KUALA LUMPUR (May 5): Hong Leong Investment Bank Bhd (HLIB) said today it sees the likelihood of property developers in Malaysia revising sales and launch value targets as the Covid-19 pandemic takes its toll on the broader economy.
In a note today, HLIB analyst Andrew Lim Ken-Wern said that as the outbreak takes its toll on the broader economy, 2020 may record a dip in property transaction volume if developers do not maintain sufficient discounts to entice buyers.
"The lower interest rate environment would improve the affordability for home buyers but may not spur sufficient demand for the market.
We lower our GDV (gross development value) launch estimates and raise our RNAV (revalued net asset value) discounts by 5%-10% to reflect the halt in operations during the MCO (movement control order) period alongside potential pushbacks in planned launches.
We maintain our 'neutral' stance on the sector, due to the absence of near-term catalysts to warrant a broad-based re-rating,” Lim said.
HLIB’s note today followed the Valuation and Property Services Department Malaysia’s latest property report, which was filed on the department’s website last week.
Despite the economic headwinds, the report said, the Malaysian property market is expected to remain resilient in 2020.
It said affordable housing and finding the right solutions to the property overhang will continue to be the main agenda of the government.
"The close monitoring on the implementation of programmes under the National Housing Policy 2.0 (2018 – 2025) and various incentives introduced to promote home ownership among Malaysians, are expected to contain the overhang situation in the coming year.
"On the development front, the revival of [the] Bandar Malaysia mega project is expected to have positive impact on the property market landscape in the medium and long term.
Meanwhile, high-impact major infrastructure projects such as [the] West Coast Expressway and East Coast Rail Link will open up new development areas to attract Foreign Direct Investment, which will entail business and employment opportunities as well as catalyst for development growth,” the department said.