measures (abolishment of local equity ownership requirement for mergers and acquisitions and Foreign Investment Committee approvals) should help boost both foreign and local demand for Malaysian properties.

“Previous policy changes (waiver of real property gains tax and monthly EPF withdrawals) introduced just before the financial crisis have yet to be fully felt and could be strong catalysts during a recovery,” it said. - By Eugene Mahalingam (The Star)


August 4, 2009 at 2:32 PMjeremy tan

Most of the buyers are speculators. They buy in bulks to push up prices,hence creating a false image of demand. It is just a matter of time before they release their units into the market.

60% of the buyers of Light Linear are their own staffs. It is part of their marketing strategy. People who went to queue up for the units will tell you this.

This false demand is not sustainable. It is the matter of time before the bubble burst.

As for most of the waterfront properties, have you actually taken global warming into consideration. Heard of a place called Greenland? The ice caps there are melting at a rate that has never been imagine before. At the rate we are emitting carbon emissions, by cars or by chopping down more trees, it is just a matter of time before the sea levels in the world will rise.

Water catchment areas in Malaysia are getting smaller and smaller with time due to deforestation and developments.

I bet HwangDBS and other financial reports didn't tell you about the incoming flood due to global warming?

The property market price in Malaysia is only sustainable if there is FDI (Foreign Direct Investments). They are relying on the recent liberalization measures, the abolishment of local equity ownership requirement for mergers and acquisitions and Foreign Investment Committee approvals, waiver of real property gains tax and monthly EPF withdrawals to boost both foreign and local demand for Malaysian properties.
It is a bubble indeed waiting to explode.

Waterfront properties and reclaimed land are not build to prepare us for the incoming flood and rise of sea levels.
Global warming is a very big issue for the world.

Jeremy Tan

August 5, 2009 at 9:01 AMUnknown

Great thoughts. Thanks Jeremy. I plan to retire to Penang in 2018. By then the property sector should have corrected and stabilized. I have read of landed property increasing 2-fold in value since launching in 2005. That is definitely a bubble.

August 6, 2009 at 8:42 AMjeremy tan

Where are you from Jack? KL?

August 6, 2009 at 10:18 AMUnknown

I live in Queens, New York City, USA. I am a US citizen. I plan to apply for the Malaysia My Second Home scheme when I turn 50 years of age in 2012. I have visited Penang 2 times and love it. Actually there is a somewhat sizable Chinese malaysian community here in New York. I have a co-worker from Selangor, KL.

September 9, 2009 at 11:30 PMUnknown

Hi Jeremy,

Are you a Penangite? I wish that more people can see the big picture like you, many are misled by greed, to make things worst, there seems to be little control from the government in keeping prices getting out of hand, especially when there is no FDI.

Maldives is already experiencing the effects of flooding due to land level of about one meter from sea level, wonder how high are the projects on the island and reclaimed land, especially when they all cost so much...

I am buying a property in Penang mainland for personal retirement, on sea level > 10m

The prices are more realistic as it is justified with good built quality and material cost (some reasonable profits to the developer of course), and not inflated by speculators.

If you are from Penang, it will be nice to meet up for a chat, my email is

September 10, 2009 at 9:23 AMPalymra

Clear signs of recovery in property sector: HwangDBS
Published: 2009/09/10

HwangDBS Vickers Research Sdn Bhd said there are clear signs of recovery in the property sector extending to the high-end luxury segment.

These are seen in the take-up rate for The Binjai on the Park condominium project at the Kuala Lumpur City Centre, which has picked up from 10 per cent in July 2009 to 35 per cent out of its 171 units.

"Compared with the initial launch in August last year that coincided with the onset of the global financial meltdown, the average sale price (of The Binjai) has been reduced from RM2,800 per sq ft to RM2,400 per sq ft for units measuring 3,200-3,700 sq ft, while the smaller units (2,200 sq ft) were released at RM1,700 per sq ft," HwangDBS Vickers said in a report yesterday.

However, the average sale price of The Binjai is set to rise after its take-up rate exceeds 40 per cent. The project is expected to be handed over by December this year.

"This is positive for (property) developers with ready-to-launch products to capitalise on this early recovery," said HwangDBS Vickers, naming DNP Holdings Bhd, Eastern & Oriental Bhd (E&O) and SP Setia Bhd as its top stock picks.
In a separate report dated September 4, HwangDBS Vickers also revealed that the Penang property market is heating up.

"Recent launches were well received with new price benchmarks being set - catching up closely to Kuala Lumpur's," it said.

These included E&O's Seri Tanjung Pinang link houses, SP Setia's Reflections condominiums at Setia Pearl Island and IJM Land Bhd's Light Linear condominiums.

"Developers are also looking to gradually pull-back incentives and raise selling prices. Buyers are mainly locals and Penangnites working outstation or overseas," it added.

HwangDBS Vickers said despite the current financial crisis, land prices in Penang have remained "sticky" and huge contiguous parcels are hard to come by.

"Therefore, developers with large prime landbank will hold an upper hand in riding on the strong demand for Penang properties," it said.

E&O is the largest landowner on Penang Island with a total of 1,123 acres, including reclamation rights to 740-acres Seri Tanjung Pinang Phase 2 and 365 acres at Gertak Sanggul.