StarBiz Monday launches a new series 'CEO Property Outlook, in which various CEOs give their comments on the property sector.
Datuk Seri Liew Kee Sin
SP Setia Bhd group managing director
and chief executive officer
STARBIZ: What is your outlook of the property sector for the second half of 2005?
Liew: We at SP Setia are still excited about the outlook of the property market, going by the good sales that we are consistently generating group-wide. For the first six months of this financial year alone, we have locked in RM640mil in new sales.
This is evident enough that the market remains promising for developers so long as you have the right product mix at preferred addresses. Despite the cautious market sentiment, I feel that our broader fundamentals are still very much intact. By this, I am referring to the positive demographics and sustained economic growth.
Our direction is very clear – continue to focus on providing superb service and product quality to capture customers’ interest and loyalty. Despite the temporary setback caused by the collapse of a section of the NKVE-Jalan Meru Link during construction, we remain committed to see through the completion of the NKVE-Jalan Meru Link to provide direct access from the NKVE into our Setia Alam and Setia Eco Park townships.
But we will only allow the consultants and specialist contractors to resume work on the NKVE-Jalan Meru Link after getting the green light from the authorities. Meanwhile, we have instructed them to take extra safety precautions and adhere to stringent safety standards to prevent a repeat of the unfortunate incident. We are convinced that this RM150mil NKVE-Jalan Meru Link, which we are fully funding as a developer, will unlock the real potential of our properties in Setia Alam and Setia Eco Park.
StarBiz: What are some of the opportunities and challenges for the sector going forward?
Liew: As in any industry, opportunities and challenges abound and it is up to businesses to turn them to their advantage. For the property sector, the prolonged bearish sentiment could potentially dampen demand. Concerns over rising oil price, the lacklustre stock market and looming interest rate hikes are also aggravating an already lethargic market.
Nevertheless, there are still plenty of opportunities for developers with the right foresight and strategy. I believe that the medium-high to high-end market should continue to lead the residential sub-sector, given the rising affluence and lifestyle expectations of our society.
Based on the Property Market Report 2004, properties priced above RM500,000 drove the residential sub-sector to register a 7.3% growth in 2004, with a 45% share of the market. Notwithstanding that, developers must be cognisant of the fact that the performance of high-end projects hinges on crucial factors such as location, lifestyle themes and the developer’s track record.
That is why our recently-launched Setia Eco Park project was an instant success with its alluring tagline “Valley of Dreams” having caught buyers’ imaginations immediately. This exclusive enclave, the biggest of its kind in the country, has the Bukit Cahaya Forest Reserve as its next-door neighbour, providing a natural green lung. The homes, exquisitely designed semi-Ds and bungalows, are set within an eco environment teeming with natural life as a tribute to Mother Nature.
StarBiz: What are some of the major government policies and happenings in the economy and the property market that have contributed to the industry’s performance?
Liew: The historic low mortgage rate and the Government’s success in managing the performance of the overall economy have contributed to the industry’s encouraging performance so far. These factors have continued to propel property purchase activity, resulting in the generally good performance of new launches in choice locations.
For example, new launches at our one-year old project, Setia Alam, have consistently registered take-up rates of over 80%. With regard to the industry specific initiatives, among the policies that have been effective in garnering sales for property developers over the past two years, is the stamp duty waiver for properties priced below RM180,000.
Our Setia Alam project also benefited from this incentive when it was first launched in April last year as the smaller-sized double storey houses were priced from RM168,000 onwards.
StarBiz: What would you like to see happening that would contribute to better opportunities and a more robust property market?
Liew: Although the country’s economic fundamentals remain strong with growth forecast at between 5% and 6% this year, the sentiment of the man in the street has been somewhat bearish of late. Several factors may have contributed to this, among the most recent being the increase in fuel prices and repatriation of foreign workers, which have hit certain segments of the public quite hard. The continued poor performance of the construction industry has also not helped – from the standpoint of consumer confidence it is currently having a disproportionately large negative impact, given its strong multiplier effect on the economy.
Nevertheless, we continue to believe that the above steps taken by the Government to balance its budget, by reducing spending and eliminating costly subsidies, have been necessary and are crucial for the long-term health of the economy. It also remains imperative for social and security reasons to curb the influx of illegal foreign workers.
However, given the very real pain experienced by several key sectors of the economy in adjusting to these changes, there must be sufficient counter-balancing measures, which create new or alternative business opportunities to ensure business and consumer sentiments continue to hold up.
In this regard, both the Government and the private sector have a role to play to ensure that the overall Malaysian economy becomes more efficient, productive and innovative in order to compete in an increasingly challenging domestic and external environment. A more vibrant stock market would also help bolster confidence as the wealth effect generated gets translated into greater purchasing power in the hands of the house-buying public.
For a nation like Malaysia with a young and growing population, the existence of a strong and resilient domestic economy in which there are ample employment, business and investment opportunities will definitely contribute towards a continually robust property market.
StarBiz: Which property sector and market offer the best potential for your company?
Liew: As we have mentioned, for this year, we have set our sights on the upgraders' market since we believe it holds the greatest potential yet to be fully tapped. Our newly-launched Setia Eco Park project is ideal to cater to the needs of this target market, given its attractively priced products.
At Setia Eco Park, buyers can own a semi-D for a price tag of RM660,000, while bungalows start from RM900,000. Buyers, too, will be spoilt for choice as Setia Eco Park’s 10-acre Show Village displays up to 16 units of creatively designed semi-Ds and bungalows with themes ranging from Malaysian Tropical, Modern Contemporary, Tropical Bali, Orient Fusion to Zen Minimalist.
On a group-wide basis, our extensive range of products, including double storey terrace houses, linked semi-Ds, wide terraces, semi-Ds and bungalows with prices ranging from RM160,000 to RM3.5mil allows us the flexibility to alter the product mix according to changing market trends and consumer sentiments.
StarBiz: What are some of the interesting property launches that can be expected from your company in the coming months?
Liew: Now that we have successfully launched Setia Alam and Setia Eco Park, we will work very hard to deliver on our promises. We want to give our buyers homes that they can be proud of. This is our way of thanking them for their confidence and trust in our ability.
We will be kept busy with these two projects fast gaining prominence in the Klang Valley market and continually garnering good sales. But that does not mean we will become complacent.
With the Klang Valley projects shaping up nicely, we will shift our focus next to Johor Baru. In the pipeline is Setia Tropika, another signature Setia project that is already generating keen interest in the Johor Baru market, even though it’s only due for launch in September. Location-wise, Setia Tropika is unrivalled.